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Fed. Reserve raises rates to 22-year high
Fed. Reserve raises rates to 22-year high
By Warcok
26 Jul 2023 2:02 pm in No Holds Barred Political Forum
27 Jul 2023 6:30 pm
So I can double my money in about 30 years by the Rule of 72.
Not really a killing.
Please seat yourself.
I like the very things you hate.
I like the very things you hate.
27 Jul 2023 6:53 pm
Won’t even do that, if you pay income taxes on the interest.DeezerShoove » 27 Jul 2023, 6:30 pm » wrote: ↑ So I can double my money in about 30 years by the Rule of 72.
Not really a killing.
Ever stop to think how lucky we were, Trump was President during the first year of Covid?
All total he either spent or promised 5 trillion bucks, of borrowed money that went straight on the national debt.
Private investors bought 5 trillion in bonds paying 2% or so.
Fox News and MAGA would have crucified any Democrat upside down for such Keynesian spending.
Did five trillion extra dollars lead to inflation?
Yes, for about one year, peaking at 9% and at 3% a year later.
The economists will give lectures on it for a hundred years.
27 Jul 2023 7:27 pm
DeezerShoove » 27 Jul 2023, 6:16 pm » wrote: ↑ What's "making a killing" these days?
I see 5.35% APY on a quick google search.
Better than a bank savings account. But is that a killing?
Depends on how much is invested.
27 Jul 2023 10:29 pm
I don't believe your numbers because you are a liar.Bruce » 27 Jul 2023, 6:53 pm » wrote: ↑ Won’t even do that, if you pay income taxes on the interest.
Ever stop to think how lucky we were, Trump was President during the first year of Covid?
All total he either spent or promised 5 trillion bucks, of borrowed money that went straight on the national debt.
Private investors bought 5 trillion in bonds paying 2% or so.
Fox News and MAGA would have crucified any Democrat upside down for such Keynesian spending.
Did five trillion extra dollars lead to inflation?
Yes, for about one year, peaking at 9% and at 3% a year later.
The economists will give lectures on it for a hundred years.
But even those you made up are damning.
Triple inflation for a year is advancing the cost of living structure by three years.
That very hard on lots of people and small businesses. That advance (price increase) never goes away.
Even if inflation goes back down, the extra money spent in that year is gone forever.
Savings are depleted, many (perhaps most) things will never be at the lower prices ever again.
You easily dismiss it as a temporary blip. That's prick behavior.
Please seat yourself.
I like the very things you hate.
I like the very things you hate.
28 Jul 2023 2:59 am
Under Trump the housing market was was inflated beyond the reality as were building supplies. Politicians need to go after corporate america the source of rising prices ............ also the source of campaign money for both sides of the aisle.Z09 » 27 Jul 2023, 5:53 am » wrote: ↑ Well said!
The little secret that Biden doesn't want to discuss
4 years ago people could afford to buy a home under Trump
Right now they're not qualified
Increasing interest rates hits on consumers who should quit spending to drive down interest rates and keep inflation under control.
28 Jul 2023 4:28 am
GAODeezerShoove » 27 Jul 2023, 10:29 pm » wrote: ↑ I don't believe your numbers because you are a liar.
But even those you made up are damning.
Triple inflation for a year is advancing the cost of living structure by three years.
That very hard on lots of people and small businesses. That advance (price increase) never goes away.
Even if inflation goes back down, the extra money spent in that year is gone forever.
Savings are depleted, many (perhaps most) things will never be at the lower prices ever again.
You easily dismiss it as a temporary blip. That's prick behavior.
Roughly $5 trillion went to households, mom-and-pop shops, restaurants, airlines, hospitals, local governments, schools and other institutions around the country grappling with the blow inflicted by Covid-19.Mar 11, 2022
—-
Trump passed five of the six Covid bills and the Republicans slammed Joe for not spending enough on the last one in early 2021.
And all that five trillion was financed by selling treasury notes to private investors, mostly in the United States.
Trump was proud to spend the five trillion and we should be too. The cost of Covid was about 14 trillion in lost productivity
—-
The economic toll of the COVID-19 pandemic in the U.S. will reach US$14 trillion by the end of 2023, our team of economists, public policy researchers and other experts have estimated.May 16, 2023
—-
Again, if any Democrat had added more to the money supply than the Klondike gold rush and World War Two combined in just one year, he likely would have been boiled, flayed, drawn and quartered.
