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Wed Sep 21, 2022, 02:06 PM

Fed raises rates by another three-quarters of a percentage point, pledges more hikes

Last edited Wed Sep 21, 2022, 02:55 PM - Edit history (1)

Source: CNBC

The Federal Reserve on Wednesday raised benchmark interest rates by another three-quarters of a percentage point and indicated it will keep hiking well above the current level. In its quest to bring down inflation running near its highest levels since the early 1980s, the central bank took its federal funds rate up to a range of 3%-3.25%, the highest it has been since early 2008, following the third consecutive 0.75 percentage point move.

Stocks had given up earlier gains after the announcement, with the Dow Jones Industrial Average dropping more than 200 points. But have since cut losses as Fed Chairman Jerome Powell discussed the outlook for interest rates. Traders have been concerned that the Fed is remaining more hawkish for longer than some had anticipated. Projections from the meeting indicated that the Fed expects to raise rates by at least 1.25 percentage points in its two remaining meetings this year. The increases that started in March and from a point of near-zero mark the most aggressive Fed tightening since it started using the overnight funds rate as its principal policy tool in 1990.

The only comparison was in 1994, when the Fed hiked a total of 2.25 percentage points; it would begin cutting rates by July of the following year. Along with the massive rate increases, Fed officials signaled the intention of continuing to hike until the funds level hits a “terminal rate,” or end point of 4.6% in 2023. That implies a quarter-point rate hike next year but no decreases. The “dot plot” of individual members’ expectations doesn’t point to rate cuts until 2024. Fed Chairman Jerome Powell and his colleagues have emphasized in recent weeks that it is unlikely rate cuts will happen next year, as the market had been pricing.

Federal Open Market Committee members indicate they expect the rate hikes to have consequences. The funds rate on its face addresses the rates that banks charge each other for overnight lending, but it bleeds through to many consumer adjustable-rate debt instruments, such as home equity loans, credit cards and auto financing. In their quarterly updates of estimates for rates and economic data, officials coalesced around expectations for the unemployment rate to rise to 4.4% by next year from its current 3.7%. Increases of that magnitude often are accompanied by recessions.


Read more: https://www.cnbc.com/2022/09/21/fed-rate-hike-september-2022-.html



Full updated headline: Fed raises rates by another three-quarters of a percentage point, pledges more hikes to fight inflation

Earlier article and headline -

Fed raises rates by another three-quarters of a percentage point to fight inflation

The Federal Reserve on Wednesday raised benchmark interest rates by another three-quarters of a percentage point and indicated it will keep hiking well above the current level. In its quest to bring down inflation running near its highest levels since the early 1980s, the central bank took its federal funds rate up to a range of 3%-3.25%, the highest it has been since early 2008 following the third consecutive 0.75 percentage point move.

The increases that started in March and from a point of near-zero mark the most aggressive Fed tightening since it started using the overnight funds rate as its principal policy tool in 1990. The only comparison was in 1994, when the Fed hiked a total of 2.25 percentage points; it would begin cutting rates by July of the following year. Along with the massive rate increases, Fed officials signaled the intention of continuing to hike until the funds level hits a “terminal rate,” or end point of 4.6% in 2023.

The “dot plot” of individual members’ expectations doesn’t point to rate cuts until 2024; Fed Chairman Jerome Powell and his colleagues have emphasized in recent weeks the unlikelihood that rate cuts will happen next year, as the market had been pricing.

Federal Open Market Committee members indicate they expect the rate hikes to have consequences. The funds rate on its face addresses the rates that banks charge each other for overnight lending, but it bleeds through to many consumer adjustable-rate debt instruments, such as home equity loans, credit cards and auto financing.

