Wallstreet and Chamber of Commerce have embraced MMT decades ago. They pushed for this as MMT works great with extremely low interest rates and because they claim that it balances money without the need for taxes to redistribute shit. Also allows our banks to influence federal policy.

Speaking of MMT, looks like the federal reserve will start to unload some of the assets they did purchase during the COVID crash.

Jun 4, 2022 19:45:26 GMT c said:

Wallstreet and Chamber of Commerce have embraced MMT decades ago. They pushed for this as MMT works great with extremely low interest rates and because they claim that it balances money without the need for taxes to redistribute shit. Also allows our banks to influence federal policy.

Speaking of MMT, looks like the federal reserve will start to unload some of the assets they did purchase during the COVID crash.

People who are rewarded based on their short term performance love MMT.
This is why politicians and CEO's are always pushing for governments to spend more.
The exact problem that the world finds itself in today, is the EXACT reason MMT can never work.

Trying to separate spending from inflation is like trying to separate throwing a ball in the air and it coming back down again.
One is an exact consequence of the other, you cannot engineer human nature out of monetary theory.
It is why socialism fails, it requires humans to display traits that they have never before displayed in a significant number throughout human history.

I would go as far as to say that the more modern society embraces liberal social values, the more we need socialism to function at anything close to a society.
by breaking down the family unit, we require all of society to function as one family, which doesn't work.

Socialism works when it is designed to work with people. The theoretical socialism no one expects to ever happen. But we can move to nordic socialism or european socialism and still function. Australia seems to function with a high degree of socialist policy.

Family units will break down over time given the old Christian norms will fade as belief does. There will be no great revival this time. In places like the US, Christianity is already too poisoned to be saved with the majority of believers following basically heretics scamming them out of all they can. There are pure churches left, but they are liberal ones and dying out since they do not evangelize like the corrupt ones do.

So society will have to find another way. If Christianity is all that is holding things together, gonna be a real bad time. Soon Christianity will not even be the most popular religion, let along belief system. Islam should be dominate within the decade, and the majority of people these days reject religion altogether.

Jun 6, 2022 6:11:05 GMT c said:

Socialism works when it is designed to work with people. The theoretical socialism no one expects to ever happen. But we can move to nordic socialism or european socialism and still function. Australia seems to function with a high degree of socialist policy.

Family units will break down over time given the old Christian norms will fade as belief does. There will be no great revival this time. In places like the US, Christianity is already too poisoned to be saved with the majority of believers following basically heretics scamming them out of all they can. There are pure churches left, but they are liberal ones and dying out since they do not evangelize like the corrupt ones do.

So society will have to find another way. If Christianity is all that is holding things together, gonna be a real bad time. Soon Christianity will not even be the most popular religion, let along belief system. Islam should be dominate within the decade, and the majority of people these days reject religion altogether.

I wasn't making a point of religion, I was making the point that the family unit is the building block of a strong society.
As you remove the family unit as a support network, something has to step into the gap.
This is why people reject the family unit and engage in socialist policies at about the same rate.

Nordic socialism is not socialism, it is a socially  minded democracy, people still have jobs and pay taxes.
With MMT the government takes an increasingly overbearing role as the spending is no longer tied to the taxation revenue, essentially making the government the employer, directly or indirectly.
The point is that you cannot have uncapped spending without  the counter balance of high interest rates, high inflation or both.
MMT is literally failing before our eyes, if we pull out of this without a decade long recession, we should count ourselves lucky and endeavor to get back to balanced national accounts.

Socially minded democracy as you call it is what people want when they talk of socialism. Almost no one wants pure socialism, and even light socialism is too far for socialists. Socialists like private property. What modern socialism is basically is income inequality reduction to basically Australian or British levels.

Did MMT fail for the people who pushed it though? They will get their losses paid for by the taxpayers. They get low interest rates to borrow and buy back their stock, record profits with inflation, and when recession hits, their losses paid for in taxes. That is my problem with capitalism, in the US, risk is hedged by corporation welfare if everyone takes the same risk together. And companies exploit the fuck out this. Most companies have almost no cash on hand after record profits.

Jun 6, 2022 7:42:07 GMT c said:

Socially minded democracy as you call it is what people want when they talk of socialism. Almost no one wants pure socialism, and even light socialism is too far for socialists. Socialists like private property. What modern socialism is basically is income inequality reduction to basically Australian or British levels.

Did MMT fail for the people who pushed it though? They will get their losses paid for by the taxpayers. They get low interest rates to borrow and buy back their stock, record profits with inflation, and when recession hits, their losses paid for in taxes. That is my problem with capitalism, in the US, risk is hedged by corporation welfare if everyone takes the same risk together. And companies exploit the fuck out this. Most companies have almost no cash on hand after record profits.

