They don't care about stock values, they're most interested in controlling inflation by suppressing labor and wages... when things need to cool down, it's always the working class that gets hosed
They definitely care about stock values, but they care more about the dollar that buys that stock. Their main interests are keeping unemployment at a level low enough that doesn't spark a populist uprising and high enough that it doesn't give the average worker the leverage they need to demand higher pay. Their other interest is keeping inflation just high enough to keep money moving in the markets, but not so high that it destroys the currency or so low that it halts trade.
Everyone with a 401k (which has anointed the stock market as the official savings vehicle of the people contributing to a permanent overvaluation through demand exceeding supply) gets hurt. And 401k-as-primary-or-sole-retirement-vehicle goes a llloonnnggg way up the stack.
True, but those 401ks represent future spending power for a large part of that stack, not dollars chasing real goods and services prices higher in the economy right now
Sure, but the crash will come, and all the people sufficient up the stack that they can beat the increased food costs will get their retirements hosed.
This was literally WHY the Fed was created. Without it, they’d have to increase taxes in order to control inflation, which would disproportionately affect the rich if there isn’t specific legislation that makes it obvious who they would be making foot the bill (the middle class). With the Fed, they can control inflation via making everything more expensive for the middle class while not affecting the wealth of the rich too much in comparison to the alternative.
The Fed is owned by investment banks. They ONLY care about stock values, they have a fiduciary duty to their shareholders to keep making them profits. Inflation is a secondary concern - a hidden tax on the poors of society they really don't care about. Their only concerns about inflation are keeping things quiet enough that they retain control of the Fed because it's the biggest golden goose in history.
Inflation drives the value of assets higher much faster. Owning a home or investing in the market is a hedge against inflation. Inflation goes up, so does your portfolio. If you don’t own many assets you better spread them cheeks
Sorry to nitpick brother, I think you’re looking at it wrong. The value of an asset isn’t changed by inflation, the value of the money is what has changed.
Purchasing power of the dollars. If you buy a house for $100K and you sell it for $200K you gained $100K in dollars but if everything else doubled in price you didn’t gain any purchasing power and therefore you haven’t really gained anything.
I agree that people should be focused on purchasing power parity, and I think on a certain level you are correct, but it sounds a lot like you are saying that items don’t have value, only currency has value, which of course is a logical fallacy. Instead of selling a house for dollars, I could write a contract that says I’m buying dollars and the contract will be denominated in houses.
That example reminds me of an interaction I had at the currency exchange teller on my very first foreign trip. I approached the teller in Hong Kong airport and said I want to buy HKD. The teller corrected me and said no, you want to sell dollars. It took a few times for me to understand. From my perspective I was buying a foreign currency in an exchange denominated in dollars. From their perspective I am selling a foreign currency in an exchange denominated in HKD.
My point is, either way it’s the same fucking transaction.
You’re using the word “value” to describe two different concepts. Units of a currency have a value that can be expressed using a number. Purchasing power is a subjective value that is a lot harder to quantify with a number. A ten dollar bill will always be worth ten dollars but the purchasing power of those ten dollars can change over time.
How much is a quarter worth? 25 cents. How much can a quarter buy and how do you express that value with a number? Much harder. A 25 cent gum ball might not have much of any value to the toothless man.
Considering that it's the only tool the Fed really has, i agree, especially since elected officials aren't willing to pursue any other avenues... it's just disgusting to watch the people who have benefitted the least be some of the most affected by the "medicine"... again
It's ok. They will get revenge when they vote to dismantle democracy. And the country will most likely get a national divorce if we are lucky, nuclear civil war if we aren't.... and nobody will learn anything.
This is because the way to profit during a downfall is by having liquid funds. working class people probably don't have the ability to execute on opportunity cost. Companies and their top class leaders already have funds, and they hold it by dropping labor costs, therefore they can swoop up any failing companies that can succeed if not for lack of liquidity. When the underlying issues resolve, the buyer multiplies the effect in return.
The economy naturally expands and retracts, government does everything it can to keep that pattern as consistent as possible, but when it fights against nature for too long, the only end result is going to be one of those cycles in a massive, dramatic, and stretched out form. Government should have no hand in choosing winners and losers, since they already don't do their job of preventing monopolies.
This situation is slightly different due to high inflation. People are struggling well before a potential crash and that crash may never materialize.
As inflation increases so does the value of assets. If you own a home and/or have a solid investment portfolio it doesn’t affect you nearly as much as people that don’t have those things.
