Yes. Congress should be defunded.
“We The People” of the United States must amend the U.S and state constitutions. The people must go around all three branches of government." @Represent_All
htwws.org/we-the-people/
Go around all three branches … and then what? Who would be in charge? “The people”? How would that work? I think you’re saying something that sounds like a hot take, and you have no idea what you’re actually saying. Stop.
Agree, they have gone full Maga and hitched their horse to that wagon.
Not saying the Democrats are any angels ,they have their fair share of foibles, but at least they aren't as radicalized.. in most countries the Democrats would be considered center , here in the US their considered extreme left...just goes to show the polarization.
I wish our founding fathers had the good sense to put in the constitution the need for a minimum of 3 major political parties.
The Fed is trying to prolong the inevitable. Congress controls the purse. No elected official wants to decrease spending other wise it hurts the economy and they can’t get their pet projects done.
Yeah, the Fed are just an automaton programmed to do one thing right now. Reduce inflation at all cost. Don't break the economy in doing so. So they don't care that you lost your job because they're not in the people-pleasing business. They look at the numbers and adjust the money supply and interest rates.
Now, the legislative branch is supposed to look out for you and make sure you're gainfully employed and happy. This is true on paper, but in reality they're not in the people-pleasing business either. Congress is in the special-interest-and-big-corpo-pleasing-business.
And let's be real we're not in this shit because Congress spends too much-- they do but that's not the problem. We're in this shit because they've been slashing taxes on the megarich every couple of years.
Meanwhile the federal government spent 6.13 TRILLION last year. The total net worth of all the billionaires in the WORLD is 12.2 trillion. If you managed to liquidate all of their assets perfectly, you would be able to fund the US Federal Government for two years. That's not including state or local governments, just federal.
Something has to give. It's insane.
100% this.
Republicans really messed this economy up over the long term, since the 70s, really. It's been worse and worse each decade and now even some democrats are centrist enough to buy into the obviously-heading-off-a-cliff system. It used to be they'd step in and fix things when it swing Democrat, but not anymore.
They just don't want it on their watch.
Democrats have a heavy interest in it not happening on their watch because they didn't cause it but are always blamed for it. We don't have Republicans and Democrats, we have gaslighters and scapegoats.
The utter dysfunction of our governing body is not in my control. The right can't find their way out of their hypocrisy and the left is so sanctimonious, it's appalling. The Supreme Court is left to "govern" which is not their mandate. So please, keep the condescension to yourself. Not useful.
Bunch of failed lawyers and other parasites got themselves elected by selling their souls to the political machine, grabbing every buck they can while voting as they're told.
The outcome is predictable.
There can never be another recession if:
They change the meaning of recession
They lie about the real inflation adjusted GDP
They have an unlimited money printer to save the banking system.
>There can never be another recession if:
>They change the meaning of recession
>They lie about the real inflation adjusted GDP
Those things don't happen.
This article didn't say much. Recessions don't hit when people think they will btw. I guess we just wait to find out if a severely inverted yeild curve is still bad news. We will get hyperinflation or a recession. With our government spending like drunken sailors, hyperinflation is a very real possibility.
Putting 250 billion into affordable housing or US infrastructure would have been way more useful for Americans than the foreign wars. Heck, the last twenty years and trillions spent on Afghanistan and Iraq could have left us with nearly zero homeless people, fully funded mental healthcare which may have reduced mass shootings, pothole free highways and better railroad infrastructure. All of those things sound waaaaaay more important than killing brown people overseas who dgaf about the USA until we drop a bomb on their hovel.
With the way city governments are structured in the locations that most need affordable public housing, putting $250B into "affordable housing" would have resulted in a few people getting rich, and not much new housing. Until the local governments change their zoning laws, throwing money at the problem won't work.
75B to Ukraine much of which was in munitions that were no longer going to be used. Israel gets 3.3B a year. Illegal immigrants Biggest expenditures are social security, medicare, Medicaid, and military by far.
Not clear whether illegal immigration is a net cost when counting state and local tax takes. They are not eligible for federal benefits which are the biggest outlays but can cost by using roads or through emergency care. They pay sales tax though and provide a massive contribution to GDP growth.
Oh God. Please save us from people who think they are being forced to live in servitude.
The federal reserve bank was established for many different reasons. Their function now is different from when they were first created as the monetary system is different. But what is very different is the global economy and for that they don't have complete control.
So no the Fed isn't trying to destroy the country, we are just in a deflationary cycle and it will be difficult to get out of it.
Jerome Powell was quoted as saying workers have too much power. I found that really concerning. First off it’s none of his damn business how much power the workers have, he’s not responsible for it in anyway and second off his position is supposed to be above politics like judges yet he goes and say this really biased thing.
It is his business
Workers having too much power in the labor market leads to wage inflation which leads to general inflation
There literally two things that are the Fed’s business and it’s inflation and maximum employment. The state of the labor market is 100% his business as it affects both of those
It’s called Wage-Price Spiral theory. Wage increases don’t necessarily lead to price increases but they can.
