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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

#551

Post by MisterMower »

InitialLastName wrote: post #179
throwaway0a5e wrote: post #135

Earlier quoted context omitted.

I don't see how tax policy matters in this case. That money still sloshes around. The only difference is who's nominally in control of it.

a) higher taxes enable the government to apply deflationary pressure on the economy (by removing currency from circulation) b) Reducing taxes without cutting spending (because it will "pay for itself in growth") leads to a larger deficit, which requires increased debt to cover, which triggers the money-printers.

Your first point is only valid if the government doesn’t spend that money or uses it to pay down debt, a dubious assumption with the US federal government.

Your second point is wrong: you can continue to run deficits without printing money. You just have to find lenders in the marketplace willing to buy your bonds.

Yes, the Federal Reserve is buying vast quantities of US treasuries right now, effectively monetizing the debt, but the sequence of events you describe isn’t typically how things work.

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

#552

Post by spiralx »

colechristensen wrote: post #262
jeffalbertson wrote: post #186

so many people in this thread will play the common HN intellectual and exclaim how the fed is obviously trapped, or what they did wrong to do get us here. And in a different thread will trash bitcoin only focusing on its energy consumption and not its potential sound money properties. If Bitcoin is bad, and the Fed (and every government ever) created a situation which will only lead to poverty & widening wealth gap,…

The fed was able to maintain a functioning economy without major disruption in essentials (i.e. there weren't major shocks in being able to buy food or maintain housing) despite shutting down or significantly modifying large sections of the economy for a significant time. They aren't "trapped" this is the natural and expected consequence of creating a lot more money to sidestep a temporary condition. Considering the…

> Bitcoin, gold, and anti-fed fanboys have a tendency to have a poor understanding at best of global economics with very basic misunderstandings like thinking that bumping the rate bumps the rates of all previous bonds.

Discussion on this post is worse than the usual level of discussion here, and the usual level around these topics isn't great at best. Hard to discuss monetary policy with someone who doesn't know what monetary policy actually is.

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

#553

Post by lazide »

e4e78a06 wrote: post #531
CPLX wrote: post #527

Earlier quoted context omitted.

> 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

I'm just saying in the absence of any alternatives (which I'm sure there are), it's better to have 1% of trillions of dollars going towards advancing humanity and technology than 0%. I am fully aware that 99% of that money is going to be burned on WeWorks and the like.

Pretty sure at least 1% of the random shitcoin/memelord stuff went to advancing humanity too. Probably more.

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

#554

Post by MisterMower »

HeavenFox wrote: post #403
tlogan wrote: post #387

We have an inflation which is about 8% while mortage rates on 30 year fixed are just 4.7% (15 year fixed are just 3.8%). So I really do not understand logic here: how can bank give me money at rate 2x times lower than inflation. Seems like free money (and it is no surprise that home prices are going thru the roof). But I’m probably naiive here and do not understand how banking works.

Presumably inflation is not going to stay at 8% over the next 30 years. In fact the current 30-year expected inflation is only at 2.2%: https://fred.stlouisfed.org/series/EXPINF30YR

What was the Fed’s outlook a year ago? Was anybody predicting 8% inflation?

Forgive me for my skepticism, but these guys are at best guessing. Most likely they are straight up lying.

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

#555

Post by MisterMower »

odonnellryan wrote: post #451
nostromo wrote: post #389

Earlier quoted context omitted.

The economy would collapse, along with the US government, at even moderately-high interest rates. The federal government is $30t in debt. Even a small rise in interest rates would quickly make the entire federal budget servicing the debt.

That's not true.

And what makes you think that?

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

#556

Post by SantalBlush »

hervature wrote: post #548
SantalBlush wrote: post #542

Earlier quoted context omitted.

I did, in fact, laugh out loud at this. Did you think those personal checks were meant to prevent you from getting COVID?

Do you have so little respect of your fellow man that you think they are incapable of thinking? A big part of the spending was designed to float businesses during lockdowns to “flatten the curve”. The idea being that paying people to stay home would reduce risk of infection. They are pointing out this outcome did not happen.

>Do you have so little respect of your fellow man that you think they are incapable of thinking?

Funny, I was thinking the same thing about the above comment I was replying to.

>They are pointing out this outcome did not happen.

Flattening the curve absolutely does not mean preventing people from getting COVID; it's about lengthening the time horizon in which the population gets infected to reduce strain on the health care system.

Moreover, a personal anecdote about getting COVID doesn't imply an overall policy failure. Just because someone let sick people cough in their face doesn't mean they should wax intellectual about macroeconomics.

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

#557

Post by schrodinger »

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?

I don't want to say yes but damn if we don't have a lot of military might, and as much as an American I want to say stop spending it who will fill the void? We're probably the least bad of all possibilities, and if you disagree, please teach me because I'm legitimately open minded!

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

#558

Post by ac29 »

refurb wrote: post #520
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.

The recency bias is amazing. No, if interest rates go up, buyers can afford less, housing prices go down.

Not necessarily true:

Interest rates and home prices both roses during the most recent period of rising rates (2016-2019):

https://fred.stlouisfed.org/series/FEDFUNDS

https://fred.stlouisfed.org/series/USSTHPI

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

#559

Post by MisterMower »

anonporridge wrote: post #74
MR4D wrote: post #65

Earlier quoted context omitted.

It’s even worse - if the Fed actions tank the markets, then millions of retirees who have been enjoying high market values are screwed and have no other source of wealth or income. I do not envy the position the Fed is in.

It's rough. On the one hand, retirees bring nothing of real value to the economy. We serve them because of the obligations they built up over their working careers. But, they get the focus of attention because a) they have all the money, b) they have all the time to be engaged in politics, and c) they vote. But they're purely an extractive cost center. A kind of economic parasite that keeps getting bigger and bigger…

I hope you never grow old or become wealthy, friend. It’d be quite the shame for you to become the very thing that you hate.

You’re living in housing built by someone in the past, driving a car engineered years ago, on bridges and roads built decades ago. You enjoy technologies that people even 30 years ago could only dream of, things you did not create or contribute to.

And then you have the gall to whine about those builders, savers, investors, and innovators who created those things.

Kind of sounds like you’re the extractive cost center, to be honest.

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

#560

Post by ShivShankaran »

adam_arthur wrote: post #420
yalogin wrote: post #254

We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. I don't know if it's the fed or if the government pushing to win elections, but feels like we didn't take care of the house in good times and we have led ourselves into this cycle.

Because Powell cares more about markets than the real economy or wealth inequality. Also they tend to care much more about the short term than the long term. People will tell you that it's not in the Feds mandate to care about those things, and they don't actually care about markets, but it's clearly not true when cast in the light of their actions. Or to any rational observer that follows them closely. Even in Powel…

sad but true. The only thing that Jpow cares about is the markets. In his defence the economy is made of people and crashing the market/causing recession is going to cause more grief to the public that is already overwhelmed with covid.
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