A Starbucks Conversation -- April 18, 2023

Locator: 44413T.   

From Reuters technology today:

The "Fed" might pause: overheard at Starbucks today --

"So, the Fed raised rates at the fastest pace in US history his past year."
"Yeah, worried about an eleven-percent inflation rate."
"And transitory."
"And due mostly to supply chain issues, with spikes in prices for used cars. And that was about it."
"I'm gonna get another croissant. Anyone want anything?"
"Don't forget eggs."
"Oh, yes, top of the list for inflation. And due to shortage due to avian flu. As if raising rates will solve that problem.
"So, they raised rates to 6%, to stop transitory inflation that was already cooling."
"And investors saw their 2022 investments plummet as much as 35% and everyone took at least a 20% hit."
"So, you're saying the Fed raised rates 6% to slow an economy that was already cooling, and killed everyone's investment accounts in the process?"
"Wow, I forgot how expensive coffee was, and they charge for a refill."
"And they say they still have a lot of work to do."
"My thoughts: they say 50% of American don't pay federal income taxes. The 50% that do pay federal income taxes are investors. Those investors really, really took a huge hit, at leeast 20%  and as much as 35%. Those investors have had it. And the biggest percentage of investors are probably in NYC and DC. They've let the Fed and Congress know that 4% inflation is better than taking another 20% loss on the market if the Fed wants to keep raising rates."
"So, what's gonna happen?"
"Yeah, the Fed is done ..."
"Sorry to interrupt, but you're saying the Fed is forcing us to pay eight percent or more to borrow money to pay for things that are rising four percent?"
"Well, it's not that ...."
"Eight percent to bring inflation down from four percent to three percent?"
"You know, there are folks in Washington who want to see the Fed raise rates to ten percent to get inflation under control."
"Well, if they do that, I'm selling everything and putting that cash into that new Apple savings account, the one that pays fourpointfive percent."
"By the way, Walmart is closing four of their stores in Chicago and the one in downtown DC."
"I wonder what that's all about?"

For the archives.