The Monetary Policy Thread

Neonmoon · February 10

Quote

Just a side note, I disagree with this statement.

Half the studies showed QE didn't work and the others said the banks greatly overstated the success. To me that says we've been sold a bill of goods by the banks. And none of the studies include any forward looking projections.

But we can take it up on another thread.

1. Past: You believe QE was not successful. The evidence you previously provided does not support that. And just because you ignore the central bank papers in the study you provided doesn’t mean they don’t exist.

2. Future: You believe the massive debt burden from QE is not worth the perceived benefits of avoiding the economy collapsing in 2008 or 2020. I agree the massive debt is bad. I’m not arguing the debt is sustainable. It is not. Eventually the house of cards will fall. It doesn’t have to though. There are ways to solve that problem through raising taxes and cutting spending.

StassneyHorn · February 10

If we’re making our debt payments we’re not in debt

/thread

DixonHur · February 10

14 minutes ago, Neonmoon said:

@DixonHur

1. Past: You believe QE was not successful. The evidence you previously provided does not support that. And just because you ignore the central bank papers in the study you provided doesn’t mean they don’t exist.

2. Future: You believe the massive debt burden from QE is not worth the perceived benefits of avoiding the economy collapsing in 2008 or 2020. I agree the massive debt is bad. I’m not arguing the debt is sustainable. It is not. Eventually the house of cards will fall. It doesn’t have to though. There are ways to solve that problem through raising taxes and cutting spending.

True, but I discount the CB studies the same way I dismiss drug company studies. They have an incentive to provide a rosy picture.

On point 2, governments have the luxury of raising taxes and/or cutting expenses. But the real danger is with corporate and private sector debt that was built upon "free money".

The average HH has over $100k in debt, while the average HH income is about $74k. That's a problem. It's the housing crisis all over again when people inevitably start to default en mass.

StassneyHorn · February 10

The HH debt is a 30 year mortgage

DixonHur · February 10

6 minutes ago, StassneyHorn said:

The HH debt is a 30 year mortgage

Debt is debt. Plus, when the correction hits, many of those houses will be worth less than when they were purchased.

Plus the average credit card debt is over $11k. With at least 18% interest.

Neonmoon · February 10

7 minutes ago, DixonHur said:

True, but I discount the CB studies the same way I dismiss drug company studies. They have an incentive to provide a rosy picture.

On point 2, governments have the luxury of raising taxes and/or cutting expenses. But the real danger is with corporate and private sector debt that was built upon "free money".

The average HH has over $100k in debt, while the average HH income is about $74k. That's a problem. It's the housing crisis all over again when people inevitably start to default en mass.

Regarding point 2

I agree regarding corporate debt. The Technology sector in particular. Every Silicon Valley keyboard warrior was hailed a genius for their ideas, but it was on the backs of cheap money. The spigot has been turned off, and many of those inflated companies are facing hard reality now. You could also make an argument for Commercial Real Estate. They are about to go through some things in the next 2 years. Was it all cheap money? Or does remote work share some of the burden?

I disagree about the similarities to the housing crisis. While a credit boom did create the housing bubble in 2007, and the cheap Covid money created a price inflation, they are not similar. Lending standards implemented by Dodd Frank don’t allow sub-prime bullshit or unqualified borrowers. We are at all time lows in foreclosures. The housing fundamentals are just different regarding supply. In fact, if it wasn’t for the supply shortage, we might have seen larger drops in price instead of steady gains (I realize some markets like Austin are outliers)

DixonHur · February 10

I didn't intend to compare the housing crisis on a causal basis. I meant it as the end result.

I think housing prices are extremely inflated and will need to come down substantially to be sustainable. That means that people who bought at the peak will be underwater.

StassneyHorn · February 10

8 minutes ago, DixonHur said:

Debt is debt. Plus, when the correction hits, many of those houses will be worth less than when they were purchased.

Plus the average credit card debt is over $11k. With at least 18% interest.

