Author Topic: It's just .25%, what's the big deal? (Fed policy)  (Read 12598 times)

wienerdog

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #50 on: September 18, 2015, 03:48:53 AM »
Im guessing you are frustrated, and angry that the country is led by politicians who don't reflect your personal values.

And what are my personal values? Are you satisfied with the quailty of our politicians and the people they bring into our government?  Do you actually trust them?

Aphalite

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #51 on: September 18, 2015, 08:15:42 AM »
Interesting you don't see 1 or 2 happening. I stumbled upon this article shortly after I saw your post.

http://seekingalpha.com/article/3517306-why-fed-rate-hikes-are-truly-laughable-but-the-world-isnt-laughing

I think the author is ignoring the immigration that continues to occur and also picking arbitrary population metrics (15-64? why 15 and why 64? Is there hard data that shows it's the core economic producing population? I find it hard to believe anyone prior to the age of 20 is contributing much to the GDP)

Look, it's easy to say that things are all doom and gloom, and LOOK AT JAPAN!!!! Fear mongering has sold well historically and will continue to sell. But standard of living has never been higher, and if you believe that things are going to crap, then we'll just have to agree to disagree.

milesdividendmd

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #52 on: September 18, 2015, 08:23:38 AM »

Im guessing you are frustrated, and angry that the country is led by politicians who don't reflect your personal values.

And what are my personal values? Are you satisfied with the quailty of our politicians and the people they bring into our government?  Do you actually trust them?

I'm guessing you are of a right wing/libertarian bent and it  frustrates you that we have a progressive in the White House.

As to me I'm very frustrated by the insanity of the modern republican party, but very satisfied with Obama. 

matchewed

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #53 on: September 18, 2015, 08:32:33 AM »

Im guessing you are frustrated, and angry that the country is led by politicians who don't reflect your personal values.

And what are my personal values? Are you satisfied with the quailty of our politicians and the people they bring into our government?  Do you actually trust them?

I'm guessing you are of a right wing/libertarian bent and it  frustrates you that we have a progressive in the White House.

As to me I'm very frustrated by the insanity of the modern republican party, but very satisfied with Obama.

This is where the argument goes from being about the thing (Fed policy) to being about the people arguing. Stop that shit.

milesdividendmd

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #54 on: September 18, 2015, 08:37:06 AM »
Just answering his questions directly.

Besides who died and made you emperor?  (Kidding)

matchewed

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #55 on: September 18, 2015, 08:47:55 AM »
Just answering his questions directly.

Besides who died and made you emperor?  (Kidding)

Dude your very first post in this thread contained personal attacks. There was no question you were answering then. That's the kind of shit that doesn't need to be on this forum and is distinctly contrary to the forum rules.

milesdividendmd

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #56 on: September 18, 2015, 08:57:33 AM »
Way to start another personal back and forth thread. You are now in violation of forum rules.

Jags4186

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #57 on: September 18, 2015, 06:34:26 PM »
I think the biggest issue of not raising rates is that as long as rates remain 0 the Fed is limited in to ability to combat another recession.

milesdividendmd

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #58 on: September 18, 2015, 06:50:07 PM »

I think the biggest issue of not raising rates is that as long as rates remain 0 the Fed is limited in to ability to combat another recession.

I agree. But the problem is that raising rates has an even higher risk of causing disinflation and of slowing the economy. There are risks both ways.

wenchsenior

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #59 on: September 19, 2015, 09:09:00 AM »

I think the biggest issue of not raising rates is that as long as rates remain 0 the Fed is limited in to ability to combat another recession.

I agree. But the problem is that raising rates has an even higher risk of causing disinflation and of slowing the economy. There are risks both ways.

I agree with both of you. This week is the first time since the Great Recession that I really had no idea how the Fed would bounce. I suspect that the Fed REALLY wants to start normalizing, but by their mandate they have to be concerned with inflation and employment. Employment raw data are ok, but there is no upward wage pressure. And consumer inflation is practically nonexistant. So I guess it makes sense they didn't bump the rate this week.

It's the wage pressure thing that really is confusing me. For several years now, I've heard report/show after report/show interviewing business owners and labor specialists insisting there is a shortage of skilled workers and all these positions are going unfilled. But presumably companies are refusing to train their own workers. And presumably they won't pay the really high wages that would tempt the actual qualified workers to relocate, etc. Why won't they? Instead, there seems increasing political pressure to import green card workers from other countries who might have these skills. Is this cheaper? I guess it must be. Then there's increasing automation taking jobs, too.

Politicians can run on 'education' and 'skills training' all they want, and that's fine, but considering there is no upward wage pressure NOW, training more people is unlikely to solve that problem. It's like to flatten wages even more.

There must be a bunch of info about this picture that just isn't apparent to me....

Anyway, I find it hard to envision at what point the Fed hypothetically SHOULD raise interest rates, if employment indicators such as upward wage pressure and inflation are going to be their signals. But without a rate above zero, they have only QE to combat any down turn.


