How are we going to pay for all this shit?

Did I say Milton Keynes? Ooops, that was for AOC.

For everyone else, here's what John Maynard Keynes thought...

"There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

From The Economic Consequences of the Peace, 1919

Inflation Haunts the Biden Economy

An historic policy failure calls for a sharp turn at the Fed and White House.

By The Editorial Board
Feb. 10, 2022 6:53 pm ET


So how’s the U.S. government’s grand experiment in modern monetary theory turning out? Not well. Consumer prices over the past 12 months rose 7.5%—the most in 40 years—while real wages declined 1.7%, the Bureau of Labor Statistics reported Thursday.

The report jolted financial markets, as stocks fell and bond yields rose. But nothing in the January report should be shocking. This is what happens when the government massively expands the money supply and over-stimulates demand. Yet the Federal Reserve and Biden Administration last year dismissed inflation as “transitory.” They have belatedly dropped that line, but they still won’t concede that inflation is becoming more entrenched as price increases have exceeded 5% for eight months in a row.

Food prices increased 0.9% in January and 7% over the year. Gas prices ticked down 0.8% last month but are still up a whopping 40% from a year ago. It’s striking that the core index that excludes food and energy rose 0.6% in January—about twice as much as last summer—and is up 6% year-over-year.

The White House points out that used car prices are moderating, but this is small consolation since rising prices for other goods and services are more than compensating. Clothing prices were relatively flat for most of the pandemic as people stayed home, but they rose 1.1% last month and are up 5.3% year-over-year. Airline fares climbed 2.3% in January even amid the Omicron surge.

Fed oracles predicted prices would ease for goods that were in high demand during lockdowns. That didn’t happen. They also forecast that the inflation rate would decline as consumption shifted to services. That also hasn’t happened. Americans are consuming more services, which has pushed up prices for travel, medical care and dry cleaning—the service index was up 4.6% from a year ago.

The economy needed support early in the pandemic. But Congress’s $900 billion Covid relief bill in December 2020 and the $1.9 trillion in spending that Democrats passed last March were overkill. The enormous income transfers reduced incentives to work while at the same time giving people more money to spend.

The Fed has helped mop up Congress’s spending with bond buying, doubling its balance sheet to an astonishing $8.9 trillion. Its monthly purchases of Treasurys and mortgage-backed securities were intended to reduce long-term interest rates, increase asset prices and create a wealth effect that stimulated consumption. You might say it over-achieved.

Housing prices have risen nearly 25%, and the Dow Jones Industrial Average is up some 20% from February 2020. Many Americans no doubt felt flush from rising asset prices and generous transfer payments—at least until the inflationary side effects hit.

Price increases are erasing even hefty nominal wage gains. Real average hourly earnings ticked up 0.1% in January but are 1.7% lower than a year ago. Real average weekly earnings are down 3.1%. Wages have been surging for lower-skilled workers especially in leisure and hospitality, but not enough to offset rising prices, since they spend more of their paychecks on food, energy and rent.

The biggest inflation mistake since the 1970s calls for a sharp turn in fiscal and monetary policy. President Biden’s floundering Build Back Better Act, even in smaller form, deserves a final burial. Sen. Joe Manchin was right to oppose the bill, and his worries about inflation have been borne out, as he noted Thursday. The economy needs a trade and deregulation agenda that will lower prices, not a regulatory onslaught that will raise them.

The Fed’s challenge is also increasing, as markets may finally be acknowledging. The central bank’s preferred path of three or four quarter-percent hikes in interest rates will still leave rates negative. The Fed’s bond portfolio will also have to be reduced sooner rather than later. Unwinding this two-year unprecedented monetary experiment will itself be an experiment, and one risk is the Fed gets spooked by the market reaction to its tightening.

The pain might have been lessened if the Fed had begun to withdraw its pandemic money rush more than a year ago. But Washington had grown to believe that a new era of cost-free spending and low interest rates had dawned. The old fiscal and monetary verities no longer held, and those who warned about inflation were proclaimed to be dinosaurs from the Reagan era.

Relearning those lessons will now be much harder than it should be, and the American worker will now pay the price.

https://www.wsj.com/articles/inflati...x-11644531980?

Well, thanks for the tough love. They wanted to run up the credit card about 30 trillion with their green new deal so maybe I’m better off without them. Originally Posted by Tiny

I think the point is we're stuck with them, like a booger on the finger.

