Thread

Fed hikes rates as inflation worries push up bond yields

184 points · 250 comments · wslh

im_down_w_otp · 1789589401 · focus · HN ↗
It bugs me that the Fed has no mechanism to really deal with supply-shock driven inflation. Prices are shooting up, but not strongly correlated to money supply at the moment. They’re shooting up because there are a dozen or more entirely capricious and totally self-inflicted supply-shocks due to bizzaro tariff “policy”, disastrous military adventurism, and general erosion of the USD the prime vessel for international trade.
The Fed tightening the money supply isn’t going to materially bring prices down, because the money supply isn’t driving the price increases.
1. miltonlost · 1789589838 · focus · HN ↗
  Yeeep, inflation right now is not a monetary phenomenon. There's also general corporate greed and ever-increasing monopolization, helped out by Trump's lax regulatory hand
  Interest rates rising aren't going to fix these sources of inflation.
  1. JumpCrisscross · 1789590212 · focus · HN ↗
    > inflation right now is not a monetary phenomenon
    It usually isn't. That doesn't change that raising rates should slow down credit creation a bit. That reduces demand in a supply-constrained economy. It also reduces risk appetites, which helps in a perilous world. (Finally, it gives rate-cutting headroom for when someone levered blows up.)

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