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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

#281

Post by tarsinge »

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?

To my understanding you can’t have both huge inflation and debts, absolute value of debts don’t change contrary to everything else. If everything (including salaries) does x2, then debts get divided by 2. Inflation has positives too.

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

#282

Post by setgree »

staticman2 wrote: post #270
setgree wrote: post #233

Earlier quoted context omitted.

I meant that they are trivially true in the sense that they, e.g., * restate the fed's mandate to keep to full employment * say that the fed will consult many sources when it makes its verdicts (I should hope so!!) * say that their verdict might change if they get new input or new guidance Surely even a true dissident on monetary matters would still acknowledge that the fed's mandate says what it says?

Here's an example of what I mean. The article states "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run." Someone on this thread stated the interests rates are actually being raised because the committee seeks to crush unions. So if that "obvious" sentence was removed I'd only be hearing one side of the story if I read the poster's take and the attached press…

Ah so this might be non-obvious context — the fed’s mandate is 1) maximum employment and 2) stable prices, which the Fed has, historically, defined as 2%. So saying this in the press release is basically like if i restated my company’s publicly known OKRs every time I made an announcement.

More on the mandate: https://www.brookings.edu/blog/up-front/2022/02/23/how-does-...

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

#283

Post by nHD93pTC78g6wvE »

ta8645 wrote: post #164
LetsGetTechnicl wrote: post #97

What is being to address the price gouging by companies? Oil and gas companies are seeing record profits, how can it be just inflation that costs are going up?

How exactly can a company price-gouge in a free market? First, nobody is compelled to buy anything from them. Second, anyone else is allowed to become a supplier, and easily make a fortune by offering a cheaper price. And the only thing that prevents the above from being true, is oppressive government policies that undermine the freemarket, which are sold to the people as "for their protection".

"nobody is compelled to buy anything from them"? Really? How are you going to get to work when your work only pays you enough to live 10+ miles away and there's no public transit (i.e. the vast, vast majority of people in the US)? Or should they just not have a job (and thus no shelter or food either)?

The free market is not free. It's a myth. It's a lie.

(And before you say Tesla or some other electric car, remember that they are a luxury and priced as such, not to mention that most Americans can't even charge them at home.)

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

#284

Post by huijzer »

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 too difficult to curb demand for things like food and housing if the population is growing

Currently population might look like it's growing but in fact things are going the opposite way since most countries have much fewer young people than before which yields also fewer young people in the future, according to Peter Zeihan.

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

#285

Post by nHD93pTC78g6wvE »

notch656a wrote: post #122
Victerius wrote: post #113

Earlier quoted context omitted.

The free market normally takes care of price gouging by drawing in new entrants. If the barriers to entry are too high, then price controls or nationalization.

>If the barriers to entry are too high, then price controls or nationalization. Or remove the barriers, like regulation/licensing/taxation.

The barrier is capital expenditure, not regulation/licensing/taxation.

Besides, any competitor entering the market would be expected to make just as much or more profit as the existing companies. Which means they would price their product just the same as the existing companies.

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

#286

Post by d4mi3n »

CoffeeCollector wrote: post #251
d4mi3n wrote: post #95

Earlier quoted context omitted.

> but inflation only happens in reality because of government spending, borrowing, and deficit spending. This is incorrect. Note that governments around the world are also experiencing record levels of inflation and each has their own fiscal policy. Inflation is an aggregate economic effect driven by a variety of factors—including but by no means limited to government spending. Other things that contribute to inflati…

Most of your ‘refutation’ is dishonest, Keynesian, MMT nonsense. Fiat doesn’t get introduced unless printed or borrowed by the government. Full stop. Companies raising prices is not inflation and conflating that with government monetary policy is outright disinformation.

I'm not an economist and don't really understand your refutation. To help me understand your viewpoint, could you explain in simple language why government spending or policy is the only source and cause of inflation? Please correct me if that's an incorrect interpretation of your statements.

Going by what I see as an individual, there are lots of things happening around me that drive prices up that don't have any strong relationship to my government's policy (e.g. bird flu raising poultry prices). I also don't understand how this can be the case simultaneously across multiple governments around the world.

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

#287

Post by kelnos »

ta8645 wrote: post #164
LetsGetTechnicl wrote: post #97

What is being to address the price gouging by companies? Oil and gas companies are seeing record profits, how can it be just inflation that costs are going up?

How exactly can a company price-gouge in a free market? First, nobody is compelled to buy anything from them. Second, anyone else is allowed to become a supplier, and easily make a fortune by offering a cheaper price. And the only thing that prevents the above from being true, is oppressive government policies that undermine the freemarket, which are sold to the people as "for their protection".

> How exactly can a company price-gouge in a free market?

We don't have a free market.

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

#288

Post by standardUser »

8note wrote: post #212
standardUser wrote: post #60

Earlier quoted context omitted.

Raising taxes on the wealthy could offset any changes to the money supply caused by a slightly more generous welfare state. An obvious solution.

That's unlikely to reduce demand though. If the inflation is trigger by a lack of supply for things poor people want, taxing the rich won't change anything

I agree, but most people like to pretend inflation is only caused by increases to the money supply.

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

#289

Post by standardUser »

al_mandi wrote: post #274
standardUser wrote: post #60

Earlier quoted context omitted.

Raising taxes on the wealthy could offset any changes to the money supply caused by a slightly more generous welfare state. An obvious solution.

Who are the wealthy in your view? Anyone making more than N amount? Or worth more than M amount? And what's that amount?

Only three leading questions? Go on, ask a few more. Or feel free to make a point.

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

#290

Post by mrep »

ClumsyPilot wrote: post #250
kelnos wrote: post #220

Earlier quoted context omitted.

> Building equity instead of paying rent is a good thing That depends heavily on your goals. I hear this a lot, but it always reads to me like people think equity just magically happens when you buy a home (with a mortgage). No, you have to put money into it monthly, and a portion of that goes to pay of principal, which builds equity. Whether or not putting that money into a large, fixed, illiquid asset (versus stock…

Mortgage is the only type of leverage that an average Joe can get cheaply. Any attempt at getting a 'normal' loan will be met with insane interest rate. That's the main reason why housing market is what it is.

What? You can get get cheapish credit for just about any asset as long is it secured by something whether that be a house, car, boat, rv... What do you consider a 'normal' loan? Unsecured ones?
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