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Comment by judge2020 | Hacker News Reader

judge2020·

I do think the Fed's stunt with 2-3% interest rates in 2020-2022 was an effort to further concentrate wealth up the stack. Everyone who could buy/refinance did and will likely stop moving for the foreseeable future, as the same house would cost at least 33% more per month thanks to the higher interest rate alone.

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Increasing interest rates should have the reverse effect. A lot of crazy financial instruments depend on low interest rates to work. When interest is increased, the price of money goes up; the wealthy are bouyed far more by ZIRP than someone say in the tenderloin, who does not have access to high finance.

what financial instruments?

Any kind of carry trade, anything with leverage, even alternatives like crypto

Shorts, options

Increasing rates is their attempts to bring inflation back to normal, since cheap money is cheap for _everyone_, including all Americans that were eager to get a low monthly payment on cars/houses (as I’ve alluded to), not just for existing collateral but for new homes/cars, thus increasing total demand - and that demand leading to price increases across the board.

> Americans that were eager to get a low monthly payment on cars/house

You're still describing relatively rich people. Those price increases really hit everyone else hard.

Moreover those loans are small fry compared to leveraged investment.

> Fed's stunt with 2-3% interest rates in 2020-2022

Really?

Fed funds rate was about 2.5% in 2019, because Fed raised rates when Trump took office. Fed funds rate scraped zero in 2020 and 2021.

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

Yeah, I assume the 2-3% rates is referring to mortgage rates, which isn’t directly caused by the fed but was certainly influenced by the fed setting short-term rates at 0.

Is there evidence?

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