Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Federal Reserve raises rates by 0.75%

usatoday.com

Post reply on HN
Print view View original

371–380 of 593 posts

Re: Federal Reserve raises rates by 0.75%

#371

Post by yywwbbn »

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.

70 cents on the dollar when oil is at $120 is still much better than 100 cents at 50$ though.

Re: Federal Reserve raises rates by 0.75%

#372

Post by imtringued »

thatjoeoverthr wrote: post #229
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.

They have debt, but they also have work contracts with out of date wages. But even in our sector, with the leverage that we as programmers have, companies don’t bother to match inflation. You have to make some risky or uncomfortable move to renegotiate your wage or find a new job. For many people it can be worse. So, everyone is under additional financial stress.

Inflation forces people to seek new jobs every few years. That is not necessarily a bad thing. The alternative is to have your boss decide for you when he wants to fire you.

Re: Federal Reserve raises rates by 0.75%

#373

Post by bullen »

imtringued wrote: post #358
bullen wrote: post #334

Earlier quoted context omitted.

I think wages only can go up with abundant energy. This time around interest is lagging inflation by atleast 1 year. In the 70s the rate and salaries increased BEFORE the inflation occured = inflation was rate/salary driven and because debt level was lower. Today salaries are not increasing 10% per year for most people. So I actually think the interest rate hike increases the scarcity inflation eventually since energ…

>So I actually think the interest rate hike increases the inflation since energy production need low interest loans to build new sources. You mean wind, solar and nuclear power? I mean they are capital intensive because the operational costs are dwarfed by the initial investment. With coal and gas, the fuel is an ongoing and high expense compared to the power plant itself.

Yes, all energy requires more energy since EROEI (energy return on energy invested) on dead trees went below 10-to-1 in the past decades (initially around 100-to-1 when coal, oil and gas where initially discovered).

Wind and solar are only interesting in very small solutions (think small sailing boats), nuclear is super energy intense to build! Hydro is the ONLY balanced investment but all good locations are already in use.

Re: Federal Reserve raises rates by 0.75%

#374

Post by rdsubhas »

afterburner wrote: post #119
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"

The piecemeal approach ensures they avoid massive shocks and over-correction. The cure should not be worse than the disease.

Or rather, it ensures they avoid a one-off under-correction. One big rate hike will be forgotten quickly and worked around. Inflation is a beast that needs long-term trends, not one-off actions.

Re: Federal Reserve raises rates by 0.75%

#375

Post by lend000 »

Predictably, the Fed's quantitative easing combined with stimulus created inflation.

You can make a decent argument that the initial policy was the right thing to do. I mean, if you're going to force people not to work because of a pandemic, you have to give them some money. Whether there was (or is ever) a need to prop up the stock market as well is less obvious.

But where they VERY clearly f'ed up is labeling the inflation as "transitory" and allowing the market to keep running up ridiculous returns (which were detached from underlying value) and now having to clamp down much harder to get a hold on inflation, which will cause significant structural unemployment as those companies that were running red hot and expanding until a few months ago have to do a bunch of layoffs.

Re: Federal Reserve raises rates by 0.75%

#376

Post by mellavora »

alephnan wrote: post #335
jmyeet wrote: post #251

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…

Thanks to serfdom, we have IPhones and Gadgets. Which consumer products do you own come from Norway?

An earlier poster mentioned something about gas and oil.

There is also some really interesting scientific research.

Re: Federal Reserve raises rates by 0.75%

#377

Post by babypuncher »

omegaworks wrote: post #123
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.

It's true that economic policy is structured such that Congress has effective control over the non-monetary levers. The problem is that Congress is functionally ineffective at responding to popular demand, intentionally. The Senate is structurally allowed to act anti-democratically against the will of the populace: two representatives for fifty arbitrarily defined land areas are allowed to override proportionally ele…

Bring back the requirement that a filibusting senator speak one the floor indefinitely to prevent a majority vote from happening.

Re: Federal Reserve raises rates by 0.75%

#378

Post by trgn »

Consultant32452 wrote: post #233
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...

Yup. The last few years have also seen some of the highest wage growth in decades, and highest saving rates across the board. All that pent up demand and broadly distributed spending power is fueling inflation now. But, in the balance of things, labor did really well.

It's capital that being severely punished now, with negative returns (on top of inflation), it will take years to recoup losses. Anybody hoping of becoming a rentier (the FIRE crowd, seniors looking to retire come to mind) has seen their plans evaporate the last year.

While the truly rich probably don't care either way, their balance sheets are all shrinking nonetheless.

Low inflation may bring price stability and sanity to the markets, but it will not particularly benefit lower incomes.

Re: Federal Reserve raises rates by 0.75%

#379

Post by dragonwriter »

lend000 wrote: post #375

Predictably, the Fed's quantitative easing combined with stimulus created inflation. You can make a decent argument that the initial policy was the right thing to do. I mean, if you're going to force people not to work because of a pandemic, you have to give them some money. Whether there was (or is ever) a need to prop up the stock market as well is less obvious. But where they VERY clearly f'ed up is labeling the i…

> Predictably, the Fed's quantitative easing combined with stimulus created inflation.

Combined with the removal of the conditions to which the stimulus and easing were responding, largely, the effects of both voluntary and mandatory behavior changes associated with the pandemic. (That's also why this didn't happen with last fiscal/monetary stimulus, because the underlying conditions didn't snap back as fast, allowing stimulus to unwind without overshooting.)

Re: Federal Reserve raises rates by 0.75%

#380

Post by imtringued »

twblalock wrote: post #40
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.

I think every possible "tanking the economy" scenario always hurts the poor the most.

I think unemployment hurts the poor the most because bosses fire the least productive people (untrained workers), even when those people spend a bigger portion of their salary on consumption and thereby generate demand for products to sell. A lot of the more "productive" people already have what they want and spend their money on acquiring capital which is kind of pointless if nobody is there to buy your products.
Post reply on HN