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US Federal Reserve raises interest rates for first time since 2018

theguardian.com

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Re: US Federal Reserve raises interest rates for first time since 2018

#581

Post by lupire »

StevePerkins wrote: post #506
mjevans wrote: post #496

Earlier quoted context omitted.

Or alternately raise taxes in the good times (rather than interest rates) and pay down that debt... which at least in the US we've got one political party dead set against at all costs.

> "raise taxes in the good times..." Oh, I know which party he's talking about! > "...and pay down that debt" Huh, nevermind.

Even the extremists admit (thought they try to hide it) the Bill Clinton paid down the debt by raising taxes and cutting military spending by not starting large new wars. Caro insulted Clinton for proposing a $200B/ye deficit, right before Bush 2 issued a one-year addition of $1T in new military spending for his personal vendetta against Saddam Hussein launched on false pretenses.

https://www.cato.org/commentary/no-bill-clinton-didnt-balanc...

Re: US Federal Reserve raises interest rates for first time since 2018

#582

Post by adam_arthur »

gruez wrote: post #564
adam_arthur wrote: post #460

Earlier quoted context omitted.

National market rents are up ~20% https://www.apartmentlist.com/research/national-rent-data Miami is up something absurd like 40% https://theshaderoom.com/major-u-s-cities-experience-drastic... CPI only shows 5%, due to the lag induced by their rent counting methodology. So inflation as measured by CPI is understated if anything, not overstated. Using the same formula as was used in the 70s would produce double digit…

>CPI only shows 5%, due to the lag induced by their rent counting methodology. So inflation as measured by CPI is understated if anything, not overstated. >Using the same formula as was used in the 70s would produce double digit numbers. Can you elaborate on this? When and what was the methodology changed?

On point one, CPI uses a combination of "owners equivalent rents" and more traditional rent measures.

Owner's equivalent rent is basically just a survey where they ask homeowners how much they could rent their house for. So survey participants understanding of market rents may lag.

But more importantly, when they survey renters, they ask them what they're currently paying. So if somebody is in a one year lease, and gets surveyed in month 11, they will give a rent figure that's almost a year old. On top of this, CPI includes rent controlled units, below market rent units etc. In some sense this is "correct" because it reflects what people are paying... But the whole value of CPI is to be a forecasting tool. Using lagging metrics is bad design imo.

Finally, they only survey 1/6 of the housing stock each month. So the whole sample is not updated every month.

To your second question, the biggest change is that CPI used to use home prices rather than the OER measure. That metric would show 15-20% rather than the 5% we get from their current formula. Given that the shelter component is the biggest weight in the CPI, it would shift the number up a few points.

Re: US Federal Reserve raises interest rates for first time since 2018

#583

Post by adam_arthur »

ShivShankaran wrote: post #560
adam_arthur wrote: post #420

Earlier quoted context omitted.

Because Powell cares more about markets than the real economy or wealth inequality. Also they tend to care much more about the short term than the long term. People will tell you that it's not in the Feds mandate to care about those things, and they don't actually care about markets, but it's clearly not true when cast in the light of their actions. Or to any rational observer that follows them closely. Even in Powel…

sad but true. The only thing that Jpow cares about is the markets. In his defence the economy is made of people and crashing the market/causing recession is going to cause more grief to the public that is already overwhelmed with covid.

Yeah, but it's a kicking the can down the road kind of situation. The mistake of acting too late has already been made.

Pushing asset prices higher and higher beyond what a neutral interest rate would support just sets up bigger declines in the future.

At least a lot of the froth in the higher multiple stocks has been cooled off at this point.

Re: US Federal Reserve raises interest rates for first time since 2018

#584

Post by [deleted] »

xxpor wrote: post #386
mudlus wrote: post #349

Earlier quoted context omitted.

All value is explanatory, that is, even if it has "intrinsic value" like carbohydrates in ATP in a cell, it is still knowledge instantiated for a resilient purpose (eg to power a cell to replicate its knowledge). As explanations change, value changes, so anything can be a currency at the level of the individual--in this way, at least for conscious minds, a public monopoly on money is, while possible, morally wrong. I…

The state has a monopoly on money because they collect taxes. Try paying your taxes in BTC and tell me how that goes.

[deleted]

Re: US Federal Reserve raises interest rates for first time since 2018

#586

Post by solotronics »

birdyrooster wrote: post #259
unyttigfjelltol wrote: post #183

Earlier quoted context omitted.

