2021 - Is inflation finally back in the conversation?

[Parliament 14260]

9 hours ago, washparkhorn said:

Technically he is right.  Also he’s an idiot.

[bernorange 8362]

10 hours ago, washparkhorn said:

Spending is subject to limited real resources/the inflation restraint. 

The problem, as MMT devotees are apt to ignore, is that there is no hard constraint, there is a soft constraint.  But Congress is not a rational actor bound by soft constraints.  This is a problem inherent with fiat currency systems which have a rich history of eventual failure.  2% inflation targeting (soon to be 4% because the Fed is trapped) is complete bullshit and immoral planned value destruction of the currency that accelerates wealth disparity as asset bubbles favor asset owners while everyone else drowns.

[washparkhorn 9939]

2 hours ago, Neonmoon said:

Or as the richest nation on earth, we could raise taxes 

Taxes drain inflationary liquidity and, when targeted at inflationary behavior (price gouging, greedflation, . . .), de-incentivize those behaviors. 

[Captainant 27680]

1 hour ago, washparkhorn said:

Taxes drain inflationary liquidity and, when targeted at inflationary behavior (price gouging, greedflation, . . .), de-incentivize those behaviors. 

That makes entirely too much sense. Can't we just cut more spending on useless things like schools and roads?

[lucious leftfoot 126]

1 hour ago, washparkhorn said:

Taxes drain inflationary liquidity and, when targeted at inflationary behavior (price gouging, greedflation, . . .), de-incentivize those behaviors. 

Your problem is that to whatever extent these things exist, politicians are not willing to address them because they either benefit from them directly or are afraid of political blowback. So you're left with broadly raising taxes. Politicians want to do that less than ever it seems. This is partially due to the belief that we can just print the money becoming more pervasive, imo. 

 

39 minutes ago, Captainant said:

That makes entirely too much sense. Can't we just cut more spending on useless things like schools and roads?

We've gone over the math here. Hitting the rough historical ceiling on tax collection means $500B revs.  Leaves $1.2T deficit still per annum. So where are the cuts?

It's all a tired argument.

 

Elevated inflation over the medium to long term is best case scenario. Losing reserve currency status or otherwise somehow upending the dollar based system is worst case. 

 

[Bozo_Casanova 26490]

2 hours ago, washparkhorn said:

Taxes drain inflationary liquidity and, when targeted at inflationary behavior (price gouging, greedflation, . . .), de-incentivize those behaviors. 

Based!

[Neonmoon 38129]

52 minutes ago, lucious leftfoot said:

Your problem is that to whatever extent these things exist, politicians are not willing to address them because they either benefit from them directly or are afraid of political blowback. So you're left with broadly raising taxes. Politicians want to do that less than ever it seems. This is partially due to the belief that we can just print the money becoming more pervasive, imo. 

 

We've gone over the math here. Hitting the rough historical ceiling on tax collection means $500B revs.  Leaves $1.2T deficit still per annum. So where are the cuts?

It's all a tired argument.

 

Elevated inflation over the medium to long term is best case scenario. Losing reserve currency status or otherwise somehow upending the dollar based system is worst case. 

 

You raise a good point

American culture is based on self-centeredness. There is no path to have people contribute more, the only path is to take away healthcare and social security. 

[jimmyjazz 45978]

Call me crazy, but the fact that we spend 3X more on defense than any country on earth, and are a long way from the most populous country, well . . . maybe we should look at that, among other things.

You're not a patriot!

[UTPhil2006 3807]

[LCHorn 2621]

50 minutes ago, jimmyjazz said:

Call me crazy, but the fact that we spend 3X more on defense than any country on earth, and are a long way from the most populous country, well . . . maybe we should look at that, among other things.

You're not a patriot!

This might have been on Shaggy but in a predecessor version of this conversation @Bozo_Casanova made the point that what we think of as “defense” is an enormous government program combining actual defense, a jobs program both in the DoD directly and via procurement (all of which has to be sourced in the US and often is located in mid-size or smaller population centers), a retirement and healthcare system, etc.  

 

I’m sure he had some other points to describe the leviathan but I think the main idea was that a lot of what we call defense spending is just a transfer payment by another name.

[jimmyjazz 45978]

I'm sure he was right to some extent, but in my career prior to entering the private sector, I did a lot of research for ARPA/DARPA/etc., and wrote several successfully-funded proposals.  The way projects were strung along with funding piled on funding even when goals weren't remotely met (performance/schedule/both) was disgusting.  I was glad to get out.  There is a lot of waste in that world.  All of defense?  No idea.  Where I was?  Absolutely.

