Post AQ4WLyCSurQ8bOcFCi by strypey@mastodon.nzoss.nz
(DIR) More posts by strypey@mastodon.nzoss.nz
(DIR) Post #AQ4WLyCSurQ8bOcFCi by strypey@mastodon.nzoss.nz
2022-11-28T19:18:41Z
2 likes, 1 repeats
This first 20 minutes or so if this episode of 1/200 podcast talks about the reasons why inflation and rising cost-of-living aren't as tightly coupled as the NatACTs would have us believe, and that inflation and government spending aren't connected in the way they'd have us think either: https://www.1of200.nz/podcast/1200-episode-185-dark-clouds-da-silva-linings#podcast #Aotearoa #NZ #NZPolitics
(DIR) Post #AQ4XXfX0FffW8CMf3I by 64@mastodon.nz
2022-11-28T19:31:56Z
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@strypey podcast added :blobcatverified:
(DIR) Post #AQ4YHaOxejsDXhUwHQ by strypey@mastodon.nzoss.nz
2022-11-28T19:40:08Z
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One way to think about inflation is to imagine our economy as a balloon. The real economy - the good and services available to be bought - form the rubber skin of the balloon and the money supply is the air inside. Obviously, the more air there is in the balloon the tighter it gets, and in economics that tightness is called inflation. It's reflected in rising prices, including rising interest rates. (1/?)
(DIR) Post #AQ4YM12oXaYfKeFdRI by strypey@mastodon.nzoss.nz
2022-11-28T19:40:57Z
1 likes, 1 repeats
One way to think about inflation is to imagine our economy as a balloon. The real economy - the good and services available to be bought - form the rubber skin of the balloon and the money supply is the air inside. Obviously, the more air there is in the balloon the tighter it gets, and in economics that tightness is called inflation. It's reflected in rising prices, including rising interest rates. (1/?)#economics #inflation
(DIR) Post #AQ4YlsTV1bNWHc455M by strypey@mastodon.nzoss.nz
2022-11-28T19:45:46Z
1 likes, 1 repeats
When most of us spend money we're just moving air around inside the balloon. But when a government spends money that pumps more air into it. So government spending always causes ballooning inflation, right? No. Because governments can also take air out of the balloon at the same time, with taxation. So total government spending in a year can only causes inflation when it's higher than total taxation. (2/?)
(DIR) Post #AQ4ZlaiL9sal9aQxOq by 64@mastodon.nz
2022-11-28T19:56:55Z
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@strypey this is a radical idea that would prevent bankers from wrecking the economy and i won’t have it!
(DIR) Post #AQ4ZnXxmMDpzCVaUlM by robertbwalker55@mastodon.nz
2022-11-28T19:57:02Z
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@strypey it is even more narrow than that in causation. If the government borrows from the existing stock of money that means a person in the private sector won’t be able to. The problem is when the government creates an overdraft equivalent at all the banks by pumping up the liabilities on its balance sheet.
(DIR) Post #AQ4ZsNjdoQmcvXHRNQ by strypey@mastodon.nzoss.nz
2022-11-28T19:58:11Z
1 likes, 1 repeats
So there are two ways a government can avoid pumping too much air into an over-inflated balloon. Reduce the amount of air they're blowing in, by cutting spending, or increase the amount of air they're sucking out by increasing taxes. Thinking about it this way, we can see that despite the spin about "tax relief", what NatACTS' tax cuts do is fight inflation by taking public services away from the poorest kiwis, by cutting spending, and give most of it to the wealthiest in tax cuts.(3/?)
(DIR) Post #AQ4aMozV2Zgu9ADFZo by strypey@mastodon.nzoss.nz
2022-11-28T20:03:41Z
1 likes, 1 repeats
Is this the only way a government can keep the balloon of our economy from exploding? Of course not. They can spend more to help working class people afford the goods and services that are available, even during a time of high inflation. They just have to raise taxes - particularly on the 1% at the top of the wealth pyramid - enough to cover the difference. If they raise them a bit more than they increase spending, they can even help deflate the balloon a bit while they're at it.(4/4)
(DIR) Post #AQ4fOrqZtNCfM3poCu by strypey@mastodon.nzoss.nz
2022-11-28T21:00:04Z
1 likes, 1 repeats
1/200 also talked about Lula's victory in Brazil, and how he's apparently been talking about setting up a unified currency for Latin America. In theory, this could be as good for economic sovereignty and cooperation among the countries in this region as the Euro has been for European nations.But...#Brazil #Lula #LatinAmerica
(DIR) Post #AQ4g9sL9sN72UkYNRA by strypey@mastodon.nzoss.nz
2022-11-28T21:08:33Z
1 likes, 1 repeats
... here be dragons!Unified currencies like the Euro serve as a bulwark against the oversized economic power of the US. One of the co-hosts talked about crippling sanctions imposed on Venezuela to punish Hugo Shavez for his unified currency proposal.The US has also done everything in its power to hobble the Euro, including supporting the Brexiteers in the UK, according to:https://truepublica.org.uk/contributor-news/how-brexit-was-engineered-by-foreign-billionaires-to-bring-about-economic-chaos-for-profit/(2/3)
(DIR) Post #AQ4gesjOTMW8gUfs3M by strypey@mastodon.nzoss.nz
2022-11-28T21:14:11Z
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One theory about why the US supported the coup against Qaddafi in Libya was his plans to set up a Pan-African currency. Evidence for this can be found in leaked emails sent to Hilary Clinton, according to:https://www.globalresearch.ca/hillary-emails-reveal-nato-killed-gaddafi-to-stop-libyan-creation-of-gold-backed-currency/5594742 If Lula is serious about a pan-Latin currency, I hope he's taking immediate steps to insulate the region's economy, mediasphere and political institutions from US interference, as much as possible. I wonder if a unified BRICS currency might be a safer bet?
