2021 - Is inflation finally back in the conversation?

[jimmyjazz 47203]

47 minutes ago, fattyflattie said:

Ammo is going up 20-50% every year or so, more on the auction sites.  Pretty good to have around imo. 

Another 1000% and we'll solve a lot of problems.

[fattyflattie 4640]

Just now, jimmyjazz said:

Another 1000% and we'll solve a lot of problems.

Maybe.  As usual, it will be the poors that are affected. 

[babysdaddy 2731]

Research note I received this morning.

 
“Two factors have so far held the US economy back from the brink of recession: the excess savings overhang and a truly rampant budget deficit 
 
The former is a form of lagged fiscal stimulus, due to run out around year-end. The latter is coincident fiscal stimulus. 
 
Both are responsible for driving Q3 nominal GDP +8.5%, or +$560bn. Government deficit spending (i.e. net increase in debt $852bn less $263bn increase in the TGA) accounted for +$588bn (105%) of nominal growth, with 93% of the funding coming via MMFs from the RRP, where only $1.1trn of MMF deposits remain. 
 
The larger the deficit, the higher bond yields. However, the faster NGDP rises on the back of the deficit, the sooner excess savings realign with the economy’s natural demand for money balances and become exhausted. 
 
By pursuing aggressive, peacetime deficits during the latter stages of a particularly mature business cycle (14 years, if you ignore the brief and rather artificial Covid lapse), the US government is crowding out the private sector and driving interest rates all along the curve to heights that render huge swathes of the economy unproductive. Thus, deficits now generate blowout GDP today, but recession later.
 
Strip out the deficit and the US private sector is revealed to have been in recession since Q3 2022. Either Biden keeps running a very high deficit ahead of the election, driving rates even higher, or the bond market vigilantes manage to restrain the Democrats, but then the pent-up recession will be revealed."

[Incredulity 11876]

can you share the source?  or even entire note?  

 

Would be very interested to read the whole thing.  

[babysdaddy 2731]

1 hour ago, Incredulity said:

can you share the source?  or even entire note?  

 

Would be very interested to read the whole thing.  

Paid research from a group out of London that is about 10 pages in pdf form so can't give you a link.  that is the teaser note.  I'll provide anything worthwhile out of the full document when I have time later today

[StassneyHorn 6775]

DoUbLe SeCrEt RuHcEsSiOn

[Guest]

On 10/26/2023 at 9:32 PM, StassneyHorn said:

It costs more to hunt than get chick fil a

It costs more to fuck than to beat off.

[nbmishoid 989]

Classic myth, crowding out the private sector.

[Newdoc 3511]

5 hours ago, nbmishoid said:

Classic myth, crowding out the private sector.

Please show your homework because on the surface it looks you’re claiming that private sector lives in a vacuum outside of governmental policy.  But it’s pretty logical that running a large deficit with loose monetary policy then continuing to jack up the cost of borrowing while inflation runs rampant should tamper private investment in the economy and certainly motivate savers to save while watching the average American consumer run out of money or at least expendable purchasing power.

[bernorange 8385]

On 8/27/2022 at 7:11 AM, bernorange said:

... the shift from holding long term debt to short term debt puts a constraint on the current Fed that Volcker didn't have to worry about.  Jpow can't raise rates like Volcker did without bankrupting the country.

Quote

Treasury Secretary Janet Yellen has some explaining to do, according to hedge-fund titan Stanley Druckenmiller.

Yellen missed an important opportunity, Druckenmille says, by not issuing more long-dated Treasury bonds when interest rates were, in the shadow of COVID-19, near zero.

“Janet Yellen, I guess because political myopia or whatever, was issuing 2-years at 15 basis points … when she could have issued 10-years at 70 basis points or 30-years at 180 basis points,” the former hedge-fund manager said during a conversation with Paul Tudor Jones at the Robin Hood Investors Conference, a clip of which circulated Monday on X, the social-media platform formerly known as Twitter.

“I literally think if you go back to Alexander Hamilton, [Yellen’s approach represented] the biggest blunder in the history of the Treasury,” Druckenmiller said.