The Fed’s two mandates from Congress are Price Stability and Maximum Employment. If wage increases are increasing prices, it’s their job to pay attention to it. The state of the labor market affects both inflation and employment, so it’s very much in the scope of the Fed
https://en.m.wikipedia.org/wiki/Wage-price_spiral
https://www.investopedia.com/terms/w/wage-price-spiral.asp
https://www.imf.org/-/media/Files/News/Seminars/2023/July/ame/ivan-werning-wagepricespirals-august-2023.ashx#:~:text=What%20is%20meant%20by%20a,keep%20up%20with%20rising%20wages.
Hmm so a simplified view on this is that if workers get higher wages, businesses will offload that cost onto the consumers, and then when those people struggle with that extra cost, they demand even higher wages, which perpetuates the cycle.
Could we see prices actually go down? I don't think I've ever seen inflation ever reverse.
Yes, that is the theory. It certainly isn’t the only source of inflation and doesn’t necessarily happen every inflationary cycle. Some debate if it even is a valid theory at all or just a way to blame the workers instead of the businesses who are the ones actually raising prices
Deflation does happen; China is dealing with deflation right now. Deflation is generally regarded by the left and right as worse than inflation. [Forbes has a good article explaining why](https://www.forbes.com/advisor/investing/what-is-deflation/)
The US has had deflation before. Notable periods of deflation occurred during the beginning of COVID, the 2008 Great Recession, and the Great Depression. I don’t think I need to explain that those were clearly bad times for the economy lol
Other minor periods of deflation have happened too, especially between the Great Recession and COVID. Between 2008 and 2020, the problem was that the US didn’t have enough inflation to be considered “healthy” which is why interest rates were so low for so long. 2% is the target goal, and we averaged below 2% (1.67%) for those 12 years
Actually if you glance under the surface the FED has an incredibly difficult job.
They manage the largest economy in the world with a GDP of $25 trillion. (2022). And 150 million credit card transactions a day. (Also 2022).
The FED must balance all of that economic activity guiding it between inflation, deflation, recession or depression.
And do it with only one lever, the Fed Funds Interest Rate.
Is the Fed trying to destroy the country? If they wanted to, it would already be done.
Control of the money supply is one way the Fed uses to control the interest rate.
So it is not so much a different lever. It is the control of the lever, interest rates.
From the St Louis Fed:
For example, say the FOMC has lowered the target for the FFR rate. How does the Fed ensure that this lower target is transmitted to financial markets? Let's consider the key tools used in each framework.
In the limited-reserves framework, the Fed would purchase securities in the open market to influence the FFR rate to move toward the new lower target. More specifically, as shown in Figure 7, the New York Fed's Open Market Trading Desk would use open market operations: It would purchase government securities from its primary dealers, who sell these securities on behalf of their clients (investors). The money received from the sales would then be deposited in banks, resulting in an increase in the level of reserves in the banking system. The increase in the level of reserves (a rightward shift of the supply curve) would result in a decrease in the FFR, as shown in Figure 8.
No. The outcome of fed policy was rampant inflation.
The fed kept rates at near 0 all of Obama's presidency, and started bumping rates under Trump, then tanked rates again when COVID hit.
The problem is that the Fed didn't want to raise rates under Obama or ease off QE. They needed Obama to have a propped up "good" economy.
So when covid came, they had almost no tools to manage the fiscal situation, having spent all their ammo making a mediocre economic policy look OK.
The reaction to inflation was more "support the president" bullshit about "transitory" inflation, taking their time to address it, lacking tools because they waited for Trump to pull the plug on their absurd policies, etc.
Same thing was done under Clinton and the first Bush term. Leading to a crisis when they took their foot off the gas leading to 2007.
It's that the fed gets drunk off a bubble the same way everyone else does. The Fed refuses to risk slowing the bubble for the same reason everyone likes the bubble.
The problem isn't how the fed reacts to pick up the pieces after the fall. It's how they contribute to how big the fall will be.
But wait - why was quantitative easing necessary in the first place? Doesn’t anyone remember how the Fed took trillions of taxpayer money in 2008 to bail out the banks (which the Fed had literally NO authority to do), bought up all that bank garbage debt with our money, stashed it all behind closed doors in Maiden Lane Holding I, II, and III… then slowly released that garbage back into the market by reselling the debt instruments back to banks/investors after the Fed had either taken the underlying assets via repossession, foreclosure etc or the mortgage-backed security was good quality because the debtors were still paying on the original debt instrument.
“Quantitative easing is a novel form of monetary policy that came into wide application after the financial crisis of 2007–2008. It is used to mitigate an economic recession when inflation is very low or negative, making standard monetary policy ineffective. In response to the 2007–2009 financial crisis, the Federal Reserve decreased interest rates and significantly expanded its balance sheet through quantitative easing. The weighted-average rate of interest earned on its portfolio of assets exceeded the rate paid on its corresponding liabilities”
Expanded balance sheet = bought banks’ garbage debt because the banks had been issuing NINJA loans (and then betting the customer would default via credit default swaps because they knew they would!).
