Fed hikes rates as inflation worries push up bond yields • Hacker News Board

Re: Fed hikes rates as inflation worries push up bond yields

#161

Post by smackeyacky » Wed, Sep 16, 2026, 10:05 PM UTC

quickthrowman wrote: post #153

carefree-bob wrote: post #147

Earlier quoted context omitted.

A 0.25% rate hike is going to cause a recession? How, exactly, would that happen? Honestly it seems your post is heavy on politics but I am not seeing an actual argument anywhere in there. My canned response to people being upset at various policies or ratios, whether it is inflation, or bond yields, or market movements, is to ask them what they think the correct value should be. Stop complaining about the movement a…

> A 0.25% rate hike is going to cause a recession? How, exactly, would that happen? I didn’t see anyone claim a single 25 bps hike will cause a recession. The 30 day FFR futures (/ZQ) curve is pricing in an 80% chance of two more hikes by the March 2027 meeting and a 70% chance of 3 or 4 hikes by Sept 2027’s meeting. So, 50 bps predicted in the next 6 months and 25-50 bps more within one year. Source is the CME Fedwa…

I don’t understand why central banks seem to use such a blunt object like interest rates for every inflation problem. It would make sense to rise if the cause of inflation was accelerated economic activity, not price rises due to supply restrictions. How does hurting mortgage holders even more help with not starting wars? All it can do is have a double dampening effect on the economy as people pull back their discretionary spending.

Using interest rates for this kind of inflation is guaranteed to cause a recession.

Re: Fed hikes rates as inflation worries push up bond yields

#162

Post by ProfessorLayton » Wed, Sep 16, 2026, 10:10 PM UTC

carefree-bob wrote: post #159

ProfessorLayton wrote: post #156

Earlier quoted context omitted.

>My canned response to people being upset at various policies or ratios, whether it is inflation, or bond yields, or market movements, is to ask them what they think the correct value should be. Maybe find a better canned response? US debt has never been higher, and because of this even rates that are below historic highs can cause economic chaos.

Did you ever think that the reason why US debt is so high is because rates are so low and borrowing is so cheap? Higher rates are needed, and are really the only mechanism to reduce borrowing. We are seeing asset bubbles across the board in this economy, in housing, in equities, auto loans, etc. It turns out that if you make something cheap, people buy more of it, and that includes the government.

I agree with you, and this is much better than your previous "canned response". However, this goes back to my earlier point that even historically low rates can cause economic chaos if the debt is high enough.

Re: Fed hikes rates as inflation worries push up bond yields

#163

Post by carefree-bob » Wed, Sep 16, 2026, 10:12 PM UTC

smackeyacky wrote: post #161

quickthrowman wrote: post #153

Earlier quoted context omitted.

> A 0.25% rate hike is going to cause a recession? How, exactly, would that happen? I didn’t see anyone claim a single 25 bps hike will cause a recession. The 30 day FFR futures (/ZQ) curve is pricing in an 80% chance of two more hikes by the March 2027 meeting and a 70% chance of 3 or 4 hikes by Sept 2027’s meeting. So, 50 bps predicted in the next 6 months and 25-50 bps more within one year. Source is the CME Fedwa…

I don’t understand why central banks seem to use such a blunt object like interest rates for every inflation problem. It would make sense to rise if the cause of inflation was accelerated economic activity, not price rises due to supply restrictions. How does hurting mortgage holders even more help with not starting wars? All it can do is have a double dampening effect on the economy as people pull back their discret…

Central banks didn't use to do this, in the post-war period up until about 1980, they tried targeting the monetary aggregates like M2.

Unfortunately they discovered that the size of monetary aggregates was outside the control of central banks, these were demand determined by the public's desire for money balances. So all attempts to control the growth of monetary aggregates failed.

Having an inability to control anything else, the central banks turned to the one thing they could control -- overnight interest interest rates, and from that, bond yields more generally. That is the one tool in their toolbox.

Do you think other tools exist?

Re: Fed hikes rates as inflation worries push up bond yields

#164

Post by unified101 » Wed, Sep 16, 2026, 10:22 PM UTC

aftbit wrote: post #152

carefree-bob wrote: post #147

Earlier quoted context omitted.

A 0.25% rate hike is going to cause a recession? How, exactly, would that happen? Honestly it seems your post is heavy on politics but I am not seeing an actual argument anywhere in there. My canned response to people being upset at various policies or ratios, whether it is inflation, or bond yields, or market movements, is to ask them what they think the correct value should be. Stop complaining about the movement a…

I dunno about the politics, but personally I don't think there is a generic "correct" value. The rate describes the state of the world, and the "correct" value is whatever accurately describes the state of the world. There is a separate question though - is that state of the world good or bad for people? Is it better or worse today than it was yesterday? What can we do - collectively - to push it in a direction that…

I personally don't think there's a correct concept of money. Money describes how happy I feel, and the correct money I should have is whatever describes my current mood.

So what can we collective do with money so I feel most happy. This may be the most important question of all to ask.

Re: Fed hikes rates as inflation worries push up bond yields

#165

Post by rayiner » Wed, Sep 16, 2026, 10:26 PM UTC

nemomarx wrote: post #47

rayiner wrote: post #15

Earlier quoted context omitted.

> And the country is run by a broken fool who has no interest or ability to fix any of that. Trump will be gone in three years, but you'll still have an electorate that wants more free stuff while also getting tax cuts. There is zero appetite for fiscal reform in the U.S. The geometric growth rate of U.S. debt has been consistent since 2010 and will remain so when AOC is President: https://usafacts.org/answers/how-mu…

You really really just need to raise taxes. Just find a way to sell that to the public (focus on the rich or large corporations or whatever outgroup you want basically)

Our budget deficit is $2 trillion. To close it, you need to significantly raise taxes on the fattest part of the income curve, which is the top 25%. They have $10 trillion of income. https://taxfoundation.org/data/all/federal/latest-federal-in.... An across the board 200 basis point increase would close the deficit. That would raise their taxes to 38% at the low end to 46% at the high end, which is perfectly fine.

