US Federal Reserve raises interest rates for first time since 2018 • Hacker News Board

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

#641

Post by ryathal » Thu, Mar 17, 2022, 2:10 PM UTC

AnthonyMouse wrote: post #616

lupire wrote: post #576

Earlier quoted context omitted.

Somehow the Red "cut the taxes and spending" never give back the net inflows they take from Blue states.... Blue states have higher taxes to care for their citizens so they have to take less in Federal handouts.

That's not how it works: https://worldpopulationreview.com/state-rankings/donor-state... California is a net recipient of federal money (though not by a lot). The biggest donors are the blue states in the northeast. But plenty of blue states are recipients and the biggest recipients are the swing states, because politicians shamelessly buy their votes. And the reason the states in the northeast pay the most isn't bec…

A state being a net contributor generally means they have a lot of high paying jobs and successful companies concentrated in their state. Michigan is actually a good example as you can see when the big 3 auto companies were at their peak the state was a net contributor, but it has been a receiver since their decline.

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

#642

Post by brimble » Thu, Mar 17, 2022, 2:16 PM UTC

stale2002 wrote: post #438

brimble wrote: post #411

Earlier quoted context omitted.

As someone who took a lot of political science and economics classes once upon a time, and has an ongoing amateur interest in these things, MMT is the first time I've looked at one of these macro-level explanations/descriptions and not felt like I needed to ask a bunch of stupid questions that are (inevitably) going to be dismissed with a heaping dose of condescension. Finally, something that makes total sense when I…

Theories that are dismissed by the vast majority of the mainstream experts are often simple, yes. It turns out that the real world is complicated, and thats why we have experts in the world.

It's less that it's simple (it doesn't really seem simpler to me than any other fundamental approaches to macro, no?) than that at least real-world behavior of governments, and changes in the world as a result of that behavior, doesn't all seem to point strongly in the direction of something about it being wrong or badly incomplete. It's simple like universal gravitation is simpler than epicycles.

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

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Post by mikeyouse » Thu, Mar 17, 2022, 2:37 PM UTC

silisili wrote: post #590

mikeyouse wrote: post #567

Earlier quoted context omitted.

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, mo…

I fully appreciate why people are pissed about the housing situation - I bought my first house last year and the process was a tire fire, we ended up offering on maybe 3 or 4 other places before this one? And it wasn't even in a "top tier" city.

I'm sure there's a ton of investor interest (which in my opinion, is "downstream" of the problem, e.g. the millions-of-homes shortage is making it an attractive investment which is bringing the investor money). But again, Blackrock is a very small player in this - I can guarantee you that wealthy boomers with one or two rental properties are a much larger ownership class of investment properties than any faceless PE firm.

Blackrock owns a few tens of thousands of homes in specific cities (https://lease.invitationhomes.com/search?_ga=2.31151100.2135...), and sure, they're causing more competition and higher prices there -- but it's a nationwide problem not so easily reduced to "private equity caused".

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

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Post by jcadam » Thu, Mar 17, 2022, 2:58 PM UTC

listenallyall wrote: post #533

jcadam wrote: post #508

Earlier quoted context omitted.

> And will migration to smaller cities/towns continue unabated, (if you haven't moved to Austin/Vegas/Idaho/Montana yet, when do you plan to??) or will that reverse as companies want a physical presence again? Moved to Alaska last year. Not going back to city life - remote forever :)

That's my point... you already moved. Will the same number of people migrate to Alaska in 2023 as moved in 2021?

No. In fact, Alaska doesn't have much net migration, not even the last 2 years. There's quite a lot of churn - people move up here, go through their first Alaskan winter, then move back to the lower 48.

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

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Post by dllthomas » Thu, Mar 17, 2022, 2:58 PM UTC

grey-area wrote: post #623

dllthomas wrote: post #518

Earlier quoted context omitted.

No, they're talking past each other. dragonwriter seems to have meant "factual" in the sense of "concerned with questions of fact", "is" rather than "ought", and was not intending to claim (at least in that statement) that the answers MMT provides are correct. gray-area seems to have interpreted "factual" as "accurate" or "truthful", and was objecting that defining a theory as "concerned with things which are actuall…

MMT is not evidence based, it is in no way factual (it is neither backed by facts, nor is it concerned with facts) - it is a conjecture about what might happen in the best of all possible worlds based on abstract arguments about perfectly spherical economies in a vacuum. Factual is entirely off base as a descriptor and has been picked here in an attempt to make it seem grounded in reality and without challenge.

I expect at this point you're actually disagreeing in some sense with what dragonwriter believes but I don't know and I won't speak for him.