Maybe you don't remember one Saikat Chakrabarti. He was AOCs campaign chairman and co-defendant in the FEC complaint about double dealing and self enrichment between a couple PACs. He was also the lead architect on her version of the Green New Deal. Anyway, on his way out of the campaign role, he was asked how his departure would effect GND. and he let us peek behind the curtain.

` Representative Alexandria Ocasio-Cortez’s chief of staff Saikat Chakrabarti admitted recently that the true motivation behind introducing the Green New Deal is to overhaul the “entire economy.”
` “The interesting thing about the Green New Deal, is it wasn’t originally a climate thing at all,”
` “Do you guys think of it as a climate thing? Because we really think of it as a how-do-you-change-the-entire-economy thing,”

Above excepts pulled from a Yahoo article

In essence, if you take the above and consider Lusty's quotes and combine it with Tiny's observations, all of which boil down to the intention of completely destroying the economy and combine all of that with F Joe O'Bidans geriatric ineptitude and the military industrial complex egging him to Ukraine. Well... we are likely proper fucked.

I believe the good Captain (not of Titanic fame) has explained how the ship goes down.

Always Chicken Littles when a Democrat is in office.

All of a sudden the debt and deficits matter!

Look....I'm not a fan of these huge deficits but come on boys....admit you didn't say a peep when Trump was blowing up deficits.

Always Chicken Littles when a Democrat is in office.

All of a sudden the debt and deficits matter!

Look....I'm not a fan of these huge deficits but come on boys....admit you didn't say a peep when Trump was blowing up deficits. Originally Posted by WTF

show your posts railing about Obama doing it. i mean .. you did complain about Obama ... didn't you?

Spending during the years Reagan budgeted (FY 1982–89) averaged 21.6% GDP, roughly tied with President Obama for the highest among any recent President. Each faced a severe recession early in their administration. In addition, the public debt rose from 26% GDP in 1980 to 41% GDP by 1988. In dollar terms, the public debt rose from $712 billion in 1980 to $2.052 trillion in 1988, a roughly three-fold increase. Originally Posted by WTF

still beating that dead horse are we?

Reagan wanted a line item veto to eliminate all that pork barrel spending Congress does. call me when the President actually draws up the US Budget then we'll blame them for spending.

still beating that dead horse are we?

Reagan wanted a line item veto to eliminate all that pork barrel spending Congress does. call me when the President actually draws up the US Budget then we'll blame them for spending. Originally Posted by The_Waco_Kid

GFY in your hypocritical ass.

You Republicans lovers and your double standards....hell , I can say the same about the Democrats but the fucking Democrats never were one to brag about their fiscal austerity!

Also....all I've blamed Reagan for is starting this nonsense. And the numbers bear that out.

GFY in your hypocritical ass.

You Republicans lovers and your double standards....hell , I can say the same about the Democrats but the fucking Democrats never were one to brag about their fiscal austerity!

Also....all I've blamed Reagan for is starting this nonsense. And the numbers bear that out. Originally Posted by WTF

show me one Democratic president wanting a line item veto to cut out all the pork crap Congress loads up spending bills with.


Congress is the reason for massive deficit spending. if you aren't smart enough to understand that then you don't understand how Government works.


as i've said before, the Republicans abandoned their fiscal conservative views when the Democrats got their massive social spending in place. of course that was a mistake but the Demorats are the real plague of massive spending and huge debts.

Are you talking about the guy who sold arms to Iran?



And who is to say we won't be at some point? Have you seen their debt compared to ours? Originally Posted by WTF

By damn WTF, give him some credit. He financed the Contras without robbing the taxpayer or running up the deficit to do it.

As to Russia, yes, their government debt is only 19% of GDP. They also have foreign reserves of $630 billion and their current account surplus is 6.6% of GDP. If the greenies shut down the oilfields here and the price of oil goes to $500 a barrel, then yeah, we may be Russia's bitch -- barefoot and pregnant.

