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Old 06-13-2022, 07:21 PM
 
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The economic expansion was already long in the tooth in 2019. The pandemic and our responses to it are in retrospect what caused inflation to get out of control, bringing an end to the Great Moderation that started forty years ago.

However interest rates had bottomed out in 2019 as well. This is really a question about the possibilities on the economic frontier. Could the economic expansion have continued had we not overdone our response to the pandemic, or was the pandemic simply the catalyst for the end of forty years of declining interest rates? If it had not been the pandemic, would another catalyst have had the same effect? Or would we have tried NIRP to keep the economy going?

I know any answer is speculation as this is a counterfactual, but the posters on this forum might have some good arguments to answer the question.
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Old 06-14-2022, 05:03 PM
 
Location: Southeast US
8,609 posts, read 2,313,009 times
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there were signs of negative GDP - that the long slow economic growth since 2010 - before Covid became an everyday concern. Q1 2020 was slightly negative; Q2 was obviously very large. By Q4 '20, GDP was back within ~2% of Q4 '19.

Folks need to understand that recessions are a "natural" part of the economic cycle. In the last 100+ years, we've had ~ 10 recessions, but only 2 of those were a huge negative event - 1929 and 2008.
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Old 06-15-2022, 09:37 AM
 
Location: Flyover part of Virginia
4,218 posts, read 2,462,786 times
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Quote:
Originally Posted by Eyebee Teepee View Post
there were signs of negative GDP - that the long slow economic growth since 2010 - before Covid became an everyday concern. Q1 2020 was slightly negative; Q2 was obviously very large. By Q4 '20, GDP was back within ~2% of Q4 '19.

Folks need to understand that recessions are a "natural" part of the economic cycle. In the last 100+ years, we've had ~ 10 recessions, but only 2 of those were a huge negative event - 1929 and 2008.
We are not "allowed" to have recessions anymore. The government will full-on nationalize the entire economy Soviet style, before they allow a recession to happen and fully play out.
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Old 06-15-2022, 09:44 AM
 
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I have no doubts that current economic negatives would not have been nearly as severe today sans Covid and the War. And in that same vein I expect things to recover fairly quickly if/as the Covid seems to be alleviating, and the War hopefully does not trudge on.
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Old 06-16-2022, 01:53 AM
 
Location: Spain
12,722 posts, read 7,587,400 times
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Quote:
Originally Posted by Hoonose View Post
I have no doubts that current economic negatives would not have been nearly as severe today sans Covid and the War. And in that same vein I expect things to recover fairly quickly if/as the Covid seems to be alleviating, and the War hopefully does not trudge on.
The war sure looks like it might be trudging on for some time. Russia is gaining ground but doing so very slowly, and Ukraine is growing in strength but it will also take a long time to regain lost ground to fortified Russian invaders holding their land. I still think the tide will turn more in Ukraine's favor this summer but the war will continue past the harvest season and who knows when control of the nearby seas normalizes.


Quote:
Originally Posted by Taggerung View Post
We are not "allowed" to have recessions anymore. The government will full-on nationalize the entire economy Soviet style, before they allow a recession to happen and fully play out.
This is ridiculous. The Fed makes moves to try to stabilize the economy, which is part of their mandate. I suspect you hate it because it foils your never ending predictions of everything crashing, but either way it is entirely possible we are either entering or about to enter a recession so how exactly will you rationalize your gibberish about a Soviet-style nationalized economy when that doesn't happen?
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Old 06-17-2022, 08:00 AM
 
Location: Flyover part of Virginia
4,218 posts, read 2,462,786 times
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Originally Posted by lieqiang View Post

This is ridiculous. The Fed makes moves to try to stabilize the economy, which is part of their mandate. I suspect you hate it because it foils your never ending predictions of everything crashing, but either way it is entirely possible we are either entering or about to enter a recession so how exactly will you rationalize your gibberish about a Soviet-style nationalized economy when that doesn't happen?
Have you not been paying attention to the past 13 years? Fedgov is absolutely terrified of a real deflation taking place, and they have every intention of pulling out all the stops to prevent that from happening. There is almost no chance that Fedgov allows a recession to fully play out to its final conclusion with no bailouts, no "stimulus," no "QE," and no ZIRP. In their eyes, the consequences are simply too horrific. If they have to nationalize the economy and print a quadrillion dollars to prevent a deflationary crash, they will do just that.
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Old 06-18-2022, 11:22 AM
 
14,409 posts, read 14,329,059 times
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Quote:
Originally Posted by Taggerung View Post
Have you not been paying attention to the past 13 years? Fedgov is absolutely terrified of a real deflation taking place, and they have every intention of pulling out all the stops to prevent that from happening. There is almost no chance that Fedgov allows a recession to fully play out to its final conclusion with no bailouts, no "stimulus," no "QE," and no ZIRP. In their eyes, the consequences are simply too horrific. If they have to nationalize the economy and print a quadrillion dollars to prevent a deflationary crash, they will do just that.
What that poster was trying to tell you is that the very mandate the federal reserve has is to prevent a severe recession and the consequences of high unemployment. What businesses have been nationalized? Please give me a list. Eight percent inflation is not fun, but inflation is worse in most countries in this world today.

As usual, you don't listen very well and you continue to engage in conspiratorial thinking.
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Old 06-18-2022, 03:20 PM
 
22,666 posts, read 24,627,441 times
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Sure, probably!

But then the question becomes, what happens if the highly-manipulated
economy is allowed to "build steam" for an additional 5 or so year before
a dramatic deflation occurs?
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Old 06-18-2022, 03:21 PM
 
Location: Flyover part of Virginia
4,218 posts, read 2,462,786 times
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Quote:
Originally Posted by markg91359 View Post
What that poster was trying to tell you is that the very mandate the federal reserve has is to prevent a severe recession and the consequences of high unemployment. What businesses have been nationalized? Please give me a list. Eight percent inflation is not fun, but inflation is worse in most countries in this world today.

As usual, you don't listen very well and you continue to engage in conspiratorial thinking.
The Federal Reserve cannot prevent recessions. All they can do is issue debt, which may delay the day of reckoning for some time, but will lead to a much more severe crisis later down the line.

The mass government bailouts for big banks and big corporations were basically a prerequisite to full-on Soviet style nationalization. Do you really think the government will just sit back and allow these "to big to fail" banks/corporations to go under? What reason is there to believe that they will? They did not allow it last time, and they will certainly not allow it this time. Government spending is already near half the economy. During the next crisis, government will take over the economy nearly completely, in their futile attempt to prevent economic Armageddon.
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Old 06-19-2022, 03:20 AM
 
Location: Spain
12,722 posts, read 7,587,400 times
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Quote:
Originally Posted by Taggerung View Post
The Federal Reserve cannot prevent recessions. All they can do is issue debt
Who just raised interest rates, the Tooth Fairy?


Quote:
Originally Posted by Taggerung View Post
The mass government bailouts for big banks and big corporations were basically a prerequisite to full-on Soviet style nationalization.
So when you say Soviet Style nationalization, it's like so many other things you say where the evidence is your speculation. You are a master of Somedayism (tm).
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