[Incredulity 11675]

11 hours ago, Captainant said:

That makes entirely too much sense. Can't we just cut more spending on useless things like schools and roads?

Roads and schools aren’t funded by Fed income taxes. You’re completely disingenuous 

Edited May 17 by Incredulity

[Brisketexan 105158]

Roads and schools aren’t funded by Fed income taxes. You’re completely disingenuous 

Texas schools receive billions in federal funding.
Texas highways receive billions in federal funding.

[jimmyjazz 45978]

18 minutes ago, Incredulity said:

Roads and schools aren’t funded by Fed income taxes. You’re completely disingenuous 

WTF are you babbling about now?

[fattyflattie 4639]

17 hours ago, Neonmoon said:

Or as the richest nation on earth, we could raise taxes 

Can you imagine if we raised taxes, made the rich pay their fair share, and then made the freeloaders actually contribute something? Anything at all. Like $300. We could be out of debt in a coupe of years.  

[jimmyjazz 45978]

1 hour ago, fattyflattie said:

Can you imagine if we raised taxes, made the rich pay their fair share, and then made the freeloaders actually contribute something? Anything at all. Like $300. We could be out of debt in a coupe of years.  

I'm not sure you've done the freeloader math there, Lou.  Let's say we generously consider half of Americans "freeloaders".  That's what, 165 million people?  At $300 a pop, that's roughly $50B annual.  We're including children here, which is laughable, but I know you think they should be pulling their own weight (the little shits), so let's go with that.

Our budget deficit is $1.7 TRILLION each year.  Your idea would put a 3% dent in that number.  Maybe we need to be looking towards the wealthy and the corporations that pay a far lower annualized tax rate than I do, huh?

[fattyflattie 4639]

37 minutes ago, jimmyjazz said:

I'm not sure you've done the freeloader math there, Lou.  Let's say we generously consider half of Americans "freeloaders".  That's what, 165 million people?  At $300 a pop, that's roughly $50B annual.  We're including children here, which is laughable, but I know you think they should be pulling their own weight (the little shits), so let's go with that.

Our budget deficit is $1.7 TRILLION each year.  Your idea would put a 3% dent in that number.  Maybe we need to be looking towards the wealthy and the corporations that pay a far lower annualized tax rate than I do, huh?

Of course I didn't attempt any math.  Just a reminder of the sheer amount of net takers in our society.  We can bitch all we want about the "rich", but there's a whole lot of nothing being contributed by a whole lot of people. 

[jimmyjazz 45978]

11 minutes ago, fattyflattie said:

Of course I didn't attempt any math.  Just a reminder of the sheer amount of net takers in our society.  We can bitch all we want about the "rich", but there's a whole lot of nothing being contributed by a whole lot of people. 

I think it might be instructive to consider the revenue that might be generated if the top 5% of income earners paid, say, 40% marginal income tax.  Beyond that, consider the vast amount of wealth being accrued tax-free (or at least tax-deferred).

Edited May 17 by jimmyjazz

[fattyflattie 4639]

5 minutes ago, jimmyjazz said:

I think it might be instructive to consider the revenue that might be generated if the top 5% of income earners paid, say, 40% marginal income tax.  Beyond that, consider the vast amount of wealth being accrued tax-free (or at least tax-deferred).

They need to pay too.  For sure/ 

[Snake Diggity 4625]

7 hours ago, fattyflattie said:

Can you imagine if we raised taxes, made the rich pay their fair share, and then made the freeloaders actually contribute something? Anything at all. Like $300. We could be out of debt in a coupe of years.  

“The poorest people each paying $300/yr more in taxes is the answer to our debt crisis” is the most fatty thing yet.  Fucking idiot.

[Bozo_Casanova 26490]

11 hours ago, LCHorn said:

This might have been on Shaggy but in a predecessor version of this conversation @Bozo_Casanova made the point that what we think of as “defense” is an enormous government program combining actual defense, a jobs program both in the DoD directly and via procurement (all of which has to be sourced in the US and often is located in mid-size or smaller population centers), a retirement and healthcare system, etc.  

 

I’m sure he had some other points to describe the leviathan but I think the main idea was that a lot of what we call defense spending is just a transfer payment by another name.

