Fed raises rates 3/4%, trying to curb inflation

[B. Kidd]

Best comment so far. Well balanced and economically literate. Few people here want to examine the real economic choices available to the Fed or the real causes of worldwide inflation.

Controlling this inflation while preventing a major recession may prove impossible with traditional Fed tools. If the Ukraine War worsens, or the Cold War with China turns hot or just ends with a collapse in world trade and a series of new proxy wars, there is nothing any U.S. Party or the Fed itself will be able to do to stop a huge decline in standards of living here.

Even if the “external factors” above, which Powell talked discretely about in his announcement of the 75% rate increase, and the inflationary spiral is stopped in the next year or less, the system is set up so that the very rich will probably end up richer and the poor and less skilled working people much worse off. The Fed is worried also about systemic credit problems which may develop, and of course is prejudiced toward preventing major asset price declines which hurt the wealthy and make a collapse more likely too. But that is a much more complicated problem to tackle.

By the way, I think there is very little chance that wages will rise to match inflation or set off a wage-price spiral as in the seventies, given that the U.S. today totally lacks a strong domestic union movement.

In so many words, you stated what I always said, "Globalism is a failed paradigm."
Thank you.
And I do agree that the wild card in the deck IS CHINA! They already know it!!

 

[bendog]

Best comment so far. Well balanced and economically literate. Few people here want to examine the real economic choices available to the Fed or the real causes of worldwide inflation.

Controlling this inflation while preventing a major recession may prove impossible with traditional Fed tools. If the Ukraine War worsens, or the Cold War with China turns hot or just ends with a collapse in world trade and a series of new proxy wars, there is nothing any U.S. Party or the Fed itself will be able to do to stop a huge decline in standards of living here.

Even if the “external factors” above, which Powell talked discretely about in his announcement of the 75% rate increase, and the inflationary spiral is stopped in the next year or less, the system is set up so that the very rich will probably end up richer and the poor and less skilled working people much worse off. The Fed is worried also about systemic credit problems which may develop, and of course is prejudiced toward preventing major asset price declines which hurt the wealthy and make a collapse more likely too. But that is a much more complicated problem to tackle.

By the way, I think there is very little chance that wages will rise to match inflation or set off a wage-price spiral as in the seventies, given that the U.S. today totally lacks a strong domestic union movement.

I don't see what the Fed can do about oil prices, although a global recession would cause them to fall, at least temporarily, and gas prices would moderate to some extent if people just stopped driving unless it was an absolute necessity or somehow budgeted. Rates probably don't affect increased US costs for producing most food.

But the fed can pretty much stop people from taking vacations and buying stuff before their old stuff quits working. And most likely, at the end of a recession, workers will make less and corp shareholders make more, and taxes will be higher on wages than capital. But the fed can't affect taxes or really wages.

 

[Concerned American]

The Federal Reserve has raised interest rates by 75 basis points, the single largest increase in nearly thirty years as inflation soars.

The hike to the federal funds rate – the benchmark interest rate at which banks borrow and lend money to each other overnight, affecting money supply in the economy – was announced Wednesday, after a meeting of the Federal Open Market Committee led by Chairman Jerome Powell. In the short-term, the Federal Reserve said that it would intend to bring the rate to a range of 1.5 percent to 1.75 percent.

Of the eight-member committee, seven voted in favor of the hike while one member, Esther George, President of the Federal Reserve Bank of Kansas City, voted against the increase, preferring that it be 0.5 percent instead.

The hike is the largest since 1994, when then-Chairman Alan Greenspan led a similar increase in anticipation of high inflation during an economic recovery. Wednesday’s move has considerable implications on individual borrowing in the economy and will likely lead to higher interest rates on loans for consumers and businesses.