(DIR) Post #AQ4gl3O1ljzxT8ciQK by christopherd@mastodon.nz
2022-11-28T21:15:15Z
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@strypey oh that would be such an interesting idea, and hopefully it can happen!
(DIR) Post #AQ4gnfAqFPhzF9hTMW by strypey@mastodon.nzoss.nz
2022-11-28T21:15:45Z
1 likes, 1 repeats
One theory for why the US supported the coup against Qaddafi in Libya was his plans for a Pan-African currency. Evidence for this can be found in leaked emails sent to Hilary Clinton, according to:https://www.globalresearch.ca/hillary-emails-reveal-nato-killed-gaddafi-to-stop-libyan-creation-of-gold-backed-currency/5594742 If Lula is serious about a pan-Latin currency, I hope he's taking immediate steps to insulate the region's economy, mediasphere and political institutions from US interference, as much as possible. I wonder if a unified BRICS currency might be a safer bet?(3/3)
(DIR) Post #AQ4hTQeobt1UNqdT1c by sj_zero@social.fbxl.net
2022-11-28T21:23:22.207465Z
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One important thing to understand is that inflation doesn't always raise prices, and rising prices isn't always caused by inflation.Inflation is monetary, so the key to inflation is money supply.To understand how governments and central banks inflate the money supply, you need to understand how money is created. Money is created when a loan is issued. The money didn't exist before, and comes to exist because the banks issue the money for the loan.Under normal circumstances, there's a few ways a central bank can affect this. One simple way is Qualitative Easing. This works by directly purchasing loans from banks and effectively replacing the loans with cash. This means that banks have the asset of a loan replaced with a liability of a deposit, so they can go out and issue more loans.But why would banks need money if they can just create money? Well, that leads into the other way banks can change the money supply, and that's by changing the reserve requirement. The reserve requirement is how much money a bank is required to have on-hand in order to loan out money. The banking system in NZ, Hong Kong, and the US do not have reserve requirements at all at the moment, so theoretically banks can loan out unlimited money.There's another reason banks need to have money in some form or another, and that's because of risk. Banks can loan money out all day long, but if you default, they take the hit. That's why banks in NZ and the US and HK still give out limited loans, because while they can loan out unlimited money, they can't afford to lose unlimited money. Central banks help reduce this risk because banks can borrow from the central bank as necessary, but all the loans in the world can't help if you've got a negative net worth.So what can governments do?Taxing and spending can increase or decrease prices by increasing or decreasing localized demand (this is exactly why you don't hand people money to help with higher prices. Overinflated housing markets around the world all have lots of government programs to "make it cheaper to buy a home", Canada being top among them), but they won't change inflation. The amount of money in the system doesn't really change. The one big thing that government does infuence is debt.When the government takes out debt, that essentially introduces many, many new dollars to the system which in turn help produce even more dollars through new loans justified because of all the dollars in the system, increasing inflation.When the government balanced budgets and starts paying down debts, that removes many, many dollars from the system which in turn helps to remove even more dollars from the economy because it's more difficult for banks to justify more loans, decreasing inflation.At the beginning of this post, I said that higher prices are not inflation and inflation isn't necessarily higher prices, and once you understand that inflation is monetary and the effects of government policies on inflation, you start to see it. Prices happened to stay level for the past 15 years despite wildly inflationary policies around the world because other factors kept prices down.One continuous impact of inflation is the creation of asset bubbles. Smart money knows it's shrinking in value, so it looks for things that grow in value to preserve itself. When this happens with lots of money at once, it becomes a self-fulfilling prophecy, such as what we saw in tech in the 90s, houses in the 2000s, tech again in the 2010s, and crypto more recently. These things aren't blowing up because they're special, they're blowing up because they're blowing up and the smart money is getting into them to protect itself which is a self-fulfilling prophecy. Money rushes in so prices rise so money rushes in.I could keep going all day long, but one last thing to think about given my last point: People are pissed off at Elon Musk or Jeff Bezos or Bill Gates or Mark Zuckerberg. Guess what created these mega-rich people? It's inflation. They aren't special, they aren't smarter than people in mining or manufacturing who didn't get to become the richest people on the planet, they just got lucky and the massively inflationary policies since the late 1990s are the reason they could get lucky.
(DIR) Post #AQ4hfl4QXZSvAWUi12 by strypey@mastodon.nzoss.nz
2022-11-28T21:25:28Z
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See the article linked here, thanks @mark_mcguire for bringing this to my attention:https://mastodon.nz/@mark_mcguire/109423105066071531
(DIR) Post #AQ4hqhuecY68Yq8zYG by strypey@mastodon.nzoss.nz
2022-11-28T21:27:31Z
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@robertbwalker55Right. But the government only has to borrow to fund spending if it's under-taxing at the top end of the wealth pyramid. See the following two posts in the rant ;)
(DIR) Post #AQ4kx9X98j4zpEuhUG by robertbwalker55@mastodon.nz
2022-11-28T22:02:15Z
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@strypey correct up to a point. There are three ways to cover a deficit: tax, borrowing from existing moneys, create create. Whether tax is upon the wealthy or across the spectrum is a policy matter. I am no fan of progressive tax as it is income based and no one knows what that is. I prefer financial transaction tax. In the Keynesian world you wouldn’t tax but rather soak up unused money to match supply and demand. The worst thing to do is create credit.