This omission seems even more egregious, according to Druckenmiller, considering that Americans refinanced their home loans at rock-bottom mortgage rates en masse, and corporations with sturdy credit ratings refinanced their debt.

“I have no idea why she hasn’t been called on this. She has no right to still be in that job.”

“When rates were practically zero, every Tom, Dick and Harry in the U.S. refinanced their mortgage … every corporation was extending their debt,” he said.

He then rattled off some alarming numbers to illustrate the consequences of not reining in spending.

“Here’s the consequences, folks. When the debt rolls over by 2033, interest expense is going to be 4.5% of GDP if rates are where they are now. By 2043 — it sounds like a long time but it is really not; it is 20 years — interest expense as a percentage of GDP will be 7%. That is 144% of all current discretionary spending,” he said.
...
To be sure, Yellen wasn’t the only Treasury secretary to preside over this latest round of near-zero interest rates. Steven Mnuchin served as Treasury secretary under Donald Trump and didn’t, leaving office in January 2021, nearly a year after the global coronavirus outbreak was formally labeled a pandemic.
...

https://www.marketwatch.com/story/stanley-druckenmiller-slams-janet-yellen-for-biggest-blunder-in-treasury-history-failing-to-lock-in-rock-bottom-interest-rates-e6439436?rss=1&siteid=rss

[Snake Diggity 4714]

16 minutes ago, bernorange said:

https://www.marketwatch.com/story/stanley-druckenmiller-slams-janet-yellen-for-biggest-blunder-in-treasury-history-failing-to-lock-in-rock-bottom-interest-rates-e6439436?rss=1&siteid=rss

Pardon my ignorance.  But why is it assumed that expiring debt is automatically converted into new debt at current rates?  Aren’t those notes paid off, and any new debt the sole result of the current federal budget deficit?

[tbone_ 14447]

Because it takes new debt to pay off the old debt.

[bernorange 8385]

18 minutes ago, Snake Diggity said:

... But why is it assumed that expiring debt is automatically converted into new debt at current rates?  Aren’t those notes paid off, and any new debt the sole result of the current federal budget deficit?

When treasuries mature, the government needs to pay the owner.  They do that by issuing new debt (at current rates).  This is from 2020:

https://thehill.com/opinion/finance/498902-now-is-the-time-for-treasury-to-issue-ultra-long-bonds/

[Incredulity 11876]

Treasury bonds are not fully amortizing like your mortgage or car loan.  The par value is due at maturity.

[babysdaddy 2731]

On 10/27/2023 at 5:45 PM, StassneyHorn said:

DoUbLe SeCrEt RuHcEsSiOn

you spelled recession wrong, fyi.

[StassneyHorn 6775]

It will be right sometime next April

[Snake Diggity 4714]

3 hours ago, bernorange said:

When treasuries mature, the government needs to pay the owner.  They do that by issuing new debt (at current rates).  This is from 2020:

https://thehill.com/opinion/finance/498902-now-is-the-time-for-treasury-to-issue-ultra-long-bonds/

I’m not holding my breath, but maybe increased interest costs impact govt spending, then when recession finally hits and rates come down they refinance everything and are able to balance the budget with the savings.

[Incredulity 11876]

2 minutes ago, Snake Diggity said:

balance the budget with the savings.

[bernorange 8385]

Related to my previous posts:

Quote

...
The total amount of Treasury securities outstanding has reached $33.68 trillion. Of that amount, $26.56 trillion are held by the public, and $7.12 trillion are securities held by government entities, such as government pension funds, the Social Security Trust Fund, etc. Those securities “held internally” are not traded and don’t have direct consequences on the supply of new securities to the market.

Here we’re talking about the debt held by the “public,” such as foreign holders, the Fed, cash-rich corporations, banks, bond funds, insurance companies, individuals, and folks like me. And that public is going to have to buy the additional $1.59 trillion in securities by the end of Q1.

