Federal Reserve raises rates by 0.75% • Hacker News Board

Re: Federal Reserve raises rates by 0.75%

#571

Post by afterburner » Thu, Jun 16, 2022, 5:27 PM UTC

wolframhempel wrote: post #541

afterburner wrote: post #136

Earlier quoted context omitted.

> This sort of FED that we have now that tries to control the overall economy is - to me - at least as hopeless as centralized 5-year plans under communism. This is a CRAZY comparison. The Fed is barely doing anything, basically trying to keep things stable using two simple tools, and is doing so iteratively and carefully. It is the literal opposite of a Soviet communist 5 year plan that details everything to the n-t…

> The Fed is barely doing anything, That is really not correct. The Fed has engaged in four phases of Quantitative Easing ( https://en.wikipedia.org/wiki/Quantitative_easing#United_Sta... ) since 2008 alone, with the last one in Mid-Summer 2020. This one resulted in an additional two billion of asset purchases with Money that didn't exist before, meaning that in 2020/2021 the Fed's money generation accounts for a tot…

Seems to me the COVID crash would have been a lot worse without the Fed's intervention. It's always a moving target, because the economy is too complex to nail the perfect intervention, and all interventions are complicated by the reactions of the participants. Under such extreme circumstances (shutting down massive parts of the global economy), there's never going to be the perfect intervention, so there will always be a second order effect to deal with afterwards.

In other words, there will always be something to complain about, even if the net effect is positive.

Re: Federal Reserve raises rates by 0.75%

#572

Post by yowzadave » Thu, Jun 16, 2022, 5:28 PM UTC

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…

Here's a nice little report talking about some of the state-led innovation going on in Nordic countries: https://www.peoplespolicyproject.org/projects/nordic-state-i...

Re: Federal Reserve raises rates by 0.75%

#573

Post by anm89 » Thu, Jun 16, 2022, 6:41 PM UTC

AnimalMuppet wrote: post #447

anm89 wrote: post #77

The Fed clearly doesn't understand how to MMT properly. What J Powell was supposed to do her was to raise the income tax rate.

1. You're assuming that MMT is the right answer, which is far from a foregone conclusion. 2. You're assuming that Powell agrees that MMT is the right answer, which is definitely false. 3. You seem to have the idea that Powell has some control over the income tax rate, which is totally false.

It's sarcasm.

Re: Federal Reserve raises rates by 0.75%

#574

Post by omegaworks » Thu, Jun 16, 2022, 7:25 PM UTC

nobody9999 wrote: post #192

omegaworks wrote: post #123

Earlier quoted context omitted.

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…

>If only the majority party were willing to wrestle a tiny speck of that anti-democratic power away from the Senate by overriding extreme rules like the filibuster... Or reverting back (pre-1970s) to the "Talking Filibuster,"[0] where you could only stop a vote by continuing to "debate" on the floor of the Senate. That won't solve the problem, but it would be a step in the right direction: Talk until you can't and in…

We need to abolish the Senate or at least make it as irrelevant as the House of Lords.

Re: Federal Reserve raises rates by 0.75%

#575

Post by hgomersall » Thu, Jun 16, 2022, 9:16 PM UTC

QuarterReptile wrote: post #557

hgomersall wrote: post #537

Earlier quoted context omitted.

Sure, the 5 principles seem good to me. The job guarantee is given not much prominence, but I can work with that. Edit: sectoral balances are not very prominent either, which are an important conceptual tool, though not really MMT per se (more an accounting identity that most people ignore).

The job guarantee is pretty well encapsulated in the discussion of inflation, since MMT focuses on NAIBER rather than NAIRU to focus inflation targets. (Wikipedia) MMT's main tenets are that a government that issues its own fiat money: 1. Can pay for goods, services, and financial assets without a need to first collect money in the form of taxes or debt issuance in advance of such purchases; The intended thrust of th…

Thanks for your considered response. I will be terse in my reply, but link to references that are those that clarified my thinking. Assuming you are discussing in good faith, I would deem those links essential reading to understand the MMT position properly.

I will not quote your responses but try to reply directly.

1. The MMT position is consistent with the chartelist view that fiat currencies are worth something because the state requires payment of taxation in said currency. It's as simple as that. Enforcing of taxation in the state currency is a sufficient condition to imbue it with value. Note that this is not a necessary condition, but it is sufficient. The historical record suggests strongly this is how money evolved and existed historically, contrary to the oft presented view that it evolved from barter using a commodity intermediary.

There are various texts that discuss this but I'll link to Warren Mosler for an MMT definitive position. He discusses the chartelist position with references in this paper: http://moslereconomics.com/wp-content/graphs/2009/07/natural...

Moreover, as a simple point of logic, fiat currencies must spend before they can tax. How else can the tax be claimed if the money has not be spent or lent into existence?

2. MMT asserts lending to a government is unnecessary. The balance sheet can just as easily represent cash as a liability as bonds as a liability. The requirement to issue bonds is purely political. This is a factual statement and has been demonstrated in a recent UCL paper for the UK: https://www.ucl.ac.uk/bartlett/public-purpose/publications/2...

I understand there is a similar paper for the US but I don't have a reference to hand.

Moreover, in Mosler's document above, he argues that the natural rate of interest is zero, making bonds essentially equivalent to reserves (which serve an important role as risk free savings).

