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.