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Prediction: this causes a recession in two years, right after a Democrat wins the White House, who will be blamed for it. The economy will turn around after a f
by dabinat 16d ago
Prediction: this causes a recession in two years, right after a Democrat wins the White House, who will be blamed for it. The economy will turn around after a few years, just in time for a Republican to win and claim they fixed it.
This is how Republicans have a reputation for being economically savvy despite actual evidence to the contrary, because the general population doesn’t understand that economics runs on a time delay.
- phendrenad2 16d ago"Global depression imminent, here's what it means for this poor American political party"
- vasco 16d agoEasy fix, have the democrats lose the next election and you break the spell. It's all military industrial complex anyway.
- beej71 16d agoI wish they'd lost in 2020, that's for sure.
- eej71 16d agoHello similarly named account. I basically agree. I don't care for DJT, but I can see how getting his "second term" underway after his first one could have been better. His four years away allowed him to stew and plan and respond.
- exe34 16d agoWould have thinned the herd nicely by botching COVID and saved a ton on welfare.
- jimmar 16d agoSo, you're aligned with President Trump who wants to cut rates, then?
- hedora 16d agoI read the comment as: Trump’s policies are all forcing the US into stagflation so hard the fed has to do this, knowing it’ll cause a recession. Fed actions typically take a few years to be felt, regardless of administration.
- hirako2000 16d agoI doubt it will take 2 years as other ingredients are already at play.
- jameslk 16d agoBoth parties are responsible for the inflation and debt. Fiscal policy is largely driven by congress, not the president
- deleted 16d ago[deleted]
- matteoraso 16d agoAnd which party controls congress? I'll give you a hint: It's the party that spent decades advocating for irresponsible tax cuts without cutting spending[0]. [0] Yes, I know that the Republicans said that they were going to cut spending to match the tax cuts, but that never ends up happening.
- jameslk 16d agoThe high inflation since Covid and $40 trillion in debt didn’t happen under one party
- owebmaster 16d agoBut just one wins elections promising they will reducing it
- jameslk 16d agoNeither party has realistic plans to reduce the debt. It’s been that way for decades. Kicking the can down the road gets more votes
- watwut 16d agoIt was democrat who ended with surplus. This is not both sides issue. This very much "conservatives make things worst and hide behind both sides".
- chucksta 16d ago
- daviding 16d ago(deleted, political, no point)
- ndesaulniers 16d ago> The important thing is really who's on the girl's soccer team I've not heard this expression before; can someone explain it to me?
- mig39 16d agoI think they're referring to the obsession that some people have to trans issues.
- almostjazz 16d agoI may be wrong but I think they are referring to the Republican party's position on trans athletes in sports (literally, who is allowed on a girls sports team) being the only thing that matters to some voters.
- ron_woods 16d agoIts a joke where all Republicans care about is winning the culture wars. Meaning there are boys on the girls sports teams who identify as girls. Its to get the base mad and get them to vote (supposedly).
- Aboutplants 16d agoWe will enter a recession in less than two years, the R timing on this one isn’t going to work out
- marcosdumay 16d agoIt's interesting that this article doesn't have the rate... (It moved from 3.5% - 3.75% to 3.75% - 4%, the US uses a range, not a fixed number.) But this one is something that gets results almost immediately. We will see what it does in 2 or 3 months, not years.
- karp773 16d agoWhat results? Overnight interbank loan rates, yes, immediately. The effect of those rates on the economy? It will take time to propagate. Heck, some important committees only meet like twice a year.
- marcosdumay 16d ago> What results? Inflation numbers, companies firing, and the magnitude of fictional numbers on financial markets. Lots and lots of things are slower to react, but those 3 are quite big and hard to ignore.
- carefree-bob 15d agoLayoffs are abnormally low right now, well below the rate a decade before 2020. Here is data: https://fred.stlouisfed.org/series/JTSLDR https://fred.stlouisfed.org/series/JTSLDR Inflation is a bit higher, but not shockingly so, here is the data: https://fred.stlouisfed.org/series/CPIAUCSL# https://fred.stlouisfed.org/series/CPIAUCSL# In terms of "fictional numbers on wall street", I don't see any real data there, but if you have access to something then please share.
- Animats 15d agoThe current official US inflation rate is 3.4%. So the real interest rate is under 1%.
- marcosdumay 15d agoThe most relevant comparison is the short term treasure rates, that is currently at 4% for 3 months. What means that the US is still paying banks to take loans. They just fixed it so it pays very, very little.
- dyauspitr 16d agoThis exact scenario has happened 4 times in my living memory already.
- bdangubic 16d agoI would upvote this 100x if I could. There are decades of evidence of this same thing happening but people be people'ing every 2-4 years :)
- Scottn1 16d agoAt what point into a presidential term does it become their actual mess? And is there evidence of a time delay? Because by that argument, the mess we are in would been caused by Democrats.
- jfengel 16d agoUsually, months to years. The economy is a very big ship and slow to steer. This particular crisis is quite abrupt, caused by a sharp jump in the price of oil. Most presidents don't really deserve either the credit or fault that they receive on the economy, but in this case there's a very clear and direct connection.
- ryathal 16d agoAll good is due to MyParty, all bad is due to OtherParty.
- HWR_14 16d agoThere's not a constant cutoff. It depends a lot on what the president and the administration do. Does the president push the button and start nuclear war? They are the primary driver for the new economy. Does the president continue the same policies that were working for the last decade and continue to work for the length of their presidency? They might never be the primary driver.
- xboxnolifes 16d agoDepending on who you ask, the mess we are in is caused by Democrats.
