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Inflation and the Fed #7576731
05/04/22 05:28 PM
05/04/22 05:28 PM
Joined: May 2011
Posts: 16,512
Oakland, MS
yotetrapper30 Offline OP
trapper
yotetrapper30  Offline OP
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Joined: May 2011
Posts: 16,512
Oakland, MS
As anyone who reads economic threads on here knows, I don't know a lot of about the financial world. From what I've gathered though, a lot of people thought that the Fed would do something more drastic than what they did today, which was raising the interest rate a half of a point.

The goal of doing so is said to help with inflation. But since it's a moderate increase, is it correct to assume inflation will continue to get worse?


~~Proud Ultra MAGA~~
Re: Inflation and the Fed [Re: yotetrapper30] #7576738
05/04/22 05:34 PM
05/04/22 05:34 PM
Joined: Jan 2007
Posts: 4,976
MD
D
DaveP Offline
trapper
DaveP  Offline
trapper
D

Joined: Jan 2007
Posts: 4,976
MD
Too little, too late.

More hikes to come.
Soon...
And more to follow.

Re: Inflation and the Fed [Re: yotetrapper30] #7576741
05/04/22 05:38 PM
05/04/22 05:38 PM
Joined: Dec 2006
Posts: 19,930
SEPA
L
Lugnut Online content
trapper
Lugnut  Online Content
trapper
L

Joined: Dec 2006
Posts: 19,930
SEPA
The Fed has five more meetings scheduled for this year. I think they will probably raise rates during each one of those. I also agree that this is too little too late and they are playing catch-up.

Of course none of this has anything to do with the Biden administration, according to them this is all the fault of Covid and the Russian invasion of Ukraine.


Eh...wot?

Re: Inflation and the Fed [Re: yotetrapper30] #7576744
05/04/22 05:45 PM
05/04/22 05:45 PM
Joined: Mar 2012
Posts: 257
Barbour county,WV
O
Oleo Acres Offline
trapper
Oleo Acres  Offline
trapper
O

Joined: Mar 2012
Posts: 257
Barbour county,WV
Just switches the inflation from goods to homes,cars,all big ticket items. So the banks can make more money.

Re: Inflation and the Fed [Re: yotetrapper30] #7576770
05/04/22 06:01 PM
05/04/22 06:01 PM
Joined: Dec 2010
Posts: 11,135
Armpit, ak
D
Dirt Offline
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Dirt  Offline
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Joined: Dec 2010
Posts: 11,135
Armpit, ak
Originally Posted by yotetrapper30
As anyone who reads economic threads on here knows, I don't know a lot of about the financial world. From what I've gathered though, a lot of people thought that the Fed would do something more drastic than what they did today, which was raising the interest rate a half of a point.

The goal of doing so is said to help with inflation. But since it's a moderate increase, is it correct to assume inflation will continue to get worse?


If you see a lot of " We're Hiring" signs, inflation will get worse. When they disappear it should start slowing down. JMHO


Who is John Galt?
Re: Inflation and the Fed [Re: yotetrapper30] #7576811
05/04/22 06:44 PM
05/04/22 06:44 PM
Joined: Apr 2010
Posts: 3,912
Ohio
S
stinkypete Offline
trapper
stinkypete  Offline
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S

Joined: Apr 2010
Posts: 3,912
Ohio
The Central Bank realized they have to raise rates. But not to fast to put the market in panic. IMO after watching the market climb. I would say it was done on a positive note. The market showed relief and growth. How long this will last is anyone’s guess. But for today it was good.

Re: Inflation and the Fed [Re: yotetrapper30] #7576978
05/04/22 09:03 PM
05/04/22 09:03 PM
Joined: Jan 2014
Posts: 17,695
Central Oregon
AntiGov Offline
trapper
AntiGov  Offline
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Posts: 17,695
Central Oregon
The same morons trying to fix it are the same morons who created it


Report a post club - Non member


Re: Inflation and the Fed [Re: Dirt] #7576980
05/04/22 09:05 PM
05/04/22 09:05 PM
Joined: Jan 2007
Posts: 3,960
Northern Nevada
B
Bob Offline
trapper
Bob  Offline
trapper
B

Joined: Jan 2007
Posts: 3,960
Northern Nevada
Originally Posted by Dirt
Originally Posted by yotetrapper30
As anyone who reads economic threads on here knows, I don't know a lot of about the financial world. From what I've gathered though, a lot of people thought that the Fed would do something more drastic than what they did today, which was raising the interest rate a half of a point.

