4 ms·

This comment isn't helpful. Please explain for those of us without a degree in economics.

by leptons 18d ago

bryanlarsen 18d ago
bwb is likely referring to the likelihood that this will send Trump into a tremendous rage.
- science4sail 18d ago
  I can't wait to see the next Truth Social post.
  - bwb 18d ago
    hah i know, his own man raised rates, he will probably send the military out to get Walsh
TrainedMonkey 18d ago
Higher rates means USG will need to print more money to pay for $40TN debt which will increase inflation which will force higher rates.
- darth_avocado 18d ago
  The debt is owed by the treasury, fed prints the money. What you’re describing is not how the monetary system works.
  - almost_usual 18d ago
    The Fed purchased Treasury securities during COVID QE. Those securities had low yields and cash reserves were created during those purchases. Those cash reserves are held by banks which the Fed funds rate pays interest on (what was hiked). Meanwhile the fixed rate debt from QE remains the same.
kadoban 18d ago
Inflation is high, so interest rates need to go up to try to slow that, but the economy isn't doing amazing already, and higher interest rates won't help that. Not to mention the US debt is _high_ as hell and bond yields mean that's more expensive. And the country is run by a broken fool who has no interest or ability to fix any of that.
- ihsw 18d ago
  [dead]
- rayiner 18d ago
  > And the country is run by a broken fool who has no interest or ability to fix any of that. Trump will be gone in three years, but you'll still have an electorate that wants more free stuff while also getting tax cuts. There is zero appetite for fiscal reform in the U.S. The geometric growth rate of U.S. debt has been consistent since 2010 and will remain so when AOC is President: https://usafacts.org/answers/how-much-debt-does-the-us-have/country/united-states/ https://usafacts.org/answers/how-much-debt-does-the-us-have/...
  - nemomarx 18d ago
    You really really just need to raise taxes. Just find a way to sell that to the public (focus on the rich or large corporations or whatever outgroup you want basically)
    - apparent 18d ago
      Disagree. We have a spending problem, not a tax revenue problem. No matter how much the govt brings in, it will want to spend an increasing amount more.
    - ifyoubuildit 18d ago
      Is there anything that can't be solved by bigger government?
    - rayiner 18d ago
dmoose 18d ago
For those of us without a degree in economics the last few years have seemed a bit unhinged from reality so I will not claim any deep insight here. However, it is hard to imagine that an increase in cost of debt will not have some impact and probably in ways not anticipated by many of those with economics degrees.
iamnothere 18d ago
Higher rates means financing/borrowing is more expensive. Mortgage rates will go up, possibly pushing home prices down. This is neutral for buyers because of higher rates, but bad for sellers. Loans (personal or business) will be harder to come by. Layoffs, or at least hiring freezes, are more likely. Companies will move into a defensive rather than an growth mode. Higher unemployment will lead to more desperation, and possibly consumer defaults on loans and mortgages. Government interest payments, which are already high, will become higher after future bond sales. This will compound future budgetary problems and could eventually lead to cuts in entitlements. If so, expect crime and political instability (already a problem) to rise in the future. This will take a while, though. Normally rates are increased to lower inflation by reducing the supply of money. Given the multiple concurrent problems with energy (Hormuz, Red Sea/Yanbu, Russia/Ukraine, possibly Libya as problems are starting there, China is buying aggressively) then higher rates may not be enough to stop inflation. This would create a situation where both borrowing is harder and inflation continues to rage. This is very bad and will lead to demand destruction (nobody’s buying anything because it’s too expensive and they can’t finance it anyway). This results in a severe recession at the minimum. Edit: wow, I really set off a discussion with this. See replies below for clarification on mortgage rates, which is the least important part anyways. Also, I should note that a lot of the above is a worst case scenario, if energy isn’t solved soon and especially if bonds don’t respond to the hike, leading to further hikes.
- jrflo 18d ago
  Home prices are sticky on the way down, 25 basis points won't change much
  - iamnothere 18d ago
    Supply is way up and sales are way down, on average: https://wolfstreet.com/2026/09/10/sales-of-existing-single-family-homes-sag-further-supply-spikes-to-decade-high-condo-sales-drop-to-data-low-supply-spikes-to-14-year-high/ https://wolfstreet.com/2026/09/10/sales-of-existing-single-f... This could be the catalyst to lower prices if sellers get spooked, especially if gas prices keep going up.
theginger 18d ago
The comment could be more about the politics of this not the economics, Donald Trump has made it clear he is very against this sort of rate rise
- Supermancho 18d ago
  What Trump says is never clear. It's also not a reliable source for what behavior the administration (or even he) exhibits.
maerF0x0 18d ago
Last time interest rates went up, Startups and SaaS went down, which many on HN 's livelihood depends.
Edman274 18d ago
Stagflation is when the economy stagnates yet inflation is higher than ideal. Inflation and economic activity are typically correlated, and the conventional wisdom back in the day was that you couldn't have unemployment going up and things costing more, because it was expected that demand going down puts a downward pressure on prices. When people aren't hiring and buying but things cost more and more, life just kind of sucks. The last time this happened was in the 1970s in the aftermath of a few oil embargoes that made oil prices go through the roof and a disastrously expensive failed war in Vietnam, there was gas rationing, it sucked. You may notice a few key similarities now with oil embargoes, reduced hiring, an extremely expensive war, and rapidly expanding government debt as a result of that war. If you want a qualitative feeling about people's moods in the 70s, you can watch such movies as: Taxi Driver The Deer Hunter The Warriors Americathon Network
- iamnothere 18d ago
  I suggest A Boy And His Dog (based on a Harlan Ellison story)
whateveracct 18d ago
why are you responding to a person like it is an LLM?