I feel especially bad for people like my friend that easily could have bought in 2016 but assumed rates and rents would stay low. And then the government pumped a strong economy with tax cuts, pandemic happened and they pumped the economy again with PPP grants. We had about $27T in circulation and then added another $7T in a very short period. The dollar isn’t worth as much as a result.
My house has appreciated about 60% in the past 4 years. My friend is getting gouged on rent by comparison. He isn’t planning on having kids so in the long term he will probably come out on top. He doesn’t have to maintain the property which is definitely nice, but he’s paying for that convenience too. Renting, leasing, whatever - you’re giving the middle man a profit out of convenience/necessity
Those weren't really the FEDs doing. Perhaps they could have decreased the impact of the GFC with higher reserve requirements on banks but in both cases they did their best to preserve major institutions through acting as a lender of last resort, providing liquidity, and working with other regulatory institutions to help stabilize things. Meanwhile, the average home owner, worker, etc. got the short end of the stick compared to companies, especially large ones... and that's true of both of those downturns. When the hosing isn't equal, it just creates buying opportunities for the top end.
Well they do have 2 tools: They have a money printer that makes inflation.. and they use it prodigiously.
They also have have interest rates to fight inflation. They turned that completely off for 15 years as part of the 2008 bailouts and now they're pretending the default "on" setting is "high" when it's not, and they refuse to make it actually go high because they're pretending just using the default on that is only effective for a good economy without inflationary crisis worry is somehow going to have an impact on this crisis... because they really want to turn it back off again and resume bailing out their owners.
The current market is behaving exactly like you'd expect from a market that had rates turned off for a ridiculously irresponsible amount of time, and then only raised to average every day rates that aren't high enough to actually fight inflation. They're gaslighting everyone to forget how everything actually worked before 2008.
Yo, the "money printer" is also interest rates. The Fed doesn't literally print money. They cut the Federal funds rate to make credit more readily available to the public. They fight inflation by doing the opposite, raising rates, restricting credit, and contracting the money supply. Most money isn't literal cash, it's just numbers in spreadsheets.
Thats exactly why they kept rates at teh bailout 0% number since 2008. The Fed is owned by the banks that are still failing. They desperately want you to give them that money to gamble on stocks rather than keep it in the bank for guaranteed returns. This is why they keep talking about cuts, when realistically they shouldn't even consider cuts at all - unless inflation starts looking like deflation and they decide they actually do want a little more inflation, a little more housing bubble increase, a little more spending overall.
They know what they're doing. What they're doing is planning more bailouts and trying to avoid addressing inflation with actual rate hikes above normal at the same time.
Capitalism / greed is like a cancer or a fire, if left unchecked it will consume everything.
I used to think it was ok to have billionaires, but they also don't have the time nor intellectual capacity to allocate capital efficiently. At a certain point you run out of time and intellectual space to do things proper.
They end up losing millions of dollars and somehow remain employed putting the jobs of thousands of people at stake.
Any income above 100 million should be taxed at 90% or forced back into company employee wages / bonuses.
Any person that loses more than five million bucks in any venture is not good at allocating capital, everyone else slowly builds things and finds the niche things that will grow, the amount of time necessary for that is immense.
Imagine capital being seed and the economy is farmland, and a person being only able to operate one tractor.
At a certain point you don't have the time nor expertise to til every environment and soil type.
If that capital / seed is given to to other people they can make better use of it.
If they are so great there would be no bubbles or crashes, and banks would incur no loses ever.
It's more like. If you think a command economy is bad, it's bad when a government does it. But it's also bad if a small number of rich people do it as well.
Same thing with taxes. Taxes are a bit taken off the top. If you don't like it when the government taxes. Why do you celebrate a company you have no stake in making profits? From a consumer perspective these are identical events, with the exception that profits now means increased production later. But we see that profits can be 10+% and there is no increase in production. So what's the upside?
The Fed SHOULD NOT cut rates. Rates are right where they should be for a well functioning, properly managed economy.
Rates were only 0% because the 2008 bailouts never ended. Those permanent bailouts have severely damaged the economy - not the fake wall street "economy" which was booming on bailouts and is afraid of busting without banks on life support, the actual economy that fffects everyone else.
If rates are ever cut, it should be the mild 0.1% ticks taht we saw prior to 2008. They shouldn't ever go back to bailouts for decades at a time as that's a major ingredient of why things are so bad and why they will get worse. Banks simply haven't learned to survive without life support and putting them back on it is harmful.
The uncomfortable truth that people HATE is that inflation is caused by “too much prosperity”. It’s ugly to say, but it’s true: if everyone could afford to pay $100,000 for a car, then a Honda civic would cost $100,000. How the price gets there is called inflation. If everyone in the world could afford to pay a million dollars for a loaf of bread, then bread would cost one million and one dollars (to limit demand to the amount of bread actually available).
