Inflation and the Fed
#7576731
05/04/22 05:28 PM
05/04/22 05:28 PM
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Joined: May 2011
Posts: 16,607 Oakland, MS
yotetrapper30
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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~~
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7576741
05/04/22 05:38 PM
05/04/22 05:38 PM
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Joined: Dec 2006
Posts: 20,063 SEPA
Lugnut
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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?
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7576770
05/04/22 06:01 PM
05/04/22 06:01 PM
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Joined: Dec 2010
Posts: 11,200 Armpit, ak
Dirt
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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?
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7576978
05/04/22 09:03 PM
05/04/22 09:03 PM
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Joined: Jan 2014
Posts: 17,740 Central Oregon
AntiGov
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The same morons trying to fix it are the same morons who created it
Report a post club - Non member
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Re: Inflation and the Fed
[Re: Dirt]
#7576980
05/04/22 09:05 PM
05/04/22 09:05 PM
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Joined: Jan 2007
Posts: 3,960 Northern Nevada
Bob
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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."
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Re: Inflation and the Fed
[Re: Dirt]
#7576993
05/04/22 09:15 PM
05/04/22 09:15 PM
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Joined: Feb 2008
Posts: 1,408 WI
BvrRetriever
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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.
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7577007
05/04/22 09:22 PM
05/04/22 09:22 PM
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Joined: Oct 2009
Posts: 7,384 western mn
bucksnbears
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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.
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7577036
05/04/22 10:02 PM
05/04/22 10:02 PM
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Joined: May 2010
Posts: 10,485 mn north of blakely
Steven 49er
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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.
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.
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Re: Inflation and the Fed
[Re: Steven 49er]
#7577047
05/04/22 10:27 PM
05/04/22 10:27 PM
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Joined: May 2011
Posts: 16,607 Oakland, MS
yotetrapper30
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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.
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~~
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Re: Inflation and the Fed
[Re: Steven 49er]
#7577050
05/04/22 10:30 PM
05/04/22 10:30 PM
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Joined: Oct 2009
Posts: 7,384 western mn
bucksnbears
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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?
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.
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7577071
05/04/22 10:54 PM
05/04/22 10:54 PM
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Joined: May 2010
Posts: 10,485 mn north of blakely
Steven 49er
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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.
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7577106
05/04/22 11:51 PM
05/04/22 11:51 PM
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Joined: Mar 2014
Posts: 3,655 Central Texas
Chancey
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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
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Re: Inflation and the Fed
[Re: yotetrapper30]
#7577109
05/04/22 11:58 PM
05/04/22 11:58 PM
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Joined: Mar 2014
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Chancey
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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
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Re: Inflation and the Fed
[Re: AntiGov]
#7577187
05/05/22 06:49 AM
05/05/22 06:49 AM
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Joined: Dec 2014
Posts: 2,477 Tug Hill, NY
Squash
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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.
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Re: Inflation and the Fed
[Re: Steven 49er]
#7577431
05/05/22 02:03 PM
05/05/22 02:03 PM
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Joined: Mar 2007
Posts: 35,175 McGrath, AK
white17
"General (Mr.Sunshine) Washington"
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"General (Mr.Sunshine) Washington"
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Posts: 35,175
McGrath, AK
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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
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Re: Inflation and the Fed
[Re: Chancey]
#7577443
05/05/22 02:31 PM
05/05/22 02:31 PM
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Joined: Mar 2007
Posts: 35,175 McGrath, AK
white17
"General (Mr.Sunshine) Washington"
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"General (Mr.Sunshine) Washington"
Joined: Mar 2007
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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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