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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

#601

Post by hgomersall »

diob wrote: post #528
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.

It's likely you can't because the 1% don't really spend excess money, so it's not inflationary. Another important insight from MMT.

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

#602

Post by vkou »

chrisco255 wrote: post #450
xxpor wrote: post #399

Earlier quoted context omitted.

I think people conflate what MMTers were saying post-2008, which was we had WAAAAAAAAAAAY more capacity to print money, especially from 2008-2014 or so, with we can spend literally infinite money. And so you get all of these people saying "MMT was wrong" with the pandemic inflation, when it's the exact opposite. We started running into real resource constraints (due to lockdowns, supply chain issues, etc) and inflati…

Where in the world would raising taxes on a dime be perfectly acceptable? Imagine you have a rent or mortgage payment, but inflation hits 10% so your taxes go up 10% month over month to counter it. Your costs were fixed, the inflation affected other things besides your long term agreements, and yet, you would default on your payments because you got 10% less that month after taxes. Who would not want to burn the whol…

> Where in the world would raising taxes on a dime be perfectly acceptable?

Any place where the no-taxes-ever party doesn't have a permanent stranglehold on at least one branch of a deadlocked government.

The United States is an outlier in this.

> Imagine you have a rent or mortgage payment, but inflation hits 10% so your taxes go up 10% month over month to counter it.

If inflation is that high, the real cost of making your mortgage payment is shrinking in real dollars.

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

#603

Post by landemva »

xxpor wrote: post #386
mudlus wrote: post #349

Earlier quoted context omitted.

All value is explanatory, that is, even if it has "intrinsic value" like carbohydrates in ATP in a cell, it is still knowledge instantiated for a resilient purpose (eg to power a cell to replicate its knowledge). As explanations change, value changes, so anything can be a currency at the level of the individual--in this way, at least for conscious minds, a public monopoly on money is, while possible, morally wrong. I…

The state has a monopoly on money because they collect taxes. Try paying your taxes in BTC and tell me how that goes.

What do you mean by, 'Try paying your taxes in BTC ...' ?

In USA, sales taxes are paid to government by the vendor. As just a typical person in USA who does not work for federal government nor reside in D.C., sales taxes and property taxes are all that I (implicitly) pay. The vendor and I determine amount and type of my payment.

Your comment had a threatening tone implying something bad may happen. What is the lurking threat?

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

#604

Post by landemva »

toyg wrote: post #293
simpthrown8id wrote: post #159

Earlier quoted context omitted.

>>Conceptually the answer in the theory is to suck up the excess money with taxes Govt spending is already 45% of GDP, so there's not much room to increase it more. As for MMT, I think what the MMT crowd doesn't realize is that there's a lot of latent inflation coming. Asset prices and CPI do not go up in tandem. First Asset prices are inflated, then later for the next decade or so, as people slowly make withdrawals…

> Govt spending is already 45% of GDP, so there's not much room to increase it more. Several European countries are well over 50%. There is plenty of room.

This points to why the EU will likely disintegrate - member countries can't print to monetize country debt. Either EU members split out to regain currency autonomy, or EU officially federalizes member country debt.

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

#605

Post by landemva »

dillondoyle wrote: post #400
simpthrown8id wrote: post #159

Earlier quoted context omitted.

>>Conceptually the answer in the theory is to suck up the excess money with taxes Govt spending is already 45% of GDP, so there's not much room to increase it more. As for MMT, I think what the MMT crowd doesn't realize is that there's a lot of latent inflation coming. Asset prices and CPI do not go up in tandem. First Asset prices are inflated, then later for the next decade or so, as people slowly make withdrawals…

I can think of a few trillion in urgently needed money we could spend taxes on: renewable energy, batteries, retrofitting homes for chargers, resilience building (and paying people to move out of high risk areas), invest in carbon capture/moonshots.

I would also pay for those items before we send another penny to NATO or WHO.

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

#606

Post by AnthonyMouse »

lupire wrote: post #572
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…

The perception is created by billionaires buying "news" media to spread propaganda to get people to vote against their own interests, leading to "hurts itself in its confusion" attitudes like "keep the government out of my Medicare". The Kochs, leaders of the "small government" movement are the heirs of a billionaire whoade his fortune building oil refinery for communist USSR government. They only dislike government…

Ironically the thing about the Kochs is a little bit reversed. They have their own agenda, to be sure, but the biggest players in the influence game aren't individual billionaires, they're corporations and government bureaucracies.

The media always dumps on the Kochs because, atypically, part of their agenda is anti-graft. Make the government smaller by reducing corrupt spending programs and regulatory capture. Most of the bureaucracies fight each other for resources but they're not trying to turn off the spigot. The one who does becomes a target for attack. So they're the ones you've heard of.

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

#607

Post by pugz »

TrispusAttucks wrote: post #593
lupire wrote: post #576

Earlier quoted context omitted.

Somehow the Red "cut the taxes and spending" never give back the net inflows they take from Blue states.... Blue states have higher taxes to care for their citizens so they have to take less in Federal handouts.

There aren't really blue states. Only blue cities. https://miro.medium.com/max/1127/1*86sURhsiwekHqCuqjbFnkQ.pn...

What's the distinction? I always assumed "blue states" meant a majority of voters in that state voted blue, likewise for red states. Otherwise you might as well say "there's no blue cities, only blue neighbourhoods" and keep getting more granular down to the individual voter.

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

#608

Post by toyg »

landemva wrote: post #604
toyg wrote: post #293

Earlier quoted context omitted.

> Govt spending is already 45% of GDP, so there's not much room to increase it more. Several European countries are well over 50%. There is plenty of room.

This points to why the EU will likely disintegrate - member countries can't print to monetize country debt. Either EU members split out to regain currency autonomy, or EU officially federalizes member country debt.

Obviously the latter will happen - it is in fact already happening, between eurobonds and recovery fund. We just don't make a big song and dance about it - quiet work is how the EU is managing to do the unthinkable of federating this anarchic and unruly continent.

The economic imbalances between EU states are nothing, compared to the ones between US states. Do you see the US "disintegrating" anytime soon?

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

#609

Post by landemva »

datavirtue wrote: post #337
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 can expect inflation as you grow the money supply. Inflation is good. Runaway, uncontrolled inflation is not. We have not had, nor do we have now, runaway inflation. You have to grow the money supply as the population and productivity increases. Most of the talk and reporting on inflation is just silly.

Inflation is not good for savers who do not want to be speculators. Inflation is not good for those on fixed incomes like retirees.

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

#610

Post by landemva »

birdyrooster wrote: post #259
unyttigfjelltol wrote: post #183

Earlier quoted context omitted.

Says the man midway through a 40-story fall from a skyscraper: "So far so good!"

The alternative is a static or deflationary currency. This leads to hoarding of assets which were originally intended to serve and increase commerce. Think Bitcoin. Without MMT, we would be falling from a skyscraper as you depict.

' deflationary currency ... leads to hoarding of assets '.

Someone owns every asset. By making it impractical to save using the fiat money, savings goes to non-fiat items like land, stocks, energy, and BTC. This harms the poor who are rarely able to escape into those non-money items.

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