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Federal Reserve to increase interest rates by 75 basis points

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

#221

Post by boppo1 »

bjt wrote: post #131
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…

The Federal Reserve doesn't print money. The Treasury does that. The Fed does two things: 1. They lend money to banks through what's called their "discount window". https://en.wikipedia.org/wiki/Discount_window 2. They buy and sell US Treasury Bonds on the open market until interest rates hit the target that they've set. https://en.wikipedia.org/wiki/Federal_Open_Market_Committee Today's announcement is about using t…

"print money" is a colloquialism for increasing the money supply, which the Fed does do. Before you argue that all banks increase the money supply: there is a limit to the maximum possible amount of money as long as the reserve ratio isn't 0. That maximum limit was raised by the Fed with bond buying.

When people complain about printing money, this is what they are complaining about. It absolutely causes asset inflation (very easy to observe with some DCF modeling or checking P/E ratios). I would also argue it is a strong contributor to increasingly binary wealth stratification. It's a legitimate complaint and pedantically pointing out that the Treasury literally prints money is either ill-informed or arguing in bad faith.

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

#222

Post by JoshuaDavid »

RIMR wrote: post #185
benjaminwootton wrote: post #159

I wonder if people are starting to question if the magnitude of the Covid response was justified now the bill is becoming due? Is anyone willing to put their head above the parapet of supporting the shutdowns and now realising it wasn’t worth the cost? Huge inflation, generational debts, increased poverty, broken systems left right and centre etc etc. Or does Putin get all the credit?

I think that if we have to choose between letting hundreds of thousands of additional people die, or having a healthy economy, we utterly failed our priorities as a society long before the pandemic started.

If a society makes the choice that they'd rather be a bit wealthier, at the cost of having slightly lower life expectancy, that certainly does say something about the society in question. I don't think I would describe a society that knowingly and intentionally made that decision as having "utterly failed", though.

US society has failed the "knowingly and intentionally" side of that, and also mostly the "trade" side of that (vaccines being the exception -- we actually did succeed at trading a pretty small amount of money for much-better-than-baseline outcomes there). But the problem wasn't that we chose to trade life for money, the problem was that we failed to have and act upon coherent priorities at all.

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

#223

Post by badtoro »

seibelj wrote: post #58
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…

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.

Judging from the downvotes you get the level of understanding of 101 economics among the HN audience remains precariously low :-)

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

#224

Post by dragonwriter »

kelnos wrote: post #211
mjr00 wrote: post #87

Earlier quoted context omitted.

> 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 s…

Wait, so you want to prohibit individual landlords in favor of large corporations managing the country's rental stock? That sounds like a perfect recipe for monopolistic behavior. And significantly raises the barrier for new entrants into the market.

> Wait, so you want to prohibit individual landlords in favor of large corporations managing the country's rental stock?

How did you get “prohibit individual landlords in favor of large corporations managing rental stock” from the upstream criticism of the forces driving both individual and corporate investment in housing-as-appreciating asset.

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

#225

Post by erellsworth »

vorpalhex wrote: post #55
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.

Inflation hurts labor, not the wealthy. Bill Gates doesn't care if his groceries are 10% more expensive. Inflation is outpacing wage increases so effective wages are actually lower in terms of buying power. Housing is getting more expensive at a faster rate than wages are increasing. If you are pro-labor you want the fed to aggressively raise rates because that makes life harder for business.

Yes, inflation hurts workers. You know what also hurts workers? Low wages.

The fed has specifically stated that reducing wages is one of their goals.

I'm not against the fed raising rates. But any benefit workers see from such a policy is unintentional.

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

#227

Post by boppo1 »

seibelj wrote: post #67
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 b…

>Countries must acquire USD to buy oil

Not anymore!

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

#228

Post by goatcode »

mjr00 wrote: post #179
goatcode wrote: post #148

Earlier quoted context omitted.

The sad thing is that individual landlords are among the most responsive to tenant needs, while corporate landlords often are sons of Hell who should be Thanos-snapped out of existence.

> The sad thing is that individual landlords are among the most responsive to tenant needs, This is extremely dependent on a lot of factors. When you are an upper-middle class tech worker renting a luxury condo, your landlord will absolutely be responsive and helpful. I've been in those condos and they're great. But I wasn't always able to afford to live in nice condos. When I lived in a cheap ground-floor unit and m…

Individual landlords may vary in how they treat you, but don't corporate also?

In my own experience: For corporate landlords, being a poor grad student or a tech worker didn't seem to make a difference; I was still treated like I didn't exist. In several instances there were serious issues with my unit that were affecting my health, and they were ignored. Individual landlords were awesome people -- fast and responsive to issues big and small, and even did things to make my stay better.

Seems that many results vary, but I suspect that when there's no human connection, you'll get a lot of bad stuff going on

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

#229

Post by thesausageking »

paulpauper wrote: post #144
thesausageking wrote: post #132

Earlier quoted context omitted.

This article by Lyn Alden is the best on the dollar as the US Currency Reserve I've read: https://www.lynalden.com/fraying-petrodollar-system/

the articles promoting gold and btc in late 2020 and 2021 as a hedge aged well too, I see.

Her Bitcoin take (which was at $19k at the time) is that "Scarce assets, particularly industrial commodities, are historically cheap... Alternatives like Bitcoin also offer asymmetric outcomes even with small allocations."

She's also talking about the "longish" timeframe, so it's early to judge.

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

#230

Post by goatcode »

pessimizer wrote: post #210
goatcode wrote: post #148

Earlier quoted context omitted.

The sad thing is that individual landlords are among the most responsive to tenant needs, while corporate landlords often are sons of Hell who should be Thanos-snapped out of existence.

You should tell my landlords that, the spoiled son and daughter who inherited a bunch of passive income from their mother (who was actually a great landlord), and who let the leak I could hear, and called them about, fester for over a year until a large chunk fell out of my ceiling.

What's worse: that person, or the company that that person runs, that has 10x the units that he might have otherwise, with a protective layer between the owner and the tenant?
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