This is the fed foolishly trying to solve an issue that is beyond their capability. The root of our current inflation is not monetary policy, but corporate monopoly and gorithmic price collision,...
Exemplary
This is the fed foolishly trying to solve an issue that is beyond their capability. The root of our current inflation is not monetary policy, but corporate monopoly and gorithmic price collision, aka greedflation. Interest rates are not the cause of our current inflation. Rather, in consumer goods, we've allowed so much monopoly power to build up, that the big consumer monopolies can raise prices with impunity. On the housing front, landlords have developed new software that allows them to perform distributed algorithmic price fixing that would have gotten them hauled into jail in prior generations if done with old fashioned methods. Policy makers also failed to implement price controls during COVID, which should have been done to address the short term supply disruptions. (Price controls work poorly for long term supply shortages, but are good and necessary for short term supply chain disruptions. Think rationing during WW2 or anti-price gouging laws during natural disasters.)
These are the roots of the problem, but the fed can't do anything to solve them. All they can address are interest rates. And so they blindly push forward, hoping to deliberately cause a recession in order to cause demand to plummet. They talk openly of needing to curtail worker power and drive down wage pressure. The whole thing is a farce. The real way to solve this inflation is to radically break up our national monopolies and criminalize landlord and other algorithmic price collusion. But as the fed doesn't have that power, they're instead going to attempt to crash the economy, cause real wages to plummet, and use that to bring inflation under control.
I think there's very compelling reason to believe that low interest rates are a driver of inequality and corporate consolidation. Also, the whole concept of greedflation I think is reasonable from...
I think there's very compelling reason to believe that low interest rates are a driver of inequality and corporate consolidation. Also, the whole concept of greedflation I think is reasonable from a perspective of raising consumer consciousness of what prices they should accept or reject, but as an actual theory of inflation it seems pretty weak. If Target is price-gouging, why not just go to another grocery store? If there isn't another option, then the problem is quite obviously consolidation not greed. Rationing on certain goods may have worked during the pandemic, but price controls on intermediate goods would have potentially been disastrous—you need the market to price in scarcity to allow for efficient adaptation in production and consumption. I agree that there's only so much that the Fed can do and we shouldn't expect them to solve our long-term problems.
It feels like you're trying to bring up the same point but in a slightly different way than the person you replied too. They clearly mentioned monopolies as do you (When you mention consolidation)...
It feels like you're trying to bring up the same point but in a slightly different way than the person you replied too. They clearly mentioned monopolies as do you (When you mention consolidation) which you do not equate to greed.
The market can price in a lot of variables but when it's allowed to price without enough regulation we get things like specific healthcare costs exploding.
I think the commenter underestimates how much of wealth inequality and rent inflation is a function of a low interest rate environment. There are other things that need to be done on the...
I think the commenter underestimates how much of wealth inequality and rent inflation is a function of a low interest rate environment. There are other things that need to be done on the legislation side of things (raising corporate tax, estate tax, cutting spending, market collusion through algorithmic pricing, etc), but the Fed is doing the right thing in raising interest rates.
The market can price in a lot of variables but when it's allowed to price without enough regulation we get things like specific healthcare costs exploding.
Fair, but there's no way in hell that the US government would have been remotely dynamic enough in its price control policy during the pandemic to not do more harm than good.
Our government has been too long for corporate interests and not the people that live in it and we're starting to feel the brunt of their lack of care for us. I can only see government involvement...
Our government has been too long for corporate interests and not the people that live in it and we're starting to feel the brunt of their lack of care for us. I can only see government involvement as the means to stop the price fixing, because now they are doing it on goods we can't say no to, food, medacine, transportation, health care etc.
Have you driven in high poverty areas? The higher gas prices and proliferation of convenience stores are a symptom of localized pricing based on micromarketing. Many many homeless and low income...
If Target is price-gouging, why not just go to another grocery store?
Have you driven in high poverty areas? The higher gas prices and proliferation of convenience stores are a symptom of localized pricing based on micromarketing. Many many homeless and low income people don't have ready transportation and don't have the options you and I have.