Mate, if the economy could recover as fast you build straw men, I could have a solid gold Ferrari.

The point is that MMT cannot be implemented without having an inflationary effect.
This is what we are seeing now, yes the MMT flowed to the bankers, but that makes it worse, it shows that inflation happens whether or not the funds get from wall street to main street, the dollars create inflation by literally just existing.
MMT is well outside the bounds of a socially minded democracy and is fully inside the hardcore socialist model.

Socially minded democracies function on the notion that the society has to first be economically stable, then divert the resources to those in need.
MMT on the other hand is spending with no regard to the health of the economy.
It won't work... It is akin to "the operation was a success but the patient died" line.

I actually agree with you. MMT failed in 2008. Then we gave it a second try. And it is failing again. And the solution will be to print more money to bailout companies again.

MMT is not socialist, but crony capitalist, which is perfect for the US really. It is the system we deserve.

The socialist solution is to take the cash from the rich and use that instead of printing more cash.


The problem we have in the US, is our companies are the largest companies in the US profit from economic downturns, as economic downturns means they lose profit, their competition loses their businesses. Then we bailout the lost earnings for the big companies as they claim they will fail otherwise. I would not be shocked to see 5 trillion in bailouts when this recession hits for corporations.

Jun 6, 2022 9:17:14 GMT c said:

I actually agree with you. MMT failed in 2008. Then we gave it a second try. And it is failing again. And the solution will be to print more money to bailout companies again.

MMT is not socialist, but crony capitalist, which is perfect for the US really. It is the system we deserve.

The socialist solution is to take the cash from the rich and use that instead of printing more cash.


The problem we have in the US, is our companies are the largest companies in the US profit from economic downturns, as economic downturns means they lose profit, their competition loses their businesses. Then we bailout the lost earnings for the big companies as they claim they will fail otherwise. I would not be shocked to see 5 trillion in bailouts when this recession hits for corporations.

Uggggh... Sometimes you are painfully obtuse and I know you are doing it deliberately.
Any time you create more money than the standard supply you have inflation.
Socialism is not taking from the rich, socialism is nationalising everything and printing money ad nauseum.
Now you of course are welcome to your own opinion, but not your own facts: Socialism invariable leads to inflation.
USSR, Venezuela, Cuba, China all got screwed over by inflation.

There won't be any wall street bailouts, there can't be, every dollar the US spends outside its budget is adding to inflation.

Not sure why you think calls for socialism means that people will move towards autocratic socialism. The calls for socialism in the US are for the same socialist programs you have in Australia, and people have in the UK, Canada, and basically every other first world country. Democratic socialism is what people are trying to get, not autocratic socialism. Like state healthcare, food benefits for the poor (not all states give them), basic housing for the homeless, and simple majority voting for policy decisions. That shit is what our extreme left wants. That is the issue we are having. Our democratic socialists do not want Marxism, we want democratic socialism where a Congress or parliament makes decisions based on the wants of the majority of members and passes laws for the people and not just those who can afford to pay for reelection campaigns and lobbies. Every other major democracy moved this way in the last hundred years but the US who still pretends we are in the 1900's. Only the anarchists and stoner socialists are calling for Marxism. The rest of us want income redistribution by closing tax loopholes that allows our super rich to pay no taxes, using a progressive tax, and increasing the estate tax to stop buy, borrow, die generational wealth accumulation.


As for wall street, they are too big to fail. Watch for it, when the recession starts to do real damage, they will be the first warn of a wall street collapse that will end the entire US economy unless congress takes action. And that action will be starting up the printing machines. They pulled this half a dozen times since the 80's and we bail them out every time.

I am not arguing against a socially minded democracy, I believe in that, what I am doing is rejected the premise that deficits don't matter when they clearly do.
This is one of those times where I wish I was better educated or more intelligent, because my following comments are just based on my logical understanding of the situation.

If we start with the M2 money supply, which is a measure of all the cash sloshing around the economy:



So if I use my awesome line drawing skills to plot the historical trend, we get this:




To make it fair I started with the trend line and intersected at the GFC to plot where we would be without the government stimulus if the economy had of stuttered and then recovered.
As you can see in my graph, we  have about USD$  3,000,000,000,000 too much floating around in the economy, 3 Trillion dollars is no small amount of money.
The problem with raising rates is that they only deal with where we go from here, meaning we can decrease the slope, but we cannot drop the number.
This brings in the next risk, which is stagflation, where the economy has to sit on it's hands with asset prices not moving until the trend line catches up.

