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Federal Reserve raises rates by 0.75%

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Re: Federal Reserve raises rates by 0.75%

#191

Post by susanasj »

SketchySeaBeast wrote: post #68
xxpor wrote: post #58

Earlier quoted context omitted.

I'm sure the lower middle class people who lose their job will appreciate it.

What's the good play here? Cause a recession or price those lower middle class out of being able to afford the cost of living? Typically they aren't the ones with the best negotiating power.

I don't see why people think inflation hits the bottom of the wealth distribution the most. If you own your home but make the minimum payments, inflation is good. Your payments stay the same but the dollars are worth less, and hopefully your wages go up (as many people's have been). If you owe student debt, healthcare debt, same thing. Almost every lower middle class person has one of these kinds of debt. Inflation hurts the people that are owed money (banks, corporations, etc).

Re: Federal Reserve raises rates by 0.75%

#192

Post by nobody9999 »

omegaworks wrote: post #123
toomuchtodo wrote: post #83

Earlier quoted context omitted.

The Fed can only manage monetary policy. If Congress wants to fix the petroleum energy crisis with policy, it has the tools to do so.

It's true that economic policy is structured such that Congress has effective control over the non-monetary levers. The problem is that Congress is functionally ineffective at responding to popular demand, intentionally. The Senate is structurally allowed to act anti-democratically against the will of the populace: two representatives for fifty arbitrarily defined land areas are allowed to override proportionally ele…

>If only the majority party were willing to wrestle a tiny speck of that anti-democratic power away from the Senate by overriding extreme rules like the filibuster...

Or reverting back (pre-1970s) to the "Talking Filibuster,"[0] where you could only stop a vote by continuing to "debate" on the floor of the Senate.

That won't solve the problem, but it would be a step in the right direction: Talk until you can't and in the meantime, try to negotiate with the majority.

[0] https://historynewsnetwork.org/article/149663

Re: Federal Reserve raises rates by 0.75%

#193

Post by mmarq »

mark_l_watson wrote: post #17

You can argue either side to this, and make a good case. My personal preference is to trigger a recession and reduce inflation. The easy cop-out solution is to say a "big f*ck off" to pensioners, lower middle class, and poor people and let inflation soar, but I believe that long term this would be more destructive to the general economy. Better take the long term view here and not kick the can down the street.

The Fed missed the chance to act quickly in November/December and now it has to show commitment to bring inflation down before it spirals out of control. In the US and the UK, the current burst in inflation is more endogenous than it is in the eurozone (see core inflation), so it can and should be put under control by the central bank and by the government, the former with interest rates and the latter cutting stimulus checks and the like.

We’ll see what the BoE and the UK government do, but I’m not an optimist. I don’t see Johnson stop using public money to directly buy votes and I’m very doubtful of the competence of a central banker that goes on TV asking people to not demand pay rises.

Re: Federal Reserve raises rates by 0.75%

#194

Post by bamboozled »

paulpauper wrote: post #60
mirntyfirty wrote: post #5

Earlier quoted context omitted.

It seems as though the dip buying will continue but perhaps the fed wants a smoother road back to reality.

will continue? it's been strait down all year i would like to see it recover

I wouldn’t think this will happen until inflation chills out and the interest rates stop rising ?

Just a guess though

Re: Federal Reserve raises rates by 0.75%

#195

Post by jonny_eh »

JumpCrisscross wrote: post #20
mark_l_watson wrote: post #17

You can argue either side to this, and make a good case. My personal preference is to trigger a recession and reduce inflation. The easy cop-out solution is to say a "big f*ck off" to pensioners, lower middle class, and poor people and let inflation soar, but I believe that long term this would be more destructive to the general economy. Better take the long term view here and not kick the can down the street.

> personal preference is to trigger a recession and reduce inflation These aren't binary outcomes. Tight money does nothing to ease supply-side bottlenecks. It does little to target demand displaced by rising energy prices. If those are the principal drivers of inflation, tightening could depress non-energy demand in a way that causes a recession without alleviating inflation. Stagflation. (To be clear, we're not at…

That's my fear. In other words, increasing interest rates may not address the cause of the current inflation, so now instead of one problem (inflation) we have two (inflation + recession, aka stagflation).

Re: Federal Reserve raises rates by 0.75%

#196

Post by jessermeyer »

susanasj wrote: post #181
mark_l_watson wrote: post #17

You can argue either side to this, and make a good case. My personal preference is to trigger a recession and reduce inflation. The easy cop-out solution is to say a "big f*ck off" to pensioners, lower middle class, and poor people and let inflation soar, but I believe that long term this would be more destructive to the general economy. Better take the long term view here and not kick the can down the street.

I don't think it's that simple. Lower middle class and poor people have debt, and inflation is good for making debt less valuable in real dollars. Pensioners, maybe, but social security is indexed to inflation if I'm not mistaken? I wouldn't be surprised if many public and private pensions are as well. This is much more a move in favor of the rich that are owed money by the poor imo.

This is a double edged sword, naturally. Old debt becomes cheaper in equal measure to more expensive new debt.

Re: Federal Reserve raises rates by 0.75%

#197

Post by jaywalk »

nemo44x wrote: post #179
FabHK wrote: post #169

Earlier quoted context omitted.

> pensioners Are US pensions not tied to the CPI or some other inflation measure? (In Germany, pensions are, in principle, tied to the development of wages, which are generally assumed to outpace inflation.)

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.

Up to $10k/year, and they're currently paying 9.62%. There's no other way to get a guaranteed return anywhere near that, and everyone should buy as much as they can afford to. You're basically saying no to free money if you don't.

Re: Federal Reserve raises rates by 0.75%

#198

Post by typeofhuman »

deltree7 wrote: post #132
mbfg wrote: post #105

Earlier quoted context omitted.

please show where trickle down economics ever worked, anywhere.

An iPhone user in rural India surfing the open internet on $1 / month LTE mobile networks is absolutely an example of Trickle down economics working. Every single of the thousands of innovation that goes into an iPhone was subsidized by rich venture capitalists and rich early adopters who were willing to plonk large sums of money to a 'gadget' that only showed promises of work. It wasn't because the Indian Government…

Great point. Don't know why you're being downvoted.

Re: Federal Reserve raises rates by 0.75%

#199

Post by nemo44x »

JaimeThompson wrote: post #162
deltree7 wrote: post #132

Earlier quoted context omitted.

An iPhone user in rural India surfing the open internet on $1 / month LTE mobile networks is absolutely an example of Trickle down economics working. Every single of the thousands of innovation that goes into an iPhone was subsidized by rich venture capitalists and rich early adopters who were willing to plonk large sums of money to a 'gadget' that only showed promises of work. It wasn't because the Indian Government…

>Every single of the thousands of innovation that goes into an iPhone was subsidized by rich venture capitalists and rich early adopters Don't forget the governments which helped fund the basic research used to make such things, the middle and lower classes that pay more in property taxes so companies can be bribed to build factories, and other such things. Put another way it's a much more complicated picture than ju…

Wealthy people pay almost all the taxes. the top 10% pay 71% of taxes and the top 25% pay 87%. 75% of the country contributes nearly nothing but complaints.

Re: Federal Reserve raises rates by 0.75%

#200

Post by susanasj »

remarkable how many people in this thread are assuming the bottom of the income distribution is hurt the most by inflation. Think about who has debt (mortgage, student, medical expenses, car payments) and who that debt is owed to (banks, corporations) and what happens to that debt in real dollars when inflation is happening. The debt becomes less meaningful. Wages rise (they have in fact been rising), and the payments are less of a burden, while the people that are owed money get less value from the payments.
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