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

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

#241

Post by Steltek » Thu, Sep 17, 2026, 4:37 PM UTC

jameslk wrote: post #57

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…

Both parties are responsible for the inflation and debt. Fiscal policy is largely driven by congress, not the president

False.

On an earlier HN economic story, someone provided data showing that this is entirely the responsibility of Republican administrations. Going back to Eisenhower, the Deficit has only increased under Republican Presidents and only decreased under Democratic ones (with one exception, Johnson was slightly positive in Deficit increase).

https://news.ycombinator.com/item?id=49714491

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

#242

Post by MarkusQ » Thu, Sep 17, 2026, 4:46 PM UTC

lenerdenator wrote: post #136

ojbyrne wrote: post #28

Earlier quoted context omitted.

"years ago" seems like the wrong criticism. Today's rate is lower than the rates from December 2022-October 2025. That seems like years ago.

Let's say pre-COVID.

That (the ZIRP period) was the anomaly; this is (historically) normal.

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

#243

Post by iamnothere » Thu, Sep 17, 2026, 5:15 PM UTC

tossandthrow wrote: post #239

iamnothere wrote: post #231

Earlier quoted context omitted.

This is true, but I was not assuming extra payments and I don’t know where you got that assumption from. Many people can’t afford to make extra payments given the already high cost of housing and the rising cost of everything else.

My initial complaint was merely that the interest rate it not neutral to buyers.

I guess I was just referring to average buyers, who don’t often pay extra.

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

#244

Post by beej71 » Thu, Sep 17, 2026, 5:20 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.

Yes. Even Trump has talked about this.

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

#245

Post by stymaar » Thu, Sep 17, 2026, 5:41 PM UTC

AnimalMuppet wrote: post #229

stymaar wrote: post #201

Earlier quoted context omitted.

You're getting my point wrong: - I absolutely agree that inflation has nothing at all to do with QE, people who claimed that are just idiots who have a gold fetish. - the problem I'm talking about is the fact that central banks didn't use QE as an opportunity to erase the public debt it bought. At the time it wouldn't have been an issue in any way. But now because inflation is back (due to oil) central banks cannot b…

I see. Well, what you propose might have the minor problem of being illegal for the Fed to do. I'm not perfectly sure (and I don't want to take the time to research this rabbit hole right now), but the Fed is deliberately different from the Treasury. It's not supposed to fund the government by creating money. At a minimum, doing so would have created doubts about the future of the dollar. (Because countries that star…

> see. Well, what you propose might have the minor problem of being illegal for the Fed to do. I'm not perfectly sure (and I don't want to take the time to research this rabbit hole right now), but the Fed is deliberately different from the Treasury. It's not supposed to fund the government by creating money.

That's a good point, but it's not as clear cut. The Fed is supposed to achieve the double goal of full employment and price stability and it's not forbidden to make money out of thin air for that purpose, that's the reason why QE is a thing at all. The exact legality of canceling US debt on its balance sheet isn't clear, but:

1. Before 2014 the Obama admin had the power to pass a law making that explicitly legal.

2. There are examples of theoretically valid instruments to achieve the same goal which have been discussed in the period (see the “1 trillion dollar coin”).

> At a minimum, doing so would have created doubts about the future of the dollar. (Because countries that start having the central bank create money to fund the government often wind up in runaway inflation, with the currency becoming worthless.)

Context matters: doing it now would send a disastrous signal, but back in the early 2010s the challenge was to drive inflation up, which is why the Fed used QE in the first place. If anything such a move could have made QE more efficient to achieve its goal (in addition to helping today's public finances, which I argue would have had a stabilizing effect over the long run).

> As to a 4% target: Given that they were stuck at 0% for the next decade (and tried, and failed, to get up to 2%), why would they move the target to 4%? They already couldn't do what they said, why double their failure?

The IMF paper I linked above is pretty clear about the goal of such a measure, but the idea is to have more leeway in case of crisis, because if your inflation is around 2%, your Fed target rate is around 2% as well and you can only lower it by 2% as a stimulus measure, whereas with a 4% baseline inflation rate you have twice the leverage in terms of target rate.

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

#246

Post by jameslk » Thu, Sep 17, 2026, 6:15 PM UTC

Steltek wrote: post #241

jameslk wrote: post #57

Earlier quoted context omitted.

Both parties are responsible for the inflation and debt. Fiscal policy is largely driven by congress, not the president

False. On an earlier HN economic story, someone provided data showing that this is entirely the responsibility of Republican administrations. Going back to Eisenhower, the Deficit has only increased under Republican Presidents and only decreased under Democratic ones (with one exception, Johnson was slightly positive in Deficit increase). https://news.ycombinator.com/item?id=49714491

A rando on the internet that put together a table of presidents and numbers has no bearing on facts, it falsifies nothing

Presidents cannot pass fiscal policy. They can only sign or veto new fiscal policies or act on existing policies passed by congress that give them fiscal latitude

I’ve explained this many times in this thread. We’ve reached the heat death of useful discussion so this will be my final comment in this thread

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

#247

Post by ThunderSizzle » Thu, Sep 17, 2026, 6:24 PM UTC

StevePrefontain wrote: post #227

ThunderSizzle wrote: post #35

Earlier quoted context omitted.