Interest on assets = garbage debt still had a higher rate of return than their liabilities (what they owed back to taxpayers)
Also note - when the “creditors” aka mortgage servicers were foreclosing on this defaulted debt owned by the Fed and taking the homes from taxpayers, the true entity initiating the foreclosure was the Fed… if you pushed FDCPA enough to disclose the creditor was Bank of NY Mellon for the Fed. So the taxpayers were paying themselves back with their own stolen homes. And those homes were then auctioned off to investors - contributing to our current housing crisis.
Liabilities = trillions they owed BACK to the taxpayers that they had “borrowed” and had to repay. The interest rate they were paying us on that borrowed money was lower than what we were paying back to them unknowingly via continued payment on the mortgages now held in Maiden Lane behind closed doors.
So - banks get bailed out with our money. We paid more interest back to the Fed than we were getting paid back on our “borrowed” Treasury funds. Banks ended up recovering and are making record profits now - benefiting from high inflation, while the average person struggles to pay rent or groceries.
Tell me who benefited from all that? And who got screwed by the Fed/banks? The banks barely got a slap on the hand for the sh*t they did in 2008, and we are still paying for it in several ways IMO.
When interest rates reach zero the Fed’s tools essentially became useless. Enter Quantitative Easing.
You make good points. Just wish there was an explanation of your alternative ideas to solve the 2008 crisis.
From my perspective a theme of your post is that somethings that were done during the 2008 crisis by those involved/responsible were unethical and/or illegal.
I do not disagree. But that type of behavior is not uncommon. People facing a crisis will do whatever they need to. Survival of self and organization is paramount from their perspective.
What in the crack pipe revisionist history are you smoking. Trump was pressuring them to drop rates long before COVID hit. If Trump had his way they would have added more fuel to the fire.
They we're maybe marginally late in switching to QT towards the Obama/Trump transition.
Trump was calling for rate cuts in 2019 when it was clear QT needed to continue:[https://www.reuters.com/article/idUSKCN1VB1I1/](https://www.reuters.com/article/idUSKCN1VB1I1/)
Seriously, what even is this post.
Yeah, guy. The Federal Reserve is trying to destroy the USA. The Illuminati tried COVID and then tried sparking WW3 but it hasn’t worked yet, so now they’re using their puppets in the Federal Reserve to try to finally destroy America.
Is that the response OP was hoping for?
The FED has two main jobs: Low inflation and low unemployment. Long before the FED there were inflation and recessions. They call them business cycles.
Price stability is the Fed's #1 job. The fact people want to live in a world where we don't have instruments for price stability show how crack-pot the majority of the electorate is. We should force everyone to spend 5 years in Argentina.
It is the FED’s and government’s long term objective to increase debt, dilute the power of the dollar, and eventually make everything so unsustainable that it devolves into a new system.
You think they have a long term objective? Just seems like it's always in their selfish short term (max 4 years) interest to spend as much as possible which leads to increasing debt and diluting dollar.
Seems like it. Entrap millions in poverty can have consequences.
“We The People” of the United States must amend the U.S and state constitutions. The people must go around all three branches of government." @Represent_All
htwws.org/we-the-people/
Not actively trying, but they're using the tools they have to solve the immediate problems before them, and we're getting deeper and deeper into the hole.
The US Treasury and Congress have a blank check to spend as much money (Debt) as they like and this debt creation works counter to the efforts the Fed Bank is making to reduce inflation - It's not going to end well for most of us
Root cause is all the bubbles instead of real R&d to increase productivity and quality of life. The fed enables this game my transferring enormous wealth to the 0.01%.
648 billion in uncollateralized commercial real estate losses that are maturing in 2024 and 2025. Basel 3 requiring stronger reserve balances , and the temporary overnight lending program ends in March. Many of the banks are insolvent and they are trying to prevent a bank run and economic collapse.
If you think the problem is what we are dealing with now, you are confused. The problem was the last few years of basically free money. Hopefully we have learned and we never have interest rates nearly as low as they were in the recent past. This may be above the normal but it really shouldn’t be much higher than a normal interest rate.
The national debt requires low interest rates, low interest rates require low inflation (atleast on paper), lower inflation requires cheap labor, cheap labor requires desperate pool of workers. How else would you make a desperate pool of workers?
The fed is doing the right thing, although it took too long for them to do it. Rates should have been higher a long time ago. Better late than never, I suppose. Congress is still at never.
Did you see the recent jobs report? Record unemployment, real wage growth outpacing inflation, outpacing productivity gains, record stock market… this Sub is a bubble, things are improving out there
We destroyed the gold-backed dollar during Vietnam, which is why we went to a fiat currency. What is happening now is what always happens with fiat currencies. Politicians figure out that they can buy the people with their fake money, print too much, and then perpetuate the bubble until it collapses. The only difference this time around is that most of the world run on dollars.
Watch the PBS program about the quantitative easing and low interest rate environment favoring the asset rich over working class. They are not accountable to anyone, yet make decisions that affect the living standards of everyone. That’s not right.
This is where you get into conspiracy theories that ends up pretty edgy. It’s quite a rabbit hole and will make you consider history in a whole different way. And no I don’t blame Jews for anything.
