FED Change Interest Rate Timeliness due to INFLATION! - Politics Forum.org | PoFo

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#15177174
https://www.google.com/amp/s/www.cnbc.com/amp/2021/06/16/fed-holds-rates-steady-but-raises-inflation-expectations-sharply-and-makes-no-mention-of-taper.html

Nothing to see here. FED still say inflation is temporary. But even so, they have brought forward their own rate timeline because... well, I don't know... to counter a risk of inflation in the future??? That is some sound logic there.

Although it shouldn't be surprising that businesses have hiked up prices given they have accumulated debt over a stagnant market whilst businesses are also trying to regain their profits they lost last year too. And we seem to have built up savings over the last year too given we have not had the opportunity to spend whilst also handing over free money to increase that surplus and soon we should see an open market of low supply and high demand. The pieces are moving. Watch this space!
#15177216
B0ycey wrote:https://www.google.com/amp/s/www.cnbc.com/amp/2021/06/16/fed-holds-rates-steady-but-raises-inflation-expectations-sharply-and-makes-no-mention-of-taper.html

Nothing to see here. FED still say inflation is temporary. But even so, they have brought forward their own rate timeline because... well, I don't know... to counter a risk of inflation in the future??? That is some sound logic there.

Although it shouldn't be surprising that businesses have hiked up prices given they have accumulated debt over a stagnant market whilst businesses are also trying to regain their profits they lost last year too. And we seem to have built up savings over the last year too given we have not had the opportunity to spend whilst also handing over free money to increase that surplus and soon we should see an open market of low supply and high demand. The pieces are moving. Watch this space!


It's to keep inflation expectations anchored, signaling it will not let inflation run amok. Also, it may be more optimistic now about future demand.
#15177221
wat0n wrote:It's to keep inflation expectations anchored, signaling it will not let inflation run amok. Also, it may be more optimistic now about future demand.


Indeed. I would say the FED need to keep expectations of inflation low given anything else spooks the market. The mere fact they plan on increasing rates is evident that they have concerns although I would say anyone making predictions right now is guessing. The only issue I have though is perhaps a plan for a way to pay back for Bidens recovery stimulus package at the very least is needed given continued borrowing during a time of high inflation, whether it is down to supply or not, has historically never ended well and I would be surprised if things are different this time round. :hmm:
#15177223
wat0n wrote:That's something the administration will need to figure out, but Biden also wants to hike taxes (on higher incomes at least).


So I heard when he announced this. As of yet, silence. I am pro higher taxes on the wealthy given it seems to make the most sense. And of course closing loopholes. Only problem. America is run by wealthy lobbyists. So if Biden is going to do that, we need clarity given we don't know who is really holding the strings in The White House. Currently we have heard about the G7s plan on taxing multi national companies and that is about it. We need more given that we are talking about $2tn of MORE BORROWING!
#15178543
It's my understanding that the Fed has been creating money to give to banks and large corporation since a few months before the pandemic. During the pandemic didn't they commit to cover all losses among large shareholders in order to prop up the stock markets?

Wouldn't this tend to damage the economy over time? I'm not talking about social effects like increasing the gap between rich and poor, but things like the housing market and the possibility that large sections of the population get moved out of a share in the economy?
#15178588
PataOneil wrote:
It's my understanding that the Fed has been creating money to give to banks and large corporation since a few months before the pandemic. During the pandemic didn't they commit to cover all losses among large shareholders in order to prop up the stock markets?

Wouldn't this tend to damage the economy over time? I'm not talking about social effects like increasing the gap between rich and poor, but things like the housing market and the possibility that large sections of the population get moved out of a share in the economy?



This is the major financial effect:



Zombie companies are indebted businesses that, although generating cash, after covering running costs, fixed costs (wages, rates, rent) they only have enough funds to service the interest on their loans, but not the debt itself.[1] As such, they are generally dependent on refinancing of maturing debt for their continued existence, and may face solvency risks should interest rates rise or investors withdraw from further financing.



https://en.wikipedia.org/wiki/Zombie_company



As to the *human* cost, it would depend to the extent that the population *has* a share in the economy in the first place.

Also:


Cathie Wood - This ENTIRE Asset’s Bubble Is About To Collapse

#15178590
ckaihatsu wrote:This is the major financial effect:







As to the *human* cost, it would depend to the extent that the population *has* a share in the economy in the first place.

Also:


Cathie Wood - This ENTIRE Asset’s Bubble Is About To Collapse



Thank you, not my field, but what little I know seems to indicate we are in serious trouble.
#15178597
ckaihatsu wrote:You're welcome.

Who's 'we'?


The West is what I meant, but probably humanity as a whole. I'm worried that a major economic meltdown of the order of the Great Depression will lead to direct war between nuclear powers. In my darkest moments I think this is inevitable. The rich have very little restraint, having so little opportunity to practice it.
#15178599
PataOneil wrote:
The West is what I meant, but probably humanity as a whole. I'm worried that a major economic meltdown of the order of the Great Depression will lead to direct war between nuclear powers. In my darkest moments I think this is inevitable. The rich have very little restraint, having so little opportunity to practice it.