Foreign holders have been increasing their holdings at a glacial pace, much more slowly than the issuance increased, and foreign holders’ share of marketable securities has dropped sharply.

The Fed, as part of QT, has shed $860 billion in Treasury securities so far, and its holdings’ share of marketable Treasuries has declined sharply.

So US investors, pension funds, insurance companies, bond funds, etc., need to be persuaded to step up to the table and buy those securities. And to pull ever more buyers to the table, yields have risen, and the tsunami of new issuance indicates that even more buyers, reluctant buyers, will have to be pulled in with even higher longer-term yields to come.

https://wolfstreet.com/2023/10/30/marketable-us-treasury-debt-to-explode-by-2-85-trillion-in-10-months-from-end-of-debt-ceiling-to-march-31-2024/

 

[unoriginal 55]

6 hours ago, Snake Diggity said:

Pardon my ignorance.  But why is it assumed that expiring debt is automatically converted into new debt at current rates?  Aren’t those notes paid off, and any new debt the sole result of the current federal budget deficit?

The dollars to pay the previous debt need to be loaned into existence.

 

[babysdaddy 2731]

3 hours ago, StassneyHorn said:

It will be right sometime next April

[babysdaddy 2731]

https://www.wsj.com/economy/the-economy-is-great-why-are-americans-in-such-a-rotten-mood-6e1044d8?mod=hp_lead_pos1

[52-80 19377]

On 10/31/2023 at 6:58 PM, Snake Diggity said:

and are able to balance the budget with the savings.

The annual budget was in surplus for like 4 years out of the last 60 years, and the last instance of it was 20 years ago. 

meanwhile, the debt has been continuously compounding. 

but sure, they’ll fix it shortly. 

 

[Neonmoon 38130]

On 10/31/2023 at 2:00 PM, bernorange said:

Related to my previous posts:

https://wolfstreet.com/2023/10/30/marketable-us-treasury-debt-to-explode-by-2-85-trillion-in-10-months-from-end-of-debt-ceiling-to-march-31-2024/

 

Your sources are always fun

 

 

[babysdaddy 2731]

1 hour ago, Neonmoon said:

Your sources are always fun

 

 

can you post that article?  I'd like to read it but I'm not giving the epoch times my email address

[Storm the Field 5366]

Encouraging re: inflation

 

[bernorange 8385]

17 hours ago, babysdaddy said:

can you post that article?  I'd like to read it but I'm not giving the epoch times my email address

Spoiler

You need a better prophylatic for your computer (I suggest NoScript browser extension for Firefox or Chrome).  I can read it without having to register:

Quote

...
Now a study from the National Institutes of Health-funded researchers in Chicago has found that unresolved respiratory infections—not necessarily those involved in SARS-CoV-2—were present in people who failed to “respond” to mechanical ventilation.
The authors wrote:

    “Recent data suggest that secondary pneumonia is present in up to 40% and pneumonia or diffuse alveolar damage is present in over 90% of autopsy specimens obtained from patients with acute SARS-CoV-2 infection (18).

“Consistent with these observations, we and others found high rates of ventilator-associated pneumonia (VAP) in patients with SARS-CoV-2 pneumonia requiring mechanical ventilation, suggesting that bacterial superinfections such as VAP may contribute to mortality in patients with COVID-19 (7, 19–22).
“These findings prompt an alternative hypothesis that a relatively low mortality rate directly attributable to primary SARS-CoV-2 infection is offset by a greater risk of death attributable to unresolving VAP (23).” They concluded:

    “These data suggest mortality associated with severe SARS-CoV-2 pneumonia is more often associated with respiratory failure that increases the risk of unresolving VAP and is less frequently associated with multiple-organ dysfunction.”

Unsurprisingly, the study found that people with bacterial pneumonia who were on ventilators had the highest mortality.

Although their analysis restricted consideration to bacterial pneumonia cases detected 48 hours after ventilation, they did not distinguish between undiagnosed cases of bacterial pneumonia upon admission and those acquired in-hospital (nosocomial infection).
The rate of co-infection is not clear either, due to insufficient testing for bacterial pneumonia in patients once diagnosed with COVID-19.