A 30 year debt of 100k when you make 75k in a year shows me you’re bad at math. Credit card debt can always be moved to a transfer card card. Christ sakes

StassneyHorn · February 10

13 minutes ago, DixonHur said:

Debt is debt. Plus, when the correction hits, many of those houses will be worth less than when they were purchased.

Plus the average credit card debt is over $11k. With at least 18% interest.

You think people now, in the last two years bought 100k houses? Did you spend your day off making shitty arguments all over this board?

Edited February 10 by StassneyHorn

David Dennison · February 10

24 minutes ago, DixonHur said:

Debt is debt.

Not when it's issued by the United States government.

DixonHur · February 10

Wow, those are some of the worst takes I've seen in a long time.

Taxes eat about 25% of the income, and about 5% of income goes to paying non-mortgage debt. That's 30% off the top.

Add to that the fact that 35% of Americans rent, and not all the mortgages have 30 years left on them and you have a crisis brewing.

If you want to bury your head in the sand, be my guest but I make my long-term financial plans on reality, not fantasy.

Neonmoon · February 10

2 minutes ago, DixonHur said:

Wow, those are some of the worst takes I've seen in a long time.

Taxes eat about 25% of the income, and about 5% of income goes to paying non-mortgage debt. That's 30% off the top.

Add to that the fact that 35% of Americans rent, and not all the mortgages have 30 years left on them and you have a crisis brewing.

If you want to bury your head in the sand, be my guest but I make my long-term financial plans on reality, not fantasy.

How much correction are you predicting in the housing industry?

David Dennison · February 10

1 minute ago, DixonHur said:

Wow, those are some of the worst takes I've seen in a long time.

Taxes eat about 25% of the income, and about 5% of income goes to paying non-mortgage debt. That's 30% off the top.

Add to that the fact that 35% of Americans rent, and not all the mortgages have 30 years left on them and you have a crisis brewing.

If you want to bury your head in the sand, be my guest but I make my long-term financial plans on reality, not fantasy.

We should probably do something about credit card interest rates.

Eh, maybe next time.

StassneyHorn · February 10

Taxes on 75k in Texas are nowhere near 25%. Especially if it’s a married household.

A 100k debt over 30 years when you make 75k is laughable. A 100k debt over 15 years is also laughable at that income level.

Stomping your feet that all debt is debt is laughable.

Credit card debt in the 100k implies spending problems and not structural problems.

DixonHur · February 10

8 minutes ago, Neonmoon said:

How much correction are you predicting in the housing industry?

In 2000 the average home price to income ratio was about 4x. In 2023 it was 5.8x so I could see 25+%

David Dennison · February 10

1 minute ago, StassneyHorn said:

Taxes on 75k in Texas are nowhere near 25%. Especially if it’s a married household.

A 100k debt over 30 years when you make 75k is laughable. A 100k debt over 15 years is also laughable at that income level.

Stomping your feet that all debt is debt is laughable.

Credit card debt in the 100k implies spending problems and not structural problems.

Is 100k in credit card debt a spending problem, a consumerism problem, or both? If both, should the blame fall more on the consumer or the society that incessantly encourages spending?

formermav43 · February 10

32 minutes ago, StassneyHorn said:

A 30 year debt of 100k when you make 75k in a year shows me you’re bad at math. Credit card debt can always be moved to a transfer card card. Christ sakes

30 minutes ago, StassneyHorn said:

You think people now, in the last two years bought 100k houses? Did you spend your day off making shitty arguments all over this board?

Having a lively argument with yourself?

DixonHur · February 10

3 minutes ago, StassneyHorn said:

Taxes on 75k in Texas are nowhere near 25%. Especially if it’s a married household.

A 100k debt over 30 years when you make 75k is laughable. A 100k debt over 15 years is also laughable at that income level.

Stomping your feet that all debt is debt is laughable.

Credit card debt in the 100k implies spending problems and not structural problems.

You clearly don't understand what you're talking about, so I'm done with engaging you on this topic. I hope you're financially safe. Good luck sir.

