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Federal Reserve raises rates by 0.75%

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Re: Federal Reserve raises rates by 0.75%

#251

Post by jmyeet »

The returns that capital demands (and the government obliges to) are ultimately unsustainable. That's the core problem here.

Rising wages? There has been no meaningful real increase in wages in 40 years despite a massive increase in productivity. Profits keep going up and up. The expectations for profits keep going up. The problem here is that the people who make companies possible don't get to share in the proceeds of what they contribute to.

Rising wages and lower profits would actually represent in workers actually getting an actual real increase in wages and getting a greater share in the fruits of their labor. But no, that's unacceptable. We have to raise prices to maintain the profits and effectively erode those wage increases.

The real failure here is the government.

Take rising energy prices. The government could take action to hasten development of existing leases and/or restrict the export of refined petroleum products. Oil hasn't gotten more expensive to produce. Oil and gas companies are simply raking in massive profits.

What we actually need is a system like Norway where we don't simply give away natural resources like this for private investors to profit off. At least in Norway, the government is making a ton of revenue from the increased prices, which it can direct back to people who need it.

Housing? Shelter is or should be a human right. What we're allowing to happen here through investors buying up housing stock (and jacking up the prices), second homes, AirBnB and so on has reached the point of being a human rights violation IMHO. Also those skyrocketing rents do even more to erode the income of particularly lower income people to keep them living paycheck to paycheck.

This is modern serfdom in action. The government acts at the behest of the capital-owning class regardless of party and part of that is having a compliant labor pool. This is turning into the West's version of Pakistan's brick kilns.

After going into massive debt for college, having to pay a huge amount for your car, gas and rent and so on, you're absolutely showing up to work. That's the point.

A budget shortfall is built into your existence.

Re: Federal Reserve raises rates by 0.75%

#252

Post by hindsightbias »

hunterb123 wrote: post #180
hindsightbias wrote: post #166

Earlier quoted context omitted.

https://www.eia.gov/todayinenergy/detail.php?id=48636 "At the beginning of 2021, 129 refineries were either operating or idle in the United States (excluding U.S. territories), down from 135 operable refineries listed at the beginning of 2020. The additional refinery closures in the 2021 Refinery Capacity Report largely reflect the impact of responses to COVID-19 on the U.S. refining sector." Claims below that leases…

That's refineries. We're talking about leases for drilling on federal land, which accounts for nearly 25% of US oil & gas production. Refineries are active and will be active as you need them when importing crude oil from other countries. The issue is the reliance and importing of crude oil in the first place. API estimation of impact by federal ban: https://www.api.org/-/media/Files/Policy/Exploration/2020/fe... --…

> 25%

And still do, today. None of those leases has been closed. If you're making some claim that Biden shut down existing leases in production, please provide a citation.

https://www.nytimes.com/2022/04/26/business/energy-environme...

"Executives at 141 oil companies surveyed by the Federal Reserve Bank of Dallas in mid-March offered several reasons that they weren’t pumping more oil. They said they were short of workers and sand, which is used to fracture shale fields to coax oil out of rock. But the most salient reason — the one offered by 60 percent of respondents — was that investors don’t want companies to produce a lot more oil, fearing that it will hasten the end of high oil prices."

Re: Federal Reserve raises rates by 0.75%

#254

Post by ProfessorLayton »

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.

Unfortunately it really depends on which side of inflation one is in. Wage increases still help in an inflationary environment if one has existing debt (i.e. a mortgage).

Furthermore, a lot of inflation is in housing itself, so if one already is a homeowner, then a significant amount of inflation is bypassed.

Re: Federal Reserve raises rates by 0.75%

#255

Post by susanasj »

qgin wrote: post #222
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…

You're very right, but I think the trick is that prices rise faster than wages, if they ever fully catch up. That lag between price and wage increase is a super immediate problem for anyone going paycheck-to-paycheck.

yes definitely agree.

Re: Federal Reserve raises rates by 0.75%

#256

Post by calvinmorrison »

susanasj wrote: post #181
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 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.

The mistake is that, most poor peoples largest expense is housing, and most poor people rent. Those who own have mortgages. Sure their $30K student loans (already on income based repayments) may benefit from inflation, but housing prices certainly not.

Re: Federal Reserve raises rates by 0.75%

#257

Post by vel0city »

Aloha wrote: post #220
toomuchtodo wrote: post #97

Earlier quoted context omitted.

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.

> I think the electric future s 15-30 years away, not 8-15

This definitely varies on the definition of "the electric future" is. Are we in the electric future when the number of total passenger miles driven increases or stays the same while the gallons of gas combusted for passenger car travel decreases? Is it when >50% of cars on the road are electric? 100% of passenger cars?

Re: Federal Reserve raises rates by 0.75%

#258

Post by ljhsiung »

susanasj wrote: post #181
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 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.

The concept of "inflating debt away" is an assumption that wages match inflation while debt stays static. This is a fair assumption in low inflation times, but is showing some cracks these days.

One might then ask, do higher-class wages match/exceed inflation more than lower-class wages? This is debatable. But here's some interesting data from the Atlanta FED, where you can track wages by quintile, education, "skill", hourly vs. non-hourly, etc. Make your own conclusions.

[1] https://www.atlantafed.org/chcs/wage-growth-tracker

Re: Federal Reserve raises rates by 0.75%

#260

Post by kgwgk »

timmg wrote: post #150
prometheus76 wrote: post #134

Earlier quoted context omitted.

You probably know this already, but I thought I'd pass on a correction to what is a common misconception. If you start making more money and end up in a higher tax bracket, only the amount of income in the new tax bracket is taxed at the higher rate, not the whole income. For example: Pretend you currently make $75,000/yr and the next tax bracket is at $80,000. And you get a nice raise to make your salary $85,000 thi…

> You probably know this already, but I thought I'd pass on a correction to what is a common misconception. If you start making more money and end up in a higher tax bracket, only the amount of income in the new tax bracket is taxed at the higher rate, not the whole income. Oh, for sure. But that money that moves into those brackets will be taxed higher.

You don’t need to change brackets: the incremental money will always be taxed at a higher rate that the average you were paying and the average will go up.
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