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U.S. interest rates have soared everywhere but savings accounts

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Re: U.S. interest rates have soared everywhere but savings accounts

#271

Post by LeapingLennie »

PaulDavisThe1st wrote: post #250
WalterBright wrote: post #199

Earlier quoted context omitted.

> purely out of greed People want to collect interest on their bank deposits purely out of greed, too.

Covering inflation is greed?

Any rational investor isn't going to be aiming to cover inflation, they are going to be trying to maximize their rate of return. It wouldn't matter if the interest rate was above or below the inflation rate, investors will always shop around to find the highest return they can get.

I think "greed" is an unhelpful term as it is too emotionally charged for what is really just rational behaviour given economic incentives. So I would avoid calling banks greedy for trying to maximize profit by offering low interest rates just as I would avoid calling consumers greedy for choosing the bank that gives them the highest interest rate.

Re: U.S. interest rates have soared everywhere but savings accounts

#272

Post by rufus_foreman »

throwaway48375 wrote: post #258
rufus_foreman wrote: post #102

Earlier quoted context omitted.

https://fred.stlouisfed.org/series/M1SL

That's not what the Fed says. >In late February and early March of 2020, the Fed cut its policy interest rate dramatically to help ease credit conditions during the COVID-19 crisis. The resulting acceleration in the supply of M1 can be understood largely as banks accommodating an increase in people’s demand for money. https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

It's literally what the Fed says, it's nothing but a link to a Fed chart.

Re: U.S. interest rates have soared everywhere but savings accounts

#273

Post by 01100011 »

ceejayoz wrote: post #88
flatiron wrote: post #43

Earlier quoted context omitted.

Based on the market a lot of people believe “buy some real estate” is the solution. But that bubble IMHO is about to pop. Maybe look into interest protected bonds? https://www.treasurydirect.gov/indiv/products/prod_ibonds_gl... Personally I have been just spending what I make assuming saving is moot right now (besides 401k and espp)

> Based on the market a lot of people believe “buy some real estate” is the solution. But that bubble IMHO is about to pop. I fear we're gonna move to an Australian-style real estate market. Never-ending boom, impossibly high prices for first-time buyers. People have predicted its collapse for 40 years or so, to no avail.

It may not pop. Supply issues are real. Certainly it will deflate in the near term as mortgage rates rise further and the economy slows, but it doesn't seem likely to crash(and as a cash heavy renter I would love it to crash).

Some markets will likely see a bear market. Real estate is local. Location matters.

The future is very uncertain right now. I could see a scenario where China moves on Taiwan and we suddenly have 5+ million people looking for asylum. I guess it's one way to get TSMC to setup a plant here.

Re: U.S. interest rates have soared everywhere but savings accounts

#274

Post by cudgy »

darth_avocado wrote: post #95
PheonixPharts wrote: post #60

Earlier quoted context omitted.

> Fed's increasing of the interest rate is causing a stock market crash. Citation needed. Rate hikes were announced mid-march and I don't think you can even find that info on this chart https://finance.yahoo.com/quote/%5EDJI/ If we do see a crash soon I think it will likely be more related to major tech stocks failing to perform as expected. Of the original FAANG, F and N have both had days where there value dropped…

Well fed increased rates in March but they announced it long ago and the market corrected accordingly. It is common knowledge by now. The market is expecting 7-8 25 point increases in 2022 which has been priced in the declines so far. Any deviation to that will move the markets further.

How do you know this? My inclination is to think investors are underestimating the effects of inflation and overestimating the Feds ability to counter it without major rate hikes (like above 7-8% or higher). The Fed has created a major problem by keeping rates so low for so long. Who is going to buy the bonds they are going to have to sell in order to back off quantitative easing. Plus now there is the threat to the US dollar remaining the preferred currency with the Biden administration seizing almost a trillion dollars worth of Russian dollar denominated assets. Other countries are likely taking notice of this.

Re: U.S. interest rates have soared everywhere but savings accounts

#275

Post by 01100011 »

dehrmann wrote: post #109
azth wrote: post #40

Serious question: inflation seems to only be getting higher (is it 8%+ now?) the Fed's increasing of the interest rate is causing a stock market crash. So if one puts their money into assets, those are decreasing in price due to the fed, and if someone is holding cash that's also going down in value due to inflation. What's the solution?

> the Fed's increasing of the interest rate is causing a stock market crash You think this is a crash?!

It will be. It isn't yet. Friday was a correction but it's nothing like what is coming. The Nasdaq isn't even below the lows set back in March. Yet.

