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Thread: Bubbles thread

  1. #1181
    Senior Member Waharoa's Avatar
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    ^Damn 4th Turning coming to the fore again....
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  2. #1182
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    Kinda amazing that theres not more press.. 101 million (80 mil successfully I think) stolen from the Fed.

    You would think they would have a better failsafe system.

  3. #1183
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    Ben & Alan's retirement fund?
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  4. #1184
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  5. #1185
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    They havent even started to try to unwind..

    Painted corners..

  6. #1186
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    It's impossible to unwind ... you and I know and accept that ... and the CB's all know it too ... debt forgiveness on an epic and global scale is the only way out of this because all the alternatives are just too nasty to ever be implemented.
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  7. #1187
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    Debt forgiveness.. and then a massive relevering as everyone borrows to the hilt again and spend spend spend..

    What could possibly go wrong... No moral hazard there

  8. #1188
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    I have recently paid off all my student debt. I'm going to be pissssed if they forgive that!




  9. #1189
    Senior Member kris-one's Avatar
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    Regarding the 'helicopter money'. It's not the CBs who will decide it will have to be a political decision. Considering the stink Ze Germans make over anything monetary expansion related I still see it as a very small possibility. Perhaps in Japan as they are the only country where fiscal & monetary policy is in lock step. Was reading an option would be to pay 100,000 usd to every new born baby.. Two birds one stone!




  10. #1190
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    The Other Problem With Debt No One Is Talking About | Economic Prism

    Nearly 7 years have elapsed since the official end of the Great Recession. By now it’s painfully obvious the rising tide of economic recovery has failed to lift all boats. In fact, many boats bottomed out on the rocks in early 2009 and have been taking on water ever since.

    Last week, for instance, it was reported that U.S. credit card debt topped $714 billion in the third quarter of 2015. That’s up $34 billion from the year before. Shouldn’t the economic recovery allow consumers to pay down their debts?

    Indeed, it should, if only the economic recovery was the result of real, economic growth. To the contrary, the recovery has been faux growth driven by cheap Fed credit and financial engineering. Mutual increases in prosperity haven’t occurred.

    In particular, those outside the financial services business, and other bubble industries, like government lobbyists, have largely missed out on any increase in income or living standard. Good paying professional jobs that vaporized during the downturn have been replaced with low paying service jobs. Consumers have used credit card debt to pick up the slack.

  11. #1191
    Senior Member sundancekid's Avatar
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    And here we are largely in agreement 555. It has indeed been a lousy recovery for the average worker, no question about that. I believe there are many reasons for that though… but government debt is not one of them.

    But yes, it represents a huge problem when the middle class and the poor get paid so little that they need government assistance or credit card debt in order to sustain a passable --- or survivable even --- living standard. We on the left have been talking about that for decades already. The latest economic downturn only made the existing trend substantially worse.

    In fact, the only way for the recovery to pick up is to put more money into the hands of those who will spend it quickly. I would support a tax cut for the middle-class for instance. Would that be considered a helicopter drop? Or a much needed and overdue minimum wage increase? I certainly don’t want people to start digging ditches for no reason, but how about building roads and bridges? And I’m sorry, but that money simply has to come from the pockets of the obscenely rich. Those who park inactive money into a humid and rotting island shelter somewhere. That's not class-warfare or envy or anything like it. That's just reality. (Dramatic drum roll 555...)
    Last edited by sundancekid; 5th April 2016 at 20:12.

  12. #1192
    Super Moderator LivinLOS's Avatar
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    Quote Originally Posted by sundancekid View Post
    And here we are largely in agreement 555. It has indeed been a lousy recovery for the average worker, no question about that. I believe there are many reasons for that though… but government debt is not one of them.
    More credit doesnt produce more productive output.

    This is where Kensians have the cart before the horse.. To them its consumption and simply pushing more credit and more consumption is the solution to generate more economic output.. The V Mises among us believe that it is the productive investment and return on savings, which drives properly allocated resources, and creates healthy economic output.

    By screwing with the measures of return, distorting the markets, creating ZIRP and now NIRP.. The boost is a temporary sugar high, without the production left behind but an ever larger hangover to deal with.

  13. #1193
    Senior Member sundancekid's Avatar
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    So what fiscal or monetary policies would you currently support?

  14. #1194
    Senior Member sundancekid's Avatar
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    Just for fun I went back to some old posts from 2012. Main point I made back then was that we would face economic sluggishness in the coming years, rather than a mother bubble. So first thing you need to notice and acknowledge is that your 2 – 3 year predictions have now spanned multiple cycles already

    And yes, your cart and horse analogy got it backwards... again. Every sustainable economy is one driven by demand. We can go around in circles on this point, but I don't think it would be very productive... so to speak. My prediction? The Mises and the Rands rear their ugly heads each cycle. And then fade. Question I've always tried to ask but never gotten an answer: Which current or past economic and societal structure would you base your ideal society on?

    My thoughts (and ugh charts...) from 2012 still stands as per the below...

    And like it or not, this current bubble took decades to build up, and looking historically it will take years of deleveraging to flush out the toxic debt. Regardless of who’s in charge. It’s not as if Obama can just implement Reagan’s “magic trick” (basically Volcker lowering the interest rates which restarted the private debt spiral). On that note, I would put just as much blame for the bubble on Clinton and Reagan, so not on Bush specifically. This isn’t about blaming others, but simply attempting to explain reality. Sadly it doesn’t always fit neatly on a bumper sticker.