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Reply Fed raises rates by another three-quarters of a percentage point, pledges more hikes (Original post)
BumRushDaShow Sep 21 OP
LineReply I
Faux pas Sep 21 #1
NewHendoLib Sep 21 #2
Samrob Sep 21 #33
Faux pas Sep 22 #54
mathematic Sep 21 #3
TheRealNorth Sep 21 #13
mathematic Sep 21 #19
TheRealNorth Sep 21 #31
Faux pas Sep 22 #56
mathematic Sep 22 #64
BumRushDaShow Sep 21 #5
Faux pas Sep 22 #57
BumRushDaShow Sep 22 #65
melm00se Sep 21 #7
durablend Sep 21 #11
melm00se Sep 21 #14
durablend Sep 21 #18
moose65 Sep 21 #38
docgee Sep 21 #40
Faux pas Sep 22 #55
peppertree Sep 21 #9
Yavin4 Sep 21 #15
peppertree Sep 21 #21
Yavin4 Sep 21 #36
peppertree Sep 21 #49
sprinkleeninow Sep 21 #23
peppertree Sep 22 #69
sprinkleeninow Sep 22 #70
peppertree Sep 22 #71
LineLineLineReply I
Faux pas Sep 22 #58
IronLionZion Sep 21 #10
MarcA Sep 21 #28
LineLineLineReply I
Faux pas Sep 22 #59
IronLionZion Sep 22 #60
Faux pas Sep 22 #62
IronLionZion Sep 22 #63
Xolodno Sep 21 #45
hot2na Sep 21 #4
ScratchCat Sep 21 #6
bucolic_frolic Sep 21 #8
Warpy Sep 21 #12
Yavin4 Sep 21 #16
Warpy Sep 21 #20
Yavin4 Sep 21 #44
Nay Sep 22 #61
madville Sep 22 #66
Paper Roses Sep 21 #17
sprinkleeninow Sep 21 #24
BumRushDaShow Sep 21 #26
MarcA Sep 21 #27
Bengus81 Sep 22 #53
speak easy Sep 21 #22
honest.abe Sep 21 #25
Bengus81 Sep 21 #29
progree Sep 21 #30
Lonestarblue Sep 21 #32
honest.abe Sep 21 #34
onecaliberal Sep 21 #35
nowforever Sep 21 #37
moonshinegnomie Sep 21 #39
progree Sep 21 #41
Shanti Shanti Shanti Sep 21 #42
honest.abe Sep 21 #43
andym Sep 21 #46
progree Sep 21 #47
BumRushDaShow Sep 21 #48
yaesu Sep 21 #50
pansypoo53219 Sep 22 #51
progree Sep 22 #52
867-5309. Sep 22 #67
madville Sep 22 #68

Response to BumRushDaShow (Original post)

Wed Sep 21, 2022, 02:13 PM

1. I

have no clue as to how raising interest rates helps cut inflation. Seems like hocus pocus to me.

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Response to Faux pas (Reply #1)

Wed Sep 21, 2022, 02:21 PM

2. I think it's all Hocus pocus! The market, the economy,...

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Response to NewHendoLib (Reply #2)

Wed Sep 21, 2022, 04:01 PM

33. Pledges to make the wealthier, more wealthy and the rest of us poorer. nt

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Response to NewHendoLib (Reply #2)

Thu Sep 22, 2022, 09:41 AM

54. Thank you!

I've always thought the stock market is one of the biggest scams going. As long as the 'rich' are happy, eff the rest of us.

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Response to Faux pas (Reply #1)

Wed Sep 21, 2022, 02:22 PM

3. Shifts preferences from future production to current production

& reduces aggregate demand

The result should be more things currently produced with less bidding up of prices.

Obviously there's more to it but that's the big picture.

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Response to mathematic (Reply #3)

Wed Sep 21, 2022, 02:45 PM

13. They seem to be acting like this is a money supply issue

But to me, it seems like a supply-side issue, and that by raising rates companies are less likely to build and invest to increase the supply of goods.

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Response to TheRealNorth (Reply #13)

Wed Sep 21, 2022, 03:04 PM

19. Interest rates are an opportunity cost. Companies are more likely to produce now than for the future

They can invest for a thing that will produce in 3 years or they can invest in a thing that produces now. Higher interest rates makes it more worthwhile to invest in something that produces in now. This works to alleviate shortages and reduce inflation.

A simplified example is: do you build a new factory that will be ready in 3 years or do you run a third shift to produce more now?

The idea that building and investing in things that will pay off years down the line will reduce inflation right now is incorrect. We need supply now, not years from now, after all.

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Response to mathematic (Reply #19)

Wed Sep 21, 2022, 03:55 PM

31. I kind of see your point.

But that is only true for the specific situation you outlined. If they are already running a 3rd shift (which I think most companies are going to do anyway before making a capital investment), this will encourage the company not to build that new factory, especially if they are expecting an economic downturn because of the increased interest rates. They may be perfectly content to maximize their profits until the economic downturn.

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Response to mathematic (Reply #3)

Thu Sep 22, 2022, 09:54 AM

56. What

do we produce? Seems to me we depend on other countries for most of what we need.

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Response to Faux pas (Reply #56)

Thu Sep 22, 2022, 11:03 AM

64. Our trade deficit hangs out around 3% of GDP, so yeah, we produce plenty here

I'm not sure what you think is going on. How could we import most of what we need if we're not producing anything to export?

Sure, foreigners want dollars because the US has the deepest and most efficient capital markets (which is, itself, a thing we produce) and that's how we can maintain trade deficits but what you're suggesting would mean that the rest of the world is literally giving away what they produce to us, for nothing in return. I know you've been saying in this thread that you don't understand economics but you've been seriously misled if you think we don't produce anything in the US.

