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I do think the Fed's stunt with 2-3% interest rates in 2020-2022 was an effort to further concentrate wealth up the stack. Everyone who could buy/refinance did

by judge2020 3y ago

I do think the Fed's stunt with 2-3% interest rates in 2020-2022 was an effort to further concentrate wealth up the stack. Everyone who could buy/refinance did and will likely stop moving for the foreseeable future, as the same house would cost at least 33% more per month thanks to the higher interest rate alone.

throwawaymaths 3y ago
Increasing interest rates should have the reverse effect. A lot of crazy financial instruments depend on low interest rates to work. When interest is increased, the price of money goes up; the wealthy are bouyed far more by ZIRP than someone say in the tenderloin, who does not have access to high finance.
- tomfunk 3y ago
  what financial instruments?
  - hammock 3y ago
    Any kind of carry trade, anything with leverage, even alternatives like crypto
    - throwawaymaths 3y ago
      Shorts, options
- judge2020 3y ago
  Increasing rates is their attempts to bring inflation back to normal, since cheap money is cheap for _everyone_, including all Americans that were eager to get a low monthly payment on cars/houses (as I’ve alluded to), not just for existing collateral but for new homes/cars, thus increasing total demand - and that demand leading to price increases across the board.
  - throwawaymaths 3y ago
    > Americans that were eager to get a low monthly payment on cars/house You're still describing relatively rich people. Those price increases really hit everyone else hard. Moreover those loans are small fry compared to leveraged investment.
wolverine876 3y ago
Is there evidence?
landemva 3y ago
> Fed's stunt with 2-3% interest rates in 2020-2022 Really? Fed funds rate was about 2.5% in 2019, because Fed raised rates when Trump took office. Fed funds rate scraped zero in 2020 and 2021. https://fred.stlouisfed.org/series/fedfunds https://fred.stlouisfed.org/series/fedfunds
- sgerenser 3y ago
  Yeah, I assume the 2-3% rates is referring to mortgage rates, which isn’t directly caused by the fed but was certainly influenced by the fed setting short-term rates at 0.

throwawaymaths 3y ago

Increasing interest rates should have the reverse effect. A lot of crazy financial instruments depend on low interest rates to work. When interest is increased, the price of money goes up; the wealthy are bouyed far more by ZIRP than someone say in the tenderloin, who does not have access to high finance.

tomfunk 3y ago
what financial instruments?
- hammock 3y ago
  Any kind of carry trade, anything with leverage, even alternatives like crypto
  - throwawaymaths 3y ago
    Shorts, options
judge2020 3y ago
Increasing rates is their attempts to bring inflation back to normal, since cheap money is cheap for _everyone_, including all Americans that were eager to get a low monthly payment on cars/houses (as I’ve alluded to), not just for existing collateral but for new homes/cars, thus increasing total demand - and that demand leading to price increases across the board.
- throwawaymaths 3y ago
  > Americans that were eager to get a low monthly payment on cars/house You're still describing relatively rich people. Those price increases really hit everyone else hard. Moreover those loans are small fry compared to leveraged investment.

wolverine876 3y ago

Is there evidence?

landemva 3y ago

> Fed's stunt with 2-3% interest rates in 2020-2022 Really? Fed funds rate was about 2.5% in 2019, because Fed raised rates when Trump took office. Fed funds rate scraped zero in 2020 and 2021. https://fred.stlouisfed.org/series/fedfunds https://fred.stlouisfed.org/series/fedfunds

sgerenser 3y ago
Yeah, I assume the 2-3% rates is referring to mortgage rates, which isn’t directly caused by the fed but was certainly influenced by the fed setting short-term rates at 0.