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Comment by extheat | Hacker News Reader

It's not wrong. The Fed is explicitly asking for these kinds of layoffs. The fact that they are seeing more layoffs in tech opposed to other industries is part of why the interest rate hikes aren't stopping.

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ELI5 why would the Feds only want this to affect the tech sector and not other markets?

You're talking past each other. The Fed doesn't want tech layoffs in particular, they want layoffs in general to destroy aggregate demand and push wage increases down. Much to the chagrin of all parties, the Fed isn't able to keep up with folks leaving the labor force and job creation.

https://fred.stlouisfed.org/series/PAYEMS#0

https://fred.stlouisfed.org/series/UNRATE

https://fred.stlouisfed.org/series/UEMPMEAN

(switch to 1Y resolution for the above)

https://seekingalpha.com/article/4531829-older-workers-propp...

https://www.federalreserve.gov/econres/feds/the-great-retire...

> “The Fed is tightening monetary policy but somebody forgot to tell the labor market,” said Fitch Ratings chief economist Brian Coulton. “The good thing about these numbers is that it shows the U.S. economy firmly got back to growth in the second half of the year. But job expansion continuing at this speed will do nothing to ease the labor supply-demand imbalance that is worrying the Fed.

> Fed Chairman Jerome Powell earlier this week said the job gains are “far in excess of the pace needed to accommodate population growth over time” and said wage pressures are contributing to inflation.

> “To be clear, strong wage growth is a good thing. But for wage growth to be sustainable, it needs to be consistent with 2 percent inflation,” he said during a speech Wednesday in Washington, D.C.

https://www.cnbc.com/2022/12/02/jobs-report-november-2022.ht...

(but lets be real, wages weren't/aren't driving inflation; it was the supply chain (goods), the Ukraine conflict (energy), ZIRP and new stock not keeping up with demand (housing), and Avian flu (eggs))

Surely raising interest rates and destroying the economy will bring back those 58 million chickens, restore the supply chain, and make Russia pull out of Ukraine.

You're saying that the current inflation is transitory, and that's heresy.

They just want make enough people become broke via layoffs/debt payments so that their demand evaporates due to not having any money to spend, because that's the only thing they have power over. JPow has repeatedly implied that the average person AKA labour force is merely an expendable statistic.

Interesting. The current administration is proud of its low unemployment numbers while pulling this move.

The hypocrisy writes itself, hehe.

Politicians are most honest when they are lying it seems :)

It's the same as Trump boasting about the bull market when it was merely a continued trend line from Obama days. Politicians love presenting favourable statistics to make themselves look good regardless of whether they did something to make that happen.

The Fed enjoys some level of policy independence so they don't take every order from the administration like a dangling puppet. So the current administration's involvement in this is somewhat limited.

It doesn't seem quite the same. Instead of "praise me for what I inherited", it's more like:

"I'm proud of low unemployment. Low unemployment is valuable and is something we want." Meanwhile the Fed is seeking to increase unemployment.

The Fed isn't directly controlled by the executive branch. And when unemployment trends become serious, it will remind the Fed that the Fed's mandate includes achieving maximum employment.

Yes.

Also, can you imagine how Trump and right-wing media would have bitched if these moves by the Fed occurred during his administration?

DEep StatE Fed bureaucrats trying to win election for socialists, etc

? For one thing, the Fed isn't really part of the administration. So the executive branch can attempt to take credit for the statistic even while the Fed tries to destroy it.

The Federal Reserve is not part of “the administration”. It’s (supposed to be) an independent entity.

So Powell’s theory is: if we can limit the middle class’s purchasing power by restricting extreme wage growth, the price of consumer goods will eventually plateau or only increase at a fixed 2%.

Otherwise, if wages are allowed to increase at the actual inflation rate or higher (10%+) from a competitive job market, the price of goods will continue to increase without any levers for the Fed to stop it.

Two possibilities exist in an economy, either there are more workers, or there are more jobs. Ideally there would be an equal number of workers and jobs, but things don't work out so exactly in real life, so an equal number isn't really an option.

Which is better, to have more workers, or more jobs?

If Powell's theory is correct, then having more jobs than there are workers results in high inflation -- not good. Thus, the only stable option for an economy is to have more workers than there are jobs? That sure sucks for the workers.

Which is why the Federal government should increase tax on (windfall) profits, to disincentivize price increases and allow real wages to increase back to 1970s levels.

The problem here is in expecting the Fed to fix the economy when all it has is an interest rate hammer.

There’s a good chance they’ll stop this year.

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