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Response to Faux pas (Reply #1)

Wed Sep 21, 2022, 02:25 PM

5. Instead of encouraging "borrowing" it encourages "saving"

although we know the banks, like the retail gas stations are SLLLLOOOOOWWWW to raise saving interest rates (like how gas stations are sllllllloooooowwwwow to drop their prices).

For the institutions, they can buy bonds/treasuries and if they hold them for some "x" amount of time, they can get a good yield/interest rate on that money. That basically pulls "cash" out of circulation and parks it. I.e., one of the purposes of "quantitative easing" was to pump money out there to keep people buying and keep the GDP up.

One of things that I am going to watch though is that normally when we have this sort of thing going on with all this excess cash out there, it signals that the dollar value is "weak/low" (takes "more dollars" to buy goods and services). However on the world currency market, the dollar is actually fairly strong, so don't know what the hell the result is going to be in this odd circumstance.

(maybe because the rest of the basket of currencies are so weak and horrid thanks to the pandemic and Russia-Ukraine war, that the dollar is like floating above all that in a relative sense and people have fled to it... )

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Response to BumRushDaShow (Reply #5)

Thu Sep 22, 2022, 10:08 AM

57. Thank you

for your information packed response. I don't understand why excess cash would be a bad thing and how it makes the dollar weaker? Are you getting why it seems like hocus pocus to me? I'm not trying do be dense I just am.

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Response to Faux pas (Reply #57)

Thu Sep 22, 2022, 11:51 AM

65. Back in 1989 when I went to Mexico City and Acapulco

there were something like 2400 Pesos to the dollar, where just before and during that period, Mexico was testing pegging the Peso to the dollar (which eventually knocked some zeros off of it to give it some higher "value" ).

If you have too much currency in circulation, there is a tendency for sellers to say - "Hey if they are willing to pay such and such for my product, then let me raise the price and see what happens". And that can continue to happen until the prices go so high that the demand drops, and that "price" is where those looking to maximize a profit, will figure they could maintain the price for the long term. So that is sortof emphasizing what was also posted in this thread about "cooling demand" which would bring the prices back down.

What can fuel it is the "easy lending" because when one talks about "excess" money circulating, a lot of it is through loans and not necessarily actual income, and it creates an artificial "demand" that can outstrip the supply, which sends the prices higher. And that is why they are doing what will be a suppression of the lending (higher cost to "borrow" ).

This is what happens with "free markets" - it seems mostly psychological (and leads to greed and gouging).

I remember a little anecdote that SiriusXM talker Joe Madison would bring up where he was asked "What is a dime worth?" and he'd answer - "10 cents". Then he was asked "What is a dollar worth?" and he might answer "4 quarters" and then asked "What is a (transit) token worth?"... and silence. The answer being "whatever value you (the transit company) assign it".

That's why (and I don't see it posted as much anymore on DU as in the past) that people were reminded how our money is based on "fiat".

I still say that we are in a freaky period that really has no good analog (which is why they keep swinging and missing on "estimates"and "expectations", although there has been some improvement the past couple months). If you look at the charts going back to the '70s/'80s, we are nowhere near the interest rates that were charged back then. I hate to say but we got "spoiled".

But my biggest issue continues to be with what most people may use (because not everyone is buying a house and getting a mortgage or buying a car and taking out a car loan) - and that is credit cards, and that is where the excessive, literally usury-level interest rates, have been maintained for years.

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Response to Faux pas (Reply #1)

Wed Sep 21, 2022, 02:28 PM

7. if it's more expensive to borrow money

or carry a balance on a credit card, consumers will spend less. When spending declines, demand will fall and, eventually, so will the price of everyday goods

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Response to melm00se (Reply #7)

Wed Sep 21, 2022, 02:42 PM

11. That's cute

Do you *really* expect companies will lower prices?

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Response to durablend (Reply #11)

Wed Sep 21, 2022, 02:48 PM

14. That's cute

that you appear to think that a drop in demand won't affect prices.

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Response to melm00se (Reply #14)

Wed Sep 21, 2022, 03:04 PM

18. Not in the least

If anything they'll raise the prices to make up for few people buying them ("we need 'x' earnings to satisfy our shareholders" )

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Response to durablend (Reply #18)

Wed Sep 21, 2022, 04:15 PM

38. That's not how supply and demand work

If demand for a product drops, raising the price of the product won't help a vendor to sell MORE of it.

I have seen slight price drops already on a few things at the grocery store.

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Response to durablend (Reply #11)

Wed Sep 21, 2022, 04:23 PM

40. Yes, it's economics 101 really.

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Response to melm00se (Reply #7)

Thu Sep 22, 2022, 09:52 AM

55. Lucky for me

I only deal in cash, if I don't have the money, I don't buy it. As long as they have us by the short hairs why, would they lower their prices? Greed is the American Way.

