> "Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings, my friend."
Could you point to some evidence that we are not? Or at least an anecdote or an opinion on what the issue is or anything at all of substance rather than a provocative question and a bit of snark? What am I supposed to take away from this- I don't even know whether 'we' refers to the consumer or participants in the labor market
Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
I'm not sure about the 99%, but I think we've established in the last few years that the economy can keep humming along quite nicely in the short term with only 10% of the population increasing their spending significantly in real terms. I doubt it would work with 0.1%. 1% might be enough.
> Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
50% of consumer spending is by the top 10%, and that trend is getting more extreme as wealth concentrates further. Is there a breaking point? Sure. But capital is willing to see how far it can push this before it breaks.
Well, actually they have a new model. I call it the "Apple" model. Low volume sales on high value items where you can charge more.
Even NVidia has moved to this model: make your money from selling high-end GPUs for Data Centers and forget the low-profit margin (GeForce) GPUs for gamers/consumers.
The whole economy is moving to that model for many things.
It was a bit of a surprise they didn't already do it. Most people expect rates to go up at the next FOMC. Inflation is moving up, mostly due to the Iran War related oil crisis.
Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system?
I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but for theirs.
> Would not lower rates mean more consumer spending
> the feeling that the federal reserve is here for the wealthy
In a sense, the disconnect between these two things is also the explanation. The behavior of consumers is not directly coupled to the fed rate. What you or I do with our money won't change if the rate goes up or down a percent, because we just don't have enough money for it to make a difference to our daily life.
But it often takes a loan to start a business. And when the bank is considering who to make loans to, higher fed rates mean they need to charge more interest, which means riskier business proposals don't get funded. Conversely, if the fed rate is low, then the only way for banks to make money is by making loans, so there's more money available, which tends to both increase inflation and decrease unemployment.
The fed has two jobs (keep inflation at ~2%, and unemployment no higher than 5%) and one lever to accomplish both. It's not so much that they only care about the wealthy, but rather that their only tool needs to percolate through the wealthy before it affects us.
> I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but for theirs.
Because that is what's happening. Our economy is fractured after years of catering to the wealthy at the expense of the working class (anyone who finances their life via their labor.)
You're making a lot of strong assertions for someone who acknowledges they don't understand pretty basic concepts in macroeconomics.
> Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system?
If managing the economics of a country was as simple as recognizing a relationship like, "when we move this number up, then things get better," then we'd be living in a utopia.
If you want to assert that the Fed isn't helping the average citizen, then go ahead and join the large group of people who have been suggesting this the whole time. But if your basis for such an assertion is that you can't comprehend why a decision like raising or lowering interest rates isn't simple, then do yourself a favor and just step away from even trying to understand what is happening here.
Yen carry trade unwind, inflation in Japan, hit to the NASDAQ, AI bubble pops, Japanese investors pull money back home and Treasuries lose its largest foreign creditor. Who knows what happens next.
The problem for mortgages is that the headline rate (30 year fixed) was historically low for almost the entire period 2009-2020, as the economy slowly struggled out of the Great Recession and then the rates went absurdly low during the Covid recession. That meant that a lot of people locked in mortgage rates that are impossibly low (including me) and going back to more "normal" rates- the current rates are a little lower than what was available in the period 1993-2008- feels high to people. And so many people locked in those low rates (either purchase or re-fi), can't get those low rates on a new house, and so feel locked into their current home, which is serving as an anchor on the entire real estate market.
> Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there.
Are we though?
Thank god corporate profits are ok...
> "Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings, my friend."
- US Presidential candidate, Mitt Romney, 2011
It's strange how they agree with that statement until it comes time for legal culpability or personal responsibility of any kind.
Could you point to some evidence that we are not? Or at least an anecdote or an opinion on what the issue is or anything at all of substance rather than a provocative question and a bit of snark? What am I supposed to take away from this- I don't even know whether 'we' refers to the consumer or participants in the labor market
Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
Not this quarter, and this quarter matters for bonuses! What happens with the next quarter is a "then-problem".
Same for politicians, 4/5 years matter, if the world collapses after, it's the next governments problem.
