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Federal Reserve raises rates by 0.75%

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Re: Federal Reserve raises rates by 0.75%

#391

Post by gilbetron »

bogomipz wrote: post #313
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…

>"This is turning into the West's version of Pakistan's brick kilns." Could you elaborate on this reference? I am not familiar with this.

I think it is equivalent to US's "company towns" or "company stores". A way to capture employee's money so they can't escape.

Re: Federal Reserve raises rates by 0.75%

#392

Post by bombcar »

jmyeet wrote: post #319
bogomipz wrote: post #313

Earlier quoted context omitted.

>"This is turning into the West's version of Pakistan's brick kilns." Could you elaborate on this reference? I am not familiar with this.

Brick kilns in Pakistan (and also Bangladesh and possibly other places) are a form of neoslavery [1]. What happens is that depserate people are forced to take a job but as part of that job they go into debt. The company provides housing? You'll have to pay that back. They provide food too. You'll have to pay that back. That's the point. For most there is absolutely no escaping that debt so they can't possibly get out…

The railway heyday in the US was famous for this, extremely high wages at the time, but company town, company store, and miles and miles from anywhere. Few were able to come out the other end much better off.

  You load 16 tons, what do you get?
  Another day older and deeper in debt
  St. Peter, don't you call me 'cause I can't go
  I owe my soul to the company store

Re: Federal Reserve raises rates by 0.75%

#393

Post by lovich »

nemo44x wrote: post #381
JaimeThompson wrote: post #330

Earlier quoted context omitted.

>75% of the country contributes nearly nothing but complaints. Only if you ignore sales tax, car tax, property taxes, and other such taxes. The top 10% typically included major corporations but without a source I don't know if the percentage you use does.

Sales tax, property tax, fees, etc are a rounding error essentially and are local. At a Federal level they are meaningless. Saying that I'd be all for a Federal sales tax of 20% if we could nearly eliminate income taxes.

Why? That puts more of the tax burden on those with the least

Re: Federal Reserve raises rates by 0.75%

#394

Post by imtringued »

QuarterReptile wrote: post #297
moneywoes wrote: post #277

Earlier quoted context omitted.

So the other becomes raising taxes right? Or MMT?

I don't follow your parallelism. But yeah, you'd probably have to raise taxes to climb out of the hole we've dug. Or you could go for MMT (sticking your head in the hole.)

The problem with your comment is that raising taxes is MMT. Sticking your head in the hole is what neo classical economics does.

Re: Federal Reserve raises rates by 0.75%

#395

Post by [deleted] »

smartmic wrote: post #135

I know this may sound petty and the wording is regularly found even in the best editorial offices, but the engineer in me resists every time: the correct wording should be "by 0.75%-points" instead of "by 0.75%". Am I the only one who is bothered by this?

[deleted]

Re: Federal Reserve raises rates by 0.75%

#396

Post by coryfklein »

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! And in fact most economists consider this to be an extremist fringe theory. A quick counterfactual here is, if the US's inflation is caused by its "money printing" (a term that is used quite loosely here, the vast majority of this money never makes it out to the general economy), then how does one explain the inflation experienced in other nations at the same time where no money was printed?

Re: Federal Reserve raises rates by 0.75%

#397

Post by TheBlight »

hypersoar wrote: post #383
TheBlight wrote: post #279

Earlier quoted context omitted.

>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. There are plenty of affordable places to live. People just don't want to move there. Buying a house in a hip U.S. city/suburb isn't a human right.

Why shouldn't we expect people who work in cities to be able to live dignified lives in those cities? There are always going to be janitors, home care providers, baristas, grocery store employees, etc. Our daily lives depend upon them. It's insane to me that we have a system that requires those people to exist but barely pays them enough to afford to live.

If workers couldn't afford to live close to those cities they'd move somewhere else. Those cities would then experience a shortage of workers. Wages would have to rise to attract new workers. Costs to everyone else in those cities would have to rise in order to accommodate this. If non-workers could no longer afford these costs they would have to sell their homes and move out. This would increase supply and bring the value of housing down in these cities.

Re: Federal Reserve raises rates by 0.75%

#398

Post by susanasj »

ljhsiung wrote: post #258
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.

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"…

yes this this a good point, and also a useful chart for contexualizing this move.

Re: Federal Reserve raises rates by 0.75%

#399

Post by otikik »

idlehand wrote: post #104
cjbgkagh wrote: post #73

Earlier quoted context omitted.

AFAIK it was how Keynesian economics was supposed to work. Also AFAIK the only country that did intentionally tighten at the top always Israel as they were worried that an economic crisis would leave them vulnerable to attack from their neighbors * * source is from a bar talk with an economist, I didn’t do my own research here…

Unlike socialism, capitalism actually seems to fare better when under a siege mentality. The 50s to 70s was a period of strong growth and right-wing support for worker-friendly policies which made the lives of the ordinary person better, not least because of fear that poor working class conditions would lead to communist uprisings in Western Europe.

It does sound like socialism helped then, albeit indirectly.

Re: Federal Reserve raises rates by 0.75%

#400

Post by jgust »

whimsicalism wrote: post #85
jgust wrote: post #69

Earlier quoted context omitted.

What's the ELI5 version of how to interpret this trend line?

The basic Fisher equation of exchange is that Velocity * Money Supply = Price Level (changes in this are inflation) * Economic Output During early pandemic, velocity tanked because people were spending less so it was not a foregone conclusion that increasing the money supply as much as the Fed did would lead to inflationary changes in the price level. Now, we are seeing velocity somewhat rebound while output is not i…

Thanks for the education!
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