I've never paid this close attention to FED rates. It's kind of crazy how arbitrary this power is.
Tid bits:
  • this interest rate they are messing with, the federal funds rate, hasn't been this high (3.75-4%) since 2007
  • it seems like they are planning more hikes. Powell:
    It is very premature, in my view, to think about or be talking about pausing our rate hikes. We have a ways to go.
  • the FED says they expect to need to raise this rate to at least 4.6% to get inflation back to 2% next year
Serious question who says this inflation we are experiencing is caused by low rates? It is possible that they are misdiagnosing the situation and making things worse.
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I'm not sure it matters what the cause is, because many causes of inflation can't be addressed directly or reversed. afaik the thinking goes: Raising interest rates reduces credit in the system -> reduces the amount of money in the system competing for goods -> cools prices. ie it's unlikely this causes inflation to get worse. It definitely wreaks economic havoc though, particularly for sectors/people dependent on cheap credit.
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The cause of Inflation is always manipulation of the money supply. Supply chains etc react to that, but the cause is 100% manipulation of the money supply every time. What the Fed is doing now is killing market demand and creating joblessness to bring down the inflation caused by the government.
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30% of all dollars that exist in the world were created since 2020. So it's hard to see how current price inflation doesn't have a significant tie-in to monetary policy. Is it possible to print $6T dollars in less than three years, and not cause 8%+ price inflation?
Of course getting the toothpaste back in the tube isn't as easy as getting it out. So there's not a linear, direct, timely relationship with raising fed rates and lowering price inflation.
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