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We'll see. we didn't have inflation like this during the last big downturn in 2008. I also don't think the Fed is going to be able to raise rates as high as t

by jcadam 5y ago

We'll see. we didn't have inflation like this during the last big downturn in 2008. I also don't think the Fed is going to be able to raise rates as high as they did back in the early 80s.

nostromo 5y ago
The economy would collapse, along with the US government, at even moderately-high interest rates. The federal government is $30t in debt. Even a small rise in interest rates would quickly make the entire federal budget servicing the debt.
- odonnellryan 5y ago
  That's not true.
  - MisterMower 5y ago
    And what makes you think that?
  - hackerfromthefu 5y ago
    Please elaborate
    - odonnellryan 5y ago
      Because interest rates don't immediately go up. Because the government has ways to ensure that they do not have to pay too much to service the debt. Because the government doesn't have to issue new debt to pay the old debt. Etc.. etc.. etc..
      - hackerfromthefu 5y ago
        I don't understand these, let's look at them one at a time. 1) >> Interest rates don't immediately go up. But the ops question is what if rates did go up (wouldn't it be unaffordable for the government). So your answer seems to be a different scenario to the one discussed? What am I missing? 2) >> Because the government has ways to ensure that they do not have to pay too much to service the debt. What ways, specifically? There's just not enough information to be able to make sense of the answer? 3) >> Because the government doesn't have to issue new debt to pay the old debt. Can you explain how this works? If they don't issue new debt, where does the money come from the pay the old debt? It's not like they are going to suddenly come into massive surplus by reducing all other spending is it? 4) >> Etc.. etc.. etc.. I'm seriously thinking about this question, if there's any real reasons, very interested to hear?
        odonnellryan 5y ago
        Just look at these charts: https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/DGS10 https://fred.stlouisfed.org/series/DGS10 I admit I'm not an expert here - but unless someone comes to be with a really good argument why the US Government is on verge of collapse b/c of raising rates (they are the ones why raise rates!!!) I am not sure how much I need to prove the counterpoint?
        hackerfromthefu 5y ago
        I didn't think I was asking for expertise, but for actual substance regarding the things you assert.
nwmcsween 5y ago
We currently have runaway inflation, if you look at how inflation was calculated in 1980s compared to now it would be between 12-16%.
- jcadam 5y ago
  Don't worry, when inflation really gets out of control the Fed will step in with a new currency (CBDC) and save us.
adam_arthur 5y ago
The inflation in the 2000s was the needle that popped the housing bubble. It wasn't comparable to current levels, but it was high and the Fed tightened aggressively to fight it. There were a lot of structural problems as well, but rising rates leading to foreclosures set off the chain of events.

by jcadam 5y ago

We'll see. we didn't have inflation like this during the last big downturn in 2008. I also don't think the Fed is going to be able to raise rates as high as they did back in the early 80s.

nostromo 5y ago

The economy would collapse, along with the US government, at even moderately-high interest rates. The federal government is $30t in debt. Even a small rise in interest rates would quickly make the entire federal budget servicing the debt.

odonnellryan 5y ago
That's not true.
- MisterMower 5y ago
  And what makes you think that?
- hackerfromthefu 5y ago
  Please elaborate
  - odonnellryan 5y ago
    Because interest rates don't immediately go up. Because the government has ways to ensure that they do not have to pay too much to service the debt. Because the government doesn't have to issue new debt to pay the old debt. Etc.. etc.. etc..
    - hackerfromthefu 5y ago
      I don't understand these, let's look at them one at a time. 1) >> Interest rates don't immediately go up. But the ops question is what if rates did go up (wouldn't it be unaffordable for the government). So your answer seems to be a different scenario to the one discussed? What am I missing? 2) >> Because the government has ways to ensure that they do not have to pay too much to service the debt. What ways, specifically? There's just not enough information to be able to make sense of the answer? 3) >> Because the government doesn't have to issue new debt to pay the old debt. Can you explain how this works? If they don't issue new debt, where does the money come from the pay the old debt? It's not like they are going to suddenly come into massive surplus by reducing all other spending is it? 4) >> Etc.. etc.. etc.. I'm seriously thinking about this question, if there's any real reasons, very interested to hear?
      - odonnellryan 5y ago
        Just look at these charts: https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/DGS10 https://fred.stlouisfed.org/series/DGS10 I admit I'm not an expert here - but unless someone comes to be with a really good argument why the US Government is on verge of collapse b/c of raising rates (they are the ones why raise rates!!!) I am not sure how much I need to prove the counterpoint?
        hackerfromthefu 5y ago
        I didn't think I was asking for expertise, but for actual substance regarding the things you assert.

nwmcsween 5y ago

We currently have runaway inflation, if you look at how inflation was calculated in 1980s compared to now it would be between 12-16%.

jcadam 5y ago
Don't worry, when inflation really gets out of control the Fed will step in with a new currency (CBDC) and save us.

adam_arthur 5y ago

The inflation in the 2000s was the needle that popped the housing bubble. It wasn't comparable to current levels, but it was high and the Fed tightened aggressively to fight it. There were a lot of structural problems as well, but rising rates leading to foreclosures set off the chain of events.