Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Federal Reserve to increase interest rates by 75 basis points for the third time

federalreserve.gov

Post reply on HN
Print view View original

151–160 of 236 posts

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#151

Post by spaceman_2020 »

Third straight hike and core CPI is going up at more than half a percentage point monthly.

CPI numbers, as reported, are very misleading. Nominally, it looks like its slowing down or plateauing (from 9% to 8.5%), but that's because the headlines always report the YoY number. The base effect is going to skew this towards a "inflation slowing down" narrative anyway.

The MoM figures are far more relevant and they're not looking good at all, especially since its now moving towards the sticky kind of inflation (services, rent).

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#152

Post by slaw »

JumpCrisscross wrote: post #126
slaw wrote: post #120

Earlier quoted context omitted.

Fed doesn't have to fight with inflation if it not creating one. So Fed's balance sheet could be as well $0

> Fed doesn't have to fight with inflation if it not creating one. So Fed's balance sheet could be as well $0 Inflation has multiple causes. Fixed-money economies experienced inflation and deflation throughout antiquity.

Still, Fed is responsible for 90% of inflation.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#153

Post by mattmoose21 »

WalterBright wrote: post #140
nine_zeros wrote: post #128

Earlier quoted context omitted.

> The Fed was forced to cut rates to zero for a long time because fiscal policy was not stimulative enough. It's not just fiscal stimulus but "how" the stimulus was applied. It's not like the government isn't spending enough. It is spending. Until recently, all the spending went on tax credits and military. What we need is fiscal stimulus in industries of the future. Only the current administration gets it and made i…

Government subsidy tends to attract a lot of malinvestment in order to get those dollars. For example, in Biden's bill, there's a subsidy for so-called "smart" glass that darkens when an electric current is applied. This is supposed to reduce solar input from windows by 20%. Of course, if this mattered, people would have already installed window blinds, which are cheap and easy. External eyebrows and eaves also work.…

Do you have a source for the smart glass subsidy? I haven't been able to find anything that mentions it.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#154

Post by spaceman_2020 »

arberx wrote: post #34
ferdowsi wrote: post #16

Earlier quoted context omitted.

A substantial chunk of the tech industry are speculative zombie companies that are built on the edifice of zero interest.

Since tech companies use other tech company's products this implies the tech industry is a speculative bubble.

Valuations are definitely in a bubble

Most of these unicorns simply can't turn a profit with their current cost structures. And even if they do, the profits will be so small that the valuations will simply not be justifiable.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#155

Post by ferdowsi »

jayski wrote: post #136
plandis wrote: post #45

Earlier quoted context omitted.

Good time to buy if you’re wealthy with cash on hand.

can you elaborate a little more?

I'd disagree that it's a good time to buy now, as prices are still high. But if prices start to decline substantially it will be a good opportunity, as you can refinance a high rate mortgage during low rate periods (like many people did in the last few years)

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#156

Post by marcusverus »

HelloMcFly wrote: post #93
sbaiddn wrote: post #38

Earlier quoted context omitted.

They've also been stagnant since the 90s

This is an honest question borne of ignorance: in what ways does that matter? I'm sure it does, but people over there are employed, they have a larger safety net, more accessible healthcare access AND better outcomes, seemingly less crime, education seems to be something of a wash (though there is so much variability in the US it's almost a waste of time to do a nation-to-nation comparison). I only know the major bul…

This seems like a very hand-wavy comparison. By the numbers, the difference is enormous--Japan's average household net-adjusted disposable income per capita is $28,900. For direct comparison, the USA's average is 77% higher than Japan's at $51,100. Japan's average is even below the OECD average (which includes a mix of leading Western countries and less developed countries like Costa Rica and and Hungary) by 5%.

[0]https://www.oecdbetterlifeindex.org/countries/japan/ [1]https://www.oecdbetterlifeindex.org/countries/united-states/

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#157

Post by spaceman_2020 »

HelloMcFly wrote: post #93
sbaiddn wrote: post #38

Earlier quoted context omitted.

They've also been stagnant since the 90s

This is an honest question borne of ignorance: in what ways does that matter? I'm sure it does, but people over there are employed, they have a larger safety net, more accessible healthcare access AND better outcomes, seemingly less crime, education seems to be something of a wash (though there is so much variability in the US it's almost a waste of time to do a nation-to-nation comparison). I only know the major bul…

It doesn't, really. A society that plateaus at a high standard of living is a very good end result.

However, the world isn't equal, nor is the wealth equally distributed. If all of the rich, developed world was to slow down and become stagnant like Japan, where will the demand for goods and commodities made by the developing world come from?

Huge western demand helped lift hundreds of millions in China and India out of poverty, for instance.

Stagnant growth might be good for an individual country, but it can doom developing countries to similar stagnancy.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#158

Post by nine_zeros »

JumpCrisscross wrote: post #148
nine_zeros wrote: post #144

Earlier quoted context omitted.

Very interesting. So historically, it appears that the FED balance sheet reserves is 25% of GDP. I wonder what it is for other countries. Especially rapidly developing ones.

> wonder what it is for other countries It varies pretty widely. I don't think there is good macroeconomic theory for its correct value, or even if there is a correct value. https://tradingeconomics.com/country-list/central-bank-asset...

It doesn't seem 100% accurate (see: UK balance sheet). But the pattern is evident. The older/more developed an economy, the larger the central bank balance sheet.

Which also seems like a correct line of thinking to me. In younger developing countries, more money is created by individuals/businesses via credit. Central banks don't need a large balance sheet to encourage more lending, banks already have a high demand for loans and have very high interest rates for credit.

In older/developed countries, less money is created by individuals/businesses via credit. So central banks are forced to increase the size of their balance sheet which allows banks to offer more money for lending by reducing the interest rates because without low interest rates, there will be no credit growth.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#159

Post by dougmwne »

vsareto wrote: post #81
dougmwne wrote: post #13

Given that mortgage rates recently rose past 6%, seems to me this latest rate increase is going to put strong pressure on house prices. The rate has a huge impact on the monthly payment required to service a loan, more so than is immediately apparent without doing the math.

Housing demand is supported by investors who probably never pay interest on the homes they buy, so I doubt you will see much decrease. I don't think you can really control home prices with interest rates any more.

It seems there are still lots of mortgages issued in the US. Prices are set at the margin, so small decreases in demand can have a big impact on price. Looking at the data, I don’t see evidence that no one loans money to buy houses anymore.

https://www.statista.com/statistics/205937/us-mortgage-origi...

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#160

Post by adgjlsfhk1 »

WalterBright wrote: post #140
nine_zeros wrote: post #128

Earlier quoted context omitted.

> The Fed was forced to cut rates to zero for a long time because fiscal policy was not stimulative enough. It's not just fiscal stimulus but "how" the stimulus was applied. It's not like the government isn't spending enough. It is spending. Until recently, all the spending went on tax credits and military. What we need is fiscal stimulus in industries of the future. Only the current administration gets it and made i…

Government subsidy tends to attract a lot of malinvestment in order to get those dollars. For example, in Biden's bill, there's a subsidy for so-called "smart" glass that darkens when an electric current is applied. This is supposed to reduce solar input from windows by 20%. Of course, if this mattered, people would have already installed window blinds, which are cheap and easy. External eyebrows and eaves also work.…

One advantage of smart glass is you can get much better wavelength control. For example, you can reflect 90% of infrared light while letting through the visible light. This is really hard to do with a curtain.
Post reply on HN