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Why is the Fed attacking the stock market? Do they not care about 401ks? What am I missing about stock prices vs bonds except that as interest rates go up peo
by sjg007 5y ago
Why is the Fed attacking the stock market? Do they not care about 401ks? What am I missing about stock prices vs bonds except that as interest rates go up people will buy bonds over stocks. But even then stocks are likely a better choice.
- IdEntities 5y agoThe op-ed is by a former regional Fed President who doesn't work or speak for the Fed now. However, his argument is that the wealth effect of high asset prices is a key driver of higher spending and rising consumer prices.
- sjg007 5y agoIs there any evidence that is true? The majority of Americans don't even participate in the stock market outside of a 401k at best.
- raincom 5y agoIt is not Starbucks barista or some amazon warehouse worker, who is bidding up for two homes, but those with fat 401ks and cushy jobs are. Even 10% of people can push the inflation.
- otoburb 5y ago>>The majority of Americans don't even participate in the stock market outside of a 401k at best. It seems that stock market household participation has inched up over the past 4 decades driven by a variety of factors and is likely a (slight) majority participation rate at this point[1][2] although as one might expect heavily skewed towards higher-income households. [1] https://www.pewresearch.org/fact-tank/2020/03/25/more-than-half-of-u-s-households-have-some-investment-in-the-stock-market/ https://www.pewresearch.org/fact-tank/2020/03/25/more-than-h... [2] https://www.usnews.com/news/national-news/articles/2021-03-15/who-owns-stocks-in-america-mostly-its-the-wealthy-and-white https://www.usnews.com/news/national-news/articles/2021-03-1...
- newacc9 5y agoHigh asset prices will make rent go up, but why would it affect anything else like food, energy or durable goods?
- raincom 5y agoAs rents go up, these rents eat up most of the wages, thereby increasing wages. Increasing wages cause inflation, and it is called "cost-push inflation", as both cost of goods, cost of services include wages.
- IdEntities 5y agoAs just one example, a tech employee whose unvested RSUs are sitting at the 2021 highs might be more willing to splash out on all kinds of things -- vacations, restaurants, a nicer fridge, primary or investment residential properties, etc -- than they would if the share price was a lot lower.
- newacc9 5y agoMiddle America's 401k gets hammered (pushing retirement off x-years) and small set of tech workers can't buy as much? Seems more harmful than good. fwiw, I don't have 401k/and I own a tiny amount of stock.
- aaaaaaaaata 5y ago> Why is the Fed attacking the stock market? The uncomfortable answer is (possibly) that a subsection of the elite have all sold mass amounts of stock and bought cryptocurrency...or, at least that's what the optics & legislation seem to indicate.