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> The economy is stabilizing. The economy is in the early phases of the biggest Fed tightening since at least the 1980s. If you know where that will end up, c

> The economy is stabilizing. The economy is in the early phases of the biggest Fed tightening since at least the 1980s. If you know where that will end up, congrats. For the rest of us, it's very much uncharted waters.

eftychis 4y ago
Yeah and if he does know please share that with everyone else (people ok with terrifying news at least). We are not stabilizing. There are serious supply issues, staffing issues, wild currency fluctuations, and fear -- including of nuclear conflict. I am not sure in what world this is stabilization. It is easy to hit on the "mule" i.e. the average Joe and say "I gave you too much money, that you never saw, thus why Yada Yada, so learn not to eat and that will work fine." This is the naive explanation offered to the public masses to make them feel bad and that they deserve the recession. Aka anything to avoid political suicide. Other countries don't go out saying this fyi-- because e.g. they have a freaking war in the doorsteps during a pandemic and can't produce goods, because no natural gas. Because of sabotage. Only stabilization is to the bottom.
- michaelcampbell 4y ago
  > Only stabilization is to the bottom. If that's where the economy should be (I don't know), then moving towards it is stabilizing, no?
Rapzid 4y ago
That's what I'm hearing; we didn't dodge a recession it just hasn't started yet. In TX energy prices are already up a lot this year. We generate a substantial percentage of electricity from natural gas, and exports are up for obvious reasons. Winter is coming.
- scottLobster 4y ago
  Thanks to the shale boom natural gas has been effectively free in the US (as a byproduct of shale oil production) for the last few years. For various reasons the boom has reverted to the mean (although shale is still very much around), and as a result natural gas in the US has gone from "free" to "not free". Prices will go up, but we'll be fine. We still literally have more gas than we know what to do with. It's the Europeans and East Asians who are being royally screwed by gas prices at the moment, and that pressure isn't likely to cease anytime soon, particularly with the destruction of Nordstream.
  - Rapzid 4y ago
    I'm not sure historical natural gas prices support this idea of "free". Would need to crunch the numbers but at a glance the price came down about 50% in the 2010s from the aughts. It's had a few big, temporary dips most recently during the start of the pandemic in 2020. It certainly wasn't "free" in Feb 2021. We have about a 3% hike on our bills now to pay down the record profits gas producers received. My bill last cycle was 20% higher than last year with near identical usage. UK has already seen incredible energy cost increases. European winter is going to drive energy prices even higher. Yeah, "we" will be fine because computers. But lower income families are getting hit hard with this and inflation. Even still there is the Applebee's effect; people with money are paying more attention to those commercials because a lunch for two is pushing past 50$ dollars these days! That's gonna dry up investment even more. In the UK Liz Truss comes in and immediately commits political suicide with these tax cuts. Putting aside critiques aimed at trickle down economics, the timing is TERRIBLE. Startups are laying off because investment is drying up; tax cuts on high earners are going into savings and low-risk market investments. All this combined is, IMHO, going to lead to a massive global recession.
    - scottLobster 4y ago
      "Free" in the sense of free extraction. Obviously you still need to pay for distribution, but the shale fields to this day are flaring off natural gas that they otherwise have no way to sell. That 50% drop in the 2010s is the shale boom. Now that shale has calmed down and global demand has spiked, there's now a cost for the actual natural gas itself. A doubling of prices may seem like a lot, but historically the price is still well below average. Much like we've gotten used to free money over the last ten years, we've also gotten used to free gas. That's not to say it isn't a problem, but we aren't in danger of running out of gas or any runaway price spikes.
