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

431–440 of 593 posts

Re: Federal Reserve raises rates by 0.75%

#431

Post by wolframhempel »

its_ethan wrote: post #170
wolframhempel wrote: post #99

The really worrying thing to me is our inability to accept that we (as in humankind) are rather rubbish at running complex systems. A good analogy is to think of the economy as a still lake. If you throw a rock into it, you know that it will create concentric circles of waves. You throw a second rock and you know that its waves will interfere with the first. But now the waves create oscillating patterns and now they…

What's your offered solution? Throw our hands up and just go back to bartering? The federal reserve doesn't micromanage the economy (throwing rocks into the lake, as you put it) they have a few levers at their disposal that I would describe more as environmental variables (like setting the "temperature" of the lake, or limiting the size of rocks people are allowed to throw). They are also doing everything at a pretty…

I think that the Fed has significantly extended its scope over time. From a pure backstop for banks towards quantitative easing and even buying of corporate bonds. And that's true for the EZB and other central banks as well. Overall, central banks do indeed seem to have a dampening effect on the economy, preventing some of the more extreme swings of the pre-Fed era, but I would argue that the Feds sustained injection of cash into the markets over the last decade has created a lot of the inflation the Fed is now trying to solve

Re: Federal Reserve raises rates by 0.75%

#432

Post by eecc »

notch656a wrote: post #352
Barrin92 wrote: post #337

Earlier quoted context omitted.

Norway's state oil&gas revenue pays and subsidizes pensions, tuition free education and healthcare while actually growing rather than shrinking most of the time. Unless your definition of feeling rich is the government buying you a lambo I'd feel very rich in Norway based on services provided at no or little cost alone.

I can see how getting a bunch of stuff without working for it appeals to a certain segment of the populace. Venezuela (and Libya) also had oil-backed welfare for their populace. Best not to get too used to it. Yes I know Venezuela is not Norway.

Ah the old patronizing saw "you just want free stuff"... no sir, I don't. I'm just playing another Game with a different equilibrium. One where everyone doesn't get to die for lack of health-care, like animals in the wilderness. One where my neighbor's education is not considered a threat to the small place under the sun I've managed to rip out of their hands, like predators quarreling for some spoils.

Re: Federal Reserve raises rates by 0.75%

#433

Post by wait_a_minute »

scoofy wrote: post #267
acd wrote: post #243

Prediction higher interest rates will reverse the following trends: * Private car leases at near zero interest rate will stop. At one point it was sometime cheaper to lease than to buy a car for cash * Housing bubble. Near zero central bank/bank interest rates has inflated a housing bubble. Higher interest rates will decrease housing prices since fewer buyers will be able to afford higher interest mortages. * Tech bu…

I generally agree with all of this, though, i think two of the points may see counter-intuitive outcomes: >* Housing bubble. Near zero central bank/bank interest rates has inflated a housing bubble. Higher interest rates will decrease housing prices since fewer buyers will be able to afford higher interest mortages. Ehh... we should expect this, but supply may meet demand, instead of the other way around. We could se…

“ We could see an unprecedented ramp down in the already unprecedentedly low inventory.”

What do you mean by this?

Re: Federal Reserve raises rates by 0.75%

#434

Post by bombcar »

slaw wrote: post #367
thfuran wrote: post #356

Earlier quoted context omitted.

All it will cost you is a few decades of deflation to get back to 70s prices.

I am very ok with housing price deflation.

As should everyone! If your finances would be wrecked by house prices staying stable, let alone decreasing, you're in for a world of hurt.

Also it's amusing that everyone wants lower cost housing but wants house prices to appreciate.

Re: Federal Reserve raises rates by 0.75%

#435

Post by alangibson »

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

Nope. I buy manufactured goods for a couple of businesses and everyone blames the price increases on supply issues.

Also, Google MMT. Printing money is only inflationary of the economy is running near capacity.

Re: Federal Reserve raises rates by 0.75%

#436

Post by bombcar »

Aloha wrote: post #429
bombcar wrote: post #409

Earlier quoted context omitted.

