Federal Reserve raises rates by 0.75% • Hacker News Board

Re: Federal Reserve raises rates by 0.75%

#91

Post by drewnick » Wed, Jun 15, 2022, 6:58 PM UTC

colinmhayes wrote: post #53

NDizzle wrote: post #24

Earlier quoted context omitted.

Energy prices which have LATELY, MAYBE, been driven by failed attempt of the US applying sanctions to Russia over the invasion of Ukraine. Reminder: https://www.csis.org/analysis/biden-makes-sweeping-changes-o...

> failed attempt of the US applying sanctions to Russia over the invasion of Ukraine. Russia is now selling a fraction of the oil they were pre-war for 70 cents on the dollar. The sanctions haven't failed.

Go look at a ruble dollar chart. Russia is making more money selling less gas.

Re: Federal Reserve raises rates by 0.75%

#92

Post by apienx » Wed, Jun 15, 2022, 6:58 PM UTC

This is a typical overcorrection (the Fed is run by humans after all). US debt is over $23x10^12, so such rates are unsustainable even in the short term (12-24 months).

Algorithmic Monetary Policy > Dictated Monetary Policy(TM) IMHO.

Re: Federal Reserve raises rates by 0.75%

#93

Post by drewbailey » Wed, Jun 15, 2022, 6:58 PM UTC

SnowHill9902 wrote: post #80

The raise is 75 bps not 0.75%.

75 basis points == 0.75%

Re: Federal Reserve raises rates by 0.75%

#94

Post by [deleted] » Wed, Jun 15, 2022, 6:59 PM UTC

Retric wrote: post #90

JumpCrisscross wrote: post #20

Earlier quoted context omitted.

> personal preference is to trigger a recession and reduce inflation These aren't binary outcomes. Tight money does nothing to ease supply-side bottlenecks. It does little to target demand displaced by rising energy prices. If those are the principal drivers of inflation, tightening could depress non-energy demand in a way that causes a recession without alleviating inflation. Stagflation. (To be clear, we're not at…

It keeps supply side bottlenecks from being inflated with cheap money.

[deleted]

Re: Federal Reserve raises rates by 0.75%

#95

Post by idlehand » Wed, Jun 15, 2022, 6:59 PM UTC

mark_l_watson wrote: post #17

You 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.

Every central bank in the world is caught between a rock and a hard place. A recession would be bad for the long-term economy, likely reducing aggregate productivity. But if they don't manage to get inflation under control, we'll see a wage/price spiral as high inflation expectations become entrenched among companies and workers.

Re: Federal Reserve raises rates by 0.75%

#96

Post by hnthrowaway0315 » Wed, Jun 15, 2022, 6:59 PM UTC

The thought that we are going to turn the table and make the slate clean finally is very troubling to me. I mean 1) this is a non-insignificant possibility right now, and 2) just reached mid-age, the worst time to get hit by a depression.

Re: Federal Reserve raises rates by 0.75%

#97

Post by toomuchtodo » Wed, Jun 15, 2022, 7:00 PM UTC

Aloha wrote: post #88

toomuchtodo wrote: post #83

Earlier quoted context omitted.

The Fed can only manage monetary policy. If Congress wants to fix the petroleum energy crisis with policy, it has the tools to do so.

High gas prices are mostly a function of insufficient refining capacity, short of the government building more, I dont see a policy fix here. The market is responding to the probability of an electric future.

Mandate work from home capability for anyone who can work from home; prioritize oil consumption for non discretionary use cases where you have no choice but to move atoms vs bits. Agree with your thesis otherwise, no way to juice output in the short term, only shims until electrification ramps faster (which, I argue, should carry the same gravity and speed as a wartime effort, but alas I am not a politician).

Edit: Normally I’d suggest a carbon tax and rebate to low income folks, but that would directly work against Fed FFR increasing efforts and Congress is so pathetic as to not be able to get it done.

Re: Federal Reserve raises rates by 0.75%

#98

Post by towaway15463 » Wed, Jun 15, 2022, 7:00 PM UTC

QuarterReptile wrote: post #57

cjbgkagh wrote: post #21

Earlier 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.

You should pay more attention. They planned to start hiking rates in ‘21 when inflation broke 2% but in their infinite wisdom they deemed it “transitory” and kept rates low and now look where we are.

Re: Federal Reserve raises rates by 0.75%

#99

Post by wolframhempel » Wed, Jun 15, 2022, 7:00 PM UTC

The really worrying thing to me is our inability to accept that we (as in humankind) are rather rubbish at running complex systems.

A good analogy is to think of the economy as a still lake. If you throw a rock into it, you know that it will create concentric circles of waves. You throw a second rock and you know that its waves will interfere with the first. But now the waves create oscillating patterns and now they hit the irregular shore and pretty much immediately you have the usual chaotic pattern of waves all over the lake.

It's the same deal with the economy. We can predict the first order, maybe the second order consequences of our actions. But again and again we're faced with a highly dynamic system with an almost infinite set of variables and we seem continuously surprised when things get out of hand.

To me, a federal reserve system that insures banks from bank runs makes sense. This sort of FED that we have now that tries to control the overall economy is - to me - at least as hopeless as centralized 5-year plans under communism.

Re: Federal Reserve raises rates by 0.75%

#100

Post by NDizzle » Wed, Jun 15, 2022, 7:01 PM UTC

colinmhayes wrote: post #53

NDizzle wrote: post #24

Earlier quoted context omitted.

Energy prices which have LATELY, MAYBE, been driven by failed attempt of the US applying sanctions to Russia over the invasion of Ukraine. Reminder: https://www.csis.org/analysis/biden-makes-sweeping-changes-o...

> failed attempt of the US applying sanctions to Russia over the invasion of Ukraine. Russia is now selling a fraction of the oil they were pre-war for 70 cents on the dollar. The sanctions haven't failed.

A large fraction? Making $100B the first 100 days of the war, overall, with it slowly decreasing, yet new channels are opening up straight to India and China? People haven't thought this through all the way.

Two days ago: https://www.bbc.com/news/business-61785111