The problem is that the top 25% isn’t an “out group” in either coalition. You have Facebook PMs who vote blue and guys who own a small plumbing company who vote red both making $1 million+ annually and neither wanting their own taxes to go up. Then there are the guys below them looking up. Over 10% of the country will be in the top 1% of earners at some point in their life. So the guys pulling in a few hundred K as a senior engineer or construction manager don’t want their taxes to go up either.

Re: Fed hikes rates as inflation worries push up bond yields

#166

Post by Forgeties79 » Wed, Sep 16, 2026, 10:28 PM UTC

dabinat wrote: post #27

Prediction: this causes a recession in two years, right after a Democrat wins the White House, who will be blamed for it. The economy will turn around after a few years, just in time for a Republican to win and claim they fixed it. This is how Republicans have a reputation for being economically savvy despite actual evidence to the contrary, because the general population doesn’t understand that economics runs on a t…

One of the more baffling things in the most recent version of that cycle was Biden being solely blamed for inflation - in particular the finger pointing over checks exactly like the ones that went out under trump.

Re: Fed hikes rates as inflation worries push up bond yields

#167

Post by smackeyacky » Wed, Sep 16, 2026, 10:28 PM UTC

carefree-bob wrote: post #163

smackeyacky wrote: post #161

Earlier quoted context omitted.

I don’t understand why central banks seem to use such a blunt object like interest rates for every inflation problem. It would make sense to rise if the cause of inflation was accelerated economic activity, not price rises due to supply restrictions. How does hurting mortgage holders even more help with not starting wars? All it can do is have a double dampening effect on the economy as people pull back their discret…

Central banks didn't use to do this, in the post-war period up until about 1980, they tried targeting the monetary aggregates like M2. Unfortunately they discovered that the size of monetary aggregates was outside the control of central banks, these were demand determined by the public's desire for money balances. So all attempts to control the growth of monetary aggregates failed. Having an inability to control anyt…

I don’t think we have a wide enough Overton window when it comes to economic discussions, the neoliberal revolution of the 1970s killed a lot of little levers of economic control in most post social democratic countries. Instead we were promised a new age of free trade and economic liberalism and one single, shiny lever to control the speed of the economy like the governor on a steam train.

Yet here we are 50 years later suffering booms and busts just like before. Nobody seems to want to acknowledge the failure of 50 years of industrialisation destruction that in hindsight was the inevitable outcome of open trade and the retreat of governments.

To answer the question, yes I think there are other options and trade barriers need to be part of that conversation.

Re: Fed hikes rates as inflation worries push up bond yields

#168

Post by throw0101a » Wed, Sep 16, 2026, 10:29 PM UTC

jameslk wrote: post #104

matteoraso wrote: post #97

Earlier quoted context omitted.

And which party controls congress? I'll give you a hint: It's the party that spent decades advocating for irresponsible tax cuts without cutting spending[0]. [0] Yes, I know that the Republicans said that they were going to cut spending to match the tax cuts, but that never ends up happening.

The high inflation since Covid and $40 trillion in debt didn’t happen under one party

> The high inflation since Covid and $40 trillion in debt didn’t happen under one party

Between his first term and his second term to date (2+ more years to go), Trump is responsible for more that one quarter (29%) of US debt (USD 11.6T / 40T):

* https://time.com/article/2026/08/21/national-debt-trump-bide...

There was a bit of a mitigating circumstance of COVID (for Trump and Biden), which caused the debt to jump for many countries as well (and not just the US), but it's not like Trump et co are helping the math along with all the tax cuts and asking for a US$ >1T military budget.

But I would say a large reason why the US is in the fiscal position it is now in is because of Trump and a GOP Congress. (See also tax cuts under Bush 43 and Reagan; Bush 41 raised them a bit.)

Re: Fed hikes rates as inflation worries push up bond yields

#169

Post by what » Wed, Sep 16, 2026, 10:37 PM UTC

smackeyacky wrote: post #161

quickthrowman wrote: post #153

Earlier quoted context omitted.

> A 0.25% rate hike is going to cause a recession? How, exactly, would that happen? I didn’t see anyone claim a single 25 bps hike will cause a recession. The 30 day FFR futures (/ZQ) curve is pricing in an 80% chance of two more hikes by the March 2027 meeting and a 70% chance of 3 or 4 hikes by Sept 2027’s meeting. So, 50 bps predicted in the next 6 months and 25-50 bps more within one year. Source is the CME Fedwa…

I don’t understand why central banks seem to use such a blunt object like interest rates for every inflation problem. It would make sense to rise if the cause of inflation was accelerated economic activity, not price rises due to supply restrictions. How does hurting mortgage holders even more help with not starting wars? All it can do is have a double dampening effect on the economy as people pull back their discret…

> hurting mortgage holders

How does raising rates hurt mortgage holders? They locked in their interest rate when they got the mortgage?

Re: Fed hikes rates as inflation worries push up bond yields

#170

Post by bdangubic » Wed, Sep 16, 2026, 10:37 PM UTC

eej71 wrote: post #75

beej71 wrote: post #53

Earlier quoted context omitted.

I wish they'd lost in 2020, that's for sure.

Hello similarly named account. I basically agree. I don't care for DJT, but I can see how getting his "second term" underway after his first one could have been better. His four years away allowed him to stew and plan and respond.

you stopped mid-sentence mate - “… to stew and plan on how to pillage as much as possible from Americans before he rides off into the sunset”