Considering that in the graph above the economy moves in the vicinity of 0.75 to 1.0 trillion dollars per decade, that's like 30 years before asset prices would make sense again.

It's no mystery where the money is.



Since the GFC the US Fed Reserve has added 6.5 trillion to it's balance sheet.
This is where the money has come from, the trick now for the Fed Reserve is to dump these assets without crashing the market.
I am too lazy to do it, but if you were to take the Fed Reserve cash out of the M2 supply you would see that this is  already an ugly recession.

Please anyone feel free to tell me if I am getting this wrong.

FJB

Every last one of them honestly.

Jun 6, 2022 23:57:00 GMT KING KID said:

FJB

I would agree with FBODTJB

It's a mess over a decade in the making and nobody has been interesting in fixing it, just add some duct tape and limp through the next election.
For the free market to function, it has to be free.
Every interference with the function of the market has just deferred a problem and made it worse.
If by some miracle we bounce back this time, it will be worse again when it rears it's head again.

The issue is that we never had the recession we needed to have after the GFC.
c would argue that this is due to banker bailouts, but the concern of the government wasn't with whether bankers get their yachts or not, it was whether the economy imploded.
So they went about propping up the banks, which is kind of like sending guns to Iraq because you hate Iran more only to have those some guns used to shoot your own soliders... Okay so American foreign policy and economic policy are equally shortsighted.
I am sure sending ship loads of guns and ammunition to the Ukraine will also have no unintended consequences... But I digress.

The key drivers of the first GFC were of course corporate greed, which is what corporations do (but usually tempered by real market conditions), but it was also moronic policy from government insisting that the home ownership rate in the USA must be lifted, they set aside trillions of dollars to accomplish this and BOOM inflation began.

Jun 7, 2022 0:01:40 GMT @ness said:

Every last one of them honestly.

@ness my man... You hit the nail right on the head.

Too many acronyms, ya boomer.

Still do not get how this is socialism's fault. Chamber of Commerce and the GOP pushed the first package through. Democrats wanted to fund it by taxing capital gains and estate but GOP said naw dogg money machine goes brrr.

When the smoke cleared 1.8 trillion went to the American people, 1.7 trillion went to bailing out businesses. Rest went to states or healthcare. I do not see why the 1.8 that went to the American people directly is somehow different than the 1.7 trillion that went to businesses and the .75 trillion that went to state slush funds. Even if people did not get checks or unemployment, still would have been 3.2 trillion issued but the economy. And really since most of this cash was issued under Trump with GOP control of the senate, they capitalists did not like this, why the hell did they create this bill? Democrats were not involved in the 3.1 package.  Dems socialists in the second packages wanted to offset the cost with taxes but emperor Manchin decreed the money machine must run.  But the 600 billion that went to people in that bill was what people claim is ruining is the US and not the other 1.5 trillion that went everywhere else.  That money was NEEDED.  

Feels like the issue people had is not the creation of the money but the US DARED give money to the people instead of to the corporations where it is should always go.

Jun 7, 2022 0:10:33 GMT KING KID said:

Too many acronyms, ya boomer.

F Barack Obama Donald Trump Joe Biden
They all have their sticky fingerprints on this cluster.

Jun 7, 2022 0:14:40 GMT c said:

Still do not get how this is socialism's fault. Chamber of Commerce and the GOP pushed the first package through. Democrats wanted to fund it by taxing capital gains and estate but GOP said naw dogg money machine goes brrr.

When the smoke cleared 1.8 trillion went to the American people, 1.7 trillion went to bailing out businesses. Rest went to states or healthcare. I do not see why the 1.8 that went to the American people directly is somehow different than the 1.7 trillion that went to businesses and the .75 trillion that went to state slush funds. Even if people did not get checks or unemployment, still would have been 3.2 trillion issued but the economy. And really since most of this cash was issued under Trump with GOP control of the senate, they capitalists did not like this, why the hell did they create this bill? Democrats were not involved in the 3.1 package.  Dems socialists in the second packages wanted to offset the cost with taxes but emperor Manchin decreed the money machine must run.  But the 600 billion that went to people in that bill was what people claim is ruining is the US and not the other 1.5 trillion that went everywhere else.  That money was NEEDED.  

Feels like the issue people had is not the creation of the money but the US DARED give money to the people instead of to the corporations where it is should always go.