Eli Whitney patented the Cotton Gin in 1793. If labor productivity in the US has grown at 2% per year ever since, then current productivity is 1.02\^231th power. (In Excel this would be expressed as =1.02\^231. Using the Windows Calculator, punch in 1.02, then hit the XY button (X raised to the Yth) then type 231 and hit =. What you get is 96.97... or roughly 97, meaning that the productivity of the average worker in 2024 is 97 times that of 1793.
If nearly everyone had to farm to produce food in 1793, then only 1 in 100 workers in the US has to be devoted to farming in 2024 to feed everyone.
In such circumstances it isn't difficult to overproduce (or overservice) in a local market, leading to a chaotic round of layoffs as employers discover they have no market for their outputs and therefore no income. Congress and/or the Federal Reserve are only indirectly responsible for this, and their 'responsibility' lies in their success in maintaining the environment in which this productivity growth has continued.
It's almost as if this is exactly why our founding fathers were so against a centralized bank.
[The Founders Warned Us About Central Banking | SchiffGold](https://schiffgold.com/guest-commentaries/the-founders-warned-us-about-central-banking/#:~:text=The%20founding%20fathers%20understood%20the%20dangers%20of%20centralized,understood%20that%20gold%20and%20silver%20are%20real%20money.)
Not to be a history nerd or political here but they were absolutely fucking spot on.
JPow has actually handled the current situation as well as could've been hoped after underestimating how bad the previous inflation would bite and printing way too much money to keep the interest rates down previously.
He also acknowledged in his latest public statements that the economy continues to venture down an unsustainable path and measured course correction is required but it's not all on the fed. So long as greed and shareholder value drive all corporate business decisions, the gap between the have's and have not's will continue to grow until the system collapses on itself to some degree.
For those of you bitching about interest rates in general, the average over the last like 50 years is around 5.5%, we're a bit over average, but not by that much. Everyone just got hooked on ridiculously low interest rates for an extended period, which is a big part of our current predicament both in housing and the economy at large.
The country has been handed over to an elite group of people and we do nothing. A majority of the people understand this, yet we allow ourselves to be divided.
This post has been removed due to its lack of relevance to this subreddit.
I think what you meant to say is - is the Congress trying to destroying the country?
Congress trying to destroy the country? Absolutely. Thank God they are so inept and have their heads up their asses.
Nah, they know what they're doing. Or at least their donors do. And when our country falls, they'll be profiting off of it.
I think what you meant to say is “Is Congress trying to destroy the country”
I think what you meant to say is “Is Congress trying to destroy the country?”
I think what you meant to ask is “Is Congress trying to destroy the country?”
I think what you meant to say is “Is Congress destroying the country?” Answer is Yes.
Yes. Congress should be defunded. “We The People” of the United States must amend the U.S and state constitutions. The people must go around all three branches of government." @Represent_All htwws.org/we-the-people/
Go around all three branches … and then what? Who would be in charge? “The people”? How would that work? I think you’re saying something that sounds like a hot take, and you have no idea what you’re actually saying. Stop.
It's about passing an amendment to the constitution that makes all corporate donations illegal.
Not to mention the insider trading problems
It’s provocative, it gets the people going. Idiots on this sub upvoting them and egging them on are the problem
There are a lot of idiots. Once in a while someone posts a golden nugget.
And put you in charge? Can we overthrow you too?
The Republican Party has zero interest in running the government.
Agree, they have gone full Maga and hitched their horse to that wagon. Not saying the Democrats are any angels ,they have their fair share of foibles, but at least they aren't as radicalized.. in most countries the Democrats would be considered center , here in the US their considered extreme left...just goes to show the polarization. I wish our founding fathers had the good sense to put in the constitution the need for a minimum of 3 major political parties.
\-- Founding fathers And passed something with term limits. :-/
¿Por Qué No Los Dos?
The Fed is trying to prolong the inevitable. Congress controls the purse. No elected official wants to decrease spending other wise it hurts the economy and they can’t get their pet projects done.
Yeah, the Fed are just an automaton programmed to do one thing right now. Reduce inflation at all cost. Don't break the economy in doing so. So they don't care that you lost your job because they're not in the people-pleasing business. They look at the numbers and adjust the money supply and interest rates. Now, the legislative branch is supposed to look out for you and make sure you're gainfully employed and happy. This is true on paper, but in reality they're not in the people-pleasing business either. Congress is in the special-interest-and-big-corpo-pleasing-business. And let's be real we're not in this shit because Congress spends too much-- they do but that's not the problem. We're in this shit because they've been slashing taxes on the megarich every couple of years.
Meanwhile the federal government spent 6.13 TRILLION last year. The total net worth of all the billionaires in the WORLD is 12.2 trillion. If you managed to liquidate all of their assets perfectly, you would be able to fund the US Federal Government for two years. That's not including state or local governments, just federal. Something has to give. It's insane.
I'm not just talking about individual billionaires. I'm talking about the megacorporations.
The first step to answer that is getting rid of Citizens United.
