Justifying raise in interest rates, read this. Very informative

[Paper Roses]

By Robert Reich:

https://www.inequalitymedia.org/the-truth-about-inflation?gclid=EAIaIQobChMIqNf5sPOo-gIVI8mUCR3PLwoZEAAYAyAAEgJ0xfD_BwE


We are all screwed by the Feds with the increase in interest rates and I just heard that, in addition to today's rise, there in another in the works: I'm sick to death about the baloney we are being fed. It punishes those of us for which this is a severe action.

[C_U_L8R]

1. We've given up our house hunt.

Between low availabilities, competitive buyers, over-asking prices, diminishing savings, and now rising interest rates, home buying is not for us until something changes in our favor. Ugh.

[Backseat Driver]

7. My daughter's given up as well...

Doesn't stop our landlords from raising our rents either. LOL (not funny), with our brand new owners/managers for this 350-unit property we must pay in the portal (office no longer accepts rental payments in any form) now with a service fee of $40 for a Visa payment - really! yet, no fee at all via their shitty 3rd party app that one needs to join w/personal information. Can you feel the monetary screw ups and breaches coming that cost the tenants all sorts of bucks?

[jmbar2]

12. How is this even legal to charge $40 to pay a bill!?

Outrageous! What kind of place is it? Corporate owned?

What kind of app are they making you use?

[elleng]

2. 'The underlying problem is not inflation. It's corporate power.'

[at140]

3. Only way to throttle corporate power is....

to make borrowing more costly for them, and that can happen only with higher rates by FED.

[elleng]

5. Competition and regulation.

[at140]

10. Much much much easier for FED to increase rates than

getting legislation passed in congress to increase regulations on large corporations.
Most regulations hurt small businesses than large corporations and that REDUCES competition.
Do what is quickly possible instead more difficult alternatives.

[elleng]

13. No, and likelihood that the 'quickly possible'

will work is nil.

Anti-trust regulation works well, when government enforces it. I worked for 20 years for government and it worked.

The only way capitalism works is in a well-regulated environment.

[at140]

20. What? are you following economic news?

Demand side is already weakening. Have you not noticed the drop in housing sales?

[scipan]

18. Antitrust actions. Laws are already in place.

Just takes some political guts. Biden is doing something. I have no idea if it's enough.

[at140]

19. I like what FED is doing although

it is not nearly enough to subdue the 9% inflation.

You are right, Congress is not doing enough to subdue inflation.
It just will keep going on and on like the 1970's.

If we used metrics from 20 years ago to measure inflation, inflation is 18%.

Only people not hurt by inflation are the top 15% richest.

[onecaliberal]

4. Corporate greed is not inflation.

Tax the ever loving hell out of the rich and corporations. They are the problem.

[DetroitLegalBeagle]

6. Requires Congress to act.

In the absence of Congressional action, the Fed is doing the only thing it can. They aren't going to sit and do nothing.

[onecaliberal]

8. The fed doesn't need to do what it's doing. It has raised the rate. Instead of waiting to see

How that affects things, they are raising and raising which just screws over poor people. What else is new. Why is it Americas favorite past time to fuck over the poor?

[at140]

11. BINGO!

[elleng]

15. Corporate greed CAUSES inflation.

[ThoughtCriminal]

9. We had to destroy the village in order to save it.

It is used as an alternative to more effective measures (anti-trust) to protect the wealthy at the expense of the middle class and poor.

[WarGamer]

14. Putting your golden retriever to sleep because he barks...

It's stupid and will help GOP in November and '24.

[Amishman]

16. Some good points in there, but monetary policy is a huge driver of inflation right now

excuse the shameless cut and paste from a prior post, but this really needs to be said again

The increase in the amount of money in circulation is a major driver of inflation, and the Federal reserve is responsible for an absurd amount of back-door money printing with their asset purchase program.

The Fed's balance sheet peaked at 8.962 trillion.

Feb 2020 it was 4.166 trillion.

They have started unloading their mountain of securities, but the balance is still 8.822 trillion.

You can't grow the money supply that rapidly without steady inflation.

M2 money supply was 15.458 trillion in Feb 2020. It is now 21.709 trillion. We increased our money supply by a third without growing our actual GDP by anything like that much. Prices will continue to rise to rebalance vs the money supply. Worse, inflation changes spending habits (increasing the velocity of money), acting as a multiplier for that money supply growth.

We're actually fortunate that prices are somewhat sticky, meaning the glut of capital pumped into the economy is very delayed in its impact. There is still time to get the Fed to accelerate their mountain of securities and pull back in the excess liquidity before prices align with the overall money supply.

Until the money supply is reduced by unwinding that excess liquidity, inflation will keep erasing Americans finances. Simply too much money in circulation.

Getting back to corporate power, it absolutely is a factor, and wages not keeping up is absolutely infuriating. But another aspect is the competitive disadvantage of small businesses right now. Economies of scale are a major factor, as is specialization of labor and the resulting efficiencies. As a result, small businesses are at a huge disadvantage compared to large corporations.

I like two ideas:

adjust the tax code (and this needs to be really carefully planned!) to shift tax burden from small businesses to large ones.

The other is mandating that employees share in companies success. Require that any stock buybacks, dividends, stock options, M&A activities, executive bonuses, or other perks to the top of the house be matched dollar for dollar with funding for company wide bonuses. If company X has 5k employees and wants to do $100 million in stock buybacks, then they need to spend $100 million to give every employee a $20k bonus.

[durablend]

17. How is this not a circular cycle?

The Fed makes it more expensive for businesses to borrow so they're going to jack prices up to make up for it. Rinse and repeat.

[former9thward]

21. The circle gets broken by recession.

People can't afford the products and stop buying. This causes companies to stop making products and lay off employees. With less demand there are many products and prices start to go down. But in between there is a lot of misery.

[Brainfodder]

22. Does this affect bank account interest rates in the upward direction at all?

If it does, then my hypothesis that this is a gift to the already rich?

And horrific for new borrowing?

Resulting in more inflation due to rising costs to anyone who borrows against future income as normal business practice?