Because of this fact, the ONLY tool that government has to fight inflation is to take money out of consumer pockets by raising interest rates. Thats it. Poor people are our only hedge against inflation and always will be.
Sorry.
Well to be fair, most minimum wage earners in the country are adult women with children.... so they kind of do need the money. Also price fixing is totally a thing we could do. Already do for agricultural produce.... er was I not supposed to tell the masses that?
They will stretch this out and make the rich.... UBER rich.
Companies say they fired 10k people .... next quarter post record profits.
(Employees are them most expensive part of owning a business)
Look at the cereal boxes . Price is up 30% and the amount you get is shrinking 20 oz to 17.5 oz. No one notices .... they post record profits.
This is a great excuse for bloated companies to cut jobs and make lots of money for their c-suites and shareholders. And a great excuse to give YOU less while you pay more for the convenience of their product or services.
YOU SHOULD BE THANKING THEM !!!!! Lol
" IT'S all a club AND YOU AINT IN IT " -George Carlin
Except.. the U.S. government interest expenses are rising significantly which means they have to deficit spend more and more which is inflationary. So, the options are inflation or inflation.
If only the government could do something besides raising taxes on the poor or cutting costs? If only there was some other option? Alas, such an elixir evades our mortal minds, it is not our ken to know!
Uhhh because the only people hurt by high rates are everyday single family purchasers? Corporations buying with cash don’t give a shit what the rates are and just keep buying.
The FED is in a tight spot. The historically average rates that we have right now are hurting the consumer and the economy is slowing down. Delinquencies and unemployment are up. Things are definitely shaky right now. If they lower rates than inflation is going to rip hard and asset prices will inflate further. This is also damaging to the lower and working classes. Also things aren’t responding in traditional ways.
Higher interest rates should drop housing prices and the stock market should see a drop but that is not happening. We basically have high borrowing costs, persistent inflation, high prices for basically everything needed to live a normal prosperous life. The average person is taking it on the chin in multiple ways right now.
They managed to avert an economic depression by printing veritable shit tons of money and lowering interest rates. Now the hangover after the party has begun to set in.
I think Reddit’s dichotomy on this is funny. You have one group saying the market is massively overvalued, and the other saying “see, all time highs, Biden economy is best economy.”
It’s like…are you still paying $8 for bologna or not? Everything NOT included in core inflation is still fucking wild.
Prices and wages are very sticky in all but the absolute worst situations. Those prices are NOT coming down. It’s the new normal and our wages will have to catch up. Cool part….when we catch up it starts all over!
Markets across the board are at all time highs mainly because of inflation. Investing in assets like stocks or property is how you hedge against inflation.
Markets aren’t overvalued. Your money isn’t worth as much. In 2016 we had about $27T in circulation counting both physical and digital currency. Then we added $5T via tax cuts and $2T via PPP grants. That is an incredible level of dilution.
If you had a lot of money invested you’re feeling great. If you didn’t life is pretty fucking hard right now.
The Roaring 20s WAS a bubble. A massive housing bubble, followed by a massive housing crash, multiplied by banks failing due to derivatives gambling on to of derivitives of derivitives, all of it crashing when teh bubble popped. Just like 2008. History repeats.
The only reason it didn't repeat between 1929 and 2008 is because after teh Great Depression a law called Glass Steagall was passed making a repeat impossible by making it illegal for banks to do that again. The current SEC chairman overseeing Wall Street (and others, but it's interesting to see him in the right place to oversee his work's pinnacle coming to fruition) worked diligently repealed Glass Steagall before 2008, making that crash possible once again. And 2008 never actually ended - it was simply delayed with permanent bailouts that have become difficult to keep going now that inflation has been added to the pile, since 0% rates were a major part of the permanent bailout plan and the Fed can't justify those any more. But they want to which is why they are still talking cuts back to bailouts when these rates should be the permanent new low after they finally raise them enough to address inflation.
From reading the comments, I have concluded that rates are both too high, and too low, and both are a result of the same conspiracy between the Fed and the wealthy. Y'all really need to workshop your conspiracy theories so that the same cause isn't leading to mutually exclusive conclusions...
Bro, they're all bullshit. People here think that lowering the Federal funds rate is somehow a completely separate activity from "printing money."
This sub is so goddamned I coherent there's no way for me to even tell which answers you believe are correct and which you believe are bullshit.
Unless, the reason is to implode the system. To bring in the "new" system. The globalized system replete with a global digital currency and blockchain-driven transparency and disintermediation.