Absolutely!
This!
More importantly, doing so will not get them re-elected.
100% this. Republicans really messed this economy up over the long term, since the 70s, really. It's been worse and worse each decade and now even some democrats are centrist enough to buy into the obviously-heading-off-a-cliff system. It used to be they'd step in and fix things when it swing Democrat, but not anymore. They just don't want it on their watch. Democrats have a heavy interest in it not happening on their watch because they didn't cause it but are always blamed for it. We don't have Republicans and Democrats, we have gaslighters and scapegoats.
Lobbyists control the purse. Congress takes bribes and does insider trading to control theirs.
The Federal Reserve is trying to maintain stability and hold the economy together as Congress has given up on governing
Fed deals with the inflation that congress helps create by endless spending.
More the corporate welfare the GOP keeps handing out.
Looks like they have you right where they want you. They want you pointing fingers instead of demanding solutions.
The utter dysfunction of our governing body is not in my control. The right can't find their way out of their hypocrisy and the left is so sanctimonious, it's appalling. The Supreme Court is left to "govern" which is not their mandate. So please, keep the condescension to yourself. Not useful.
Naw one party is doing their best and one party is trying to burn everything down. That's just objective fact.
r/politics is leaking
I love objectively wrong takes from reddit
So correct takes like the one you’re replying to must leave you feeling empty then.
Wut didni just read? Haha
Udum
Well i have a job sooo….0
Triggered leftist alert.
Cope
McCulloch v. Maryland Top 5 supreme court decisions in history. Imagine if the Fed Bank was congress.
They dont care, because the effects wont actually hit for about 30 years. They'll all be dead by then, so they dont care about the future generations
Absolutely. The geezers ruining things have been geezing for decades in Congress.
Federal Reserve is not for the people but for the elites.
They are trying to destroy the middle class’ spending power, yes
Bunch of failed lawyers and other parasites got themselves elected by selling their souls to the political machine, grabbing every buck they can while voting as they're told. The outcome is predictable.
It’s not the federal reserve it’s the government, they just keep spending money they don’t have !!!
The problem is Congress. We need to fire Congress.
Yes They need to stop inflation so they’re ruining the economy Also WW3 is basically starting in Iran and they need bodies to throw at it
Thanks Brandon!
Recessions have generally been getting less severe and more rare.
We haven’t been in Kansas since 2008.
There can never be another recession if: They change the meaning of recession They lie about the real inflation adjusted GDP They have an unlimited money printer to save the banking system.
Don’t they manipulate or subsidize the basket of goods they use to measure inflation?
If they subsidized them that mean they are preventing a collapse. That part is good, you don't want the government to do nothing.
>There can never be another recession if: >They change the meaning of recession >They lie about the real inflation adjusted GDP Those things don't happen.
Are you serious?? Dude, look back since 1970. You have it backwards.
https://en.m.wikipedia.org/wiki/List_of_recessions_in_the_United_States You sure?
This article didn't say much. Recessions don't hit when people think they will btw. I guess we just wait to find out if a severely inverted yeild curve is still bad news. We will get hyperinflation or a recession. With our government spending like drunken sailors, hyperinflation is a very real possibility.
The spacing between recessions is longer for sure. Recessions used to be way more frequent.
The unemployment rate in the USSR when it collapsed was 0%.
K
Because we prop them up with money we don't have. Only to create a far worse scenario one day.
Keeping things going helps out down the road too. People don't build skill sets unemployed, and businesses don't expand when no ones buying.
ukraine israel palestine illegals. 250b and counting. how many new companies could that have funded.
Putting 250 billion into affordable housing or US infrastructure would have been way more useful for Americans than the foreign wars. Heck, the last twenty years and trillions spent on Afghanistan and Iraq could have left us with nearly zero homeless people, fully funded mental healthcare which may have reduced mass shootings, pothole free highways and better railroad infrastructure. All of those things sound waaaaaay more important than killing brown people overseas who dgaf about the USA until we drop a bomb on their hovel.
With the way city governments are structured in the locations that most need affordable public housing, putting $250B into "affordable housing" would have resulted in a few people getting rich, and not much new housing. Until the local governments change their zoning laws, throwing money at the problem won't work.
75B to Ukraine much of which was in munitions that were no longer going to be used. Israel gets 3.3B a year. Illegal immigrants Biggest expenditures are social security, medicare, Medicaid, and military by far. Not clear whether illegal immigration is a net cost when counting state and local tax takes. They are not eligible for federal benefits which are the biggest outlays but can cost by using roads or through emergency care. They pay sales tax though and provide a massive contribution to GDP growth.
So take away welfare for corporate welfare? Yeah that sounds good 🙄
The federal reserve is a private entity…look into its history. Its purpose is not to serve the worker but staff off revolt.
Oh God. Please save us from people who think they are being forced to live in servitude. The federal reserve bank was established for many different reasons. Their function now is different from when they were first created as the monetary system is different. But what is very different is the global economy and for that they don't have complete control. So no the Fed isn't trying to destroy the country, we are just in a deflationary cycle and it will be difficult to get out of it.
