even worse, you have to keep your $ in the saving account for the whole year to capture the .75%. It's possible the fed may lower rates again 6 months form now if sudden recession risk.
Federal Reserve to increase interest rates by 75 basis points
81–90 of 329 posts
Re: Federal Reserve to increase interest rates by 75 basis points
#82Still a very low rate by historic standards. We've got a ways to go.
It was about 6.5% in the 1998 recession and 5.25% in the 2007 great recession. It's unlikely we will head into a recession anytime soon. Numbers are all over the place, but I see most of it as temporary (Covid, Gas Prices) and not structural or risky behavior from investment banks in 2007. Remind me if I'm wrong, but I think inflation will drastically drop next report.
> not structural or risky behavior from investment banks in 2007
I don't see it that way at all. Over the last couple years, we've seen an explosion in private capital investments, NFT and crypto fads (questionable, but I would argue that these were large enough to be considered structural), greatly increasing home prices, supply chain disruptions, the war in ukraine (and all its knock-on effects). Things are a bit topsy-turvy, and I am hesitant to write off all of these things as "not structural".
Re: Federal Reserve to increase interest rates by 75 basis points
#83I'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.
What I find tragic is that 'we' had all this time to gradually increase the retirement age but didn't do so. I can totally understand the political backlash of trying to immediately increase the retirement age, as old people vote and young people don't.
However I feel like forward looking legislators could have passed gradual increases on future generations. If we know life expectancy is gradually going upwards, why not increase the retirement age incrementally based on cohort?
Re: Federal Reserve to increase interest rates by 75 basis points
#84Re: Federal Reserve to increase interest rates by 75 basis points
#85Very 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.
A year ago the economy was still in the grip of covid. no one expected things to recover so fast from such a huge crisis like covid. Thing went from "the world is coming to an end" to new highs just 7 months later. that's nuts.
Re: Federal Reserve to increase interest rates by 75 basis points
#86Earlier quoted context omitted.
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.
Idk what the retirement age in other countries is but here in Norway I think it is currently 67. How much additional productive work do we realistically expect people to be able to supply, from age 67 to age 70?
Especially in housing, manufacturing and food, which is what the shortages are purported to be in
Re: Federal Reserve to increase interest rates by 75 basis points
#87I'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…
> It's too difficult to curb demand for things like food and housing if the population is growing.
It's also difficult (impossible) to curb demand for housing if housing is far and away the best investment you can possibly make, both in the short, medium, and long-term.
Unfortunately, so many people in the west have their net worth tied up in their homes that policies directly targeting property values is political suicide.
The best case scenario at this point for our future society is interest rate hikes causing a housing crash, then while prices are in the dumpster, put in legislation that prohibits the behaviours that have contributed to this cycle of housing mania: AirBNB/individual landlords, corporate investment in housing a la BlackRock, etc.
Re: Federal Reserve to increase interest rates by 75 basis points
#88Earlier quoted context omitted.
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.
That makes sense. If the US government defaults on their debt the bank has more important things to worry about.
Re: Federal Reserve to increase interest rates by 75 basis points
#89I'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…
It's almost like you are encouraging supply side economics... aka... trickle down We need to massively cut corporate taxes, investment taxes, regulations, and all manner of things to increase supply. The government has been attacking business for so long we are in quite the hole.
I think we should cut corporate taxes to match the rest of the world, but decreasing taxes will make inflation worse not better.
Re: Federal Reserve to increase interest rates by 75 basis points
#90I'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…
> I'm skeptical that interest rate hikes will curb inflation. I'm even skeptical that a recession will curb inflation.
They won't, but the Fed has to do them anyway. That's the nasty situation we're in: current inflation is mainly being caused by supply shortfalls, which can't be fixed by interest rates short of massive demand destruction with a recession, but if the Fed doesn't do anything we could transition to a regime where the inflation is expectations-driven instead. That's the really bad kind of inflation which becomes self-reinforcing and hard to stop without completely Volckering the economy.
There are no easy answers here, but doing it is better than not doing it.