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Response to Faux pas (Reply #1)

Wed Sep 21, 2022, 02:32 PM

9. Monetarists claim that by doing so, you slow the economy, demand - and thereby prices

But what they leave out, is that this theory - though not without some truth - fails to take into account other variables, such as commodity bubbles and 'greedflation'.

They also conveniently fail to mention that their theory works well, only if a depression - or near-depression - is triggered.

And even then, often only indirectly - i.e. by popping any commodity bubbles, inflation in those items (and to some extent general prices) slow as well.

But raise your hand if you want another depression/near-depression.

Least of all with the looming threat of fascism we're dealing with right now.

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Response to peppertree (Reply #9)

Wed Sep 21, 2022, 02:57 PM

15. This. This post right here. Everyone needs to read peppertree's post.

But raise your hand if you want another depression/near-depression.

Least of all with the looming threat of fascism we're dealing with right now.


This is how Trump, or DeSantis, gets into office with a Republican majority in congress and on SCOTUS.

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Response to Yavin4 (Reply #15)

Wed Sep 21, 2022, 03:15 PM

21. Thank you, Yavin.

It is what it is.

And yes- it's also politics, not just academic economics.

There are more than a few players in Wall Street - and even the Fed - who want to push the country into a severe recession for that very reason.

And if this leads to fascist slide - all the better, as far as some of them see it.

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Response to peppertree (Reply #21)

Wed Sep 21, 2022, 04:08 PM

36. And that should put chills down our spines.

There are players on Wall Street angrier at WFH, Quiet Quitting, labor shortages, etc. than they are about becoming a Fascist nation and losing our democracy. They're encouraging the Fed to push us into a near depression.

Trump is not where he is today without major assistance from Wall Street.

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Response to Yavin4 (Reply #36)

Wed Sep 21, 2022, 10:40 PM

49. Well said

That's true of practically all fascist despots over the past century.

Big money was key to their rise to power - as much, or more, than any ranting or raving they may have done.

Cheeto understood this.

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Response to Yavin4 (Reply #15)

Wed Sep 21, 2022, 03:22 PM

23. ...

👍

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Response to sprinkleeninow (Reply #23)

Thu Sep 22, 2022, 03:14 PM

69. Why - thank you.

Let's just hope they don't throttle the economy for political ends - like Greenspan did in 1999/2000, in hopes of getting Bush elected.

There was practically no inflation - and the smarmy bastard was raising rates like there was no tomorrow.

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Response to peppertree (Reply #69)

Thu Sep 22, 2022, 04:18 PM

70. I do not like what I'm hearing. I do not trust Powell's 'remedy'.

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Response to sprinkleeninow (Reply #70)

Thu Sep 22, 2022, 04:48 PM

71. Yeah. Sounds more like a POLITICAL remedy, than an economic one.

"One of Biden's strengths will be job creation and near-record low unemployment," Repugs are telling themselves in smoke-filled rooms.

"You think we can get Powell to ruin that for him?

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Response to peppertree (Reply #9)

Thu Sep 22, 2022, 10:20 AM

58. I

have a big problem with theories! That's where I get my hocus pocus theory I don't want a depression! Just makes the masses easier targets for all kinds of bad things.

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Response to Faux pas (Reply #1)

Wed Sep 21, 2022, 02:39 PM

10. It makes it more expensive to borrow money, thereby slowing the velocity

of money in our economy. This affects business loans as well as new mortgages, car loans, etc. While interest rates get the attention, the other part of it is quantitative tightening or reducing the amount of money in circulation.

So it's a deliberate slowing of the economy to lower demand for goods and services. Since there is nothing left that can be done to increase supply due to limits on labor and many supply chain materials.

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Response to IronLionZion (Reply #10)

Wed Sep 21, 2022, 03:40 PM

28. Perhaps the Military could be used for construction projects

Housing comes to mind as they have done so in the past.

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Response to IronLionZion (Reply #10)

Thu Sep 22, 2022, 10:32 AM

59. I

don't believe there would be a lower demand for things like food, clothing or shelter. I see it as another way to get screwed over by a bunch of rich effers who have been doing it for eons. It does nothing for the rest of us.

Thank you for your response tho

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Response to Faux pas (Reply #59)

Thu Sep 22, 2022, 10:37 AM

60. The rich would like a permanent service class

of people who are desperate and afraid of starvation and homelessness. All aboard the cheap labor express.

They kept telling us that if wages are raised, people will be replaced by robots. Where are the robots?

If people get hungry enough, they might eat the rich.

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Response to IronLionZion (Reply #60)

Thu Sep 22, 2022, 10:47 AM

62. Agree!

That's why we need unions and support for unions. Lol I'm pretty sure the rich would taste as rotten as they are.

