Federal Reserve raises rates by 0.75% • Hacker News Board

Re: Federal Reserve raises rates by 0.75%

#231

Post by laputan_machine » Wed, Jun 15, 2022, 7:38 PM UTC

susanasj wrote: post #200

remarkable how many people in this thread are assuming the bottom of the income distribution is hurt the most by inflation. Think about who has debt (mortgage, student, medical expenses, car payments) and who that debt is owed to (banks, corporations) and what happens to that debt in real dollars when inflation is happening. The debt becomes less meaningful. Wages rise (they have in fact been rising), and the payment…

Inflation affects the poor more than the wealthy.

Food, energy, shelter all become less attainable for the poor. They will always be attainable for the rich.

In absolute terms the rich will "lose" more money, or not gain as much, but this isn't the concern.

The concern is the inevitable increase of absolute poverty that will happen, and that is because the poor will be worse affected.

Rich people aren't going to struggle to pay their gas bill, or struggle to buy food.

Re: Federal Reserve raises rates by 0.75%

#232

Post by ipaddr » Wed, Jun 15, 2022, 7:38 PM UTC

francisofascii wrote: post #65

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.

What good is a higher wage if inflation is worse.

Reduces preexisting debt

Re: Federal Reserve raises rates by 0.75%

#233

Post by Consultant32452 » Wed, Jun 15, 2022, 7:38 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.

Speaking of lower middle class and poor people. Powell recently stated that workers had too much power and were able to demand too much higher wages. He intended to create policy to tip the balance of power away from workers to resolve this. I don't believe the well-being of lower middle class and poor people are a concern of his.

https://www.wsj.com/articles/transcript-fed-chief-powells-po...

Re: Federal Reserve raises rates by 0.75%

#234

Post by mullingitover » Wed, Jun 15, 2022, 7:38 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.

The upper/middle classes hold more debt overall, but it's debt that's much easier to shed - mortgages. You can just walk away from that mortgage at any time. The lower classes are saddled with medical debt, credit card debt, and student loans which aren't dischargeable in bankruptcy.

Re: Federal Reserve raises rates by 0.75%

#235

Post by [deleted] » Wed, Jun 15, 2022, 7:38 PM UTC

bko wrote: post #203

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…

> If those are the principal drivers of inflation, tightening could depress non-energy demand in a way that causes a recession without alleviating inflation You don't think the inflation has anything to do with printing $14 trillion out of thin air, or increasing the M1 money supply from ~4tn in march 2020 to over $20tn today? https://www.covidmoneytracker.org/ https://fred.stlouisfed.org/series/M1SL

[deleted]

Re: Federal Reserve raises rates by 0.75%

#236

Post by DangitBobby » Wed, Jun 15, 2022, 7:38 PM UTC

hnthrowaway0315 wrote: post #96

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.

I thought the worst time to get hit by a depression was right before you enter the job market for the first time and/or as you attempt to buy your first house. I guess every stage of life has unique challenges that come along with a depression.

Re: Federal Reserve raises rates by 0.75%

#237

Post by syspec » Wed, Jun 15, 2022, 7:39 PM UTC

afterburner wrote: post #165

misiti3780 wrote: post #159

Earlier quoted context omitted.

that happened.

It could have been worse, that's the point. It is also unknown exactly how much of a total raise is needed, hence the iterative approach to ensure no over-correction. The world economy has many moving parts, you can't panic when trying to manipulate it.

It /could/ have been better.

Re: Federal Reserve raises rates by 0.75%

#238

Post by ishjoh » Wed, Jun 15, 2022, 7:39 PM UTC

paulpauper wrote: post #127

blip54321 wrote: post #108

Earlier quoted context omitted.

I have mixed feelings on tech stocks. I feel like the general competence has gone down, and that makes them vulnerable. Google is a shitshow right now. I don't think they can do B2B. Chrome Extensions. GSuite Free. Google Workspace App security audits. I can list of dozens of other disruptions like that. No one trusts them. At the same time, cost structure is astronomical; employee count has grown exponentially, to m…

Google and Facebook make insane profits. Advertisers are paying huge $ per click or for YouTube views. Maybe Google management is suboptimal, but the company generates cash like no other.

I agree and own Google stock, but I would be a little cautious:

"After the collapse of the stock market during the recession of 2008, ad spending saw a reduction of over 27% across all channels." [1]

Now that is across all channels so firms might prioritize Web over TV/Print, and that is from 2008 when much more spend was focused on TV, but food for thought.

[1] - https://www.wearemiq.com/blog/advertising-during-a-recession...

Re: Federal Reserve raises rates by 0.75%

#239

Post by mirntyfirty » Wed, Jun 15, 2022, 7:39 PM UTC

paulpauper wrote: post #60

mirntyfirty wrote: post #5

Earlier quoted context omitted.

It seems as though the dip buying will continue but perhaps the fed wants a smoother road back to reality.

will continue? it's been strait down all year i would like to see it recover

Overall it’s gone down but seems as though a lot of the big drops are followed by smaller surges of buying.

Re: Federal Reserve raises rates by 0.75%

#240

Post by heartbreak » Wed, Jun 15, 2022, 7:39 PM UTC

bko wrote: post #203

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…

> If those are the principal drivers of inflation, tightening could depress non-energy demand in a way that causes a recession without alleviating inflation You don't think the inflation has anything to do with printing $14 trillion out of thin air, or increasing the M1 money supply from ~4tn in march 2020 to over $20tn today? https://www.covidmoneytracker.org/ https://fred.stlouisfed.org/series/M1SL

No, because they did basically the same thing ~15 years ago without increasing inflation.

Year over year inflation is higher than it’s been in 40 years, and they weren’t printing money then either.