And it was inflationary. The final numbers are:
—-
n the United States, the Consumer Price Index rose 6.8% between November 2020 and November 2021, spurred by price increases for gasoline, food, and housing. Higher energy costs caused the inflation to rise further in 2022, reaching 8.9%, a high not seen since 1981.
——
If Trump had not spent that we’d be in Great Depression II. It would have likely caused a deflation of a third or more, we’d have taken a decade to recover from.
28 Jul 2023 7:59 am
That was a good explanation. So, I see you have a well thought out plan there. One that fits with your particular situation.ConsRule » 27 Jul 2023, 10:44 am » wrote: ↑ Either I am not explaining well, or you are too focused on one side.
First, you can still deduct interest and property taxes...it's just that the standard deduction is so high very few pay enough. If you actually read what I posted, I said we could make the purchase mortgage free but would take a bath on taxes. We have enough saving for 20% down and closing...and still have almost one year of our current income in the account.
A loan against the 401(k) is not an option because we focused on long-term investing in other ways and only contributed up to the percentage of the match. Therefore, the account balances do not allow a large enough loan as it would exceed the percentage of the balance eligible for loan (we knew of this restriction since the very beginning...it wasn't an issue). Additionally, both plans would require the loan be repaid in full if we decide to retire...which is a possibility. Of course, given our age we could simply take money out, but that is taxable income. Given we already have income greater than the tax table, the taxes on that income would be really high (by my definition).
If we decide to sell equity investments, we will incur significant capital gains. The gains will never be completely avoidable, but we don't want them all at once.
My wife is one of two beneficiaries on one trust and one of six beneficiaries on a second trust. Using today's numbers, she will inherit just over $1 million (and both trusts must liquidate when her mother passes away per the language of the trusts). Her mother turns 99 soon and is in slightly worse health than the "typical" person that age. Most of that total will be stocks, but my wife benefits from the step up in basis of those stocks and can immediately sell them for no (or very little) capital gains.Not to be cold and callous, but the odds of her living more than 2-3 more years are slim so a mortgage is a relatively short term instrument.
Both interest and taxes are an expense...we will probably choose to use cash to pay the expense over time (interest) rather than all at once (taxes).
28 Jul 2023 8:11 am
Yes, and that was not an unusual rate given how high it had been during Carter's Administration. So, no one was pointing fingers at Regan as far as rates go. The devaluation of the dollar was one of the bigger economic concerns.Bruce » 27 Jul 2023, 10:57 am » wrote: ↑ Ronald Reagan won 49 states and 60% of the popular vote with a Fed funds rate of 9%
Now, however, rates have risen many points beyond what has been the "modern" historic average. Folks got addicted to the low rates - only old, dying Boomers in nursing homes remember when rates were much higher. And, Biden is responsible for this. Directly responsible. He championed two drunken-sailor spending bills that threw nitro-methane on the warm coals of inflation. And, that's real "Bidenomics".
28 Jul 2023 8:49 am
No. Hear are my reasons:
- The Fed is actually, finally, doing what it should have been doing over the past 12 years. And, everyone familiar with economics and finance realize this too. I hate to say this, but so far, this is one of the more responsible Fed-Boards I've seen in a long time. These interest rate hikes are needed and actually are data-driven.
- Because interest rates were so low for over a decade, there is still little inventory of homes on the market. So, I don't see house prices crashing. And, if house values don't crash, then the bundled loans behind all of those houses are not likely to fall into default.
- Unemployment is still low - too low.
- I don't see anyone playing games with artificially inflating housing values like in the mid 2000's. House values are where they are due to a huge bump in inflation - real inflation. Democrat-spending driven inflation.
- The Equities Markets have only made modest gains over the past couple of years, and that is off of a substantial correction. If you look at the P/E's of most stocks, they reflect reasonable prices for the value of the shares. You don't have the crazy P/E's from momentum investing. Everyone is a value investor now.
- People are locking up cash in hard assets like real estate, precious metals, etc. This is cash that isn't chasing investments in Securities Markets - i.e. I don't think the stock markets are full of cash-inflated values.
- Office Properties - they have not bounced back. Rents are still low and traditional office space, especially offices in smaller buildings are difficult to rent. This is due to a systemic way in which people are doing business.
- Retail Properties - There are still quite a few retail properties with depressed rents and lower vacancies.