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Response to Faux pas (Reply #62)

Thu Sep 22, 2022, 10:52 AM

63. Here's a good article explaining the impact to main street local economies

Federal Reserve’s increasing interest rate hikes put Main Street economy ‘dangerously close’ to edge of lending cliff
https://www.cnbc.com/2022/09/21/what-the-fed-raising-rates-by-0point75percent-means-for-main-street-economy.html

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Response to Faux pas (Reply #1)

Wed Sep 21, 2022, 07:02 PM

45. In general it raises the "price" of money.

Demand for things like homes, cars, exotic vacations, refrigerators, a nice meal at a plush restaurant go down (all which often requires some sort of financing). Auto repair, cheap entertainment, local vacations, etc. rise as they aren't in demand as much during a booming economy.

However, prices don't go down right away, they adjust slowly downward, this is called Price Stickiness.

https://www.investopedia.com/terms/p/price_stickiness.asp

There are a number of factors that can cause this; sunk costs, companies moving too slow to adjust for the lack of demand (seen it many times, they hold on to their forecasts like gold and assume it will go back to normal, most CEO's are good talkers, not economists), company could be bloated, having a hard time which projects to axe, stuck in too many vendor contracts, who they should lay off, etc.

But once it becomes obvious they are looking at losing market share to a competitor, they implement cost cutting measures and drop prices. Losing market share drops the stock price even worse than not meeting your targets.

But unfortunately, this usually results in a recession as the Fed Bank is often late to react.

We should have been slightly nudging things up under the Velveeta Former Guy, but if people remember, he pushed hard against it and I think the Fed relented.

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Response to BumRushDaShow (Original post)

Wed Sep 21, 2022, 02:23 PM

4. The economy is overcooked right now.

Basically the economy is on overdrive and that is what leads to inflation. Interest rates slow the economy down. See the article below.

https://www.washingtonpost.com/business/2022/09/20/fed-interest-rate-hike-inflation/

How does raising interest rates affect inflation?

Inflation happens when there’s a mismatch of supply and demand in the economy. During the pandemic, for example, so many people wanted to buy cars that factories couldn’t keep up. Families relocated and scoured for new houses, but there weren’t enough available. So cars and houses got more expensive.

The Fed can’t do anything to boost chip manufacturing or build more houses, which would fix the supply side of the equation. So it has to focus on slowing down demand instead. It wants fewer people to buy new cars or put in bids for houses, which would bring prices down.


When the Fed raises its benchmark interest rate, it makes all kinds of lending more expensive. Mortgage rates go up. So do auto loans. And over time, that helps supply and demand get back in sync.

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Response to BumRushDaShow (Original post)

Wed Sep 21, 2022, 02:26 PM

6. I keep asking the same thing

How is continuing to increase the FFR going to stop wealthy industry owners from continuing to raise prices? All this is doing is crashing the entire nation real estate market and making it impossible for working Americans to buy a home. It's increasing debt to pass more wealth to the rich. Virtually every member of The Fed can be described as having a seven figure or better net worth and votes Republican. This is nothing more than fleecing America. We are here because they insisted on propping up a fake economy for Trump.

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Response to BumRushDaShow (Original post)

Wed Sep 21, 2022, 02:29 PM

8. Powell's Fed was 9 months late to end the party, this would have been easier a year ago

Bank of England forecasts 5 quarter recession.

I still think rates will eventually double from here before inflation is broken, but it will be 3-6 years before the hard medicine finally bites. Not to say it's years of recession, it will be prosperity with jobs and growth, but with inflation too.

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Response to BumRushDaShow (Original post)

Wed Sep 21, 2022, 02:45 PM

12. Markets not reacting yet

They're down but not by much.

I don't expect the sell off to begin in earnest until tomorrow. The big guys already trousered their profits over the last couple of months. It's the twitchy, fast money crowd who panic and sell, the idiots.

In the meantime, it seems the Fed hasn't noticed that inflation is easing. It will be back this winter as heating costs go way up, we'll be competing with Europe since they lost 40% of their supply because Putin started a war and then had a hissy fit over sanctions. This rate hike is just a little premature.

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Response to Warpy (Reply #12)

Wed Sep 21, 2022, 03:00 PM

16. The markets priced in this hike last week

It was down over 1000 points when the inflation reports came out.

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Response to Yavin4 (Reply #16)

Wed Sep 21, 2022, 03:09 PM

20. Yeah, I know

but panicky people always react after the hike, not before it. Magical thinking tells them the experts are wrong, that the Fed will stand pat. Happens every damned time. Then the people who priced in th hike before it happened buy their stocks back at a lower price and pocket the difference, while the panicky types wait until the market is higher, making them feel safe again.

You know, fools and their money...

My stuff is mostly for income and not face value, so I've only lost about 10% in paper profit since the slide started in earnest and nothing in income. In fact, the income has gone up.

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Response to Warpy (Reply #20)

Wed Sep 21, 2022, 05:48 PM

44. I'm mostly sitting out the market and hunkering down in cash.

If we go into another deep recession, we may not survive. We live in a time of very dark politics.

