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Can someone explain to me why the Fed continued to purchase massive amounts of mortgage backed securities and did not stop buying entirely until the middle of this month. Why did they feel it was necessary to "prop" up an already overheated housing market?
The same reason their “dot plot” pointed to .50 interest rate increases just 12 months ago.
Powell said said early this year they didn’t want to spook the market so stuck to the plan with rates and QT. Now they’re flying blind looking in the rear view mirror. Maybe they get away with it but perhaps Japan is right in that inflation pressures are not interest rate driven.
Well the corrupt banks the Fed board used to work for (and will work for again after leaving the Fed) got addicted to free money, and threw tantrums in the form of sell offs every time the Fed indicated they *might maybe think an itsy bitsy bit* about very slightly slowing that flow of money directly to the banks.Quote:
Originally Posted by bigdude2468
Hot girl explaining monetary policy:
Attachment 427592
https://twitter.com/ninaturner/statu...SF65kU2rsAmpbg
Later this year the US National Debt will surpass $31.536 Trillion.
At that time, at the rate of $1 per second, it would take 1 Million Years to repay the Debt.
ONE MILLION YEARS!
$1 sec
$60 min
$3600 hour
$86,400 day
$604,800 wk
$2,592,000 month
$31,536,000 year
$1 Million 11.57 days
$1 Billion 31.71 years
$1 Trillion - 31,709 years
$31,536,000,000,000 - 1 Million years
This is the result of US Monetary Policy and these numbers are just plain silly!
Does anyone believe this will end any other way than by default?
That’s fiscal policy - taxing and spending - which the Fed doesn’t control, but have to react to.Quote:
Originally Posted by powpig
rightQuote:
Originally Posted by J. Barron DeJong
but the point is boomers keep riding the debt train to death and who is paying for this in the end?
since taxes are evil and gov't spending is necessary we keep on keeping on
I absolutely love how all these high rollers are starting to cry about the interest rate hikes
since they are always playing with other peoples money and hedging their bets it suddenly got alittle harder to rape the rest of us
This tired old trope is nonsense just like it was when my old man would froth about it in the early 90's.Quote:
Originally Posted by powpig
Attachment 427620Quote:
Originally Posted by skaredshtles
https://www.marketwatch.com/amp/stor...sis-2018-05-14
Japan has not defaulted.
The real risk is to countries who don’t borrow in their own currency.
Only if the country dies or retires or becomes disabled.Quote:
Originally Posted by powpig
Nobel Prize for economics went to Bernanke, Diamond, and Dybvig for their work on banking and financial crises.
Some descriptions of their work:
https://marginalrevolution.com/margi...ond-and-dybvig
https://marginalrevolution.com/margi...d-dybvig-model
https://marginalrevolution.com/margi...f-ben-bernanke
Attachment 429439
Attachment 429990
Attachment 429991
https://twitter.com/jasonfurman/stat...PkuW7TbVFOmB5g
The housing component used in official core inflation data looks well back in time (like a year, apparently) so core - which is 40% housing - missed how drastically housing costs were increasing. But it’s about to start doing the opposite, perhaps leading the Fed to overtighten going forward.
https://www.cbc.ca/news/business/ban...sion-1.6629901
another rate hike in canada
Good overview of the inflation situation of the past two years, and going forward:
https://jabberwocking.com/its-time-t...-of-inflation/
Attachment 438335
“It's a little complicated. Sorry about that. But the orange line shows Jason Furman's revised measurement of core inflationusing actual rents instead of official BLS rent measurements that are six months out of date. What we now know is that rents skyrocketed in mid-2021 and core inflation was even higher than we thought. It hit 18% month-over-month in June of 2021!But don't look at that. Look at the trendline. It's just a simple least-squares regression, so it's not rocket science. But it does a good job of smoothing the monthly data, and we now have figures for nearly two years to look at. Here's what it shows us: the trendline for modified core inflation peaked in September 2021 and then started declining.
