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Trump didnt kick off the layoffs. It was the war with Russia that drove the fed to raise interest rates in 2022 - a measure that was intended to curb inflation

• frontfor 1y ago
  I don’t believe the war specifically drove the Fed to raise interest rates. Inflation and asset prices have risen sharply a year prior to the war.
  • andyferris 1y ago
    There was a specific and particular expectation (and even patience) for inflation to drop naturally as the supply chains again reached equilibrium after Covid. Russia's invasion of Ukraine however caused a whole bunch of economic inputs like energy and fertilizer to spike, and central banks world wide didn't want economies to "get used to" constant high inflation rates, causing a perpetual problem.
    • Workaccount2 1y ago
      Work from home was the wrench in the governments plan. If the pandemic happened in 2000, the stimulus would have been needed, as the tools for remote work were way too poor back then. But instead all the productivity workers just switched to their home office and things just kept working. The stimulus should have been shut off in early-mid 2021 when this was abundantly clear. But the government let it run because people were so jubilant in the money shower.
  • larrled 1y ago
    Biden credited the inflation to Putin, claiming that 70% was due to Putin’s price hikes. That was not entirely true. Trump’s pandemic spending (lockdowns, vaccines…), and subsequently Biden’s, but most importantly the curiously named Inflation Reduction Act were obvious drivers. You can’t stimulate an already overheated economy to the tune of 2 trillion without getting Larry Summers a bit worked up.
• deleted 1y ago
  [deleted]
• nxm 1y ago
  2 trillion in unnecessary Covid related spending when Covid impact was winding down was the key reason for inflation. "$2000 checks!" was the campaign slogan
  • xorcist 1y ago
    People sometimes conveniently forgets that inflation historically has taken some 12-24 months to trickle through the economic system. That was the case this time, too. And the first inflationary impulses, famous for being "transitory", was actually before the Russian invasion of Eastern Europe.
  • bgwalter 1y ago
    That's one of the factors. In Europe at least the other factor is high energy prices after the broken turbine theater and subsequent destruction of Nord Stream. Prices and unemployment really started to rise after that. The EU buys overpriced LNG from the US, so the US is somewhat isolated from that. But the US is not isolated against the general economic downturn worldwide. Politicians do not care. Merz, with barely 25% approval of the German population, continues the policies outlined by Hegseth during his visit to the EU. Trump still plays theater to appease his MAGA base, but Senators Rubio and Graham increasingly start holding the reins.
  • johnnyanmac 1y ago
    We're blaming the 1000 dollar stimulus checks to the people and not the massive PPP loans that the government never bothered to collect on? It's amazing how well billionaires trained us to fight amongst one another as they ransack in broad daylight.
    • Workaccount2 1y ago
      No. The checks were mostly meaningless. The near zero interest rates, pause on student loan payments, pause on rent payments, doubling of unemployment pay, and then the dustings of stimulus checks and bonus childcare checks, all while most white collar workers just continued working like nothing happened, created an incredibly cash rich environment that most people have never seen before. And the PPP loans handouts to business owners just to throw more gas on the fire.
• bojan 1y ago
  "War with Russia" sounds like someone willingly started that war, and Russia was the target. Of course, nothing is further from the truth. "Russian invasion of Ukraine" is what should be written there.
  • andyferris 1y ago
    Fully agreed, but I suspect that was written that way because the Fed was rather more worried about the fact Russia was at war and under western sanctions, than that Ukraine was busy defending itself. Perhaps "Russia's war" would have been a better phrasing that captures both spirits (but it's not a phrase you hear said much).
    • pbhjpbhj 1y ago
      You think "Russia's war" captures more of the global relevance than "Russia's invasion of Ukraine"? For example, Ukraine was a very important food supplier -- one of the top grain suppliers in the World -- and the invasion caused shortages of some foods. Another example is that Ukraine provided a good source of iron ore for EU-based manufacture. If nothing else that would be important to USAmericans as indicating a market opportunity. Without that invasion and Putin's inspiration, would Trump have threatened invasion of USA's neighbours? That's got to be vital to USA finances too.
  • pydry 1y ago
    Your demands of an absolute committment to maintaining the domestic establishment's war narrative while making a technical point have been noted. Slava Ukraini.
    • sham1 1y ago
      Truth is the best narrative, and it's better than – perhaps unconsciously – downplaying the culpability of the Russian Federation for the war. Heroyam Slava.
      • pydry 1y ago
• bubbleRefuge 1y ago
  There is no proof that higher interest rates lead to greater unemployment. In fact, macro employment kind of boomed during the referenced period. I'd posit that higher rates actually boosted macro employment stats . Why ? Because higher rates = higher income to rich people via interest income channel = higher fed budget deficits ( gov is net payer of interest) = higher GDP = lower unemployment ceterus paribus.
  • lxgr 1y ago
    This is completely backwards. When interest rates are high, the expected returns of equity investments have to be even higher to justify the risk over risk-free fixed income assets. And that's only the indirect effect on equity funding; debt funding just directly becomes more expensive.
• brandall10 1y ago
  Anecdotally, I detected a cooling starting in March of 2022. Was actively looking at this time for months prior and it went from a few recruiters a day reaching out to a few a week.
• fallingknife 1y ago
  Raising interest rates has nothing to do with the 2022 war. If it did, rates would have come back down. Interest rate increases don't help with supply/demand driven price spikes. They do help with money supply and aggregate demand driven inflation, which was the cause of our recent inflation (that started way before Russia invaded Ukraine). The war was a convenient excuse because it deflects responsibility. And remember when they first said inflation was "transitory" and caused by supply chain issues from the economy reopening after covid? They didn't raise interest rates then because, like I mentioned above, interest rates don't help with supply shocks. If they did, the Fed would have raised rates then.
• mempko 1y ago
  You are wrong, Trump's 2017 Tax cut bill had a provision that kicked in that caused the layoffs. Engineers became more expensive because now companies had to amortize their costs over 5 years instead of immediately.