3 and 4 I'll discuss together in the context of the job guarantee scheme, since that's the primary automatic stabiliser policy advocated by MMT. The JG sets a pricing anchor, defining the value in currency of a unit of lowest price labour. This is really important - the value of the currency is tied to a specific real resource. I'll be honest that this was the bit I found hardest to grasp, but Warren Mosler has a very elegant justification which made it click (he calls it "employer of last resort" here, but it's the same thing): http://moslereconomics.com/wp-content/uploads/2019/02/Full-E...

5. As discussed, MMT asserts that there is no need to borrow money. Separately, the bond market appears to be rather more resistant to low interest rates than might be assumed from a mainstream analysis (bond sales with negative real term returns are still oversubscribed). This fits with the understanding that bonds are really just interest bearing reserves, and who wouldn't want to buy something interest bearing when the alternative is no interest (CB reserves).

I'll be honest and say I can't actually contribute more to the discussion until we're talking in terms of those references, and even then I may not be the best person to discuss them. I'm happy to discuss more though if posed in good faith.

The big point about MMT is to have a much better understanding of the system so as to have a better understanding of the available policy space. The main test of MMT would be to implement a JGS and see who turns up.

Edited for clarity.

Re: Federal Reserve raises rates by 0.75%

#576

Post by AnimalMuppet » Thu, Jun 16, 2022, 10:00 PM UTC

anm89 wrote: post #573

AnimalMuppet wrote: post #447

Earlier quoted context omitted.

1. You're assuming that MMT is the right answer, which is far from a foregone conclusion. 2. You're assuming that Powell agrees that MMT is the right answer, which is definitely false. 3. You seem to have the idea that Powell has some control over the income tax rate, which is totally false.

It's sarcasm.

Ah, I see. I missed that...

Re: Federal Reserve raises rates by 0.75%

#577

Post by rrrrrrrrrrrryan » Fri, Jun 17, 2022, 4:50 AM UTC

millimeterman wrote: post #474

ericns wrote: post #445

Earlier quoted context omitted.

Hmmm, Moody's where do I remember that name from? Oh ya here it is - https://www.theguardian.com/business/2017/jan/14/moodys-864m... Economics is the lies told by some middle class assholes with a degree and/or credential that get paid just enough by upper class assholes to trick low class rubes.

> Economics is the lies told by some middle class assholes with a degree and/or credential that get paid just enough by upper class assholes to trick low class rubes. Why does nonsense like this get parroted so much? Economics is as much a science as any other social science. Which is to say that it's certainly imperfect and is subject to social problems surrounding science (e.g. the replication crisis), but it's sti…

Any economic thought a bit further left than left-of-center gets quickly deemed "not economics."

Phrased differently, the field of economics dismisses any economic thought that doesn't serve the interests of capital and the people with the capital.

I don't think people take an issue with economists' predictions as much as their prescriptions. Younger econ doctoral candidates would do well to spend some time hanging out with the political scientists on campus. (They largely are doing this.)

The field will move forward one death at as time.

Re: Federal Reserve raises rates by 0.75%

#578

Post by snapplebobapple » Fri, Jun 17, 2022, 4:55 AM UTC

danaris wrote: post #438

whiplash451 wrote: post #292

Earlier quoted context omitted.

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 it…

If you are going to use the happiness of the country as justification for something you need to do a bunch of fancy statistics to try and disagregate the specific thing you are justifying from the large basket of differences between the countries you are comparing, as there are often large differences that are unrelated to what you are talking about driving happiness differentials.

It is also extremely disingenuous to call innovation and companies "new ways to part people from their money." People are often parting with their money because that new thing meaningfully improves their lives. Also, the basic scientific research argument is extremely overplayed. Breakthroughs in basic scientific research amount to nothing if they don't make it into the supply chain for goods and services eventually and that happens through company formation.

Re: Federal Reserve raises rates by 0.75%

#579

Post by 29083011397778 » Fri, Jun 17, 2022, 6:55 AM UTC

willcipriano wrote: post #468

danaris wrote: post #463

Earlier quoted context omitted.

Fuck that. Stop thinking of yourself as an individual employee and start thinking of yourself as a member of a union . Then actually form that union. You don't get across-the-board raises by "generating leads". You get them by collectively bargaining. And I reject entirely the notion that one should be only looking out for one's own gain.

I went from washing dishes to six figures my way. Has your way done well for you thus far?

Moving to a union environment has left me working fewer hours, getting better benefits, and more than doubling my salary. I'm glad things worked out for you [presumably in what is currently one of the hottest occupations], but a union has been a boon to my total compensation.

Re: Federal Reserve raises rates by 0.75%

#580

Post by babypuncher » Fri, Jun 17, 2022, 4:14 PM UTC

bombcar wrote: post #410

babypuncher wrote: post #339

Earlier quoted context omitted.

Where is all this new demand for gasoline coming from? I know a lot of people are back to in-person work and school, but a substantial number of people are now full or part-time WFH where they weren't before 2020. On top of that we've "unexpectedly" lost over a million people in that same time frame. Shouldn't demand for gasoline be lower than it was before the pandemic?

The million lost weren't big gas users, I suspect.

And those of us left are apparently filling our swimming pools with it