(DIR) Post #AQ4pMen4SqN1p5mM1w by midway@soapbox.midwaytrades.com
2022-11-28T21:54:57.149584Z
1 likes, 0 repeats
@strypey @sj_zero There are multiple types of inflation. Monetary inflation is certainly one type, but asset inflation is a thing that can be caused by monetary inflation but by other things as well.At the end of the day it all comes back to supply and demand. In 2008, the US printed a crap ton of money yet we didn’t have inflation. Why? Most of that money never hit the real economy and just sat in bank reserves to act as a bulwark for the bad loans they has to write off. And that money was ultimately paid back so no harm, no foul (at least with respect to inflation).Now look at 2020-2021. The US printed a crap ton of money and “bailed out Main Street”, i.e. they gave out a ton of welfare. Most of these folks didn’t actually need it so what did they do? They bought up everything they could find. The to make things worse, they did this in a time when they shut down a ton of supply of goods. So prices skyrocketed based on a supply crunch and a demand surge. That also pushed the stock market higher (as well as crypto) since people has free extra money and there wasn’t as much stuff to buy so they yolo’ed in the markets. My point to all of this is that not all money printing is created equal. Where it goes matters. And asset inflation is a thing it’s just that, unlike retail inflation, no one complains while it’s happening because people think they are getting rich.Ironically all of the welfare the US printed ultimately hurts the people they say they want to help. Monetary inflation at these levels benefits people who hold real assets, which tend to be folks who are already wealthy or at least not poor. Meanwhile the price rise hit everyone and the folks at the lower end are no better off because the printed money you gave them doesn’t buy any more than it did before (probably buys less) and they don’t have real assets to help cushion the blow to their net worth.Welfare is bad, kids. It only looks like you are helping.
(DIR) Post #AQ4zyN7Dcw3pYCpEq8 by sj_zero@social.fbxl.net
2022-11-29T00:50:39.634148Z
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The money printing may not have the same effects, but it's all monetary inflation.Arguably, the effects of the main street bailout were better for the world because at least they were honest. The incredible malinvestment caused by 2008 has demolished many productive industries because not just money but talent has been siphoned off of other things to get lost in the black hole of tech. Hundreds of thousands of the generations smartest people working on chat apps and other useless crap. Trillions of dollars siphoned into useless crap instead of finding additional oil, gas and minerals. A total lack of investment in capital equipment such that key strategic manufacturing can't be done anymore without outsourcing it to our opponent in the next war.At least the consumer side inflation is honest, it hits you in the face and you have to deal with it.
(DIR) Post #AQ6w8LTWZLbzrJg97g by strypey@mastodon.nzoss.nz
2022-11-29T23:16:59Z
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@sj_zeroI've been reading Joseph Stiglitz' book Freefall, about what caused 2008 and reviewing the various responses and how effective they were. If you're really interested in a deep understanding of this subject, I highly recommend it.@midway
(DIR) Post #AQ73AhjZTvSf9TFyAi by strypey@mastodon.nzoss.nz
2022-11-30T00:35:47Z
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@robertbwalker55> The worst thing to do is create credit.Agreed. That's not an option available to NZ govts anyway, because it's currently outsourced to trading banks (mainly an oligopoly of Oz-based corporations). Trying to restrain credit creation is why interest rates are going up.
(DIR) Post #AQ73gdWwe7qJNgZqNs by strypey@mastodon.nzoss.nz
2022-11-30T00:41:38Z
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@robertbwalker55 Fair points. I have no firms opinions on tax policy other than it needs to structured in a way that makes sure the wealthy pay their share. A vastly disproportionate share of the tax take in NZ comes from the working class because of things like GST and secondary tax, and the complete absence of taxes on income from capital gains, inheritance, and so on. Also the loopholes that allow corporations and trusts to avoid tax through creative accounting. The whole system needs work.
(DIR) Post #AQ74DDyQgc4nfsyJfc by robertbwalker55@mastodon.nz
2022-11-30T00:47:29Z
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@strypey the government can certainly do it and they did. They called it the Large Scale Assets Purchases Programme. The title itself is sleight of hand. It encompasses the camouflage of government borrowing in the usual way but it was really just a roundabout way to create credit in order to fund COVID mitigation measures.
(DIR) Post #AQ74UufvB05d29kWci by strypey@mastodon.nzoss.nz
2022-11-30T00:50:43Z
1 likes, 1 repeats
@midway @sj_zero Govt debt is a red herring in the context of the point I'm making about whether govt spending (whether on public services or tax cuts) is inflationary, see:https://mastodon.nzoss.nz/@strypey/109423548908355360But sure, I'll go off on a public debt tangent with you...(1/2)
(DIR) Post #AQ74tGmAeqIwWoHq0O by robertbwalker55@mastodon.nz
2022-11-30T00:55:06Z
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@strypey I am an accountant (or at least I was - but that is another story). I am suspicious of taxing events it is difficult to see. Income tax is crazy. It gives rise to a vast deadweight on the economy. For a financial transactions tax you need 3 people: a computer person to insert the metaphorical needle into the monetary bloodstream, an accountant to account for it and a person to watch the other two. FTT is automatically progressive that’s why Jim Anderson liked it.
