Federal Reserve raises rates by 0.75% • Hacker News Board

Re: Federal Reserve raises rates by 0.75%

#211

Post by ticviking » Wed, Jun 15, 2022, 7:32 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.

I agree.

Selfishly I want inflation to inflate away my debt. But I'm well compensated and able to pursue new opportunities even in pretty lean times. Practically we have to control inflation in order to avoid far worse problems.

Re: Federal Reserve raises rates by 0.75%

#212

Post by nlittlepoole » Wed, Jun 15, 2022, 7:33 PM UTC

queuebert wrote: post #176

ren_engineer wrote: post #156

Earlier quoted context omitted.

takes guts to do this and it was needed. Problem is that it will expose that most of the US economy is a sham that needed 0% interest rates to even fake growth. our "leaders" have been kicking the can down the road for a long time. US economy used to grow even with very high interest rates, now even a slight increase puts us into a recession.

Is this because of the transition to a service economy?

I see it as a combination of demographics (less millennials than boomers to drive consumption) and a lack of investment 20 to 30 years ago into next generation infrastructure and institutions (energy, transport, healthcare, education, etc) that would have given us more productivity growth outside of software and the internet.

Re: Federal Reserve raises rates by 0.75%

#213

Post by prepend » Wed, Jun 15, 2022, 7:33 PM UTC

drewbailey wrote: post #93

SnowHill9902 wrote: post #80

The raise is 75 bps not 0.75%.

75 basis points == 0.75%

True

Re: Federal Reserve raises rates by 0.75%

#214

Post by nemo44x » Wed, Jun 15, 2022, 7:33 PM UTC

tamaharbor wrote: post #36

morninglight wrote: post #7

> Seniors, should reap the benefits of higher bank savings rates after years of piddling returns. Not to any significant degree. Bank rates won't come close to offsetting the effect of inflation. The big winner will be the IRS, as intended. .

When inflation was surging in the late 1970s and early 1980s, CD rates exceeded 10%.

And a mortgage came with a 16% rate. No thanks!

Re: Federal Reserve raises rates by 0.75%

#215

Post by imachine1980_ » Wed, Jun 15, 2022, 7:33 PM UTC

queuebert wrote: post #176

ren_engineer wrote: post #156

Earlier quoted context omitted.

takes guts to do this and it was needed. Problem is that it will expose that most of the US economy is a sham that needed 0% interest rates to even fake growth. our "leaders" have been kicking the can down the road for a long time. US economy used to grow even with very high interest rates, now even a slight increase puts us into a recession.

Is this because of the transition to a service economy?

I thinks most becouse real growth only happens in Asian countries last decades, and usa and europe companies fake growth by overlabredge debt becouse of the lower inters rate, not productivity

Re: Federal Reserve raises rates by 0.75%

#216

Post by eastbound » Wed, Jun 15, 2022, 7:33 PM UTC

kelnos wrote: post #29

roody15 wrote: post #14

Earlier quoted context omitted.

Agree the Russian invasion doesn't help matters... but this is not the primary cause of inflation. The amount of money that the US has simply created and spent in last couple of years in unprecedented. The amount of money inserted into the US economy dwarfs that of the TARPP and related bailouts of 2008 by a factor of 4. You just cannot create and hand out that much cash in an economy and not expect inflation.

I'm not convinced. I agree that Russia/Ukraine is not the main driver of inflation (certainly isn't helping, though), but I would look more toward supply chain shortages than money-printing. Prices go up when things are hard to find but the demand is still there -- not exactly grad-level econ.

Fixing supply chain shortages? That sounds hard! I’d rather believe there is a big knob somewhere underground that drives the entire economy, and that we can adjust its basepoint to make people richer or poorer!

More seriously, Ukraine is probably not the reason of scarcity, but if you want to solve the supply chain, you’ll hit China very fast: Their growing local population means that one day, they’ll keep everything they produce for themselves. And that’s big enough to be the cause of inflation: Mid-term inflation is probably due to lack of productivity during Covid; long-term inflation is certainly due to the lack of goods produces in the West, while the East starts to keep their production.

Re: Federal Reserve raises rates by 0.75%

#217

Post by moneywoes » Wed, Jun 15, 2022, 7:34 PM UTC

googlryas wrote: post #177

mullingitover wrote: post #124

Earlier quoted context omitted.

...and the lower classes hold a lot of debt, which under high inflation would start to vaporize. It would effectively transfer a lot of wealth from those who hold a lot of cash to those who don't. Can't have that.

The lower classes hold a lot of debt? Can you source that? I would assume middle/upper class would hold most debt.

Exactly, who have the biggest mortgages?

Re: Federal Reserve raises rates by 0.75%

#218

Post by QuarterReptile » Wed, Jun 15, 2022, 7:34 PM UTC

towaway15463 wrote: post #98

QuarterReptile wrote: post #57

Earlier quoted context omitted.

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.

I think you're assuming some backstory to my comment that's not there.

But, for what it's worth, the rate hikes needed to start years before that, probably between 2013 and 2015. 2010-2020 was the window to make up for big spending.

Re: Federal Reserve raises rates by 0.75%

#219

Post by ren_engineer » Wed, Jun 15, 2022, 7:34 PM UTC

ahi wrote: post #204

queuebert wrote: post #176

Earlier quoted context omitted.

Is this because of the transition to a service economy?

Financialization. Damn near everything is actually a bank these days.

and even more so the fact that 2008 resulted in no real punishment of this system like a real free market should have caused. The response to 2008 will be seen as a historic gaffe

Re: Federal Reserve raises rates by 0.75%

#220

Post by Aloha » Wed, Jun 15, 2022, 7:35 PM UTC

toomuchtodo wrote: post #97

Aloha wrote: post #88

Earlier quoted context omitted.

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: N…

Mind you, I think the electric future s 15-30 years away, not 8-15 - but the lifetime of a refinery is 40-50 years. Thats the issue, it wont pay for itself on a conventional amortization schedule.