Unleaded gas was introduced in the 1970s in the US - and leaded gas was still made and sold until the 1990s. And it's still available if you know where to look in every city in the US as 100LL Avgas, or with additives.

I'm expecting retail gas stations to be common for the next 20-40 years, with some density reduction towards the middle of that period is what I'm saying more or less. To say leaded fuel is still available is a little bit of a misnomer, in the states anyhow, its not legally available as a road fuel, nor is a TEL additive - there are lead substitutes, but they're potassium I think, largely to prevent valve seat wear.…

Yeah, was just showing that it takes time for things to change, even given that most cars sold in the 70s worked fine on unleaded, there were still leaded cars out there.

And cars didn't last nearly as long as they did before.

Re: Federal Reserve raises rates by 0.75%

#437

Post by notch656a »

eecc wrote: post #432
notch656a wrote: post #352

Earlier quoted context omitted.

I can see how getting a bunch of stuff without working for it appeals to a certain segment of the populace. Venezuela (and Libya) also had oil-backed welfare for their populace. Best not to get too used to it. Yes I know Venezuela is not Norway.

Ah the old patronizing saw "you just want free stuff"... no sir, I don't. I'm just playing another Game with a different equilibrium. One where everyone doesn't get to die for lack of health-care, like animals in the wilderness. One where my neighbor's education is not considered a threat to the small place under the sun I've managed to rip out of their hands, like predators quarreling for some spoils.

Hey who doesn't like free stuff. I like free stuff. Just pointing out not to get too used to it. History hasn't been kind to those who become too dependent on oil revenue, including in the form of distributions from the state.

>"you just want free stuff"

Ah the old patronizing "I invent a quote the person didn't say, and then I straw man against it like they did."

Re: Federal Reserve raises rates by 0.75%

#438

Post by danaris »

whiplash451 wrote: post #292
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…

The Norway example is really annoying. It keeps coming back as an example to follow, when everybody knows it is a complete outlier that cannot be reproduced elsewhere. Norway is sitting on a gigantic pile of offshore gas that it uses to generate massive profits that go into a huge fund they don't know what to do with, all of that for a 5M population that drowns into social programs. There is literally no country in t…

> Yet, when you look at what Norway has actually produced over the past few decades in terms of innovation, companies, etc. the picture is very, very empty.

I don't agree with this being used as a primary metric for determining the worth of a nation or the value of its policies.

The #1 priority of a country should be the well-being of its people. Not "of its wealthiest"; not "of its economy". The well-being of all its people.

Norway is, last I knew, consistently among the happiest countries on Earth. I think that's a far, far more meaningful metric than "how many new ways to part people from their money have they come up with?"

(Now, I think there's a reasonable argument to be made with respect to things like basic scientific research, improved green technologies and other advances toward ending climate change, etc—particularly since that's vitally important for every nation's long-term well-being. But that's not at all the same thing as "innovation, companies, etc".)

Re: Federal Reserve raises rates by 0.75%

#439

Post by coryfklein »

The Fed has been placed in a tough position here. A huge portion of the inflation from this year comes from temporary supply-side shocks, and the federal funds rate is quite a blunt instrument to counter such a complex dynamic. Were it not for the pandemic and Russia's war with Ukraine, this would probably be a non-news 0.25% rate hike.

But now the Fed has to thread the needle and find that "soft landing", something that they don't have a great track record of doing. But they'd rather trigger a recession then deal with the greater issues that come with persistent 8% inflation, so they have to bite the bullet.

Of course equity markets are all down significantly ("the stock market") but equity prices are actually a quite poor indicator of recession. The ol' saying "the stock market predicted 9 of the last 5 recessions" is very true.

But in addition to the aforementioned supply side shocks, the economy is indeed running quite hot. We're nearly at full employment, open job listings are at record highs. Although real wage growth is still stagnant, nominal wage growth – particularly for the lowest paid workers – is growing; something it has historically been loathe to do.

An otherwise robust economy could deal with a few issues like this, but throw in the shocks to the economy and, indeed, the Fed has to step in with a moderating influence.

Re: Federal Reserve raises rates by 0.75%

#440

Post by lovecg »

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?

I like my reMarkable tablet, thank you very much
Post reply on HN