The study leads to the stunning potential that perhaps 58 percent of “COVID” cases were respiratory issues other than COVID-19 (43 percent bacterial pneumonia, 16 percent non-pathogen causes of respiratory failure). Treated as “COVID,” these patients were doomed to a fate of non-treatment due to mis- or under-diagnosis.

It is unclear what percentage of deaths attributed to COVID-19 could have been prevented via a standard therapy for bacterial pneumonia, but it is potentially very high.
...

The NIH study was published here:

https://www.jci.org/articles/view/170682/version/2/pdf/render.pdf

 

[Storm the Field 5366]

18 hours ago, Neonmoon said:

Your sources are always fun

 

 

Lol, a Mises Caucus nut that frequently retweets Ian Miles Chong. Just what this thread needs.

[Snake Diggity 4714]

2 hours ago, Storm the Field said:

Encouraging re: inflation

 

I have wondered about this, and especially what kind of impact AI might have on worker productivity.  I have thought about this more in terms of mitigating risk of the boomers retiring en masse and worker demographic issues in general, but this highlights how it might also mitigate inflation risks.  Of course it does suck that we’re borrowing against that benefit before it actually exists.

Edited November 2, 2023 by Snake Diggity

[washparkhorn 9973]

Terrible job numbers - UE rate up, job participation down, wage inflation anemic, manufacturing and retail only added 1k jobs=bond rally and markets up. 
 

[Bozo_Casanova 26851]

On 10/27/2023 at 8:17 AM, babysdaddy said:

Research note I received this morning.

 
“Two factors have so far held the US economy back from the brink of recession: the excess savings overhang and a truly rampant budget deficit 
 
The former is a form of lagged fiscal stimulus, due to run out around year-end. The latter is coincident fiscal stimulus. 
 
Both are responsible for driving Q3 nominal GDP +8.5%, or +$560bn. Government deficit spending (i.e. net increase in debt $852bn less $263bn increase in the TGA) accounted for +$588bn (105%) of nominal growth, with 93% of the funding coming via MMFs from the RRP, where only $1.1trn of MMF deposits remain. 
 
The larger the deficit, the higher bond yields. However, the faster NGDP rises on the back of the deficit, the sooner excess savings realign with the economy’s natural demand for money balances and become exhausted. 
 
By pursuing aggressive, peacetime deficits during the latter stages of a particularly mature business cycle (14 years, if you ignore the brief and rather artificial Covid lapse), the US government is crowding out the private sector and driving interest rates all along the curve to heights that render huge swathes of the economy unproductive. Thus, deficits now generate blowout GDP today, but recession later.
 
Strip out the deficit and the US private sector is revealed to have been in recession since Q3 2022. Either Biden keeps running a very high deficit ahead of the election, driving rates even higher, or the bond market vigilantes manage to restrain the Democrats, but then the pent-up recession will be revealed."

Broad strokes, that the private sector is being crowded out is a fair enough if debateable thesis. HOWEVER the takeaway is total horseshit, that this was an executive branch problem specific to Democrats and by implication could be solved with a new executive. 

It’s also wrong on dating it to the post 2008 business cycle- the policy pursuit of flattening the business cycle with combined fiscal and monetary stimulus financed be deficit dates to 2001 and 1994, respectively. 
 

Like how would a president unilaterally stop running a deficit over the next 11 months? That’s absurd. It reads like political propaganda, not research. You paid for that note?

Edited November 3, 2023 by Bozo_Casanova

[bernorange 8385]

1 hour ago, washparkhorn said:

Terrible job numbers ... =bond rally and markets up. 

You forgot the intermediate links:

TJ#s = Disinflation = Fed won't raise, might ease sooner than expected = market rally

[Incredulity 11876]

1 hour ago, washparkhorn said:

Terrible job numbers - UE rate up, job participation down, wage inflation anemic, manufacturing and retail only added 1k jobs=bond rally and markets up. 
 

I was told Jobsgiving was upon us.