Fed Hikes Interest Rates By 75 Points, Largest Increase Since 1994 | National Review

Chairman Jerome Powell has said that the Fed will do ‘whatever it takes’ to curb inflation and signaled that more rate hikes were to come.

www.nationalreview.com

The move comes as inflation has reached its highest level since 1982. The thing is, when you raise interest rates, like taxes you get less investment and lower economic growth. And that's just the way it is folks, cuz the costs of borrowing money goes up. And they're talking about raising interest rates again next month, either another half or 3/4% increase.

They printed and released more money in one year than the US had borrowed in 235 years and they think raising interest rates on money people don't need to borrow is going to reduce consumption? LMAO You can't make this shit up. Its easy to open Pandora's box, but its a bitch to get all them demons back in.

 

[Tom Paine 1949]

In so many words, you stated what I always said, "Globalism is a failed paradigm."
Thank you.
And I do agree that the wild card in the deck IS CHINA! They already know it!!

“Globalism” was a natural, inevitable evolution of capitalism. Nobody can stop capitalism at national borders, or stop trade beyond state borders. Even the biggest national states only play limited roles in the for-profit worldwide production and circulation of goods. The U.S. has had a good run as top dog, and will remain a great power in a global system of competition and alliances — if the world doesn’t totally destroy itself.

You are right that there is occurring a “reshuffling” of the deck and the fate of China (and Russia) are “wildcards.” But there are other wildcards as well. The fate of Europe, the fate of liberal-democratic vs. authoritarian states, the fate of non-Chinese Asia, of rising India, of all of what used to be called the “underdeveloped world.” It is difficult at this level of abstraction to separate out economics and politics, or to define terms even.

What is your definition of the “global” paradigm that you claim has failed? When did it start? With the first imperial and colonial wars? What superior “paradigm” do you propose, and how would it actually work?

 

[Flopper]

I don't see what the Fed can do about oil prices, although a global recession would cause them to fall, at least temporarily, and gas prices would moderate to some extent if people just stopped driving unless it was an absolute necessity or somehow budgeted. Rates probably don't affect increased US costs for producing most food.

But the fed can pretty much stop people from taking vacations and buying stuff before their old stuff quits working. And most likely, at the end of a recession, workers will make less and corp shareholders make more, and taxes will be higher on wages than capital. But the fed can't affect taxes or really wages.

You are right the FED can't do much about oil prices but there is a lot more to inflation than just oil prices. A 10% sustained increase in fuel costs will result in 2.7% inflation. The only thing that will bring oil prices down is increases supply. Decreasing the demand in the US will have only a moderate effect since the price of oil is determined on the world market. Increases in the our production of oil would help lower the price but only moderately and that would take a couple of years. There are two things that would send gasoline prices back to what they were last year quickly. Ending the war in Ukraine but that does not seem likely this year or OPEC drastically increasing output which seems very unlikely. Gas prices may stabilize between $5 and $7 this year.

 

[B. Kidd]

“Globalism” was a natural, inevitable evolution of capitalism. Nobody can stop capitalism at national borders, or stop trade beyond state borders. Even the biggest national states only play limited roles in the for-profit worldwide production and circulation of goods. The U.S. has had a good run as top dog, and will remain a great power in a global system of competition and alliances — if the world doesn’t totally destroy itself.

You are right that there is occurring a “reshuffling” of the deck and the fate of China (and Russia) are “wildcards.” But there are other wildcards as well. The fate of Europe, the fate of liberal-democratic vs. authoritarian states, the fate of non-Chinese Asia, of rising India, of all of what used to be called the “underdeveloped world.” It is difficult at this level of abstraction to separate out economics and politics, or to define terms even.

What is your definition of the “global” paradigm that you claim has failed? When did it start? With the first imperial and colonial wars? What superior “paradigm” do you propose, and how would it actually work?

You sound like Kamala when she speaks 'vegetable salad'.

 

[B. Kidd]

“Globalism” was a natural, inevitable evolution of capitalism. Nobody can stop capitalism at national borders, or stop trade beyond state borders. Even the biggest national states only play limited roles in the for-profit worldwide production and circulation of goods. The U.S. has had a good run as top dog, and will remain a great power in a global system of competition and alliances — if the world doesn’t totally destroy itself.