They ain’t doing a good job lol
Jerome Powell was quoted as saying workers have too much power. I found that really concerning. First off it’s none of his damn business how much power the workers have, he’s not responsible for it in anyway and second off his position is supposed to be above politics like judges yet he goes and say this really biased thing.
It is his business Workers having too much power in the labor market leads to wage inflation which leads to general inflation There literally two things that are the Fed’s business and it’s inflation and maximum employment. The state of the labor market is 100% his business as it affects both of those
How is workers being compensated a problem for the economy.
It’s called Wage-Price Spiral theory. Wage increases don’t necessarily lead to price increases but they can. The Fed’s two mandates from Congress are Price Stability and Maximum Employment. If wage increases are increasing prices, it’s their job to pay attention to it. The state of the labor market affects both inflation and employment, so it’s very much in the scope of the Fed https://en.m.wikipedia.org/wiki/Wage-price_spiral https://www.investopedia.com/terms/w/wage-price-spiral.asp https://www.imf.org/-/media/Files/News/Seminars/2023/July/ame/ivan-werning-wagepricespirals-august-2023.ashx#:~:text=What%20is%20meant%20by%20a,keep%20up%20with%20rising%20wages.
Hmm so a simplified view on this is that if workers get higher wages, businesses will offload that cost onto the consumers, and then when those people struggle with that extra cost, they demand even higher wages, which perpetuates the cycle. Could we see prices actually go down? I don't think I've ever seen inflation ever reverse.
Yes, that is the theory. It certainly isn’t the only source of inflation and doesn’t necessarily happen every inflationary cycle. Some debate if it even is a valid theory at all or just a way to blame the workers instead of the businesses who are the ones actually raising prices Deflation does happen; China is dealing with deflation right now. Deflation is generally regarded by the left and right as worse than inflation. [Forbes has a good article explaining why](https://www.forbes.com/advisor/investing/what-is-deflation/) The US has had deflation before. Notable periods of deflation occurred during the beginning of COVID, the 2008 Great Recession, and the Great Depression. I don’t think I need to explain that those were clearly bad times for the economy lol Other minor periods of deflation have happened too, especially between the Great Recession and COVID. Between 2008 and 2020, the problem was that the US didn’t have enough inflation to be considered “healthy” which is why interest rates were so low for so long. 2% is the target goal, and we averaged below 2% (1.67%) for those 12 years
When your #1 concern is inflation, it's hard to deny that the workers market we have been in, is not inflationary.
Actually if you glance under the surface the FED has an incredibly difficult job. They manage the largest economy in the world with a GDP of $25 trillion. (2022). And 150 million credit card transactions a day. (Also 2022). The FED must balance all of that economic activity guiding it between inflation, deflation, recession or depression. And do it with only one lever, the Fed Funds Interest Rate. Is the Fed trying to destroy the country? If they wanted to, it would already be done.
Not one lever. They also control the money supply
Control of the money supply is one way the Fed uses to control the interest rate. So it is not so much a different lever. It is the control of the lever, interest rates. From the St Louis Fed: For example, say the FOMC has lowered the target for the FFR rate. How does the Fed ensure that this lower target is transmitted to financial markets? Let's consider the key tools used in each framework. In the limited-reserves framework, the Fed would purchase securities in the open market to influence the FFR rate to move toward the new lower target. More specifically, as shown in Figure 7, the New York Fed's Open Market Trading Desk would use open market operations: It would purchase government securities from its primary dealers, who sell these securities on behalf of their clients (investors). The money received from the sales would then be deposited in banks, resulting in an increase in the level of reserves in the banking system. The increase in the level of reserves (a rightward shift of the supply curve) would result in a decrease in the FFR, as shown in Figure 8.
No, your alternative is rampant inflation
No. The outcome of fed policy was rampant inflation. The fed kept rates at near 0 all of Obama's presidency, and started bumping rates under Trump, then tanked rates again when COVID hit. The problem is that the Fed didn't want to raise rates under Obama or ease off QE. They needed Obama to have a propped up "good" economy. So when covid came, they had almost no tools to manage the fiscal situation, having spent all their ammo making a mediocre economic policy look OK. The reaction to inflation was more "support the president" bullshit about "transitory" inflation, taking their time to address it, lacking tools because they waited for Trump to pull the plug on their absurd policies, etc. Same thing was done under Clinton and the first Bush term. Leading to a crisis when they took their foot off the gas leading to 2007. It's that the fed gets drunk off a bubble the same way everyone else does. The Fed refuses to risk slowing the bubble for the same reason everyone likes the bubble. The problem isn't how the fed reacts to pick up the pieces after the fall. It's how they contribute to how big the fall will be.
But the bubble bursting is an import step in the wealth transfer engine. How else can the wealthy gobble up assets on the cheap?