Actually, it was the corrupt, spendthrift, irresponsible, pandering, vote-buying politicians who started us down the road of running up big deficits year in and year out, in good years and bad ones. They cloaked and justified their fiscal malpractice using pseudo-Keynesian jargon. When real Keynesians pushed back against such heresy by pointing out that Keynes only endorsed pump-priming and deficit-spending when needed for temporary counter-cyclical purposes, the corrupt politicians started looking around for a new academic theory to "legitimize" their hopeless addiction to spending and debasing the coin of the realm. That's when idiot self-styled Social Justice Warriors like Professor Stephanie stepped up to provide a phony academic cover in the form of "Modern Monetary Theory". MMT started out as a joke that was taken seriously only by fringe types and Trotskyites wasting away their lives in dim faculty lounges, but once it was embraced by braindead socialists like Bernie Sanders, it quickly acquired cache with the far-left "woke" classes inside the Beltway. Thanks to the pandemic and Biden's pusillanimity, MMT is now being put into practice - the corrupt politicians view it as a green light to spend us into oblivion without any constraint or any consideration of where we are in the business cycle!

In truth, MMT is just empty, pernicious poison that lacks even a smidgen of intellectual respectability among serious economists. Now that it has blown inflation through the roof, there is zero chance of it ever becoming a credible or workable economic doctrine. Originally Posted by lustylad

I nominate this for the best written post of 2022. And it's spot on, based on the little I know anyway.

Did I say Milton Keynes? Ooops, that was for AOC. Originally Posted by lustylad

Question -- In her Instagram thread where my beloved Alexandria posted about the Great Economist Milton Keynes, she said he said that by 2030 technology will have advanced so much that everyday people will only have to work 15 hours a week. Do you believe that actually came from John Maynard Keynes? Or is it more likely AOC pulled that out of the air?

Question -- In her Instagram thread where my beloved Alexandria posted about the Great Economist Milton Keynes, she said he said that by 2030 technology will have advanced so much that everyday people will only have to work 15 hours a week. Do you believe that actually came from John Maynard Keynes? Or is it more likely AOC pulled that out of the air? Originally Posted by Tiny

Yes, Keynes wrote that. Would AOC actually make up anything? LOL

http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

Just got home and checked in on this thread ... a little tired and don't have time to get to it tonight, but will step in tomorrow and try to address Why_Yes_I_Do's comment about what the hell happens if interest rates rise sharply. Scary!

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Always Chicken Littles when a Democrat is in office.

All of a sudden the debt and deficits matter! Originally Posted by WTF

Perhaps you didn't notice, but we're talking about inflation now. If you want to compare dim-retards versus Republicans on that metric, be my guest!

You can start by comparing the inflation records of Jimmy Carter and your pal Ronnie! Who was the Chicken Little and who put the fire out?

Question -- In her Instagram thread where my beloved Alexandria posted about the Great Economist Milton Keynes, she said he said that by 2030 technology will have advanced so much that everyday people will only have to work 15 hours a week. Do you believe that actually came from John Maynard Keynes? Or is it more likely AOC pulled that out of the air? Originally Posted by Tiny

Keynes said it. He was right, too. We only HAVE to work 15 hours weekly (or less) to maintain the same living standard as the average British worker toiling 40+ hours in 1930. But most people want a much higher living standard today, so we're still putting in full shifts.

https://www.forbes.com/sites/billcon...-aoc-disagree/

Just got home and checked in on this thread ... a little tired and don't have time to get to it tonight, but will step in tomorrow and try to address Why_Yes_I_Do's comment about what the hell happens if interest rates rise sharply. Originally Posted by CaptainMidnight

The comment to which I was referring appeared in this thread's quote snippet:

https://eccie.net/showpost.php?p=106...postcount=1213

Now that it's clear that the Fed seems intent on making every effort to "pivot" away from easing, I think one way to slice this is to consider what monetary "normalization" might look like, and what import that will likely have on future budgets.

What might a normalized set of monetary conditions look like? I have often liked to look to the 1962-64 period; one generally characterized by low inflation and soundly-based growth.

The effective Fed funds rate then trended around the 2.75-3.00% neighborhood and the 10-year UST yield around 4.25-4.50%. That might imply a blended rate (across all durations) of roughly 3.5%. That's well over 2.5 percentage points greater than the pandemic-era blended average.

If I recall correctly, today's debt held by the public (the proper value to consider for this purpose) is around $23.5 trillion.

So, a 2.5% increase in the blended interest rate would amount to almost $600 billion in increased interest payments.

Not exactly small potatoes, even in today's insane world.

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