StassneyHorn · February 10

2 minutes ago, David Dennison said:

Is 100k in credit card debt a spending problem, a consumerism problem, or both? If both, should the blame fall more on the consumer or the society that incessantly encourages spending?

The individual and their spending. Feel good on that one

Edited February 10 by StassneyHorn

David Dennison · February 10

1 minute ago, StassneyHorn said:

The individual and their spending. Feel good on that one

That's so American of you.

StassneyHorn · February 10

4 minutes ago, DixonHur said:

You clearly don't understand what you're talking about, so I'm done with engaging you on this topic. I hope you're financially safe. Good luck

You just made a post about how people in 2000 had loans that were 4x their income, while having a bitchfest about people with 75k in income now having 100k in debt? Is that anywhere near 4x?

Spoiler it isn’t

Edited February 10 by StassneyHorn

StassneyHorn · February 10

3 minutes ago, David Dennison said:

That's so American of you.

It’s a knowledge issue, I’ll concede that. Plenty of alternatives available to chip away that are less than 18-22%

StassneyHorn · February 10

9 minutes ago, formermav43 said:

Having a lively argument with yourself?

No read what the dumb fuck wrote

BamaATL · February 10

1 minute ago, StassneyHorn said:

Taxes on 75k in Texas are nowhere near 25%. Especially if it’s a married household.

A 100k debt over 30 years when you make 75k is laughable. A 100k debt over 15 years is also laughable at that income level.

Stomping your feet that all debt is debt is laughable.

Credit card debt in the 100k implies spending problems and not structural problems.

The idea that all debt is bad is part of this Dave Ramseyesq way of thinking. Debt taking on investments (depending on the rate and return) spur growth. For example, if you be an investment property, according to Ramsey and his ilk, you are crazy to do so if you take on debt to do it. This ignores the fact that you might cover the debt taken by purchasing the property thru a rental, etc. Given that over time, an asset like this, that generates revenue and covers cost plus, you are making money in the short term and making money in the long term by asset value growth. Ramsey and his ilk would have you ignore these facts, because debt, leveraged or otherwise is akin to the plague. There are certainly risks, and you need to know what you are doing and the risks associated, but leveraging debt can certainly be a major net positive.

As it applies at the Federal level, imagine if we hadn't done the interstate highway system. In today's dollars, it cost trillions, but the ROI has been insanely net positive. The Federal government took on debt to do it, and it was plenty worth it. If we hadn't done it, our GDP would likely be half of what it is. That's not to say that oversight on projects and the like aren't necessary, it is. That's also not to say we should willy nilly just build shit for the sake of building shit, that's not good either. However, leveraging debt into things that pay long term benefits are not just worth it, they are massively worth it.

Bottom line, the argument that all debt just the worst thing imaginable isn't just wrong, it's massively wrong.

David Dennison · February 10

Jeez, what does Dave Ramsey think of mortgages?

StassneyHorn · February 10

I’d post the tax brackets for 75k in federal taxes in Texas but @DixonHurknows better

StassneyHorn · February 10

Oh fuck my thumb slipped. Top bracket for 75k marrieds is 12% which means a smaller net even with elevated property taxes in the state

Tax Rate	For Single Filers	For Married Individuals Filing Joint Returns	For Heads of Households
10%	$0 to $11,600	$0 to $23,200	$0 to $16,550
12%	$11,600 to $47,150	$23,200 to $94,300	$16,550 to $63,100
22%	$47,150 to $100,525	$94,300 to $201,050	$63,100 to $100,500
24%	$100,525 to $191,950	$201,050 to $383,900	$100,500 to $191,950
32%	$191,950 to $243,725	$383,900 to $487,450	$191,950 to $243,700
35%	$243,725 to $609,350	$487,450 to $731,200	$243,700 to $609,350
37%	$609,350 or more	$731,200 or more	$609,350 or more

Edited February 10 by StassneyHorn

BamaATL · February 10

One other thing I will add

I'm betting you don't live in a house (in terms of value) that is equal to your income, nor are you concerned with that. Say you make 100k (for sake of simplicity), I'm betting you don't live in a house worth exactly 100k. You also wouldn't look at that as a bad investment, it costs you 600 a month against your salary. Well, our GDP in 2022 was right around 24 trillion. Our debt is 35 trillion. Yes we have payments to make, and obligations to meet, and yes the numbers are huge. The national debt situation is along the same lines.