- Silver Prices - Bumping at $25, they are too high. 1) Check out YouTube - I've never seen so many videos by silver bugs claiming that silver is poised to go through the roof soon. When I see this, that usually makes me want to sell, because too many idiots are buying silver as an investment. 2) Even if silver goes to $50/ounce in the next 10 years, that's still only double your investment if you bought silver today. Well, that SUCKS compared to what the Securities Markets are likely to do. When folks figure out that Silver will not get you to retirement, they will all want to sell their shiny rounds of silver so they can have CASH to invest in COMPANIES that MAKE MONEY AND PAY DIVIDENDS!!!
28 Jul 2023 9:28 am
Way too much "feedback", pal.Bruce » 28 Jul 2023, 4:28 am » wrote: ↑ GAO
Roughly $5 trillion went to households, mom-and-pop shops, restaurants, airlines, hospitals, local governments, schools and other institutions around the country grappling with the blow inflicted by Covid-19.Mar 11, 2022
—-
Trump passed five of the six Covid bills and the Republicans slammed Joe for not spending enough on the last one in early 2021.
And all that five trillion was financed by selling treasury notes to private investors, mostly in the United States.
Trump was proud to spend the five trillion and we should be too. The cost of Covid was about 14 trillion in lost productivity
—-
The economic toll of the COVID-19 pandemic in the U.S. will reach US$14 trillion by the end of 2023, our team of economists, public policy researchers and other experts have estimated.May 16, 2023
—-
Again, if any Democrat had added more to the money supply than the Klondike gold rush and World War Two combined in just one year, he likely would have been boiled, flayed, drawn and quartered.
And it was inflationary. The final numbers are:
—-
n the United States, the Consumer Price Index rose 6.8% between November 2020 and November 2021, spurred by price increases for gasoline, food, and housing. Higher energy costs caused the inflation to rise further in 2022, reaching 8.9%, a high not seen since 1981.
——
If Trump had not spent that we’d be in Great Depression II. It would have likely caused a deflation of a third or more, we’d have taken a decade to recover from.
I took your post at face value but you didn't like the "liar" part.
Tough ****. Don't **** like a partisan hack so much and maybe you'll get the benefit of the doubt once in a while.
You mentioned Trump 4 times for some reason. An ineffectual, single term president, right? Hack.
Please seat yourself.
I like the very things you hate.
I like the very things you hate.
28 Jul 2023 9:42 am
Not counting that first Covid bill over two years ago that finished up five trillion of spending Uncle Joes 900 billion act is a year old.Skans » 28 Jul 2023, 8:11 am » wrote: ↑ Yes, and that was not an unusual rate given how high it had been during Carter's Administration. So, no one was pointing fingers at Regan as far as rates go. The devaluation of the dollar was one of the bigger economic concerns.
Now, however, rates have risen many points beyond what has been the "modern" historic average. Folks got addicted to the low rates - only old, dying Boomers in nursing homes remember when rates were much higher. And, Biden is responsible for this. Directly responsible. He championed two drunken-sailor spending bills that threw nitro-methane on the warm coals of inflation. And, that's real "Bidenomics".
https://en.m.wikipedia.org/wiki/Inflation_Reduction_Act
They’ll spend that spread out over ten years.
Did Trump spending five trillion almost all at once, cause inflation?
Yes, a little. Looks like a total of about 16% over two and a half years. We are back to 3% and falling.
And if it shuts up the Republicans forever about how evil government spending is during a crisis it’s more than worth the cost.
The worst thing we can have, is massive deflation.
Price levels dropped close to 50% between 1930 and 1932, on the gold standard.
28 Jul 2023 10:38 am
We had massive deflation during most of the Obama-Biden presidency.Bruce » 28 Jul 2023, 9:42 am » wrote: ↑ Not counting that first Covid bill over two years ago that finished up five trillion of spending Uncle Joes 900 billion act is a year old.
https://en.m.wikipedia.org/wiki/Inflation_Reduction_Act
They’ll spend that spread out over ten years.
Did Trump spending five trillion almost all at once, cause inflation?
Yes, a little. Looks like a total of about 16% over two and a half years. We are back to 3% and falling.
And if it shuts up the Republicans forever about how evil government spending is during a crisis it’s more than worth the cost.
The worst thing we can have, is massive deflation.
Price levels dropped close to 50% between 1930 and 1932, on the gold standard.
28 Jul 2023 12:42 pm
As always, your responses are thorough and well thought out. My question is that if the rates are increasing, then won't this price out most home buyers? If so, then won't that make the market decrease substantially?Skans » 28 Jul 2023, 8:49 am » wrote: ↑ No. Hear are my reasons:Here are some areas of concern:
- The Fed is actually, finally, doing what it should have been doing over the past 12 years. And, everyone familiar with economics and finance realize this too. I hate to say this, but so far, this is one of the more responsible Fed-Boards I've seen in a long time. These interest rate hikes are needed and actually are data-driven.