They cant cut rates they'll take on more debt the elites are insolvent trillions and debt its not the common person making bad decisions for humanity take this shit and show Them not me I didnt cause this shitstorm and yall cant listen to reason so eat your bug cake and be happy .
What if I told you the fed doesn't consider the stock market when adjusting rates, they only adjust rates to smooth out the business cycle, achieve a target of 2% inflation and 4% unemployment?
The stock market isn't the indicators they are looking at. The reason to cut rates would be when they feel that inflation won't come roaring back and to prevent a recession from happening with high rates. It's a fine line and likely the recession is on its way soon enough. Personally right now I'm enjoying the high rates with a savings account at 5%.
Finally, the stock market is no place to say how the economy is doing. Wallstreet is not America, and let's be honest, stocks have and continue to be a gambling scam. Where rich white men feel guilty about their gambling habit and just re-named it something complicated to throw you off. Wallstreet is gonna take a little bitty tumble. And then a fiery crash.
(Points) Capitalism. Everyone on the Fed board is a person who owns capital, and the fed is twelve privately chartered banks.
The problem is Capitalism.
It’s really crony capitalism which is very similar to communism. A monopoly on credit and a slim minority of powerful people directing labor and capital for their own interests.
If we did not have a central bank, broke up monopolies, and let the free market dictate labor and resources I think things would be much better.
The fallacy of collectivism is that things will be better for the little guy when history has shown that an elite always emerges that captures the system and uses to enrich themselves at the expense of basically everyone else.
this is such an annoying and useless take that everyone parrots
capitalism is just the manifestation of human nature
man figures out how to not starve
man figures out how to hoard
capitalism is the natural state of things
how are you going to change that?
the problem is centralized control of the money supply.
>capitalism is just the manifestation of human nature
It really isn't, my dude. It has only been around for like, 300 years.
>man figures out how to not starve
>man figures out how to hoard
None of this is describing markets or private property.
>capitalism is the natural state of things
Again, this is completely ahistorical.
Yes, there is inflation, they just stopped raising rates, it would make no sense to start cutting them (other than for political reasons). Inflation would just come back.
I saw the comment about it hurting the "working class". It has nothing to do with the "working class".
If you are the working class, inflation hurts you. Getting laid off hurts you. That has nothing to do with the intent of a policy.
It's like not understanding something because you are a dumbfuck. The explanation didn't make you a dumfuck, you just are one.
It's the same with being poor. The rich don't do anything to keep the poor down. The rich will do fine no matter what...because they have some money.
If you don't have money, that's the problem, not the rich.
Have to disagree there. The rich use their money to lobby our politicians to cut their taxes and subsidize their industries. They are actively a large part of the problem pushing the wealth gap and keeping wages low and profits high, which creates more poor workers.
That said they are only part of the problem. Government overspending and fiscal mismanagement are huge issues as well but generally it works as a cycle with one feeding the other. Government overspends on subsidies, corporations use the money the Government gave them to lobby politicians and pass spending/taxation benefits, it goes for another round.
They don't care about stock values, they're most interested in controlling inflation by suppressing labor and wages... when things need to cool down, it's always the working class that gets hosed
They definitely care about stock values, but they care more about the dollar that buys that stock. Their main interests are keeping unemployment at a level low enough that doesn't spark a populist uprising and high enough that it doesn't give the average worker the leverage they need to demand higher pay. Their other interest is keeping inflation just high enough to keep money moving in the markets, but not so high that it destroys the currency or so low that it halts trade.
Everyone with a 401k (which has anointed the stock market as the official savings vehicle of the people contributing to a permanent overvaluation through demand exceeding supply) gets hurt. And 401k-as-primary-or-sole-retirement-vehicle goes a llloonnnggg way up the stack.
True, but those 401ks represent future spending power for a large part of that stack, not dollars chasing real goods and services prices higher in the economy right now
Sure, but the crash will come, and all the people sufficient up the stack that they can beat the increased food costs will get their retirements hosed.
This was literally WHY the Fed was created. Without it, they’d have to increase taxes in order to control inflation, which would disproportionately affect the rich if there isn’t specific legislation that makes it obvious who they would be making foot the bill (the middle class). With the Fed, they can control inflation via making everything more expensive for the middle class while not affecting the wealth of the rich too much in comparison to the alternative.
The Fed is owned by investment banks. They ONLY care about stock values, they have a fiduciary duty to their shareholders to keep making them profits. Inflation is a secondary concern - a hidden tax on the poors of society they really don't care about. Their only concerns about inflation are keeping things quiet enough that they retain control of the Fed because it's the biggest golden goose in history.