We'll continue through the depression we've started since 2008. (GDP growth should be closer to 3.5%-5%, but we haven't really escaped sub-2% since 2008) - our GDP has been depressed by at least 1-2% growth since that crisis, and I think a large part of it has been the inflationary cycle we started and never stopped. The wars already put us into too much debt, Obama continued it for 8 years (granted, the deficit slow…

GDP growth is never going to be that high again. GDP growth is just per-capita GDP growth (1-1.5% per year) + population growth (used to be 1%, now is 0% or slightly negative). GDP growth of 1-1.5% will be normal going forward and could even go lower if population decline is at -.5% per year, for example.

I did list GDP growth per capita[0], so that already was accounting for population changes.

Having said that, you are depressingly very correct. A negative population growth will cause the post-2008 depression to continue even longer, and probably more agressively.

[0] https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG?end=2...

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

#248

Post by AnimalMuppet » Thu, Sep 17, 2026, 6:27 PM UTC

stymaar wrote: post #245

AnimalMuppet wrote: post #229

Earlier quoted context omitted.

I see. Well, what you propose might have the minor problem of being illegal for the Fed to do. I'm not perfectly sure (and I don't want to take the time to research this rabbit hole right now), but the Fed is deliberately different from the Treasury. It's not supposed to fund the government by creating money. At a minimum, doing so would have created doubts about the future of the dollar. (Because countries that star…

> see. Well, what you propose might have the minor problem of being illegal for the Fed to do. I'm not perfectly sure (and I don't want to take the time to research this rabbit hole right now), but the Fed is deliberately different from the Treasury. It's not supposed to fund the government by creating money. That's a good point, but it's not as clear cut. The Fed is supposed to achieve the double goal of full employ…

Re 4%: And, as we saw in 2008 and after, being stuck against 0% with no room to move is a really uncomfortable place to be.

Re the "1 trillion dollar coin": I like your wording: "Theoretically valid". I don't like YOLOing theoretically valid moves in a crisis, only to find out a month later that the courts rule them invalid and you have to unwind them.

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

#249

Post by lenkite » Thu, Sep 17, 2026, 6:40 PM UTC

carefree-bob wrote: post #190

esalman wrote: post #189

Earlier quoted context omitted.

I don't think numbers matter here. Bond prices shooting up is a result of market losing trust in US, or it's ability to not default. Dollar is famous backed by $700T military. But the world has seen how it failed to secure a strait. The current US government has broken all kind of promises. I want to highlight two in particular - free trade and immigration. World economy has benefited for decades on the promises of f…

The dollar is not "backed" by a military. China has a huge military and no one uses the Yuan for third party trade. Why not? Because China does not run trade deficits that allow third parties to acquire the Yuan in the first place, it does not have open capital markets that allow third parties to store their surpluses in Yuan, and it does not have the investor protections that give investors confidence that they can…

The dollar is most certainly backed by military of the Corporate States. This is eminently observable to the rest of the world, who tend to get "regime changed" when the talk comes about not using the USD.

The leaked, then, declassified emails about Gaddafi and how his "Gold Dinar" was considered a threat really opens your eyes on why the Corporate States maintains a very big stick to hit anyone they don't like in the world and most especially nations who were foolish enough to disarm, stupidly trusting the Corporate States.

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

#250

Post by stymaar » Thu, Sep 17, 2026, 6:55 PM UTC

AnimalMuppet wrote: post #248

stymaar wrote: post #245

Earlier quoted context omitted.

> see. Well, what you propose might have the minor problem of being illegal for the Fed to do. I'm not perfectly sure (and I don't want to take the time to research this rabbit hole right now), but the Fed is deliberately different from the Treasury. It's not supposed to fund the government by creating money. That's a good point, but it's not as clear cut. The Fed is supposed to achieve the double goal of full employ…

Re 4%: And, as we saw in 2008 and after, being stuck against 0% with no room to move is a really uncomfortable place to be. Re the "1 trillion dollar coin": I like your wording: "Theoretically valid". I don't like YOLOing theoretically valid moves in a crisis, only to find out a month later that the courts rule them invalid and you have to unwind them.

> I don't like YOLOing theoretically valid moves […], only to find out a month later that the courts rule them invalid and you have to unwind them.

I agree, which is why I put “go through the legislative process to make that legal” above. Especially since there was no real emergency. (“in a crisis” though going YOLO may still be worth it though, because it may be enough to earn the time you need to go through the bottom of the crisis. And also if it's very unclear how legal/illegal this is, the fait accompli may be enough to convince the judges to side with your decision in order to put the country in too much of a trouble).