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

The Fed plans to sharply boost unemployment

cbsnews.com

Post reply on HN
Print view View original

121–130 of 227 posts

Re: The Fed plans to sharply boost unemployment

#121

Post by vsareto »

koheripbal wrote: post #57
fxtentacle wrote: post #2

"With an additional million or two people out of work, the newly unemployed and their families would sharply cut back on spending, while for most people who are still working, wage growth would flatline. When companies assume their labor costs are unlikely to rise, the theory goes, they will stop hiking prices. That, in turn, slows the growth in prices." That seems like a pretty whacky theory to me because it assumes…

Supply-Demand pricing is probably one of the most well studies aspects of modern economics. There is a range of prices between the underlying costs+overhead to the price point where demand drops off. In that range, several factors influence where a company sets its price. In a case where a company produces a unique product on the market, then it will price in the higher end of the range where demand drops off. On the…

Shrinkflation is very real and illustrates that companies still have some agency based on profit/greed in determining prices.

Re: The Fed plans to sharply boost unemployment

#122

Post by cj »

slenk wrote: post #115
starkd wrote: post #96

Earlier quoted context omitted.

Killing off the zombie companies will drive unemployment rate higher. Good in the longer term, but it won't come without a cost. That's the price we pay for such an extended period of cheap credit.

Zombie company to me sounds like a shell company with one or two people - that is not going to spike unemployment. Unless I don't understand what a zombie company is

Based on context, I’m guessing they mean companies that are “Alive” when they should be “Dead”

For example, many public company SPACs, many highly funded VC startups, and a vast variety of other companies that employee hundreds / thousands of people without ever having made a profit (and worse, many of them with negative gross margins - meaning even if they trimmed operations to barebones they still wouldn’t be profitable)

These sort of companies proliferate when VCs and investors run out of high quality companies to put their cash into. Which tends to happen when money is “cheap” (which is another way of saying “when interest rates are extremely low”)

Re: The Fed plans to sharply boost unemployment

#123

Post by theknocker »

yuan43 wrote: post #89

Zero direct evidence for the title's claim was provided in the article. All the Fed is doing is to normalize interest rates. Deeply negative real yields (5% or more) are aberrations that history has shown to ultimately lead to catastrophe. Yet talking head and Dem Senator alike are treating rate normalization as financial Armageddon. Somebody tell me how at the very least a 0% real yield on cash is going to kill the…

No post body was provided.

Re: The Fed plans to sharply boost unemployment

#124

Post by givemeethekeys »

MonkeyMalarky wrote: post #58
jmoak3 wrote: post #31

Earlier quoted context omitted.

Wages are too high, because our entire economy is built on the backs of available race to the bottom international labor. Demographics and the security situation is changing this, and the establishment (for better and worse) is absolutely freaking out. The world as we have lived it the past 30 years cannot exist if people doing labor can command a decent wage by USA standards, we’re going to have to recalibrate for a…

That's why you import labour en mass, pay them less and kick them out when you're done with them. At least that seems to be my country's solution? Literally a permanent underclass of temporary foreign workers propping up parts of the economy.

If by your country you mean, Singapore, then yes. It works because foreign exchange is likely in Singapore's favor. People who come can be indentured servants and help out a lot of people back home. At some point though, the tide begins to turn and you have to find new sources of cheap labor. But, what happens when the sources run dry?

Re: The Fed plans to sharply boost unemployment

#125

Post by echelon »

BlargMcLarg wrote: post #116
echelon wrote: post #87

Earlier quoted context omitted.

Some of those on /r/antiwork seem to expect to build careers from McJobs and Starbucks. Instead of seeing these as part time jobs for high school and college students, their expectations are that these jobs can support an apartment rent in a big city without roommates. These types of complaints seem irrational or misguided. Many of their complaints do seem grounded in truth, however. America's low hanging fruit blue…

Blue collar shortage in a non-US area. Here, you're not getting the big bucks until you have quite a few years underneath your belt. Additionally, you'll have to be self-employed. That's what people are complaining about. The hurdles are higher and more frequent than before. It's still there, but having your first home at 35 is vastly different from having it at 25. My friend group is filled with people privileged en…

What's the fix for this?

America won't be regaining its 1940's unilateral industrial superpower status again.