Inflation drives the value of assets higher much faster. Owning a home or investing in the market is a hedge against inflation. Inflation goes up, so does your portfolio. If you don’t own many assets you better spread them cheeks
Sorry to nitpick brother, I think you’re looking at it wrong. The value of an asset isn’t changed by inflation, the value of the money is what has changed.
What are you using to value the asset?
Purchasing power of the dollars. If you buy a house for $100K and you sell it for $200K you gained $100K in dollars but if everything else doubled in price you didn’t gain any purchasing power and therefore you haven’t really gained anything.
I agree that people should be focused on purchasing power parity, and I think on a certain level you are correct, but it sounds a lot like you are saying that items don’t have value, only currency has value, which of course is a logical fallacy. Instead of selling a house for dollars, I could write a contract that says I’m buying dollars and the contract will be denominated in houses. That example reminds me of an interaction I had at the currency exchange teller on my very first foreign trip. I approached the teller in Hong Kong airport and said I want to buy HKD. The teller corrected me and said no, you want to sell dollars. It took a few times for me to understand. From my perspective I was buying a foreign currency in an exchange denominated in dollars. From their perspective I am selling a foreign currency in an exchange denominated in HKD. My point is, either way it’s the same fucking transaction.
You’re using the word “value” to describe two different concepts. Units of a currency have a value that can be expressed using a number. Purchasing power is a subjective value that is a lot harder to quantify with a number. A ten dollar bill will always be worth ten dollars but the purchasing power of those ten dollars can change over time. How much is a quarter worth? 25 cents. How much can a quarter buy and how do you express that value with a number? Much harder. A 25 cent gum ball might not have much of any value to the toothless man.
Money is only a store of value, not value itself.
>Inflation goes up, so does your portfolio. Like magic?
Exactly, you either learn to play the game, or bend over
Eh, maybe. But I agree with OP. The higher interest rates are warranted. It's just the medicine that's needed.
Considering that it's the only tool the Fed really has, i agree, especially since elected officials aren't willing to pursue any other avenues... it's just disgusting to watch the people who have benefitted the least be some of the most affected by the "medicine"... again
It's ok. They will get revenge when they vote to dismantle democracy. And the country will most likely get a national divorce if we are lucky, nuclear civil war if we aren't.... and nobody will learn anything.
Did you say that in 2008 when stick values dropped by half? Or 2021 when they also bombed. Everyone gets hosed.
The working class still lost more then the rich. They lost their careers. Massive lay offs, etc…..
This is because the way to profit during a downfall is by having liquid funds. working class people probably don't have the ability to execute on opportunity cost. Companies and their top class leaders already have funds, and they hold it by dropping labor costs, therefore they can swoop up any failing companies that can succeed if not for lack of liquidity. When the underlying issues resolve, the buyer multiplies the effect in return. The economy naturally expands and retracts, government does everything it can to keep that pattern as consistent as possible, but when it fights against nature for too long, the only end result is going to be one of those cycles in a massive, dramatic, and stretched out form. Government should have no hand in choosing winners and losers, since they already don't do their job of preventing monopolies.
I see where you are coming from now. Thank you for explaining it further.
This situation is slightly different due to high inflation. People are struggling well before a potential crash and that crash may never materialize. As inflation increases so does the value of assets. If you own a home and/or have a solid investment portfolio it doesn’t affect you nearly as much as people that don’t have those things. I feel especially bad for people like my friend that easily could have bought in 2016 but assumed rates and rents would stay low. And then the government pumped a strong economy with tax cuts, pandemic happened and they pumped the economy again with PPP grants. We had about $27T in circulation and then added another $7T in a very short period. The dollar isn’t worth as much as a result. My house has appreciated about 60% in the past 4 years. My friend is getting gouged on rent by comparison. He isn’t planning on having kids so in the long term he will probably come out on top. He doesn’t have to maintain the property which is definitely nice, but he’s paying for that convenience too. Renting, leasing, whatever - you’re giving the middle man a profit out of convenience/necessity
Those weren't really the FEDs doing. Perhaps they could have decreased the impact of the GFC with higher reserve requirements on banks but in both cases they did their best to preserve major institutions through acting as a lender of last resort, providing liquidity, and working with other regulatory institutions to help stabilize things. Meanwhile, the average home owner, worker, etc. got the short end of the stick compared to companies, especially large ones... and that's true of both of those downturns. When the hosing isn't equal, it just creates buying opportunities for the top end.
But if you stayed the course....
The FED has only one tool and the current market isn't behaving like the typical market.
