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Comment by freitzkriesler2 | Hacker News Reader

How is it murkier? They're going to fund bank bailouts by making other banks and US pay for it via inflation and passed on fees to those of us who don't store our money in financial institutions run by idiots. And they will keep raising rates because the consequence of letting inflation run even higher is a populist revolt.

And the worst part is the majority of this country and the world are too stupid to realize it. Gotta slow boil that frog.

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> fund bank bailouts

So far no bank has been bailed out. e.g. SVB had assets to cover deposit liabilities (just not in a liquid form).

The problem was their assets are going to pay out over at least a decade. If they wanted to redeem them "now" then those assets would have been sold on the open market below the par value. The fed is stepping in as the buyer of last resort and offering what is essentially QE in all but name again to buy those bonds/MBS at their par value.

Releasing that cash out into the wider economy when it was initially locked up in loans increasing inflation which is a tax on all of us.

It very much is a bailout and everyone who uses the dollar is paying for it.

But this is a narrow interest so that depositors at least have access to their money. It does not reward the bank. So long as the bank isn't rewarded, it should be a caution flag for the other banks to take risk management more seriously. Startups have to also have to get their burn rate under control or go out of business.

I think the argument here is that the SVB execs were "in bed" (so to speak) with the VCs who were pushing their companies to deposit at SVB, and the now-fired execs still have their recent bonus payouts. So the punishment is not spread out far enough to discourage moral hazard and future systemically-risky gambling with millions of dollars of other people's money.

I'm not sure the same argument applies for the other bank(s) with huge MBS investments with lower yields than equivalent Treasury bonds. I don't know enough about those casees.

that is a lie - the value of their assets is far below their liabilities. mods here need to somehow crack down on outright falsehoods

...New York-based Signature Bank, which collapsed over the weekend and will be bailed out by the new Bank Term Funding Program (BTFP), the Biden administration announced on Sunday.... [1]

Either Daily Caller is calling it incorrectly or at least one bank is being bailed out as of now. All comes down to the definition of 'bailing out', does it mean that depositors are made whole past the $250K limit, that investors are being made whole, that banks are simply taken over with their losses covered by the government which hopes to recoup the costs when the banks are sold on the market?

[1] https://dailycaller.com/2023/03/13/former-dem-rep-landmark-f...

Until recently - wage gains were beating inflation by more than usual - obviously not everyone is affected equally.

The main people who should've been fuming about inflation are retirees on defined benefit pensions.

As opposed to asset holders getting indiscrominate gains as opposed to the hourly/salary worker?

OH NOES! How dare we let workers benefit from increased wages while we let those poor boomers laze around in retirement. God forbid they can't take a 4th cruise this year.

Lol, lmao even.

>wage gains were beating inflation

Nitpick: the real value of wages paid has been declining since 2020. Individual real wages increased because of workforce composition effects, but you can't run an economy on workforce composition effects.

https://www.dallasfed.org/research/economics/2022/0215

Letting inflation run even higher risks a populist revolt?

Inflation hurts everyone. It is particularly cruel to the poor and middle class, but business also suffers because it is an unpredictable business climate. Are you actually suggesting higher inflation would be the smart strategy if not for the pesky mob?

"Big" business doesn't suffer, smaller businesses do. And from the perspective of legislation and regulation, smaller businesses tend to get the same shit treatment and regular people.

If you believe the arguments of Matt Stoller, the current round of inflation isn't actually inflation, it's just coordinated price increases and corresponding profit increases by the biggest corporations.

Definitionally, it's not inflation if wages aren't keeping up with consumer prices.

Per the article, they are now expected to raise rates much more slowly than they otherwise would have.

"expected". At some point, the FED is going to run out of instruments to tamper with to prop up a fake economy. It's going to crash, that's inevitable. The whole narrative behind the creation of the FED was that private bankers would enact more rigorous economic policies than politicians and it would lead to more economic stability. It's clearly not the case now. The very existence of the FED will be questioned.

Eh, this is par for the course in democratic decline… same situation in Argentina for example, central bank is supposed to be independent but in reality the government controls fiscal policy. It’s true that the US has a long way to fall though.

It'd be way worse without the Fed, we'd have a collapse of everything...

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