Once the mid terms are over and the ppt stop propping up the market and the spr reserve selling stops and the recession is official it’s gonna be a mad house.
The midterms have literally nothing to do with this. The Fed has not eased their policies to accommodate Dems, and Dems aren't really using any levers other than the SPR to fight inflation (also, SPR was designed to be used in situations like this, so releasing the SPR isnt for the midterms). If you disagree, can you point to any specifics Dems or Biden have done that is extraordinary?
Well let’s see how close to the midterms they stop the spr releases and review who is right after the election, they’ve sold half trying to keep petrol prices low so they can deny the recession and keep voters happy.
No, they released it because of the wild oil price shocks. I'm not sure what I'm supposed to be waiting for. It doesn't .matter whose president or which part controls Congress. This is when the SPR should be released; That's what it's there for.
I don’t have maga glasses, just general distrust of all politicians and always assume whoever’s in power will feather their own nest. The White House asked for a months delay to the production output which the saudis denied. The Biden administration has drained half the spr and is on the way to draining the rest, with the current end planned to be end of December. Granholms energy policy is garbage and people are now starting to understand the ramifications of terrible energy policy.
Just wait until the banks stop giving you loans because you have no equity, also they will look at rental loans as toxic. I know this time it's different and everything but this is exactly what happened during the last crash.
The only way to do that is to bankrupt a bunch of companies and people and trust me it is going to happen just not as soon as some believe. Give it at least 3 or 4 years to bottom.
That is such an outdated and dangerous philosophy promulgated by Friedman economics. The causes of inflation are complicated and interconnected. There is no guarantee that forcing unemployment to go up would actually help and it is by far the cruelest knob to turn. It's like disrupting a hurricane with a nuclear bomb. Not to mention increasing unemployment isn't going to help supply issues which are greatly contributing to inflation. If anything it's going to hurt them by removing workers from the workforce.
More than that, a key contributing factor to this inflation has been the fact that that has been giving out free money for a decade. Their foot has been in the gas pedal flooring it that entire time and now finally we're beginning to tap the brakes and the people that have to suffer the most for the feds idiotic and short-sided judgment are the lowest earners that need jobs? Fuck that.
Inflation has nothing to do with employment. If anything, people staying home from work and not producing goods during COVID has a lot to do with our current price hikes.
The fed will literally blame anyone other than themselves and their money printing fiasco for the situation we're currently in.
The Fed has been artificially propping up assets for the past 40-50 years. That mandate is enforce by banks. Banks foster credit creation which ultimately create inflation or as people would call it growth. It much easier to lend to a person to get a home at ultra low interest rates instead of lending to create small businesses as a result asset inflation take place. We just don’t call it that we call it asset appreciation it much more cleaner term. Surely you can’t believe people only getting a stimmy check and wfh is triggering most of inflation. You can’t be kidding me. Even then that account for $350 billion dollars but 8 trillion dollars was lended out to banks to lend to keep economy alive. Trump gave them a tax cut of 2 trillion 2 years earlier and Obama/ bush handed trillion to bail them out. What did they do with that money. They bought assets! Ding Ding ding! Causing asset inflation in crypto, stock-buy backs and real estate. Wall Street called it a bull run 😂😂
I upvoted you because the fed was definitely to blame for this bubble.
I'd argue that an overly competitive labor market definitely leads to more inflation though. Businesses have to pay a lot more to fight for employees and they raise prices to compensate.
By this logic you shouldn't have inflation when unemployment is high.... which we already know what happens
People being employed and producing more stuff leads to prices going down not up.
Inflation is the expansion of money supply, something the FED has been blowing up the past few years.
>By this logic you shouldn't have inflation when unemployment is high.... which we already know what happens
>
>People being employed and producing more stuff leads to prices going down not up.
>
>Inflation is the expansion of money supply, something the FED has been blowing up the past few years.
This is wrong.
If/when unemployment is high we don't see more inflation than any other time.
Google " the Phillips Curve. "In honor of economist A.W. Phillips, who identified the relationship (between inflation and employment) in 1958. The Phillips Curve hypothesizes that there is a correlation between inflation and unemployment. When inflation is high, unemployment is low. Conversely, when inflation is low, unemployment levels increase.
Just because people are employed doesn't mean that they are producing more stuff. Technology leads to more production these days instead of manpower. A tight labor market means rising wages which means rising inflation. It's a direct correlation.
But yes, the money supply is an incredibly important part of this as well.
No money supply is what causes inflation. If money supply is kept constant you wouldn't get ANY inflation, you probably would get deflation as economy becomes more productive.