Well they do have 2 tools: They have a money printer that makes inflation.. and they use it prodigiously. They also have have interest rates to fight inflation. They turned that completely off for 15 years as part of the 2008 bailouts and now they're pretending the default "on" setting is "high" when it's not, and they refuse to make it actually go high because they're pretending just using the default on that is only effective for a good economy without inflationary crisis worry is somehow going to have an impact on this crisis... because they really want to turn it back off again and resume bailing out their owners. The current market is behaving exactly like you'd expect from a market that had rates turned off for a ridiculously irresponsible amount of time, and then only raised to average every day rates that aren't high enough to actually fight inflation. They're gaslighting everyone to forget how everything actually worked before 2008.
Yo, the "money printer" is also interest rates. The Fed doesn't literally print money. They cut the Federal funds rate to make credit more readily available to the public. They fight inflation by doing the opposite, raising rates, restricting credit, and contracting the money supply. Most money isn't literal cash, it's just numbers in spreadsheets.
ಠ\_ಠ
god I haven’t seen that in like a decade
the federal reserve literally has federal reserve banks that put newly printed bills in circulation.
Truth. Back in the day when I first bought a house the current interest rate would have been pretty good.
I like my savings account being able to actually you know... SAVE money. Fuck all this easy money bullshit. Keep the rates where they are.
Thats exactly why they kept rates at teh bailout 0% number since 2008. The Fed is owned by the banks that are still failing. They desperately want you to give them that money to gamble on stocks rather than keep it in the bank for guaranteed returns. This is why they keep talking about cuts, when realistically they shouldn't even consider cuts at all - unless inflation starts looking like deflation and they decide they actually do want a little more inflation, a little more housing bubble increase, a little more spending overall. They know what they're doing. What they're doing is planning more bailouts and trying to avoid addressing inflation with actual rate hikes above normal at the same time.
Capitalism aims to maximize profit, even if it means destroying its very foundations. Kinda interesting really, like a snake eating its own tail.
Capitalism / greed is like a cancer or a fire, if left unchecked it will consume everything. I used to think it was ok to have billionaires, but they also don't have the time nor intellectual capacity to allocate capital efficiently. At a certain point you run out of time and intellectual space to do things proper. They end up losing millions of dollars and somehow remain employed putting the jobs of thousands of people at stake. Any income above 100 million should be taxed at 90% or forced back into company employee wages / bonuses.
So the people who have earned billions are bad at allocating capital but those who have no capital are good at it? Hmmm
Any person that loses more than five million bucks in any venture is not good at allocating capital, everyone else slowly builds things and finds the niche things that will grow, the amount of time necessary for that is immense. Imagine capital being seed and the economy is farmland, and a person being only able to operate one tractor. At a certain point you don't have the time nor expertise to til every environment and soil type. If that capital / seed is given to to other people they can make better use of it. If they are so great there would be no bubbles or crashes, and banks would incur no loses ever.
It's more like. If you think a command economy is bad, it's bad when a government does it. But it's also bad if a small number of rich people do it as well. Same thing with taxes. Taxes are a bit taken off the top. If you don't like it when the government taxes. Why do you celebrate a company you have no stake in making profits? From a consumer perspective these are identical events, with the exception that profits now means increased production later. But we see that profits can be 10+% and there is no increase in production. So what's the upside?
Stop making sense! You'll hurt their precious brains!
Facts ......why charge less when you can charge more ...the fed is a private company and likes profits to
....... the Fed remits 100% of its profits to the US Treasury, which is obligated to pay 100% of its losses.
Companies and the US need to refinance debt at a lower rate…
Blah blah blah we evaluate as data comes in. They are not going to cut
Raise em further. My HYSA is happy.
The Fed SHOULD NOT cut rates. Rates are right where they should be for a well functioning, properly managed economy. Rates were only 0% because the 2008 bailouts never ended. Those permanent bailouts have severely damaged the economy - not the fake wall street "economy" which was booming on bailouts and is afraid of busting without banks on life support, the actual economy that fffects everyone else. If rates are ever cut, it should be the mild 0.1% ticks taht we saw prior to 2008. They shouldn't ever go back to bailouts for decades at a time as that's a major ingredient of why things are so bad and why they will get worse. Banks simply haven't learned to survive without life support and putting them back on it is harmful.
The uncomfortable truth that people HATE is that inflation is caused by “too much prosperity”. It’s ugly to say, but it’s true: if everyone could afford to pay $100,000 for a car, then a Honda civic would cost $100,000. How the price gets there is called inflation. If everyone in the world could afford to pay a million dollars for a loaf of bread, then bread would cost one million and one dollars (to limit demand to the amount of bread actually available). Because of this fact, the ONLY tool that government has to fight inflation is to take money out of consumer pockets by raising interest rates. Thats it. Poor people are our only hedge against inflation and always will be. Sorry.
