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Fed's Kashkari says 'now is the time to start slowly moving' rates up

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Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#51

Post by wr0ng0 »

huntertwo wrote: post #16
Molitor5901 wrote: post #3

Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system? I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but…

Inflation is bad, we have high inflation due to the energy crisis, the treatment for high inflation is increasing interest rates.

[dead]

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#52

Post by wr0ng0 »

Molitor5901 wrote: post #3

Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system? I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but…

[dead]

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#53

Post by techdmn »

MrDrone wrote: post #11
Molitor5901 wrote: post #3

Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system? I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but…

> I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but for theirs. Because that is what's happening. Our economy is fractured after years of catering to the wealthy at the expense of the working class (anyone who finances their life via their labor.)

Yes. If costs are up AND profits are up or steady, it implies that the squeeze is being felt by consumers rather than by the large companies seeing profits. To me that implies the issue is a lack of competition, itself largely due to failure to enforce existing antitrust laws. It's hard to fix monopolization with interest rates.

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#54

Post by yndoendo »

techdmn wrote: post #53
MrDrone wrote: post #11

Earlier quoted context omitted.

> I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but for theirs. Because that is what's happening. Our economy is fractured after years of catering to the wealthy at the expense of the working class (anyone who finances their life via their labor.)

Yes. If costs are up AND profits are up or steady, it implies that the squeeze is being felt by consumers rather than by the large companies seeing profits. To me that implies the issue is a lack of competition, itself largely due to failure to enforce existing antitrust laws. It's hard to fix monopolization with interest rates.

Part of the _profits are up_ is synthetic while the squeeze is real.

Tariffs are one of the culprits. The invalid taxes people paid are not going back to them but to the companies that sold the products and services.

Price of goods are not going down after tariffs were invalidated. Majority of companies are keeping the same price point. It is extremely rare for companies to lower it. [0]

Rich keep getting richer and everyone else keeps getting poorer.

[0] https://www.tomshardware.com/pc-components/cooling/pc-coolin...

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#55

Post by prewett »

brcmthrowaway wrote: post #49
LazyMans wrote: post #17

Earlier quoted context omitted.

In comparison to what? Buyers usually want this to be lower. Historically quite low still.

I'm saying renting is way cheaper than buying in most metros

Whether that is true depends on what kind of place you want to buy and the amount of the loan. In Boston's north shore, the only available apartments are triple-deckers where you can hear your neighbors, for $2500/month, while houses are something like $800k; I consider renting to be a poor value here. In Cambridge, MA rent is higher, an average of $3500/month and you can choose between a commercial apartment and triple-deckers. An actual house is something like $2 million, although if you are okay buying an apartment or the top floors of a triple-decker, maybe you could get one for $1 million. I'm not interested in buying somewhere where I can hear my neighbors talking, so triple-deckers are out. Here rent is a little better deal (except that living in Cambridge is a bad deal). In the far Chicago suburbs (admittedly not "most metros"), on the other hand, rent for a decent apartment is close to the price of a monthly mortgage payment. And if you can pay most of the purchase price (or the price is cheaper), buying looks better, because you have less interest.

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#56

Post by all2 »

webdood90 wrote: post #26
all2 wrote: post #20

Earlier quoted context omitted.

My parents bought their house when rates were about 12-14%... "High" is relative.

Lazy, regurgitated take. House prices then were also 1/10 of what they are today.

This is more complex than "houses cost less then".

Given a fiat currency and fractional reserve banking, the dollar floats in value like a leaf on the wind.

Houses cost less, people made proportionally less (inflation is a consideration here), and interest rates still bite you in the butt over the long haul, regardless of your monetary baseline.

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#57

Post by treebeard901 »

thijson wrote: post #40
IAmGraydon wrote: post #34

Earlier quoted context omitted.

What happens next is that US Treasury yields go to the moon, making previously bought treasuries nearly worthless. Most bank deposits in the US are instantly used to buy treasuries, so severe devaluation of those less-than-mature bonds on the secondary markets means that money held by banks is not really there. Should there be a larger than average number of people making withdrawals, bonds would be dumped on the sec…

Isn't that when the Fed stepped into the reverse repo market in order to allow the banks to extend and pretend?

The repo market angle is an important one. Not sure if this has been as widely reported but they want to expand the repo market to directly support the yen intervention: https://www.cnbc.com/amp/2026/08/03/bessent-fed-japan-yen-fi...

What I find more interesting though is a recent comment by the Treasury Secretary that deflation in Japan has "stopped". If that is true, then doesn't the yen carry trade unwind automatically? Kicking off the above cycle in the U.S.? It's only a matter of time, hence the need to expand the repo market as soon as possible.

But this presents so many more problems, because that repo market is meant to be used for short term funding, not refunding foreign creditors over long term debt. It also implies that the normal mechanisms to provide liquidity to Japanese investors and institutions who pull money out of the U.S. is not exactly solvent to the point to be able to do so. Hence, again, the need to expand the repo market.

So now, depending on how fast the yen carry trade unwinds, and how fast money moves back to Japan, combined with the fact they will likely stop funding further issuance of debt, all leads to a very bleak picture.

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#58

Post by IAmGraydon »

staticman2 wrote: post #50
IAmGraydon wrote: post #34

Earlier quoted context omitted.

What happens next is that US Treasury yields go to the moon, making previously bought treasuries nearly worthless. Most bank deposits in the US are instantly used to buy treasuries, so severe devaluation of those less-than-mature bonds on the secondary markets means that money held by banks is not really there. Should there be a larger than average number of people making withdrawals, bonds would be dumped on the sec…

You write as if nobody has ever raised interest rates before and this is some unprecedented event that no bank could be prepared for.

I’m not talking about raising interest rates. I’m talking about uncontrollable increases in treasury yields due to the biggest holder of US treasuries selling them off.

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#59

Post by [deleted] »

IAmGraydon wrote: post #58
staticman2 wrote: post #50

Earlier quoted context omitted.

You write as if nobody has ever raised interest rates before and this is some unprecedented event that no bank could be prepared for.

I’m not talking about raising interest rates. I’m talking about uncontrollable increases in treasury yields due to the biggest holder of US treasuries selling them off.

[deleted]

Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up

#60

Post by bigtex88 »

LazyMans wrote: post #17
brcmthrowaway wrote: post #6

I feel the mortgage rates are a bit too high now. Anyone else?

In comparison to what? Buyers usually want this to be lower. Historically quite low still.

It doesn't matter if the rate is "historically low". The average monthly cost of housing is at the most unaffordable it's ever been.
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