I feel like they’re backed into a corner.

On one hand, the free money has made everyone rich, and too much money chasing too few goods.

But if they raise rates, everyone is taking a 10-30% haircut in their assets whether it be homes or stocks.

Do you actually think they’ll start in March, or keep dragging this along, and say they’re serious, and it’s going to come.

they can't.

they won't.

The market has already pretty much factored in the rate increases, 2021 will be volatile, but I believe things will chug along same as they have been. 1.) Election in Nov and 2.) They don't want to crunch the economy.  The best thing that could happen right now is a recession, we need one in fact, it'll suck in the short term, but it will make things better.

2023 is going to suck. It will be a combination of the chickens coming home to roost, Dems trying to make a likely GOP controlled congress look bad (because the DNC is a bunch of petty whiney bitches), and burnout.

It has nothing to do with your money, you lowly peon. It's that if they raise the rate, they can't really service the debt, and then it's off to the races we go.

4 rate hikes in 2022.
They can and will.
How? Who's going to stop them? They are a private company and everyone in Washington is in on the deal.

I love shit like this. "The market" does this or that as though monolithic. You can say it's factored in but raise rates and watch people yank money out.

How does a rate increase of 0.25 result in a 30% haircut?

They are going to start in March.  They threatened up to 3 rate increases to see if the threat will slow down inflation but the threat alone won't work.  They have to make a rate hike so they can evaluate the actual response to it.  If inflation still doesn't slow then they will raise it again.

...and it will go right back up a week or two later.

Rates should've increased many months ago before the bubble got bigger and inflation got as bad as it currently is. Now the market reaction will be worse when it finally happens. Oh well, at least I'll be buying stocks "on sale."

Meh, I wouldn’t say the free money has made everyone rich. What it has done is devalued the dollars of the middle class, making them poorer. Remember “American Poor” gets a lot more than just stimmy bucks, every aspect of their life is funded by welfare, which has also increased the last 2 years. The “poor” aren’t bothered by inflation, gov just increases their welfare.

A lot of stocks are already at a 50% haircut from a year ago. The reason most people don’t notice it with their index funds is because of how heavily weighted the mega caps are within them.

They can't do it because they can't service the national debt at higher rates. I suppose they technically have the ability, but that would be entering some uncharted territory, because it won't take much rate increase and debt service will enter unsustainable levels in re revenue.

They should have but they really couldn't do it back then because of their own mandates.  One mandate is to promote full employment.  If they raise rates businesses spend less and higher fewer people.  Now that the BLS numbers show full employment they can raise rates.  

As for the people freaking out that the sky is falling, even if the Fed raises rates 3 or 4 times this year, the interest rate will still be below where it was pre-covid...which was when people were signing songs about how great the economy and interest rates were.  Right now is the salad days of low interest rates.

 Then maybe it is just you investing wrong.  Go ahead and list 10 stocks that have lost 50% of their value in the last year.

Yup. Going up 1% would crash the economy.

Ill be refinancing again in about 6 months, looking forward to a 1% rate on my mortgage.  Future looks scary as fuck.

We never intended to ever pay any of our debt off, and both sides knew that going in. What we do is basically sign a forever contract to pay interest on the principal ad infinitum and never pay down the balance so much as a smidge. Like if you got a mortgage that the payment was just the interest on the principal forever at an adjustable rate. It's a much lower cash payment, but you never have any equity. If the interest rate goes up, your vig goes up, but regardless, you always owe that principal as a call note.

Interest rates are going up no matter what the FED does. Look at the 10 year bond price over the last 2 weeks, it's gone up dramatically.
Nobody is going to buy bonds at a rate that far below inflation, it makes no sense.
The FED has 2 choices, raise rates and slow down the economy or continue current policies and hope the dollar doesn't tank.

They can't.  Any meaningful increase will bring about bankruptcies.  The US government can't afford to service its debt, yet alone try to pay it off (El Oh El).  The Too Big To Fail/Jail crowd can't survive either as they rely on cheap currency to survive.

Any decrease/tapering will also be meaningless.  What?  .25 of one percent?  El Oh El again.

The entire fiat currency system is based on an expanding currency supply until it doesn't work; at which point it collapses.  We're near that point now and if you know fiat currency history, you would know that fiat currencies historically lasts only 40-50 years.  We're past the 50 year mark and that's a pretty good run; but when it's over, it's over.

Unfortunately its demise will destroy a large part of the middle class (which was on intent) as wealth is not destroyed but transferred and in this case, upwards.

Don't let this happen to your grandchildren yet to be born.  End the Fed.  End their power over us.  Stop the thefts.

I'm patiently waiting for rates to normalize and bring the demand for new housing back to reality. We want to build, but material prices and land prices are so insane right now due to demand, especially here in Florida. Cheap money is a double edged sword.

If the last 40 years is a guide, they’ll raise rates right into a recession, then overreact on loosening, this time following the new negative rates euro model that is only considered sane in the clowniest of worlds.

And this will be a recession with inflation or something bizarre like that. Just to add a twist.

Keep your assets diverse and keep building them. That’s all you can do.

No matter what happens, you will be the last to know.  Bernanke ramped up rates from 1% to 5.25% from about 2004 to 2007.  That's what kicked off the Great Recession.  

