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Fed hikes rates as inflation worries push up bond yields

184 points · 250 comments · wslh

  1. bwb · · focus · HN ↗
    Get ready for a fun ride my friends :)

    Fun ride =

    Oil is going up, possibly for a long time, which will have a big inflationary effect on everything. And it appears the USA government has lost the conflict it started and effectively given control over key oil delivery channels to Iran. Not to mention Saudia facing real issues from rebel groups / Yemen (simplification).

    Government debt is high in several key economies, and the bond market is being saturated with AI-related bonds, as well as possibly people finally tired of lending the USA/France/UK money at low rates and demanding higher ones. And with higher interest rates and bonds rolling over it means more and more money going to pay for the debt, rather than core services.

    Wild cards lurking in the bushes... AI, AGI, RSI.

    And yonder you have a nuclear power floundering; its only source of hard currency is being rightfully degraded, and its leadership delusional.

    And the one to watch IMO... Russian wheat export ability: wheat prices are up considerably, and combined with inflation from oil, this is the kind of stuff that creates waves of political change like the Arab Spring.

    1. leptons · · focus · HN ↗
      This comment isn't helpful. Please explain for those of us without a degree in economics.
      1. Edman274 · · focus · HN ↗
        Stagflation is when the economy stagnates yet inflation is higher than ideal. Inflation and economic activity are typically correlated, and the conventional wisdom back in the day was that you couldn't have unemployment going up and things costing more, because it was expected that demand going down puts a downward pressure on prices. When people aren't hiring and buying but things cost more and more, life just kind of sucks. The last time this happened was in the 1970s in the aftermath of a few oil embargoes that made oil prices go through the roof and a disastrously expensive failed war in Vietnam, there was gas rationing, it sucked.

        You may notice a few key similarities now with oil embargoes, reduced hiring, an extremely expensive war, and rapidly expanding government debt as a result of that war. If you want a qualitative feeling about people's moods in the 70s, you can watch such movies as:

        Taxi Driver The Deer Hunter The Warriors Americathon Network

        1. iamnothere · · focus · HN ↗
          I suggest A Boy And His Dog (based on a Harlan Ellison story)
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