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It's like clockwork: fed raises rates, cheap money dries up. Seems like all markets for the last 15 years (since 2007-2008) have just been tracking the fed.
by api 4y ago
It's like clockwork: fed raises rates, cheap money dries up.
Seems like all markets for the last 15 years (since 2007-2008) have just been tracking the fed.
- lazide 4y agoI can’t wait for the retconning to happen with the Modern Monetary Theory folks.
- big_youth 4y agoI'm no economist but my understanding is that even though we are printing money like MMT advocates, we are not implementing any of the policy decisions to combat inflation. Namely large tax increases on ultra rich. Since we've started printing we seen a huge rise in wealth inequality and more billionaires than ever, but we don't fight the inflation with high taxes on them so assets they use (high end real estate, art, crypto, yachts) have blown up as have things they invest the extra money into (middle class housing). We should be getting ride of the extra cash floating around with higher taxes.
- lazide 4y agoI guess we'll find out soon! I doubt taxing capital gains is going to go well startup wise though. :s
- api 4y agoReminds me of how we do Keynes: we spend countercyclically… and then also spend cyclically so really we just spend.
- missedthecue 4y agoIs inflation caused by the ultra rich? How much ground chuck does Jeff Bezos buy? Probably not much more than I do.
- cudgy 4y agoHe certainly buys real estate, stocks, commodities, yachts, and automobiles. Investment bubbles are also part of inflation.
- missedthecue 4y ago99.999998% of the population has no idea and doesn't care how much yacht prices have inflated over the last several years. They care about toilet paper, food, energy, clothing, and other essentials.
- cudgy 4y agoTrue, but yachts require inputs like steel, wood, fiberglass, electronics, physical labor, trucks, fuel, etc. Those are all products that 99.999998% of people are purchasing either directly or indirectly, so the prices of those products are impacted.
- matthewdgreen 4y agoAnd then the markets cool down and head towards recession territory, and the fed lowers rates. Which is driving which?
- tomc1985 4y agoAt this time, that would be a complete 180 as the Fed's messaging all year has been about how they will be raising rates, even if it means sacrificing markets. On an accelerated timeline, no less, compared to what they had floated in January.
- echelon 4y ago> On an accelerated timeline, no less, compared to what they had floated in January. Is the Biden admin asking the Fed to get this over with in time for the election? Quick shock and return to normalcy in an attempt to retain power? Or is this because they moved too slow and we're heading into something worse than a minor recession?
- jupp0r 4y agoHistorically the Fed has been independent and the current administration (in contrast to the last) seems to respect this tradition.
- shostack 4y agoHave their actions backed that assertion up?
- tomc1985 4y agoI think they are trying to roll back the quantitative easing (aka unleashing the money printers) that staved off a massive recession right when covid lockdowns began. The fed blames current inflation rates (the highest they've been since the 70s) on all the extra money that is floating around. It is thought that the weird bull market we saw through the end of 2021 was a result of money having nowhere else to go... so when interest rates get raised suddenly other investment vehicles (like bonds) look more lucrative and that money leaves the stock market.
- shostack 4y agoIs there any data on how that interacts with political cycles, which party gets power, and if these changes have been timed in a way that consistently benefits one party?