Re: U.S. interest rates have soared everywhere but savings accounts

#276

Post by 01100011 »

jeffbee wrote: post #54
azth wrote: post #40

Serious question: inflation seems to only be getting higher (is it 8%+ now?) the Fed's increasing of the interest rate is causing a stock market crash. So if one puts their money into assets, those are decreasing in price due to the fed, and if someone is holding cash that's also going down in value due to inflation. What's the solution?

Consensus opinion seems to be that peak annual inflation already is behind us and mostly it was spectacular because of low March 2021. If inflation increases in the remainder of 2022, all the economic forecasts, and the federal reserve policy, are totally wrong.

That should read "Publicly stated consensus at the federal reserve, who massively screwed up by misreading inflation in the first place, is that peak annual inflation is behind us."

The bond market doesn't seem to believe it. The managing director of the IMF just publicly stated that the central banks screwed up and act like "8 year olds playing soccer" who don't anticipate the 2nd order effects of their actions.

20% of shipping is tied up in traffic jams. We're in a economic war with a major commodity producer. It is daft to believe inflation is peaking. Even if that assumption is right, we will end up with inflation well above the fed target rate, so instead of 8%(CP 'lie' bullshit inflation) we get 5% persistent inflation.

Re: U.S. interest rates have soared everywhere but savings accounts

#277

Post by 01100011 »

darth_avocado wrote: post #95
PheonixPharts wrote: post #60

Earlier quoted context omitted.

> Fed's increasing of the interest rate is causing a stock market crash. Citation needed. Rate hikes were announced mid-march and I don't think you can even find that info on this chart https://finance.yahoo.com/quote/%5EDJI/ If we do see a crash soon I think it will likely be more related to major tech stocks failing to perform as expected. Of the original FAANG, F and N have both had days where there value dropped…

Well fed increased rates in March but they announced it long ago and the market corrected accordingly. It is common knowledge by now. The market is expecting 7-8 25 point increases in 2022 which has been priced in the declines so far. Any deviation to that will move the markets further.

What the bond market has priced in and what equities have priced in are two completely different scenarios. If the bond market is right, equities are about to get slaughtered.

Remember, the fed folks can't insider trade like they used to, so they have no reason to prop up equities anymore. They made their money.

Re: U.S. interest rates have soared everywhere but savings accounts

#278

Post by sethammons »

mise_en_place wrote: post #196
BayAreaEscapee wrote: post #189

Earlier quoted context omitted.

The obvious problem is that there is nowhere to hide. All markets are overvalued by virtually any historical metric. At least if you take the -6% real hit, at least you can know and predict what the hit is.

My portfolio with foreign value stocks and gold and silver mining stocks, plus oil companies is doing great. I am up by more than 10%. This is just the beginning for them. My financial advisor who manages the vast majority of my wealth is down 2% in comparison. I'm close to pulling my money because he's extremely anti commodities and I had to yell at him to invest my money into mining companies because he thinks it's…

> he thinks it's better to just hold cash

That doesn't make sense to me. Equities can rebound, cash cant

Re: U.S. interest rates have soared everywhere but savings accounts

#279

Post by throwaway48375 »

rufus_foreman wrote: post #272
throwaway48375 wrote: post #258

Earlier quoted context omitted.

That's not what the Fed says. >In late February and early March of 2020, the Fed cut its policy interest rate dramatically to help ease credit conditions during the COVID-19 crisis. The resulting acceleration in the supply of M1 can be understood largely as banks accommodating an increase in people’s demand for money. https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

It's literally what the Fed says, it's nothing but a link to a Fed chart.

Yes they changed how it was measured around that time, but that didn't cause the substantial change in money supply. They didn't really change how it was measured that much. They say themselves it was due to increased demand for money.

Re: U.S. interest rates have soared everywhere but savings accounts

#280

Post by everybodyknows »

twblalock wrote: post #256

After one year, I-bonds are pretty similar to savings accounts and they are indexed to inflation. Your money won't grow, but it won't shrink either -- and as Treasury bonds they are the lowest-risk investment that exists. If you buy some today, they will pay 7.12% for the next 6 months. After that they will probably be adjusted to pay even more, based on the current inflation rate. There are two major catches: you ha…

For anyone who filed a 4868, and expects a refund, note that up to $5000 of it can be claimed in the form of paper I-bonds. This limit is independent of the $10000 online bond limit. There is a nuisance factor in that some portion will be delivered in small denominations -- down to $50.

If you're using TurboTax, the necessary checkbox is well hidden. Look for a "more options" tab or some such, IIRC.

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