And in financial terms, those are really long periods, at least compared to HFT.
I'm not sure about the 99%, but I think we've established in the last few years that the economy can keep humming along quite nicely in the short term with only 10% of the population increasing their spending significantly in real terms. I doubt it would work with 0.1%. 1% might be enough.
> Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
50% of consumer spending is by the top 10%, and that trend is getting more extreme as wealth concentrates further. Is there a breaking point? Sure. But capital is willing to see how far it can push this before it breaks.
Well, actually they have a new model. I call it the "Apple" model. Low volume sales on high value items where you can charge more.
Even NVidia has moved to this model: make your money from selling high-end GPUs for Data Centers and forget the low-profit margin (GeForce) GPUs for gamers/consumers.
The whole economy is moving to that model for many things.
Auto sales, airline ticket prices (notice the expansion of 1st, business, and comfort class seats), etc.
It was a bit of a surprise they didn't already do it. Most people expect rates to go up at the next FOMC. Inflation is moving up, mostly due to the Iran War related oil crisis.
Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system?
I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but for theirs.
> Would not lower rates mean more consumer spending
> the feeling that the federal reserve is here for the wealthy
In a sense, the disconnect between these two things is also the explanation. The behavior of consumers is not directly coupled to the fed rate. What you or I do with our money won't change if the rate goes up or down a percent, because we just don't have enough money for it to make a difference to our daily life.
But it often takes a loan to start a business. And when the bank is considering who to make loans to, higher fed rates mean they need to charge more interest, which means riskier business proposals don't get funded. Conversely, if the fed rate is low, then the only way for banks to make money is by making loans, so there's more money available, which tends to both increase inflation and decrease unemployment.
The fed has two jobs (keep inflation at ~2%, and unemployment no higher than 5%) and one lever to accomplish both. It's not so much that they only care about the wealthy, but rather that their only tool needs to percolate through the wealthy before it affects us.
> I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but for theirs.
Because that is what's happening. Our economy is fractured after years of catering to the wealthy at the expense of the working class (anyone who finances their life via their labor.)
Inflation is bad, we have high inflation due to the energy crisis, the treatment for high inflation is increasing interest rates.
> Rates up, rates down, I'm so confused.
You're making a lot of strong assertions for someone who acknowledges they don't understand pretty basic concepts in macroeconomics.
> Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system?
If managing the economics of a country was as simple as recognizing a relationship like, "when we move this number up, then things get better," then we'd be living in a utopia.
If you want to assert that the Fed isn't helping the average citizen, then go ahead and join the large group of people who have been suggesting this the whole time. But if your basis for such an assertion is that you can't comprehend why a decision like raising or lowering interest rates isn't simple, then do yourself a favor and just step away from even trying to understand what is happening here.
Yen carry trade unwind, inflation in Japan, hit to the NASDAQ, AI bubble pops, Japanese investors pull money back home and Treasuries lose its largest foreign creditor. Who knows what happens next.
US Treasury just bought about $10 billion worth of Yen
Praise FSM. Without circular investments we'd all be broke.
Finally a new type of circular financing to talk about!
I feel the mortgage rates are a bit too high now. Anyone else?
The problem for mortgages is that the headline rate (30 year fixed) was historically low for almost the entire period 2009-2020, as the economy slowly struggled out of the Great Recession and then the rates went absurdly low during the Covid recession. That meant that a lot of people locked in mortgage rates that are impossibly low (including me) and going back to more "normal" rates- the current rates are a little lower than what was available in the period 1993-2008- feels high to people. And so many people locked in those low rates (either purchase or re-fi), can't get those low rates on a new house, and so feel locked into their current home, which is serving as an anchor on the entire real estate market.
But you can see this pattern here in FRED: https://fred.stlouisfed.org/series/MORTGAGE30US
My parents bought their house when rates were about 12-14%... "High" is relative.
Lazy, regurgitated take. House prices then were also 1/10 of what they are today.
Houses were cheap even with inflation though
In comparison to what? Buyers usually want this to be lower. Historically quite low still.