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'Is monetary policy even working?'

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Re: 'Is monetary policy even working?'

#21

Post by nradov »

A4ET8a8uTh0 wrote: post #14
alephnerd wrote: post #13

Earlier quoted context omitted.

Foreign Aid for Ukraine is overstated. It's just $5bil, which is a drop in the bucket for even state governments in the US. If that's the cost to fight a proxy war, it's fairly cheap. That's how much it costs to build a highway from Pittsburgh to Morgantown (Mon–Fayette Expressway). > managed to pass some corporate stimulus This is the key point, and a critical one at that. That corporate stimulus suddenly made swath…

You know.. if I could only get a small fraction of that $5b instead of contributing to it being send to everyone but me, I would be a happier man. edit: I will make a less convoluted statement. Ideally, the amount of that small 5b donation abroad would be zero.

You probably wouldn't be happier in the long run if Russia succeeds in their goal of reconquering much of Eastern Europe. That will make the entire world poorer and more violent. A few billion dollars is a cheap price to contain Russian expansionism.

Re: 'Is monetary policy even working?'

#22

Post by [deleted] »

alephnerd wrote: post #3

The core point from the article (because no one will actually read it): "Higher interest rates have proved a lot less destructive than investors feared in 2022, when the world’s central banks embarked on one of the most aggressive episodes of monetary tightening in history. Nothing has “broken”, contrary to the prevailing view two years ago; and this has even sparked a lively debate about why mainstream macro exagger…

[deleted]

Re: 'Is monetary policy even working?'

#23

Post by smallmancontrov »

A4ET8a8uTh0 wrote: post #14
alephnerd wrote: post #13

Earlier quoted context omitted.

Foreign Aid for Ukraine is overstated. It's just $5bil, which is a drop in the bucket for even state governments in the US. If that's the cost to fight a proxy war, it's fairly cheap. That's how much it costs to build a highway from Pittsburgh to Morgantown (Mon–Fayette Expressway). > managed to pass some corporate stimulus This is the key point, and a critical one at that. That corporate stimulus suddenly made swath…

You know.. if I could only get a small fraction of that $5b instead of contributing to it being send to everyone but me, I would be a happier man. edit: I will make a less convoluted statement. Ideally, the amount of that small 5b donation abroad would be zero.

Can you deliver a credible reduction in the amount of future money we will have to spend to contain Putin's territorial ambitions? No? In that case I think the $5b is best spent in Ukraine.

Re: 'Is monetary policy even working?'

#24

Post by [deleted] »

AnimalMuppet wrote: post #7
alephnerd wrote: post #3

The core point from the article (because no one will actually read it): "Higher interest rates have proved a lot less destructive than investors feared in 2022, when the world’s central banks embarked on one of the most aggressive episodes of monetary tightening in history. Nothing has “broken”, contrary to the prevailing view two years ago; and this has even sparked a lively debate about why mainstream macro exagger…

This wasn't "one of the most aggressive episodes". This was nothing compared to Volcker in 1979-1981. And the fact that nothing has broken indicates that they didn't go overly aggressive. They stopped inflation from getting worse without driving the country into a recession. That's a pretty decent balancing act.

[deleted]

Re: 'Is monetary policy even working?'

#26

Post by MuffinFlavored »

alecsm wrote: post #5

What bothers me is that in Europe it was expected to affect the real estate prices. The higher the interest, the lower the prices, which sounds logical but...the prices kept increasing. So what's going to happen when Lagarde decides to lower them? The demand is way to high and the offer is almost non existent. And it seems that it didn't affect the inflation either. Bad years for everybody who's not getting a 10% rai…

> The higher the interest, the lower the prices, which sounds logical but...the prices kept increasing.

This is a side effect of "demand" I think.

Higher interest rates increase mortgage/financing costs. This is supposed to "destroy" demand.

Except, there's so much demand (and so little supply) that it didn't, and we're getting the worst of both worlds.

In the US: A $500k 3/2 house at 2.75% 30-year fixed in 2020 is now $750k at 6.75%

It "shouldn't" have played out that way but my theory is

Home buyers from before ~2015 (random guess) are "up so much" in equity from this quiet "real estate inflation/demand appreciation boom" that they don't care to "overpay" $200k compared to what they would've paid 4 years ago because they were "gifted/given" $200k+ in equity out of the sky. They're just moving the money from one property to the next.