[StassneyHorn 6775]

I don’t have my glasses on, was it negative or positive 150k?

[Royalfan5 2384]

27 minutes ago, StassneyHorn said:

I don’t have my glasses on, was it negative or positive 150k?

Positive 150K. Should get 33K back from the UAW on the November as well that were off for Oct. 

Edited November 3, 2023 by Royalfan5

[babysdaddy 2731]

2 hours ago, Bozo_Casanova said:

Broad strokes, that the private sector is being crowded out is a fair enough if debateable thesis. HOWEVER the takeaway is total horseshit, that this was an executive branch problem specific to Democrats and by implication could be solved with a new executive. 

It’s also wrong on dating it to the post 2008 business cycle- the policy pursuit of flattening the business cycle with combined fiscal and monetary stimulus financed be deficit dates to 2001 and 1994, respectively. 
 

Like how would a president unilaterally stop running a deficit over the next 11 months? That’s absurd. It reads like political propaganda, not research. You paid for that note?

yes.  I almost didn't include that given it would take away from the bolded part and someone would come along and only focus on that portion of the note. Filtering out obvious political bias and lack of understanding on how our government is funded is necessary when reading anything these days, imo. 

And, clearly the US government has lost the plot on deficit spending.  Just gorging now and have been for multiple years across multiple administrations and different party control of congress.  Arguing about when that started is not relevant.

[Storm the Field 5366]

Fed aggressively raises interest rates with stated aim of cooling off overheated job market and wage inflation

Job market finally cools off and wage inflation slows, lowering odds of additional hikes, bond sell-off reverses course

Surly Permabears: What?!??! Why market no crash?!?!?! 

[Captainant 28539]

34 minutes ago, babysdaddy said:

And, clearly the US government has lost the plot on deficit spending.  Just gorging now and have been for multiple years across multiple administrations and different party control of congress.  Arguing about when that started is not relevant.

It's less so the spending and moreso the decades long tax cuts to the ultra wealthy that still haven't paid for themselves in economic growth

[Bozo_Casanova 26851]

39 minutes ago, babysdaddy said:

yes.  I almost didn't include that given it would take away from the bolded part and someone would come along and only focus on that portion of the note. Filtering out obvious political bias and lack of understanding on how our government is funded is necessary when reading anything these days, imo. 

And, clearly the US government has lost the plot on deficit spending.  Just gorging now and have been for multiple years across multiple administrations and different party control of congress.  Arguing about when that started is not relevant.

But it's not a matter of arguing about what started it or what part of the note to focus on- that's the point of the note, not an editorial speculation (which would be fine) and it is causally wrong about both the way in this jam and the way out of it for investors. That's what separates propaganda from financial information or actionable analysis about markets. And if you were the babysdaddy on hornfans in 2003,  I remember telling you and everyone who would listen (especially @washparkhorn, who also argued with me about it) that this point right now was where we were heading because we changed the structure of our deficits and that going forward they would not yield positive ROI.

Edited November 3, 2023 by Bozo_Casanova

[babysdaddy 2731]

39 minutes ago, Bozo_Casanova said:

But it's not a matter of arguing about what started it or what part of the note to focus on- that's the point of the note, not an editorial speculation (which would be fine) and it is causally wrong about both the way in this jam and the way out of it for investors. That's what separates propaganda from financial information or actionable analysis about markets. And if you were the babysdaddy on hornfans in 2003,  I remember telling you and everyone who would listen (especially @washparkhorn, who also argued with me about it) that this point right now was where we were heading because we changed the structure of our deficits and that going forward they would not yield positive ROI.

one and the same.  And I don't remember that convo on hornfans but that's probably because I was drunk or didn't give af or didn't know shit, and most likely a combo of all 3 (plus 20 years ago.....that's a little depressing).

[babysdaddy 2731]

49 minutes ago, Captainant said:

It's less so the spending and moreso the decades long tax cuts to the ultra wealthy that still haven't paid for themselves in economic growth

Pal, this just isn't remotely true and I think I provided you data from the St. Louis federal reserve that you either missed or actively ignored that would prove this talking point is not correct.  But at least you're consistent.

