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US Federal Reserve raises interest rates for first time since 2018

theguardian.com

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Re: US Federal Reserve raises interest rates for first time since 2018

#501

Post by thehappypm »

Qub3d wrote: post #181
thehappypm wrote: post #156

Earlier quoted context omitted.

It’s really not callous. If a boomer’s 401(k) is still heavy on stocks they’re being greedy! De-risk, people. I don’t want to let inflation tank my economy to protect a generation of greedy grandparents.

Generally 401(k) plan ratios are not managed individually. Most will have target date funds[0] that automatically transition in to progressively less-risky investments as you get closer to retirement. The problem is... almost no financial instruments outside of stocks can provide a meaningful return any more, so even the target date funds are almost all stock. I noted your other "time in the market beats timing the m…

Half stocks is a great example of diversification. If there’s a huge correction (say 20%) they’ll lose 10% — hardly something that would drop you from prosperous to poverty stricken.

Re: US Federal Reserve raises interest rates for first time since 2018

#502

Post by lumost »

mjevans wrote: post #496
SkyMarshal wrote: post #453

Earlier quoted context omitted.

Yeah, happened with both monetary policy as you observe, and with Keynesian fiscal policy - deficit spend to cushion and shorten downturns, then contract govt spending and pay down the debt during good times, so that you can afford to deficit spend again in the next downturn. Makes sense in theory, but the second half doesn't always happen b/c politicians like buying votes with govt spending (either via under-taxatio…

Or alternately raise taxes in the good times (rather than interest rates) and pay down that debt... which at least in the US we've got one political party dead set against at all costs.

A generation ago, progressive cycles of deficit spending and taxation had put the top tax bracket in the US at 90%. Still, there was persistent inflation - and worse high unemployment.

The belief was that the Federal Government had grown too large in the economy and needed to be "starved". To what extent government austerity vs. new monetary policy moved the needle for the US economy is unknowable. However many Americans of that generation feel that the starve the beast approach was correct.

If you talk to Americans opposed to new taxes, their opposition is usually based on the idea that the government will waste the money in one way or another. Even those on the left in favor of taxes are often in favor of taxes for redistribution purposes. It's rare that anyone pitches the government as competent outside of military spending, and even then there are many asterisks on 10k light bulbs in submarines.

If you want Americans to agree to taxes you'll need to change the perception of government competence.

Re: US Federal Reserve raises interest rates for first time since 2018

#503

Post by dustingetz »

atlgator wrote: post #112

Recession is inevitable. If you’re only considering interest rates, you haven’t bothered to look at the Fed’s balance sheet or FOMC meeting minutes from 2020. We bailed out the world through currency swaps, corporate bonds, and MBS purchases and we’re still doing it to the tune of $120B per month.

can you post links? hard for learning layperson to identify the right sources

Re: US Federal Reserve raises interest rates for first time since 2018

#504

Post by thehappypm »

qbasic_forever wrote: post #377
notch656a wrote: post #371

Earlier quoted context omitted.

You've been played by a study designed to manipulate the view of American wealth. The median household has a gigantic amount of wealth, over $100k worth. Not having $1k in a checking account doesn't mean you can't afford $1k or even a $10k expense.

Sure if you define 'household' as home owners, of course their assets are well above $100k because of the hyper inflated housing market in the country. I would _love_ to see how someone renting an apartment and working minimum wage with less than $1k in their checking account can get a $10k loan. What are they going to do, go to the check cashing place around the corner and walk out with 10 grand? (that's saracasm bt…

If you’ve paid off part of a mortgage you can do something like a cash-out refinance, or more obviously, you can sell and downsize to meet your needs.

Re: US Federal Reserve raises interest rates for first time since 2018

#505

Post by hammock »

whoseonthat wrote: post #7
nickff wrote: post #2

It's worth taking a look at the effective federal funds rate over time, which clearly shows how low it's been recently: https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

It seems interest rates lower during recessions. Right now we are already low and are raising which seems to be a different pattern. Is lowering interest rates a method to overcome a recession?

The more important causation is the raising of rates. The Fed raises rates which leads to a recession. Then they lower the rates in response.

