How are we going to pay for all this shit?

I just read the Politico article, and it is indeed excellent. Originally Posted by Tiny

If you liked the Christopher Leonard piece linked above by Why_Yes_I_Do, you might really like his new book, which I just read yesterday. Quite an interesting and informative read.

A good friend of mine gave me a heads up about the book last week, saying he was going to add it to his list of most highly recommended reads. It is his understanding that Leonard spent many, many hours poring through transcripts of Fed meetings and determined that not just Hoenig, but virtually all key Fed decision makers, knew exactly what they were doing regarding the realization that their operations would surely do much more to boost asset prices than to be of substantial direct or even indirect benefit to America's middle class. (What a surprise!)

That's why I wrote earlier that this whole ongoing operation, although claimed by its supporters to be something of an updated form of implementing "trickle-down economics" on steroids, yielded little in the way of predicted benefits to the non-affluent, or even to sound, healthy economic growth.

By the way, I still find it amusing that many journalists and even economists (who really should know better!) continue to lambaste Reagan for pursuing a policy centered around "trickle-down economics," even though that's not remotely what happened.

(But when did facts matter to most of these people, anyway?)

.

Look like the group of starship trooper are nothing but thieving soldier.

If you liked the Christopher Leonard piece linked above by Why_Yes_I_Do, you might really like his new book, which I just read yesterday. Quite an interesting and informative read.

A good friend of mine gave me a heads up about the book last week, saying he was going to add it to his list of most highly recommended reads. It is his understanding that Leonard spent many, many hours poring through transcripts of Fed meetings and determined that not just Hoenig, but virtually all key Fed decision makers, knew exactly what they were doing regarding the realization that their operations would surely do much more to boost asset prices than to be of substantial direct or even indirect benefit to America's middle class. (What a surprise!)

That's why I wrote earlier that this whole ongoing operation, although claimed by its supporters to be something of an updated form of implementing "trickle-down economics" on steroids, yielded little in the way of predicted benefits to the non-affluent, or even to sound, healthy economic growth.

By the way, I still find it amusing that many journalists and even economists (who really should know better!) continue to lambaste Reagan for pursuing a policy centered around "trickle-down economics," even though that's not remotely what happened.

(But when did facts matter to most of these people, anyway?)

. Originally Posted by CaptainMidnight

Sounds like a good read. I'm going to add it to my Kindle collection.

On a somewhat related subject, the effect of fiscal policy on inequality, it looks like the advocates of Modern Monetary Theory (MMT) have had a great real world experiment over the last couple of years. For those who don't know, MMT encourages putting the printing presses in overdrive and running up the national debt to accomplish social and political objectives. This supposedly works great just as long as the economy has the ability to churn out the needed goods and services. The love of my life, Ditzy Alexandria Ocasio Cortez, and Bernie Sanders used MMT to justify deficit spending for their proposed Green New Deal.

Well it seems we've done much of what they described. The federal debt held by the public at the end of 2019 was 17.2 trillion. Now it's 23.1 trillion. So we've grown public debt by a whopping 30% of GDP in just 2 years! Now admittedly COVID put a kink in the supply of goods and services, and the progressives behind the MMT didn't get the higher taxes on the corporations and wealthier Americans they craved. But higher taxes in the middle of a huge recession would have been asking for a bruising.

And so what was the outcome of the grand experiment? The billionaires got a lot richer. The Working Man though is losing ground to inflation, as inflation in goods and services, now 7.5%, is higher than wage inflation. Real hourly wages were down 2% in 2021.

But apparently the fans of MMT are cheering the results of this grand experiment! They got it right! (Haha) One of our fellow posters kindly shared a couple of articles on MMT with me. An excerpt,

"Of course, MMT proponents themselves didn’t see things that way. They did indeed attempt to take a victory lap. But this is always what they were going to do, no matter what! If Covid relief efforts hadn’t been sufficient to produce inflation, they would have also taken a victory lap. If interest rates on U.S. government bonds had risen, causing a contraction in economic activity, they would have taken a victory lap, arguing that the Fed should have used monetary policy to lower those interest rates. Even if the U.S. government had defaulted on its sovereign debt, throwing the economy into chaos, the MMT people would have taken a victory lap, arguing that this was a mistake.

In other words, there was no conceivable state of the Universe in which MMT people would not have taken a victory lap. They always take victory laps, all day long, rain or shine. When you have an unfalsifiable meme complex instead of a concrete and falsifiable theory, it’s easy to claim that your ideas cannot fail, they can only be failed."

I'm a believer in MMT, but it works until it doesn't. It should only be employed when the Economy is distressed, like April, 2020.

The Federal Reserve went way beyond reasonable duty, then dug in its heels, in spite of strong and growing data that suggested they should stop bond purchases and raise interest rates. Add in too much Fiscal stimulus, and a willful abandonment of Energy independence, and it may take a recession to dig ourselves out.

Consider a family of 5, middle class, 3 children ages 5, 8, and 10. Beginning last Spring, they received an instant $7,000 check from the Government, followed shortly by a monthly $800 advance child tax credit stipend. The stock market was hitting new records, new Robinhood Traders gambled with Call Options and crypto. ''Everyone'' was suddenly rich, or thought they were.

Now the free money is cut off. The Market is dropping, inflation sky-rocketing. Russia's threats against the Ukraine is sending energy prices even higher. Not a word about increasing oil production in the US.. A few years ago, Oil Companies rushed in to produce more, when crude hit $50, now it's over $90, but no, just hang in for another 10 years, until we get wind, solar, and electric vehicles.

The ''Winners'' are the wealthy retired, who saw their asset values rise tremendously. The Losers, as always, are the poor and middle class.