(DIR) Post #AQ751lGrA7OFQIglrU by strypey@mastodon.nzoss.nz
2022-11-30T00:56:39Z
1 likes, 1 repeats
According to Stiglitz, you got it exactly backwards. When govt borrowing gives money to Main St, this grows the real economy, so two things happen. More goods and services become available; so rising supply keeps pace with rising demand, keeping prices in check. Plus, the growth in tax take gives the govt a way to service the debt. (1/?)@midway @sj_zero
(DIR) Post #AQ75zFY4EaVCPf6ai8 by strypey@mastodon.nzoss.nz
2022-11-30T01:07:25Z
1 likes, 1 repeats
When govt gives money to Wall St - especially while raising interest rates to restrain credit creation - Wall St sits on it, sends it offshore, or invests it in blowing bubbles. The money supply increases, but creating no real growth domestically, no increased tax take, no way for the govt to pay down the debt. Offshoring hits the country's balance of payments, and puts it even further into debt with the rest of the world. I don't need to convince you bubbles are bad.(3/?)@midway @sj_zero
(DIR) Post #AQ7HVJuqdAN8ikFuiG by midway@soapbox.midwaytrades.com
2022-11-30T02:54:09.194230Z
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@strypey @sj_zero As long as the economy keeps growing, government printing can be kept in check. The US has been doing this for decades. 2008 was about stabilizing the banks (especially Citi as it turned out). But that money never hit the real economy in any serious manner and it was all paid back with interest. Now it shouldn’t have happened but the housing bubble was largely due to government policies (from both parties) combined with malfeasance backed up by the rating agencies.The current problem is that the government printed a shit ton of money, gave it largely to people who were not really affected by the pandemic in terms of lost income so it was, essentially, spare cash, and shut down global production thus forcing the economy to shrink. Yeah, that’s a recipe for disaster. And on top of that the world is trying to embargo one of the world’s largest energy suppliers and energy is a cost to everything. A lot of the offshore dollars are due to the dollar still being a reserve currency. The government used that status as an opportunity to push dollars overseas in foreign government’s reserves where it wasn’t directly hitting the US economy. It was actually helping to keep inflation lower by keeping those dollars out of the domestic markets. Now Mr. Magoo is screwing that up with crazy confiscation of Russian accounts. This is what is driving BRICS to come up with an alternative as a reserve. Whether you like Russia or not, kicking them off of SWIFT was stupid because it shakes faith in the dollar as a reserve currency. If a lot of counties stop being interested in holding dollars, the US will feel even more inflation than now as fewer of those printed dollars will stay offshore.
(DIR) Post #AQ7HVKOcqSBwD6Bh7w by midway@soapbox.midwaytrades.com
2022-11-30T03:14:41.387609Z
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@strypey @sj_zero I think we saw what happened when government gave money to Main St. They sat on their asses and watched Tiger King while yolo’ing on meme stocks, crypto shit coins, and NFT monkey pictures trying to strike it rich. So much for it growing the economy. Nice theory, but 2020/21 debunked it thoroughly.
(DIR) Post #AQ7HW4ZXAEFXQFe3W4 by sj_zero@social.fbxl.net
2022-11-30T03:16:26.150540Z
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A lot of economists get government spending wrong because telling the government spending too much money and not taxing enough is the right thing to do is a great way to stay employed by the government. Politicians love it, they want to be able to promise all things to all people.Reality is much more complicated. There's a reason why the workforce labour participation rate is at record lows, labour productivity is plummeting, fertility is below replacement, and so on and so forth. No matter where the government money goes, it takes up real resources that would have otherwise gone elsewhere. If the government is hiring, then those people get soaked up doing non-productive work. If the government gives money to companies that don't necessarily have the capcity to use it, then either you get stock buybacks or you get companies that get huge and are filled with non-productive or anti-productive people because there's money for it and spending tends to expand to fill budgets. If the government gives money to regular people, then some of those people will decide they don't need to be part of the productive economy.In all 3 cases, you have people sucking up productivity but not producing any. That might make the numbers go up, but it doesn't improve quality of living for people as a whole.Now, government spending *can* help improve productivity, but it has to be extremely carefully calculated because government cannot create wealth, it can only pull wealth from one spot and injected it into another spot. Medical doctors often pull something out of one part of the body and inject it into another part of the body and it results in positive results, but if you just do it randomly you'll kill the patient dead.
(DIR) Post #AQ7HyvCh4fyKlTiZn6 by midway@soapbox.midwaytrades.com
2022-11-30T03:21:27.947977Z
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@strypey @sj_zero Everyone’s a Kayesian when the economy is bad. But everyone forgets it when the economy recovers. It coukd work in theory, but when the economy recovers and tax revenues go back up, they just spend and borrow even more instead of paying off the debt from the lean times. Economists have to make a living too and you don’t get those sweet government gigs by being an Austrian and telling them to do nothing. And being a leftist shill pays more than being an economist. See: Thomas Friedman.
(DIR) Post #AQ7I5M7VuduJyxMZc0 by sj_zero@social.fbxl.net
2022-11-30T03:23:01.954932Z
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The half application of Keynesianism is one of my biggest pet peeves in economics and politics.We just finished having the longest economic recovery ever, and everyone everyone everyone went "we need to spend more money!" the whole time, despite under Keynes the right thing to do was to suck some of the air out of that recovery to save for tomorrow.
(DIR) Post #AQ7IJ8XxAwULwGIkO8 by midway@soapbox.midwaytrades.com
2022-11-30T03:25:19.015248Z
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@sj_zero @strypey Yep. But we let everyone vote and that always leads to bankruptcy.
(DIR) Post #AQ7JUGsGealGuEfzWq by midway@soapbox.midwaytrades.com
2022-11-30T03:24:30.705256Z
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@sj_zero @strypey Labor participation rates are dropping because the boomers are mostly retired, Gen X is about to retire and neither of them had kids to replace themselves. And old people are living longer which skews the numbers even more. It’s why SS has had a deficit since 2010 and is scheduled to go insolvent around 2030.
(DIR) Post #AQ7JUHHR90tWAIS5lA by sj_zero@social.fbxl.net
2022-11-30T03:38:43.450305Z
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The fact that the number of kids collapsing I think has a core economic basis. If people feel like they can, they inherently *want* to procreate -- that's a fundamental of life. The problem is that entire generations have felt like they can't for various reasons.The Millennials were actually a relative population boom, that's why the generation is called "Echo boom" by some sociologists. But then those kids grew up into situations where they didn't feel they could have kids of their own, and so there's serious problems[sauce on "echo boom"] https://www.cbsnews.com/news/the-echo-boomers-01-10-2004/The attached image demonstrates that the working class is getting a short end of the stick. Everyone is working harder and harder for less and less. In times where disparities like this add up, there's often bad times for everyone ahead. The French Revolution was one such time in history, for example.