Is it hard to be the only ideologue in the room?
You want to brush past any fact that doesn't fit your socialism good, capitalism bad narrative.
To address your non-points one at a time:

I think we have already CLEARLY demonstrated that it doesn't matter whose pocket the money sits in: Wall Street, Main Street, Mean Street Posse... It doesn't make a difference the results are clearly inflationary.
You also like to recount events looking through only the lens of the banking sector, when there were multiple stupid factors in play:

• Corporations like to make money, it is their purpose
• Government policy demanded the raise in home ownership in marginalized communities
• People with the Financial IQ of a liter of house paint went out and gorged themselves on cheap debt.

All of these things are not only contributors to the GFC but essentially all three were root causes.
Now what you seem incapable of facing is the notion that the American public who want to be trusted to own a gun, or vote, went out and made some incredibly stupid mortgage applications lying their ass off while the banks were ethically negligent in their vetting of these applications. Though I am sure that there would have been outcry if the banks stop giving mortgages to minorities.

Fast forward through all of that nonsense... We are on the precipice of the GFC.
The government has two options, intervene or the US mortgage market literally goes bankrupt.
This means that every single home loan in the USA gets called in and you see an event that makes the great depression look like a walk in the park.

The issue we have today is not the bank bailouts, but the acts the Fed Reserve took to stimulate the economy afterwards.
This where the Quantitive easing started and we cheerfully launched into it having absolutely zero discussion of whether it was a prudent move or knowing what the consequences would be.
Once upon a time we relied on government policy to stimulate markets.
Maybe we could have built infrastructure or something, but now we have nothing to show for all that money but sky high inflation and a record S&P 500.

And again, this was the Chamber of Commerce and lobbies advising congress that if interests rates were to rise above zero the US economy would completely collapse. This is capitalism in action in the US. It has been this way for 40 years now, and will be this way moving forward.

Dems warned this would happen when the The Glass-Steagall Act was repealed. US had two options, bail out the banks making the risky investments or let banks fail great depression style in 2008. Then in 2020 we were here again. Since increasing taxes is off the table, the sole way left to get more cash to deal with crises is to print it.

Far more profitable to buy "speech" for bailouts and take incredible risks, than to be fiscally conservative. Moreso with the culture of leveraged buyouts that you profit from when you win, and breakoff the debt into a separate company and bankrupt with the Texas two step when you lose, walking away still in the green.

Economics in the US is a corrupt system, the basic rules no longer apply.

Jun 7, 2022 0:07:36 GMT iNCY said:

Jun 7, 2022 0:01:40 GMT @ness said:

Every last one of them honestly.

@ness my man... You hit the nail right on the head.

Yeah I really don't get how anyone can support either side at this point in time. It's like when coworkers virtue signal that they don't make a mess like the OTHERS. Bitch you're just as bad if not worse.

Jun 7, 2022 0:47:55 GMT c said:

And again, this was the Chamber of Commerce and lobbies advising congress that if interests rates were to rise above zero the US economy would completely collapse. This is capitalism in action in the US. It has been this way for 40 years now, and will be this way moving forward.

Dems warned this would happen when the The Glass-Steagall Act was repealed. US had two options, bail out the banks making the risky investments or let banks fail great depression style in 2008. Then in 2020 we were here again. Since increasing taxes is off the table, the sole way left to get more cash to deal with crises is to print it.

Far more profitable to buy "speech" for bailouts and take incredible risks, than to be fiscally conservative. Moreso with the culture of leveraged buyouts that you profit from when you win, and breakoff the debt into a separate company and bankrupt with the Texas two step when you lose, walking away still in the green.

Economics in the US is a corrupt system, the basic rules no longer apply.

Yes, you could also engage lobbyists to tell government that you needed to be paraded through the streets of Washington with your bare ass painted red or Western civilisation would end as we know it... Doesn't mean that government has to follow it.
Lobbyists lobby and governments govern, it is the way it has always been.
Your idea that the Dems bravely stood against this is a complete fabrication.
Clinton and Obama both cheer leaded the run up to the sub prime mortgage crisis, it was literally their policy to put poor minority groups in homes.

What your response again fails to acknowledge that the debts that had to be recovered did not occur in a vacuum, it was a mix of greed and stupidity in Wall street, main street and capitol hill.
I would think that wouldn't be too hard for even a jaded socialist to acknowledge?

Again you are conflating Quantitive Easing with the banking bail outs.
The Fed Reserve completely screwed this up on their own without any help from government, who were happy to sit on their hands and let the bill run up for the next guy.
Let's not forget the breadth of ignorance from the Biden administration and Fed reserve who as recent as a couple of months ago were saying this was all Putin in Ukraine and not stupid monetary policy coming home to roost.