    Just to finish up with my “excuses” for the sluggish recovery… Slow day at work 555.

    Looking at the current crisis, this lack of demand fits neatly with the NFIB study regarding which problems current small businesses face. By far the biggest issue reported by small businesses is “poor sales”. As a subsequent point, one can also see that some of these businesses have always complained about taxes and regulations --- so one can always find anecdotal evidence of such --- but the current situation is not unprecedented historically.



    And finally, the past recessions post WWII got help from the public sector during the recovery. Both under the Reagan and the Bush recovery, we saw huge boosts in local and state employment. No such luck for Obama. In fact, had Obama had similar help as his predecessors, the unemployment figure would have been at least one percentage point lower.



    So all taken into consideration, there’s not really that much Obama can do to help boost the recovery. That is, other than keep plugging the private demand gap with more government investments until the deleveraging cycle has finished.
    Last edited by sundancekid; 5th April 2016 at 21:29.

  15. #1195
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    Quote Originally Posted by sundancekid View Post

    But yes, it represents a huge problem when the middle class and the poor get paid so little that they need government assistance or credit card debt in order to sustain a passable --- or survivable even --- living standard. We on the left have been talking about that for decades already. The latest economic downturn only made the existing trend substantially worse.
    I'd really like to look in to the lifestyles, employment and spending patterns of people who receive benefits for being in work. Todays ''living standards'' bear no resemblance to what previous generations would have known as poverty. Having a job that consists of 16 hours a week is not ''working hard'' as I've seen some say when interviewed on tv. Some people also believe that having the latest model of mobile phone for themselves and their kids is an absolute life necessity.

  16. #1196
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  17. #1197
    Senior Member sundancekid's Avatar
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    Sorry, could not even get past the third paragraph...

    If you think that the "Keynesian economic church" has been dominant during the 20th century... then look at what actually happened. It's kind of incredible, right? Look up the average life expectancy of a white male around 1900... and we are both around that age. Mid to late 40s. Today that number has almost doubled.

    So why exactly do you think that happened? In spite of so-called Keynesian policies --- which Stockman does not even understand --- or because of it? I suppose if Libertarian policies were put in place around 1900, we would all live to be 200? Again, your side is so full of ideological bluster and theorems... and soo far removed from reality.
    Last edited by sundancekid; 17th April 2016 at 23:55.

  18. #1198
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  19. #1199
    Senior Member sundancekid's Avatar
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    In the interest of balance and sanity... I'd still offer this as the most plausible case going forward. No US bubble on the horizon at least... unless private / middle-class spending starts booming again.

    The comedy website Mises.org had some responses to the recent uproar over the TIME magazine article referring to the US government as insolvent. The two big concerns were in fact funny which is good because comedy websites are supposed to be…funny. Specifically, they said:

    1. The US government can’t afford the interest on the national debt.

    2. Foreign governments might sell US government bonds crashing the US bond market.

    The first one is common and I wrote a detailed answer on this back in 2014. The short answer is that the US government can completely control the cost of its debt if it so desires. In fact, it could issue nothing but 30 day paper at 0.35% and investors would scoop it up so long as we’re not in an inflation crisis. But the main point is that the US government can completely control the cost of its debt by altering the duration of its liabilities and rolling them over. So long as this paper is expected to be repaid at par (which doesn’t appear remotely in doubt) then there’s no reason to expect cash holders to forgo the extra 0.35% the US government is guaranteeing them. Mises appears to be confusing a solvency crisis with an inflation crisis. One is a potential threat (though unrealistic at present) while the other simply doesn’t apply for a sovereign country who has its own bank and printing press.

    The second one is also common and it’s something I wrote about in detail back in 2013. The short answer is that the US government doesn’t rely on foreign governments to bolster demand for bonds. This gets the causation backwards. Foreign governments end up with US dollars because they run trade surpluses with the USA. What they do with those dollars is completely up to them. They can leave them as cash or they can choose to earn that interest premium. If they decide to sell their holdings or forgo that interest premium then that’s their loss. But what they won’t do is stop demanding US dollars because they want those dollars as a function of their trade position. So, it makes no sense to argue that demand for bonds might dry up when the very demand for those bonds comes from the high demand for dollars via trade. Mises confuses the context of the discussion and misunderstands basic facts.

    The third (and less important) assertion made in the Mises piece was that this is all politically motivated by liberals commentators. I don’t think that’s true at all. I am a pretty centrist person. I have no problem being critical of government spending and citing potential risks with government debt. But I also understand the operational realities of the US monetary system and how the US economy specifically fits into that context. And from that view, I find no credibility in the idea that the US government is insolvent.

    Make no mistake. A sovereign currency issuer can default. I’ve written about that in detail here. But the concerns raised in TIME and on Mises are not legitimate concerns. They are taking the story and operational realities out of context.
    2 Concerns About the US Government?s Debt | Pragmatic Capitalism
    Last edited by sundancekid; 24th April 2016 at 20:30.

  20. #1200
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    No buyers ...no problem ... soon coming to a stock market near you ...

    The Tokyo whale is quietly buying up huge stakes in Japan Inc - DealStreetAsia
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