dragontamer 4y ago
> The economy is in the early phases of the biggest Fed tightening since at least the 1980s. But the 2010s through 2020s period is a myth, a figment of cheap money. This money was made cheap to help us get out of the 2007/2008 recession, but the cheap money clearly went on too long. Its warped all of our thinking. We should have been raising rates and paying down the Fed's balance sheet a long, long time ago. To be fair, we began the process in 2019, but COVID19 wrecked us in 2020. Now its 2022 and inflation is growing out of control. We have no choice but to raise rates now.
- scottLobster 4y ago
  Plus we pretty much lowered rates to 0. Europe's experimentation with negative interest rates yielded... well it's debatable whether it yielded anything of substance (pun intended). So there's pretty much nowhere else to go, and if we want to have the option to lowering rates to combat future crises... well it looks like we'll have to pay for the option. Human complacency never ceases to fuck things up. Those who seriously plan ahead are a minority, and don't control the ballot box.
  - dhruval 4y ago
    “ Those who seriously plan ahead are a minority, and don't control the ballot box.” Sadly true. And sometimes this reduces the benefits of planning ahead. If the fed money printer will bail is out every time then it makes financial sense to splurge.
  - dragontamer 4y ago
    On the contrary. We're not complacent. The Fed is raising rates, like it should be. Its a known fact that the Fed Rate takes months, maybe years, before its effects propagate through the economy. The 2.25% raise in just a few months is the steepest increase in decades, one of the most proactive moves ever done. -------- But we as a society need to also be proactive and understand what this means. It means higher mortgage rates, higher rates for car loans, more difficult student loans, more expensive debt. There are a couple of... other state banks... who are ignoring the issue and are dropping rates right now, despite the current state of the economy. Those are the ones who seem to have a short-sighted view on the world. USA is actually leading the charge and is more proactive than most other countries on this matter. Furthermore, our political system is talking about it, and we're right now talking about it here on news.ycombinator.com. We're all being proactive and forward looking right now. And even back in 2020, the political system had the debates and forward looking statements about inflation risk vs COVID19 recession risks. No one ever stopped looking forward. Was it perfect? No. But no one's perfect when looking into the future. But the political system absolutely discussed and decided upon what we should do. I don't think anybody was short-term thinking at any of these points, we were just trapped between bad choices. -------- For the most part, the super-low rates from 2010 through 2019 have been confirmed to be a good idea, as it kept inflation at the 2% for the duration. We were roughly on target. But we also were in a mystical time, of warped thinking of cheap money for the duration.
tjr225 4y ago
NASDAQ is UP 20 or so % from just before the pandemic. That’s how inflated things got in the last two years. The person you’re responding to is right on the money.
majormajor 4y ago
"uncharted waters" is so tired. When's the last time they were "charted" economically? Things have been changing constantly for a century, basically.
mbesto 4y ago
> For the rest of us, it's very much uncharted waters. Aren't economies all uncharted waters until they aren't (e.g. hindsight)? 2 years ago we hit a global pandemic and tech stocks were trading at absurd PE levels 6 months later. So, no one really knows "where this will end up".

