Swipe the Card - National Debt
Over the next decade, the national debt is expected to reach a record high of 107% of GDP. This is before Biden's new round of stimulus.
On Wednesday, Federal Reserve Chairman Jay Powell, a Republican himself, expressed alarm about the high unemployment rate and said that now was not the right time to focus on the national debt. Ok! Jay!
Some hope for GDP to return to pre-pandemic levels because Vaccines! Sounds like wishful thinking, but I sure hope so.
Comments
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Great documentary released a few years back on the Fed and how we've handled the recovery from 2008 to now. Long story short, nobody wants to be the person to say "we need to put the brakes on the economy" even if the economy badly needs to be slowed down. All we've done since 2008 is stimulate our way out of a recession with greater and greater stimulus being needed to keep the party rolling. How long will it last? Who knows?
https://www.youtube.com/watch?v=lA0obw6PbCU -
This thread is worthless without @HoustonHusky .
Don't have an hour right now, but will watch this later today and report back. Looks like a good one. Thanks for posting it. -
Hadn't seen this but guessing I'm of similar mindset...I'll try and watch it this weekend as well.louism2wash said:Great documentary released a few years back on the Fed and how we've handled the recovery from 2008 to now. Long story short, nobody wants to be the person to say "we need to put the brakes on the economy" even if the economy badly needs to be slowed down. All we've done since 2008 is stimulate our way out of a recession with greater and greater stimulus being needed to keep the party rolling. How long will it last? Who knows?
https://www.youtube.com/watch?v=lA0obw6PbCU
The entire business cycle is based on expansions and contractions (where all the poor business decisions come back to haunt folks)...the idea of the "Great Moderation" cheered on by the Central Bankers where the cycles aren't as severely because of the increased size/diversity of the economy has somehow mutated to the idea that the government and indirectly the Fed should print money to paper over/prevent any possible downturn.
Its comically stupid from a bunch of supposedly smart people.
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I think @louism2wash nailed it: nobody wants to be the one to say, "Let's let the economy cool down a little."HoustonHusky said:
Hadn't seen this but guessing I'm of similar mindset...I'll try and watch it this weekend as well.louism2wash said:Great documentary released a few years back on the Fed and how we've handled the recovery from 2008 to now. Long story short, nobody wants to be the person to say "we need to put the brakes on the economy" even if the economy badly needs to be slowed down. All we've done since 2008 is stimulate our way out of a recession with greater and greater stimulus being needed to keep the party rolling. How long will it last? Who knows?
https://www.youtube.com/watch?v=lA0obw6PbCU
The entire business cycle is based on expansions and contractions (where all the poor business decisions come back to haunt folks)...the idea of the "Great Moderation" cheered on by the Central Bankers where the cycles aren't as severely because of the increased size/diversity of the economy has somehow mutated to the idea that the government and indirectly the Fed should print money to paper over/prevent any possible downturn.
Its comically stupid from a bunch of supposedly smart people.
Of course, they wouldn't be, because that would pre-suppose the economy needed cooling down. The real economy doesn't. What you really don't want to be is the guy who says, "Let's stop this charade and let the shit hit the fan because that would be keeping it real."
And frankly, I wouldn't want to be that guy either. But the chickens will come home to roost eventually. They always do. -
Herbert Hoover, Jimmy Carter, and Bush 1 agree. Bush 2 as well but it was his second termcreepycoug said:
I think @louism2wash nailed it: nobody wants to be the one to say, "Let's let the economy cool down a little."HoustonHusky said:
Hadn't seen this but guessing I'm of similar mindset...I'll try and watch it this weekend as well.louism2wash said:Great documentary released a few years back on the Fed and how we've handled the recovery from 2008 to now. Long story short, nobody wants to be the person to say "we need to put the brakes on the economy" even if the economy badly needs to be slowed down. All we've done since 2008 is stimulate our way out of a recession with greater and greater stimulus being needed to keep the party rolling. How long will it last? Who knows?
https://www.youtube.com/watch?v=lA0obw6PbCU
The entire business cycle is based on expansions and contractions (where all the poor business decisions come back to haunt folks)...the idea of the "Great Moderation" cheered on by the Central Bankers where the cycles aren't as severely because of the increased size/diversity of the economy has somehow mutated to the idea that the government and indirectly the Fed should print money to paper over/prevent any possible downturn.
