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

[task0778]

People aren't thinking about this consequence:

Higher interest rates mean more interest costs on our national debt. Higher interest costs ultimately mean more taxes, direct or indirect. So, the steps the government is taking in hopes of tamping down inflation may ultimately mean a tax hike on millions of American families.

One could still argue that it’s worth it, but this real consequence must be acknowledged regardless. Policy choices inevitably have trade-offs and consequences.

Our leaders refused to spend within their means, instead running up multi-trillion-dollar deficits and printing trillions of new dollars. We got crushing price increases as a result. And we’re also going to face trillions more in taxes as interest rates rise and our debt becomes more expensive.

 

[B. Kidd]

I advise Mac1958 to tell his clients to invest in the housing market!

 

[Flopper]

Balony! That's the stupid Biden argument that doesn't hold water. We only bought 8% from Russia of our oil. They don't have squat to do with OPEC either. The price has bolted from a few dollars a barrel to $120 a barrel since Biden became president. What has happened? Yes, oil companies can ask drill anywhere. But, the Biden administration is not approving any new drilling at all. He just got on TV and yelled at the oil companies for not drilling enough and charging too much when they have no control of the production of oil and the price. Keep on drinking the kool-aid because the people no longer believe it. Republicans will destroy Democrats in November because of the continued lies.

Oil prices are determined by purchases on the world market. So whether the 8% reduction in Russia oil was in the US or Europe or elsewhere it would make only a small difference. An no, Oil was not a few dollars a barrel when Biden too office. It was $53 a barrel on Jan 20, 2021 when he took office

WTI Crude Oil Prices - 10 Year Daily Chart

Interactive chart showing the daily closing price for West Texas Intermediate (NYMEX) Crude Oil over the last 10 years. The prices shown are in U.S. dollars.

www.macrotrends.net

 

[Cougarbear]

Oil prices are determined by purchases on the world market. So whether the 8% reduction in Russia oil was in the US or Europe or elsewhere it would make only a small difference. An no, Oil was not a few dollars a barrel when Biden too office. It was $53 a barrel on Jan 20, 2021 when he took office

WTI Crude Oil Prices - 10 Year Daily Chart

Interactive chart showing the daily closing price for West Texas Intermediate (NYMEX) Crude Oil over the last 10 years. The prices shown are in U.S. dollars.

www.macrotrends.net

“Because of these regulations, [oil companies] can’t produce as much oil in America and it’s made us more reliant on thugs like Putin and other dictators who are limiting supply so they can raise the price. Let’s open up American energy [and] get all these federal agency roadblocks out of the way so we can produce oil in America and lower the cost at the pump.” – House Republican Whip Steve Scalise (R-LA)

The reason why prices were low was because we were energy independent. We didn't have to buy from Iran, Saudi's, Russian, Venezuela and other enemies. But, because Biden refuses to re-instate the executive orders that allowed oil companies to drill, we have to pay the going rate set now by OPEC and other enemies. The U.S. is the larges consumer of oil and it stands that if we cannot produce our own oil for gasoline and many other products, the world can increase their prices and have. How do you like Biden's world so far?

 

[Flopper]

“Because of these regulations, [oil companies] can’t produce as much oil in America and it’s made us more reliant on thugs like Putin and other dictators who are limiting supply so they can raise the price. Let’s open up American energy [and] get all these federal agency roadblocks out of the way so we can produce oil in America and lower the cost at the pump.” – House Republican Whip Steve Scalise (R-LA)

The reason why prices were low was because we were energy independent. We didn't have to buy from Iran, Saudi's, Russian, Venezuela and other enemies. But, because Biden refuses to re-instate the executive orders that allowed oil companies to drill, we have to pay the going rate set now by OPEC and other enemies. The U.S. is the larges consumer of oil and it stands that if we cannot produce our own oil for gasoline and many other products, the world can increase their prices and have. How do you like Biden's world so far?

Most of those road blocks do have an important purposes. In Venezuela, after a well drains the oil, operators move on without plugging the wells which is pretty expensive. Over the years the oil seeps into the soil poisonings the ground water. And in many countries, operators run swallow wells 24 hours a day drawing every drop as fast as they can. Although this will generate the most production and profits over the short run, it's better to drain the oil pools slower and the production will be greater over a long run do to seepage and other factor. Most states limit production. I could go on listing tons of stuff like title searches to make sure royalty owners get paid the right amount, leases, and division order processing, transfer requirements, well permits, well, storage tanks and pipeline inspections, etc which all hamper production.