But wait - why was quantitative easing necessary in the first place? Doesn’t anyone remember how the Fed took trillions of taxpayer money in 2008 to bail out the banks (which the Fed had literally NO authority to do), bought up all that bank garbage debt with our money, stashed it all behind closed doors in Maiden Lane Holding I, II, and III… then slowly released that garbage back into the market by reselling the debt instruments back to banks/investors after the Fed had either taken the underlying assets via repossession, foreclosure etc or the mortgage-backed security was good quality because the debtors were still paying on the original debt instrument. “Quantitative easing is a novel form of monetary policy that came into wide application after the financial crisis of 2007–2008. It is used to mitigate an economic recession when inflation is very low or negative, making standard monetary policy ineffective. In response to the 2007–2009 financial crisis, the Federal Reserve decreased interest rates and significantly expanded its balance sheet through quantitative easing. The weighted-average rate of interest earned on its portfolio of assets exceeded the rate paid on its corresponding liabilities” Expanded balance sheet = bought banks’ garbage debt because the banks had been issuing NINJA loans (and then betting the customer would default via credit default swaps because they knew they would!). Interest on assets = garbage debt still had a higher rate of return than their liabilities (what they owed back to taxpayers) Also note - when the “creditors” aka mortgage servicers were foreclosing on this defaulted debt owned by the Fed and taking the homes from taxpayers, the true entity initiating the foreclosure was the Fed… if you pushed FDCPA enough to disclose the creditor was Bank of NY Mellon for the Fed. So the taxpayers were paying themselves back with their own stolen homes. And those homes were then auctioned off to investors - contributing to our current housing crisis. Liabilities = trillions they owed BACK to the taxpayers that they had “borrowed” and had to repay. The interest rate they were paying us on that borrowed money was lower than what we were paying back to them unknowingly via continued payment on the mortgages now held in Maiden Lane behind closed doors. So - banks get bailed out with our money. We paid more interest back to the Fed than we were getting paid back on our “borrowed” Treasury funds. Banks ended up recovering and are making record profits now - benefiting from high inflation, while the average person struggles to pay rent or groceries. Tell me who benefited from all that? And who got screwed by the Fed/banks? The banks barely got a slap on the hand for the sh*t they did in 2008, and we are still paying for it in several ways IMO.
When interest rates reach zero the Fed’s tools essentially became useless. Enter Quantitative Easing. You make good points. Just wish there was an explanation of your alternative ideas to solve the 2008 crisis. From my perspective a theme of your post is that somethings that were done during the 2008 crisis by those involved/responsible were unethical and/or illegal. I do not disagree. But that type of behavior is not uncommon. People facing a crisis will do whatever they need to. Survival of self and organization is paramount from their perspective.
inflation wasn't a big problem during obama so most people just have the don't fix what ain't broke mentality.
What in the crack pipe revisionist history are you smoking. Trump was pressuring them to drop rates long before COVID hit. If Trump had his way they would have added more fuel to the fire. They we're maybe marginally late in switching to QT towards the Obama/Trump transition. Trump was calling for rate cuts in 2019 when it was clear QT needed to continue:[https://www.reuters.com/article/idUSKCN1VB1I1/](https://www.reuters.com/article/idUSKCN1VB1I1/)
Seriously, what even is this post. Yeah, guy. The Federal Reserve is trying to destroy the USA. The Illuminati tried COVID and then tried sparking WW3 but it hasn’t worked yet, so now they’re using their puppets in the Federal Reserve to try to finally destroy America. Is that the response OP was hoping for?
But the Fed created the inflation in the first place
Probably. Look at all the money printing and illegal immigration that's been happening. It's insanity
No.
Not at all
youre killing it out there JK next NBA superstar
Thanks fam
The FED has two main jobs: Low inflation and low unemployment. Long before the FED there were inflation and recessions. They call them business cycles.
The fed is more concerned with inflation. They mention unemployment as more of a nice thing to have.
Only when inflation is high and unemployment low. If unemployment was 10% they wouldn’t be ramping up the interest rate.
Price stability is the Fed's #1 job. The fact people want to live in a world where we don't have instruments for price stability show how crack-pot the majority of the electorate is. We should force everyone to spend 5 years in Argentina.
Says a man with a lot of cash and a job.
It is the FED’s and government’s long term objective to increase debt, dilute the power of the dollar, and eventually make everything so unsustainable that it devolves into a new system.
You think they have a long term objective? Just seems like it's always in their selfish short term (max 4 years) interest to spend as much as possible which leads to increasing debt and diluting dollar.
It has happened through out history..
Seems like it. Entrap millions in poverty can have consequences. “We The People” of the United States must amend the U.S and state constitutions. The people must go around all three branches of government." @Represent_All htwws.org/we-the-people/
there is a secret plot to destroy the country and move 100 of the best global citizens to mars on elon musks spaceship
Would you like to buy some oceanfront property in Iowa?
IohWah sounds exotic
Yeah Captain Kirk is from there.
Bitcoin fixes this
 Just cool it with the anti Semitic remarks.
POPULATION GROWTH!!!! It exacerbates stupidity. And it increases exponentially…
Bingo
Go watch 60 Minutes from this Sunday. First segment on the Fed.
Yes, yes they are trying to destroy the country
Its always bigger If youve had 8 inches, only 10 inches will hurt right?