(DIR) Post #AQ7KcVPSayNoG1gyki by midway@soapbox.midwaytrades.com
2022-11-30T03:45:38.281222Z
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@strypey @sj_zero It’s not income that caused people to not have kids. It’s a combination of a welfare state and empowering women. When you give women options other than having kids, a lot of them are going to take those options. And when you have a giant welfare state you don’t think of your kids as your retirement safety net.Look a where the population is booming. It’s not in places with high incomes and female empowerment. People had lots of kids out of a need to survive. They’ve done plenty of research here and as income goes up, men are far more interested in having more kids than women. Replace family supplying needs with the government and don’t be surprised when the birth rate plummets.
(DIR) Post #AQ7KcVyYUUSK0s70SG by sj_zero@social.fbxl.net
2022-11-30T03:51:25.447805Z
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It's a combination of many factors. Tiny income growth often not keeping up with inflation is one, high cost of living in terms of finding a stable place to live is another, both the drive to get women into the workforce and the requirement that they get into the workforce to be able to maintain a reasonable quality of living is yet another.My wife really felt a peer pressure not to be a stay at home wife and mother. That's what our culture is doing to women. She rejected society's demands because that's what she wanted, and I feel our family is happier for it. The thing is, not only did she have to reject society's pressure to go fail to become a CEO, but we also have to walk an economic tightrope to be able to attain the ability to have such a lifestyle.
(DIR) Post #AQ7LHoLR6FrirAVQXI by midway@soapbox.midwaytrades.com
2022-11-30T03:57:26.453731Z
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@sj_zero @strypey But look at places like Scandinavia where we’re all told that a good life standard is provided for everyone. Their birth rate is dog shit too. But they have even more feminism there then we have here and a spectacularly large welfare state. If economic security was the biggest factor they should at least be leading the modern western countries in birth rates. But the only people there having kids are the middle eastern and northern African immigrants and … well… let’s just say in those communities they have very different societal rules than the natives.
(DIR) Post #AQ7LHosP7gEkVPvkvI by sj_zero@social.fbxl.net
2022-11-30T03:58:53.870497Z
1 likes, 1 repeats
We're told a lot of things.One interesting thing you hear from immigrants is that they're shocked at how expensive just living is. Many move back after realizing it isn't actually the land of milk and honey they've been promised.
(DIR) Post #AQ7M1larf225e2dTcm by theorytoe@ak.kyaruc.moe
2022-11-30T04:04:47.805203Z
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@sj_zero @strypey @midway ironically enough all the rich people burning money at every conciveable convenience make that even worse.Especially those who hail from highly populated areas.
(DIR) Post #AQ7MH60E3wnDHno932 by midway@soapbox.midwaytrades.com
2022-11-30T04:02:16.879299Z
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@sj_zero @strypey But the ones who stayed are having all the kids. You can see it here in the US. Your typical Amish family has 7 kids. But they have rejected modern life here and live by their own rules. And they are very small and interested in preserving their way of life. I’m not saying that’s how I want to live but you can’t argue with the results.
(DIR) Post #AQ7MH6RARmLMdMPf2e by sj_zero@social.fbxl.net
2022-11-30T04:09:57.836109Z
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It doesn't really end up sustainable though. Within a generation the kids of that immigrant are living the same as everyone else.The Amish is a different beast, because they're completely outside of the system we've built. Certainly seems to be evidence that there is another way.I expect big changes in the next couple generations. The whole world looks different when populations start to shrink, starting with a massive improvement in quality of life for the working class. That's why governments and corporations are so terrified of a shrinking population.
(DIR) Post #AQ7NHmZhscARHAILrc by midway@soapbox.midwaytrades.com
2022-11-30T04:17:06.318439Z
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@sj_zero @strypey I’m not so sure. Governments need taxpayers to pay for their welfare bribes. But the lower end jobs can be done by either automation or by importing laborers. The US is lucky in that our cheap labor pool is largely Latin American who are more like us culturally than Europe who has been importing from Africa and the Middle East and parts of Asia. That’s a tougher cultural mix, at least at the lower end of the labor pool. But mass immigration can fill those lower end jobs and keep wages down at least by first world standards. We will lose some of our culture for sure as the demographics change but it will keep the patient on life support longer.
(DIR) Post #AQ7NHmzELiaGYKEjeC by sj_zero@social.fbxl.net
2022-11-30T04:21:17.461599Z
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It can for a while, but not forever. We've got a real crisis brewing, because the few productive people that are left are dying of old age. Those immigrants are going to turn right back around more and more as they realize they're not going to get ahead coming here.Automation is a big topic, but let me just say this: It can be useful in spots to reduce labour, but it's not nearly as straightforward as proponents would have you believe. You need a bunch of highly productive people to make the highly productive machines and to make them work and keep working. The promise of fractal automation is a lie.
(DIR) Post #AQ7S7uI2q8aU4x8zlw by midway@soapbox.midwaytrades.com
2022-11-30T05:15:30.175998Z
1 likes, 0 repeats
@sj_zero @strypey @PatriotReactor One factor for sure. Another is that the post ww2 US manufacturing bubble was starting to pop. Post WW2, the US had a near monopoly on manufacturing since most of Europe had been bombed out and Asia wasn’t really in full gear yet. That started to change in the 70s and accelerated in the 80s. A ton of global competition hit the world market and US companies couldn’t unilaterally set prices any more.