There are ways around the mathematical inability to continue servicing the debt.  We could sell Alaska or just the tip of Florida to the Chinese.  Hawaii or Puerto Rico will be spared because they are full of good liberal sheep.  Or we could just start selling a lot of other federal assets like national parks and forests.  Maybe enslave unvaccinated people and send them to work in Chinese mines and factories.

The money printing orgy is stealing 15% of your dollar value with inflation on top of it all.

This is my point I came to post, the fed will not be able to service THEIR debt.  That and you have an entire generation of business owners that have never operated in a "normal" rate environment.

What hurts the majority of Americans worse, high inflation or raising interest rates ?

That’s what they will do .

Thanks for the clarification. Exactly so, THEIR debt.

Bingo.  Mid and long term rates are creeping up already; they are market-driven.

It should have been raised in Barry O’s time and more in Trumps term.  It has to go up and sooner than later.

The market has already priced it in

Get with the program

Like the guy said earlier, it's all based on ever expanding money supply and it works great right up until it doesn't anymore and then it just stops, like that cigarette truck in Beverly Hills Cop. Literally it stops overnight, like, Tuesday afternoon everything is fine and Wednesday morning it's fucked to the sky and unrecoverable.

This. The fed must raise rates. Inflation is way too fucking hot. Remember their goal is to manage inflation.

We haven't paid a dime of the principal national debt off in like 60-70 years. All we've done is pay the interest and rolled the balance over on EZ Kredit Termz!

The creditors never expected to get the balance of the loans back. It was sort of like buying an annuity or winning the Publisher's Clearing House. You put up a thousand dollars, and get paid $59 a month forever and in the end they still owe a $1000 to get square.

And to keep the county at full employment.  It is a dual mandate and that is good as it puts constraints on them as one effects the other.

They can and they must.   I'll take the stock market haircut.  The inflation is worse and in the long run it will cost me more.

kwg

Which is fine as long as they can keep up the vig, but unlike Vinnie the shylock, you can't send muscle to kneecap an amorphous state entity. Yes I am rambling on a Sunday morning; wanna fight about it?

Inflation is transitory, or so I've been told.

Verb form modifying a direct object. 'Affects'

the unfortunate truth. hope y’all brought your own lube.

Interest rates are already rising.  Bond rates have risen rapidly the last 2 weeks.  Bond rates affect everything from credit card rates to mortgage rates.

Whose goal are we talking about here?

This whole thread seems like an advertisement for bitcoin and gold

Bitcoin and other crypto currency is nice for now but could easily be shut down overnight, because it is completely unusable and inaccessible without the internet backbone infrastructure that is controlled by para and quasi governmental and also corporate entities.

No, the dual mandate is not a good thing, it is the single worst thing that has happened to the Fed.

Their only focus should be price stability.

Aside from rates, they need to stop buying stuff. FED needs to completely stop, not just slow down, buying Treasury debt and mortgage-backed securities. The market distortion is huge because of the Fed.

And boy, would the Gov have a problem if they couldn't print money to pay their expenses.

The instant a sufficient amount of controlling interests are in accord, crypto is dead. Instantly worthless and non-negotiable.

If stocks take a dive bet they both do as well.

The "market" believes the Fed will simply jump in and bail out the market with more QE and lower rates if things start going tits up.

But how awkward is the Fed going to look restarting QE and cutting rates when inflation is still ripping hot?

That will destroy what little credibility they have left.

This.... PLUS. Don't underestimate the effect of the "taper". The fed as been buying and that sorta builds a floor, a ever rising floor (like a elevator) for the bond market that in turn does the same for stocks. Taper is them buying less and less (slowing it down). Now they say that as soon as they are done with buying, they are going to start SELLING what they had bought..... At the SAME time they are going to raise int rates. Personally I would NOT be shocked if the first rate hike is .50 or even .75 or even a nice round 1. They are acting super hawkish. I mean, taper is one thing (they should have never been buying as much as they have been for as long as they have been). BUT to reverse from buy to sell and a int rate hike as well. No way this doesn't tank the market.

They are trapped, they have no choice. Even if they try the game of NOT raising rates, the bond market sees the inflation, and with the fed not buying in that market, the MARKET will price in and int rates will rise with inflation without the FED, and sorta make a joke out of them (and a easy way to scam them), it's already sorta happening. Now having said that. I think they are going to crash the market, then panic and start flooding it with money again.... inflation with stop and turn to deflation (with the market crash), then when they start flooding it with money, inflation will come rushing back, the question is how much, and how much loss in faith people have. We are in for a wild ride, and I think the largest wealth transfer of my lifetime.

Scary thing to remember. Deflation always proceeds hyper inflation. First you have inflation (we are hear now, have been before, it can be controlled, a little is a health thing, WE SHOULD HAVE BEEN HAVING A LITTLE FOR THE LAST 2 DECADES, but haven't, because of "free" fed money, those chickens are coming home to roost), then you have deflation (a real beast that can get out of hand NOT easy to control), then comes hyper inflation if people don't trust you and it's Katie bar the door. Gee would you say we have seen a loss in faith at the way the gov handles things...

Side crazy part. Though this mess, I think the dollar is going to be super strong as money rushes hear from all over the world. REALLY strong till it suddenly isn't (last phase).

Another side. I think we need this. Things are bloated. 20% of the companies are zombies, there's tons of Ponzi schemes out there (looking at you some shit crypto coins). Young people starting out can't afford housing. Sad part, it's going to DESTROY a lot of retirement plans.