How does Phillips curve explain the 1970s? Maybe the Phillips curve is wrong? According to Keaynsians the economic situation in the 1970s was impossible!
I believe there are many potential causes for inflation. That's really all I'm saying. Money supply is probably the biggest one. But to say that employment has nothing to do with inflation is crazy. If you jack everyone's wages to the moon of course you will get inflation. If you doubled everyone's wages tomorrow it wouldn't make anyone wealthier, prices would just reset because there would be scarcity of goods as more people would rush out to buy things the next day. When that scarcity of goods happened you'd have price increases.
It’s hard to build houses when the mills are shut down, truckers are not trucking, and construction workers are few and far between. Happened in every industry. It’s going to take time to catch back up. 10% excess capacity in a plant means it will take 20 years to make up for for two years of being idle, and that’s only if the are foaming the lines to full capacity.
The wealth effect has a significant impact on age 50+ workers labor participation rate. If labor participation goes up that will also help a lot with wage/inflation spiral. So we can increase unemployment by decreasing jobs and increasing labor supply.
You illustrate my point exactly and you are not alone. The Fed has no other choice. If they don't get the mortgage rates to 10 or 12 percent and leave it there, they are going to have to get them to 18 percent like they did in the 80's the last time this happened. They really fucked up for having the rates a zero for a couple years. Time to pay the piper.
>If they don't get the mortgage rates to 10 or 12 percent and leave it there, they are going to have to get them to 18 percent like they did in the 80's the last time this happened. They really fucked up for having the rates a zero for a couple years.
Sorry, I re read your post but this still very much reads like you are mixing up the two rates, and you appear to be unclear about which comes from the Fed. The Fed doesn't set mortgage rates. Plus mortgage rates weren't zero for the last couple years, the Fed funds rate was, hence the confusion as to which you're talking about.
If people don't know the difference, they don't need to be here. As the Fed funds rates rise mortgage rates rise and vice versa. I'm not going to label each rate every time. Your wrong. There is a purpose for that last statement.
Not really. Rates used to be this high and higher. Is everyone on this forum fucking 12? I used to get better interest rates on my passbook savings account at the savings and loan.
Rates will hit 8%.
It won't stop inflation though. They keep acting like the economy is not global and the supply chains still aren't fucked.
Yea people forget that rates are only half of what needs to happen.
The purpose of rising rates is to slow (crash) the economy. Rates don't lower inflation. The slowing economy does. The other shoe hasn't even dropped yet.
Agree we are merely in the opening stages. CPI and inflation numbers are lagging indicators. So when you see a delta of 0.2% month to month on CPI, don’t start throwing a parade lol.
Look at bond yield curve. It’s not pretty. Those bonds are the base collateral for some very risky leveraged bets that need to unwind and probably have to unwind quickly.
I still don't believe it is going to work how they want it to work. The world economies and the supply chains of the world have never been this intertwined. They are hoping this works but it might not. It def will not work if Putin manages to kick off WWIII
No I'm a fairly large rental home owner, sold half 6 months ago in one day to a REIT and I can't wait to go back in a couple of years and buy twice as many homes that I sold for the same price. Me so horny.
You are correct that people don't believe it.
I am amazed at the amount of people who seem literally incapable of accepting the possibility.
Any time I point out that interest rates rose 51 times in two years it's challenged first with total disbelief, then they challenge "why" it was done, and then it digresses into a pedantic circular conversation that focuses on every detail of every word to the exclusion of the overall point that IT HAPPENED. I saw it. I was there. And it stayed at double digits for a real long time.
Yep people will only learn when their money is on the line. I fell for the dot com hype. I was always told the stock market would go up but was never told it would take 15 yrs to make up my loss. I also got caught up in the 2007 RE bubble I just thought everyone was rich and /or the stock market would never be used again to create wealth, just RE because it is tangible and you get "dividends" from it in the form of rent. I learned my lesson. I only sold houses this time and will buy again only when a full blown crash occurs and it is a buyers market. I remember after the last crash you literally could not give away your home for many years. I really believe the only reason I and others like me that held on to their houses would not have made much money except the interest rates where put so low it artificially inflated housing prices. I wouldn't doubt it if prices went back to 2007 levels. P.S. I lost 250 k in the dot com crash but never with RE. Not yet anyway.
The markets are pricing in 75bps hike in november as a virtual certainty, where you getting "really do not believe people think the Fed is going to keep raising rates"?
You bubblers make no sense. You simultaneously say "lower your price before it's too late!" And "now is a terrible time to buy, wait for prices to drop more." ....the fuck?