My point here is not to defend MMT but the quality of the conversation.

If someone comes along and says Modern Moo-netary Theory says we should to build too many catapults, and another someone points out that the theory doesn't address questions of "should", pointing out that the theory talks about spherical cows in space doesn't rescue the original objection.

That a theory makes unrealistic assumptions is absolutely an appropriate objection to raise, but it belongs upthread. Otherwise it won't be seen by people who've already decided what they think of the narrower topic of this subthread, and we'll get more repetition of worse arguments.

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

#646

Post by brimble » Thu, Mar 17, 2022, 3:19 PM UTC

bitshiftfaced wrote: post #639

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…

> and that the primary risk once the economy reaches full employment is inflation, which can be addressed by gathering taxes to reduce the spending capacity of the private sector. I don't understand this. Increasing taxes reduces the spending power of the individuals who pay the taxes. But that taxed money doesn't evaporate. The government spends it or redistributes it. It ultimately makes its way back into the priva…

The key concept is that taxation is unrelated to the government's ability to spend (with fiat currency). They can tax $1T and spend $1T. Or they can tax $0 and spend $1T. Government is not constrained from spending whatever amount it likes—except in the spending's effects on money supply, inflation, et c.

From that POV, destroying money (or, if you prefer, reducing the rate of increase in the money supply) is exactly what taxation does.

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

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Post by AviationAtom » Thu, Mar 17, 2022, 3:21 PM UTC

kavalg wrote: post #619

AviationAtom wrote: post #240

Earlier quoted context omitted.

This is one of the best ideas, but it would be wise to find a business that is recession resistant.

Any ideas what kinds of businesses these might be?

I think you just have to really consider what items or services people (or businesses) might always need, or would be last for them to cut. I can't think of those immediately, but food is one example, though grocery, not fast food.

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

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Post by rsync » Thu, Mar 17, 2022, 3:22 PM UTC

lumost wrote: post #502

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.

A generation ago, progressive cycles of deficit spending and taxation had put the top tax bracket in the US at 90%. Still, there was persistent inflation - and worse high unemployment. The belief was that the Federal Government had grown too large in the economy and needed to be "starved". To what extent government austerity vs. new monetary policy moved the needle for the US economy is unknowable. However many Ameri…

"A generation ago, progressive cycles of deficit spending and taxation had put the top tax bracket in the US at 90%."

This is incorrect.

The 90% tax rate (and other notably high tax rates from that period) were temporary measures explicitly enacted to discourage war profiteering:

"The crisis of World War II led Congress to pass four excess profits statutes between 1940 and 1943. The 1940 rates ranged from 25 to 50 percent and the 1941 ones from 35 to 60 percent. In 1942, a flat rate of 90 percent was adopted, with a postwar refund of 10 percent; in 1943 the rate was increased to 95 percent, with a 10 percent refund." [1]

These were not tax rates analogous to any of our normal, peacetime rates and they were not enacted as progressive policy measures.

It is misleading and disingenuous to make any comparison between the tax rates we choose in modern peacetime which arise from political decisions about relatively progressive vs. regressive rates, etc., and these administrative rates designed to combat war profiteering and other behaviors related to a wartime economy.

[1] https://en.wikipedia.org/wiki/Excess_profits_tax

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

#649

Post by [deleted] » Thu, Mar 17, 2022, 3:34 PM UTC

dang wrote: post #346

jonnycomputer wrote: post #172

Good thing I didn't come here for informed economic commentary. Now back to the blogosphere.

" Please don't sneer, including at the rest of the community. " It's reliably a marker of bad comments and worse threads. https://news.ycombinator.com/newsguidelines.html If you know more than others do, that's great—but then you should either share some of what you know, so the rest of us can learn, or just accept that people are wrong on the internet. Posting supercilious putdowns doesn't help anything. https://hn.…

[deleted]

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

#650

Post by phkahler » Thu, Mar 17, 2022, 3:42 PM UTC

mikeyouse wrote: post #85

phkahler wrote: post #34

Earlier quoted context omitted.

In particular a bursting of the housing bubble that has been reinflated (and then some) since the last time it popped in '08.

There's no evidence at all for this. The exotic mortgage products (e.g. reverse ARMs) have essentially disappeared, people's homes are well capitalized, lending standards are much higher than they were, there's very low levels of home equity debt, overall debt payments as a percent of household income are at very low levels. The people waiting for a housing crash are going to wait a long time. This one chart sums it…

The people who should not have been buying houses are now renting. Home prices in my area are higher than they were in 2008. Prices will still drop when interest rates rise - that's how it works. It's good that people will be able to keep their homes this time around, but that doesn't mean it's not a bubble.