The goal of doing so is said to help with inflation. But since it's a moderate increase, is it correct to assume inflation will continue to get worse?


If you see a lot of " We're Hiring" signs, inflation will get worse. When they disappear it should start slowing down. JMHO


If that’s the case….buckle up…


"I have two guns, one for each of ya."
Re: Inflation and the Fed [Re: Dirt] #7576993
05/04/22 09:15 PM
05/04/22 09:15 PM
Joined: Feb 2008
Posts: 1,384
WI
B
BvrRetriever Offline
trapper
BvrRetriever  Offline
trapper
B

Joined: Feb 2008
Posts: 1,384
WI
Originally Posted by Dirt
Originally Posted by yotetrapper30
As anyone who reads economic threads on here knows, I don't know a lot of about the financial world. From what I've gathered though, a lot of people thought that the Fed would do something more drastic than what they did today, which was raising the interest rate a half of a point.

The goal of doing so is said to help with inflation. But since it's a moderate increase, is it correct to assume inflation will continue to get worse?


If you see a lot of " We're Hiring" signs, inflation will get worse. When they disappear it should start slowing down. JMHO


That is one thing that Powell kept circling back to today. The job market needs to stabilize.

Re: Inflation and the Fed [Re: yotetrapper30] #7577007
05/04/22 09:22 PM
05/04/22 09:22 PM
Joined: Oct 2009
Posts: 7,254
western mn
B
bucksnbears Offline
trapper
bucksnbears  Offline
trapper
B

Joined: Oct 2009
Posts: 7,254
western mn
P.M jbyrd63, he'll set you straight.
Lol,lol,lol


swampgas chili and schmidt beer makes for a deadly combo

You have to remember that 1 out of 3 Democratic Voters is just as dumb as the other two.
Re: Inflation and the Fed [Re: yotetrapper30] #7577036
05/04/22 10:02 PM
05/04/22 10:02 PM
Joined: May 2010
Posts: 10,421
mn north of blakely
S
Steven 49er Offline
trapper
Steven 49er  Offline
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S

Joined: May 2010
Posts: 10,421
mn north of blakely
Originally Posted by yotetrapper30
As anyone who reads economic threads on here knows, I don't know a lot of about the financial world.


None of us do, well except the Kentucky wonder.



Originally Posted by yotetrapper30


The goal of doing so is said to help with inflation. But since it's a moderate increase, is it correct to assume inflation will continue to get worse?


I wouldn't say it's a "moderate" increase. It's been 20 years since we've had a half-point increase. The FED has said they were going to raise a half point this go around. I suppose the markets were worried it would be more, personally, I would have been more than a little surprised if they did.

I lean to thinking that inflation is getting close to peaking at least officially. I don't shop much but every time I do I can't find anything that has only gone up 8 percent in the last year.


"Inflation is always and everywhere a monetary phenomenon". Milton Friedman.
Re: Inflation and the Fed [Re: Steven 49er] #7577047
05/04/22 10:27 PM
05/04/22 10:27 PM
Joined: May 2011
Posts: 16,512
Oakland, MS
yotetrapper30 Offline OP
trapper
yotetrapper30  Offline OP
trapper

Joined: May 2011
Posts: 16,512
Oakland, MS
Originally Posted by Steven 49er
Originally Posted by yotetrapper30
As anyone who reads economic threads on here knows, I don't know a lot of about the financial world.


None of us do, well except the Kentucky wonder.



Originally Posted by yotetrapper30


The goal of doing so is said to help with inflation. But since it's a moderate increase, is it correct to assume inflation will continue to get worse?


I wouldn't say it's a "moderate" increase. It's been 20 years since we've had a half-point increase. The FED has said they were going to raise a half point this go around. I suppose the markets were worried it would be more, personally, I would have been more than a little surprised if they did.

I lean to thinking that inflation is getting close to peaking at least officially. I don't shop much but every time I do I can't find anything that has only gone up 8 percent in the last year.


You keep alluding to something happening in the not too distant future. Are you expecting a recession, then?