eftychis 4y ago

Yeah and if he does know please share that with everyone else (people ok with terrifying news at least). We are not stabilizing. There are serious supply issues, staffing issues, wild currency fluctuations, and fear -- including of nuclear conflict. I am not sure in what world this is stabilization. It is easy to hit on the "mule" i.e. the average Joe and say "I gave you too much money, that you never saw, thus why Yada Yada, so learn not to eat and that will work fine." This is the naive explanation offered to the public masses to make them feel bad and that they deserve the recession. Aka anything to avoid political suicide. Other countries don't go out saying this fyi-- because e.g. they have a freaking war in the doorsteps during a pandemic and can't produce goods, because no natural gas. Because of sabotage. Only stabilization is to the bottom.

michaelcampbell 4y ago
> Only stabilization is to the bottom. If that's where the economy should be (I don't know), then moving towards it is stabilizing, no?

Rapzid 4y ago

That's what I'm hearing; we didn't dodge a recession it just hasn't started yet. In TX energy prices are already up a lot this year. We generate a substantial percentage of electricity from natural gas, and exports are up for obvious reasons. Winter is coming.

scottLobster 4y ago
Thanks to the shale boom natural gas has been effectively free in the US (as a byproduct of shale oil production) for the last few years. For various reasons the boom has reverted to the mean (although shale is still very much around), and as a result natural gas in the US has gone from "free" to "not free". Prices will go up, but we'll be fine. We still literally have more gas than we know what to do with. It's the Europeans and East Asians who are being royally screwed by gas prices at the moment, and that pressure isn't likely to cease anytime soon, particularly with the destruction of Nordstream.
- Rapzid 4y ago
  I'm not sure historical natural gas prices support this idea of "free". Would need to crunch the numbers but at a glance the price came down about 50% in the 2010s from the aughts. It's had a few big, temporary dips most recently during the start of the pandemic in 2020. It certainly wasn't "free" in Feb 2021. We have about a 3% hike on our bills now to pay down the record profits gas producers received. My bill last cycle was 20% higher than last year with near identical usage. UK has already seen incredible energy cost increases. European winter is going to drive energy prices even higher. Yeah, "we" will be fine because computers. But lower income families are getting hit hard with this and inflation. Even still there is the Applebee's effect; people with money are paying more attention to those commercials because a lunch for two is pushing past 50$ dollars these days! That's gonna dry up investment even more. In the UK Liz Truss comes in and immediately commits political suicide with these tax cuts. Putting aside critiques aimed at trickle down economics, the timing is TERRIBLE. Startups are laying off because investment is drying up; tax cuts on high earners are going into savings and low-risk market investments. All this combined is, IMHO, going to lead to a massive global recession.
  - scottLobster 4y ago
    "Free" in the sense of free extraction. Obviously you still need to pay for distribution, but the shale fields to this day are flaring off natural gas that they otherwise have no way to sell. That 50% drop in the 2010s is the shale boom. Now that shale has calmed down and global demand has spiked, there's now a cost for the actual natural gas itself. A doubling of prices may seem like a lot, but historically the price is still well below average. Much like we've gotten used to free money over the last ten years, we've also gotten used to free gas. That's not to say it isn't a problem, but we aren't in danger of running out of gas or any runaway price spikes.

dragontamer 4y ago

> The economy is in the early phases of the biggest Fed tightening since at least the 1980s. But the 2010s through 2020s period is a myth, a figment of cheap money. This money was made cheap to help us get out of the 2007/2008 recession, but the cheap money clearly went on too long. Its warped all of our thinking. We should have been raising rates and paying down the Fed's balance sheet a long, long time ago. To be fair, we began the process in 2019, but COVID19 wrecked us in 2020. Now its 2022 and inflation is growing out of control. We have no choice but to raise rates now.

scottLobster 4y ago
Plus we pretty much lowered rates to 0. Europe's experimentation with negative interest rates yielded... well it's debatable whether it yielded anything of substance (pun intended). So there's pretty much nowhere else to go, and if we want to have the option to lowering rates to combat future crises... well it looks like we'll have to pay for the option. Human complacency never ceases to fuck things up. Those who seriously plan ahead are a minority, and don't control the ballot box.
- dhruval 4y ago
  “ Those who seriously plan ahead are a minority, and don't control the ballot box.” Sadly true. And sometimes this reduces the benefits of planning ahead. If the fed money printer will bail is out every time then it makes financial sense to splurge.
- dragontamer 4y ago
  On the contrary. We're not complacent. The Fed is raising rates, like it should be. Its a known fact that the Fed Rate takes months, maybe years, before its effects propagate through the economy. The 2.25% raise in just a few months is the steepest increase in decades, one of the most proactive moves ever done. -------- But we as a society need to also be proactive and understand what this means. It means higher mortgage rates, higher rates for car loans, more difficult student loans, more expensive debt. There are a couple of... other state banks... who are ignoring the issue and are dropping rates right now, despite the current state of the economy. Those are the ones who seem to have a short-sighted view on the world. USA is actually leading the charge and is more proactive than most other countries on this matter. Furthermore, our political system is talking about it, and we're right now talking about it here on news.ycombinator.com. We're all being proactive and forward looking right now. And even back in 2020, the political system had the debates and forward looking statements about inflation risk vs COVID19 recession risks. No one ever stopped looking forward. Was it perfect? No. But no one's perfect when looking into the future. But the political system absolutely discussed and decided upon what we should do. I don't think anybody was short-term thinking at any of these points, we were just trapped between bad choices. -------- For the most part, the super-low rates from 2010 through 2019 have been confirmed to be a good idea, as it kept inflation at the 2% for the duration. We were roughly on target. But we also were in a mystical time, of warped thinking of cheap money for the duration.

tjr225 4y ago

NASDAQ is UP 20 or so % from just before the pandemic. That’s how inflated things got in the last two years. The person you’re responding to is right on the money.

majormajor 4y ago

"uncharted waters" is so tired. When's the last time they were "charted" economically? Things have been changing constantly for a century, basically.

mbesto 4y ago

> For the rest of us, it's very much uncharted waters. Aren't economies all uncharted waters until they aren't (e.g. hindsight)? 2 years ago we hit a global pandemic and tech stocks were trading at absurd PE levels 6 months later. So, no one really knows "where this will end up".