You are right that there is occurring a “reshuffling” of the deck and the fate of China (and Russia) are “wildcards.” But there are other wildcards as well. The fate of Europe, the fate of liberal-democratic vs. authoritarian states, the fate of non-Chinese Asia, of rising India, of all of what used to be called the “underdeveloped world.” It is difficult at this level of abstraction to separate out economics and politics, or to define terms even.

What is your definition of the “global” paradigm that you claim has failed? When did it start? With the first imperial and colonial wars? What superior “paradigm” do you propose, and how would it actually work?

It started in the late 80's with the mantra 'Think globally, act locally' with greedy producers thinking they could make a shit load of money overseas..
Unfortunately they forgot the 'act locally' part of the mantra, and moved the means of production overseas to maximize profits even more.
They were ignorant to mis-perceive that geo-politics would get in the way along with other global unforseen circumstances!

 

[Oddball]

It's really not a reasonable choice to do nothing. High inflation drives up inflation expectations, causing workers to demand higher wages to make up for loss of purchasing power. When workers get higher wages, business raise prices and thus you get a cycle that will end in economic collapse if nothing changes. The fact that inflation is due to a number of factors, pent-up consumer demand, problems in the domestic supply chain, shortages in overseas markets due to the presence of Covid, and now a world wide shortage of oil, there is no expected natural outcome.

The FED hopes for a soft landing of the economy as they apply the brakes. We don't know if that will happen but it's pretty certain that the alternative of doing nothing will have a worse outcome.

The thing that's primarily responsible for the current inflation is the printing up of $3 trillion and basically throwing it out of helicopters.

After decades of easy money, there will be no "soft landing"....Today's .75 rate hike is pissing on the Dresden fire storm.

 

[Oddball]

“Globalism” was a natural, inevitable evolution of capitalism. Nobody can stop capitalism at national borders, or stop trade beyond state borders. Even the biggest national states only play limited roles in the for-profit worldwide production and circulation of goods. The U.S. has had a good run as top dog, and will remain a great power in a global system of competition and alliances — if the world doesn’t totally destroy itself.

Nice run-on platitude stream.

 

[Tom Paine 1949]

They printed and released more money in one year than the US had borrowed in 235 years and they think raising interest rates on money people don't need to borrow is going to reduce consumption? LMAO You can't make this shit up. Its easy to open Pandora's box, but its a bitch to get all them demons back in.

I’m afraid you exaggerate and at least partly misunderstand. Money works its way through economies in complicated ways, and it can be buried in bank accounts or spent or invested. “Printed” & “released” money circulates (or not) — productively or not.

Few working and poor people are still spending their Covid checks! This is not a permanent cause of inflation. Permanent programs that over time circulate money for useful social ends, like Social Security and Medicare, tend to stabilize the system and allow for building up a medical industry and a fairer society, so long as they do not discourage working.

The Covid checks are mostly spent now and are no longer a driver of future inflation of consumer goods. Inflation is worldwide. The dollar has actually strengthened over the last year compared to other currencies. Most of the “created trillions” and the “loose credit” policy of the past have found their way into overpriced “assets” like stocks — which themselves may see their monetary value just “disappear” when markets collapse.

The political decision to provide a few thousand dollars to everyone during Covid was a policy inaugurated by Trump and extended by Biden, and should have been better directed to those who really needed it. But the politics of helping the poorest and most immediately effected doesn’t “sell” anymore. In any case you are mistaken if you think that Covid money is the main factor in causing this inflation, or that it can counteract the Fed it it ever really puts on the brakes and forces loans and mortgage rates to go up dramatically.

The “Pandora’s Box” has been stuffed with “bad money” chasing “good money” (and ultimately big expensive homes, luxury cars and even yachts) for … decades.

