Fed Raises Rates, Consumers Check Couch Cushions

The Federal Reserve will raise interest rates by a quarter point in September. Consumers will pay more for mortgages, car loans, and credit cards. This is news to approximately nobody who has opened their eyes in the past eighteen months.

Inflation persists. That's the headline. Inflation persists like a drunk uncle at Thanksgiving. It won't leave. It keeps talking. Everyone pretends this is unexpected.

The Fed's benchmark rate goes up. Your savings account might earn an extra eleven dollars per year. Your mortgage payment goes up three hundred. Congratulations on your net gain of negative two hundred eighty-nine dollars. The American Dream is a spreadsheet error.

Retail traders spent the last two years convinced that inflation was transitory, then convinced it was permanent, then convinced the Fed would pivot, then convinced the Fed would never pivot. They were wrong in sequence. They maintained perfect consistency in being incorrect. It's almost impressive, like watching someone miss every step walking down stairs.

The quarter-point hike means your adjustable-rate mortgage adjusts. Your car payment adjusts. Your credit card minimum adjusts. Nothing about your salary adjusts. The technical term for this is getting f*cked with your pants on.

Consumers are told this is necessary to fight inflation. The logic is elegant. Make everything more expensive so people stop buying things because things are expensive. It's like curing a headache by hitting yourself in the head with a hammer until you forget about the original headache.

The Fed meets in September. They'll raise rates. Markets will react for forty-five seconds. Talking heads will explain what it means. None of it matters because your chart doesn't care about Jerome Powell's speeches and your technical indicators don't have a line item for monetary policy.

But sure, read the articles. Adjust your portfolio based on what some reporter thinks the Fed thinks about what consumers think about inflation. I'm sure that'll work out great for you.

Photo by Markus Winkler on Unsplash