~~Proud Ultra MAGA~~
Re: Inflation and the Fed [Re: Steven 49er] #7577050
05/04/22 10:30 PM
05/04/22 10:30 PM
Joined: Oct 2009
Posts: 7,254
western mn
B
bucksnbears Offline
trapper
bucksnbears  Offline
trapper
B

Joined: Oct 2009
Posts: 7,254
western mn
Originally Posted by Steven 49er
Originally Posted by yotetrapper30
As anyone who reads economic threads on here knows, I don't know a lot of about the financial world.


None of us do, well except the Kentucky

So your saying your portfolio didn't increase from his sound financial advice?
eek


swampgas chili and schmidt beer makes for a deadly combo

You have to remember that 1 out of 3 Democratic Voters is just as dumb as the other two.
Re: Inflation and the Fed [Re: yotetrapper30] #7577071
05/04/22 10:54 PM
05/04/22 10:54 PM
Joined: May 2010
Posts: 10,421
mn north of blakely
S
Steven 49er Offline
trapper
Steven 49er  Offline
trapper
S

Joined: May 2010
Posts: 10,421
mn north of blakely
For sure I'm expecting a recession, Angela. GDP in first quarter was down, the technical definition of a recession is two negative quarters in a row.

10-2 yield curve is basically the same and was slightly negative for a moment a month or so ago.

8 percent plus inflation, interest rates rising, gasoline through the roof, the war in Russia, stimulus monies running out, China shut down. Geeze don't get me started on the whole China fiasco, it's going to be interesting to see if we can find a tube of toothpaste in a month.

My outlook isn't all that positive if you can not tell lol. Oh well, at least my gas isn't getting shut off. Hard to turn off a propane tank I own.

I really don't see how the FED can come out on this one.

Doing some further research, I think the markets were positive today more because of Powells comments he thinks we could see a "soft landing". That's the same guy who said inflation is transitory.

Last edited by Steven 49er; 05/04/22 10:56 PM.

"Inflation is always and everywhere a monetary phenomenon". Milton Friedman.
Re: Inflation and the Fed [Re: yotetrapper30] #7577106
05/04/22 11:51 PM
05/04/22 11:51 PM
Joined: Mar 2014
Posts: 3,653
Central Texas
C
Chancey Offline
trapper
Chancey  Offline
trapper
C

Joined: Mar 2014
Posts: 3,653
Central Texas
Thank you for your replies Steven. It helps me tremendously and others as well I think.

Question: The interest rate affects Everyone, how and why is it tied to the stock market? I run in circles every day of very very hard working people that don't have one care or the other about the stock market, but inflation and interest affects them tragically. Why and how does the stock market help dictate the inflation/interest rate? Most working class people I know could care less about the stock market, but inflation and interest hits them hard.

Last edited by Chancey; 05/04/22 11:53 PM.

Resident Conspiracy Theorist
Accused Moron, Nazi, Low IQ, and Putin Fan Boy
Re: Inflation and the Fed [Re: yotetrapper30] #7577109
05/04/22 11:58 PM
05/04/22 11:58 PM
Joined: Mar 2014
Posts: 3,653
Central Texas
C
Chancey Offline
trapper
Chancey  Offline
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Joined: Mar 2014
Posts: 3,653
Central Texas
Thinking back on the articles and comments you, and Whte17, Dirt, and others made, I guess it is because the banks have taken all the savings of people and given them out for other things while still drawing interest on something that is not really there. Basically, paying interest on debt instead of something like a hard asset?


Resident Conspiracy Theorist
Accused Moron, Nazi, Low IQ, and Putin Fan Boy
Re: Inflation and the Fed [Re: AntiGov] #7577187
05/05/22 06:49 AM
05/05/22 06:49 AM
Joined: Dec 2014
Posts: 2,446
Tug Hill, NY
S
Squash Offline
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Squash  Offline
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S

Joined: Dec 2014
Posts: 2,446
Tug Hill, NY
Originally Posted by AntiGov
The same morons trying to fix it are the same morons who created it



X2, and remember they said it was ,”transitory.” LOL The current Fed and administration doesn’t have a clue how to fix it. Nor do I think they care ?