One could make the argument, and be correct that we could certainly do a better job managing this. Some of this certainly has to do with taxation, in particular towards all the cuts that have gone to the top 1%. I would argue though, even if those were reversed, that pinning all that towards debt service wouldn't be the best use of the money, rather further infrastructure and quality of life investments in my opinion would be a better use (without adding to current debt levels).

The 15% corporate tax initiative that most of the western world was close to adopting not happening was a bummer to me, as it would level the field, and in my opinion it not happening hurt ordinary people of all the potential participating countries.

StassneyHorn · February 10

Imagine any other developed country on earth telling two people who make a combined $94,299 that we won’t tax you more than 12%

gmr548 · February 10

1 hour ago, DixonHur said:

I didn't intend to compare the housing crisis on a causal basis. I meant it as the end result.

I think housing prices are extremely inflated and will need to come down substantially to be sustainable. That means that people who bought at the peak will be underwater.

1 hour ago, DixonHur said:

In 2000 the average home price to income ratio was about 4x. In 2023 it was 5.8x so I could see 25+%

lol I love these shitty housing takes. Do you get these from Facebook or TikToK?

Housing has spiked because it was significantly underbuilt after the late 2000's financial crisis. It is simple supply and demand.

DixonHur · February 10

47 minutes ago, StassneyHorn said:

Oh fuck my thumb slipped. Top bracket for 75k marrieds is 12% which means a smaller net even with elevated property taxes in the state

Tax Rate For Single Filers For Married Individuals Filing Joint Returns For Heads of Households

10% $0 to $11,600 $0 to $23,200 $0 to $16,550

12% $11,600 to $47,150 $23,200 to $94,300 $16,550 to $63,100

22% $47,150 to $100,525 $94,300 to $201,050 $63,100 to $100,500

24% $100,525 to $191,950 $201,050 to $383,900 $100,500 to $191,950

32% $191,950 to $243,725 $383,900 to $487,450 $191,950 to $243,700

35% $243,725 to $609,350 $487,450 to $731,200 $243,700 to $609,350

37% $609,350 or more $731,200 or more $609,350 or more

So only married people buy houses. Gotcha.

David Dennison · February 10

20 minutes ago, StassneyHorn said:

Imagine any other developed country on earth telling two people who make a combined $94,299 that we won’t tax you more than 12%

It's hard to imagine developed countries with a sense of collective well-being for all citizens, but I know they exist.

DixonHur · February 10

6 minutes ago, gmr548 said:

lol I love these shitty housing takes. Do you get these from Facebook or TikToK?

Housing has spiked because it was significantly underbuilt after the late 2000's financial crisis. It is simple supply and demand.

Had nothing to do with sub-prime mortgages and low interest rates.

DixonHur · February 10

1 hour ago, StassneyHorn said:

You just made a post about how people in 2000 had loans that were 4x their income, while having a bitchfest about people with 75k in income now having 100k in debt? Is that anywhere near 4x?

Spoiler it isn’t

It would be nice to debate with someone who understood the concept of averages...oh well, guess I'm stuck with @StassneyHorn

David Dennison · February 10

2 minutes ago, DixonHur said:

Had nothing to do with sub-prime mortgages and low interest rates.

That's begs the question: blame the borrower or the lender?

DixonHur · February 10

Just now, David Dennison said:

That's begs the question: blame the borrower or the lender?

Why not both?

David Dennison · February 10

Just now, DixonHur said:

Why not both?

Well, mainly because one of those parties has more power than the other, but yeah, let's blame the people chasing the American Dream along with those looking to exploit it.

