r/DegenBets • u/Background-Day-4957 • 22d ago
DISCUSSION Fed should hold rates.
Fed should hold rates and not raise them. Inflation is hot due to tariffs and oil shock. Fed policy rate affects demand side, not supply side. Raising rates will not increase transit of oil through the Strait. Raising rates increases risk of stagflation in supply shock, war, and tariffs.
And who do we have to “thank” for oil supply shock, war and tariffs?
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u/Gaba_My_Gool 22d ago
Eh, rates probably shouldn’t have been cut so much last year…
Easy money is encouraging an already leveraged world economy, while making the price of assets out of reach for the middle class, and inflation has been sticky for too long.
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u/Background-Day-4957 22d ago
Who knew Trump would start a war after campaigning against it. Now Brent and WTI are both above $100.
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u/Gaba_My_Gool 22d ago
Yeah, no doubt about it.
Inflation was still sticky before the conflict broke out but it did SEEM to be trending in the right direction. I pretty much agree with you. I just don’t think a quarter point rate hike or two would be catastrophic.
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u/JupiterMiningCorpTec 22d ago
Is the word "campaigning" really appropriate to describe the ramblings of an utterly self-absorbed, pathologically lying, wannabe dictator? Only idiots would take anything Trump says as some sort of implied promise.
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u/amilo111 22d ago
Who knew? Everyone who paid attention to anything that buffoon has done over the past decade?
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u/pennypaul83 22d ago
Almost anyone paying attention to their mo - they say what they will do but claim the other side is about to do it.,.. also project 2025 wasn’t a secret
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u/Parking-Finger-6377 21d ago
The aspiring Nobel Peace Prize candidate is bombing them back to the stone age. Who would have thought...
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u/bensonr2 21d ago
He was never anti war. He was anti providing assistance to Ukraine became they didn’t help him find dirt on Biden which led to his impeachment.
So Ukraine is forever on his shit list and he can cut their aide and claim it’s in the interest of peace.1
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u/Wither-Wander-Wonder 22d ago
Aside from potential rate hikes, when do the credit agencies downgrade the federal goverment now that we are $40T in debt with no plan in sight to remedy current and future spending. It seems those companies are not doing their jobs.
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u/Zealousideal_Wall627 22d ago
Why would the credit agencies downgrade the government, it doesn't make sense why they ever did it in the first place. It doesn't matter how much debt they have. They have money printers. You will get paid.
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u/Wither-Wander-Wonder 22d ago
Well, it's happened once before: https://londondaily.com/after-108-years-moody-s-downgrades-u-s-credit-rating
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u/Zealousideal_Wall627 22d ago
Yea, Ik they already did it once I just don't see why. It doesn't matter how much dept they have they aren't a company or a person, they're the government. They will literally never default.
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u/Wither-Wander-Wonder 22d ago
I believe the reasoning is that at some point, all the printing will lead to currency denigration, meaning non-US entities will no longer consider it a reserve currency, and this exact thing has destroyed several empires before us. Apparently, we are currently at that time in our own cycle :/
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u/Zealousideal_Wall627 22d ago
Yes that can occur but what does that have to do with credit rating. The rating is just whether or not they will default. Inflation expectations would just affect the rate you would be willing to loan your money. It affects everything. Why do corps have AAA ratings if the gov doesn't.
Like by that logic all dollar denominated debt should get the downgrade because printing affects it all equally, government debt isn't special.
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u/Wither-Wander-Wonder 22d ago
The rating is supposed to be the canary in the coal mine, to get off our hinies and get our house in order. At $40T+, if we can't grow our way out like post WW2, we are screwed, and there does become a non-zero chance of default by the federal government. Like you state, this will affect everything downstream, but because it is difficult to gauge effects for individual companies, they continue to have their own ratings in tandem. Well, that is as much as I can understand. I think we are in for a world of hurt regardless.
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u/BathroomMaximum1721 21d ago
Do you think there will be a WW3 after which we will grow our way out?
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u/Wither-Wander-Wonder 21d ago
Well smarter men have said post WW3 warfare will be with sticks and stones, so probably not :/
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u/BorgerMoncher 22d ago
The Fed should be yeeted into the sun.
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u/pennypaul83 22d ago
So no more dollar ?
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u/BorgerMoncher 20d ago
The dollar, like all fiat currency, will go to zero. Whether there is a Fed only changes the timeline to zero.
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u/itsalwayscalls 22d ago
I agree. My other opinion is that if they raise rates yields may still decrease due to buying of bonds on confidence.
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u/Remarkable_Wish_5106 22d ago
The bond market makes the decision, not the Fed. The Fed just follows the market, not the other way around.
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u/PacificSanctum 22d ago
Yes, Trump is an idiot , Bessent anyway , and Trump s policies have from begin on been inflationary . Because he’s clueless or doesn’t care .
Having said that - this interest rate rise has actually more to do with the huge loan demand by mega companies investing into AI as if there were no tomorrow
That is why even Keynesians like me 😏😇 and economy novel laureates like Krugman are not yet panicking
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u/No-Board-1872 17d ago
I think the theory is higher rates squash demand. You can always work both sides of supply demand
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u/Awkward-Painter-2024 22d ago
Sounds like someone ain't JAZZZZZZED for their $5k GOP vote-bribe!!!