Economy Thread

[Mrs Whiggins 13049]

The last time I checked the JHU database map the virus is all over the place albeit greatest numbers in China. Hard to tell how much it is slowing down due to preventative measures, though.

[Incredulity 11532]

6 minutes ago, Mrs Whiggins said:

The last time I checked the JHU database map the virus is all over the place albeit greatest numbers in China. Hard to tell how much it is slowing down due to preventative measures, though.

Mortality rate is the most important statistic at this point.

[washparkhorn 9931]

1 hour ago, Dbeasy said:

 

Nothing like obfuscation to hide serious issues. Our budget deficits are currently tagging every household in this country with $7500 per year of “savings” debt. This whole perspective is nonsense. Complete and utter bullshit.

 

Pete Peterson created a cult around the national debt.

So, please explain this. Take your time, please. I want to understand. I can wait for a cogent answer. Why haven't interest rates risen? 

[elfenix 34168]

1 hour ago, Dbeasy said:

Nothing like obfuscation to hide serious issues. Our budget deficits are currently tagging every household in this country with $7500 per year of “savings” debt. This whole perspective is nonsense. Complete and utter bullshit.

maybe you didn't notice but the government isn't a household and households aren't the government.

[Incredulity 11532]

6 minutes ago, elfenix said:

maybe you didn't notice but the government isn't a household and households aren't the government.

it takes a village?

[Mrs Whiggins 13049]

Your question was not directed at me but I am interested in your picture.

So the graph on the left is the Treasury Securities? And the theoretical value is going down and down since the 80s?

But the public debt (on the right) is going up and up.

The graph on the right helps determine rates for mortgages and savings? If it's theoretical, what would happen if they raised it?

(Forgive me for the novice questions.) My mantra was always no debt no debt no debt and we have succeeded in that but learning greater complexities are fun.

[elfenix 34168]

4 minutes ago, Mrs Whiggins said:

Your question was not directed at me but I am interested in your picture.

So the graph on the left is the Treasury Securities? And the theoretical value is going down and down since the 80s?

But the public debt (on the right) is going up and up.

The graph on the right helps determine rates for mortgages and savings? If it's theoretical, what would happen if they raised it?

(Forgive me for the novice questions.) My mantra was always no debt no debt no debt and we have succeeded in that but learning greater complexities are fun.

the graph on the left is the 10 year interest rate.  the graph on the right is public debt.  the takeaway is that if the market had no confidence in the US ability to pay its bills, the rate would have been going up. 

[washparkhorn 9931]

24 minutes ago, elfenix said:

the graph on the left is the 10 year interest rate.  the graph on the right is public debt.  the takeaway is that if the market had no confidence in the US ability to pay its bills, the rate would have been going up. 

Correct - the chart on the left is the cost of the US government to borrow money. It tends to negate the Pete Peterson lie that government spending causes an increase in the "borrowing" cost for the USG. At a certain level, it will. 

https://www.cnbc.com/2019/03/01/bernie-sanders-economic-advisor-stephanie-kelton-on-mmt-and-2020-race.html - Kelton explains MMT and spending - and answers how much is too much. 

[Zavala 1384]

https://www.bloomberg.com/news/articles/2020-01-22/pentagon-racks-up-35-trillion-in-accounting-changes-in-one-year

Pentagon Racks Up $35 Trillion in Accounting Changes in One Year

Whoops, that's like 100k+ per taxpayer or something? Lol.

The money is funny, it won't matter.

[tx 3 putt 76159]

Pentagon is preparing for the asteroid headed towards earth 

[washparkhorn 9931]

$35 Trillion, yet we aren't Zimbabwe. 

Inflate or die? Well it is technically "Defensive" in nature - so let's give it to the Pentagon. 

Pete Peterson poisoned so many minds with his right-wing propaganda for billionaires and tyrants. 

[Bateshorn 9882]

The US government and your household budget are not remotely alike.  Stop making that comparison.  The vast majority of US debt is actually held by the US government. For all practical purposes,  it doesn’t exist. 
 

 

[TwiceHorn 31184]

17 minutes ago, Bateshorn said:

The US government and your household budget are not remotely alike.  Stop making that comparison.  The vast majority of US debt is actually held by the US government. For all practical purposes,  it doesn’t exist. 
 

 

The first bolded is true.

The second bolded is dangerous thinking.

