How are we going to pay for all this shit?

eh'

Has anyone figured out how we are going to pay for all this shit?

Or come up with any proof that Reagan wasn't the one who started this nonsense about debt!



.

Has anyone figured out how we are going to pay for all this shit?

Or come up with any proof that Reagan wasn't the one who started this nonsense about debt!



. Originally Posted by WTF

who says you proved it? other that you, of course.

Sorry for the delayed response, I've had a busy week!

For starters, one friend of mine noted recently that Fed officials always seem to be trying to find the "path of least embarrassment." I think that's a pretty good way of putting it. Often that means avoiding a recession, but right now it's hardly possible to check any news source and not immediately see stories on how America's working- and middle-classes are pretty freaked out about rising costs for food, energy, cars, housing, etc.

That's why we may see announcements after this week's meeting that they are committed to "tapering acceleration" and will likely steer guidance into expectations of two or three rate hikes during the first half of 2022. Most observers now seem to expect a doubling of the tapering rate to $30 billion/month.
At least a couple of private-sector economists have posted recently that the mere mention of Fed "semi-hawkishness" will be likely to dampen inflation expectations for the next 2-3 quarters. Originally Posted by CaptainMidnight

Since you posted, the Fed announced it will accelerate the taper and raise rates three times next year. So the Fed will continue buying bonds, and we can expect the Fed Funds rate to end 2022 a shade above 0.75%, assuming the rate increases are each 0.25%. Given YoY CPI inflation in November was 6.8%, and the consensus forecast for 2022 is 4.2%, that sounds downright dovish to me.

I've never paid attention to the relationship between Fed announcements and inflation expectations, and don't know how to do that, although I'm sure there must be a way with TIPS or something else. I have paid attention to forex rates and the Fed. Following what you said, many times the dollar strengthens at the mere hint that U.S. interest rates will increase. Not so this week. The dollar weakened after Powell spoke, then rebounded a bit and ended the week about flat

As a long-time Texas economist named Ray Perryman always said, "the most important thing is what people think."

Perryman also said that he decided between taking classes in economics and psychology with a coin flip, and says it's very fortunate that economics won out. Otherwise, he said, there might be a lot more really fucked-up people! LOL

https://www.baylor.edu/giving/foster....php?id=873949

(To be continued later today ...)

. Originally Posted by CaptainMidnight

Perryman's very popular out here in the hinterlands where I now live. He's been on the local news from time to time.

I like El-Erian and generally read all of his stuff. Although I have probably agreed with him in more cases than not over the last decade or so, he seems to get a bit carried away at times. For instance, he has praised the Biden fiscal agenda, saying that it "holds the key to enhancing productivity, increasing labor force participation, and providing greater opportunities for advancement to more Americans." Then he says that it would be tragic if Fed policy "derailed this administration's economic agenda."

https://www.washingtonpost.com/opini...bidens-agenda/

(I wouldn't find that quite so tragic!)

. Originally Posted by CaptainMidnight

Good article, thanks. I think his view differs somewhat from yours, and even though intuitively I agree with the first part of his piece, I'd still be more inclined to believe what some guy named Captain Midnight writes on a hooker board that what El-Erian writes in the Washington Post. I'm not being facetious either -- I honestly feel the USA would be in more capable hands if people like you were running economic policy instead of people like El-Erian.

Which might explain what's going on with the last part of the article. Maybe El-Erian's angling for the Treasury Secretary's position in a Democratic administration, kind of like Lusty Lad, errr, sorry, Mnuchin in the Trump administration.

That or El-Erian shares our friend WTF's mistaken belief that the federal government runs things efficiently. El-Erian wrote this before the infrastructure bill was passed. I've read a couple of articles about costs of government run infrastructure in the U.S. versus Europe lately. One mentioned that states in the northeast pay 5X more for transportation projects than what France pays. In my city, we have busses running regularly that often have no passengers. Why? Because the federal government was shoveling mass transit funds our way but you had to buy big busses instead of vans or subsidized Uber or whatever. I'm not convinced federal money is going to remove infrastructure bottlenecks and lower inflation. More likely it will fan the flames, and a good chunk will be flushed down the toilet.

I haven't looked at the proposed corporate minimum tax in the BBB, because it doesn't affect me. Maybe it's a good thing. But I don't see how that, and a 48.8% marginal federal tax rate on medium sized pass through businesses (as a result of the 8% surtax and requiring all businesses to pay the 3.8% NIIT), is going to improve productivity. You're moving funds from an efficient private sector to an inefficient federal government with these taxes.