Years ago in Louisiana, I remember fishing the bayous in South Louisiana where the water was covered in oil scum from leaking wells and storage tanks. It got so bad, they drove the state bird to extension. Today much to the sorry of oil companies, the state has forced them to cleanup their act and it has made a huge difference.

Oil or Gasoline produced in America will only stay in America if foreign buyers are not willing to pay a higher price than American buyers. If a German oil company is willing to pay a dollar a barrel more than a US buyer and an additional $5 a barrel for shipping on 5,000 barrels, then those barrels of oil going into a pipeline will end up in a tanker going to Germany. So if America becomes self sufficient, it just means that more oil will be available on the international market.

Increasing oil production in the US makes more oil available to the world. And since half the countries in world produce little if any oil, there is always a huge demand for oil.

 

[B. Kidd]

Most of those road blocks do have an important purpose. In Venezuela, after a well drains the oil, operators move on without plugging the wells which is pretty expensive. Over the years the oil seeps into the soil positioning the ground water. And in many countries, operators run swallow wells 24 hours a day drawing every drop as fast as they can. Although this will generate the most profit over short run, it's better to drain the oil pools slower and the production will be greater over a long run do to seepage and other factor. Most states limit production. I could go on listing ton of stuff like title searches to make sure royalty owners get paid the right amount, leases, and division order processing, transfer requirements, etc which all hampers production. Years ago in Louisiana, I remember fishing the bayous in South Louisiana where the water was covered in oil scum from leaking wells and storage tanks. It got so bad, they drove state bird to extension. Today much to the sorry of oil companies, the state has forced them to cleanup their act and it has made a huge difference.

Oil or Gasoline produced in America will only stay in America if foreign buyers are not willing to pay a higher price than American buyers. If a German oil company is willing to pay a dollar a barrel more than a US buyer and an additional $5 a barrel for shipping, then 5,000 barrels of oil going into a pipeline will end up in a tanker going to Germany. So if America becomes self sufficient, it just means that more oil will be available on the international market.

Increasing oil production in the US makes more oil available to the world. And since half the countries in world produce little if any oil, there is always a huge demand for oil.

Nice word salad!
Kamala taught you well.
Idjit!

 

[Cougarbear]

Most of those road blocks do have an important purpose. In Venezuela, after a well drains the oil, operators move on without plugging the wells which is pretty expensive. Over the years the oil seeps into the soil poisonings the ground water. And in many countries, operators run swallow wells 24 hours a day drawing every drop as fast as they can. Although this will generate the most profit over the short run, it's better to drain the oil pools slower and the production will be greater over a long run do to seepage and other factor. Most states limit production. I could go on listing tons of stuff like title searches to make sure royalty owners get paid the right amount, leases, and division order processing, transfer requirements, etc which all hampers production. Years ago in Louisiana, I remember fishing the bayous in South Louisiana where the water was covered in oil scum from leaking wells and storage tanks. It got so bad, they drove state bird to extension. Today much to the sorry of oil companies, the state has forced them to cleanup their act and it has made a huge difference.

Oil or Gasoline produced in America will only stay in America if foreign buyers are not willing to pay a higher price than American buyers. If a German oil company is willing to pay a dollar a barrel more than a US buyer and an additional $5 a barrel for shipping on 5,000 barrels, then those barrels of oil going into a pipeline will end up in a tanker going to Germany. So if America becomes self sufficient, it just means that more oil will be available on the international market.

Increasing oil production in the US makes more oil available to the world. And since half the countries in world produce little if any oil, there is always a huge demand for oil.

Yes, we should be drilling the oil and not depend nor support countries like Venezuela for many reasons. We do a better job with the environment and we can keep the oil here in the U.S. Trump did just this. But, Biden rolled back the executive orders that now the various regulators are able to stop companies from producing oil on the lands they lease from. It makes no difference if Biden gives out leases but prevents drilling at the same time. More demand with less oil raises prices here and around the world. Biden is supposed to go off to the Saudi's again begging for them to drill more oil so the price will come down. He could just open the spickets here in the U.S. and allow the oil from Canada to flow in as well. Another thing he could do is start allowing for more refining of oil into gasoline to be built.
Biden could make sure that the oil stays here in the U.S. as well as sell it around the world like we did before. This problem with oil isn't much different than the mishandling of other products like baby formula. The Biden administration is pathetic at business.