Its comically stupid from a bunch of supposedly smart people.
Of course, they wouldn't be, because that would pre-suppose the economy needed cooling down. The real economy doesn't. What you really don't want to be is the guy who says, "Let's stop this charade and let the shit hit the fan because that would be keeping it real."
And frankly, I wouldn't want to be that guy either. But the chickens will come home to roost eventually. They always do.
Pretty sure both parties now fix the numbers with accounting tricks and they aren't going to volunteer to be the one out front
Headline today - new unemployment claims down in California!!!111!!!. Well most of us are on old claims. And before the pandemic when UI had an expiration date they stopped counting you as unemployed when your bennies ran out
At this point we better hope they can keep it going -
The entire point of the Fed was that they weren't political and weren't elected officials...they don't have to say we don't want the economy to do anything. And heck in reality they can say they want to the economy to grow bigly. NOCs. They just had to say we aren't going to monetize the debt to do it. Never would have been in this mess if they had set that limit a long time ago...and in the process they would have forced Congress to behave a long time ago.
Unfortunately these morons just thought they were smart enough to do it "right" so it would make things better. And if you look at their history its a pretty similar path to most drug addicts. Start with just a little when you needed when you were down...just a little larger hit...a little more often...evolved the last 10 years into becoming a constant user...tried to get off the smack in 2018 and couldn't when everyone screamed about the stock market...and now they have spent the last year curled up on a Seattle street corner shaking violently high as a kite telling everyone they just need a few more hits but they will stop using next year maybe.
Leads to another interesting conversation had with a coworker yesterday. If the Fed hadn't printed money to basically transfer wealth to the upper classes and keep assets and specifically the stock market riding high does anyone really think the govt behavior would have been the same? Would the same people lecturing everybody to stay home and not do anything be saying that if their retirement savings shrank 50%. The Covid discussion belongs in the Tug, but don't think anybody can argue the Fed and the Fed alone ended up setting all the policy the last year.
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Fantastic post. Disagree, though, that any part of it belongs in the Tug. We can talk about this here. Mantra here is if it relates to the economy we can chew on it.HoustonHusky said:The entire point of the Fed was that they weren't political and weren't elected officials...they don't have to say we don't want the economy to do anything. And heck in reality they can say they want to the economy to grow bigly. NOCs. They just had to say we aren't going to monetize the debt to do it. Never would have been in this mess if they had set that limit a long time ago...and in the process they would have forced Congress to behave a long time ago.
Unfortunately these morons just thought they were smart enough to do it "right" so it would make things better. And if you look at their history its a pretty similar path to most drug addicts. Start with just a little when you needed when you were down...just a little larger hit...a little more often...evolved the last 10 years into becoming a constant user...tried to get off the smack in 2018 and couldn't when everyone screamed about the stock market...and now they have spent the last year curled up on a Seattle street corner shaking violently high as a kite telling everyone they just need a few more hits but they will stop using next year maybe.
Leads to another interesting conversation had with a coworker yesterday. If the Fed hadn't printed money to basically transfer wealth to the upper classes and keep assets and specifically the stock market riding high does anyone really think the govt behavior would have been the same? Would the same people lecturing everybody to stay home and not do anything be saying that if their retirement savings shrank 50%. The Covid discussion belongs in the Tug, but don't think anybody can argue the Fed and the Fed alone ended up setting all the policy the last year.