This is systematic and drives inequality and homelessness unless changes are made. What changes? There is no political motivation to even explore change.
So we are left to pontificate and uselessly discuss our empty theories on social media, supporting the fiction that something might be done.
The fed is doing the right thing by holding rates where they are. 7% 30 year mortgages have been the historical norm, guys. those 2% rates are literally why all these assholes have been able to...
The fed is doing the right thing by holding rates where they are. 7% 30 year mortgages have been the historical norm, guys. those 2% rates are literally why all these assholes have been able to speculate on asset prices so brazenly. Really we just need asset prices to drop, which they are slowly but surely.
That said, the problem is also as you said not something the fed can solve. It's a supply side problem, and its because the people running these companies are being greedy assholes. The solution is of course unions.
What the fed is doing now scares me because if they send rates skyrocketing to try and kill the economy instead of letting unions do some work for once, Biden will probably lose next year, and Trump will immediately make everything way worse. I really hope that doesn't happen and its just normal rate increases.
My personal ancedote to share: I bought my first house during Brexit, 2016ish. I had finally, in my 30s, scraped enough of a down payment to get an FHA loan. A really low rate, like 3.1%, but...
My personal ancedote to share:
I bought my first house during Brexit, 2016ish. I had finally, in my 30s, scraped enough of a down payment to get an FHA loan. A really low rate, like 3.1%, but mortgage insurance of like $180 a month that offset it.
In Nov of 2020, I refinanced that loan to get rid of mortgage insurance (lowering my monthly payment), get $10k in my pocket, and lowering my overall term by like 2 years. A win in every category.
Then in April of 2021, I glanced at the value of my home, it shot up in "value" $80k. I looked around my home and (correctly) figured this home was not worth anything near that.
House was listed in May 2021 for about $100k more than I paid for it. It was on the market for less than 12 hours. I got a cash offer, over asking price, with my choice of move out date so I could find another home to move to first. Oh and they waived all inspections other than termite. I probably could have gotten another 50k if I was willing to risk being homeless, but that was not in the cards.
So now I'm one of the poorest people in a rich neighborhood. I'm paying about the same as I was on my original FHA home, but now the school district is a 10 instead of a 2.
Just looked up the estimated value of that home. It's only about $10k more than they bought it from me. And I heard from my old neighbor that they have done at least $50k on the house since they bought it. They'll need to do at least another $50k to sell it if they don't intend to die there.
But anyhow, think of all the people that profited from those transactions. The real estate agents in particular (4 of them) all got a pretty nice payday courtesy of cheap debt and a housing frenzy.
This is the fed foolishly trying to solve an issue that is beyond their capability. The root of our current inflation is not monetary policy, but corporate monopoly and gorithmic price collision, aka greedflation. Interest rates are not the cause of our current inflation. Rather, in consumer goods, we've allowed so much monopoly power to build up, that the big consumer monopolies can raise prices with impunity. On the housing front, landlords have developed new software that allows them to perform distributed algorithmic price fixing that would have gotten them hauled into jail in prior generations if done with old fashioned methods. Policy makers also failed to implement price controls during COVID, which should have been done to address the short term supply disruptions. (Price controls work poorly for long term supply shortages, but are good and necessary for short term supply chain disruptions. Think rationing during WW2 or anti-price gouging laws during natural disasters.)
These are the roots of the problem, but the fed can't do anything to solve them. All they can address are interest rates. And so they blindly push forward, hoping to deliberately cause a recession in order to cause demand to plummet. They talk openly of needing to curtail worker power and drive down wage pressure. The whole thing is a farce. The real way to solve this inflation is to radically break up our national monopolies and criminalize landlord and other algorithmic price collusion. But as the fed doesn't have that power, they're instead going to attempt to crash the economy, cause real wages to plummet, and use that to bring inflation under control.
