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If people were really feeling better economically, then why did Bernie (on the left) and Trump (on the right) have so much popularity and support compared to the more "mainstream" candidates during the previous election???
You have a point there. The plurality (majority?) is exasperated and more than mildly perturbed. Anger swirls, with culprits and scapegoats varying depending on one's biases and political persuasions. Imagine a political candidate stating that "OK, things could assuredly be improved, but in the large they're OK, and the last thing that we ought to pursue, is some massive and unprecedented alteration." Would such a candidate succeed?
If people were really feeling better economically, then why did Bernie (on the left) and Trump (on the right) have so much popularity and support compared to the more "mainstream" candidates during the previous election???
When economic issues are not a concern, the people will focus on other issues like healthcare/education (Bernie), and anti-immigration (Trump).
Let's refrain from blaming any politician at first. Let's talk about the current state of the economy. The media on both sides have generally pushed the narrative that it's booming in recent years. However, is that really the case? First and foremost, the only thing that has really boomed since the beginning of 2017 is the stock market. Everything else has continued humming along as it has since at least early in Obama's second term. We have nearly full unemplyoment but it doesn't feel like it. Wages are not rising like they should if the unemployment rate really was as low as the official number. This isn't a '90s economy. This is an '06 economy. It also doesn't feel like a 3% GDP economy. It feels more like 1-2%. I would say this economy is not bad per say but it's not as rosy as some would have you believe. I also think recession is coming sooner than people want to admit as well.
What are your thoughts on the current economy?
I think the 70's represented the PEAK of our standard of living as Americans, the appex of the post WWII era where all the major economies of the world, except our own, was destroyed by the war. That resulted in America becoming the largest net exporter and creditor in the world. We had a virtual monopoly and as a result American wages and living standards grew tremendously in the post war era, then peaked in the early 70's when other economies recovered and we had to breech the gold standard to adjust to a more economically competitive globe.
Ever since we went off the gold standard we have been maintaining our standard of living by increasing the number of workers in the household (most wives used to be domestic and the husbands worked outside the home), via debt and via working multiple jobs. As each year has passed, the globe gets even more competitive. China becoming capitalistic in its economy and the rise of India has increased global economic competition ...resulting in huge trade deficits to the point that America now has the largest trade deficit in the world and maybe the largest debtor nation in the world, which is the reverse of our situation shortly after WWII.
I don't think our economy is strong by any means. I think we are just maintaining by borrowing from our future. I think every administration is going to do all it can to improve the economy because their reelection is all about the economy......so they all do the same stealing from the future to prop up today.
Last edited by Indentured Servant; 06-20-2018 at 08:03 AM..
Au contraire. Had the Federal Reserve not bailed out Fannie and Freddie with $2 trillion in QE, those homes would have been foreclosed in a timely manner. The investors left holding the bag would have demanded it. As it is now... no one has to pay, the builders/sellers/GSEs/etc. were made whole at the point of purchase, the Federal Reserve just reduces/erases the line item as the MBS mature and roll off (remember, they don't have to mark to market or recognize any losses), and that $2 trillion in QE is never unwound. Well, maybe some of it will unwind, but most certainly not all.
So, let's see... ~$13,000/year in free QE money for even 20 years of what should have been a 30-year mortgage? That's $260,000 free QE money. But only for those who were irresponsible and didn't/don't pay their mortgages.
Here is an article about the current state of the unwinding.
QE is being unwound including the MBS. Mark to market is not an issue. Many if not all the MBS purchased during the financial crisis have been replaced now with more recent MBS. For the record the MBS the Fed owns were not purchased directly from the GSEs and were not a bailout of the GSEs.
However you are getting closer as to how China can do so much for their people and so quickly.
Either off the books, secretive moneys or loans. Or loans forgiven on a massive scale in a secretive manner.
The Fairness issue again comes up.
And suspicion of the viability of a country's economy and/or currency, whichever applies. China printed the equivalent of $19 trillion in QE to "do so much for their people and so quickly." That's on the verge of crashing now, and they've already used their most potent weapon to egregious excess... QE. It's a lesson in the truth of the fact that the free money machine injection only works as long as it continues to spew money. IOW, It's not real money being spent, it's artificially created money. And there comes a point at which that doesn't work anymore. Cue Zimbabwe, Weimar Germany, etc. references.
Essentially a QE for the people is what we will need here in the USA to cover our HC, and maybe city housing. And in the far future probably national income/allowance. The money (USD) needed is too much for taxes to cover. Of course this can incite inflation. Or not. Depending on available resources.
The Federal Reserve has been quietly tiptoeing around this. Think of it as walking a tightrope between the top floors of two skyscrapers. They might be able to get away with some QE, which they used to bail out Fannie and Freddie and homeowners who are delinquent on/won't ever pay their mortgages, but they can't keep printing QE forever.
QE is being unwound including the MBS. Mark to market is not an issue. Many if not all the MBS purchased during the financial crisis have been replaced now with more recent MBS. For the record the MBS the Fed owns were not purchased directly from the GSEs and were not a bailout of the GSEs.
Mark to market IS an issue. The Federal Reserve is hiding losses because it can. The GSE MBS were bought with created money with no corresponding REAL debt created to back it (like US Treasuries). All it takes is a keystroke to wipe out any defaults/nonpayments, and no one actually has to realize any loss. No one's the wiser.
And yes, I know that the MBS the Federal Reserve owns were not directly purchased from the GSEs. They're the underperforming GSE MBS the Federal Reserve bought from others to take them off their hands. A back door bail out that completely sidestepped the Congressional approval process.
And suspicion of the viability of a country's economy and/or currency, whichever applies. China printed the equivalent of $19 trillion in QE to "do so much for their people and so quickly." That's on the verge of crashing now, and they've already used their most potent weapon to egregious excess... QE. It's a lesson in the truth of the fact that the free money machine injection only works as long as it continues to spew money. IOW, It's not real money being spent, it's artificially created money. And there comes a point at which that doesn't work anymore. Cue Zimbabwe, Weimar Germany, etc. references.
The Federal Reserve has been quietly tiptoeing around this. Think of it as walking a tightrope between the top floors of two skyscrapers. They might be able to get away with some QE, which they used to bail out Fannie and Freddie and homeowners who are delinquent on/won't ever pay their mortgages, but they can't keep printing QE forever.
The major difference with China compared to Weimar is productivity. You don't go down the tubes with continuous productivity growth and relatively low inflation. Of course Weimar was the opposite. Zimbabwe is simply a story of governmental malfeasance. China having raised the lot of hundreds of millions of their people in a relatively short time means that they are doing something right.
And much of their success IMO is due to their more aggressive and secretive use of their fiat. This is real QE for their people. No, I don't think it can or will go on forever. And as their central command turns their now advancing economy towards its people as we did post-WW2, they will support themselves more through conventional consumerism.
We are at our highest rate of earning since we've been married (20 years).
Generally speaking, even in a poor economy, you'd be at your highest rate of earning, outside of unemployment.
My highest rate of earning in 2007... was 2007. Same in 2008... and 2009. If you mean to say "I've been continuously employed" than that's good. And that could be indicative of a strong economy.
Speaking for myself, my employment got rocky in 2018 and I had to switch jobs. Does that one incident mean the economy, stinks... no of course not. But, if you stay employed, commonly, your compensation goes up and not down.
The major difference with China compared to Weimar is productivity. You don't go down the tubes with continuous productivity growth and relatively low inflation.
And yet there China is, on the brink of an economic collapse unless they keep printing funny money. If China's productivity was so great, they wouldn't have needed the equivalent of $19 trillion in QE.
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