Team Transitory was right all along. When you look at a better measure of core inflation, it peaked higher than we thought and sooner than we thought. It's been declining pretty steadily for the past 15 months.”
(more at the link)
That’s so fucked up. Yea his trend line is going down!!
Admittedly good data to understand the trend.
But show me the curve of actual wages and actual consumer prices.
I know it will look insane.
The discussion is about monetary policy, and what the Fed is doing, etc.Quote:
Originally Posted by Core Shot
The point is that the Fed targets core CPI in setting interest rates to control inflation, but there are issues with the housing measurements in official core CPI (only measured twice a year, and looks at all rents, not just new) and so looking at this alternative core measurement which uses new monthly rent data collected by industry -may- provide a better real time estimate of where core CPI is.
Here’s headline and official core CPI from the release two days ago:
Attachment 438376
https://jabberwocking.com/inflation-...e-in-november/
(wages are in the first chart I posted)
Edit:
Here’s wages and headline CPI, indexed such that they both equal 100 at the start of 2020, so you can see the changes clearly.
Attachment 438379
In the 80's there was a year where almost 50% of tax revenues went to pay interest on the national debt. And yet... we survived.Quote:
Originally Posted by skaredshtles
The US gov will engage in financial repression well before they default. Also we could just open the gates to some more young hard working taxpayers.... but o well.
Interest payments as % of revenue peaked at 19.2% in 1985.
‘Inflation’ to the average person seems to be whatever the price of gas is doing. FWIW, it’s now lower than it was before RU invaded UKR:
Attachment 438404
I like that last graph. It shows the fed is doing a good job.Quote:
Originally Posted by J. Barron DeJong
Or. It also shows that desperate employers are giving raises to keep up with the inflation.
Or both.
But sadly. I don’t buy the official CPI.
“Substitution” is bullshit.
By substitution, you mean chained CPI, where if, say, the price of beef goes up but chicken doesn’t, then consumers will cut down on beef and buy more chicken, thus partially negating the increased price of beef?Quote:
Originally Posted by Core Shot
Edit:
Here’s chained vs non-chained measurement. Not a huge difference since 2020:
Attachment 438410
The previous chart showing wages vs inflation was using the non-chained CPI.
Monetary policy does play a role in the National Debt. Debt hawks can relax though.
The below is pre-inflation getting above target, but still helpful in helping understand that national debt is not like household debt.
https://www.stlouisfed.org/publicati...al-debt-matter
Inflation bites, but high unemployment and deflation suck worse, so let’s not all go calling for full austerity measures and get an over correction here voters.
A good easy read:
https://hls.harvard.edu/today/the-pa...o-a-recession/
50% of Americans making over 100k per yr are living paycheck to paycheck. Thats just fucking great. I hate everyone.
^^^ That is by choice. How many of that 50% have overspent themselves into living paycheck to paycheck?
https://www.businessinsider.com/amer...aycheck-2023-1Quote:
In June 2022, over a third of high-income consumers making over $250,000 were also living paycheck to paycheck.
I agree thats why I hate everyone. Except you. You are the best
Awww shucks.
It probably a different thread but i never made 100K and the only time i ever lived paycheck to paycheck were the times i was marriedQuote:
Originally Posted by byates1
I was just reading where 20% of the people with mortgages in Canada will not be able to afford them reason being most mortgages are amortised over25yrs but on of a 1/ 2/ 3/ 5yr or variable period so with the rise in interest to combat inflation a whole bunch of people are going to have to renew at rates they can't afford
of course the low interest rates were going to go on forever so people buy the biggest house they can afford at lowest rates and now some of the will have to sell in a falling market
I pay attention to lots of little things out there
I play an idiot on tv
Here is my hot take, my business is starting to go downhill. For the first time in 12 years I'm slightly concerned. On one hand I could actually care less, on the other hand riding the gravy train is so nice. Customers are still beating down the door wanting projects completed. The issue is now cost, prices have spiraled out of control in the construction industry, lack of productivity, wage demands, cost of materials, and the complexity of projects these days have contributed to these cost increases. Once people are provided an estimate they balk. The lack of cheap free money that has been holding our country hostage for so long is drying up.