(DIR) Post #AQ7vyxoRN4r71Rws8u by strypey@mastodon.nzoss.nz
2022-11-30T10:50:00Z
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@robertbwalker55 Borrowing is, by definition, not credit creation. That's an interesting titbit though, I'll look into it.
(DIR) Post #AQ7wdXJanF8wiMrlMu by robertbwalker55@mastodon.nz
2022-11-30T10:57:19Z
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@strypey I agree. It was made to look like common or garden debt issuance but it was a facade. Whatever it is it caused house price inflation and then inflation in commodities measured for the CPI. Though some of price increases in goods is caused by bottlenecks in supply chains.
(DIR) Post #AQ8oRdKI0rDlPLxulc by strypey@mastodon.nzoss.nz
2022-11-30T21:00:03Z
1 likes, 1 repeats
@midway> government printing can be kept in checkThe US govt has been borrowing. "Printing" implies credit creation, something governments operating under neoliberal policy - the US has since Reagan - don't do. They privatize credit creation, under the control of trading banks, and then get the central bank to raise interest rates if the banks are overdoing it and increasing inflation. @sj_zero
(DIR) Post #AQ8xohBOju7xcIsVZQ by strypey@mastodon.nzoss.nz
2022-11-30T22:45:14Z
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@midwayYour second paragraph I mostly agree with, as would Stiglitz, except that the money not hitting the real economy was a bad thing and the evidence he marshalls for that in Freefall is pretty conclusive. Also I'd like to see a reference for the claim that the bank bailout debt has been paid back. @sj_zero
(DIR) Post #AQ8yKoWqxjJ5fPEFvs by strypey@mastodon.nzoss.nz
2022-11-30T22:51:04Z
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@robertbwalker55Is this the LSAP you're talking about?https://www.rbnz.govt.nz/monetary-policy/monetary-policy-tools/large-scale-asset-purchase-programmeI have to admit I'm struggling to connect what I'm reading there with what you're talking about.
(DIR) Post #AQ8zKjnwcx2qy7kc3k by strypey@mastodon.nzoss.nz
2022-11-30T23:02:16Z
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@robertbwalker55> a roundabout way to ... fund COVID mitigation measures.> Whatever it is it caused house price inflationReally? How could it? House price inflation had been happening for more than a decade before COVID, and house prices have stabilized and started to come down since COVID.> some of price increases in goods is caused by bottlenecks in supply chains.Agreed, and this distinction between inflation and consumer price increases is one of the points made in the podcast.
(DIR) Post #AQ8zt64wJqFRte5GGe by robertbwalker55@mastodon.nz
2022-11-30T23:08:27Z
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@strypey you can see it in the RBNZ balance sheet. At Feb 2020 govt bonds held as assets were $5 bn and liabilities to banks $16bn. By Nov 2020 bonds held were $54bn and liabilities to banks $53bn. What it means is that Treasury issued $50bn of bonds to banks. RBNZ bought them back the effect of which is to create cash balances at the banks which would not otherwise exist. RBNZ put their balance sheet on a spreadsheet called balance-sheet-at-work.
(DIR) Post #AQ904SnGCq0NWyEb5c by strypey@mastodon.nzoss.nz
2022-11-30T23:10:32Z
1 likes, 1 repeats
@midwayThe rest of the post, and the subsequent posts, are a tangled mix of uncontroversial facts, bizarre statements, and ideological claims. Yes, the Russian embargo is contributing to rising energy prices (although it's one cause among many). But offshoring currency doesn't stop it contributing to inflation, it's still a claim on US economic output wherever in the world its held. So the criticism of confiscating Russian gangsters' ill-gotten gains holds no water.@sj_zero
(DIR) Post #AQ90H6YUCO1gKBLruK by robertbwalker55@mastodon.nz
2022-11-30T23:12:48Z
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@strypey I set out the accounting in a model which demonstrates how quantitative easing happens and its effects . It is difficult to summarise. I could send the spreadsheet somewhere.
(DIR) Post #AQ90Xvb2CGnTG7Z8BU by strypey@mastodon.nzoss.nz
2022-11-30T23:15:52Z
1 likes, 1 repeats
@midway We've drifted a long way off anything relevant to the OP. Untangling these facts and unfacts and addressing them coherently is really not suited to this kind of medium, even if you weren't kind of Gash Galloping here. So I'm happy to park the discussion there. Unless you'd like to move it to a platform more suited to long form debate?@sj_zero
(DIR) Post #AQ915BtmbczxNOCDgW by robertbwalker55@mastodon.nz
2022-11-30T23:21:50Z
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@strypey the other point to note is that increase in house prices can reflect true economic activity. Money supply = price of X + price of Y. If MS stays constant and Y increases by $1 then MS = (X-1) + (Y+1). Conversely if MS is artificially increased it will be added to X or Y or both. If Y is asset values (property, shares) then it doesn’t show in the inflation measure because they aren’t counted. We used to have house prices included and they should be.
(DIR) Post #AQ91ZT3bNN8JHOE45A by midway@soapbox.midwaytrades.com
2022-11-30T23:15:15.116826Z
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@sj_zero @strypey What I did find was that while some smaller banks didn’t fully pay it back (some went under) enough did with interest plus eventually selling the shares they got in the bigger banks that the government made money on the entire transaction. So the whole thing ended up being a net profit for the treasury. Now the union bailouts are a totally different story. You can find that on several sites.