The middle statement is inaccurate.  The "public" holds most of the US debt, the rest is intragovernmental.  The public is mostly US entities. While there isn't a bankruptcy or a repo or foreclosure and there is no bill collector out there, there will eventually be a reckoning and it will not be pleasant.  The further out we get, the more likely the reckoning becomes.  The reckoning will probably be less pleasant for countries other than the US, but it will be unpleasant nevertheless.

Edited February 9, 2020 by TwiceHorn

[Nice Guy Eddie 13391]

14 minutes ago, Bateshorn said:

The US government and your household budget are not remotely alike.  Stop making that comparison.  The vast majority of US debt is actually held by the US government. For all practical purposes,  it doesn’t exist. 
 

 

If it doesn’t exist, why don’t we just sell more debt and eliminate taxes?  At best the US govt owns 40% of the debt with most of that owed to future social security payments. Which will have to be paid back within 10-15 years since SS’s surplus will be zero.

[TwiceHorn 31184]

It occurs to me that there is an accusation flying around, that is mostly accurate, that some want to pull up the ladder they ascended to success.

Continued spending without regard to debt and percentage of GDP is a version of that.  

[Nice Guy Eddie 13391]

On one hand, increased borrowing right now isn’t a bad idea since interests rates are so ridiculously low. However it would seem like you would want to use that to invest (infrastructure week) or retire old, higher-interest debt. I don’t even know if the govt does the latter or not.

but instead I think we’re basically funding the tax breaks. We’re basically mortgaging the next generations to put money in our pocket today.  Now private industry is investing more because of the tax break structure but will it pay off?

[Onboard 2.0 9083]

1 minute ago, Nice Guy Eddie said:

On one hand, increased borrowing right now isn’t a bad idea since interests rates are so ridiculously low. However it would seem like you would want to use that to invest (infrastructure week) or retire old, higher-interest debt. I don’t even know if the govt does the latter or not.

 

So yer sayıng the Fed should sign up for one of those credit cards that lets you transfer the balance of another higher interest rate card ?  

[Nice Guy Eddie 13391]

4 minutes ago, Onboard 2.0 said:

So yer sayıng the Fed should sign up for one of those credit cards that lets you transfer the balance of another higher interest rate card ?  

Exactly. Maybe get some wicked large airline miles as well.

[Bateshorn 9882]

5 minutes ago, Nice Guy Eddie said:

On one hand, increased borrowing right now isn’t a bad idea since interests rates are so ridiculously low. However it would seem like you would want to use that to invest (infrastructure week) or retire old, higher-interest debt. I don’t even know if the govt does the latter or not.

but instead I think we’re basically funding the tax breaks. We’re basically mortgaging the next generations to put money in our pocket today.  Now private industry is investing more because of the tax break structure but will it pay off?

This is a far better way to think of it. We are borrowing aggressively to cut the corporate rate and wealthy tax goers, thus encouraging them to juice the market and give the illusion of broad economic growth, which papers over the growing deficit and debt service.
 

We have an almost endless capacity to borrow,  but we are doing it for terribly stupid and short sighted reasons right now.   

[TwiceHorn 31184]

But are we intentionally borrowing at low rates, or just spending like a drunken sailor without regard to consequences?

The borrowing at low rates sounds like a post hoc to justify buying that $70k pickup on a 120-month note.  To continue the consumer analogies.

[Mrs Whiggins 13049]

I was reading @washparkhorn's article link, and the MMT explanation that the interviewee gave. I like the idea of spending  on our roads, bridges, dams, etc. We've been kicking the can down the literal road far too long. This goes back to Warren and the other candidates though--there is quite a bit of corruption w/respect to how infrastructure is funded, implemented and built and I'd like to see that addressed. Course, I'd also like to be Queen for a week so I guess there's that.

[Onboard 2.0 9083]

1 minute ago, Mrs Whiggins said:

I was reading @washparkhorn's article link, and the MMT explanation that the interviewee gave. I like the idea of spending  on our roads, bridges, dams, etc. We've been kicking the can down the literal road far too long. This goes back to Warren and the other candidates though--there is quite a bit of corruption w/respect to how infrastructure is funded, implemented and built and I'd like to see that addressed. Course, I'd also like to be Queen for a week so I guess there's that.

Allow a revision of the woefully outdated gas tax, and legislatively tie ALL funds to physical infrastructure spending, ACTUAL infrastructure not tenusously related things.