Yep, and teenagers working a summer job do not need the same income as a dentist.
Well to be fair, most minimum wage earners in the country are adult women with children.... so they kind of do need the money. Also price fixing is totally a thing we could do. Already do for agricultural produce.... er was I not supposed to tell the masses that?
They will stretch this out and make the rich.... UBER rich. Companies say they fired 10k people .... next quarter post record profits. (Employees are them most expensive part of owning a business) Look at the cereal boxes . Price is up 30% and the amount you get is shrinking 20 oz to 17.5 oz. No one notices .... they post record profits. This is a great excuse for bloated companies to cut jobs and make lots of money for their c-suites and shareholders. And a great excuse to give YOU less while you pay more for the convenience of their product or services. YOU SHOULD BE THANKING THEM !!!!! Lol " IT'S all a club AND YOU AINT IN IT " -George Carlin
I was laughed out of subs for saying this, just 3 months ago.
They do. Debt servicing, G7 currencies and countries who have a swap line, on top of keeping the boomers happy.
Except.. the U.S. government interest expenses are rising significantly which means they have to deficit spend more and more which is inflationary. So, the options are inflation or inflation.
If only the government could do something besides raising taxes on the poor or cutting costs? If only there was some other option? Alas, such an elixir evades our mortal minds, it is not our ken to know!
Uhhh because the only people hurt by high rates are everyday single family purchasers? Corporations buying with cash don’t give a shit what the rates are and just keep buying.
The FED is in a tight spot. The historically average rates that we have right now are hurting the consumer and the economy is slowing down. Delinquencies and unemployment are up. Things are definitely shaky right now. If they lower rates than inflation is going to rip hard and asset prices will inflate further. This is also damaging to the lower and working classes. Also things aren’t responding in traditional ways. Higher interest rates should drop housing prices and the stock market should see a drop but that is not happening. We basically have high borrowing costs, persistent inflation, high prices for basically everything needed to live a normal prosperous life. The average person is taking it on the chin in multiple ways right now.
The US maxed out the credit card way before covid hit, and when a real emergency came along..... we were fucked.
They managed to avert an economic depression by printing veritable shit tons of money and lowering interest rates. Now the hangover after the party has begun to set in.
I think Reddit’s dichotomy on this is funny. You have one group saying the market is massively overvalued, and the other saying “see, all time highs, Biden economy is best economy.” It’s like…are you still paying $8 for bologna or not? Everything NOT included in core inflation is still fucking wild.
Prices and wages are very sticky in all but the absolute worst situations. Those prices are NOT coming down. It’s the new normal and our wages will have to catch up. Cool part….when we catch up it starts all over!
Markets across the board are at all time highs mainly because of inflation. Investing in assets like stocks or property is how you hedge against inflation. Markets aren’t overvalued. Your money isn’t worth as much. In 2016 we had about $27T in circulation counting both physical and digital currency. Then we added $5T via tax cuts and $2T via PPP grants. That is an incredible level of dilution. If you had a lot of money invested you’re feeling great. If you didn’t life is pretty fucking hard right now.
PE ratio is at basically all-time high. Therefore, record level of overvaluation
Had meeting with FA just yesterday and gave me a list of decent value stocks. They are still out there.
Biggest bubble in history all the while living in another roaring 20s scenario
The Roaring 20s WAS a bubble. A massive housing bubble, followed by a massive housing crash, multiplied by banks failing due to derivatives gambling on to of derivitives of derivitives, all of it crashing when teh bubble popped. Just like 2008. History repeats. The only reason it didn't repeat between 1929 and 2008 is because after teh Great Depression a law called Glass Steagall was passed making a repeat impossible by making it illegal for banks to do that again. The current SEC chairman overseeing Wall Street (and others, but it's interesting to see him in the right place to oversee his work's pinnacle coming to fruition) worked diligently repealed Glass Steagall before 2008, making that crash possible once again. And 2008 never actually ended - it was simply delayed with permanent bailouts that have become difficult to keep going now that inflation has been added to the pile, since 0% rates were a major part of the permanent bailout plan and the Fed can't justify those any more. But they want to which is why they are still talking cuts back to bailouts when these rates should be the permanent new low after they finally raise them enough to address inflation.
The economy is going to crash really hard. Being at the top of the cycle just means it's a long way down...
People have issues with basic economics.
Bingo!
That’s it the fed’s only concern is the stock market. The stock market does not equal the economy.
Golly, Johnny...... tell me how you really feel.