This comment isn't helpful. Please explain for those of us without a degree in economics.

by leptons 18d ago

This comment isn't helpful. Please explain for those of us without a degree in economics.

bryanlarsen 18d ago

bwb is likely referring to the likelihood that this will send Trump into a tremendous rage.

science4sail 18d ago
I can't wait to see the next Truth Social post.
- bwb 18d ago
  hah i know, his own man raised rates, he will probably send the military out to get Walsh

TrainedMonkey 18d ago

Higher rates means USG will need to print more money to pay for $40TN debt which will increase inflation which will force higher rates.

darth_avocado 18d ago
The debt is owed by the treasury, fed prints the money. What you’re describing is not how the monetary system works.
- almost_usual 18d ago
  The Fed purchased Treasury securities during COVID QE. Those securities had low yields and cash reserves were created during those purchases. Those cash reserves are held by banks which the Fed funds rate pays interest on (what was hiked). Meanwhile the fixed rate debt from QE remains the same.

kadoban 18d ago

Inflation is high, so interest rates need to go up to try to slow that, but the economy isn't doing amazing already, and higher interest rates won't help that. Not to mention the US debt is _high_ as hell and bond yields mean that's more expensive. And the country is run by a broken fool who has no interest or ability to fix any of that.

ihsw 18d ago
[dead]
rayiner 18d ago
> And the country is run by a broken fool who has no interest or ability to fix any of that. Trump will be gone in three years, but you'll still have an electorate that wants more free stuff while also getting tax cuts. There is zero appetite for fiscal reform in the U.S. The geometric growth rate of U.S. debt has been consistent since 2010 and will remain so when AOC is President: https://usafacts.org/answers/how-much-debt-does-the-us-have/country/united-states/ https://usafacts.org/answers/how-much-debt-does-the-us-have/...
- nemomarx 18d ago
  You really really just need to raise taxes. Just find a way to sell that to the public (focus on the rich or large corporations or whatever outgroup you want basically)
  - apparent 18d ago
    Disagree. We have a spending problem, not a tax revenue problem. No matter how much the govt brings in, it will want to spend an increasing amount more.
  - ifyoubuildit 18d ago
    Is there anything that can't be solved by bigger government?
  - rayiner 18d ago

dmoose 18d ago

For those of us without a degree in economics the last few years have seemed a bit unhinged from reality so I will not claim any deep insight here. However, it is hard to imagine that an increase in cost of debt will not have some impact and probably in ways not anticipated by many of those with economics degrees.

iamnothere 18d ago

Higher rates means financing/borrowing is more expensive. Mortgage rates will go up, possibly pushing home prices down. This is neutral for buyers because of higher rates, but bad for sellers. Loans (personal or business) will be harder to come by. Layoffs, or at least hiring freezes, are more likely. Companies will move into a defensive rather than an growth mode. Higher unemployment will lead to more desperation, and possibly consumer defaults on loans and mortgages. Government interest payments, which are already high, will become higher after future bond sales. This will compound future budgetary problems and could eventually lead to cuts in entitlements. If so, expect crime and political instability (already a problem) to rise in the future. This will take a while, though. Normally rates are increased to lower inflation by reducing the supply of money. Given the multiple concurrent problems with energy (Hormuz, Red Sea/Yanbu, Russia/Ukraine, possibly Libya as problems are starting there, China is buying aggressively) then higher rates may not be enough to stop inflation. This would create a situation where both borrowing is harder and inflation continues to rage. This is very bad and will lead to demand destruction (nobody’s buying anything because it’s too expensive and they can’t finance it anyway). This results in a severe recession at the minimum. Edit: wow, I really set off a discussion with this. See replies below for clarification on mortgage rates, which is the least important part anyways. Also, I should note that a lot of the above is a worst case scenario, if energy isn’t solved soon and especially if bonds don’t respond to the hike, leading to further hikes.

jrflo 18d ago
Home prices are sticky on the way down, 25 basis points won't change much
- iamnothere 18d ago
  Supply is way up and sales are way down, on average: https://wolfstreet.com/2026/09/10/sales-of-existing-single-family-homes-sag-further-supply-spikes-to-decade-high-condo-sales-drop-to-data-low-supply-spikes-to-14-year-high/ https://wolfstreet.com/2026/09/10/sales-of-existing-single-f... This could be the catalyst to lower prices if sellers get spooked, especially if gas prices keep going up.

theginger 18d ago

The comment could be more about the politics of this not the economics, Donald Trump has made it clear he is very against this sort of rate rise

Supermancho 18d ago
What Trump says is never clear. It's also not a reliable source for what behavior the administration (or even he) exhibits.

maerF0x0 18d ago

Last time interest rates went up, Startups and SaaS went down, which many on HN 's livelihood depends.

Edman274 18d ago

Stagflation is when the economy stagnates yet inflation is higher than ideal. Inflation and economic activity are typically correlated, and the conventional wisdom back in the day was that you couldn't have unemployment going up and things costing more, because it was expected that demand going down puts a downward pressure on prices. When people aren't hiring and buying but things cost more and more, life just kind of sucks. The last time this happened was in the 1970s in the aftermath of a few oil embargoes that made oil prices go through the roof and a disastrously expensive failed war in Vietnam, there was gas rationing, it sucked. You may notice a few key similarities now with oil embargoes, reduced hiring, an extremely expensive war, and rapidly expanding government debt as a result of that war. If you want a qualitative feeling about people's moods in the 70s, you can watch such movies as: Taxi Driver The Deer Hunter The Warriors Americathon Network

iamnothere 18d ago
I suggest A Boy And His Dog (based on a Harlan Ellison story)

whateveracct 18d ago

why are you responding to a person like it is an LLM?