One day if things turn out well we will see Jerome Powell in jail
Federal Reserve raises rates by 0.75%
71–80 of 593 posts
Re: Federal Reserve raises rates by 0.75%
#72Curious to see what BoE will do
Re: Federal Reserve raises rates by 0.75%
#73Earlier quoted context omitted.
I just wish it was done earlier and more cheaply during otherwise good times.
I think you would need monarchy (or something more tyrannical) to get that. Democracies seem reliably short-sighted. The personal responsibility of taking on debt is so thoroughly attenuated in a democracy that piling on ($90k per citizen and counting, in the US) debt is the expedient thing to do, and it's seemingly impossible to overcome the electoral price paid for trying to reject that expedient option.
AFAIK it was how Keynesian economics was supposed to work. Also AFAIK the only country that did intentionally tighten at the top always Israel as they were worried that an economic crisis would leave them vulnerable to attack from their neighbors *
* source is from a bar talk with an economist, I didn’t do my own research here…
Re: Federal Reserve raises rates by 0.75%
#74Earlier quoted context omitted.
A key driver to inflation is that wages for lower-income workers was finally starting to rise. Tanking the economy will hurt these people the most. But yes, inflation would flatten.
I think every possible "tanking the economy" scenario always hurts the poor the most.
That's a straightforward, non-cynical thing to say just like 'what comes up must come down.' People don't seem to think so.
Anyone with $1,000 has the resources to stop any (or several) of a large number of unfortunate circumstances that they may encounter. $10,000 even more so. $100,000 should be years of runway along the same lines. So it makes sense that when everyone is riding an economy downward, the people with the least cushion get hurt the worst.
Re: Federal Reserve raises rates by 0.75%
#75The fed is aggressively raising rates as the economy goes into recession. The last time something similar to this happened was in 1980. A very bad unusual situation, but on the other hand, the worst may be over.
I think Google, Microsoft, Facebook, Amazon, and other large cap tech stocks are good buys at these levels and are more immune to macro factors (compared to other sectors ) and can hedge inflation by raising prices.
Re: Federal Reserve raises rates by 0.75%
#76Earlier quoted context omitted.
I just wish it was done earlier and more cheaply during otherwise good times.
I think you would need monarchy (or something more tyrannical) to get that. Democracies seem reliably short-sighted. The personal responsibility of taking on debt is so thoroughly attenuated in a democracy that piling on ($90k per citizen and counting, in the US) debt is the expedient thing to do, and it's seemingly impossible to overcome the electoral price paid for trying to reject that expedient option.
The US effectively had that with the executive and legislative acting the way they did the years before COVID.
Re: Federal Reserve raises rates by 0.75%
#77The Fed clearly doesn't understand how to MMT properly. What J Powell was supposed to do her was to raise the income tax rate.
Re: Federal Reserve raises rates by 0.75%
#78No post body was provided.
Re: Federal Reserve raises rates by 0.75%
#79You can argue either side to this, and make a good case. My personal preference is to trigger a recession and reduce inflation. The easy cop-out solution is to say a "big f*ck off" to pensioners, lower middle class, and poor people and let inflation soar, but I believe that long term this would be more destructive to the general economy. Better take the long term view here and not kick the can down the street.
Inflation is largely being driven by import problems and oil prices, therefore, it is unclear if a recession is a golden key to lower inflation. Keep in mind that oil is internationally expensive, and even a reduction in the US may not bring down prices significantly.
So we could see recession AND inflation at the same time. Then tack on higher interest rates, and everything goes squish.
Re: Federal Reserve raises rates by 0.75%
#80The raise is 75 bps not 0.75%.