Then you've got the child care credit. Now admittedly that's one part of the bill that I actually like, if it were modified as proposed by Manchin so that only the needy got the money. But it's not going to improve labor force participation because it's going to encourage people not to work. Or at least there's a woman in her late 20's who works at one of my favorite restaurants who has 5 kids. The proprietor told a year or so ago me she quit because she was getting enough money from the government so she didn't need to work. Now she's back, just after extended unemployment benefits ended and about when the child credit is about to end. Is this good or bad? I don't know, maybe her kids are better off if Mom is at home. But what's happening with her is contrary to what El-Erian's contending.

So anyway, as to the last part of his article, the praise for Biden's fiscal agenda, I'm calling bull shit.

Maybe Dominion will donate some of the 1.5B they are on their way to collecting from Fox?

.



I don't know much about Indonesia and haven't seen much coverage of it in the financial press lately, but Turkey has been a real basket case for a while now, with multiple debt and currency crises going back a few years. The Turkish lira started dropping like a stone against all major currencies during the pandemic era. Sure hope we don't ever become "Turkey Lite." If so, it's time to head for the hills -- literally!

In contrast, the US dollar remains strong against almost every major global currency, and in fact has strengthened slightly against many of them during the last few weeks. Compare that with what happened around 1978, when the USD crumpled against other currencies, dropping 30% or more vs. the yen and the West German mark. 10-year treasury rates, already very high at about 8%, shot up over the next three years to over 15%.

Also, there were repeated wage cycles as automatic COLAs were built into many labor contracts, quite unlike the case today. Oil and other commodity prices were also spiraling out of control. Crude oil prices skyrocketed more than 10-fold between 1972 and 1980. We don't see anything remotely like any of that today.

Wage-push and demand-pull inflation seemed to come in waves and form continuing viscous cycles.

(Thankfully, a certain Mr. Volcker was available to do some heavy lifting!)





Although the Fed funds rate has been "negative real" for well over a decade, the government has only been pouring money into household accounts like there's no tomorrow for about 18 months. This vastly exceeded missing salary and wage income during the pandemic era. JPM put out a note recently saying that the median household bank balance is about 50% higher than in February 2020. Another note said there's $2-2.5 more liquidity available to households than would be the case if COVID (and rescue packages) had never happened.

That's why I see this as much more comparable to 1946-48, when a vast pool of saving immediately following the war collided with an unprepared level of industrial capacity as producers were shifting from wartime to consumer goods. Double-digit annual rates of inflation occurred for about a 2-year period, receding just in time for Truman to rescue his presidential campaign, which had begun looking hopeless.

If a recession commences sometime in 2023, and if republicans then hold the house, the last thing they're likely to do is hand Biden (or Harris) a lifeline. Extensions of unemployment benefits, maybe, or something like that, but no more. I suspect the days of extreme largesse will be done and gone.

So I think the primary challenge in 2023-24 is much more likely to be economic weakness and stagnation than enduring high rates of inflation.

. Originally Posted by CaptainMidnight

This is a very convincing argument, and why I'd believe your view over, say, El-Erian's, even though in my bones I'm a doom and gloom type.

I don't understand why the dollar is strong, but I've never understood currency movements. Here's a comparison between my "basket case", Turkey, and the USA:

Real interest rate, using short term benchmark rate and November CPI -
USA: -6.7%
Turkey: -7.3%

Current Account Deficit as % GDP -
USA: -3.2%
Turkey: -2.35%

External Debt as % GDP:
USA: 107%
Turkey: 56%

Annual Exports as % External Debt -
USA: 11%
Turkey: 530%

Budget Balance as % GDP
USA: -11.5%
Turkey: -1.45%

Maybe time to buy lira? That's a joke. Turkey lowered its benchmark interest rate to 14% this week from 15%, and the lira dropped from 13.8 to the dollar on Monday to 16.4 today.

My post:

My problem with setting tax rates at revenue maximizing levels is that it treats taxpayers like cattle or slaves. They're here to be milked for the benefit of the government. The government is more important than the people. That's just not right. And considering how wasteful the federal government is, it's just stupid to design tax policy around that. Originally Posted by Tiny

Your reply:

I hardly ever disagree with my manners Tiny but I have to disagree strongly, like in A Few Good Men, we definitely should be seeking the sweet spot to maximize revenue. It is the most efficient course of action.

Of course the size of government should not expand beyond that efficiency.