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Response to Yavin4 (Reply #44)

Thu Sep 22, 2022, 10:46 AM

61. Amen. Us, too. nt

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Response to Warpy (Reply #20)

Thu Sep 22, 2022, 12:17 PM

66. I'm still steady buying

The more it goes down, the more I continue buying. Been bringing my cost average/basis down, most of it will inevitably go back up and much more, might take a few years.

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Response to BumRushDaShow (Original post)

Wed Sep 21, 2022, 03:03 PM

17. The rise in interest rates punishes those of us with low income.


To the wealthy, this rise means not much. To those of us, perhaps trying to survive on Social Security and with monthly debts, this is a smack in the face. How about raising the taxes on the rich and corporations and leave us peons alone. This stinks. I'm one of the many who will suffer from this raise.

No matter what I read, this rise is nothing but a gift to those to whom it does not matter.
Yes, I'm angry to see this. It is hard enough to keep the wolf from the door now.

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Response to Paper Roses (Reply #17)

Wed Sep 21, 2022, 03:23 PM

24. This.

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Response to Paper Roses (Reply #17)

Wed Sep 21, 2022, 03:31 PM

26. "How about raising the taxes on the rich and corporations"

"H.R.5376 - Inflation Reduction Act of 2022" actually did finally start doing that... It was signed into law last month.

PART 1—Corporate tax reform

SEC. 10101. Corporate alternative minimum tax.

(a) Imposition of tax.—

(1) IN GENERAL.—Paragraph (2) of section 55(b) is amended to read as follows:

“(2) CORPORATIONS.—

“(A) APPLICABLE CORPORATIONS.—In the case of an applicable corporation, the tentative minimum tax for the taxable year shall be the excess of—

“(i) 15 percent of the adjusted financial statement income for the taxable year (as determined under section 56A), over

“(ii) the corporate AMT foreign tax credit for the taxable year.

(snip)


FACT SHEET: The Inflation Reduction Act Supports Workers and Families

August 19, 2022 • Statements and Releases


(snip)

MAKE THE TAX CODE FAIRER

The Inflation Reduction Act will make our tax code fairer by cracking down on millionaires, billionaires, and corporations that evade their obligations, and making sure the largest corporations pay their fair share. No family making less than $400,000 per year will see their taxes go up by a single cent. The Inflation Reduction Act will raise revenue by:

  • Going after tax dodgers, ensuring the wealthy and large corporations pay the taxes they already owe.
  • Cracking down on the largest profitable corporations that currently get away with paying little to no federal income tax, instituting a minimum corporate tax of 15%.
  • Imposing a 1% surcharge on corporate stock buybacks, to encourage businesses to invest instead of enriching CEOs or funneling profits tax-free to shareholders.
  • Making transformational investments in taxpayer service so that regular Americans can get their questions answered and access the credits and benefits they are entitled to.


  • The law’s tax reforms won’t just raise revenue to finance critically needed investments to lower costs for working families and combat climate change, they are also an important component of building an economy that rewards work rather than wealth and doesn’t let the rich and powerful get away with playing by a separate set of rules.

    (snip)

    https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/19/fact-sheet-the-inflation-reduction-act-supports-workers-and-families/

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    Response to Paper Roses (Reply #17)

    Wed Sep 21, 2022, 03:31 PM

    27. Unfortunately this is too often the "solution". n/t

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    Response to Paper Roses (Reply #17)

    Thu Sep 22, 2022, 07:42 AM

    53. Everyone except the rich are punished on these phony hikes

    Yet ANOTHER rate hike and I'll guarantee the price at the pump will be the same and Kroger and their cronies will CONTINUE to raise food prices.

    This works out fantastic for the Feds Banker buds who are raking in CASH hand over fist on credit cards. Food prices,gas prices and Utility prices are so high that many people HAVE to turn to credit cards just to get by week by week,day by day.

    This is raise #6 for 2022,where is the relief??

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 03:19 PM

    22. Brent Crude falls below $90

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 03:27 PM

    25. This is killing the housing market, stock market, 401K accounts, etc...

    and seemingly no effect on inflation. I think they need a new strategy.

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 03:41 PM

    29. Yeah!!! That'll lower RIP OFF gas prices and food prices.........

    Total BS just to put billions more in their banker buddies pockets. They promise more hikes after the first of the year? You mean when Republicans are supposedly going to take over??

    NEVER HAPPEN............

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 03:47 PM

    30. I bought stocks on sale back in mid-June after the S&P 500 entered a bear market (more than 20% down

    Last edited Thu Sep 22, 2022, 02:05 AM - Edit history (2)

    I shifted 14.5% of my investible assets from fixed income to stocks.

