Re:US Federal Reserve says its goal is ‘to get wages down’
by kevin_thibedeau on Saturday May 28, 2022 @04:57PM
(#31543789)
> It reduces access to, and increases the cost of, working capital for businesses. This reduces growth and cuts into how much they can spend on employees and will reduce salaries.
If that were true there never would have been growth when rates were over 5%. This is all about the wealthy rigging the system to maximize their returns. They're running out of financial instruments to game after decades of lopsided policy designed to shift money into their sphere of control so now they're squirming.
Re:US Federal Reserve says its goal is ‘to get wages down’
by stefan_ on Saturday May 28, 2022 @04:58PM
(#31543793)
Why do the rich care about inflation? Isn't the point that they own all the cash flows?
Re:US Federal Reserve says its goal is ‘to get wages down’
by arcticbull on Saturday May 28, 2022 @05:08PM
(#31543881)
Most rich folks aren't rich from holding dollars, they're exposed (to your point) to equity. Higher expected inflation usually means higher future nominal interest rates, and a higher future cost of capital. The DCF model used to value that equity means they get put through the ringer in exactly the way you're seeing paying out in the stock market right now.
Raising interest rates is literally what Powell is proposing, and has already started carrying out.
Higher interest rates have other effects too. It reduces access to, and increases the cost of, working capital for businesses. This reduces growth and cuts into how much they can spend on employees and will reduce salaries.
> ... and don't want to pay more interest at the government level or on the $8T borrowed in the last decade ...
This is also backwards. High inflation allows the government to get out of paying off the national debt. The national debt has in real-dollar terms gone down significantly in the last two years. [edit] (Debt-to-GDP ratio is down 10% since 2020.)
> Yeah, that's what's best for America.
[edit] In my opinion leaving interest rates low and letting the market set prices of goods where supply meets demand, and incentivizing adding new supply, is the right thing to do. But hey, I'm not on the Fed board, so what do I know.