 

[Cougarbear]

The Federal Reserve has raised interest rates by 75 basis points, the single largest increase in nearly thirty years as inflation soars.

The hike to the federal funds rate – the benchmark interest rate at which banks borrow and lend money to each other overnight, affecting money supply in the economy – was announced Wednesday, after a meeting of the Federal Open Market Committee led by Chairman Jerome Powell. In the short-term, the Federal Reserve said that it would intend to bring the rate to a range of 1.5 percent to 1.75 percent.

Of the eight-member committee, seven voted in favor of the hike while one member, Esther George, President of the Federal Reserve Bank of Kansas City, voted against the increase, preferring that it be 0.5 percent instead.

The hike is the largest since 1994, when then-Chairman Alan Greenspan led a similar increase in anticipation of high inflation during an economic recovery. Wednesday’s move has considerable implications on individual borrowing in the economy and will likely lead to higher interest rates on loans for consumers and businesses.

Fed Hikes Interest Rates By 75 Points, Largest Increase Since 1994 | National Review

Chairman Jerome Powell has said that the Fed will do ‘whatever it takes’ to curb inflation and signaled that more rate hikes were to come.

www.nationalreview.com

The move comes as inflation has reached its highest level since 1982. The thing is, when you raise interest rates, like taxes you get less investment and lower economic growth. And that's just the way it is folks, cuz the costs of borrowing money goes up. And they're talking about raising interest rates again next month, either another half or 3/4% increase.

This is to fight inflation. However, this inflation isn't just because of the overspending of the Federal Government. It's being driven by the idiotic damnation of our energy independence Trump had established. OPEC is now the driving force of the price of oil and this has increased gasoline to a point that all products and delivery services are spiking their costs. So, we will see a recession for sure now because of the Fed and Biden being so stupid.

 

[Concerned American]

I’m afraid you exaggerate and at least partly misunderstand. Money works its way through economies in complicated ways, and it can be buried in bank accounts or spent or invested. “Printed” & “released” money circulates (or not) — productively or not.

Few working and poor people are still spending their Covid checks! This is not a permanent cause of inflation. Permanent programs that over time circulate money for useful social ends, like Social Security and Medicare, tend to stabilize the system and allow for building up a medical industry and a fairer society, so long as they do not discourage working.

The Covid checks are mostly spent now and are no longer a driver of future inflation of consumer goods. Inflation is worldwide. The dollar has actually strengthened over the last two years compared to other currencies. Most of the “created trillions” and the “loose credit” policy of the past have found their way into overpriced “assets” like stocks — which themselves may see their monetary value just “disappear” when markets collapse.

The political decision to provide a few thousand dollars to everyone during Covid was a policy inaugurated by Trump and extended by Biden, and should have been better directed to those who really needed it. But the politics of helping the poorest and most immediately effected doesn’t “sell” anymore. In any case you are mistaken if you think that Covid money is the main factor in causing this inflation, or that it can counteract the Fed it it ever really puts on the brakes and forces loans and mortgage rates to go up dramatically.

The “Pandora’s Box” has been stuffed with “bad money” chasing “good money” (and ultimately big expensive homes, luxury cars and even yachts) for … decades.

The purpose of raising interest rates is to reduce the money supply by making it more expensive to borrow. The process is ineffective if the money supply has already been increased by other actions. The easy answer would be, "Is it borrowing that is increasing the money supply." I submit that it is not. The flooding of the market with "free money" coupled with the non-free market increase of energy prices by executive action is what created ALL of the inflation problems that the economy is experiencing. Covid is/was/and always will be a distraction that was created by politics.

 

[Markle]

It’s all that extra money we have in our pockets from Trumps tax cuts that’s causing all this inflation.

I presume you are being facetious.