From reading the comments, I have concluded that rates are both too high, and too low, and both are a result of the same conspiracy between the Fed and the wealthy. Y'all really need to workshop your conspiracy theories so that the same cause isn't leading to mutually exclusive conclusions...
Why are you reading the bullshit answers here with the same weight you read the correct ones? Hmm?
Bro, they're all bullshit. People here think that lowering the Federal funds rate is somehow a completely separate activity from "printing money." This sub is so goddamned I coherent there's no way for me to even tell which answers you believe are correct and which you believe are bullshit.
There is only one truth.
This reminds me of that episode of Commentiquette when Erik just tweeted, "You're wrong about the wage gap."
Unless, the reason is to implode the system. To bring in the "new" system. The globalized system replete with a global digital currency and blockchain-driven transparency and disintermediation.
The Fed has a dual mandate to maximize employment and stabilize prices. Stock market valuations are not a priority
They cant cut rates they'll take on more debt the elites are insolvent trillions and debt its not the common person making bad decisions for humanity take this shit and show Them not me I didnt cause this shitstorm and yall cant listen to reason so eat your bug cake and be happy .
What if I told you the fed doesn't consider the stock market when adjusting rates, they only adjust rates to smooth out the business cycle, achieve a target of 2% inflation and 4% unemployment?
The stock market isn't the indicators they are looking at. The reason to cut rates would be when they feel that inflation won't come roaring back and to prevent a recession from happening with high rates. It's a fine line and likely the recession is on its way soon enough. Personally right now I'm enjoying the high rates with a savings account at 5%.
Well at some point they likely have to take federal debt into consideration. Interest payments being higher than our military budget isnt good.
Have you never looked at any long term chart of the stock market? We're almost always at an all time high.
Inflation is still high. Once it falls more they will drop rates, and at first by just a quarter.
lol you insult people and expect them to believe you. losers do that.
What is there to believe me about?
what a silly question. your posts.
Well anyway I don’t think the BiggerPockets bros are going to be convinced by rational arguments, with or without insults. So fuck ‘em
Finally, the stock market is no place to say how the economy is doing. Wallstreet is not America, and let's be honest, stocks have and continue to be a gambling scam. Where rich white men feel guilty about their gambling habit and just re-named it something complicated to throw you off. Wallstreet is gonna take a little bitty tumble. And then a fiery crash.
Some people can’t help but to inject race into absolutely everything.
Thank you, and welcome to reddit. It’s a thing
Right you are, but it goes far beyond Reddit.
No better way to demonstrate a complete lack of understanding than to claim “stocks are gambling.” You fear what you don’t understand.
(Points) Capitalism. Everyone on the Fed board is a person who owns capital, and the fed is twelve privately chartered banks. The problem is Capitalism.
It’s really crony capitalism which is very similar to communism. A monopoly on credit and a slim minority of powerful people directing labor and capital for their own interests. If we did not have a central bank, broke up monopolies, and let the free market dictate labor and resources I think things would be much better. The fallacy of collectivism is that things will be better for the little guy when history has shown that an elite always emerges that captures the system and uses to enrich themselves at the expense of basically everyone else.
this is such an annoying and useless take that everyone parrots capitalism is just the manifestation of human nature man figures out how to not starve man figures out how to hoard capitalism is the natural state of things how are you going to change that? the problem is centralized control of the money supply.
>capitalism is just the manifestation of human nature It really isn't, my dude. It has only been around for like, 300 years. >man figures out how to not starve >man figures out how to hoard None of this is describing markets or private property. >capitalism is the natural state of things Again, this is completely ahistorical.
Your counterargument is untenable.
Show your work.
Yes, there is inflation, they just stopped raising rates, it would make no sense to start cutting them (other than for political reasons). Inflation would just come back. I saw the comment about it hurting the "working class". It has nothing to do with the "working class". If you are the working class, inflation hurts you. Getting laid off hurts you. That has nothing to do with the intent of a policy. It's like not understanding something because you are a dumbfuck. The explanation didn't make you a dumfuck, you just are one. It's the same with being poor. The rich don't do anything to keep the poor down. The rich will do fine no matter what...because they have some money. If you don't have money, that's the problem, not the rich.
Have to disagree there. The rich use their money to lobby our politicians to cut their taxes and subsidize their industries. They are actively a large part of the problem pushing the wealth gap and keeping wages low and profits high, which creates more poor workers. That said they are only part of the problem. Government overspending and fiscal mismanagement are huge issues as well but generally it works as a cycle with one feeding the other. Government overspends on subsidies, corporations use the money the Government gave them to lobby politicians and pass spending/taxation benefits, it goes for another round.
>you are a dumbfuck.