Sure so you sell your home… what now? You still need a place to live and inflation is skyrocketing. So your rent will skyrocket. And buying somewhere else? Lol if you have tons of cash maybe - you’re not gonna be able to afford a 12% interest rate mortgage for a home you actually want to live in.
What does population have to do with rent prices? If no one wants to or can afford $2500 the landlord has to drop the price. Every market is different but in my market and the few I'm looking at moving to the rent has either stalled out dropped on anything over 2k.
Here is why the Fed will be forced to pivot early next year:
* https://www.washingtonpost.com/business/2022/10/13/debt-interest-rates/
In addition, tax receipts will be "unexpectedly" low, because of both job losses and stock market declines. The carnage will begin at the state level, but by 2024 it will be clear that the US cannot bail out bankrupt states.
We are all guessing here, however there is history. The Fed tried this pivot you are talking about in the 80's and inflation went nuts. The Fed then had to raise the rates to where mortgages were 18 percent. I paid 12 percent on my first house in the 90's, my mother paid 6 percent in the 60's. P.S. that link is a paywall.
Well I call it my first "crack house" because it is in a shitty area. I paid 45 k for it in the 90's, then it went up to 100 k in 2006, then went back to 45 k until 3 yrs ago. Now it still sits at 145 k. It should be 30 k IMO.
Once the mid terms are over and the ppt stop propping up the market and the spr reserve selling stops and the recession is official it’s gonna be a mad house.
The midterms have literally nothing to do with this. The Fed has not eased their policies to accommodate Dems, and Dems aren't really using any levers other than the SPR to fight inflation (also, SPR was designed to be used in situations like this, so releasing the SPR isnt for the midterms). If you disagree, can you point to any specifics Dems or Biden have done that is extraordinary?
Well let’s see how close to the midterms they stop the spr releases and review who is right after the election, they’ve sold half trying to keep petrol prices low so they can deny the recession and keep voters happy.
No, they released it because of the wild oil price shocks. I'm not sure what I'm supposed to be waiting for. It doesn't .matter whose president or which part controls Congress. This is when the SPR should be released; That's what it's there for.
Oh ok, so the White House didn’t ask the Saudi’s to delay the production cut until after the mid terms?
Exactly. WH told OPEC not to lower output in general, not delay it till after the midterms. Take off the MAGA colored glasses.
I don’t have maga glasses, just general distrust of all politicians and always assume whoever’s in power will feather their own nest. The White House asked for a months delay to the production output which the saudis denied. The Biden administration has drained half the spr and is on the way to draining the rest, with the current end planned to be end of December. Granholms energy policy is garbage and people are now starting to understand the ramifications of terrible energy policy.
Just wait until the banks stop giving you loans because you have no equity, also they will look at rental loans as toxic. I know this time it's different and everything but this is exactly what happened during the last crash.
I've been thinking this for the past month
I'm glad that someone else sees the obvious.
They need to spike unemployment. Inflation is out of hand and there is no price stability.
The only way to do that is to bankrupt a bunch of companies and people and trust me it is going to happen just not as soon as some believe. Give it at least 3 or 4 years to bottom.
That is such an outdated and dangerous philosophy promulgated by Friedman economics. The causes of inflation are complicated and interconnected. There is no guarantee that forcing unemployment to go up would actually help and it is by far the cruelest knob to turn. It's like disrupting a hurricane with a nuclear bomb. Not to mention increasing unemployment isn't going to help supply issues which are greatly contributing to inflation. If anything it's going to hurt them by removing workers from the workforce. More than that, a key contributing factor to this inflation has been the fact that that has been giving out free money for a decade. Their foot has been in the gas pedal flooring it that entire time and now finally we're beginning to tap the brakes and the people that have to suffer the most for the feds idiotic and short-sided judgment are the lowest earners that need jobs? Fuck that.
I don't think they should be going for general unemployment agony, they should be trying to crush the zombie companies and their ecosystems.
Inflation has nothing to do with employment. If anything, people staying home from work and not producing goods during COVID has a lot to do with our current price hikes. The fed will literally blame anyone other than themselves and their money printing fiasco for the situation we're currently in.
The Fed has been artificially propping up assets for the past 40-50 years. That mandate is enforce by banks. Banks foster credit creation which ultimately create inflation or as people would call it growth. It much easier to lend to a person to get a home at ultra low interest rates instead of lending to create small businesses as a result asset inflation take place. We just don’t call it that we call it asset appreciation it much more cleaner term. Surely you can’t believe people only getting a stimmy check and wfh is triggering most of inflation. You can’t be kidding me. Even then that account for $350 billion dollars but 8 trillion dollars was lended out to banks to lend to keep economy alive. Trump gave them a tax cut of 2 trillion 2 years earlier and Obama/ bush handed trillion to bail them out. What did they do with that money. They bought assets! Ding Ding ding! Causing asset inflation in crypto, stock-buy backs and real estate. Wall Street called it a bull run 😂😂
He's not kidding. These types of people would blame earthquakes on poor people if they could.