Not only that,  it’s also our most essential  and strategic provider of 

1) vocational training
2) Leadership and management development 
3) infrastructure 
4) healthcare 

 

So when we consider how to spend less on “defense,” what we are really asking is:

“Can we reduce our economic dependence on defense by redirecting funds to education, infrastructure and healthcare?”

[Incredulity 11675]

10 hours ago, Brisketexan said:

Texas schools receive billions in federal funding.
Texas highways receive billions in federal funding.

lol.  You think the feds only get money from income tax?

https://www.taxpolicycenter.org/briefing-book/what-highway-trust-fund-and-how-it-financed#:~:text=Revenue from the federal excise,use tax on those vehicles.

 

Public schools are over 92% state and local funded

https://usafacts.org/articles/how-are-public-schools-funded/#:~:text=In the 2019-2020 school,about 7.6% of school funding.

 

 

 

 

[jimmyjazz 45978]

2 hours ago, Bozo_Casanova said:

Not only that,  it’s also our most essential  and strategic provider of 

1) vocational training
2) Leadership and management development 
3) infrastructure 
4) healthcare 

Which does lead to the question "what percentage of other world powers' defense budgets are similarly allocated?"

[NotActuallyALonghorn 4976]

The DOD can't account for 1.9 trillion dollars worth of assets. Maybe we should start holding them accountable for the money we give them and go from there when we set their budget. 

[Bozo_Casanova 26490]

39 minutes ago, NotActuallyALonghorn said:

The DOD can't account for 1.9 trillion dollars worth of assets. Maybe we should start holding them accountable for the money we give them and go from there when we set their budget. 

Why do you hate us? Is it because we’re free?

[Dbeasy 15068]

On 5/15/2024 at 9:28 PM, washparkhorn said:

This is a terrific example of a knowledgeable person not being able to see the forest for the trees. We all read about academics with no common sense and here is a great example. 

Yes, you are technically correct. The government can avoid default by just printing money. But that’s not the point, obviously. The point is that the inflation risk produced by out of control deficits threatens the entire system. There are many reasons Japan hasn’t imploded. The US is not Japan.  And oh by the way they’ve had a pretty miserable 20-30 years anyway. 

[washparkhorn 9939]

On 5/17/2024 at 7:05 PM, Dbeasy said:

The US is not Japan.  And oh by the way they’ve had a pretty miserable 20-30 years anyway. 

While excessive money printing can lead to inflation, it is not the sole determinant. Advanced economies like the US (Japan, GB, Australia. . .) have multiple tools and mechanisms to control inflation, including monetary actions by the Federal Reserve (such as adjusting interest rates and open market operations). US demonstrates inflation can be managed even when significant amounts of money are injected into the economy, such as during the quantitative easing periods following the 2008 financial crisis.

Japan's experience demonstrates that a country with its own currency can maintain high debt levels without triggering hyperinflation or economic collapse. Japan's debt-to-GDP ratio is significantly higher than that of the US, yet it has managed to avoid hyperinflation and maintain economic stability. This is largely because Japan, like the US, has control over its currency and can conduct monetary policy to mitigate inflationary pressures.

While Japan has experienced periods of low growth and deflation, labeling the entire period as "miserable" is an oversimplification. Japan has maintained a high standard of living, low unemployment rates, and technological advancements. Japan's economic issues are complex and not solely attributable to its monetary policies—demographic challenges and other structural factors also play significant roles.

Inflation is just one of many economic factors that need to be managed. Fiscal deficits can be sustainable if they are used to finance productive investments that boost economic growth. Moreover, in times of economic downturn, running deficits can be necessary to stimulate demand and avoid deeper recessions. The real threat to economic stability is not necessarily the size of the deficit or the act of money printing, but rather the mismanagement of economic policies overall.

Like propaganda from Peterson think tanks, you overly simplifies complex economic relationships and ignores the evidence that monetary sovereign countries, like the US and Japan, have managed to control inflation despite high deficits. 
 

[Dbeasy 15068]

4 minutes ago, washparkhorn said:

While excessive money printing can lead to inflation, it is not the sole determinant. Advanced economies like the US (Japan, GB, Australia. . .) have multiple tools and mechanisms to control inflation, including monetary actions by the Federal Reserve (such as adjusting interest rates and open market operations). US demonstrates inflation can be managed even when significant amounts of money are injected into the economy, such as during the quantitative easing periods following the 2008 financial crisis.