[Incredulity 11532]

2 minutes ago, Mrs Whiggins said:

I was reading @washparkhorn's article link, and the MMT explanation that the interviewee gave. I like the idea of spending  on our roads, bridges, dams, etc. We've been kicking the can down the literal road far too long. This goes back to Warren and the other candidates though--there is quite a bit of corruption w/respect to how infrastructure is funded, implemented and built and I'd like to see that addressed. Course, I'd also like to be Queen for a week so I guess there's that.

“Shovel ready wasn’t so shovel ready.”   Barry

[Fudge Nuggets 19118]

10 hours ago, washparkhorn said:

$35 Trillion, yet we aren't Zimbabwe. 

Inflate or die? Well it is technically "Defensive" in nature - so let's give it to the Pentagon. 

Pete Peterson poisoned so many minds with his right-wing propaganda for billionaires and tyrants. 

Why do you hate the troops, small business, patriotic farmers and 6 lb baby Jesus?

[Dbeasy 14953]

maybe you didn't notice but the government isn't a household and households aren't the government.

Thanks mr. obvious. However showing those debt levels in perspective to the population is an important measure that demonstrates the long-term negative consequences of high government debt, in terms of slower economic growth and prosperity, more dollars going to debt service instead of things that benefit citizens, raising the longer term risk that the US dollar gets replaced as the reserve currency, etc.

And Wash’s dumb statement that it’s not a problem because interest rates aren’t higher is such a simplistic amateur comment I’m not going to waste time addressing it.

It’s stunning to me we have a bunch of rubes running around believing there are no negative consequences to deep deficit spending.

[elfenix 34168]

The first bolded is true.
The second bolded is dangerous thinking.
The middle statement is inaccurate.  The "public" holds most of the US debt, the rest is intragovernmental.  The public is mostly US entities. While there isn't a bankruptcy or a repo or foreclosure and there is no bill collector out there, there will eventually be a reckoning and it will not be pleasant.  The further out we get, the more likely the reckoning becomes.  The reckoning will probably be less pleasant for countries other than the US, but it will be unpleasant nevertheless.

People have been making this claim since David Ricardo and it has yet to happen.

[elfenix 34168]

Thanks mr. obvious. However showing those debt levels in perspective to the population is an important measure that demonstrates the long-term negative consequences of high government debt, in terms of slower economic growth and prosperity, more dollars going to debt service instead of things that benefit citizens, raising the longer term risk that the US dollar gets replaced as the reserve currency, etc.

And Wash’s dumb statement that it’s not a problem because interest rates aren’t higher is such a simplistic amateur comment I’m not going to waste time addressing it.

It’s stunning to me we have a bunch of rubes running around believing there are no negative consequences to deep deficit spending.

We have far many more rubes running around believing there's much greater consequences to deficit spending than have ever been observed.

Again, people have been predicting the collapse of the state and the sale of the nation under the weight of debt for 250 years. It has yet to happen.

[Rusty Shackelford 414]

Why are foreign governments willing to buy US treasury debt? Because the US Dollar is the reserve currency and they need dollars for international trade, and to stabilize their own currency.

Our main export is the USD, and as long as the USD is the world’s reserve currency there will be a buyer for our debt and no real consequences. There is a reason our worst enemies are trying like hell to come up with a new reserve currency, and something will probably replace it in the next 10 -20 years.

[Captainant 27311]

Circling back around to the "wages are better than ever!" conversation - despite a so-called "blue collar boom", wage data shows that workers and wage earners have NOT benefited from the trump economy. A UM professor published a decent study on it using the quarterly BLS data recently released in Dec 2019 (with links to the raw data as well) and generated some pretty significant findings, based on the more complete picture of information. Ya know, more than just employment numbers and the DJIA.

And while wages only stagnated, they also analyzed the "fringe" benefits that aren't wages such as health insurance, retirement, and bonuses and found that those have declined 1.7% over the last three years. I wonder what happened in 2019 that made benefits drop if the economy is doing so well....

So yes, the nominal data shows a 2.2% increase in pay since trump took office. But the actual REAL increase in pay is at best non-existent at the cost of 1.5 trillion in debt from the tax cut. Trickle down in action, baby.

[CowboyFred 1151]

so we don't have the best economy under any administration?  this is horseshit!

[Js1 85056]

Did Bush or Obama cut taxes enough to give everyone a Costco membership?

No?

Okay then.  

[Incredulity 11532]

6 minutes ago, CowboyFred said:

so we don't have the best economy under any administration?  this is horseshit!

No, no, no the current talking point is that this is still the Obama economy.  We’ll keep you posted if the messaging needs to change.

