6 ms·

Don't know why you're being downvoted. This isn't a problem that raising interest rates can fix. Raising interest rates can't create supply on inelastic demand.

thehappypm 4y ago
Demand is not inelastic. Folks with no jobs don’t buy cars and gasoline.
- akmarinov 4y ago
  Unemployment is at an all time low, so yeah...
  - thehappypm 4y ago
    So yeah.. Fed has a tool for that.. which they will keep hammering
    - akmarinov 4y ago
      People still need to eat and that food gets processed and delivered with energy. They'll have to heat their homes in the coming months, all of that has been hit hard with energy prices and is something that can't be wished away with higher rates.
      - thehappypm 4y ago
        Are you implying that people have zero control over their spending?
        akmarinov 4y ago
        On inelastic products, if you've read my point above - yeah. Can you turn off your spending on food? Edit: from the report: > Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. Can't turn off spending for food and medical care if you want to live
        Auracle 4y ago
        You need a house, you don't need a nice house. You can buy food you need to cook instead of expensive premade stuff - or even go to primarily rice, beans, and potatoes. Medical care you can put off, switch to a cheaper generic medication, etc.
        thehappypm 4y ago
        I can absolutely turn off my spending for food, probably by 95%. If I lost my job I’d switch to beans and rice and other cheap homemade food and totally cut out anything expensive like takeout. I could live out of my pantry and freezer for a while if I had to, even.
  - ethagknight 4y ago
    Unemployment is a tricky stat, which according to BLS conveniently excludes unemployed people who "haven't looked for a job in 4 weeks." And then knowing how difficult it is to pull hard information out of these poverty stricken areas, especially hidden homeless, I feel confident the whole picture is being blurred intentionally. I live in a high poverty city with wondrously low "unemployment" but a high number of people who don't have jobs. The answer: if you can qualify for a job, yes you can get a job, but a lot of people do not qualify for anything worthwhile, so why try?
    - mrep 4y ago
      U6 is also at an all time low: https://fred.stlouisfed.org/series/U6RATE https://fred.stlouisfed.org/series/U6RATE
NickLamp 4y ago
I would guess that people either don't appreciate or don't recognize the sarcasm. Or recognize it and don't agree that tightening the money supply is unnecessary
mattbrewsbytes 4y ago
Exxon, Chevron and Shell all have record profits during the last year. My guess is its not because they found some magical SAG cost cutting activity. Raising interest rates isn't going to impact companies just charging more for what they sell.
- meragrin_ 4y ago
  What is SAG?
  - mattbrewsbytes 4y ago
    Sales Admin and General costs = usually where companies go to do layoffs
- s1artibartfast 4y ago
  They have record profits because individuals are spending/buying more. The only thing that stops companies from charging more is individuals unwilling or unable to pay the higher price.
mitthrowaway2 4y ago
> Raising interest rates can't create supply on inelastic demand. They don't need to. Interest rates aren't intended to control prices by creating an abundance of gasoline, but by creating a scarcity of dollars. Yes, this can bring down gasoline prices. No, it doesn't mean gasoline gets less scarce in the process. It just means that each $1 gets dearer. It means that the price looks fine but you can't afford it anyway because your pockets are empty. The gasoline is still scarce even though the price is low. That's what they can do, and what they are doing. And it's best to understand that, when interest rates go up, the first pockets to empty are emptied by falling asset prices. Stocks, bonds, and real estate. That's why high inflation numbers are bad news for assets, even though they'd intuitively seem like inflation hedges.
- akmarinov 4y ago
  Yeah you've completely ignored the inelastic portion of the sentence... There are these products that no matter how dearer $1 gets - you will absolutely buy them. You can't destroy demand on these products like what you're describing. You and your family could literally die without some of these products. And no raising of interest is going to help that.
  - mitthrowaway2 4y ago
    Yes; you will buy them with the last one dollar in your pocket, instead of the last two dollars. The price can vary fluidly even if the quantity consumed does not. A century ago, a loaf of bread cost only a nickel and that's not because people ate less or because food supply was more plentiful or demand more elastic. But even setting that aside, interest rates operate on aggregate demand which is averaged across all goods, just like inflation is.