Japan's experience demonstrates that a country with its own currency can maintain high debt levels without triggering hyperinflation or economic collapse. Japan's debt-to-GDP ratio is significantly higher than that of the US, yet it has managed to avoid hyperinflation and maintain economic stability. This is largely because Japan, like the US, has control over its currency and can conduct monetary policy to mitigate inflationary pressures.

While Japan has experienced periods of low growth and deflation, labeling the entire period as "miserable" is an oversimplification. Japan has maintained a high standard of living, low unemployment rates, and technological advancements. Japan's economic issues are complex and not solely attributable to its monetary policies—demographic challenges and other structural factors also play significant roles.

Inflation is just one of many economic factors that need to be managed. Fiscal deficits can be sustainable if they are used to finance productive investments that boost economic growth. Moreover, in times of economic downturn, running deficits can be necessary to stimulate demand and avoid deeper recessions. The real threat to economic stability is not necessarily the size of the deficit or the act of money printing, but rather the mismanagement of economic policies overall.

Like propaganda from Peterson think tanks, you overly simplifies complex economic relationships and ignores the evidence that monetary sovereign countries, like the US and Japan, have managed to control inflation despite high deficits. 
 

“How can I try to justify outrageous government spending and deficit behavior by arguing that it hasn’t yet destroyed another country’s entire economic foundation” - washparkhorn. 

Your blatherings really are an embarrassment. There is zero justification for the way our government (Congress and executive branch) is operating. They aren’t using monetary policy to smooth out downturns. They are mortgaging our future for personal financial gain. Your viewpoint is really ridiculous. 

[bernorange 8362]

Delaying consequences is not "managing" if we are being honest.  

[LCHorn 2621]

36 minutes ago, washparkhorn said:

Inflation is just one of many economic factors that need to be managed. Fiscal deficits can be sustainable if they are used to finance productive investments that boost economic growth.

 

29 minutes ago, Dbeasy said:

There is zero justification for the way our government (Congress and executive branch) is operating. They aren’t using monetary policy to smooth out downturns.

I think you gents are in more agreement than the tone of your posts might suggest…

I think Washpark is trying to rebut the idea that “deficits=always bad” rather than justify the current budget.  
 

Also, @Dbeasy, if I might quibble, neither Congress nor the executive branch sets monetary policy.  They do set fiscal policy, however.  I don’t really blame them—apparently getting elected to any Federal office is better than cocaine for a certain personality type.  It’s the electorate that’s really to blame.    

[Armybrat 40851]

On 5/15/2024 at 9:28 PM, washparkhorn said:

Try that with your credit cards.

[Neonmoon 38129]

31 minutes ago, Armybrat said:

Try that with your credit cards.

I don’t think you have fully grasped the analogy 

[Armybrat 40851]

Ok, I’ll just start printing money on my HP.

[jimmyjazz 45978]

People have been howling about the imminent deficit spending induced collapse for a half century.  That's not to say it can't or won't happen, but the hysteria has been roughly the same the whole time.

[Neonmoon 38129]

8 hours ago, jimmyjazz said:

People have been howling about the imminent deficit spending induced collapse for a half century.  That's not to say it can't or won't happen, but the hysteria has been roughly the same the whole time.

In my experience, it typically gets louder during certain periods, and then forgotten during other periods. 

[Bozo_Casanova 26490]

23 hours ago, Neonmoon said:

In my experience, it typically gets louder during certain periods, and then forgotten during other periods. 

 

[jimmyjazz 45978]

On 5/19/2024 at 7:50 AM, Neonmoon said:

In my experience, it typically gets louder during certain periods, and then forgotten during other periods. 

So random.  If only we could crack the code.

[Trey3216 15347]

On 5/16/2024 at 8:09 PM, jimmyjazz said:

I'm sure he was right to some extent, but in my career prior to entering the private sector, I did a lot of research for ARPA/DARPA/etc., and wrote several successfully-funded proposals.  The way projects were strung along with funding piled on funding even when goals weren't remotely met (performance/schedule/both) was disgusting.  I was glad to get out.  There is a lot of waste in that world.  All of defense?  No idea.  Where I was?  Absolutely.

Now do that same mental calculus with the healthcare industry and you'll really see where some of our problems lie.  

[Biff Tannen 45691]

7 hours ago, Trey3216 said:

Now do that same mental calculus with the healthcare industry and you'll really see where some of our problems lie.  

Yes, because of insurance companies.

[Trey3216 15347]

58 minutes ago, Biff Tannen said:

Yes, because of insurance companies.