[Brisketexan 106899]

3 hours ago, babysdaddy said:

Pal, this just isn't remotely true and I think I provided you data from the St. Louis federal reserve that you either missed or actively ignored that would prove this talking point is not correct.  But at least you're consistent.

Wait....do we actually have a real-live proponent of "the Trump tax cuts are a net positive" and "trickle-down economics works" here?  Do tell.

[fattyflattie 4640]

16 hours ago, Brisketexan said:

Wait....do we actually have a real-live proponent of "the Trump tax cuts are a net positive" and "trickle-down economics works" here?  Do tell.

A classic capitalism is eViL and the root of all our problems vs proponent of tax cuts for the ultra wealthy no holds barred cage match.   

[bernorange 8385]

20 hours ago, babysdaddy said:

Pal, this just isn't remotely true and I think I provided you data from the St. Louis federal reserve that you either missed or actively ignored that would prove this talking point is not correct.  But at least you're consistent.

 

17 hours ago, Brisketexan said:

Wait....  Do tell.

https://www.surlyhorns.com/board/topic/19611-2021-is-inflation-finally-back-in-the-conversation/?do=findComment&comment=5496098

 

[Bozo_Casanova 26851]

2 hours ago, fattyflattie said:

A classic capitalism is eViL and the root of all our problems vs proponent of tax cuts for the ultra wealthy no holds barred cage match.   

It’s really not. And it’s funny, too- the fact that the cuts weren’t equitable is the least of the problems, almost irrelevant. I would in fact argue that the rent-seeking and short termism behaviors encouraged by fiscal stimulus via the tax code since 2001 has probably done immense and permanent damage to American capitalism, and we will likely never recover.

Go read Adam Smith and Jean-Baptiste Say sometime and stop believing in kayfabe economic voodoo. Whatever this is, it is not capitalism.
You’ve been hoodwinked. We all have.

Edited November 4, 2023 by Bozo_Casanova

[nbmishoid 989]

3 hours ago, fattyflattie said:

A classic capitalism is eViL and the root of all our problems vs proponent of tax cuts for the ultra wealthy no holds barred cage match.   

Excluded middle fallacy

[fattyflattie 4640]

3 hours ago, Bozo_Casanova said:

It’s really not. And it’s funny, too- the fact that the cuts weren’t equitable is the least of the problems, almost irrelevant. I would in fact argue that the rent-seeking and short termism behaviors encouraged by fiscal stimulus via the tax code since 2001 has probably done immense and permanent damage to American capitalism, and we will likely never recover.

Go read Adam Smith and Jean-Baptiste Say sometime and stop believing in kayfabe economic voodoo. Whatever this is, it is not capitalism.
You’ve been hoodwinked. We all have.

Are you not familiar with the posters I was speaking about?  Because one thinks any profit amount is price gouging, and posts as much about every fifth post. 

[jimmyjazz 47203]

1 hour ago, fattyflattie said:

Are you not familiar with the posters I was speaking about?  Because one thinks any profit amount is price gouging, and posts as much about every fifth post. 

Well, that's a flat out fatty lie, which we're used to, but you should be ashamed.  LOL.  "fatty feeling shame"

[Bozo_Casanova 26851]

On 11/3/2023 at 12:18 PM, babysdaddy said:

Pal, this just isn't remotely true and I think I provided you data from the St. Louis federal reserve that you either missed or actively ignored that would prove this talking point is not correct.  But at least you're consistent.

Not sure how productive it will be and it’s certainly tangent to this thread, but I’m very curious to understand what data you mean and in what way it shows that the last three tax cuts paid for themselves. Do I even wanna ask?

[fattyflattie 4640]

47 minutes ago, jimmyjazz said:

Well, that's a flat out fatty lie, which we're used to, but you should be ashamed.  LOL.  "fatty feeling shame"

I have neither the time or inclination to find that cocksuckers tears about someone making a dollar.  Feel free to leave it; I couldn’t give a single fuck