This is all to say, fiscal discipline. It's never fun, but you're usually glad you did it later on. On this point it's almost apoltical, because we all know Trump was a spender too, and he was all over the Fed when they were talking about (and did as I recall) tweak rates ever so slightly. He was afraid of what it would do to his beautiful economy. In the end, I'm afraid, politicians, all of them (and Trump became one once he got there) have all learned the lesson: it's the economy stupid. Nobody will ever succeed in the oval office making decisions that in the short term pour water on the economis. -
This. That statistic is about as useless as tits on a boar.RaceBannon said:
Herbert Hoover, Jimmy Carter, and Bush 1 agree. Bush 2 as well but it was his second termcreepycoug said:
I think @louism2wash nailed it: nobody wants to be the one to say, "Let's let the economy cool down a little."HoustonHusky said:
Hadn't seen this but guessing I'm of similar mindset...I'll try and watch it this weekend as well.louism2wash said:Great documentary released a few years back on the Fed and how we've handled the recovery from 2008 to now. Long story short, nobody wants to be the person to say "we need to put the brakes on the economy" even if the economy badly needs to be slowed down. All we've done since 2008 is stimulate our way out of a recession with greater and greater stimulus being needed to keep the party rolling. How long will it last? Who knows?
https://www.youtube.com/watch?v=lA0obw6PbCU
The entire business cycle is based on expansions and contractions (where all the poor business decisions come back to haunt folks)...the idea of the "Great Moderation" cheered on by the Central Bankers where the cycles aren't as severely because of the increased size/diversity of the economy has somehow mutated to the idea that the government and indirectly the Fed should print money to paper over/prevent any possible downturn.
Its comically stupid from a bunch of supposedly smart people.
Of course, they wouldn't be, because that would pre-suppose the economy needed cooling down. The real economy doesn't. What you really don't want to be is the guy who says, "Let's stop this charade and let the shit hit the fan because that would be keeping it real."
And frankly, I wouldn't want to be that guy either. But the chickens will come home to roost eventually. They always do.
Pretty sure both parties now fix the numbers with accounting tricks and they aren't going to volunteer to be the one out front
Headline today - new unemployment claims down in California!!!111!!!. Well most of us are on old claims. And before the pandemic when UI had an expiration date they stopped counting you as unemployed when your bennies ran out
At this point we better hope they can keep it going -
@HoustonHusky: "Would the same people lecturing everybody to stay home and not do anything be saying that if their retirement savings shrank 50%."
I agree with this. This also brings up an interesting predicament that 401Ks have put our country in... can any politician really afford to let the market "correct" that way markets, in theory, should? I think a huge reason that we're in the place we are now is because letting the market collapse would mean that 401Ks would be worth half as much and we'd have a crisis of retirement-age folks going on food stamps.
The old pension system didn't make sense because it assumed that companies would grow forever(which they don't). I feel like we've now created an environment where the markets are now forced to "grow forever" because it's politically unfeasible to let the markets correct. Could you imagine what would happen to our society if we had a Japan-style, multi-decade recession happen? -
Agree completely, but I'd also argue the crazy low rates of the Fed the last 10+ years resulted in the leveraging up of everything including companies/the stock market which destroyed the realistic expectations of everything.
And the problem isn't retirement-age folks going on food stamps...its the upper class retirement-age folks not having a boat and buying a new iPad every year. Average 401k holding for folks 50+ is something like $170k, but the median is only something like $60k.
https://www.personalcapital.com/blog/retirement-planning/average-401k-balance-age/
And that's for the people who have 401ks, which is only something like 1/3 of the population (may be a bit higher for those over 50...hadn't seen that data):
https://www.fool.com/retirement/2017/06/19/does-the-average-american-have-a-401k.aspx
Average retirement-age folks aren't depending on the stock market for retirement...they are depending on a few assets if they are lucky and a SS check. And working until they are really old. Its the upper class folks that are. And magically enough a subset of those folks are the ones making policy for the masses.
Agree with your pension system using unfunded assets and a "constantly growing company" assumption. Japan is an interesting and good comparison...as somebody else also mentioned the largest stock shareholder for most companies there is their Central Bank. I expect that process to kick in here whenever there is a stock downturn because of the the reasons you pointed out.