My opinion of course. Originally Posted by WTF

You've got some explaining to do. You believe the chief purpose of man is to produce maximum revenues for the government? I'm going to have to start calling you a 2% Libertarian instead of a three-quarters Libertarian.

Wtf is a libertarian pretender!

That or El-Erian shares our friend WTF's mistaken belief that the federal government runs things efficiently. Originally Posted by Tiny

I did not say the government ran things more efficiently. I said it is better for all if the government finds the most efficient tax rate. To low or high and we have lower tax revenue and higher deficits/debt.

Actually that was the jest of the Laffer Curve.

My post:



Your reply:



You've got some explaining to do. You believe the chief purpose of man is to produce maximum revenues for the government? I'm going to have to start calling you a 2% Libertarian instead of a three-quarters Libertarian. Originally Posted by Tiny

I think I explained it in the above post.

Why would you want higher debt for future generations?

And I ended that by saying that government should not expand beyond that efficiency.

So I am a proponent to paying our bills and living within our means. I think that is rather Libertarian.

I do not think you want government either spending more on defense or over promising Social programs and putting that debt on future generations.

Wtf is a libertarian pretender! Originally Posted by dilbert firestorm

My belief is that poster/voters no longer understand libertarian. conserative or liberal beliefs. They seem to get them mixed up.

who says you proved it? other that you, of course. Originally Posted by The_Waco_Kid

I've had you and others have proved it. Y'all keep posting exactly where the rise in ratio from debt to GDP ratio took an extreme uptick! 1980

I've mostly been arguing where this trend that our debt seemed not to matter...I say it started with Reagan. To lazy to look back how Stockman came up...probably because he was on the inside. Not sure why I brought you in even. Maybe my memory is slipping and I mistakenly thought you may be in agreement with his views...here from 2016. I think he is way more right than wrong though bitcoin seems to be the new gold.

https://octavianreport.com/article/d...central-banks/

OR: How does the GOP go from Reagan to Trump in three decades?

Stockman: After 30 years, it lost its way entirely. It drew all the wrong lessons from the 1980’s, it came to embrace the idea that deficits don’t matter, that entitlements can be left to ride indefinitely into the future, that you can grow your way out of any fiscal problem. Reagan never really said that: it was a different environment, he had double-digit inflation, we needed to cut rates because of bracket creep. But after 30 years of being lost in the wilderness and giving up on the job of what the Republican party is supposed to do — which is to be the party of fiscal rectitude and sound money — you end up with a wildcard like Trump. Originally Posted by WTF

First, great link. Some very interesting comments by Stockman. I hope he's wrong about a lot of this but fear he may be right.

Art Laffer said he was an admirer of Bill Clinton. No, Clinton didn't get everything right. He did raise taxes on ordinary income. But he, and a Republican Congress, reformed welfare, promoted free trade, balanced the budget, and cut the capital gains tax. And he didn't get us into any wars. And in the words of Laffer, 4 out of 5 ain't bad. Or something like that.

You can say the same about Reagan. He

1. Restored pride in America, after four years of Jimmy Carter, your hero, and the Iran fiasco brought us to a new low

2. Shored up social security and Medicare

3. Cut the marginal tax rate from the ridiculous level of 70% even while making the income tax system more progressive

4. Helped end the cold war, and bring freedom and liberty to Eastern Europe and parts of the Soviet Union.

5. Mostly kept us out of foreign wars.

And yes, unfortunately, there was too much deficit spending. Please note that part of this was attributable to the steep recession in 1981/1982. For some reason you blame Reagan but give Obama a pass on the even larger deficits, in terms of % of GDP, run up for years after the 2009 recession. And, as Lusty Lad pointed out previously, perhaps the spending on the military during the Reagan administration, which played a part in ending the cold war, created a peace dividend that enabled Clinton, Gingrich, et al to balance the budget in later years.

I read the Triumph of Politics, Stockman's book, years ago. Yes, Stockman was somewhat frustrated by Reagan and the generals in his efforts to limit military spending. But Reagan was with him in terms of wanting to cut out the pork. Unfortunately Congressional members of both parties wouldn't let that happen. Remember Democrats controlled the House, where spending bills originate, throughout Reagan's terms. So, as reflected in the title of the book, the increase in the debt under Reagan reflects "the Triumph of Politics" over common sense, not failings on the part of Reagan, in my opinion anyway.

Star Trek 4 welcome to the most advance society over here but, how are you going to pay for all this SHIT, a black Friday black line money laundering scam credit.