Federal Reserve raises rates by 0.75%

Post by dlp211 » Wed, Jun 15, 2022, 7:30 PM UTC

jcadam wrote: post #45

nostromo wrote: post #22

Earlier 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.

Still waiting for inflation to hit my effing salary. I know it won't, because we're entering stagflation territory and unemployment is going to go up. COVID was a massive wealth transfer from the lower and (esp) middle class to the oligarchs.

Post by bko » Wed, Jun 15, 2022, 7:30 PM UTC

JumpCrisscross wrote: post #20

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.

> 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…

Post by FabHK » Wed, Jun 15, 2022, 7:31 PM UTC

whatevenisthat wrote: post #125

beezle wrote: post #115

Ridiculous that the Fed doesn't just raise 200bp and be done. They could have done this six months ago (call it 250bp then) if they truly believe that the level of interest rates will have a material effect on the inflation rate. The piece meal, drip drip increases just raises uncertainty for consumers and businesses while ensuring they are "behind the curve"

Too many dollars are chasing too few goods because of supply chain issues caused by these governments locking everyone down when they overreacted. You can't reduce inflation this way except by affecting tens of millions of innocent people who now have austerity measures imposed on them from on high courtesy of Janet Yellen and her posse. They should have avoided the steep lockdowns and given cash directly to househol…

Post by helloooooooo » Wed, Jun 15, 2022, 7:31 PM UTC

QuarterReptile wrote: post #137

dnadler wrote: post #26

Something I haven’t seen discussed much is the impact of inflation on the existing federal debt. This is actually a positive for taxpayers as the federal debt will become cheaper. Obviously we’re still spending a ton and are issuing debt at higher rates now, so it’s not some kind of magic cure or anything.

It's true that we are incrementally getting out of debt commitments by debasing the currency But as others have pointed out, bonds eventually come to term and then have to be rolled over into the higher prevailing interest rate. With such a high debt burden, that debt service can become a significant portion of all tax receipts, at which point all services are funded from deficit spending. 2021 tax receipts estimate…

Post by susanasj » Wed, Jun 15, 2022, 7:31 PM UTC

jessermeyer wrote: post #196

susanasj wrote: post #181

Earlier quoted context omitted.

I don't think it's that simple. Lower middle class and poor people have debt, and inflation is good for making debt less valuable in real dollars. Pensioners, maybe, but social security is indexed to inflation if I'm not mistaken? I wouldn't be surprised if many public and private pensions are as well. This is much more a move in favor of the rich that are owed money by the poor imo.

This is a double edged sword, naturally. Old debt becomes cheaper in equal measure to more expensive new debt.