Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

US Federal Reserve raises interest rates for first time since 2018

theguardian.com

Post reply on HN
Print view View original

511–520 of 693 posts

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

#511

Post by selimthegrim »

lumost wrote: post #473
roenxi wrote: post #303

Earlier quoted context omitted.

An important point to keep in mind when talking about MMT in a policy setting is that the people who will implement it don't care about theory and will make a series of short-term politically expedient and/or vaguely corrupt decisions. If they implement MMT, there are good odds that it will just look like money printing. It doesn't really matter what the academic plan is, the policy isn't going to follow it. Much lik…

I'd highly recommend the historical fiction "Red Plenty" which followed the trajectory of Academics in the soviet union trying to compute idealized prices - meanwhile administrators, consultants, and realists had to just make the system work. At one point a quota increase leads a factory to sabotage it's old equipment, so that they may get a new machine to hit the quota. The administrator in charge of approval determ…

Red Plenty's mathematically illiterate treatment of mutations makes me doubt the rest of the book.

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

#512

Post by CPLX »

e4e78a06 wrote: post #489
lazide wrote: post #483

Earlier quoted context omitted.

Compared to a Great Depression type cycle in the middle of the pandemic, what is the other alternative?

Well I think a big contributor to the current inflation problem was the last round of stimulus passed right as the pandemic was starting to wind down. At that point unemployment numbers had almost gotten back to normal and most revenue numbers for things like restaurants, travel, etc. had recovered to at least 70% of pre-pandemic levels. And then some states like California dumped even more money into the economy thr…

> a lot of people that just dumped their stimulus checks on memecoins or wasted it buying spurious goods

By contrast, when the Bush tax cuts were passed all that money was used for tasteful, ethical spending

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

#513

Post by selimthegrim »

CPLX wrote: post #469
roenxi wrote: post #303

Earlier quoted context omitted.

An important point to keep in mind when talking about MMT in a policy setting is that the people who will implement it don't care about theory and will make a series of short-term politically expedient and/or vaguely corrupt decisions. If they implement MMT, there are good odds that it will just look like money printing. It doesn't really matter what the academic plan is, the policy isn't going to follow it. Much lik…

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…

MMT is a bunch of emergent identities that get dubbed gospel which depend on the US dollar being a reserve currency backed by global economic imperialism. MMT died the day the US and EU froze Russia's reserves.

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

#514

Post by jnsie »

lumost wrote: post #502
mjevans wrote: post #496

Earlier quoted context omitted.

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 Ameri…

> It's rare that anyone pitches the government as competent outside of military spending

Genuine question - do people see military as competent when it comes to spending?

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

#515

Post by diognesofsinope »

mywittyname wrote: post #117
adamhp wrote: post #25

Earlier quoted context omitted.

Lowering interest rates makes capital cheaper, which does spur investment and thus economic development, so, it can certainly have that effect given the right circumstances. But keep it too low, too long, and you see money start flying around too quickly, getting a little too loose because everyone wants to get theirs, and then they start inventing things like mortgage-backed securities and everyone starts over-lever…

It's important to separate out fraud from low interest rates. Low rates absolutely drive investment, and riskier investment at that. But the issue with 2008 was fraud in the lending market, not necessarily the low rates. Risky investments aren't necessarily bad investments. Low interest rates give businesses more runway to operate investments that might take a while to show returns. A million dollar loan at 10% for a…

For the record, the evidence of 'widespread' fraud is extremely weak:

See Antoinette Schoar's (MIT) work: https://www.nber.org/papers/w20848

It makes for a good news story that regular Americans understand and frankly want to hear (the banks were bad). But if you really dig into the reports, e.g. Financial Crisis Inquiry Report, almost the only fraud comes from misreporting of income which is essentially consumers lying. There could be other documentation issues, but underwriting almost entirely depends on credit score + income, so they're fairly trivial.

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

#516

Post by inkeddeveloper »

jnsie wrote: post #514
lumost wrote: post #502

Earlier quoted context omitted.

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 Ameri…

> It's rare that anyone pitches the government as competent outside of military spending Genuine question - do people see military as competent when it comes to spending?

The $2000 leather chair and multiple $3000 tvs my commander ordered for his office to be delivered to Kabul during a war would say no.

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

#517

Post by selimthegrim »

UncleOxidant wrote: post #275
lvl102 wrote: post #270

Higher rates won’t impact US as much as they will impact emerging economies. Those countries will face food crisis in addition to rapidly rising debt costs. Keep an eye on this because we are on cusp of civil unrests across the globe.

War in Ukraine will have a much larger effect. Something like ~25% of global wheat supply comes from Ukraine and Russia. There won't be any planting to speak of in Ukraine this spring. And Russian wheat is pretty much off the world market.

I am sure Dubai will trade it

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

#518

Post by dllthomas »

karpierz wrote: post #475
dragonwriter wrote: post #444

Earlier quoted context omitted.

> Your definition is circular. No, it's not. > What proves MMT is in any way ‘factual’. Factual is class of statements, opposed to normative statements. > MMT is an old lie It can't be that old, since it only describes the constraints on sovereign finance of entities functioning in their own pure-fiat currencies, which isn't a subject that has been of interest for very long.

> Factual is class of statements, opposed to normative statements. They're asking for supporting evidence for MMT.

No, they're talking past each other.

dragonwriter seems to have meant "factual" in the sense of "concerned with questions of fact", "is" rather than "ought", and was not intending to claim (at least in that statement) that the answers MMT provides are correct.

gray-area seems to have interpreted "factual" as "accurate" or "truthful", and was objecting that defining a theory as "concerned with things which are actually fr-reals true" is cheating.

To be fair to gray-area, "true" is probably much more common a use of "factual". On the other hand, the broader context was that dragonwriter raised the point in objecting to argument about what MMT purportedly says we "should" do.

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

#519

Post by lumost »

jnsie wrote: post #514
lumost wrote: post #502

Earlier quoted context omitted.

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 Ameri…

> It's rare that anyone pitches the government as competent outside of military spending Genuine question - do people see military as competent when it comes to spending?

Nope, but the military gets a pass in most years as at least being competent. Most Americans believe that most government agencies are both incompetent and profligate.

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

#520

Post by refurb »

odonnellryan wrote: post #449
seizethecheese wrote: post #305

Earlier quoted context omitted.

What do you think is going to happen to your home price is interest rates go up to 5% and then people can’t afford huge mortgages anymore?

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.

The recency bias is amazing.

No, if interest rates go up, buyers can afford less, housing prices go down.

Post reply on HN