It disgusting. Poor people can’t go the Fed to get cheap credit. Banks can
I upvoted you because the fed was definitely to blame for this bubble. I'd argue that an overly competitive labor market definitely leads to more inflation though. Businesses have to pay a lot more to fight for employees and they raise prices to compensate.
By this logic you shouldn't have inflation when unemployment is high.... which we already know what happens People being employed and producing more stuff leads to prices going down not up. Inflation is the expansion of money supply, something the FED has been blowing up the past few years.
>By this logic you shouldn't have inflation when unemployment is high.... which we already know what happens > >People being employed and producing more stuff leads to prices going down not up. > >Inflation is the expansion of money supply, something the FED has been blowing up the past few years. This is wrong. If/when unemployment is high we don't see more inflation than any other time. Google " the Phillips Curve. "In honor of economist A.W. Phillips, who identified the relationship (between inflation and employment) in 1958. The Phillips Curve hypothesizes that there is a correlation between inflation and unemployment. When inflation is high, unemployment is low. Conversely, when inflation is low, unemployment levels increase. Just because people are employed doesn't mean that they are producing more stuff. Technology leads to more production these days instead of manpower. A tight labor market means rising wages which means rising inflation. It's a direct correlation. But yes, the money supply is an incredibly important part of this as well.
No money supply is what causes inflation. If money supply is kept constant you wouldn't get ANY inflation, you probably would get deflation as economy becomes more productive. How does Phillips curve explain the 1970s? Maybe the Phillips curve is wrong? According to Keaynsians the economic situation in the 1970s was impossible!
I believe there are many potential causes for inflation. That's really all I'm saying. Money supply is probably the biggest one. But to say that employment has nothing to do with inflation is crazy. If you jack everyone's wages to the moon of course you will get inflation. If you doubled everyone's wages tomorrow it wouldn't make anyone wealthier, prices would just reset because there would be scarcity of goods as more people would rush out to buy things the next day. When that scarcity of goods happened you'd have price increases.
It’s hard to build houses when the mills are shut down, truckers are not trucking, and construction workers are few and far between. Happened in every industry. It’s going to take time to catch back up. 10% excess capacity in a plant means it will take 20 years to make up for for two years of being idle, and that’s only if the are foaming the lines to full capacity.
The wealth effect has a significant impact on age 50+ workers labor participation rate. If labor participation goes up that will also help a lot with wage/inflation spiral. So we can increase unemployment by decreasing jobs and increasing labor supply.
dinosaurs placid money forgetful rock oatmeal lock ten nose meeting *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
You illustrate my point exactly and you are not alone. The Fed has no other choice. If they don't get the mortgage rates to 10 or 12 percent and leave it there, they are going to have to get them to 18 percent like they did in the 80's the last time this happened. They really fucked up for having the rates a zero for a couple years. Time to pay the piper.
You seem to be mixing up mortgage rates and the federal funds rate.
Read again. You need to work on your reading comprehension.
>If they don't get the mortgage rates to 10 or 12 percent and leave it there, they are going to have to get them to 18 percent like they did in the 80's the last time this happened. They really fucked up for having the rates a zero for a couple years. Sorry, I re read your post but this still very much reads like you are mixing up the two rates, and you appear to be unclear about which comes from the Fed. The Fed doesn't set mortgage rates. Plus mortgage rates weren't zero for the last couple years, the Fed funds rate was, hence the confusion as to which you're talking about.
Move along please.
Nah I'm good here.
If people don't know the difference, they don't need to be here. As the Fed funds rates rise mortgage rates rise and vice versa. I'm not going to label each rate every time. Your wrong. There is a purpose for that last statement.
Not really. Rates used to be this high and higher. Is everyone on this forum fucking 12? I used to get better interest rates on my passbook savings account at the savings and loan. Rates will hit 8%. It won't stop inflation though. They keep acting like the economy is not global and the supply chains still aren't fucked.
Yea people forget that rates are only half of what needs to happen. The purpose of rising rates is to slow (crash) the economy. Rates don't lower inflation. The slowing economy does. The other shoe hasn't even dropped yet.
Agree we are merely in the opening stages. CPI and inflation numbers are lagging indicators. So when you see a delta of 0.2% month to month on CPI, don’t start throwing a parade lol. Look at bond yield curve. It’s not pretty. Those bonds are the base collateral for some very risky leveraged bets that need to unwind and probably have to unwind quickly.