Says the man midway through a 40-story fall from a skyscraper: "So far so good!"

The alternative is a static or deflationary currency. This leads to hoarding of assets which were originally intended to serve and increase commerce. Think Bitcoin. Without MMT, we would be falling from a skyscraper as you depict.

Bitcoin isn't static or deflationary. There is a schedule of inflation built in via the mining reward which is currently at 1.5% until the next "halvening" where it will become 0.75%. The mining reward will continue to half every 4 years until roughly near the year 2140.

https://charts.woobull.com/bitcoin-inflation/

Re: US Federal Reserve raises interest rates for first time since 2018

#587

Post by zzleeper »

tatersolid wrote: post #571
zer0tonin wrote: post #351

Earlier quoted context omitted.

Is France a small country now?

> Is France a small country now? Frances’s GDP is 15% smaller than the single US state of California, and its population is only about 1.67x that of California.

Well Cali has 1/7th of the entire US GDP, so it's an unfair comparison. By itself, it would be the 5th largest economy in the world.

Re: US Federal Reserve raises interest rates for first time since 2018

#588

Post by jdougan »

dragonwriter wrote: post #444
grey-area wrote: post #393

Earlier quoted context omitted.

Your definition is circular. What proves MMT is in any way ‘factual’. MMT is an old lie, oft repeated, and only discovered as a lie after it is far too late.

> Your definition is circular. No, it's not. > What proves MMT is in any way ‘factual’. Factual is class of statements, opposed to normative statements. > MMT is an old lie It can't be that old, since it only describes the constraints on sovereign finance of entities functioning in their own pure-fiat currencies, which isn't a subject that has been of interest for very long.

Earlier and similar theories are Chartalism and functional finance.

Re: US Federal Reserve raises interest rates for first time since 2018

#589

Post by ece »

germinalphrase wrote: post #336
hn_throwaway_99 wrote: post #180

Earlier quoted context omitted.

Here are the first two paragraphs on the MMT Wikipedia article: > Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox[1] macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.[2][3] MMT is opposed to the mainstream understanding of…

Wouldn’t it also suggest that the prescribed inflation antidote - raising taxes - would be impractical due to political opposition. Seems like a double win: stand strong against raising taxes (which is the heterodox position) while showing MMT “doesn’t work”.

A few years ago, Janet Yellen (testifying in congress I believe) called for more research into "hot" economies because presumably there was a lack of such research. We're now in a period of growth and basically full employment after a pandemic where the fed and fiscal policy decided to keep things "hot." There have also been supply and energy shocks that are contributing to inflation.

The remaining part of the MMT puzzle as I see it is: raise corporate taxes, and see if it helps bring inflation under control. If raising rates slowly doesn't quite do it, this should be the next go to for policy makers.

Re: US Federal Reserve raises interest rates for first time since 2018

#590

Post by silisili »

mikeyouse wrote: post #567
silisili wrote: post #547

Earlier quoted context omitted.

It's not debunked, you're playing with stats. The claim is that investors are buying nearly 20 percent of housing. Your refutal is that they only own 1%. Both can be, and are, true. "A record 18.2 percent of all home purchases were made by investors during the third quarter of 2021, according to a new report by Redfin. That was up from 16.1 percent during the second quarter of 2021 and up 11.2 percent from the third…

I mean sure? If you change the statement from: "Blackrock bought 10%+ of the homes in the US in 2020" To: "Various 'investors' (including personal trusts and other tax / estate shielding entities often used for people buying their primary residence) bought 10%+ of the homes if you restrict the data to 40 large cities" then it's mostly true? But that's a different thing than was claimed.. The Redfin data that WaPo is…

So a sample size of 33% isn't indicative? You might be right here, I don't know for sure.

I think the main problem is that before 2020, nobody really cared who bought what.

Starting right at the beginning of 2020, inventory vanished, and is still vanished to this day. In most major markets, investors are snapping up everything which compounds the problem. Now people are pissed. And they're doing it in the hottest, most contested markets to boot.

I live in a pretty dumpy city, and blackrock has purchased more than 20% of everything on the market in the last 2 years. Homes have almost doubled in values.

Do you understand why people are pissed at that? Pointing out they own 1% nationally does nothing to help us.

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