Frugal D

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #60 on: September 19, 2015, 09:57:25 AM »

I think the biggest issue of not raising rates is that as long as rates remain 0 the Fed is limited in to ability to combat another recession.

I agree. But the problem is that raising rates has an even higher risk of causing disinflation and of slowing the economy. There are risks both ways.

I agree with both of you. This week is the first time since the Great Recession that I really had no idea how the Fed would bounce. I suspect that the Fed REALLY wants to start normalizing, but by their mandate they have to be concerned with inflation and employment. Employment raw data are ok, but there is no upward wage pressure. And consumer inflation is practically nonexistant. So I guess it makes sense they didn't bump the rate this week.

It's the wage pressure thing that really is confusing me. For several years now, I've heard report/show after report/show interviewing business owners and labor specialists insisting there is a shortage of skilled workers and all these positions are going unfilled. But presumably companies are refusing to train their own workers. And presumably they won't pay the really high wages that would tempt the actual qualified workers to relocate, etc. Why won't they? Instead, there seems increasing political pressure to import green card workers from other countries who might have these skills. Is this cheaper? I guess it must be. Then there's increasing automation taking jobs, too.

Politicians can run on 'education' and 'skills training' all they want, and that's fine, but considering there is no upward wage pressure NOW, training more people is unlikely to solve that problem. It's like to flatten wages even more.

There must be a bunch of info about this picture that just isn't apparent to me....

Anyway, I find it hard to envision at what point the Fed hypothetically SHOULD raise interest rates, if employment indicators such as upward wage pressure and inflation are going to be their signals. But without a rate above zero, they have only QE to combat any down turn.

Check out zerohedge.com. It's doom and gloom 24/7, but if you can read and comprehend the material it will teach you a lot.

nobodyspecial

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #61 on: September 19, 2015, 10:38:26 AM »
But presumably companies are refusing to train their own workers.
Small business owner here. High tech startup we employ 24 people, all have degrees and  most have years of experience.
We hire some new graduates, coop students in production and testing and are training them but what I need are PhD maths/physics/CS people, I can't take a high school student and "train" them to PhD level.

Quote
And presumably they won't pay the really high wages that would tempt the actual qualified workers to relocate, etc.
We are a startup, we have $2M in VC funding - its difficult to outbid Google/Amazon/Apple/Hootsuite, nevermind Wall St.

Quote
Instead, there seems increasing political pressure to import green card workers from other countries who might have these skills. Is this cheaper? I guess it must be.
Not cheaper - necessary.
I find a research paper by a group at Cambridge, ETH, Technion - I don't say, "well I'm not going to use that idea because it's not American".
But I can't hire the researcher to come and turn it into a product.  All I can do is pray that they don't find a European/Isreali/Russian investor and start a competitor

I added up the people that work for us. We have one "native" and they are first generation HK-Chinese. The rest are Brits, Israeli, Korean, Indian, Chinese,  German, Japanese, Chilean, Russian, even an Iraqi. But they were all already living here, I can't hire a foreign one.

Yes H1B is a scam, I have been on both sides of it. Yes it is almost entirely used by large body shops to bring in cheap offshore developers to do crud work to keep costs down - but that is because of the limits on H1B (sponsors, quotas, limited ability to change jobs etc).

Allowing people with STEM graduate degrees to move to your country and work is not going to put the "average" American out of work.

« Last Edit: September 19, 2015, 01:05:51 PM by nobodyspecial »

milesdividendmd

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #62 on: September 19, 2015, 10:39:09 AM »


I think the biggest issue of not raising rates is that as long as rates remain 0 the Fed is limited in to ability to combat another recession.

I agree. But the problem is that raising rates has an even higher risk of causing disinflation and of slowing the economy. There are risks both ways.

I agree with both of you. This week is the first time since the Great Recession that I really had no idea how the Fed would bounce. I suspect that the Fed REALLY wants to start normalizing, but by their mandate they have to be concerned with inflation and employment. Employment raw data are ok, but there is no upward wage pressure. And consumer inflation is practically nonexistant. So I guess it makes sense they didn't bump the rate this week.

It's the wage pressure thing that really is confusing me. For several years now, I've heard report/show after report/show interviewing business owners and labor specialists insisting there is a shortage of skilled workers and all these positions are going unfilled. But presumably companies are refusing to train their own workers. And presumably they won't pay the really high wages that would tempt the actual qualified workers to relocate, etc. Why won't they? Instead, there seems increasing political pressure to import green card workers from other countries who might have these skills. Is this cheaper? I guess it must be. Then there's increasing automation taking jobs, too.

Politicians can run on 'education' and 'skills training' all they want, and that's fine, but considering there is no upward wage pressure NOW, training more people is unlikely to solve that problem. It's like to flatten wages even more.

There must be a bunch of info about this picture that just isn't apparent to me....

