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I'm from Missouri, the show-me state. Show me a fed funds rate that exceeds the inflation rate by 1% or more, because that's what it took last time we had high

I'm from Missouri, the show-me state. Show me a fed funds rate that exceeds the inflation rate by 1% or more, because that's what it took last time we had high inflation to kill the beast. 5% fed funds is not enough to kill 5% inflation in the CPI. Powell seems ignorant of this fact!

medvezhenok 3y ago
The current I-bond rate is 4.3%, of which 0.9% is the fixed rate. So inflation over the last 6 months has been roughly 1.7%, which is 3.4% annualized.
- williamDafoe 3y ago
  Wrong, it's 5%. https://www.bls.gov/cpi/ https://www.bls.gov/cpi/
  - dragonwriter 3y ago
    Wrong, if you read the words around the chart in your link, that’s the 12-month trailing figure, which says nothing about GPs claim regarding the 6-month trailing figure.
- unnouinceput 3y ago
  You don't add percentages, you multiply them. So 1.7 x 1.7 = 2.89% annualized
  - medvezhenok 3y ago
    That's not the proper way to multiply. If you mean to use compounding interest, the proper rate is 1.017 * 1.017 = 1.034289 = 3.428% annualized. I rounded it to 3.4% for simplicity.
- deleted 3y ago
  [deleted]
delfinom 3y ago
>Powell seems ignorant of this fact! Powerll is only the chairman and basically spokesperson of the Fed. He however isn't making any interest rate decisions by himself and there is in fact a Board that votes on it. They base their decision on data and analysis fed to them by the staff under them at their respective Fed Banks.
- dragonwriter 3y ago
  > They base their decision on data and analysis fed to them by the staff under them at their respective Fed Banks. The 7 members of the Board of Governors members aren't each individually associated with one or more of the 12 Federal Reserve Districts, that’s not how it works at all. There are seven members with staggered 14-year terms; three of those members serve as Chair, Vice Chair, and Vice Chair for Supervision, to which they are all appointed from the membership for four year terms, but aside from the three leadership positions and various committees that the boaed forms, the members all have general responsibility.
- kevviiinn 3y ago
  Next you'll tell me the president doesn't have a lever under his desk to make gas prices go up!
  - dariusj18 3y ago
    Technically, the President could very easily make gas prices go up. But that would require quite extraordinary means. Going down is a bit tougher.
rr808 3y ago
I agree. A lot of talk how high interest rates are but to me they still are stimulative. People seem happy to earn 5% on savings as if its better than 1% with 1% inflation. Inflation will come down soon though as lower oil price filters through along with the high inflation months of last summer.

medvezhenok 3y ago

The current I-bond rate is 4.3%, of which 0.9% is the fixed rate. So inflation over the last 6 months has been roughly 1.7%, which is 3.4% annualized.

williamDafoe 3y ago
Wrong, it's 5%. https://www.bls.gov/cpi/ https://www.bls.gov/cpi/
- dragonwriter 3y ago
  Wrong, if you read the words around the chart in your link, that’s the 12-month trailing figure, which says nothing about GPs claim regarding the 6-month trailing figure.
unnouinceput 3y ago
You don't add percentages, you multiply them. So 1.7 x 1.7 = 2.89% annualized
- medvezhenok 3y ago
  That's not the proper way to multiply. If you mean to use compounding interest, the proper rate is 1.017 * 1.017 = 1.034289 = 3.428% annualized. I rounded it to 3.4% for simplicity.
deleted 3y ago
[deleted]

delfinom 3y ago

>Powell seems ignorant of this fact! Powerll is only the chairman and basically spokesperson of the Fed. He however isn't making any interest rate decisions by himself and there is in fact a Board that votes on it. They base their decision on data and analysis fed to them by the staff under them at their respective Fed Banks.

dragonwriter 3y ago
> They base their decision on data and analysis fed to them by the staff under them at their respective Fed Banks. The 7 members of the Board of Governors members aren't each individually associated with one or more of the 12 Federal Reserve Districts, that’s not how it works at all. There are seven members with staggered 14-year terms; three of those members serve as Chair, Vice Chair, and Vice Chair for Supervision, to which they are all appointed from the membership for four year terms, but aside from the three leadership positions and various committees that the boaed forms, the members all have general responsibility.
kevviiinn 3y ago
Next you'll tell me the president doesn't have a lever under his desk to make gas prices go up!
- dariusj18 3y ago
  Technically, the President could very easily make gas prices go up. But that would require quite extraordinary means. Going down is a bit tougher.

rr808 3y ago

I agree. A lot of talk how high interest rates are but to me they still are stimulative. People seem happy to earn 5% on savings as if its better than 1% with 1% inflation. Inflation will come down soon though as lower oil price filters through along with the high inflation months of last summer.