Do we just say that the Silent and Boomer generations were a fluke?

Do politicians that promise to redistribute wealth get elected?

Does automation really save us? Or lead to greater inequality?

Re: The Fed plans to sharply boost unemployment

#126

Post by votepaunchy »

VictorPath wrote: post #108
yuan43 wrote: post #89

Zero direct evidence for the title's claim was provided in the article. All the Fed is doing is to normalize interest rates. Deeply negative real yields (5% or more) are aberrations that history has shown to ultimately lead to catastrophe. Yet talking head and Dem Senator alike are treating rate normalization as financial Armageddon. Somebody tell me how at the very least a 0% real yield on cash is going to kill the…

> the central bank projected its benchmark rate hitting 4.4% by the end of the year > "There will very likely be some softening of labor market conditions," Powell said > The Fed forecasts the unemployment rate to rise to 4.4% next year, from 3.7% today The fed changed its rate, forecast a change in unemployment due to that and said there was a "softening of labor market conditions". I guess that counts as "zero dire…

>> The Fed forecasts the unemployment rate to rise to 4.4% next year, from 3.7% today

> The fed changed its rate, forecast a change in unemployment due to that and said there was a "softening of labor market conditions". I guess that counts as "zero direct evidence" in your book for fed intentions.

The headline says “sharply boost”.

Re: The Fed plans to sharply boost unemployment

#127

Post by PaulDavisThe1st »

NeverFade wrote: post #69
Aunche wrote: post #60

Earlier quoted context omitted.

>The steady chorus of claims that wages are too high strikes me as consent-manufacturing by capital. It's the opposite actually. The Fed is raising interest rates to contract the money supply, which will temper inflation. They acknowledge the negative impacts it will have to unemployment and wages, but if you read their press releases, you can tell it's clearly not their intent. Meanwhile, the MSM is spinning it as t…

It's easy to scapegoat the Fed for the ongoing recession and inevitable layoffs.

What recession? Measured with what metrics?

Re: The Fed plans to sharply boost unemployment

#128

Post by PaulDavisThe1st »

nilsbunger wrote: post #66

Inflation is high because demand exceeds supply. You have to reduce demand to match the available supply. Interest rates are the main tool to do that. This is true even if the ultimate cause is supply chain issues.

Inflation is high because corporations have increased consumer prices well above their own increases in costs.

There's just as much evidence for this claim as "inflation is demand > supply" or "inflation is M2".

Re: The Fed plans to sharply boost unemployment

#129

Post by PaulDavisThe1st »

econ101time wrote: post #15
fxtentacle wrote: post #2

"With an additional million or two people out of work, the newly unemployed and their families would sharply cut back on spending, while for most people who are still working, wage growth would flatline. When companies assume their labor costs are unlikely to rise, the theory goes, they will stop hiking prices. That, in turn, slows the growth in prices." That seems like a pretty whacky theory to me because it assumes…

> That seems like a pretty whacky theory to me because it assumes that companies only increase prices when forced to do so, and not just because they can. I see people post things like this, and I'm forced to conclude that you don't understand supply and demand. Edit: Sure, monopoly pricing is real. But blaming monopoly pricing for inflation is dubious. You'd need an account of 1) how the goods in the CPI basket are…

Do you think that Robert Reich also doesn't understand supply and demand?

https://www.theguardian.com/commentisfree/2022/sep/25/inflat...

Re: The Fed plans to sharply boost unemployment

#130

Post by pclmulqdq »

NeverFade wrote: post #69
Aunche wrote: post #60

Earlier quoted context omitted.

>The steady chorus of claims that wages are too high strikes me as consent-manufacturing by capital. It's the opposite actually. The Fed is raising interest rates to contract the money supply, which will temper inflation. They acknowledge the negative impacts it will have to unemployment and wages, but if you read their press releases, you can tell it's clearly not their intent. Meanwhile, the MSM is spinning it as t…

It's easy to scapegoat the Fed for the ongoing recession and inevitable layoffs.

You could make a decent argument that they have actually caused this recession. 75 bps rate hikes immediately after a crisis where they slam rates to 0 and do a ton of QE does not sound like a particularly responsible form of monetary policy.
Post reply on HN