Bozo_Casanova · February 10

Neonmoon · February 10

Do we have sub-prime mortgages today?

It’s almost like a law was passed around let’s say 2010

Neonmoon · February 10

What else isn’t happening today?

DixonHur · February 10

2 minutes ago, Neonmoon said:

Do we have sub-prime mortgages today?

It’s almost like a law was passed around let’s say 2010

Not sure if this was directed at me, but @gmr548 said prices increased after 2000 because of supply and demand. My understand is that the housing crisis of 2008 was before 2010, but I could be mistaken.

DixonHur · February 10

1 minute ago, Neonmoon said:

What else isn’t happening today?

Key word...today. The economy is still juiced up on steroids.

I believe we are in a bubble caused by low interest rates and "free money"...aka stimulus. Clearly you disagree, which is fine. One of us will be right, and I hope it's you.

fattyflattie · February 10

7 minutes ago, David Dennison said:

Well, mainly because one of those parties has more power than the other, but yeah, let's blame the people chasing the American Dream along with those looking to exploit it.

Is the lender not chasing the American dream?

DixonHur · February 10

7 minutes ago, DixonHur said:

Not sure if this was directed at me, but @gmr548 said prices increased after 2000 because of supply and demand. My understand is that the housing crisis of 2008 was before 2010, but I could be mistaken.

Just realized I misread his post...I saw 2000 and financial crisis and assumed he was talking about the financial crisis in...wait for it...2000

But the stimulus and free money definitely helped drive up prices.

Edited February 10 by DixonHur

Neonmoon · February 10

16 minutes ago, DixonHur said:

Not sure if this was directed at me, but @gmr548 said prices increased after 2000 because of supply and demand. My understand is that the housing crisis of 2008 was before 2010, but I could be mistaken.

He said housing spike (prices inflated) because housing was under built after the 2000’s financial crises. He was stating that after 2008, we stopped building houses significantly, which led to less supply. So when 3% rates appeared in 2020, demand skyrocketed and we didn’t have the supply to meet that supply, therefore home prices skyrocketed.

It was not due to sub-prime mortgages. Free money was a catalyst for sure, but the same reason home prices skyrocketed is the same reason home prices did not crash when mortgage rates hit 8%. We don’t have the supply.

Edited February 10 by Neonmoon

StassneyHorn · February 10

31 minutes ago, DixonHur said:

So only married people buy houses. Gotcha.

I’ve already explained that stupid bullshit. Yes, for the most part, married couples are buying houses and single people are getting condos

30 minutes ago, David Dennison said:

It's hard to imagine developed countries with a sense of collective well-being for all citizens, but I know they exist.

Us

StassneyHorn · February 10

26 minutes ago, DixonHur said:

It would be nice to debate with someone who understood the concept of averages...oh well, guess I'm stuck with @StassneyHorn

Averages one million percent tilt towards the rich so please show me the median amount that will be lower

StassneyHorn · February 10

Jesus Christ @DixonHurhas a hit rate of 0

DixonHur · February 10

3 minutes ago, StassneyHorn said:

Jesus Christ @DixonHurhas a hit rate of 0

Haha, the hamster in your brain must be proud

1 hour ago, BamaATL said:

I'm betting you don't live in a house (in terms of value) that is equal to your income, nor are you concerned with that. Say you make 100k (for sake of simplicity), I'm betting you don't live in a house worth exactly 100k. You also wouldn't look at that as a bad investment, it costs you 600 a month against your salary. Well, our GDP in 2022 was right around 24 trillion. Our debt is 35 trillion. Yes we have payments to make, and obligations to meet, and yes the numbers are huge. The national debt situation is along the same lines.

You are correct. I'm in the 35% tax bracket but my house is only worth about $250k. I guess I'm frugal.

David Dennison · February 10

2 minutes ago, DixonHur said:

You are correct. I'm in the 35% tax bracket but my house is only worth about $250k. I guess I'm frugal.

You sound poor.

/surly

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