 

[Tom Paine 1949]

It started in the late 80's with the mantra 'Think globally, act locally' with greedy producers thinking they could make a shit load of money overseas..
Unfortunately they forgot the 'act locally' part of the mantra, and moved the means of production overseas to maximize profits even more.
They were ignorant to mis-perceive that geo-politics would get in the way along with other global unforseen circumstances!

Well I think you forget the epoch of colonial powers and imperialism. But I understand and partly agree with you about more recent geopolitical threats and misperceptions. Right now there is a slow return to regional and domestic restoring of logistical chains, and increased concern over national security.

But there is an inevitable price to be paid for this. Also there is the real threat that, as in WWI and WWII, the growth of regional hegemony & political blocks, the collapse of world trade, the onset of world depression, the rise of protectionism & authoritarianism, will end in world war.

The hope and desire to make war a thing of the past is a profoundly human one … that often leads to “misperceptions.” Few expected WWI. Few expected Putin to act so aggressively.

In the case of the U.S. during the Cold War with Russia, our alliance with then very underdeveloped Maoist China seemed a smart move … for decades. It gave U.S. and West European corporations profits and gave Uncle Sam great political advantages vs. the Kremlin.

But as they say … the Piper must be paid.

 

[HereWeGoAgain]

Yes, from my understanding of it....

And it does work, but it is not painless, that's for sure!

It also makes us bank stockholders a shitload of money!!!!
Thanks liberals.

 

[Flopper]

The thing that's primarily responsible for the current inflation is the printing up of $3 trillion and basically throwing it out of helicopters.

After decades of easy money, there will be no "soft landing"....Today's .75 rate hike is pissing on the Dresden fire storm.

The national budget for 2020 was 4.78 trillion (Trump's budget plus special bills passed in Dec 2019 and sighed by Trump)
The national budget for 2021 was 1.68 trillion
The national budget for 2022 was 1.8 trillions.

 

[Flopper]

The thing that's primarily responsible for the current inflation is the printing up of $3 trillion and basically throwing it out of helicopters.

After decades of easy money, there will be no "soft landing"....Today's .75 rate hike is pissing on the Dresden fire storm.

Economist say the Biden spending during Covid added 2% to 4% of our total inflation of 8.6%. In other words the Covid spending is responsible for one quarter to one half of the inflation.

Fact check: Did Biden's government spending cause inflation?

Jane Timken, a candidate in Ohio's Republican U.S. Senate primary, launched a new campaign ad claiming that President Biden's spending "has sent prices skyrocketing." PolitiFact checks her claim.

www.wral.com

 

[Admiral Rockwell Tory]

It’s all that extra money we have in our pockets from Trumps tax cuts that’s causing all this inflation.

You are SOOOOOOOOOOO full of shit! Take a laxative before you go to bed and pretend you are Joe Biden and shit the bed!

 

[Flopper]

This is to fight inflation. However, this inflation isn't just because of the overspending of the Federal Government. It's being driven by the idiotic damnation of our energy independence Trump had established. OPEC is now the driving force of the price of oil and this has increased gasoline to a point that all products and delivery services are spiking their costs. So, we will see a recession for sure now because of the Fed and Biden being so stupid.

OPEC production since the spike in oil prices has remained about the same rising only slightly, about 2 million barrels a day. The spike in oil prices is due primarily to an embargo against Russia oil shipped to North America and Europe.

It's simply not true that the Biden administration or it's energy policies are holding back domestic energy production. U.S. production of crude oil will rise to an average of 12 million barrels per day in 2022 and then to a record-high of 13 million barrels per day in 2023.

Have Biden Administration Policies Reduced U.S. Oil Production?

Republicans have ramped up their criticism of Biden's agenda as Russia-Ukraine crisis throws the global energy market into a tailspin.

www.newsweek.com

OPEC Crude Oil Production Monthly Insights: International Energy Statistics | YCharts

In depth view into OPEC Crude Oil Production including historical data from 1973 to 2023, charts and stats.

ycharts.com

 

[Toro]

View attachment 658368

yes you are

what was the question?