A fellow contractor who is at least 20 years older than me pulled up his costs for a "custom" home built in summit county in the early/mid nineties. He is now remodeling this home. The cost of construction was $280 sq ft. Today $600 sq ft is the starting base cost. For a fully custom pimp home, those costs are around 900 - 1200 sq ft.
Due to poor monetary policy to help support growth as well as the boomers comfort and quality of life as they die off has created many of these issues. As well as the obscene shut down and handing out of trillions of dollars of non existent government money due to covid.
People who have recently purchased cars with sub 700 credit score are now starting to default, housing costs have escalated, the cost of food is crazy. And for some reason we are allowing two of the largest grocery chains to merge to create an almost absolute monopoly/price fixing of the food supply in this country. Corporate profits have maintained to some degree even as inflation soars. Most of this makes no sense for the average American.
My point is, it is going to be a slow crumble down hill mostly due to inflation/resulting stagflation. This stagflation could last ten years as we pick up the pieces and fight the man over the need to constantly prop up wall street, failed hedge funds, and investment banks. The greatest failure was the deregulation of the insurance, investment, and banking industry. Corporate bail outs as needed by the end of 2023 with government money that doesn't exist. Absolutely no over haul of the deficit, current healthcare system, welfare system (which needs expanding, thankfully the republicans have backed off on cutting social security/medicare due to most of their constituents relying on these "hand outs"), and corporate monopolies that have been allowed to flourish.
As long as people are addicted to facebook ticktok and every other bullshit social media out there, the idea that anyone is going to lift their head away from their phone, truly educate themselves on fiscal policy, we are doomed. The revolution will never take place because we are satiated by this false sense of being created by the internet.
^ what he said...
“TikTok is the opiate of the masses” -Marx
Heavy physical work, the care of home and children, petty quarrels with neighbours, films, football, beer, and above all, gambling, filled up the horizon of their minds. To keep them in control was not difficult.Quote:
Originally Posted by fastfred
It was not desirable that the proles should have strong political feelings. All that was required of them was a primitive patriotism which could be appealed to whenever it was necessary to make them accept longer working-hours or shorter rations. And even when they became discontented, as they sometimes did, their discontent led nowhere, because being without general ideas, they could only focus it on petty specific grievances. The larger evils invariably escaped their notice.
They don’t have fixed rate mortgages in Canada?Quote:
Originally Posted by XXX-er
Sent from my iPhone using TGR Forums
No. Or at least not as an American would recognize.Quote:
Originally Posted by MagnificentUnicorn
30-year fixed rate mortgages in the US exist due to government backing.
In Canada a fixed rate mortgage is only fixed for a short period of time (a few years) not for the whole amortization period. At the end of that period the rate re-adjusts to current rates.
Not sure if there is anywhere else in the world doing what US does, where you can lock in rates for 30 years, and also refinance without penalty if rates go down.
https://www.cbc.ca/news/canada/londo...mare-1.6750229Quote:
Originally Posted by J. Barron DeJong
Gotta get in that market ^^ a FOMO story that is playing out all over Canada ^^ a nice couple is paying almost double the mortgage rate they signed for 1 years ago and the house is worht 150K less
So fully 20 % of canadians with mortgages are on track to not be able to pay them, So the housing market is tanking
Gotcha. I’ve never used a variable rate mortgage. Just 15 year fixed rate.Quote:
Originally Posted by J. Barron DeJong
Sent from my iPhone using TGR Forums
Yeah, that’s why your bank (usually) doesn’t keep the mortgage. Nobody wants a fixed rate 30 year asset on their books. The interest rate risk is too high and will put your balance sheet under water.