US Federal Reserve raises interest rates for first time since 2018 • Hacker News Board

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

#521

Post by briHass » Thu, Mar 17, 2022, 1:58 AM UTC

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.

I assume you're taking a swipe at Team Red, but do remember that the recent TCJA had a provision that removed the ability to deduct state/local (SALT) taxes from your Federal taxes due, above a certain amount. One could consider this very fair: if you argue for higher (Federal) taxes, you should pay what's owed, regardless of what you paid to any local governments, especially since you have much more control over where you live and the taxation policies at the local and state level.

The uproar about this change from Team Blue was palpable; this was clearly a targeted attack on liberal, high-tax areas. The cutoffs for the changes were well above an income level of $150K, which meant it went after the 'rich' that Team Blue always positions as the enemy, but none of that mattered.

Nobody wants more taxation when it actually hits their pocketbook. If there's anything the constituents of the two major political parties can agree on, it's that.

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

#522

Post by louloulou » Thu, Mar 17, 2022, 2:00 AM UTC

voisin wrote: post #250

mikaeluman wrote: post #229

Earlier quoted context omitted.

The FED receive interest payments. They don't make them. But yes, raising too much too fast will cause stress and defaults, and nobody wants that unless it's absolutely necessary.

Federal Reserve receives but the payments are made as a share of the government’s budget, no? So the Fed is trying to balance inflation with effectively defunding the governments non-debt servicing initiatives.

Fed profits (after paying out their 6% shareholder dividend to banks) gets remitted back to the US treasury. With a captured Fed, this is nothing but the government printing money to cancel their debt, with an extra step where banks skim some of it off the top.

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

#523

Post by dlsa » Thu, Mar 17, 2022, 2:05 AM UTC

It will be interesting to see how the dynamics change as the USD loses its grip on the crude oil trade and possibly other commodities as well. Will the US keep doing these money-printing and interest rate interventions for the next shock?

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

#524

Post by RickJWagner » Thu, Mar 17, 2022, 2:06 AM UTC

I think I would've felt better with a half point raise.

Remember, the Fed called inflation 'transitory' for quite a while, even as others pointed out it seemed here to stay. They may not be giving it the respect it deserves.

I'd be delighted to be wrong, to watch inflation fall with the smaller raise. But if it fails, I hope they move aggressively against it soon to stop it.

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

#525

Post by e4e78a06 » Thu, Mar 17, 2022, 2:09 AM UTC

CPLX wrote: post #512

e4e78a06 wrote: post #489

Earlier quoted context omitted.

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

Never said TCJA or the Bush era tax cuts were used for good purposes :) but it's probably better for the country in the long run to have excess money flowing into tech VC funds rather than being spent on memecoins and shitty electronics. That way maybe 1% of the funds will have positive returns rather than all of it being set on fire.

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

#526

Post by naijaboiler » Thu, Mar 17, 2022, 2:11 AM UTC

brimble wrote: post #411

stale2002 wrote: post #375

Earlier quoted context omitted.

> it's not an ideology or set of policies or even policy goals That might be true in the academic sense. But in reality, the only people who talk about MMT are people who just want to spend money infinitely and claim that there is no negative consequences to doing so. Which of course, doesn't make any sense if you know anything about MMT in the academic sense, which absolutely admits that there is negative consequenc…

As someone who took a lot of political science and economics classes once upon a time, and has an ongoing amateur interest in these things, MMT is the first time I've looked at one of these macro-level explanations/descriptions and not felt like I needed to ask a bunch of stupid questions that are (inevitably) going to be dismissed with a heaping dose of condescension. Finally, something that makes total sense when I…

Similar background. MMT, for me as well, is the first comprehensive explanation of money that just fits everything and makes complete sense without any glaring holes.

All other theories feel like yeah... but how does it explain this phenomenon or that

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

#527

Post by CPLX » Thu, Mar 17, 2022, 2:14 AM UTC

e4e78a06 wrote: post #525

CPLX wrote: post #512

Earlier quoted context omitted.

> 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

Never said TCJA or the Bush era tax cuts were used for good purposes :) but it's probably better for the country in the long run to have excess money flowing into tech VC funds rather than being spent on memecoins and shitty electronics. That way maybe 1% of the funds will have positive returns rather than all of it being set on fire.

> better for the country in the long run to have excess money flowing into tech VC funds rather than being spent on memecoins and shitty electronics

Why

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

#528

Post by diob » Thu, Mar 17, 2022, 2:20 AM UTC

andreyk wrote: post #137

An interesting aspect of this is that the endless printing of money in the last few years was a sort of stress test of modern monetary theory, which has been seeing lots of discussion in those same years. I never quite understood how this theory would work while avoiding inflation, and what's happening now seems to at least be related - https://www.nytimes.com/2022/02/06/business/economy/modern-m... Conceptually the…

You raise a good point that we could really reverse inflation by actually closing tax loopholes and reabsorbing the excess we printed and gave out to the 1%. . . but like you said, never going to happen unfortunately.

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

#529

Post by xwdv » Thu, Mar 17, 2022, 2:23 AM UTC

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?

Given that it’s the most powerful military in the world I would say it’s probably the one place where we have at least gotten our money’s worth.

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

#530

Post by willcipriano » Thu, Mar 17, 2022, 2:23 AM UTC

stale2002 wrote: post #438

brimble wrote: post #411

Earlier quoted context omitted.

As someone who took a lot of political science and economics classes once upon a time, and has an ongoing amateur interest in these things, MMT is the first time I've looked at one of these macro-level explanations/descriptions and not felt like I needed to ask a bunch of stupid questions that are (inevitably) going to be dismissed with a heaping dose of condescension. Finally, something that makes total sense when I…

Theories that are dismissed by the vast majority of the mainstream experts are often simple, yes. It turns out that the real world is complicated, and thats why we have experts in the world.

The world isn't that complicated. Its brutal and uncaring. We make up complicated systems beacuse we'd rather not face the pointless brutality of it all. Contrast the complexity of religious faith in life after death to the biological reality on the ground for the best example of this.