- Because interest rates were so low for over a decade, there is still little inventory of homes on the market. So, I don't see house prices crashing. And, if house values don't crash, then the bundled loans behind all of those houses are not likely to fall into default.
- Unemployment is still low - too low.
- I don't see anyone playing games with artificially inflating housing values like in the mid 2000's. House values are where they are due to a huge bump in inflation - real inflation. Democrat-spending driven inflation.
- The Equities Markets have only made modest gains over the past couple of years, and that is off of a substantial correction. If you look at the P/E's of most stocks, they reflect reasonable prices for the value of the shares. You don't have the crazy P/E's from momentum investing. Everyone is a value investor now.
- People are locking up cash in hard assets like real estate, precious metals, etc. This is cash that isn't chasing investments in Securities Markets - i.e. I don't think the stock markets are full of cash-inflated values.
- Office Properties - they have not bounced back. Rents are still low and traditional office space, especially offices in smaller buildings are difficult to rent. This is due to a systemic way in which people are doing business.
- Retail Properties - There are still quite a few retail properties with depressed rents and lower vacancies.
- Silver Prices - Bumping at $25, they are too high. 1) Check out YouTube - I've never seen so many videos by silver bugs claiming that silver is poised to go through the roof soon. When I see this, that usually makes me want to sell, because too many idiots are buying silver as an investment. 2) Even if silver goes to $50/ounce in the next 10 years, that's still only double your investment if you bought silver today. Well, that SUCKS compared to what the Securities Markets are likely to do. When folks figure out that Silver will not get you to retirement, they will all want to sell their shiny rounds of silver so they can have CASH to invest in COMPANIES that MAKE MONEY AND PAY DIVIDENDS!!!
28 Jul 2023 12:44 pm
unemployment is too low? WtfSkans » 28 Jul 2023, 8:49 am » wrote: ↑ No. Hear are my reasons:Here are some areas of concern:
- The Fed is actually, finally, doing what it should have been doing over the past 12 years. And, everyone familiar with economics and finance realize this too. I hate to say this, but so far, this is one of the more responsible Fed-Boards I've seen in a long time. These interest rate hikes are needed and actually are data-driven.
- Because interest rates were so low for over a decade, there is still little inventory of homes on the market. So, I don't see house prices crashing. And, if house values don't crash, then the bundled loans behind all of those houses are not likely to fall into default.
- Unemployment is still low - too low.
- I don't see anyone playing games with artificially inflating housing values like in the mid 2000's. House values are where they are due to a huge bump in inflation - real inflation. Democrat-spending driven inflation.
- The Equities Markets have only made modest gains over the past couple of years, and that is off of a substantial correction. If you look at the P/E's of most stocks, they reflect reasonable prices for the value of the shares. You don't have the crazy P/E's from momentum investing. Everyone is a value investor now.
- People are locking up cash in hard assets like real estate, precious metals, etc. This is cash that isn't chasing investments in Securities Markets - i.e. I don't think the stock markets are full of cash-inflated values.
- Office Properties - they have not bounced back. Rents are still low and traditional office space, especially offices in smaller buildings are difficult to rent. This is due to a systemic way in which people are doing business.
- Retail Properties - There are still quite a few retail properties with depressed rents and lower vacancies.
- Silver Prices - Bumping at $25, they are too high. 1) Check out YouTube - I've never seen so many videos by silver bugs claiming that silver is poised to go through the roof soon. When I see this, that usually makes me want to sell, because too many idiots are buying silver as an investment. 2) Even if silver goes to $50/ounce in the next 10 years, that's still only double your investment if you bought silver today. Well, that SUCKS compared to what the Securities Markets are likely to do. When folks figure out that Silver will not get you to retirement, they will all want to sell their shiny rounds of silver so they can have CASH to invest in COMPANIES that MAKE MONEY AND PAY DIVIDENDS!!!
28 Jul 2023 12:58 pm
Not massive.Skans » 28 Jul 2023, 10:38 am » wrote: ↑ We had massive deflation during most of the Obama-Biden presidency.
It would have been massive deflation of Bush hadn’t thrown enough money at the Great Recession in October 2008 That should have forever proved Keynes was right, you can’t spend too much in a crisis.