Re: 'Is monetary policy even working?'

#27

Post by bequanna »

alephnerd wrote: post #13
A4ET8a8uTh0 wrote: post #10

Earlier quoted context omitted.

They did slow it down ( including the form of couple banks going under and Summers begging for a bailout ). It just so happens that federal government also managed to pass some corporate stimulus in the form of 'green new deal' or whatever they ended up calling it and war of Ukraine, which helps domestic warmachine ( billions from misnamed foreign aid ). edit: Oh, and the Summeers did manage to scare enough people to…

Foreign Aid for Ukraine is overstated. It's just $5bil, which is a drop in the bucket for even state governments in the US. If that's the cost to fight a proxy war, it's fairly cheap. That's how much it costs to build a highway from Pittsburgh to Morgantown (Mon–Fayette Expressway). > managed to pass some corporate stimulus This is the key point, and a critical one at that. That corporate stimulus suddenly made swath…

Umm, you’re off by an order of magnitude.

We could run several states for a year with what we’ve sent them.

$75 billion: https://www.cfr.org/article/how-much-aid-has-us-sent-ukraine...

Re: 'Is monetary policy even working?'

#28

Post by dragonwriter »

nradov wrote: post #21
A4ET8a8uTh0 wrote: post #14

Earlier quoted context omitted.

You know.. if I could only get a small fraction of that $5b instead of contributing to it being send to everyone but me, I would be a happier man. edit: I will make a less convoluted statement. Ideally, the amount of that small 5b donation abroad would be zero.

You probably wouldn't be happier in the long run if Russia succeeds in their goal of reconquering much of Eastern Europe. That will make the entire world poorer and more violent. A few billion dollars is a cheap price to contain Russian expansionism.

What would have been really cheaper is if when Russia told NATO not to offer MAPs to Ukraine and Georgia in 2008, claiming that doing so would lead to regional instability while refraining would support peace, NATO had thanked them for their input and done the opposite, rather than complying.

Over a decade of unchecked Russian aggression before the 2022 Russian escalation in Ukraine made constraining that aggression more expensive, but still less so than it would be with additional Western appeasement.

Re: 'Is monetary policy even working?'

#29

Post by randomdata »

alephnerd wrote: post #3

The core point from the article (because no one will actually read it): "Higher interest rates have proved a lot less destructive than investors feared in 2022, when the world’s central banks embarked on one of the most aggressive episodes of monetary tightening in history. Nothing has “broken”, contrary to the prevailing view two years ago; and this has even sparked a lively debate about why mainstream macro exagger…

> a lot of people assumed (high interest rates = slowing economy)

A fair assumption. It is extremely likely that the economy is slower than it would have been if interest rates remained low. Things were starting to get extremely hot – which is why we saw higher interest rates arrive in reaction.

There was a lot of concern floating around that rates would overcorrect (which, to be fair, may still prove to be the case – it is still early days), leading to an economy slowing more than needed, but the so-called "soft landing" was always the goal. Explicitly so. The status quo is in quite in line with what we were hoping to see come out of the higher rates, slowing the economy just enough, but not too much.

Re: 'Is monetary policy even working?'

#30

Post by [deleted] »

alephnerd wrote: post #13
A4ET8a8uTh0 wrote: post #10

Earlier quoted context omitted.

They did slow it down ( including the form of couple banks going under and Summers begging for a bailout ). It just so happens that federal government also managed to pass some corporate stimulus in the form of 'green new deal' or whatever they ended up calling it and war of Ukraine, which helps domestic warmachine ( billions from misnamed foreign aid ). edit: Oh, and the Summeers did manage to scare enough people to…

Foreign Aid for Ukraine is overstated. It's just $5bil, which is a drop in the bucket for even state governments in the US. If that's the cost to fight a proxy war, it's fairly cheap. That's how much it costs to build a highway from Pittsburgh to Morgantown (Mon–Fayette Expressway). > managed to pass some corporate stimulus This is the key point, and a critical one at that. That corporate stimulus suddenly made swath…

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