Edited February 12, 2020 by Incredulity

[David Dennison 18608]

4 minutes ago, Incredulity said:

No, no, no the current talking point is that this is still the Obama economy.  We’ll keep you posted if the messaging needs to change.

What's different between the economy under Obama and the economy now?

[Js1 85056]

Just now, David Dennison said:

What's different between the economy under Obama and the economy now?

We cut taxes to run up the deficit instead of needing a stimulus to bail out the previous Republican to crash the economy, per usual. 

[David Dennison 18608]

4 minutes ago, Js1 said:

We cut taxes to run up the deficit instead of needing a stimulus to bail out the previous Republican to crash the economy, per usual. 

Patience, grasshopper.

[CowboyFred 1151]

2 minutes ago, Js1 said:

We cut taxes to run up the deficit instead of needing a stimulus to bail out the previous Republican to crash the economy, per usual. 

We gave a bailout to the Farmers for far more than we gave the auto industry with the main difference being that the auto industry paid the $$ back.  Farmer's bailout was because president fail couldn't back up promises of bringing jobs/money back to the midwest so fuck it give them some money and let the next admin deal with it.

 

10 minutes ago, Incredulity said:

No, no, no the current talking point is that this is still the Obama economy.  We’ll keep you posted if the messaging needs to change.

I agree that our economy is still riding the wave of the Obama economy but trump is trying his best to sink that to shit for short term gains (are they really gains tho?).

 

Again, we are trusting someone to run our economy that couldn't even turn a profit on a FUCKING CASINO.  But people voted for him because he's a businessman...a really shitty one but a businessman nonetheless I guess.

[wildcat09 29187]

9 minutes ago, Js1 said:

We cut taxes on the rich to run up the deficit instead of needing a stimulus to bail out the previous Republican to crash the economy, per usual. 

FIFY. Taxes have actually gone up for most Americans, given Trump's tariffs.

[bernorange 8346]

On 2/7/2020 at 7:12 AM, Mrs Whiggins said:

...

President Trump’s bid to install economist Judy Shelton on the Federal Reserve’s board of governors ...

Quote

Republican lawmakers expressed concern about Judy Shelton, President Trump’s nominee for the Federal Reserve, casting doubt on the confirmation chances of a candidate viewed as a potential next Fed chair.

Ms. Shelton faced skepticism from both Republicans and Democrats on the Senate Banking Committee, with lawmakers questioning whether she would protect the Fed’s independence and pressing her about previous policy positions she had espoused, including a return to the gold standard.

“I’m concerned,” Senator Richard C. Shelby, Republican of Alabama, said after the hearing when asked which way he was leaning on her confirmation. Senator John Kennedy, Republican of Louisiana, and Senator Patrick J. Toomey, Republican of Pennsylvania, also expressed uncertainty about whether she would win their support.
...
Because Ms. Shelton would need a simple majority vote to move onto confirmation by the full Senate, only one Republican would need to object to potentially dash her chances of moving forward. The committee has 13 Republicans and 12 Democrats, and it is not clear that any of the Democrats would support her bid.

“They asked substantive, tough questions,” Sam Bell, the founder of Employ America, said of the Republican senators. Mr. Bell’s group has been pushing for Fed nominees who are focused on lifting employment and has vocally opposed Ms. Shelton.

“The aura, after the hearing, is that there’s serious bipartisan skepticism,” he said.
...

https://www.nytimes.com/2020/02/13/business/economy/judy-shelton-fed.html

[workswithseed 2033]

I can't tell, do presidents run an economy or not?

Unless something has changed, it's the people who buy and sell do.

[elfenix 34168]

2 hours ago, workswithseed said:

I can't tell, do presidents run an economy or not?

they don't run it but they have a large influence in fiscal policy (which breaks down to the deficit at large and wealth effects from deciding who to tax and whose bank account to deposit dollars into), and they have a lesser influence in monetary policy by appointing fed directors (the fed needs to remain independent - dependent central banks are a hallmark of shit economies). 

Edited February 14, 2020 by elfenix

[David Dennison 18608]

2 hours ago, workswithseed said:

I can't tell, do presidents run an economy or not?

Unless something has changed, it's the people who buy and sell do.

They don't run it, but their policies and appointments definitely affect buying and selling. 

Edited February 14, 2020 by David Dennison
elfenix beat me to it.

[RayDog 682]

With over half of China's population in quarantine, likely for the next two or three months, I think it is impossible that the Coronavirus does not cause a world-wide recession.

