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Feds raise interest rates and the stock market demands layoffs. The reward is a stable or increased stock price which is a proxy for growth. This keeps money i

Feds raise interest rates and the stock market demands layoffs. The reward is a stable or increased stock price which is a proxy for growth. This keeps money in the stock vs pulling it to get 4% interest. So the layoffs are done in anticipation of (or even perhaps precipitate) a recession which helps reduce inflation since people reduce spending when they lose their jobs. Laid off Microserfs won't be remodeling their homes or buying new ones and what not.

everforward 3y ago
I don't think that points to companies colluding with the Fed, that's just companies adjusting to market forces the Fed created (the difference being coordination). I don't even know if an anticipated recession is in play here. The simple explanation is that safe investments are now pulling 4% returns (pre-inflation), so now riskier investments like stocks have to return more than 4% to account for the risk. Nobody wants stocks where the best outcome is matching inflation (unless safe investments are returning less than inflation). If companies were involved in the discussion, I suspect they'd be most interested in getting interest rates back down to 0 because it pushes money into the stock market and raises their share price.
- salawat 3y ago
  >I don't think that points to companies colluding with the Fed, that's just companies adjusting to market forces the Fed created (the difference being coordination). You are a programmer, right? You understand the concept of indirection? The only way I can imagine this wooshing is if you don't realize that indirection isn't just a technological mechanism. It is, in fact, near omnipresent, and reached for constantly by people in management positions. It's a sociological tool that imbues the wielder not just with great power to get things done while detaching themselves from the suffering created by doing so, but also gives them enough plausible psychological distance that even the masses tend to cut them a check when in reality, a bit of thought on the arrangement of things boils things down to "actor creates signal, signal hanfler handles"

everforward 3y ago

I don't think that points to companies colluding with the Fed, that's just companies adjusting to market forces the Fed created (the difference being coordination). I don't even know if an anticipated recession is in play here. The simple explanation is that safe investments are now pulling 4% returns (pre-inflation), so now riskier investments like stocks have to return more than 4% to account for the risk. Nobody wants stocks where the best outcome is matching inflation (unless safe investments are returning less than inflation). If companies were involved in the discussion, I suspect they'd be most interested in getting interest rates back down to 0 because it pushes money into the stock market and raises their share price.

salawat 3y ago
>I don't think that points to companies colluding with the Fed, that's just companies adjusting to market forces the Fed created (the difference being coordination). You are a programmer, right? You understand the concept of indirection? The only way I can imagine this wooshing is if you don't realize that indirection isn't just a technological mechanism. It is, in fact, near omnipresent, and reached for constantly by people in management positions. It's a sociological tool that imbues the wielder not just with great power to get things done while detaching themselves from the suffering created by doing so, but also gives them enough plausible psychological distance that even the masses tend to cut them a check when in reality, a bit of thought on the arrangement of things boils things down to "actor creates signal, signal hanfler handles"