... Blimey! ... Wouldja look at that! ... Back again.

About time... Hopefully you'll surely stay-about this time.

Oh, and yer post was good there, mate.

#### Salty

I'm a believer in MMT, but it works until it doesn't. It should only be employed when the Economy is distressed, like April, 2020. Originally Posted by Chung Tran

Chung Tran, Salty's spot on. Good post!

I know from what you've written in other threads that you know more about macroeconomics than I do. But I just read a bit about MMT and don't think you actually believe in it. What you're describing is more like Keynesian theory, stimulating the economy when we're in a recession. That's a good idea. The MMT'ers on the other hand would run up big deficits year in and year out to accomplish their political and social goals. Or that's what I think anyway. Hopefully CM or LL will correct me if I'm wrong.

... Thanks, mate ... But you must mean that Mister Chung knows
the bit about macro-economics and what-not.

Though I DO know-of "Aussie-economics" - that's where you
make certain that you always have BOTH time and money
- for another beer! ... ...

#### Salty

... Thanks, mate ... But you must mean that Mister Chung knows
the bit about macro-economics and what-not.

Though I DO know-of "Aussie-economics" - that's where you
make certain that you always have BOTH time and money
- for another beer! ... ...

#### Salty Originally Posted by Salty Again

A kindred spirit!

https://www.eccie.net/showpost.php?p...1&postcount=11

https://www.eccie.net/showpost.php?p...3&postcount=12

Oh, you said AUSSIE economics, not Austrian economics. Darn it!

Chung Tran, Salty's spot on. Good post!

I know from what you've written in other threads that you know more about macroeconomics than I do. But I just read a bit about MMT and don't think you actually believe in it. What you're describing is more like Keynesian theory, stimulating the economy when we're in a recession. That's a good idea. The MMT'ers on the other hand would run up big deficits year in and year out to accomplish their political and social goals. Or that's what I think anyway. Hopefully CM or LL will correct me if I'm wrong. Originally Posted by Tiny

That's exactly right.

In Professor Stephanie's world, the government can just spend as it pleases in order to pay for endlessly expanding social benefits, jobs programs for all, the "green new deal," etc., etc., etc. The only constraint is inflation, in MMTers' view, and that can be handled appropriately by tax increases according to their proponents. Of course, the only tax increases that would actually suck much demand out of the economy would have to be levied on lower income households rather than the "wealthy," since members of the latter group don't have a very high marginal propensity to consume. (Good luck with that!)

That's why Liz Ann Sonders (and a few others) have referred to MMT as the "Magic Money Tree."

Judging from Chung Tran's posts, I don't have the sense that he supports limitless deficit spending, although he may have less angst about the debt than some. He is possibly a little more simpatico with a number of fairly mainstream Keynesian economists.

The only area in which I'm pretty sure I'd have a disagreement with Chung Tran is this:

We may prefer slightly different body types for our pay-for-play lady friends. For instance, my favorite SB squeeze these days checks in at around 5' 7" and 120.

Chung Tran might be OK with the 120 bodyweight number, judging from what he has said from time to time, but only if we're talking kilos, not pounds!

.

Not a word about increasing oil production in the US.. A few years ago, Oil Companies rushed in to produce more, when crude hit $50, now it's over $90, . Originally Posted by Chung Tran

You can't just turn on a spicket and instantly get more oil....



Have you noticed the increased rig count?
https://ycharts.com/indicators/us_rotary_rigs
Investors wanted return on their investments via dividends and stock buybacks.

Those in energy have done ok of late

You can't just turn on a spicket and instantly get more oil....



Have you noticed the increased rig count?

Investors wanted return on their investments via dividends and stock buybacks.

Those in energy have done ok of late Originally Posted by WTF

still falsely blaming Ronnie.



BAAHHAAHAAAA

Might have to be answered in another thread, so as no to hijack the OP here:So what do you think the annual interest payment will be two years from now on the $30T already racked up in debt after a dozen or so interest rate hikes?? Originally Posted by Why_Yes_I_Do

OK, as you suggested, I'm moving my reply to a more appropriate place. God forbid I hijack my own thread.

I'm not sure whether you should be thinking about $30 trillion in gross federal debt, or $22 trillion in federal debt held by the public, which would remove money owed by the government to the government. I don't know what interest rates will be in two years nor the maturities. However, kind of pulling a number out of the air, you could use the Fed Funds rate as a proxy for short term T-bill rates. And the average Fed Funds rate since January 1, 1964 is 5.02%. I only have 10 year treasury rates going back to 1988, but the average since then is 4.8%.

Anyway, if you assume a 5% interest rate on the debt, that would imply $1.1 trillion in annual interest expense using $22 trillion net debt or $1.5 trillion using $30 trillion gross debt.

For comparison, the total money raised by the individual income tax was $1.9 trillion in 2019.

Now I think the 5% is too high. But who knows. CPI inflation is currently 7.5%.

The only area in which I'm pretty sure I'd have a disagreement with Chung Tran is this:

We may prefer slightly different body types for our pay-for-play lady friends. For instance, my favorite SB squeeze these days checks in at around 5' 7" and 120.

Chung Tran might be OK with the 120 bodyweight number, judging from what he has said from time to time, but only if we're talking kilos, not pounds!

. Originally Posted by CaptainMidnight

Indeed.

https://www.eccie.net/showthread.php?p=1061828570

That's got to be the greatest report in the history of eccie. I can't believe Chung Tran only got three "likes."

still falsely blaming Ronnie.



BAAHHAAHAAAA Originally Posted by The_Waco_Kid

I only blame Ronnie for convincing you and others that debt does not matter when Republicans are in charge.