In good times, the government should raise taxes, not too much, but enough to balance revenue against expenses. But during a crisis you can cut taxes to zero, and everybody quits spending, and quits buying, and quits producing. They are scared.
The only way to stimulate demand, production and confidence in a crisis is toss enough cash out to restore it.
Bush II did that, but he was a piker compared to Trump.
And only a Republican could have convinced Congress.
28 Jul 2023 1:03 pm
Not in the short term and here's why. For the past 10 years people have either purchased houses or re-financed at interest rates around 3.5%. These are typically 30 year mortgages - maybe some 20 year mortgages. In any event, mortgages that will be around for quite some time.Vegas » 28 Jul 2023, 12:42 pm » wrote: ↑ As always, your responses are thorough and well thought out. My question is that if the rates are increasing, then won't this price out most home buyers? If so, then won't that make the market decrease substantially?
For people that have houses financed at around 3.5%, selling their house and buying one that is comparable, just somewhere else prices them out of the market if they need a mortgage. Their payment would go up 4 and 5 times what it is right now. So, none of them are selling - they can't.
For people that don't have houses, they must look to new construction. There's only so much new product that can come online at a given time. Also, there is also a big trend toward buying houses with cash. There are a lot of cash buyers out there, and they are getting preference over those who need loans.
Adding to this is a huge influx of Puerto Ricans to Florida, and illegal immigrants coming across the Mexican border. These people are finding places to live - i.e. older, cheaper houses.
It will take years for the housing inventory crisis to resolve. By the time the housing inventory loosens up, hopefully the Fed will start reducing rates. So, for the next few years, I don't see housing prices plummeting. I see them stabilizing.
I think @Buck Naked might have something to add here. He tends to disagree with me when it comes to housing economics, but I believe he is knowledgeable and worth listening to - - if he decides to chime in.
28 Jul 2023 1:07 pm
Skans » 28 Jul 2023, 1:03 pm » wrote: ↑ Not in the short term and here's why. For the past 10 years people have either purchased houses or re-financed at interest rates around 3.5%. These are typically 30 year mortgages - maybe some 20 year mortgages. In any event, mortgages that will be around for quite some time.
For people that have houses financed at around 3.5%, selling their house and buying one that is comparable, just somewhere else prices them out of the market if they need a mortgage. Their payment would go up 4 and 5 times what it is right now. So, none of them are selling - they can't.
For people that don't have houses, they must look to new construction. There's only so much new product that can come online at a given time. Also, there is also a big trend toward buying houses with cash. There are a lot of cash buyers out there, and they are getting preference over those who need loans.
Adding to this is a huge influx of Puerto Ricans to Florida, and illegal immigrants coming across the Mexican border. These people are finding places to live - i.e. older, cheaper houses.
It will take years for the housing inventory crisis to resolve. By the time the housing inventory loosens up, hopefully the Fed will start reducing rates. So, for the next few years, I don't see housing prices plummeting. I see them stabilizing.
I am a renter. Even rent here is ridiculous. I hope to hell that our landlord doesn't decide to increase it, because there are no homes here with reasonable rent. Even a studio apartment, 500 sq ft, is running for 1k. A studio! Apartments are in the 1600 to 2200 range.
I think the reason why the immigrants are finding homes is because they have like 3 families per home. They are kind of dirty that way.
28 Jul 2023 1:07 pm
If you run a restaurant, unemployment is too low.
28 Jul 2023 1:12 pm
say what?
28 Jul 2023 1:14 pm
This a tough time to be a renter. If you are renting from an individual, (not some sharp investor type), and you treat the property and the landlord well, they will want to keep you around. Good tenants are not always easy to find, so when you find one, you tend to treat them better by only conservatively adjusting their rent.Vegas » 28 Jul 2023, 1:07 pm » wrote: ↑ I am a renter. Even rent here is ridiculous. I hope to hell that our landlord doesn't decide to increase it, because there are no homes here with reasonable rent. Even a studio apartment, 500 sq ft, is running for 1k. A studio! Apartments are in the 1600 to 2200 range.
I think the reason why the immigrants are finding homes is because they have like 3 families per home. They are kind of dirty that way.
As for immigrants - the fact that they put 3 families into a **** house is good for you; bad for the landlord. Imagine for a moment that instead of Mexicans, the US had an influx of rich Swiss immigrants flooding across our border. In the 1990's a 1500sf single-family home in Switzerland cost over $1,000,000 US. If you think Californian migration is bad, NO ONE would be able to afford houses if the Swiss migrated to America en mass.
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