My point is that I don't see anyway out... Decades of Stagflation... Or rapidly deflate the asset prices causing a crash, essentially shocking killing the patient with the hope they can be resuscitated later.
I don't blame Biden for where we are today, I do however hold him accountable for having no real plan or idea on where to go from here.
The advice he gets from the banking sector will only be how they want to band-aid it until after their employment contracts expire and capitol hill don't care past the next elections.
This is going to take real leadership and I don't see anyone in the White House since George Bush Sr or Bill Clinton who could provide anything resembling the leadership the country needs.

Jun 7, 2022 1:04:01 GMT @ness said:

Jun 7, 2022 0:07:36 GMT iNCY said:

@ness my man... You hit the nail right on the head.

Yeah I really don't get how anyone can support either side at this point in time. It's like when coworkers virtue signal that they don't make a mess like the OTHERS. Bitch you're just as bad if not worse.

This is exactly the real problem mate, we are all hypocrites.
We have what we like to believe about ourselves, then we have the decisions we actually make which are more often than not at odds with the picture we have of ourselves.

Society would be greatly served by all of us looking in the mirror and acknowledging that we are hypocrites and actually making a decision to reflect our values.

Disagree with the minimum wage? Don't buy from Amazon
Don't like the way China is posturing with Taiwan? Then don't buy from there
Don't want global warming? Leave the heater and AC off and ride your bicycle everywhere.
Don't like the erasure of small businesses? Don't shop at Walmart.

I am not going to do half of these things, but then I don't believe I am a good person... So at least I am not a hypocrite.

Our Reserve Bank today raised the cash rate from 0.35% to 0.85% it's the largest single rise since these 2000.
They're predicting 2.5% by the end of next year.

Current home loan variable rates are at 4% p.a


The average new loan in Australia for people buying an existing property was $623,744 in April 2022, up 1.8% on the month before and up 10.7% on April 2021.

That's repayments of $2,848 per month
A 1% move on the rate is an extra $400 per month.
House prices are already down about 11 % from their peak

Jun 7, 2022 1:10:46 GMT iNCY said:

Jun 7, 2022 0:47:55 GMT c said:

And again, this was the Chamber of Commerce and lobbies advising congress that if interests rates were to rise above zero the US economy would completely collapse. This is capitalism in action in the US. It has been this way for 40 years now, and will be this way moving forward.

Dems warned this would happen when the The Glass-Steagall Act was repealed. US had two options, bail out the banks making the risky investments or let banks fail great depression style in 2008. Then in 2020 we were here again. Since increasing taxes is off the table, the sole way left to get more cash to deal with crises is to print it.

Far more profitable to buy "speech" for bailouts and take incredible risks, than to be fiscally conservative. Moreso with the culture of leveraged buyouts that you profit from when you win, and breakoff the debt into a separate company and bankrupt with the Texas two step when you lose, walking away still in the green.

Economics in the US is a corrupt system, the basic rules no longer apply.

Yes, you could also engage lobbyists to tell government that you needed to be paraded through the streets of Washington with your bare ass painted red or Western civilisation would end as we know it... Doesn't mean that government has to follow it.
Lobbyists lobby and governments govern, it is the way it has always been.
Your idea that the Dems bravely stood against this is a complete fabrication.
Clinton and Obama both cheer leaded the run up to the sub prime mortgage crisis, it was literally their policy to put poor minority groups in homes.

What your response again fails to acknowledge that the debts that had to be recovered did not occur in a vacuum, it was a mix of greed and stupidity in Wall street, main street and capitol hill.
I would think that wouldn't be too hard for even a jaded socialist to acknowledge?

Again you are conflating Quantitive Easing with the banking bail outs.
The Fed Reserve completely screwed this up on their own without any help from government, who were happy to sit on their hands and let the bill run up for the next guy.
Let's not forget the breadth of ignorance from the Biden administration and Fed reserve who as recent as a couple of months ago were saying this was all Putin in Ukraine and not stupid monetary policy coming home to roost.


My point is that I don't see anyway out... Decades of Stagflation... Or rapidly deflate the asset prices causing a crash, essentially shocking killing the patient with the hope they can be resuscitated later.
I don't blame Biden for where we are today, I do however hold him accountable for having no real plan or idea on where to go from here.
The advice he gets from the banking sector will only be how they want to band-aid it until after their employment contracts expire and capitol hill don't care past the next elections.
This is going to take real leadership and I don't see anyone in the White House since George Bush Sr or Bill Clinton who could provide anything resembling the leadership the country needs.

