Federal Reserve raises rates by 0.75%

I think that in order to have any chance of actually measuring the value of money, whatever metric is used would have to be something that cannot be sold (because otherwise, when the value of money drops relative to the value of the inflation measure, people will sell the inflation measure to buy money, and vice versa, in order to keep their portfolios balanced). We see it with gold, and with bitcoin, and with stocks, and housing, and the general saying that "during a market crash, everything is correlated".

Of course, that leads to the question of "what would serve as a good proxy for the actual value of currency", and I don't have a good answer to that. CPI is the traditional answer, but I don't think it's a sufficient one because

1. CPI misses out on some of what people care about (e.g. asset prices are actually important in determining what kind of long-term lifestyle people can afford) 2. We want to disentangle "commodities went up because of supply shocks that will resolve themselves" and "commodities went up because money is permanently worth less", to the extent that it is even meaningful to disentangle these things

So yeah, it is entirely possible that the dollar is worth less [relative to what people care about], and also gold is worth less [relative to what people care about], and it is even possible that that is causally downstream of injecting a bunch of dollars into the economy, but I have no idea how one would robustly demonstrate that that was or was not the case. If you have any ideas on that front I'd love to hear them.

Also if you are aware of any assets that are _strongly and reliably anticorrelated_ with most other assets during recessions, I would be interested for much more personal reasons.

Interest rates are not the only government mechanism that can be used to control interest rates.

Stimulus can be done in a way that is highly targeted. When it is not, it has the same effect as rates being too low and can lead to things like overemployment and inflation.

Politically, there has been significant demand for overemployment, that is, unemployment levels that are lower than they should be, or, put another way, an economy where labor is too scarce.

Anyone who has tried to hire tech talent domestically in recent years has faced significant scarcity and can attest to the quality tradeoffs that must often be made such as hiring someone with insufficient experience and hoping it works out, or needing to invest more heavily in training and mentorship than seems reasonable.

In growth areas like tech, this is normal and is the result of growth itself, but recently the US economy has seen this kind of thing in many different kinds of jobs, even retail and food service jobs. It's not uncommon to find a packed restaurant being handled by one or two waitstaff, leading to slower turnaround and overall reduced capacity of the restaurant and less money being made overall.

This is blamed on the pandemic and all kinds of other causes, but the root cause is the infliction of intentional labor shortages on the economy for political reasons.

Similarly, the COVID stimulus in the previous administration was given out with minimal vetting and significant misallocation (payments to businesses that didn't need it), and there has been no retrospective accountability for any of it. It boils down to something that was supposed to be a targeted stimulus (to prevent firms from going out of business or laying off workers) became an untargeted one and spoils were given to firms that misrepresented need and used the money for things other than staying solvent or keeping payroll going.

So of course we are seeing the consequences of this now in the form of both inflation and economic stagnation.

This is not the fault of one political party. Neither has any restraint when it comes to wanting broad stimulus and artificially low unemployment numbers, and there is a lot of finger pointing about the extremely predictable inflation that is occurring.

Raising rates penalizes all the firms that did not seek stimulus inappropriately, as well as the ones who sought it because they needed it.

Chances are rates will go up at least another 1.5 or 2 percent in the next year. This is unfortunate, and the economic correction resulting from it will be significant and will last for many years longer than the brief period of artificial joy we got over the past few years.

Wages have been riser faster than inflation and triggering a recession will reverse that.

People love to act like they’re helping poor people when in truth they’re just hurting the labor market ie everyone but rich people.

The lower classes hold a lot of debt? Can you source that? I would assume middle/upper class would hold most debt.

Yes, Social Security is indexed to inflation. You can also buy a certain amount of I-Bonds that are tied to inflation and are paying very nicely nowadays. Tax free too.