(DIR) Post #AQ91ZTUXlCgScwpa4m by strypey@mastodon.nzoss.nz
2022-11-30T23:27:17Z
1 likes, 1 repeats
@midway> the government made money on the entire transaction.> You can find that on several sites.Then I'm sure you can provide links to a couple. To credible sources please, not ZeroHedge or some Austrian agitprop site. Because I think this claim is a laughable fantasy, but I'm open to reading evidence that proves otherwise. @sj_zero
(DIR) Post #AQ91rueJWmeM4FC1Ue by sj_zero@social.fbxl.net
2022-11-30T23:30:44.736871Z
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https://home.treasury.gov/data/troubled-assets-relief-programAccording to the treasury, The TARP bank bailout was ultimately a program in the green by 7 billion dollars.That's not including all the other haywire stuff mind you, just TARP itself.
(DIR) Post #AQBMpcwAtc0NuRDbMG by strypey@mastodon.nzoss.nz
2022-12-02T02:34:51Z
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@sj_zeroThat's a very solid reference 😄 I'm happy to concede the specific point that the Treasury itself has found a way to show a profit on its books. Mainly because of actually taking some shares in one the bailed out institutions. What a shame they mostly just gave public money away without taking an ownership share. It could have been much more profitable for the public and given bankers a much stronger incentive not to take foolish risks with their investors' money. @midway
(DIR) Post #AQBP7MfiJEVuaF6XmS by sj_zero@social.fbxl.net
2022-12-02T03:00:40.197811Z
1 likes, 0 repeats
I'd personally have preferred we let the companies that made unreasonable risks just fail completely. It would have hurt a lot more in the short term, but the idea that megacorps need to be bailed out is a great way to make sure we have nothing but megacorps :(
(DIR) Post #AQBQvoCML9foOAzXyy by midway@soapbox.midwaytrades.com
2022-12-02T03:07:40.979333Z
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@strypey @sj_zero Ideally I agree with you. The problem in 2008 was, if nothing was done, there would have been a credit crunch and runs on banks. That affects far more than just those companies. A lot of businesses large and small have very uneven revenue streams throughput the year and rely on short term credit to make payroll.So potentially millions of people’s paychecks just don’t happen and there’s no credit for anyone. That’s Great Depression level bad. And you can rightfully argue that it should have never reached that point in the first place, to which I agree. But once it’s happened it’s too late to have that discussion. It’s no longer a theoretical issue. It’s real with real world consequences.
(DIR) Post #AQBQvodIizDxjjb3ya by sj_zero@social.fbxl.net
2022-12-02T03:20:58.960754Z
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I'd argue the past 20 years were great depression levels of bad for main street anyway, all while we turn into a feudal society as the megacorps we saved just used our own money to snatch up all the assets normal people who aren't immortal soulless legal constructs need to not die.I just think about what's happened to home prices, what's happened to rents, what's happened to energy, and importantly what hasn't happened to wages. It's been the greatest wealth transfer in the history of the world, and it's created several of the richest people in the history of the world.I understand why we might not want to feel the pain, but every time we take that heroin, it's one more step away from ever going straight.
(DIR) Post #AQBS3cRw0PkoDnZ68W by dj@rojogato.com
2022-12-02T03:33:31.547294Z
1 likes, 0 repeats
@sj_zero @strypey @midway Boomers are just delaying the inevitable until they are gone. Until then they will continue to band aid no matter how much worse it becomes for the rest of us.
(DIR) Post #AQBSGMr5IRH9cZPL16 by sj_zero@social.fbxl.net
2022-12-02T03:35:54.810134Z
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I doubt the millennials will be any different either. Probably not Gen Z either. It won't be until the current generations of adults have broken everything so badly there's no can left to kick that some poor bastards in the future will have to actually do the right thing.
(DIR) Post #AQBW091ZLq45uOpcPo by sj_zero@social.fbxl.net
2022-12-02T04:17:43.287044Z
2 likes, 1 repeats
Getting a deal off an insanely overinflated price still isn't a deal. The average house price in Canada in 2000 was $164,000. The average house price in 2011 was closer to $340,000. The average house price in 2022 in Canada is over $800,000. That isn't up and down, it's up and up more and up more still. That's not a sane number. It's a perfect microcosm of the reality of the past 20 years. Some people's numbers went up so much that we can ignore all the people whose numbers can't.The truth is that we've had bailout after bailout. 2001, 2003, 2008, 2020. They hit the nitrous again and again, cranked more cocaine and more heroin into the system to make the numbers rise. It made the numbers rise, but it isn't healthy. Instead of avoiding the withdrawl, we ought to just stop the constant cocaine and heroin and accept the pain so we can get back to being healthy.Homeless populations are at all time highs. Drug deaths are at all time highs. Gangs infest even small towns. Yeah, there are big winners, but there's a lot of people realizing they can't even play.The rate hikes and QT are a good start, and I hope they continue. They're going to have to be paired with government policy that stops selling our kids kids into slavery and commits to balanced budgets. Households need to deleverage. Governments need to deleverage. Investors need to deleverage. Money isn't the thing we're trying to achieve, it's what you can do with the money, and the malinvestment caused by excess debt means real resources that could be put towards real productivity are instead being spent on frivolousness.
(DIR) Post #AQBWmHtHgo4ZJ6ueQK by sj_zero@social.fbxl.net
2022-12-02T04:26:30.598501Z
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I wish I could dispute that, but it seems clear that the final result is absolute totalitarian central economic planning in a way that looks like falling into a bottomless pit forever.
(DIR) Post #AQBWq4tPxOoQ9ZmZl2 by InceptionState@poa.st
2022-12-02T04:27:12.028447Z
2 likes, 0 repeats
@sj_zero @midway @strypey Canada is just going full retard. They already have a housing crisis and they are increasing their immigration target to 500k per year? I guess they realized that the only way to keep housing prices from crashing as interest rates increase is a flood of foreign demand and capital.