    At the moment, I am a tiny bit ahead -- the S&P 500 was 3790 when I bought it (its at 3815 as I type this, plus some dividends), but the latest downward trend could very well take it below 3790 and probably will at some point in the near future. Maybe a lot below.

    But the historic track record of buying equities when they are on sale is stellar.
    http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

    Compare to the fixed income alternatives.

    The stock market periodically sets new all-time highs. It has never set a new all time low. It has recovered from every bear market every time and gone on to a new all-time high.

    For example, over the past 30 years, ending September 21, the Vanguard S&P 500 index fund (including reinvested dividends) has gone up 17.8 fold, a 10.1%/year annual average return.

    https://finance.yahoo.com/quote/VFINX/history?p=VFINX
    The Adjusted Close column includes reinvested distributions

    I don't write this to brag. I wasn't primarily invested in stocks over that entire 30 year period, I wish I had been. And my manuver in mid-June is barely above break-even. I just hope at the very least that people don't sell and lock in a loss.

    Update What a coincidence, the S&P 500 closed today, Wednesday Sept 21 at 3790 - the very same level that it was when I did my maneuver, so I'm only ahead by 3 months of miniscule dividends. https://finance.yahoo.com/ . But the idea wasn't to make a "quick killing" but something that would pay off over the long run, perhaps taking years. In the meantime, I may very well look like an idiot that threw good money after bad.

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 03:58 PM

    32. My fear is that the FED will cause another recession, which they've often done.

    Raising interest rates moat hurt the people who can least afford higher rates. I think at least some of our inflation is being cause by predatory pricing and the continuing supply chain issues. I see predatory pricing here in Austin. Landlords lost money during the pandemic when renters could not pay their rent, and now they are making up for it by raising rents significantly. Another reason for higher rents is a significant increase in property taxes, another way for municipalities to make up for losses from lower sales taxes during the shutdown. Landlords can charge higher prices here also because the governor has given away the tax store to lure businesses here and neither rental units nor housing stock have been able to keep up with the demand from an influx of new residents. That is not the case in many parts of the country, but the exorbitant gas prices were certainly an example of predatory pricing.

    I’ve enjoyed reading the sometimes contrarian economic views of Joseph Stiglitz, who argues that raising rates is addressing the wrong inflation stimulus. He likens rate increases to the archaic practice of bleeding people to cure them because neither is a cure. It’s clear that this website needs to hire proofreaders!

    “Economist and Nobel laureate in economics, Joseph Stiglitz, believes that rate hikes by central banks are akin to “bleeding” that will only not to curb inflation (Archives).

    In the United States, the United Kingdom, the euro zone, but also in most emerging economies, key rate hikes follow one another at a frantic pace in order to slow inflation. But critics point to the risk of stifling growth in this way.

    It reminds me of what happened with bloodletting, said Nobel Prize in Economics Joseph Stiglitz in an interview with AFP, referring to the practice since antiquity of to make a patient bleed to cure him.

    According to Joseph Stiglitz, the inflationary outbreak is less caused by excess demand than energy and food price hikes and continued blockages in supply chains. Phenomena against which central bankers have a much smaller field of action.

    They are using a remedy stemming from a misdiagnosis, hammers the economist, warning that we could see in the United States the prices of rents continue to soar under the effect of the rise in rates , and therefore inflation will persist.

    According to Joseph Stiglitz, the inflationary outbreak is less caused by excess demand than energy and food price hikes and continued blockages in supply chains. Phenomena against which central bankers have a much smaller field of action.”


    https://thesaxon.org/raising-rates-to-fight-inflation-the-bad-remedy-believes-an-economist/

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    Response to Lonestarblue (Reply #32)

    Wed Sep 21, 2022, 04:02 PM

    34. Love the analogy of bleeding a person to cure them.

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 04:05 PM

    35. So the poor can't buy homes or cars. Yeah that's going to solve the problem. NOT

    What the fuck do these people think. The trickle down bullshit has been proven wrong. Replace this asshole with someone who doesn't keep doing things to make the economy WORSE.

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 04:10 PM

    37. So inflation will be quelled by raising the price of everything

    It's literally moronic and yet preached as gospel that we must reduce demand so prices will go down. This BS is just repeated over and over and accepted as some basic economic truth when in actuality it is complete garbage. Of course demand is a factor but what is it about demand that supposedly results in runway inflation. Demand just makes you increase supply which is ultimately what you want. Merchants take advantage of this to raise price not because their costs go up but because they can...so greed is a factor never calculated in. If you allow the natural economic mechanisms to operate then increased demand results in economic growth by encouraging people to increase supply which encourages competition and should actual lower prices. The crushing inflation of the early 70's and early 80's was driven initially by the oil embargo's initiated by OPEC and Iran in reaction to US support of Israel in the '73 war and in '79 by the Iranian revolution. The cost of oil literally quadrupled in both instances and this drove up the cost of everything because energy is needed for everything. But the reaction of the Fed in response to rising prices ( caused largely by energy costs) was extreme interest rate hikes which then fueled the runaway inflation. The hike in oil prices this time is partly demand but also a calculated reduction in production capacity by OPEC and domestic producers who looked to profit as Pandemic eased. So please don't preach the economics of destroying demand as a solution to inflation. The very wealthy love this type of economic solution...they short everything as it goes down and then buy when things bottom. They also get to reduce wages as jobs are eliminated and the workers lose all that they have recently gained. This is just another move in the game of the rich get richer and the poor get poorer.