Supply chains for many things are being disrupted and non-essential goods are not being sold in China nor shipped in or from China. The drop in German car sales alone could send Germany and by extension the rest of the EU into a recession.

Economics is not my area of expertise, but it seems inevitable at this point.

[4th&Five 41457]

you were saying...

 

[washparkhorn 9931]

On 2/16/2020 at 1:29 AM, RayDog said:

With over half of China's population in quarantine, likely for the next two or three months, I think it is impossible that the Coronavirus does not cause a world-wide recession.

Supply chains for many things are being disrupted and non-essential goods are not being sold in China nor shipped in or from China. The drop in German car sales alone could send Germany and by extension the rest of the EU into a recession.

Economics is not my area of expertise, but it seems inevitable at this point.

Deflationary pressure will certainly intensify. The de-coupling from China will also speed up, which I am not sure is welcome news given the tension between the nations. 

The asset bubble continues to worry me.

To anyone - Are we seeing actual institutional moves into safe havens - Swiss Franc, Japanese Yen and US Dollar and retreat from the Australian Dollar? 

[washparkhorn 9931]

On 2/14/2020 at 6:06 AM, bernorange said:

https://www.nytimes.com/2020/02/13/business/economy/judy-shelton-fed.html

Sad to think we might have someone worse in that position. How is that possible. 

[babysdaddy 2711]

9 minutes ago, washparkhorn said:

Deflationary pressure will certainly intensify. The de-coupling from China will also speed up, which I am not sure is welcome news given the tension between the nations. 

The asset bubble continues to worry me.

To anyone - Are we seeing actual institutional moves into safe havens - Swiss Franc, Japanese Yen and US Dollar and retreat from the Australian Dollar? 

Yes.  Flows to Treasuries and the Yen have increased recently.  Mr. Market is getting antsy.  Will try to find something to share

[washparkhorn 9931]

4 minutes ago, babysdaddy said:

Yes.  Flows to Treasuries and the Yen have increased recently.  Mr. Market is getting antsy.  Will try to find something to share

Thanks for the response. I can track it down, so don't go to too much trouble. Just wanted to make sure there is some evidence of a flight to safety. 

[horn4life 3753]

Inflation is not huge mainly because there has not been an increase in disposable income for wage workers.  Without inflation as a motivator the Fed generally does not push too hard to increase interest rates.  Secondarily globally we are still the safest currency to invest in and thus the "safe haven" for international monetary investment.  These are the two primary drivers in keeping interest rates still at very low levels.

For the poor Fox news watchers that really honestly believe this is the greatest economy ever! And Donald Trump did this because we were in the shitter under that non-white President.  It is always good to know facts.  Like the growth rate of the Trump economy has been less than most Presidencies in your lifetime.  It is also good to know that Trump has created fewer jobs than Obama did in the economy that Trump INHERITED.   In essence if you get your news from Fox (only foreign controlled network) you simply do not get the facts.  You get fake facts designed specifically to fool you. And you believe the misinformation.

The debt problem is only a problem when Democrats are in the Whitehouse according to all evidence presented by our GOP elected representatives. Trump in fact "during the greatest economy ever" has added debt at a faster pace than Obama did when we were clawing out of the worst economy any President in our lifetimes ever inherited.  Let's say that again- Trump and the GOP are accumulating debt at a faster rate than when we were teetering on a depression and desperately needed stimulative spending.

Eventually the debt service will explode as interest rates gradually rise.  We've been lucky. But if we get 4 more years of Trump our country will end up exactly like all of his inherited and made money as a businessman, we will be flat broke.  The good news is we will still be the one "safe haven" for international currency investors so we won't be as bad off as many countries.  The problem will be because we have kept interest rates so low, we simply no longer have the tools in the tool box that you would normally use in a time of fiscal crisis.  So when then worm turns it is going to be very, very bad.

FACT: The GNP growth rater per dollar borrowed is the worst under Trump than under ANY Presidency in our lifetimes. 

[Message Board User 12389]

Stock market gonna take a beating today due to coronavirus fears.

if this coronavirus lingers throughout 2020, the economy (and by extension Trump) may be fucked.

[Homercles 10205]

I’ve casually brought up recently how little people seem to consider the huge impact that virus is having on China’s ability to manufacture goods and that we aren’t feeling the effects yet.  Pretty much everyone says ‘oh yeah I hadn’t though of that’.  Well when the next Finger Me Elmo toy is unobtanium at Christmas time maybe they’ll understand just how intertwined our economies are.