Last edited by Squash; 05/05/22 06:50 AM.
Re: Inflation and the Fed [Re: bucksnbears] #7577254
05/05/22 08:44 AM
05/05/22 08:44 AM
Joined: Dec 2006
Posts: 62,661
Minnesota
330-Trapper Offline

trapper
330-Trapper  Offline

trapper

Joined: Dec 2006
Posts: 62,661
Minnesota
Originally Posted by bucksnbears
P.M jbyrd63, he'll set you straight.
Lol,lol,lol

grin


NRA and NTA Life Member
www.BackroadsRevised@etsy.com




Re: Inflation and the Fed [Re: Steven 49er] #7577431
05/05/22 02:03 PM
05/05/22 02:03 PM
Joined: Mar 2007
Posts: 35,129
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
W

Joined: Mar 2007
Posts: 35,129
McGrath, AK
Originally Posted by Steven 49er
For sure I'm expecting a recession, Angela. GDP in first quarter was down, the technical definition of a recession is two negative quarters in a row.

10-2 yield curve is basically the same and was slightly negative for a moment a month or so ago.

8 percent plus inflation, interest rates rising, gasoline through the roof, the war in Russia, stimulus monies running out, China shut down. Geeze don't get me started on the whole China fiasco, it's going to be interesting to see if we can find a tube of toothpaste in a month.

My outlook isn't all that positive if you can not tell lol. Oh well, at least my gas isn't getting shut off. Hard to turn off a propane tank I own.

I really don't see how the FED can come out on this one.

Doing some further research, I think the markets were positive today more because of Powells comments he thinks we could see a "soft landing". That's the same guy who said inflation is transitory.


I agree. I think the market was initially 'relieved' that the Fed is finally taking action but also 'relieved' that they didn't go for 75 bp and SEEMED to remove that from future possibilities. I think that is wishful thinking.

I think what we are seeing today is hindsight being 20/20. Investors realize that what the Fed is intending to do in terms of QT (reducing its bond portfolio) Will only amount to about a trillion dollars per year reduction in the Fed balance sheet..........in other words....there will still be a lot of easy money sloshing through the system.

Powell may be right that supply chain corrections will help reduce inflation........but remember.....he has also said that inflation is being exacerbated by, the supply chain, the price of oil/gas, the Russian invasion of Ukraine............but not once have I heard him say that it is a consequence of the Fed being too easy for too long.

I wish him well. He's in a tough spot for sure but I would put our odds of a recession at greater than 75%


Mean As Nails
Re: Inflation and the Fed [Re: Chancey] #7577443
05/05/22 02:31 PM
05/05/22 02:31 PM
Joined: Mar 2007
Posts: 35,129
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
W

Joined: Mar 2007
Posts: 35,129
McGrath, AK
Originally Posted by Chancey
Thank you for your replies Steven. It helps me tremendously and others as well I think.

Question: The interest rate affects Everyone, how and why is it tied to the stock market? I run in circles every day of very very hard working people that don't have one care or the other about the stock market, but inflation and interest affects them tragically. Why and how does the stock market help dictate the inflation/interest rate? Most working class people I know could care less about the stock market, but inflation and interest hits them hard.


I'll take a stab at this.

First of all the stock market doesn't "help dictate the inflation/interest rate. The market fluctuations are a symptom of what is happening in credit markets (interest rates).

In "normal" circumstances when interest rates fall, stocks rise and vice versa. WHY ?

Because in rising interest rate environments it costs more to produce a product AND, consequently, a company's profit margin will likely decline. Also, customers have their own rising costs to cover and thus have less discretionary cash to spend on other items.........so again.........companies may take a hit by selling fewer products.

Since stock market investors make purchases based on the cost today of a stream of earnings in the future, that cost or share price today has to be lower if interest rates next year will cut into company earnings.

Still confused ? Ill try an example.

Let's take a real situation.

Right now Microsoft ( MSFT) is trading at $276.00 Last year MSFT earned $9.58 per share from its various lines of business.

Investors who want to own a piece of those earnings in the future are willing to pay 28.8 times ( P/E ratio) 9.58......for one share of stock....that gives us a rough price of $275.904 per share.

So if, because of increased costs from higher labor costs, taxes, and borrowing costs we may think that MSFT will only earn $9.25 next year.....not much of a reduction really. But, if we use that same P/E ratio of 28.8..........that would indicate that we should only be paying $266.40 per share..........about 10 bucks less than previously.

What actually happens is that that P/E ratio also compresses. Instead of people being willing to pay 28.8 times earnings they may decide that 27 is more appropriate. ( and the higher rates go the more that ratio will compress). If we use $9.25 in earnings with a 27 P/E...it knocks the price down to $249.75

That's how it actually works on a share of stock and the market in general.
But the bottom line is that higher rates remove money from circulation and consequently, leave less available for things other than necessities.


Mean As Nails
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