Fed increases target rate to 3.75-4.00% • Hacker News Board

Re: Fed increases target rate to 3.75-4.00%

#51

Post by whoooooo123 » Wed, Nov 02, 2022, 6:50 PM UTC

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

If inflation is caused by selfish companies raising their prices, why are they only doing it now and not, say, three years ago? Did they only decide recently that they want to make more money?

Re: Fed increases target rate to 3.75-4.00%

#52

Post by whimsicalism » Wed, Nov 02, 2022, 6:50 PM UTC

BitwiseFool wrote: post #37

c0nsumer wrote: post #27

Earlier quoted context omitted.

This affects mortgage rates, but not housing prices. If anything, housing prices should decrease a bit as rates go up, since people tend to buy based on monthly payment which is house price + rate. Therefore, your down payment should be just as effective as it was before, particularly if it's enough to pay for much of the house and keep your monthly payment lower.

This should be happening, but prices do not seem to be falling in-line with what we would expect. I have no answer as to why this is.

Homeowners are just reluctant to lower, so they are happy to sit with fewer sales and higher prices. It will go down, it is just sticky because nobody wants to admit their home is worth less.

Re: Fed increases target rate to 3.75-4.00%

#53

Post by yieldcrv » Wed, Nov 02, 2022, 6:51 PM UTC

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

> his goal is to crash the economy for his buddies on Wall Street

nah, any avid trader can take any direction of the market to capitalize on any opportunity

it doesnt matter what someone is lobbying for

when he was increasing the fed balance sheet, who do you think he was buying from and giving free money to at every transaction? his buddies on wall street

its the same any direction

Re: Fed increases target rate to 3.75-4.00%

#54

Post by lazide » Wed, Nov 02, 2022, 6:51 PM UTC

BitwiseFool wrote: post #37

c0nsumer wrote: post #27

Earlier quoted context omitted.

This affects mortgage rates, but not housing prices. If anything, housing prices should decrease a bit as rates go up, since people tend to buy based on monthly payment which is house price + rate. Therefore, your down payment should be just as effective as it was before, particularly if it's enough to pay for much of the house and keep your monthly payment lower.

This should be happening, but prices do not seem to be falling in-line with what we would expect. I have no answer as to why this is.

It takes years for existing sellers to wake up to market shifts, unless they’re desperate is why.

If it’s a nicer area, many can ride it out through an entire bust cycle.

Most folks can get 30 yr fixed rates, so any area where most owners have stable employment and/or strong capital reserves, can cruise with zero movement for years if conditions aren’t favorable, barring estate sales, forced sales from divorces, etc.

Re: Fed increases target rate to 3.75-4.00%

#55

Post by r00fus » Wed, Nov 02, 2022, 6:51 PM UTC

c0nsumer wrote: post #27

agildehaus wrote: post #16

I just started to have enough money for a decent downpayment on a house when all this rate hike started. Now I'm basically priced out.

This affects mortgage rates, but not housing prices. If anything, housing prices should decrease a bit as rates go up, since people tend to buy based on monthly payment which is house price + rate. Therefore, your down payment should be just as effective as it was before, particularly if it's enough to pay for much of the house and keep your monthly payment lower.

Builders are holding off building more housing because interest rates going high means they get less. The lowered prices actually reduce the stock, making housing even less available.

https://www.businessinsider.com/housing-market-outlook-downt...

Re: Fed increases target rate to 3.75-4.00%

#56

Post by ok123456 » Wed, Nov 02, 2022, 6:51 PM UTC

stu2b50 wrote: post #40

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

Crashing the economy would ease inflation though by cause a big demand hit.

Our current inflation isn't being driven by demand, therefore decreasing demand won't be an effective lever for dealing with it.

Re: Fed increases target rate to 3.75-4.00%

#57

Post by nightski » Wed, Nov 02, 2022, 6:51 PM UTC

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

I like how the law of supply and demand in economics has been renamed "price gouging" by democrats.

Re: Fed increases target rate to 3.75-4.00%

#58

Post by megous » Wed, Nov 02, 2022, 6:51 PM UTC

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

"Crashing the economy"? Any definition of that? It's not like it's a car or a plane. Some metrics will be 5% different than before?

Sounds like fearmongering, to me, this kind of language.

Re: Fed increases target rate to 3.75-4.00%

#59

Post by nine_zeros » Wed, Nov 02, 2022, 6:52 PM UTC

adventured wrote: post #50

nine_zeros wrote: post #22

Earlier quoted context omitted.

> "I am once again asking for" a common sense explanation for how increasing interest rates will reduce the prices of retail food and gas. It will not. The only way to reduce prices of oil/gas and fertilizers (for food) is to bring back the amount of oil/gas and ammonia that went offline due to Russia. There is no amount of digging anywhere in the world that will quickly replace this much lost natural resource. What…

Oil isn't a serious problem, neither is gasoline. The West can safely maintain the situation with Russia indefinitely. Brent has been in the $90s for a while now. That's equivalent to $65-$70 from ten years ago, which also wasn't a problem then. It's very modestly elevated at present. Natural gas may be a different matter, although the Europeans look like they can have that permanently solved over the next few years…

> Oil isn't a serious problem, neither is gasoline.

Isn't a serious problem, yet. That's because China is offline and EU is still purchasing oil from Russia.

Re: Fed increases target rate to 3.75-4.00%

#60

Post by intrasight » Wed, Nov 02, 2022, 6:53 PM UTC

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

> This will do nothing for actually impacting inflation.

Correct and incorrect. You are correct about the causes of inflation. But it's the Feds mandate to tame inflation, and their only tool is rates. The correct solution would be for congress to act - but they won't.