I think there's very compelling reason to believe that low interest rates are a driver of inequality and corporate consolidation. Also, the whole concept of greedflation I think is reasonable from a perspective of raising consumer consciousness of what prices they should accept or reject, but as an actual theory of inflation it seems pretty weak. If Target is price-gouging, why not just go to another grocery store? If there isn't another option, then the problem is quite obviously consolidation not greed. Rationing on certain goods may have worked during the pandemic, but price controls on intermediate goods would have potentially been disastrous—you need the market to price in scarcity to allow for efficient adaptation in production and consumption. I agree that there's only so much that the Fed can do and we shouldn't expect them to solve our long-term problems.
It feels like you're trying to bring up the same point but in a slightly different way than the person you replied too. They clearly mentioned monopolies as do you (When you mention consolidation) which you do not equate to greed.
The market can price in a lot of variables but when it's allowed to price without enough regulation we get things like specific healthcare costs exploding.
I think the commenter underestimates how much of wealth inequality and rent inflation is a function of a low interest rate environment. There are other things that need to be done on the legislation side of things (raising corporate tax, estate tax, cutting spending, market collusion through algorithmic pricing, etc), but the Fed is doing the right thing in raising interest rates.
Fair, but there's no way in hell that the US government would have been remotely dynamic enough in its price control policy during the pandemic to not do more harm than good.
If this were true then we should expect inequality to improve significantly now with 5% interest rates. It seems unlikely?
It may substantially reduce the rate at which inequality is growing.
Our government has been too long for corporate interests and not the people that live in it and we're starting to feel the brunt of their lack of care for us. I can only see government involvement as the means to stop the price fixing, because now they are doing it on goods we can't say no to, food, medacine, transportation, health care etc.
Have you driven in high poverty areas? The higher gas prices and proliferation of convenience stores are a symptom of localized pricing based on micromarketing. Many many homeless and low income people don't have ready transportation and don't have the options you and I have.
This is systematic and drives inequality and homelessness unless changes are made. What changes? There is no political motivation to even explore change.
So we are left to pontificate and uselessly discuss our empty theories on social media, supporting the fiction that something might be done.
Change is achieved by action.
The fed is doing the right thing by holding rates where they are. 7% 30 year mortgages have been the historical norm, guys. those 2% rates are literally why all these assholes have been able to speculate on asset prices so brazenly. Really we just need asset prices to drop, which they are slowly but surely.
That said, the problem is also as you said not something the fed can solve. It's a supply side problem, and its because the people running these companies are being greedy assholes. The solution is of course unions.
What the fed is doing now scares me because if they send rates skyrocketing to try and kill the economy instead of letting unions do some work for once, Biden will probably lose next year, and Trump will immediately make everything way worse. I really hope that doesn't happen and its just normal rate increases.
Definitely, it drove consolidation and asset inflation (housing, stock market etc).
My personal ancedote to share:
I bought my first house during Brexit, 2016ish. I had finally, in my 30s, scraped enough of a down payment to get an FHA loan. A really low rate, like 3.1%, but mortgage insurance of like $180 a month that offset it.
In Nov of 2020, I refinanced that loan to get rid of mortgage insurance (lowering my monthly payment), get $10k in my pocket, and lowering my overall term by like 2 years. A win in every category.
Then in April of 2021, I glanced at the value of my home, it shot up in "value" $80k. I looked around my home and (correctly) figured this home was not worth anything near that.
House was listed in May 2021 for about $100k more than I paid for it. It was on the market for less than 12 hours. I got a cash offer, over asking price, with my choice of move out date so I could find another home to move to first. Oh and they waived all inspections other than termite. I probably could have gotten another 50k if I was willing to risk being homeless, but that was not in the cards.
So now I'm one of the poorest people in a rich neighborhood. I'm paying about the same as I was on my original FHA home, but now the school district is a 10 instead of a 2.
Just looked up the estimated value of that home. It's only about $10k more than they bought it from me. And I heard from my old neighbor that they have done at least $50k on the house since they bought it. They'll need to do at least another $50k to sell it if they don't intend to die there.
But anyhow, think of all the people that profited from those transactions. The real estate agents in particular (4 of them) all got a pretty nice payday courtesy of cheap debt and a housing frenzy.