"Not so bad" inflation has fed hiking rates.

[CivilDiscourse]

St's "not so bad" inflation last month has the feds doing another massive rate hike. We are now headed for at least a minor biden-cession. This means, expect an increase in unemployment as we try to tamp down demand.

[Sparko]

Death by a thousand cuts.

[Teallaura]

St's "not so bad" inflation last month has the feds doing another massive rate hike. We are now headed for at least a minor biden-cession. This means, expect an increase in unemployment as we try to tamp down demand.

Um, I think the car was already over the cliff edge. I think we're just seeing gravity in action now.

And I'm dubious that we aren't already in a biden recession. I might be a tad cynical in my old age.

[rogue06]

Um, I think the car was already over the cliff edge. I think we're just seeing gravity in action now.

And I'm dubious that we aren't already in a biden recession. I might be a tad cynical in my old age.

IIRC, by the standard used in all other Administrations, we've been in a recession for a couple of months now.

[seanD]

St's "not so bad" inflation last month has the feds doing another massive rate hike. We are now headed for at least a minor biden-cession. This means, expect an increase in unemployment as we try to tamp down demand.

I'm not so sure about unemployment. It may go up, but we've been in a recession for two quarters already with a crashing market since the start of the year yet we're still at unemployment lows. Also, there's not much local politics can do to stop it (they only exacerbate it) because the inflation is global with major central banks around the world doing the exact same tightening. Sweden central bank just raised their rate to full 1.00 bps.

[Zara]

Ohh no, interest rates heading out of absurd lows, how terrible, that bad Biden.

[seanD]

Ohh no, interest rates heading out of absurd lows, how terrible, that bad Biden.

High interest rates in an over-leveraged market and an economy with insanely high levels of debt (both public and private) is a recipe for disaster. We're already beginning to see the effects of the former; we've yet to see the effects of the latter.

[Zara]

High interest rates in an over-leveraged market and an economy with insanely high levels of debt (both public and private) is a recipe for disaster. We're already beginning to see the effects of the former; we've yet to see the effects of the latter.

Right, so keep rates low so that you can borrow more at insanely low interest rates. Don't take on debt you can't afford, rates were going to increase at some time - chickens, roost.

[seanD]

Right, so keep rates low so that you can borrow more at insanely low interest rates. Don't take on debt you can't afford, rates were going to increase at some time - chickens, roost.

Correct. It's a catch-22.

The problem is that it's highly doubtful the Fed raising rates will actually curb inflation and not just exacerbate a recession at the same time.

[Zara]

Correct. It's a catch-22.

The problem is that it's highly doubtful the Fed raising rates will actually curb inflation and not just exacerbate a recession at the same time.

People are using low cost credit to buy stuff, people will now either keep money in the bank for interest or not borrow, not buy stuff, inflation decreases - unless of course, inflation is a function of international problems, in which case, you get a bit poorer, that's life.

[seanD]

People are using low cost credit to buy stuff, people will now either keep money in the bank for interest or not borrow, not buy stuff, inflation decreases - unless of course, inflation is a function of international problems, in which case, you get a bit poorer, that's life.

People are using low cost credit to buy non-discretionary goods they can't afford otherwise because of inflation. They can't keep money in the bank because they're also depleting their savings to buy non-discretionary goods.

[Zara]

People are using low cost credit to buy non-discretionary goods they can't afford otherwise because of inflation. They can't keep money in the bank because they're also depleting their savings to buy non-discretionary goods.

Non-discretionary goods became more expensive because of, what exactly? Why are people in the US so poor, that they can't afford a 10% increase in non-discretionary goods?

Your solution is to allow people that can't afford it, to borrow more, to live - a bad solution.

[Cow Poke]

Interestingly enough, every time I turn around, it seems, Markus is HIKING my savings account interest rate (currently 2.25%).

(obviously in attempt to offset some of the pain of inflation, though woefully behind)

[seanD]

Non-discretionary goods became more expensive because of, what exactly? Why are people in the US so poor, that they can't afford a 10% increase in non-discretionary goods?

Your solution is to allow people that can't afford it, to borrow more, to live - a bad solution.

Where is "my solution"? Show me the post I offered a solution. There really is no solution.

Non-descretionary goods became expensive because of the same reason everything else became expensive (not sure if that was rhetorical question) -- inflation. The inflation was a result of global central banks unprecedented money printing. The excess money created excess demand at the same time supply was smothered globally by pandemic and lockdowns, and this happened on a global level. Personally, I believe we've still yet to see the full effects of that (as there is a lag effect to inflation), which is why I'd be surprised if inflation actually started to fall consistently anytime soon, especially considering central banks are still grossly behind the curve of fighting it.

[seanD]

Interestingly enough, every time I turn around, it seems, Markus is HIKING my savings account interest rate (currently 2.25%).

(obviously in attempt to offset some of the pain of inflation, though woefully behind)

Aside from the inflation, if you have no debt as a consumer you're good to go.