Agree with most of this.  Not the causes, but interest rates should never be zero and they sat and watched the inflation numbers go up then their drastic action was a .25% increase?  What the fuck was that.  Not even a Dem vs GOP thing as it is the same people working in the Reserve under Trump and Biden.  

No one really has a plan to get out of this as Chamber of Commerce is claiming a collapse of the economic if the interest rates increase over 1%.  Any action that takes Congressional action is blocked by the minority, so price gouging by energy and meat industries cannot be addressed.  FTC is mostly toothless when dealing with anti-competitive actions by businesses as they will pay the fines and continue on as business as usual. 

Businesses made themselves basically untouchable and now the US will pay the price of decades of letting them increase their power and allowing lobbies for them to get so much influence.

Any meaningful action will wait until 2023 after midterm elections as right now it is campaign season and that is the focus of congress.  Then we are likely to have the GOP taking the lead in the House, so lack of the ability to work in a bipartisan manner means, two years of relative inaction should be expected.  2025, maybe a few mix of people will see action but again only if Congress and the White House are the same party as with hyperpartisanism nothing gets done otherwise.  Even if one party takes all three though, there still is the lobby issue to get over as Dems learned the hard way with Manchin and Sinema.  Many businesses think this inflation is a good thing, and they will pay to keep it that way.  In the Senate buy a couple of votes, and you can kill anything relatively cheap.  Killing drug price reform cost 150k with Sinema's donations.

America be broke.  Money in politics means we do not do what is right by any economic theory standards, but do what businesses want us to do since they are the ones with the lobbies that interest with lawmakers on a regular basis.  I mean look at our tax code, most of it in recent years was written by lobbies then given to lawmaker to present in congressional committees.  It is why we have so many loopholes, and things like the Delaware tax loophole can exist despite everyone knowing it is a messed up situation that every company for decades was a Delaware company despite having no physical presence there.

Jun 7, 2022 12:07:23 GMT c said:

Jun 7, 2022 1:10:46 GMT iNCY said:

Yes, you could also engage lobbyists to tell government that you needed to be paraded through the streets of Washington with your bare ass painted red or Western civilisation would end as we know it... Doesn't mean that government has to follow it.
Lobbyists lobby and governments govern, it is the way it has always been.
Your idea that the Dems bravely stood against this is a complete fabrication.
Clinton and Obama both cheer leaded the run up to the sub prime mortgage crisis, it was literally their policy to put poor minority groups in homes.

What your response again fails to acknowledge that the debts that had to be recovered did not occur in a vacuum, it was a mix of greed and stupidity in Wall street, main street and capitol hill.
I would think that wouldn't be too hard for even a jaded socialist to acknowledge?

Again you are conflating Quantitive Easing with the banking bail outs.
The Fed Reserve completely screwed this up on their own without any help from government, who were happy to sit on their hands and let the bill run up for the next guy.
Let's not forget the breadth of ignorance from the Biden administration and Fed reserve who as recent as a couple of months ago were saying this was all Putin in Ukraine and not stupid monetary policy coming home to roost.


My point is that I don't see anyway out... Decades of Stagflation... Or rapidly deflate the asset prices causing a crash, essentially shocking killing the patient with the hope they can be resuscitated later.
I don't blame Biden for where we are today, I do however hold him accountable for having no real plan or idea on where to go from here.
The advice he gets from the banking sector will only be how they want to band-aid it until after their employment contracts expire and capitol hill don't care past the next elections.
This is going to take real leadership and I don't see anyone in the White House since George Bush Sr or Bill Clinton who could provide anything resembling the leadership the country needs.

Agree with most of this.  Not the causes, but interest rates should never be zero and they sat and watched the inflation numbers go up then their drastic action was a .25% increase?  What the fuck was that.  Not even a Dem vs GOP thing as it is the same people working in the Reserve under Trump and Biden.  

No one really has a plan to get out of this as Chamber of Commerce is claiming a collapse of the economic if the interest rates increase over 1%.  Any action that takes Congressional action is blocked by the minority, so price gouging by energy and meat industries cannot be addressed.  FTC is mostly toothless when dealing with anti-competitive actions by businesses as they will pay the fines and continue on as business as usual. 

Businesses made themselves basically untouchable and now the US will pay the price of decades of letting them increase their power and allowing lobbies for them to get so much influence.

