4 ms·

You are correct. Striking how many HN commentors are so often confident and yet wrong...

mbar84 2y ago
Was he really that wrong? Isn't a bond just another debt instrument? It's not obvious to me, that there is any fundamental difference between the operations that both comments describe.
- insane_dreamer 2y ago
  While the effects may be similar, they are fundamentally different mechanisms. Also, this statement is incorrect: > Simplified: the central bank decide on an interest rate that they want to see. By itself that decision doesn't do anything. The Fed does in fact set interest rates and that decision directly impacts rates all down the line to mortgages and local loans. Intervening in the bond market is another tool that the Fed can use.
  - eru 2y ago
    The Fed still has to make (and receive) loans at these rates, for them to have an effect on the market.
  - benj111 2y ago
    I think you're talking past each other. A central bank doesn't directly set interest rates for your mortgage. It can set rates at which it will lend to other banks, which in turn influences the rates banks will offer to mortgage borrowers, but this isn't necessarily so, see for example 2008. Of course there are more contracts directly tied to the central bank rates, but thats just formalising the thing thats supposed to happen anyway.
    - eru 2y ago
      Yes. Btw, I'm not sure how many contracts are directly tied to whatever rate the central bank announces these days? It used to be more common to tie contracts to eg LIBOR, which is or was a reported interbank lending rate, not a decreed one.
rf15 2y ago
You are wrong. Striking how many HN commentators are so often confident and yet wrong in their assumption that everything is about the US.
- yamazakiwi 2y ago
  It's easy to see why many commentators on a US company's forum would make said assumptions.
  - benj111 2y ago
    Theres not much about the forums that makes it Y combinator specific. Unless youre talking more broadly, in which case this is the internet. Do Tik Tok videos have to assume everyone is Chinese?
    - xadhominemx 2y ago
      “The Fed” is the US Federal Reserve The Finnish central bank is called the “Bank of Finland”
      - benj111 2y ago
        Yes and the parent was talking about an american companys forums, which I think is logically flawed.
- hansvm 2y ago
  > Central banks work this way >> Here's a biggish counter-example, setting fiscal policy for 25% of the world's economic output >>> Right! How could the other poster have possibly missed that? >>>> There are other central banks. Ignorant Americans...
- Supermancho 2y ago
  > You are wrong. Wrong about what? This is about the US Fed, in context of...well you can read the thread.

Was he really that wrong? Isn't a bond just another debt instrument? It's not obvious to me, that there is any fundamental difference between the operations that both comments describe.

insane_dreamer 2y ago
While the effects may be similar, they are fundamentally different mechanisms. Also, this statement is incorrect: > Simplified: the central bank decide on an interest rate that they want to see. By itself that decision doesn't do anything. The Fed does in fact set interest rates and that decision directly impacts rates all down the line to mortgages and local loans. Intervening in the bond market is another tool that the Fed can use.
- eru 2y ago
  The Fed still has to make (and receive) loans at these rates, for them to have an effect on the market.
- benj111 2y ago
  I think you're talking past each other. A central bank doesn't directly set interest rates for your mortgage. It can set rates at which it will lend to other banks, which in turn influences the rates banks will offer to mortgage borrowers, but this isn't necessarily so, see for example 2008. Of course there are more contracts directly tied to the central bank rates, but thats just formalising the thing thats supposed to happen anyway.
  - eru 2y ago
    Yes. Btw, I'm not sure how many contracts are directly tied to whatever rate the central bank announces these days? It used to be more common to tie contracts to eg LIBOR, which is or was a reported interbank lending rate, not a decreed one.

rf15 2y ago

You are wrong. Striking how many HN commentators are so often confident and yet wrong in their assumption that everything is about the US.

yamazakiwi 2y ago
It's easy to see why many commentators on a US company's forum would make said assumptions.
- benj111 2y ago
  Theres not much about the forums that makes it Y combinator specific. Unless youre talking more broadly, in which case this is the internet. Do Tik Tok videos have to assume everyone is Chinese?
  - xadhominemx 2y ago
    “The Fed” is the US Federal Reserve The Finnish central bank is called the “Bank of Finland”
    - benj111 2y ago
      Yes and the parent was talking about an american companys forums, which I think is logically flawed.
hansvm 2y ago
> Central banks work this way >> Here's a biggish counter-example, setting fiscal policy for 25% of the world's economic output >>> Right! How could the other poster have possibly missed that? >>>> There are other central banks. Ignorant Americans...
Supermancho 2y ago
> You are wrong. Wrong about what? This is about the US Fed, in context of...well you can read the thread.