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Federal Reserve to increase interest rates by 75 basis points

federalreserve.gov

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

#61

Post by jason-phillips »

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.

I see what you're saying, but taking that logically a few steps further, I see this round of inflation is simply a rebalancing of prices relative to finite supply at the hands of a more empowered worker class. But I think you're right too.

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

#62

Post by redblacktree »

wincy wrote: post #36
HillRat wrote: post #26

Earlier quoted context omitted.

This is what's called "open market operations," and it's basically the first echelon of attack on inflation. If the Fed sells government (and government agency) securities, then banks buy them, returning money to the Treasury and reducing the banks' lending liquidity. By reducing the money supply, the Fed can put a brake on inflation. The overall implication is that the Fed either wants a sharp anti-inflationary shoc…

Do the banks have to buy them? Why do they buy them? Wouldn’t the bank have an advantage if it had liquidity when nobody else does?

The banks buy them for the risk-free return.

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

#63

Post by vorpalhex »

just_steve_h wrote: post #46
erellsworth wrote: post #35

Earlier quoted context omitted.

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!

The wealthy can afford private security. Crime mostly hurts less fortunate people and has had a significant jump: https://abcnews.go.com/US/12-major-us-cities-top-annual-homi...

In terms of military spending, you may have heard of an illegal invasion and war happening in Eastern Europe...

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

#64

Post by WebbWeaver »

88913527 wrote: post #22
dustingetz wrote: post #2

what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities

In short, it means this line will go down: https://fred.stlouisfed.org/series/WALCL You can see it went up substantially in 2020 and 2021.

And 2008 (without going back down). The component from 2008 AFAIK is mostly the mortgage backed securities.

I don't endorse everything this guy is saying but it is an interesting article

https://www.axios.com/2022/05/18/fed-mortgage-portfolio

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

#65

Post by adrr »

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.

There is a labor shortage not caused by covid but due to significant portion of the population retiring. We're missing 2 million workers from 2019. Biggest issue is that raising rates actually exacerbates the issue due to increased expense in investing in automation. From a society standpoint and an economic standpoint, people shouldn't be manually picking and packing things in a warehouse when we have automation that can drastically improve this. Businesses are to blame because labor was so cheap that they never invested in automation.

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

#66

Post by ParksNet »

mywittyname wrote: post #47

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 t…

Easiest way to increase labor supply is to immediately increase the retirement age to 70. Welfare and retirement systems across the West are insolvent at current settings anyway.

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

#67

Post by seibelj »

colinsane wrote: post #56

anyone know of bullet-proof analyses into central banking policy out there? after dealing with crypto projects that offer high interest rates, and do so by just inflating their token supply, fed policy seems magical to me. the fed’s offering you yield on your dollars, and that yield comes from printing new dollars (right? there’s no tax increase as part of this announcement). your share of dollars stays constant. so…

All fiat currencies are backed by the USD. All commodities that matter are priced in USD. Countries must acquire USD to buy oil. Therefore we increase interest rates, makes USD-denominated debt harder to manage, increases demand for dollars, weakens other fiat currencies, dollar is strengthened.

What USA business can do now is swoop in and buy all foreign capital assets at pennies on the dollar. Go to Sri Lanka and buy whatever factories and industrial capacity they have. Emerging market crashes are great for the USD money printing country.

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

#68

Post by jollyllama »

lampshades wrote: post #28
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.

California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. If they’re giving out stimulus, they must be getting it from tax payers, right?

If there's an institution willing to give them a loan, then the money can be created ex nihilo, just like a person takes out a mortage on a home.

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

#69

Post by icedchai »

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.

We need to realize rates are still quite low. To put it in perspective, we're finally back to 2019 levels. There's still a long way to go to get back to 2005 (5%-ish rates).

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

#70

Post by post_break »

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 for a package of oreos is about $5 now. Diesel is still way up over a year ago. Prices for food will not go back down, this is the new normal at the grocery store.
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