And because of lobbyists.   And because of politicians in the pockets of lobbyists.  And because of politicians profiteering off the stock prices of companies.  And because of the laws of the land at some points in time that benefited north the companies and the politicians.    And so forth.   

[washparkhorn 9939]

Just a reminder—Higher rates makes goods and services more expensive.

Unfortunately, higher rates also supply income (interest income) to support higher prices (i.e., “stickyfying” higher prices, especially in the services sector).

 

[Captainant 27680]

22 minutes ago, washparkhorn said:

Just a reminder—Higher rates makes goods and services more expensive.

Unfortunately, higher rates also supply income (interest income) to support higher prices (i.e., “stickyfying” higher prices, especially in the services sector).

 

I'd love to see the breakdown between wages paid to people providing services vs revenues generated. I'd bet there's a similar divergence that tracks more with revenue than with wages - prices have gone up a shitload faster than wages

[CHIEF 5094]

On 5/18/2024 at 11:20 PM, jimmyjazz said:

People have been howling about the imminent deficit spending induced collapse for a half century.  That's not to say it can't or won't happen, but the hysteria has been roughly the same the whole time.

True. But there is a problem with the BRICS nations and ASEAN nations trying de-dollarization. Russia, Iran, and North Korea have been sanctioned off for a couple of years to decades. China and India have bought up enough gold and silver that COMEX and the LBM no longer control the precious metals market. The Bank of Shanghi has the majority of the World's gold, currently, and China is going to use it to back the BRICS currency, after they start a situation that gets them sanctioned by the Western nations.

We are dangerously close to loosing half of the nations, in the East, using US dollars as a reserve currency. The bond market is shit. Central banks are using printed dollars to buy up as much gold as they can, but foreign governments are reluctant to buy US debt. China liquidated from three billion dollars down to about 700 billion. I'm not sure who will eventually get left holding the bag, but someone is. The US has, by far, had the longest standing fiat currency, even though it has truly been a fiat currency since 1971. We have been printing money with nothing to back it for decades. The federal government just prints money to buy its own bonds. I have heard people say we will just inflate the debt away, others that say the trap has been laid. We may have some hyperinflation, followed by austerity  measures. No one will like it, but something has to be "reset".

CHIEF

[Schulz2.0 28961]

10 hours ago, CHIEF said:

True. But there is a problem with the BRICS nations and ASEAN nations trying de-dollarization. Russia, Iran, and North Korea have been sanctioned off for a couple of years to decades. China and India have bought up enough gold and silver that COMEX and the LBM no longer control the precious metals market. The Bank of Shanghi has the majority of the World's gold, currently, and China is going to use it to back the BRICS currency, after they start a situation that gets them sanctioned by the Western nations.

The BRICS countries all want their own individual currency to be used and don't really want the others' currency. Good luck with all of that.

Edited May 27 by Schulz2.0

[LCHorn 2621]

5 hours ago, Schulz2.0 said:

The BRICS countries all want their own individual currency to be used and don't really want the others' currency. Good luck with all of that.

The other flaw with @CHIEF’s prediction is its presumption that the central government in China or India have control over their market participants and could enforce transactions in their sovereign currency.  The Eurodollar podcast guys have repeatedly pointed out that every time, for example, the Chinese start making pronouncements that this might happen, large amounts of private money flows out of the country.  
 

Chinese investors may not like using dollars, but they like them a whole lot more than yuan.

[Fudge Nuggets 19206]

On 5/17/2024 at 6:14 AM, Snake Diggity said:

“The poorest people each paying $300/yr more in taxes is the answer to our debt crisis” is the most fatty thing yet.  Fucking idiot.

Nah, I don’t think he will ever be able to top his thought that poor people don’t deserve an education.

[CHIEF 5094]

This guy is a good listen. I started listening to him before I purchased precious metals. He lays out what he thinks will happen. The big one is he believes OPEC and the Saudis will start taking payment in other currencies besides the US dollar before eventually moving completely out of dollars. No currency has been the World's reserve currency for much more than a hundred years or so.

CHIEF

[CHIEF 5094]

I misquoted the amount of US debt that China has sold off. They had three trillion worth and sold off all but $700 billion. They are using that $2.3 trillion to buy up all the precious metals they can.

CHIEF

[Neonmoon 38129]

Jesus, you guys watch a lot of cuckoo goldbug shit 

[Captainant 27680]

1 hour ago, Neonmoon said:

Jesus, you guys watch a lot of cuckoo goldbug shit 

Hey man they're just reading whatever Twitter is showing them, or something