 

[struth]

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

haha wow

 

[task0778]

The Biden administration is pathetic at business.

They are pathetic at everything. Except maybe hypocrisy and lying, they're pretty good at that.

 

[Flopper]

Yes, we should be drilling the oil and not depend nor support countries like Venezuela for many reasons. We do a better job with the environment and we can keep the oil here in the U.S. Trump did just this. But, Biden rolled back the executive orders that now the various regulators are able to stop companies from producing oil on the lands they lease from. It makes no difference if Biden gives out leases but prevents drilling at the same time. More demand with less oil raises prices here and around the world. Biden is supposed to go off to the Saudi's again begging for them to drill more oil so the price will come down. He could just open the spickets here in the U.S. and allow the oil from Canada to flow in as well. Another thing he could do is start allowing for more refining of oil into gasoline to be built.
Biden could make sure that the oil stays here in the U.S. as well as sell it around the world like we did before. This problem with oil isn't much different than the mishandling of other products like baby formula. The Biden administration is pathetic at business.

There are few tariffs on imported oil so it trades mostly tariff free in most countries. That allows producers to sell their products world wide. However, supplies of oil and prices vary from country to country for many reasons, production costs, taxes, labor costs, problems in refineries and pipelines, seasonal changes in supply and demand, etc. Also there are a number of grades of oil and each grade has it's own price and refining cost and not all refineries can handle all grades. Thus everyday, different grades of oil are flowing into and out of US. This is the way it should be because we are always having natural and man made events that increase and decrease supply and demand within the country.

 

[busybee01]

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.

Unfortunately this will not help in terms of what is causing inflation. Companies are raising prices because they can, not because they have to. We are being gouged by big businesses because there are too many monopolies or oligopolies. They can dictate prices because they have no competition. Taxes should be raised on these businesses as well as dividends and stock buybacks. They can be used to cut taxes for ordinary people.

 

[busybee01]

That money is long gone, but all the money given out in 2020 and 2021 is coming back to roost.

No it is not. That money is long gone as well and has nothing to do with inflation.

 

[Flopper]

Unfortunately this will not help in terms of what is causing inflation. Companies are raising prices because they can, not because they have to. We are being gouged by big businesses because there are too many monopolies or oligopolies. They can dictate prices because they have no competition. Taxes should be raised on these businesses as well as dividends and stock buybacks. They can be used to cut taxes for ordinary people.

No, corporation gouging the public is not the cause of the inflation. I think it more likely to be a result of inflation. The basic cause of inflation is increases in the money supply. The solution is reducing the money supply. Raising the fed interest rate is one of the tools the feds have. There is no doubt the Fed will be able to deduce inflation. The question is will they be able to reduce it without throwing the country into a major recession.

 

[busybee01]

Inflation began in April 2020 as supply chains broke, began feeding on itself, and then the Fed thought it wise to sit on its hands.

I liked Powell, but this has been a real blunder.

There is far more than that going on. The areas that have seen the biggest increases are in industries where there is little or no competition. Meat is a good example. Another example are televisions. That is a very competitive industry and although prices rose initially, they have come back to pre-pandemic levels. One calculation shows that 60% of the inflation is due to price gouging by big businesses. This was based on a examination of financial statements reported by companies themselves.

Powell is committing a blunder now. He should raise rates to a more normal pre-pandemic rate however he was talked into this rate hike by Wall Street. They will be hurt very little by this. These people are apologists for price gouging by big business.

 

[busybee01]

No, corporation gouging the public is not the cause of the inflation. I think it more likely to be a result of inflation. The basic cause of inflation is increases in the money supply. The solution is reducing the money supply. Raising the fed interest rate is one of the tools the feds have. There is no doubt the Fed will be able to deduce inflation. The question is will they be able to reduce it without throwing the country into a major recession.

CEOs have admitted that they have the power to raise prices. Their own financial statements show that they are making profits way above the rate of inflation. This comes from raising prices way above the rate of inflation. Money supply is horseshit.

 

[Mac1958]

Powell is committing a blunder now. He should raise rates to a more normal pre-pandemic rate however he was talked into this rate hike by Wall Street. They will be hurt very little by this. These people are apologists for price gouging by big business.