Anyway, I find it hard to envision at what point the Fed hypothetically SHOULD raise interest rates, if employment indicators such as upward wage pressure and inflation are going to be their signals. But without a rate above zero, they have only QE to combat any down turn.

Check out zerohedge.com. It's doom and gloom 24/7, but if you can read and comprehend the material it will teach you a lot.

Doom and gloom is fine. But being wrong nearly all of the time about the consequences of monetary policy is not an endorsement I would follow.

Zero hedge teaches you the wrong way to think about macro, although they are admittedly sometimes spot on when it comes to exposing the corruption on Wall Street.

DarinC

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #63 on: September 20, 2015, 11:12:16 AM »
Look the inflation rates posted by the Fed are broad measurements across the whole country. They don't apply well to individual experience. But they do apply well to broad actions. So they may not reflect how much an iPad will cost tomorrow but they will tell us broadly speaking how much things will cost in the future.

+1

As long as your government runs a deficit and monetizes the debt, you have inflation. Also printing paper money (quantitative easing) = inflation.

Watch this...
http://www.peakprosperity.com/blog/86953/inflation-crash-course-chapter-11
As far as I understand it, in the US, inflation is only a function of private banks creating and loaning money to individuals. QE only serves to drive down interest rates through bond purchases, not increase the amount of money in circulation.

http://business.time.com/2013/09/18/taper-tantrums-3-myths-about-quantitative-easing/

forummm

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #64 on: September 20, 2015, 03:46:44 PM »
Look the inflation rates posted by the Fed are broad measurements across the whole country. They don't apply well to individual experience. But they do apply well to broad actions. So they may not reflect how much an iPad will cost tomorrow but they will tell us broadly speaking how much things will cost in the future.

+1

As long as your government runs a deficit and monetizes the debt, you have inflation. Also printing paper money (quantitative easing) = inflation.

Watch this...
http://www.peakprosperity.com/blog/86953/inflation-crash-course-chapter-11
As far as I understand it, in the US, inflation is only a function of private banks creating and loaning money to individuals. QE only serves to drive down interest rates through bond purchases, not increase the amount of money in circulation.

http://business.time.com/2013/09/18/taper-tantrums-3-myths-about-quantitative-easing/
Inflation is only a function of the rate of change of prices. The rate of change of prices is a function of many things. The amount of money in the economy (a function of government and bank activity) is important but not determinative. The velocity of money is also a vital factor (how quickly dollars change hands). Right now we have a lot of money in the economy but a lot of it is just sitting around, so it's not leading to inflation. As the velocity speeds up the government will need to move more of it to the sidelines (say by selling Treasuries and other assets) to temper inflation.

DarinC

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #65 on: September 24, 2015, 09:53:58 PM »
How does the rate of transactions affect the inflation rate, assuming they don't involve additional lending?

milesdividendmd

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #66 on: September 24, 2015, 10:38:46 PM »

How does the rate of transactions affect the inflation rate, assuming they don't involve additional lending?

Why assume no additional lending? 

Forummm's exact point is that increasing the money supply without the new money circulating, first as credit, then as commerce is insufficient to cause price inflation.

Our current inflation rate and money supply tell this story very well.

DarinC

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #67 on: September 25, 2015, 09:37:50 PM »
I was under the impression that Forummm stated there's a difference between inflation via lending and inflation via other avenues. I'm not familiar with the latter, which is why I was excluding lending.

nobodyspecial

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #68 on: September 25, 2015, 10:19:33 PM »
I was under the impression that Forummm stated there's a difference between inflation via lending and inflation via other avenues.
Probably depends on who.how you lend it.
Lending it to banks to prop up their reserves has no effect on the "real" economy
Announcing interest free $20K car loans to anyone who wants one may have more effect on prices 

PizzaSteve

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Re: It's just .25%, what's the big deal? (Fed policy)
« Reply #69 on: September 26, 2015, 12:05:22 PM »
The global economy is a complex system.  Sadly few want to actually research the complex relationships.  Rather people always want simple answers.

Analogy
A good example of how people tend to simply complex systems is represented by how many think about setting the temperature in a house.  They want to set it and forget it.  It is easy to set a thermostat and think that is what causes the environment of the room. 

Sure you can move a dial, but what really created the amount of energy in a room is a very complex set of factors.  A system to completely control the temperature of a localized space would actually require control of the power of the sun and the ability to alter the heat capacity of the earth.  Factors such as: the angle of the planet earth; where we are in our rotation, insulation of the room; what might be burning in the atmosphere; body heat of creatures in the room; wind speed; the core temp of the earth, etc., etc. all come into play.

Determining and controlling temperature is actually so complex that we can only really measure the final outcome.  We appear to have control, but it is very localized and we seldom think about the full equation of factors that impact what seems so simple to control.
« Last Edit: July 23, 2018, 09:03:58 AM by PizzaSteve »