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Fed attacks inflation with its largest rate hike since 1994

29 Comments
By CHRISTOPHER RUGABER

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29 Comments
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What BOJ will do now, especially with weak yen?

https://www.reuters.com/markets/currencies/nearly-half-japan-firms-see-weak-yen-bad-business-survey-2022-06-14/

-4 ( +3 / -7 )

Well they would have more money if they weren't giving it away.

A debate to give $40 billion to Ukraine made the big news at the same time as this.

But quietly the Feds approved a monthly $1.5 Billion indefinitely to Ukraine and to finance it all they are borrowing the money (yes from China).

So this raise in interest rates is it because of inflation or is it really because the Government is borrowing so much money ( from China) at higher rates it must raise rates to compensate?

0 ( +8 / -8 )

Congratulations Biden. You’ve achieved a bear market. We’re embraced for the upcoming recession. Love your leadership. Without a doubt the greatest president ever.

-2 ( +10 / -12 )

MrN,the market is up today,you still can buy a lottery ticket for 1 dollar

-2 ( +4 / -6 )

Mr. NoidallToday  07:13 am JST

Congratulations Biden. You’ve achieved a bear market. We’re embraced for the upcoming recession. Love your leadership. Without a doubt the greatest president ever.

Biden is responsible for inflation in the UK, across Europe, throughout Asia and the world?

Haha.

-1 ( +8 / -9 )

About time.

2 ( +4 / -2 )

Well it sure isn’t Putin @Peter Neil.

Biden once said the buck stops with him, since then he hasn’t taken responsibility for any of his failed policies.

2 ( +8 / -6 )

Got a feeling the yen might even hit ¥150 to the dollar very soon.

-1 ( +6 / -7 )

Chickens coming home to roost. Should have stuck it up 100 basis points, and still wouldnt have been enough. Tech stocks, and US stocks need to return to the trend line. The post-2008 bubble is a joke. Biden has not helped this situation at all with his money printing, but no-one could have stopped the inevitable crash of the US fiat ponzi nightmare.

In the meantime, whats the current situation with money printing in Japan? Probably best not to think about that.

1 ( +4 / -3 )

Money printing under Biden? In 2020 alone , almost 20% of all $ in circulation ($3.38 trillion) was printed under the leadership of that guy.

-4 ( +2 / -6 )

My favorite American presidential candidate Ron Paul warned Americans about what is happening now with inflation many many years ago. He was right when he said we need to audit the Fed. There is a absolutely no reason for central banks. Central banks have enslaved us for far to long.

Trillions of dollars spent on other countries and endless unnecessary wars and conflicts. This isn’t about Republicans vs Democrats. Both parties have started wars and continued printing money when they knew it would eventually collapse the system.

4 ( +8 / -4 )

Cigars,how many stimulus checks did you cash

-7 ( +1 / -8 )

Sell your yen; today.

-7 ( +4 / -11 )

PN

Nope, but all the major central banks have been printing like crazy for decades now. Finally, after asset price inflation over those decades, we are seeing consumer price inflation around the world.

If the Fed thinks that this kind of puny rate rise will tame almost 9% (and still rising) inflation, they are in for a rude shock.

0 ( +3 / -3 )

all the major central banks have been printing like crazy for decades now. 

None more so than Japan. Which got deflation and then near zero inflation for many, many years. That changed only very recently -- after the global supply shocks of port shutdowns in China and the Ukraine war.

So, it's really clear what is responsible -- and it's not "printing."

-10 ( +0 / -10 )

Fed attacks inflation with its largest rate hike since 1994:

The Fed is intensifying its effort to tame high inflation by raising its key interest rate.

Could this be the correct way?

Chances are the Fed would continue using the same measure even it it fails soon.

The final collapse seems inevitable this time..

0 ( +2 / -2 )

@Yrral I donated it to charity. You probably spent it on shoes or a new video game.