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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 04:19 PM

    39. im starting to think the fed is clueless

    nomrally ive been a big believer in the fed fighting inflation but not this time.
    looking at inflation numbers,the year over year rate if horrendous. but thats in the rear view mirror. the rate for the last 12 months was 8.3%
    look at more recent number,specifcally the month over month change in inflation
    thru june it was red hot.
    july and august not so much. july was zero and august was .12
    if you look at the last 4 months and extrapolate is comes to a rate of 7.15
    for the last 3 months its 5.7% extrapolated over 12 month
    for the last 2 months its under .5%



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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 04:34 PM

    41. S&P 500 closed down 1.71%, the DOW down 1.70% (522 points) -- just to set the scene for

    tomorrow.

    And the NASDAQ down 1.79%
    https://finance.yahoo.com/

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 05:07 PM

    42. Yeah, the Fed has pretty much thrown in the towel on the so-called soft-landing, buckle up peoples

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    Response to Shanti Shanti Shanti (Reply #42)

    Wed Sep 21, 2022, 05:13 PM

    43. "soft landing"

    This is like trying to pet a lion.

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 07:13 PM

    46. We should be happy it won't take the extreme rate increases that Paul Volcker implemented 1979-83

    in order to end a very strong inflationary cycle wit poor economic growth-- stagflation. The federal fund rate hit something around 20%. Jimmy Carter appointed him knowing it would hurt his reelection chances. A strong recession ensued in the early 80s, as borrowing became very expensive.

    Ironically, Reagan was the main beneficiary as the economy finally responded in 1983, and a new era of growth and lower inflation resulted. Of course Ronnie claimed credit, but it was predominately Volcker's work at the Fed.

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 07:25 PM

    47. Ughh, I forgot, the S&P 500 is back in bear market territory, down 21.0% from its all-time-high

    Last edited Wed Sep 21, 2022, 08:06 PM - Edit history (1)

    of January 3 (bear markets begin at 20% down).

    Technically we've been in a bear market since we first reached that milestone (3838) in June and won't be out of it until we reach a new all time high.

    But we've haven't closed below 3838 since July 18. Until today.

    S&P 500 All time high: January 3: 4797.

    20% below that is 3838 "Munich Munich"

    (easy to remember, "Munich Munich" since 1938 was the year of the Munich agreement with Hitler and Peace For Our Time)

    Today's close (Wednesday Sept 21): 3790

    Peace For Our Time

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    Response to progree (Reply #47)

    Wed Sep 21, 2022, 07:30 PM

    48. I know it's been flirting with it for months

    but I guess finally got there.

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    Response to BumRushDaShow (Original post)

    Wed Sep 21, 2022, 11:29 PM

    50. kicking a dead horse, guaranteeing a dead economy. nt

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    Response to BumRushDaShow (Original post)

    Thu Sep 22, 2022, 01:32 AM

    51. a few weeks ago i started reading my 1989 grieder book about the fed reserve. secrets of the

    temple. and we are reliving 1979 all over again. but he did say historically after war interest rates surge. we just did covid + afghanistWan. i also just hit where raising rates was not effective at slowing the economy. they also kept ecpecting a recession, but nope. the discount was just listed at 20%.
    oh. + the media isn't telling the truth. rates were much higher at times. i'll be posting shit. just pray we don't get ron reagan 2. we need to kill voodoo doodoo.
    i recommend this 'old'book.

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    Response to pansypoo53219 (Reply #51)

    Thu Sep 22, 2022, 02:10 AM

    52. Well we did have a double dip recession in 1980-82. The unemployment rate reached 10.8%

    which was unsurpassed until the pandemic.

    Unemployment rate: http://data.bls.gov/timeseries/LNS14000000

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    Response to BumRushDaShow (Original post)

    Thu Sep 22, 2022, 12:25 PM

    67. I get it, I just hope it doesn't slow things too much before the mid-terms

    n/t

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    Response to BumRushDaShow (Original post)

    Thu Sep 22, 2022, 12:41 PM

    68. My mortgage is 3.125% and $985 a month

    Got it in May 2021. Same would be $1454 a month at 6.5% if I got it today, ouch.

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