He does need to do that, but it could spook markets. I was glad to see them go to 75bps increases, and I would have liked even 100 or 125 to provide a shock to the system. But nowadays the Fed is all about "sending a message" (yeah, annoying), and with a few spots of weakness showing in the economy now (real estate, for example), Powell figures he's walking a fine line.

Bad enough the Fed was behind the curve on inflation. But they were STILL DOING QE during this.

Now it's looking more and more like they'll have to trade inflation for a recession. Uncontrolled inflation is worse. The Fed is still hoping for a soft landing. We'll see.

 

[Flopper]

He does need to do that, but it could spook markets. I was glad to see them go to 75bps increases, and I would have liked even 100 or 125 to provide a shock to the system. But nowadays the Fed is all about "sending a message" (yeah, annoying), and with a few spots of weakness showing in the economy now (real estate, for example), Powell figures he's walking a fine line.

Bad enough the Fed was behind the curve on inflation. But they were STILL DOING QE during this.

Now it's looking more and more like they'll have to trade inflation for a recession. Uncontrolled inflation is worse. The Fed is still hoping for a soft landing. We'll see.

Powell became chairmen of the Federal Reserve in 2018 when the Fed rate was 2.5%. He immediately began reducing rates till it was .25% which is what it was going into the pandemic. Trump nominated Powell because he knew he would cut interest rates and keep them low which is what he did.

Trading a high interest rate for recession is not uncommon. The Fed has to known both how much to reduce the money supply and when. I think we will be lucky, if we avoid a deep recession.

The stock market is always the first casualty in attempts to reduce the money supply. I have always found the market actions amusing. It's like a kid taking his medicine. He knows he needs it but he scream and fights it. If interest rates rise, the market goes down and if the Fed fails to raise rates the market may still go down.

 

[busybee01]

He does need to do that, but it could spook markets. I was glad to see them go to 75bps increases, and I would have liked even 100 or 125 to provide a shock to the system. But nowadays the Fed is all about "sending a message" (yeah, annoying), and with a few spots of weakness showing in the economy now (real estate, for example), Powell figures he's walking a fine line.

Bad enough the Fed was behind the curve on inflation. But they were STILL DOING QE during this.

Now it's looking more and more like they'll have to trade inflation for a recession. Uncontrolled inflation is worse. The Fed is still hoping for a soft landing. We'll see.

I disagree. The inflation is being caused by price gouging. Until consumers say that they will not pay your overinflated prices is when inflation goes away.

 

[busybee01]

“Because of these regulations, [oil companies] can’t produce as much oil in America and it’s made us more reliant on thugs like Putin and other dictators who are limiting supply so they can raise the price. Let’s open up American energy [and] get all these federal agency roadblocks out of the way so we can produce oil in America and lower the cost at the pump.” – House Republican Whip Steve Scalise (R-LA)

The reason why prices were low was because we were energy independent. We didn't have to buy from Iran, Saudi's, Russian, Venezuela and other enemies. But, because Biden refuses to re-instate the executive orders that allowed oil companies to drill, we have to pay the going rate set now by OPEC and other enemies. The U.S. is the larges consumer of oil and it stands that if we cannot produce our own oil for gasoline and many other products, the world can increase their prices and have. How do you like Biden's world so far?

The reason why prices were low was the pandemic. Oil companies have since decided that they can make more money by constraining the supply of oil.

 

[Flopper]

I disagree. The inflation is being caused by price gouging. Until consumers say that they will not pay your overinflated prices is when inflation goes away.

Addressing your statement is like addressing the question of what came first the chicken or the egg. In my opinion price gouging is not the cause of inflation it is result of inflation.

When the economy is not in a period of growing inflation, business are continually looking for ways to increase prices or lower cost to increase profits which is the goal of most businesses. Most price increase are met by competitors taking customers away with lower prices. If they see an opportunity, they'll grab it. In a high inflationary period, producers will increase prices anticipating price increase by supplier or competitors. I don't see this a price gouging. It's simple the way businesses operate.

There are businesses such as farming certain crops that will have several bad years and may lose their whole crop. If they survive and they have a really good year where their competitors have a bad year, they will demand top prices for their crop. There is also the case of a company that produces ice in south Florida mainly for packing fish. The owner barely made a profit holding out for a bad hurricane or storm that would allowed him to sell his ice at 3 or 4 times the normal price making up for the years of little or no profit.

Do you consider this price gouging?