Federal Reserve to increase interest rates by 75 basis points • Hacker News Board

Re: Federal Reserve to increase interest rates by 75 basis points

#41

Post by nimbius » Wed, Jul 27, 2022, 6:32 PM UTC

zamalek wrote: post #6

Very good. This is going to hurt quite a bit, but is going to prevent real pain in the long run. Much like something we should have all done a year ago.

I think you're right, but I'm a little pessimistic after covid relief and the 08 crash. we have 9.1℅ inflation and the damage control from the reigning party trying to explain away an obvious recession makes quarter point increases seem like performance art. student loans are already such an untenable debt bubble that the same potus that stumped for their perpetuity is now forgiving them. auto loans are an equally prime disaster waiting to happen as their average term is now 72 months and the average monthly payment is $700

Re: Federal Reserve to increase interest rates by 75 basis points

#42

Post by UncleOxidant » Wed, Jul 27, 2022, 6:32 PM UTC

nodesocket wrote: post #10

Now if we can only get states (like California) to stop giving out stimulus payments (they literally calling it inflation stimulus; learn economics 101) and drop student debt forgiveness nonsense. The fed is trying to curb inflation, while politicians are trying to get re-elected at any cost, fighting the fed.

> Now if we can only get states (like California) to stop giving out stimulus payments (they literally calling it inflation stimulus;

I agree with you on this. They're ostensibly to help people afford to buy more gasoline. We should let the high gas prices change behavior instead.

> drop student debt forgiveness nonsense.

Not sure I agree with you on this. While I don't think it would be a great idea to forgive all student debt, I think a targeted forgiveness (under certain income/net worth threshold) of some student debt makes sense.

Re: Federal Reserve to increase interest rates by 75 basis points

#43

Post by aresant » Wed, Jul 27, 2022, 6:32 PM UTC

fenek wrote: post #29

I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?

Gas isn't a great indicator as it's currently being subsidized with the US + allies from their strategic reserves to the tune of ~240,000,000 barrels

https://home.treasury.gov/news/press-releases/jy0887

Re: Federal Reserve to increase interest rates by 75 basis points

#44

Post by grepLeigh » Wed, Jul 27, 2022, 6:32 PM UTC

jsnell wrote: post #27

alexb_ wrote: post #17

Earlier quoted context omitted.

Dollars becoming more expensive is the exact opposite of inflation. ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this

The GP is living in a different country, that doesn't use USD as the currency. They already have high inflation. The change in the US interest rate would be expected to strengthen the dollar. This makes dollar-based imports (i.e. oil and gasoline) more expensive in their local market, fueling inflation further.

Thank you for explaining this!

Re: Federal Reserve to increase interest rates by 75 basis points

#45

Post by bhahn » Wed, Jul 27, 2022, 6:32 PM UTC

01100011 wrote: post #8

Funny that this would rocket to the front page so quickly. Shows where everyone's minds are at. A lot of folks were banking on a pivot by the fed but they failed to understand how seriously the fed now sees inflation. Sure, the fed could/should have raised even higher, but consider they need to orchestrate a less disruptive start to our next recession. They're still doing QT as well, which will also help tame inflati…

> Funny that this would rocket to the front page so quickly. Shows where everyone's minds are at.

I don't find this so surprising. Inflation (and rates as a consequence) has been affecting a good number of people directly or indirectly (cost of goods/gas, stocks, layoffs, etc).

Re: Federal Reserve to increase interest rates by 75 basis points

#46

Post by just_steve_h » Wed, Jul 27, 2022, 6:32 PM UTC

erellsworth wrote: post #35

fenek wrote: post #29

I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?

The price of labor. Their goal is to suppress wages. Gotta put workers back in their place or the whole system collapses.

Which is also why there's bipartisan consensus on giving lots more money to police and the military. After all, someone has to control the violent rabble as they are priced out of decent living!

Re: Federal Reserve to increase interest rates by 75 basis points

#47

Post by mywittyname » Wed, Jul 27, 2022, 6:32 PM UTC

I'm skeptical that interest rate hikes will curb inflation. I'm even skeptical that a recession will curb inflation.

We have significant shortages of so many products and services that people rely on and the only way I see the situation improving is if supplies increase, maybe dramatically. It's too difficult to curb demand for things like food and housing if the population is growing. Those are things we just need to make more of. And I don't think raising interest rates is going to spur housing starts or investment in production capabilities.

Re: Federal Reserve to increase interest rates by 75 basis points

#48

Post by vorpalhex » Wed, Jul 27, 2022, 6:33 PM UTC

fenek wrote: post #29

I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?

Inflation (food, transport) is still about 10%.

> The CPI figures in the latest report were grim. Food prices rose 1.0% in June and are 10.4% above year-ago levels. Food at home costs 12.2% more than a year ago. Energy prices overall rose 7.5% in June and stand 41.6% above where they were in June of 2021. Gasoline prices rose 11.2% in June and are a whopping 60% higher than a year ago. The so-called “core” inflation measure of goods and services other than food and energy rose 0.7% in June and are 5.9% above year-ago levels.

Re: Federal Reserve to increase interest rates by 75 basis points

#49

Post by notch656a » Wed, Jul 27, 2022, 6:33 PM UTC

lampshades wrote: post #20

alexb_ wrote: post #17

Earlier quoted context omitted.

Dollars becoming more expensive is the exact opposite of inflation. ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this

Not for other countries that have to print more of their own currency to try and afford more dollars.

How would printing more foreign currency make their total dollar-measured goods/services/estate that people actually want to trade dollars for any different in terms of dollars?

Re: Federal Reserve to increase interest rates by 75 basis points

#50

Post by JumpCrisscross » Wed, Jul 27, 2022, 6:33 PM UTC

erellsworth wrote: post #35

fenek wrote: post #29

I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?

The price of labor. Their goal is to suppress wages. Gotta put workers back in their place or the whole system collapses.

Broadly speaking, if complaints oscillate between the central bank punishing savers one year and workers the other, that bank is doing something right.