thehappypm 4y ago

Demand is not inelastic. Folks with no jobs don’t buy cars and gasoline.

akmarinov 4y ago
Unemployment is at an all time low, so yeah...
- thehappypm 4y ago
  So yeah.. Fed has a tool for that.. which they will keep hammering
  - akmarinov 4y ago
    People still need to eat and that food gets processed and delivered with energy. They'll have to heat their homes in the coming months, all of that has been hit hard with energy prices and is something that can't be wished away with higher rates.
    - thehappypm 4y ago
      Are you implying that people have zero control over their spending?
      - akmarinov 4y ago
        On inelastic products, if you've read my point above - yeah. Can you turn off your spending on food? Edit: from the report: > Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. Can't turn off spending for food and medical care if you want to live
        Auracle 4y ago
        You need a house, you don't need a nice house. You can buy food you need to cook instead of expensive premade stuff - or even go to primarily rice, beans, and potatoes. Medical care you can put off, switch to a cheaper generic medication, etc.
        thehappypm 4y ago
        I can absolutely turn off my spending for food, probably by 95%. If I lost my job I’d switch to beans and rice and other cheap homemade food and totally cut out anything expensive like takeout. I could live out of my pantry and freezer for a while if I had to, even.
- ethagknight 4y ago
  Unemployment is a tricky stat, which according to BLS conveniently excludes unemployed people who "haven't looked for a job in 4 weeks." And then knowing how difficult it is to pull hard information out of these poverty stricken areas, especially hidden homeless, I feel confident the whole picture is being blurred intentionally. I live in a high poverty city with wondrously low "unemployment" but a high number of people who don't have jobs. The answer: if you can qualify for a job, yes you can get a job, but a lot of people do not qualify for anything worthwhile, so why try?
  - mrep 4y ago
    U6 is also at an all time low: https://fred.stlouisfed.org/series/U6RATE https://fred.stlouisfed.org/series/U6RATE

NickLamp 4y ago

I would guess that people either don't appreciate or don't recognize the sarcasm. Or recognize it and don't agree that tightening the money supply is unnecessary

mattbrewsbytes 4y ago

Exxon, Chevron and Shell all have record profits during the last year. My guess is its not because they found some magical SAG cost cutting activity. Raising interest rates isn't going to impact companies just charging more for what they sell.

meragrin_ 4y ago
What is SAG?
- mattbrewsbytes 4y ago
  Sales Admin and General costs = usually where companies go to do layoffs
s1artibartfast 4y ago
They have record profits because individuals are spending/buying more. The only thing that stops companies from charging more is individuals unwilling or unable to pay the higher price.

mitthrowaway2 4y ago

> Raising interest rates can't create supply on inelastic demand. They don't need to. Interest rates aren't intended to control prices by creating an abundance of gasoline, but by creating a scarcity of dollars. Yes, this can bring down gasoline prices. No, it doesn't mean gasoline gets less scarce in the process. It just means that each $1 gets dearer. It means that the price looks fine but you can't afford it anyway because your pockets are empty. The gasoline is still scarce even though the price is low. That's what they can do, and what they are doing. And it's best to understand that, when interest rates go up, the first pockets to empty are emptied by falling asset prices. Stocks, bonds, and real estate. That's why high inflation numbers are bad news for assets, even though they'd intuitively seem like inflation hedges.

akmarinov 4y ago
Yeah you've completely ignored the inelastic portion of the sentence... There are these products that no matter how dearer $1 gets - you will absolutely buy them. You can't destroy demand on these products like what you're describing. You and your family could literally die without some of these products. And no raising of interest is going to help that.
- mitthrowaway2 4y ago
  Yes; you will buy them with the last one dollar in your pocket, instead of the last two dollars. The price can vary fluidly even if the quantity consumed does not. A century ago, a loaf of bread cost only a nickel and that's not because people ate less or because food supply was more plentiful or demand more elastic. But even setting that aside, interest rates operate on aggregate demand which is averaged across all goods, just like inflation is.