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If there was going to be inflation we should have had it already in spades.
By April the government will have put $3200 into, what, 150 million people's pockets? Not to mention the increased unemployment. Just the $3200 is about 8% of American median personal income of $36k.
On top of that they have put trillions into business's pockets, trillions on the Fed balance sheet. Overall the government + Fed will have stimulated the economy with almost half of annual GDP ($9 Trillion, 42% of 2019 GDP of 21 Trillion) come April. This is not even to mention the 15-20 Trillion spent by the other governments and central banks of the world.
Again, if there was going to be inflation, this is the time. Where is it? It's certainly not in commodities. I was just looking up commodities on St. Louis Fed: Flour & Milk. Flat since 2011. Apples. Flat. Eggs. More volatile but the trendline is flat. Cotton. Down. Steel. Volatile but trendline down. Copper. Down. Where is the !*&%^ing inflation?? Finally found something... metal utensils, pots, pans - spiked up in 2018.
I would look for more inflation as we come out of the Pandemic. By next year, hopefully!
What is the long term consequences of that level of debt, that is one topic I am not very well read in yet.
That depends on the Fed, and how much and how long it keeps its enlarging stock of US Treasuries on its balance sheet. When the Fed owns federal debt, the interest paid to it is swept back to the Treasury. If it rolls over that debt into perpetuity, then the Treasury and our tax payers never come on the hook. Except for any inflation that the process creates.
1. The inflation thing is easy. There is no significant general price inflation because at the crotch of all supply and demand curves we have about the right amount of money in broad circulation. The details are myriad but the guts of the issue really is that simple. I understand that you won't accept what I just said but I'm right and I'd guess deep down you know that.
Okay! So inflation is not happening because it's not happening. We just happen to have issued JUST the right amount of stimulus, done the right amount of QE and done exactly the right things. Wow.
But maybe you are right, if there is no downturn from here on out, maybe they know things I am not giving them credit for.
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2. Stimuli are much of the reason the economy has recovered so well. Think of it this way the combination V and U recovery shows what our economy is doing in aggregate. K recovery lines show good and bad or good, better, best areas in the the economy etc. That's all...not surprising...not special...not confusing...not particularly interesting.
Well, then the austerity hawks from 10-12 years ago were wrong, and Keynesians were right if that's the case.
It is pretty interesting, and quite important. If things proceed as I think they will, we will have a very 19th century-like "other half" economy where people on the top half are quite big winners of the changes and the bottom half are quite big losers. We need the healthy bell curve, not a hollowed out middle. This is not good, as anyone who knows what the history of the 19th century led to.
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3. Yawn, Banerjee is just another in a long line of brilliant but hyper-left Indian economists. GDP measures dollars of economic output, GDP is 2 + 2 = 4, 4 + 5 = 9........adding qualitative inputs may make some people feel better but we literally need the hard numbers. Guys like Sen and Banerjee are the worst economics has to offer.....overtly political types who use economics as a means sell their horribly out of touch politics. Much as with the MMT frauds these guys are selling a bill of goods, a desired wild political shift to the left, as economics.
As an aside it's interning to me that so many Indian economists of note claim to hate The Indian Communists in power but want a world that is very much like that.
3.1. Which economists were way off about the covid bust and recovery?[/quote]
Well Banerjee is not a Marxist. Also not an MMT. Their argument is that our current economic paradigm managed differently can resolve or at least greatly relieve inequality. Guess you don't like Nobel laureates? Which Friedman was too, and he was also highly political, an economic advisor to Reagan and Thatcher no less.
Inequality is economic question of the 21st century. That is why the best minds are thinking about it. If we want to suppress leftism, the best way is to nip it in the bud. As Bismarck said, the way to beat the communists is to take away the source of their agitation.
Another interesting question is why leftism is on the rise despite economic indicators better than they've ever been. Traditionally it is only popular when the economy is bad. Again, the late 19th century is relevant. Banerjee's work addresses this kind of question, and the answer is that the measures don't pick up the problems that are there.
Last edited by redguard57; 02-09-2021 at 09:42 AM..
Rates come first ..in fact the 10 year has more than doubled since the lows on inflation.
Corporate financing via bond sales has shot up big time along with anything else that follows bond rates. Credit cards have been sending out notices like crazy increasing their rates ... chase is now going to almost 30% on their premium cards
Rates come first ..in fact the 10 year has more than doubled since the lows on inflation.
Corporate financing via bond sales has shot up big time along with anything else that follows bond rates. Credit cards have been sending out notices like crazy increasing their rates ... chase is now going to almost 30% on their premium cards
My bet is that we will not see a substantial preemptive rate increase. A meager one to message future intention is possible.
My bet is that we will not see a substantial preemptive rate increase. A meager one to message future intention is possible.
Well so far like I said , the 10 year is up over 100% since the low ..the 30 year is up about 75% from the low .
So rates already did rise... the fed is trying to hold the line on short term rates for now but this is the steepest yield curve we have had in years and it already happened based on future expectations.
Well so far like I said , the 10 year is up over 100% since the low ..the 30 year is up about 75% from the low .
So rates already did rise... the fed is trying to hold the line on short term rates for now but this is the steepest yield curve we have had in years and it already happened based on future expectations.
By the time the fed moves usually the fed funds futures already did the work for them ...the fed moving is really just confirming the markets actions.
market perception moves rates before the fed does ....it is more pronounced in bonds but even short term rates are moved by investors before the fed announcements happen
Last edited by mathjak107; 02-09-2021 at 11:25 AM..
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