Any meaningful action will wait until 2023 after midterm elections as right now it is campaign season and that is the focus of congress.  Then we are likely to have the GOP taking the lead in the House, so lack of the ability to work in a bipartisan manner means, two years of relative inaction should be expected.  2025, maybe a few mix of people will see action but again only if Congress and the White House are the same party as with hyperpartisanism nothing gets done otherwise.  Even if one party takes all three though, there still is the lobby issue to get over as Dems learned the hard way with Manchin and Sinema.  Many businesses think this inflation is a good thing, and they will pay to keep it that way.  In the Senate buy a couple of votes, and you can kill anything relatively cheap.  Killing drug price reform cost 150k with Sinema's donations.

America be broke.  Money in politics means we do not do what is right by any economic theory standards, but do what businesses want us to do since they are the ones with the lobbies that interest with lawmakers on a regular basis.  I mean look at our tax code, most of it in recent years was written by lobbies then given to lawmaker to present in congressional committees.  It is why we have so many loopholes, and things like the Delaware tax loophole can exist despite everyone knowing it is a messed up situation that every company for decades was a Delaware company despite having no physical presence there.

The fact that the White House and the Federal Reserve saw this inflation to be a blip is truly frightening to me.
They know the graphs I posted a couple of threads up showing the money supply is 30 years ahead of where it needs to be.
The problem is that I do not see any way forwards.

If you cripple the supply of money then the US economy goes the way of Japan, and does literally nothing for 20 years.
If you keep the wheels turning inflation gets worse and you risk hyper inflation.

I am going to do another graph:




(The orange bit is mine)
How do you un-ring this bell?

How in the bluest of blue hells could they not see the inflation coming?

This is the "Shiller PE Ratio"



What is the P/E 10? How is it calculated?



To calculate P/E10:



Look at the yearly earning of the S&P 500 for each of the past ten years.

Adjust these earnings for inflation, using the CPI (ie: quote each earnings figure in 2022 dollars)

Average these values (ie: add them up and divide by ten), giving us e10.

Then take the current Price of the S&P 500 and divide by e10.

You draw that yellow line on did the site add it? Because I am not sure it is accurate. If you are doing a regression starting at 97 it should end around 3.2.

And yeah the market is grossly overpriced. A lot of it is driven by the COVID cash we gave to companies who used that for operating expenses and their profit to aggressively buy back stocks. Companies are now running with almost no cash on hand as they been removing stock from the market like crazy to drive the price up. Which also means when the recession does fully hit, they will be in a position to claim without government help they will go under or have to cut hundreds of thousands of jobs.

These fucks all know what they are doing. They are operating at such insane risk margins they would be considered insane in a rational system. But they know they can leverage those jobs to the US government to have us bail them out, so they feel no need for a safety net for economic downturns.

Meanwhile people like you would be utterly fucked if you tried to run the same way. And they are here, with small businesses rapid eroding as these constantly economic shocks bankrupt them. Large businesses get the bailouts, the small ones just collapse.

What should be FAR more concerning is banks are investing cash as well. Not sure if you knew this but in many banks in the US you cannot actually get your cash back. Many banks cannot cover a 10k cash withdrawal. In NC I needed to move 15k and the bank could not cover more than 5k. Took three days to move it each at 5k. Banks take your savings and retirement cash and invest it themselves in risky shit as well for their own profit. Shit takes a steep enough turn and people pull their cash, banks can only cover a small percentage of it before they collapse. Glass Seigel Act prohibited this but as your charts show, we repealed that in the late 90's causing the stock market to skyrocket as most of American's cash now is there. With how risky the investments banks are making are, we could face total financial collapse in the US and nearly did when people were pulling cash at the start of the COVID era and banks were very close to not being able to cover.

Jun 7, 2022 13:01:51 GMT c said:

You draw that yellow line on did the site add it? Because I am not sure it is accurate. If you are doing a regression starting at 97 it should end around 3.2.

And yeah the market is grossly overpriced. A lot of it is driven by the COVID cash we gave to companies who used that for operating expenses and their profit to aggressively buy back stocks. Companies are now running with almost no cash on hand as they been removing stock from the market like crazy to drive the price up. Which also means when the recession does fully hit, they will be in a position to claim without government help they will go under or have to cut hundreds of thousands of jobs.

These fucks all know what they are doing. They are operating at such insane risk margins they would be considered insane in a rational system. But they know they can leverage those jobs to the US government to have us bail them out, so they feel no need for a safety net for economic downturns.

Meanwhile people like you would be utterly fucked if you tried to run the same way. And they are here, with small businesses rapid eroding as these constantly economic shocks bankrupt them. Large businesses get the bailouts, the small ones just collapse.