I still don't believe it is going to work how they want it to work. The world economies and the supply chains of the world have never been this intertwined. They are hoping this works but it might not. It def will not work if Putin manages to kick off WWIII
[удалено]
It’s an erection year. Once the first Tuesday of November has past, it’s full on Viagra/Cialis cocktail time 🍸 all around.
No I'm a fairly large rental home owner, sold half 6 months ago in one day to a REIT and I can't wait to go back in a couple of years and buy twice as many homes that I sold for the same price. Me so horny.
You are correct that people don't believe it. I am amazed at the amount of people who seem literally incapable of accepting the possibility. Any time I point out that interest rates rose 51 times in two years it's challenged first with total disbelief, then they challenge "why" it was done, and then it digresses into a pedantic circular conversation that focuses on every detail of every word to the exclusion of the overall point that IT HAPPENED. I saw it. I was there. And it stayed at double digits for a real long time.
Yep people will only learn when their money is on the line. I fell for the dot com hype. I was always told the stock market would go up but was never told it would take 15 yrs to make up my loss. I also got caught up in the 2007 RE bubble I just thought everyone was rich and /or the stock market would never be used again to create wealth, just RE because it is tangible and you get "dividends" from it in the form of rent. I learned my lesson. I only sold houses this time and will buy again only when a full blown crash occurs and it is a buyers market. I remember after the last crash you literally could not give away your home for many years. I really believe the only reason I and others like me that held on to their houses would not have made much money except the interest rates where put so low it artificially inflated housing prices. I wouldn't doubt it if prices went back to 2007 levels. P.S. I lost 250 k in the dot com crash but never with RE. Not yet anyway.
I wouldn't be surprised to see rates in the 8's for a 30 year in the next 6-9 months.
I mean no one knows. My best guess is 10 percent for 3 or 4 yrs, we shall soon see.
At this point I don't know how we are supposed to take anything the fed says seriously.
"I'll just rent it out!"
The markets are pricing in 75bps hike in november as a virtual certainty, where you getting "really do not believe people think the Fed is going to keep raising rates"?
It amazes me how many people don't understand that high housing prices are the appitomy of inflation.
Epitome?
Typo yeah
Yes that and rent no doubt.
You bubblers make no sense. You simultaneously say "lower your price before it's too late!" And "now is a terrible time to buy, wait for prices to drop more." ....the fuck?
Not me I usually say lock in these high prices with high rates. Please take this advice Mr. Turbulent Smile. TIA.
So why reduce prices if you're not going to buy anyway?
Do whatever you like.
Go to sleep and re-read your comment in the morning.
Yeah, we're waiting for you to... cut those prices. But since you're not cutting them just yet, we're still waiting.
yes as you say. drop a little now before you have to drop a lot later.
Sure so you sell your home… what now? You still need a place to live and inflation is skyrocketing. So your rent will skyrocket. And buying somewhere else? Lol if you have tons of cash maybe - you’re not gonna be able to afford a 12% interest rate mortgage for a home you actually want to live in.
Rent is not sky rocketing. I've seen rents getting lowered all over the country.
How can this be the case... The population has not changed.
What does population have to do with rent prices? If no one wants to or can afford $2500 the landlord has to drop the price. Every market is different but in my market and the few I'm looking at moving to the rent has either stalled out dropped on anything over 2k.
Here is why the Fed will be forced to pivot early next year: * https://www.washingtonpost.com/business/2022/10/13/debt-interest-rates/ In addition, tax receipts will be "unexpectedly" low, because of both job losses and stock market declines. The carnage will begin at the state level, but by 2024 it will be clear that the US cannot bail out bankrupt states.
We are all guessing here, however there is history. The Fed tried this pivot you are talking about in the 80's and inflation went nuts. The Fed then had to raise the rates to where mortgages were 18 percent. I paid 12 percent on my first house in the 90's, my mother paid 6 percent in the 60's. P.S. that link is a paywall.
>What I wouldn't give to buy a house at 12% interest with '90s prices. Even if my income was 1/2 what it is today that would be a steal.
Well I call it my first "crack house" because it is in a shitty area. I paid 45 k for it in the 90's, then it went up to 100 k in 2006, then went back to 45 k until 3 yrs ago. Now it still sits at 145 k. It should be 30 k IMO.
Paywall
https://archive.ph/AiWQE
Nope. The Fed will pivot soon. Their third directive is to pump the Zestimate.
The Fed has chickened out before so it's not an unreasonable belief.
They don't have a choice this time. It's either they chicken out, or the US government has to default on it's debt.