Re: US Federal Reserve raises interest rates for first time since 2018

#506

Post by StevePerkins »

mjevans wrote: post #496
SkyMarshal wrote: post #453

Earlier quoted context omitted.

Yeah, happened with both monetary policy as you observe, and with Keynesian fiscal policy - deficit spend to cushion and shorten downturns, then contract govt spending and pay down the debt during good times, so that you can afford to deficit spend again in the next downturn. Makes sense in theory, but the second half doesn't always happen b/c politicians like buying votes with govt spending (either via under-taxatio…

Or alternately raise taxes in the good times (rather than interest rates) and pay down that debt... which at least in the US we've got one political party dead set against at all costs.

> "raise taxes in the good times..."

Oh, I know which party he's talking about!

> "...and pay down that debt"

Huh, nevermind.

Re: US Federal Reserve raises interest rates for first time since 2018

#507

Post by thehappypm »

Sohcahtoa82 wrote: post #362
thehappypm wrote: post #96

Earlier quoted context omitted.

A recession may be all right. Americans have a gigantic amount saved up and so long as it’s mild enough it’ll probably strengthen the dollar.

You are living in a bubble. This may be true for you and the people you associate with, but for the majority of Americans, it's not true in the slightest.

I disagree. We’re burned out because in the last 14 years we’ve seen two gigantic recessions. They’re not always catastrophes!

Re: US Federal Reserve raises interest rates for first time since 2018

#508

Post by jcadam »

listenallyall wrote: post #487
odonnellryan wrote: post #449

Earlier quoted context omitted.

Probably not much. The only time the US had a major home price adjustment was 2008 and that was because the housing market was the problem. Currently the housing market is up but not a problem. There aren't crazy foreclosures and there aren't any expected. Tho that can change if we have a big recession absolutely. Also home prices did not take a very long time to recover all things considered.

It's always different this time, until it's not. Foreclosure rates aren't high today, but the people who bought extremely expensive houses did so just this year and last. Demand for homes is very high, in large part because hedge funds are buying lots of them... if rates rise, or if prices stabilize, they will pull out, decreasing demand significantly. And will migration to smaller cities/towns continue unabated, (if…

> And will migration to smaller cities/towns continue unabated, (if you haven't moved to Austin/Vegas/Idaho/Montana yet, when do you plan to??) or will that reverse as companies want a physical presence again?

Moved to Alaska last year. Not going back to city life - remote forever :)

Re: US Federal Reserve raises interest rates for first time since 2018

#509

Post by icedchai »

nine_zeros wrote: post #11
frockington1 wrote: post #4

They did the absolute minimum to appear to be able to say they are dong something. With official inflation nearing 8%, this is nowhere near enough. SO far equity markets agree this is effectively nothing

They need to go slow. An abrupt rate increase will cause a recession.

They are going slow. It will take years to get back to pre-covid levels (2.5%-ish), which were low as it is. We haven't had a historically "normal" rate since the mid 2000's (4 to 5% ish.) There will no doubt be another crisis before we get anywhere near there.

Re: US Federal Reserve raises interest rates for first time since 2018

#510

Post by CPLX »

diognesofsinope wrote: post #500
CPLX wrote: post #469

Earlier quoted context omitted.

I mean it did make everyone better. The COVID pandemic could have really wiped out a lot of people and we printed money and it helped. It’s the austerity people that have never cared about anything but their ideology. Austerity for austerity’s sake has caused unfathomable human misery in the globalization era. Right now the labor market is good for workers. That is good. Getting there has always opposed by the ruling…

> we printed money and it helped. I mean, did it? What evidence do you have for this claim? Vaccines absolutely helped. But now everyone's wages are going down -- it was basically ~$3k stimulus checks that were actually loans with a 400% interest rate. Real workers wages are falling. Inflation fundamentally increases inequality, i.e. people who own assets watch the value of those assets increase while people who work…

> What evidence do you have for this claim

A tight job market

> now everyone's wages are going down

Not the people that just got jobs

> Inflation fundamentally increases inequality

Not nearly as much as unemployment does

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