If you're a dummy like me, 25 bps means 0.25%.
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US Federal Reserve raises interest rates for first time since 2018
141–150 of 693 posts
Re: US Federal Reserve raises interest rates for first time since 2018
#142Earlier quoted context omitted.
Jesus Christ, work til you die eh? For a lot of people, what is even the point of living if there's no retirement to enjoy? They are an extractive class insofar as their present contributions are net negative. But you are forgetting they likely spent their entire life building up that account, both in terms of an actual retirement and the broader accounting of total life's contributions. Indeed, it is something that…
> Jesus Christ, work til you die eh? That is the normal human experience. But also not what I'm suggesting.
Among the poverty-striken, sure.
But nearly every society has some form of elder care.
Re: US Federal Reserve raises interest rates for first time since 2018
#143Earlier quoted context omitted.
Welcome to stagflation.
We are not yet in stagflation, unless I really missed something. The economy is actually fairly strong by most indicators. The question is whether inflation can be tamed by the time we hit a recession(which we will, whether it is in 6 months, 2 years, 5 years, etc...)
Everyone is sure acting like it'll be 6-12mo and if everyone expects a recession in 6-12mo then...
Re: US Federal Reserve raises interest rates for first time since 2018
#144Earlier quoted context omitted.
Won't somebody please think of the poor poor boomers with millions of equity in their houses! Cry me a river.
Most "boomers" have a house maybe worth a few 100K, if they even own their own home. Very few live in million dollar homes.
California would like a word.
Re: US Federal Reserve raises interest rates for first time since 2018
#145Earlier quoted context omitted.
Consensus from who?
Every person in the US who has had their purchasing power destroyed over the past ~18 months. Unfortunately, most people were/are too drunk on (maybe temporary) housing and stock market gains to care. Cheap money, free money and rampant speculation could all have easily been cut off a year ago and we would have had a much “softer landing”. Now we’re in a much more precarious position and may end up fighting stagflati…
> Every person in the US who has had their purchasing power destroyed over the past ~18 months.
The vast majority of people in the US have no idea what the fed is. Why would you trust their judgement?
Re: US Federal Reserve raises interest rates for first time since 2018
#146Earlier quoted context omitted.
> imo this has been a comically glacial effort, and im not sure the feds 1.9% interest target by EOY is anywhere near aggressive enough to stave off 10% or greater inflation by Q4. How much of the current inflation has anything to do with interest rates? You think oil/gas prices will care much about the Fed's action? And we still have supply chain issue before all geopolitical problems even started: just try asking n…
The amount of money being circulated absolutely does affect inflation (almost by definition). The Fed interest rate affects the amount of money in circulation because the Fed credit money is simply printed. This printed credit money gets spent and ends up circulating. The lower the interest rate, the easier it is to borrow, the more borrowing gets done, the more money is printed and enters circulation, which leads to…
> The amount of money being circulated absolutely does affect inflation (almost by definition).
No, money supply ≠ inflation. E.g., Japan M2:
* https://fred.stlouisfed.org/series/MYAGM2JPM189S
Japan inflation:
* https://fred.stlouisfed.org/series/FPCPITOTLZGJPN
Why do Friedman-esqe Monetarists continue to ignore velocity?
* https://fred.stlouisfed.org/series/M2V
I personally like Cullen Roche's analogy:
> But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy.
* https://www.pragcap.com/three-things-i-think-i-think-i-see-d...
> The Fed interest rate affects the amount of money in circulation because the Fed credit money is simply printed. This printed credit money gets spent and ends up circulating. The lower the interest rate, the easier it is to borrow, the more borrowing gets done, the more money is printed and enters circulation, which leads to inflation.
Things do not work like this. Money gets created through private banks by credit creation, and the only limit on that is the the risk they see in their loans being defaulted on. The Bank of England put out a primer a few years ago:
> The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.
* https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
Roche again from a 2011 paper, "Understanding the Modern Monetary System":
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625
Banks create (hopefully) viable loans first, and then look for reserves after—assuming reserve requirements even exist, as many countries removed them decades ago.
Re: US Federal Reserve raises interest rates for first time since 2018
#147Earlier quoted context omitted.
What a horrific ageist and bigoted comment. This literally could mean the difference between living independently or not for a lot of people. Not to mention everybody working today with a 401k as their retirement plan will lose value no matter their age, which means they have to work longer than planned. This is a real life impact to a lot of people.
> This literally could mean the difference between living independently or not for a lot of people. Given that quality of assistive care matters, it could literally mean the difference between living and not for people. Of course, on the other hand, so could runaway inflation for lots of people into the same age group (not every elderly person is self-sufficient on retirement income; many are supported by younger, wo…
If your retirement portfolio crumbles with a stock market correction when you’re actively retired, you have made terrible investment choices.
Re: US Federal Reserve raises interest rates for first time since 2018
#148Earlier quoted context omitted.
In particular a bursting of the housing bubble that has been reinflated (and then some) since the last time it popped in '08.
There's no evidence at all for this. The exotic mortgage products (e.g. reverse ARMs) have essentially disappeared, people's homes are well capitalized, lending standards are much higher than they were, there's very low levels of home equity debt, overall debt payments as a percent of household income are at very low levels. The people waiting for a housing crash are going to wait a long time. This one chart sums it…
My (very amateur) understanding of the housing issue is that its primarily a problem of supply. Since houses have been redefined from a dwelling to a financial investment, there is strong pressure on political policy to encourage asset appreciation. That means NIMBYism and corporate REITs are acting as two wealthy and highly-motivated special interest groups in favor of making new development nigh-impossible.
Or at least, so I've been lead to believe. All I know for sure is I can't by a third of the sq. ft my older sibling could 8 years ago.
Re: US Federal Reserve raises interest rates for first time since 2018
#149The Fed is trapped: It can’t raise too much since trillions of debt rely on very low rates. If it doesn’t raise enough then inflation will cause a recession.
people say this every time rates go up. The fed is not trapped. Rates went up from 0% in 2015 to 2.25% by 2018 and nothing bad happened. Inflation remained low, bonds did well.
Re: US Federal Reserve raises interest rates for first time since 2018
#150The Fed is trapped: It can’t raise too much since trillions of debt rely on very low rates. If it doesn’t raise enough then inflation will cause a recession.
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