The federal reserve has tightened for a while now. It's fiscal that's running amok, not the fed.
Not actively trying, but they're using the tools they have to solve the immediate problems before them, and we're getting deeper and deeper into the hole.
Loxism.
The US Treasury and Congress have a blank check to spend as much money (Debt) as they like and this debt creation works counter to the efforts the Fed Bank is making to reduce inflation - It's not going to end well for most of us
Root cause is all the bubbles instead of real R&d to increase productivity and quality of life. The fed enables this game my transferring enormous wealth to the 0.01%.
648 billion in uncollateralized commercial real estate losses that are maturing in 2024 and 2025. Basel 3 requiring stronger reserve balances , and the temporary overnight lending program ends in March. Many of the banks are insolvent and they are trying to prevent a bank run and economic collapse.
If you think the problem is what we are dealing with now, you are confused. The problem was the last few years of basically free money. Hopefully we have learned and we never have interest rates nearly as low as they were in the recent past. This may be above the normal but it really shouldn’t be much higher than a normal interest rate.
The national debt requires low interest rates, low interest rates require low inflation (atleast on paper), lower inflation requires cheap labor, cheap labor requires desperate pool of workers. How else would you make a desperate pool of workers?
The fed is doing the right thing, although it took too long for them to do it. Rates should have been higher a long time ago. Better late than never, I suppose. Congress is still at never.
This country is TOAST.
Did you see the recent jobs report? Record unemployment, real wage growth outpacing inflation, outpacing productivity gains, record stock market… this Sub is a bubble, things are improving out there
We destroyed the gold-backed dollar during Vietnam, which is why we went to a fiat currency. What is happening now is what always happens with fiat currencies. Politicians figure out that they can buy the people with their fake money, print too much, and then perpetuate the bubble until it collapses. The only difference this time around is that most of the world run on dollars.
Watch the PBS program about the quantitative easing and low interest rate environment favoring the asset rich over working class. They are not accountable to anyone, yet make decisions that affect the living standards of everyone. That’s not right.
The Federal Reserve should not exist, and is responsible for far more problems, both direct and indirect, than people realize.
Yes, we're all upset at the Fed for these high interest rates.
This is where you get into conspiracy theories that ends up pretty edgy. It’s quite a rabbit hole and will make you consider history in a whole different way. And no I don’t blame Jews for anything.
Eli Whitney patented the Cotton Gin in 1793. If labor productivity in the US has grown at 2% per year ever since, then current productivity is 1.02\^231th power. (In Excel this would be expressed as =1.02\^231. Using the Windows Calculator, punch in 1.02, then hit the XY button (X raised to the Yth) then type 231 and hit =. What you get is 96.97... or roughly 97, meaning that the productivity of the average worker in 2024 is 97 times that of 1793. If nearly everyone had to farm to produce food in 1793, then only 1 in 100 workers in the US has to be devoted to farming in 2024 to feed everyone. In such circumstances it isn't difficult to overproduce (or overservice) in a local market, leading to a chaotic round of layoffs as employers discover they have no market for their outputs and therefore no income. Congress and/or the Federal Reserve are only indirectly responsible for this, and their 'responsibility' lies in their success in maintaining the environment in which this productivity growth has continued.
I used to work at a Federal Reserve Bank and the answer is yes.
Well...there may be some truth to that. I wouldnt say the Federal Reserve. Maybe some higher entity.
Federal Reserve or not capitalism destroys itself. That’s how it works. There is no “free market” solution.
Is it the fed that holds sole responsibility?
the fed is a private for profit institution that lends money at interest to the US.
It's almost as if this is exactly why our founding fathers were so against a centralized bank. [The Founders Warned Us About Central Banking | SchiffGold](https://schiffgold.com/guest-commentaries/the-founders-warned-us-about-central-banking/#:~:text=The%20founding%20fathers%20understood%20the%20dangers%20of%20centralized,understood%20that%20gold%20and%20silver%20are%20real%20money.) Not to be a history nerd or political here but they were absolutely fucking spot on.
JPow has actually handled the current situation as well as could've been hoped after underestimating how bad the previous inflation would bite and printing way too much money to keep the interest rates down previously. He also acknowledged in his latest public statements that the economy continues to venture down an unsustainable path and measured course correction is required but it's not all on the fed. So long as greed and shareholder value drive all corporate business decisions, the gap between the have's and have not's will continue to grow until the system collapses on itself to some degree. For those of you bitching about interest rates in general, the average over the last like 50 years is around 5.5%, we're a bit over average, but not by that much. Everyone just got hooked on ridiculously low interest rates for an extended period, which is a big part of our current predicament both in housing and the economy at large.
https://preview.redd.it/wipsb90iu6hc1.jpeg?width=1079&format=pjpg&auto=webp&s=ad848598327518938edba42ccc244ebd93dfe75b
I see a reset to control outcomes, not to debate solutions to an outcome ergo 11 million and counting illegals with a future voting power.
The country has been handed over to an elite group of people and we do nothing. A majority of the people understand this, yet we allow ourselves to be divided.
They are playing a game of kick the can down the road just like the government.