0 ( +4 / -4 )

JL

The pandemic/supply chains/war excuses are partially valid inasmuch as they exacerbate specific price rises. But price rises across the board come from more currency being created (they are not actually price rises but falls in the value of currency). The fact that the central banks have been trying so hard to mitigate the consequences of their reckless policies has delayed the inevitable outcome. but it is coming. and when it does it is going to be muy painful

-2 ( +1 / -3 )

Biden once said the buck stops with him, since then he hasn’t taken responsibility for any of his failed policies.

unlike the last guy that just said I dont take any responsibility at all

https://www.youtube.com/watch?v=uM5KsiG0HjQ

https://www.youtube.com/watch?v=G0sbYp-J84g

1 ( +4 / -3 )

Money printing under Biden? In 2020 alone , almost 20% of all $ in circulation ($3.38 trillion) was printed under the leadership of that guy.

well Trump left us with a record 7.8 trillion deficit in 4yrs,

oh but gas was cheap in the middle of a worldwide lockdown.

-2 ( +3 / -5 )

WTF

This is not a Trump/Biden issue. It is a consequence of the Fed creating money to finance deficits. If the Fed didn't buy USTB's then the government would have to face the consequences of rising interest rates or an inability to sell its bonds.

All politicians love to run deficits - basically live beyond their means - because it buys votes in a democracy or buys power in an autocracy.

-2 ( +2 / -4 )

He was right when he said we need to audit the Fed. There is a absolutely no reason for central banks.

Right on the second part, so why bother with the first part.

Let’s not waste money “auditing” these central banks, let’s just abolish them.

-2 ( +2 / -4 )

Biden has sought to show he recognizes the pain that inflation is causing American households but has struggled to find policy actions that might make a real difference. The president has stressed his belief that the power to curb inflation rests mainly with the Fed.

It’s an amusing thing, that when the pandemic hit the prior administration decided to go against its natural instincts and spend lots of money to tide people over during the initial onslaught. (Debatable whether that was really a good idea, but that’s what they did.)

Now the situation is reversed, and the Biden administration really has to go its instincts and enact policies that boost the supply-side of the economy, and cut back on demand boosting spending. The economy doesn’t need more demand now, it needs more supply.

That would alleviate the heavy lifting that the Fed feels it has to do with monetary policy.

-2 ( +2 / -4 )

This global (not just US) inflation is being driven less by money supply issue and more by supply chain issues.

1 ( +1 / -0 )

What nobody talks about is the other side of the coin: Quantitative Tightening. This month, the Fed starts dropping 50 Billion of bonds per month from its balance sheets, ramping up to 95 Billion a few months later. By the end of the year, it plans to drop over 1.5 trillion.

It seems slow, but this coupled with rate rises will have a one-two-punch effect on all those artificially-inflated assets and money-losing "winners" still finding funding until recently. Low yield stocks in the bear market will have to compete with higher-yielding, less risky bonds. Good luck, all you recent suspicious SPACS and junk Pump-And-Dump companies!

We're at the end of the ride, folks, and look...a brand new ride is coming up! Buckle up, this is going to get a little bumpy...oh hey, look! S&P is down 2.75% as we type! lol.

0 ( +1 / -1 )

In most instances inflation is driven by too much money chasing too few goods. Raising interest rates tends to remove money from circulation and acts to reduce inflation. Pretty straightforward. But in our current situation, inflation is being driven by shortages, not too much money in circulation. I am not sure raising interest rates is going to work. I say this as an economist.

The pandemic created a huge change in buying habits in the developed world. With entertainment, sports and dining venues closed people substituted away from spending on entertainment to spending on goods. This trend was accelerated by the trend of people working from home and by distance learning. That sudden spike in buying of goods sort of stunned the whole world of manufacturing, transportation, logistics and warehousing. That was not a predictable change and thus industry was not prepared for it. Compounding this were the shutdown of most air travel that disrupted air cargo and port shutdowns that backed up cargo ships around the world. Add another layer for factory shut downs all around the world leading to shortages of goods and services world wide.

Then just as all of these disruptions were starting to smooth out and it looked like markets were going to settle down, a major war disrupts global energy and food markets. I am not sure cutting interest rates is going to solve shortages but there is pressure on governments to "do something".

0 ( +0 / -0 )

Gold is bouncing around 8000 yen per gram and will go higher-the metric of inflation.

0 ( +0 / -0 )

Gold is bouncing around 8000 yen per gram and will go higher-the metric of inflation.

And??? With prices rising and people struggling to pay necessary bills do you really think most people have money lying around to buy gold with? That's a game for rich tossers. What does it do for the average wage earner who lives paycheck to paycheck and has to borrow from time to time just to get by?

0 ( +0 / -0 )

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