What should be FAR more concerning is banks are investing cash as well. Not sure if you knew this but in many banks in the US you cannot actually get your cash back. Many banks cannot cover a 10k cash withdrawal. In NC I needed to move 15k and the bank could not cover more than 5k. Took three days to move it each at 5k. Banks take your savings and retirement cash and invest it themselves in risky shit as well for their own profit. Shit takes a steep enough turn and people pull their cash, banks can only cover a small percentage of it before they collapse. Glass Seigel Act prohibited this but as your charts show, we repealed that in the late 90's causing the stock market to skyrocket as most of American's cash now is there. With how risky the investments banks are making are, we could face total financial collapse in the US and nearly did when people were pulling cash at the start of the COVID era and banks were very close to not being able to cover.

I drew the orange line to show the trend without QE, it is just a rough trend line to show where we broke away from the historical average post-GFC.
What frightens me about the banks is that in March 2020 the Fed reserve dropped all requirements for the banks to hold cash reserves down from 10% to 0.

This is the problem, banks have been forced to invest.
Offer home loan rates at 1 and 2% is not going to keep the shareholders happy.
The banks have been the tool the Fed Reserve used to push liquidity into the market.
All that has achieved is high asset prices and crazy inflation.

Jun 7, 2022 12:07:23 GMT c said:

Businesses made themselves basically untouchable and now the US will pay the price of decades of letting them increase their power and allowing lobbies for them to get so much influence.

Yes, time for megacorps and real life Shadowrun! Can't wait until the President is a dragon.

Jun 7, 2022 13:43:03 GMT iNCY said:

Jun 7, 2022 13:01:51 GMT c said:

You draw that yellow line on did the site add it? Because I am not sure it is accurate. If you are doing a regression starting at 97 it should end around 3.2

I drew the orange line to show the trend without QE, it is just a rough trend line to show where we broke away from the historical average post-GFC.
What frightens me about the banks is that in March 2020 the Fed reserve dropped all requirements for the banks to hold cash reserves down from 10% to 0.

This is the problem, banks have been forced to invest.
Offer home loan rates at 1 and 2% is not going to keep the shareholders happy.
The banks have been the tool the Fed Reserve used to push liquidity into the market.
All that has achieved is high asset prices and crazy inflation.

Def were overly generous with that line. Def would be closer to 3.2.


And yeah I commented on the zero holding rule when they announced it as that couple with allowing banks to invest is what triggered the great depression. One fast small downturn that causes people to get cash out and banks will be in a place where they cannot cover and it will be a shit storm. Bank collapse or not, people will riot if they go to convert their savings into cash and the banks tell them no, they cannot release it.

Jun 7, 2022 15:41:53 GMT Gyro LC said:

Jun 7, 2022 12:07:23 GMT c said:

Businesses made themselves basically untouchable and now the US will pay the price of decades of letting them increase their power and allowing lobbies for them to get so much influence.

Yes, time for megacorps and real life Shadowrun! Can't wait until the President is a dragon.

Shadowrun and the cyberpunk it was all based on is scary accurate.  Debit cards, VR chat, acceptable monopolies, hacking, privatization pushes for everything, electronic music, the modern web, neurolink technology, machine learning, precrime tracking, autonomous robots, drones, they predicted so damn much.

We are seeing Amazon become a megacorp.  They have dominant positions in several different areas from web hosting, to retail, to logistics, to AI, to shipping in the US.  

Now imagine if they threatened to boycott America entirely over the implementation of a law.  No selling productions in the US, no webspace for US companies or web access to US computers, all amazon smart devices go dead, all workers furloughed, ect.  They would cause mass disruption.  This makes them as powerful as the government basically and unmanageable. 

As other companies get this big, will just be a matter of time before they turn cities private Disney style and the sprawls start.

This graph was published in an online news website over here, it tracks consumer confidence




They make the note that never in the history of Australia have we ever raised interest rates  when consumer confidence was below 100 points.
This is what bothers me, the inflation in the economy today is not todays inflation, but that of 2-5 years ago.
I am not saying central banks have a choice, but this graph shows we are pulling the handbrake exactly when the engine is starting to stall.

I just do not see a situation were federal interest rates are less than half of the inflation rate. Particularly when that number hits under 1%. When interest is lower than inflation, debt investing becomes the proper place for an individual but if everyone is debt investing then society is at risk when by expected chance, a percentage of those investments do not pay off.

I mean I am not well versed in economics, just the standard college course I barely passed, but it makes no damn sense for inflation to be near 10 and interest rates at 1. In my imaginary socialist paradise, we would have rates at 20 now to tame that shit down. And it would make sense to do it as when inflation is skyrocketing and a recession is loaming, in the US at least, companies should be saving to endure to the coming storm, not trying to maximize profit before they pay off enough of Congress for a bailout.