Hmmmm, interest rates have been at 1% or lower for *decades* now, so I really don't think that there's much *at stake*. We're not in an era of intense international dynamism, like the 20th century that you referenced.

Neither can there really be a 'major economic meltdown', because prevailing rates of industrial productivity are such that *deflation* is the norm, as the video indicates, rather than the *inflationary*, turbulent, competitive scenario that *you* have in mind.

The rich are making their money through *finance*, buttressed / funded mostly by government funds, as you noted.

Breathing a little easier now?
#15178605
ckaihatsu wrote:Hmmmm, interest rates have been at 1% or lower for *decades* now, so I really don't think that there's much *at stake*. We're not in an era of intense international dynamism, like the 20th century that you referenced.

Neither can there really be a 'major economic meltdown', because prevailing rates of industrial productivity are such that *deflation* is the norm, as the video indicates, rather than the *inflationary*, turbulent, competitive scenario that *you* have in mind.

The rich are making their money through *finance*, buttressed / funded mostly by government funds, as you noted.

Breathing a little easier now?


I would be if it weren't for climate change and the social upheaval it is bringing... which could easily flip things into the turbulent, competitive scenario. I live in the USA and while not a member of either party... I've been watching the social fabric of our nation fray for about fifty years now. Seems like a lot more people here are stressed to the point of crazy, than just ten years ago.

I also think that the vast majority of the people think of the economy in very simple terms... will I have food, a place to live... will my children have a life with such things. I talk with a lot of people every day, and the vast majority of them scared first, and angry second.

{sighs}

But thanks for trying.
#15178609
PataOneil wrote:
The West is what I meant, but probably humanity as a whole. I'm worried that a major economic meltdown of the order of the Great Depression will lead to direct war between nuclear powers. In my darkest moments I think this is inevitable. The rich have very little restraint, having so little opportunity to practice it.



You are ODing on panic...

The inflation is temporary. We are in an period of economic growth, but that's to be expected after a year when everybody's life was on hold.

This is a very different world from the 70s, much less the 30's of the Great Depression. Roughly 1/3 of American money simply vanished in the Depression,, it was a hell of a bubble.

Stiglitz recently did a paper that looked at labor dislocation as one of the causes. In any case, they didn't pump the economy full of money, but everybody is a Keynesian now...

However, I am not dismissing your concerns out of hand. If you want to know why, read this:
https://www.amazon.com/Lords-Finance-Bankers-Broke-World/dp/0143116800

We are entering a transformational era, and big wars are pretty common when there are such big changes. Humans have a tendency to do the worst things possible as a response to things getting bad.

Anyway, that is likely 20 or 30 years down the road. There is one other thing, MAD works. Humans discount the future horribly, we are wildly irrational about some things. But the great thing about nukes is stupid today means getting dead manana. People may be irrational, and none too bright, but they can understand dead manana.

So we might get through this with all manner of ugly, but no nukes.

I figure we will also wind up quite busy trying to keep climate change from killing us.
Last edited by late on 26 Jun 2021 17:47, edited 1 time in total.
#15178610
PataOneil wrote:
I would be if it weren't for climate change and the social upheaval it is bringing... which could easily flip things into the turbulent, competitive scenario. I live in the USA and while not a member of either party... I've been watching the social fabric of our nation fray for about fifty years now. Seems like a lot more people here are stressed to the point of crazy, than just ten years ago.

I also think that the vast majority of the people think of the economy in very simple terms... will I have food, a place to live... will my children have a life with such things. I talk with a lot of people every day, and the vast majority of them scared first, and angry second.

{sighs}

But thanks for trying.



Yeah, I'm in the U.S., too -- maybe we could grab coffee sometime.... (grin)

There hasn't been any *real economy* since 2000 -- that's why everything feels so weird and void-ish. We've basically been treading water since then.

Here's a recent item from my news blog:


Calif. Legislators Reach Deal To Pay Off Unpaid Rent, Extend Eviction Moratorium To Sept. 30




https://www.tapatalk.com/groups/redmarx ... t1560.html
#15178613
late wrote:



It is commonly believed that the Great Depression that began in 1929 resulted from a confluence of events beyond any one person's or government's control. In fact, as Liaquat Ahamed reveals, it was the decisions made by a small number of central bankers that were the primary cause of that economic meltdown, the effects of which set the stage for World War II and reverberated for decades. As we continue to grapple with economic turmoil, Lords of Finance is a potent reminder of the enormous impact that the decisions of central bankers can have, their fallibility, and the terrible human consequences that can result when they are wrong.






You'll have to excuse late -- he's a blood-oath liberal, and is *deflecting* attention away from capitalism itself, to 'central bankers' or 'central banking', as a dodge.
#15178643
ckaihatsu wrote:Also:


Cathie Wood - This ENTIRE Asset’s Bubble Is About To Collapse


Sounds great.

I don't give a fuck about corporate profits or asset holders.

I don't hold any assets.

I care about the price of gas and the price of food and the price of lumber and the price of sledge hammers.

Burn this bitch down.
#15178645
Crantag wrote:
Sounds great.

I don't give a fuck about corporate profits or asset holders.

I don't hold any assets.

I care about the price of gas and the price of food and the price of lumber and the price of sledge hammers.

Burn this bitch down.



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