- RickJWagner 15d agoArbitrarily decided by the person with political convictions blinding them. Yes, it happens to both sides. People convince themselves their side always makes right decisions, the other side always wrong. The truth is that the secret sauce is in the pendulum going back and forth. The excesses of one side are soon erased by the other. It is working, as it has for many years.
- hedora 16d agoExactly like “biden’s” inflation from the zero interest rate policy.
- trashface 16d agoAnother possibility is recession in next two years, but its brief enough that recovery starts before 2028 election - republicans take credit and voters believe it - JD Vance gets elected president. I recall reading something from axios or similar, talking about how a CEO said a "nice light recession right now would be perfect for us" or something to that effect.
- seanmcdirmid 16d agoNo, this will probably fall apart before Trump is out of office and a Democrat will be expected to clean up his mess again.
- tmountain 15d agoIt’s optimistic to assume that a Democrat will be permitted to hold the office of the President. It came down to Mike Pence last time, and things have changed a lot since then.
- AnimalMuppet 16d agoBut not doing this would, in two years, cause (or at least allow) inflation that would cause harm, too. But Trump might get blamed in that case, because inflation would increase for the next two years, and so people would experience the pain during his term.
- UncleOxidant 16d agoBut this being supply shock induced inflation means that raising rates will likely have little effect on lowering inflation.
- impure 16d agoWouldn’t surprise me if it was a lot sooner given skyrocketing fuel costs, high bond yields, and unsustainable AI spending.
- UncleOxidant 16d ago> Prediction: this causes a recession in two years "this" (raising the fed rate by .25%) is not what causes a recession in 2 years, it's what led to "this" (the ill-advised, badly-planned, Iran war) + tariffs + popping AI bubble that will do that.
- swed420 16d ago> This is how Republicans have a reputation for being economically savvy despite actual evidence to the contrary, because the general population doesn’t understand that economics runs on a time delay. And it's how Democrats have a reputation for being the "wrongly victimized underdog / misunderstood savior" despite actual evidence to the contrary, because the general population doesn’t understand that economics runs on a time delay.
- carefree-bob 16d agoA 0.25% rate hike is going to cause a recession? How, exactly, would that happen? Honestly it seems your post is heavy on politics but I am not seeing an actual argument anywhere in there. My canned response to people being upset at various policies or ratios, whether it is inflation, or bond yields, or market movements, is to ask them what they think the correct value should be. Stop complaining about the movement and instead ask them for their target. You think a 4% FedFunds is too high or too low? What do you think the correct value is and why? You think the stock market is too high or too low, what do you think the correct value of the index should be? Most people, who were just moments ago vociferously complaining about a movement, when asked this question fall silent, because they have no idea what the target should be, and because they have no idea about the target, they really have no business complaining about movement. Instead, they use the movement as a springboard to air their ideological beefs. But if you are going to tie some thesis to a rate hike, you better be able to explain what you think the correct rate should be and why. I'm waiting. Personally, I think a 4% rate is perfectly fine. 5% may even be warranted, and historically this has not been a high rate, if you assume, say, 2.5% inflation and 2% GDP growth, this is a pretty reasonable place to be.
- aftbit 16d agoI dunno about the politics, but personally I don't think there is a generic "correct" value. The rate describes the state of the world, and the "correct" value is whatever accurately describes the state of the world. There is a separate question though - is that state of the world good or bad for people? Is it better or worse today than it was yesterday? What can we do - collectively - to push it in a direction that best serves our collective interests? These are valid questions to ask, and I think each takes us further in the direction of politics.
- unified101 15d agoI personally don't think there's a correct concept of money. Money describes how happy I feel, and the correct money I should have is whatever describes my current mood. So what can we collective do with money so I feel most happy. This may be the most important question of all to ask.
- Forgeties79 15d agoOne of the more baffling things in the most recent version of that cycle was Biden being solely blamed for inflation - in particular the finger pointing over checks exactly like the ones that went out under trump.
- mikewarot 15d agoI think this could be the thing that finally pops the AI circular financing bubble, leading to World Depression II. I'm not sure either of the existing 2 faces of the duopoly infesting politics will survive, and there's a non-zero chance this breaks civilization as supply chains collapse, and we enter a new dark ages.
- disgruntledphd2 15d ago> leading to World Depression II This is very, very unlikely. The US would probably suffer more, given how much AI related expenditure there is. The EZ mostly wouldn't notice, and China is already basically in a depression that it's desperately trying to export its way out of (which seems unlikely without them doing something about all the underwater property debt).
- vdomi 15d ago> China is already basically in a depression You gotta expand on that, chief.
- disgruntledphd2 15d agoSo, their property sector essentially collapsed from 2019-21, vaporising much of the wealth possessed by many Chinese people (who were often buying expensive flats of the plans). As a result of this many local government pushed money into car/electronics/whatever export industries. This lead to vicious competition, and many of the exporters are tapped out of Chinese markets (vicious competition) so they are attempting to export as much as possible (which is rational). Looking at things more broadly, one could argue that lots of the reason for the vicious competition is precisely that many Chinese people are still in loads of debt from the property bust (much like Irish/Greek/Spanish people were after their property busts). The central government is pushing the exporting companies hard, as they don't want to have to inject loads of money into the economy (apart from local support of exporters). This makes sense from the government perspective as they want to be able to build everything that they need (so the US/EU can't screw them), but it's pretty bad for the chinese people, many of whom are not spending (there's been some deflation over the past 5 years). So, in many ways the Chinese economy is not in a good state, even lots of the exporters/industrial companies are doing badly, hence why they are focusing on exports. And because Xi is basically leader for life, the likelihood is that these policies won't change until he dies.