(DIR) Post #AQBaHHK29Y0UNptTMW by strypey@mastodon.nzoss.nz
2022-12-02T05:05:40Z
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@BlinkRape> get rid of all the cash, force everyone onto crypto they can track and control your life withThis would be very bad, for the same reasons surveillance capitalism in general is bad. But this isn't the inevitable outcome of creating CBDCs.Done right, CBDCs could be the digital cash that existing crypto-tokens promised and failed to be. A vendor-neutral and more privacy-respecting replacement for the existing digital payments oligopoly (PayPal, Stripe etc).@midway @sj_zero
(DIR) Post #AQBbSpkyZB1wJtZNRY by midway@soapbox.midwaytrades.com
2022-12-02T04:40:52.729530Z
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@sj_zero @strypey I admit my experiences with house prices is in the US, not Canada. However, housing everywhere still comes back to supply and demand. One of the biggest things that locals do to keep housing prices high is zoning. This is not to say there isn’t a legitimate use of zoning, as anyone who has been to a city like Houston can attest. But in far too many places zoning has been abused to keep new housing starts down to keep supply down. Again, Canada may have other issues of which I’m not aware but in a normal market it prices are rising that quickly and consistently, builders should be running to Canada to build as much as possible. Local zoning and permits put a stop to that as the current home owners are a big and influential voting bloc. If housing isn’t being built at a frantic pace under those conditions, it’s worth figuring out why.
(DIR) Post #AQBbSqF6l98JpLfRPU by strypey@mastodon.nzoss.nz
2022-12-02T05:18:54Z
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@midway> If housing isn’t being built at a frantic pace under those conditions, it’s worth figuring out why.There are many possible reasons. In Aotearoa we have chronic supply problems with many building materials and shortages of labour, especially skilled tradespeople. So targeted increases in immigration can help increase housing supply where it fills those gaps.But supply shortages are only one driver among many of skyrocketing house prices. Freefall examines this too...@sj_zero
(DIR) Post #AQBcKTJKEhACLIDG6q by strypey@mastodon.nzoss.nz
2022-12-02T05:28:30Z
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@BlinkRape> these are going to be on a blockchain and your entire transaction history can be seen> there will be a public facing blockchain and a private one where we can't see what they're doing at the institutional levelReferences please? According to the CBDC discussion documents from the NZ central bank, they haven't even got as far as formalizing conceptual design, let alone specifying what database tech to use:https://www.rbnz.govt.nz/have-your-say/closed-consultations/future-of-money---central-bank-digital-currency@midway @sj_zero
(DIR) Post #AQBcTRqX3A5iPI1d3o by midway@soapbox.midwaytrades.com
2022-12-02T05:09:19.089111Z
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@sj_zero @strypey @BlinkRape A digital currency? Absolutely. A central bank digital currency? Never. It will be sold as a way to fight crime. You can’t do that and have privacy as well. Say what you want about physical cash. It has the ability to be quite anonymous. There is zero incentive for a government to build a privacy-based digital currency.
(DIR) Post #AQBcTSFLYtwNeFdRjs by strypey@mastodon.nzoss.nz
2022-12-02T05:30:15Z
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@midway> There is zero incentive for a government to build a privacy-based digital currency.By this logic, they should have stopped minting cash a long time ago. Since the observation doesn't fit the logic, the logic must be flawed.@BlinkRape @sj_zero
(DIR) Post #AQBpjCBiKlRdsflwQq by midway@soapbox.midwaytrades.com
2022-12-02T05:38:06.333465Z
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@sj_zero @BlinkRape @strypey The logic is not flawed. The monetary system in most places has been becoming digital. Governments like this. But it’s tough to just turn off cash altogether. It’s been around a long time. That doesn’t mean it isn’t a long term goal. It takes a long time for the infrastructure to be put in place to do a full replacement both in technology and general acceptance. I believe that time is getting near.
(DIR) Post #AQBpjCfUY3GRN1hiqW by strypey@mastodon.nzoss.nz
2022-12-02T07:58:44Z
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@midway> it’s tough to just turn off cash altogether. That doesn’t mean it isn’t a long term goal. OK, but I see no reason to think it is either, at least not for govts and central banks. Yes, cash use has been declining, but the simplest explanation is the emergence of non-cash payment systems - every one of them initiated by the private sector not by states - are more convenient than cash. Also a lot of commerce is moving online and there's no way to pay cash online.@BlinkRape @sj_zero
(DIR) Post #AQC4ej40AsFZhuUXfU by sj_zero@social.fbxl.net
2022-12-02T10:46:06.270739Z
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There's also the issue of malinvestment caused by debt bubbles.You *could* spend money building houses and make a linear amount of profit, or you could spend money building useless tech tech and potentially make exponential profits. Money tends to go where it'll grow, especially in an environment like the past 20 years where if it isn't continuously growing massively then you're basically losing money. People who would otherwise be risk averse have to be extremely open to high risk because that's the only way to get ahead.Just look at the crypto market. At its peak, bitcoin alone was worth well over 2 trillion dollars, going towards 3 trillion. That's money that went into this tech tech thing that wasn't going into building new houses, new factories, or anything else productive. A lot of it went into building single purpose ASICs or video cards, and we didn't need more single purpose ASICs or video cards. Same with a lot of the overinflated tech stocks. That money ended up going into companies that just ended up getting bloated and lumbering because the money was going into a thing that went up because it went up causing it to go up.People think money is just money, but it isn't money is a representation of the productivity of an economy. When money is spent on things that are useless, it means that the productivity is going towards useless things and isn't going towards useful things.
(DIR) Post #AQCg5lwvFXQ6mQwM9g by midway@soapbox.midwaytrades.com
2022-12-02T15:56:30.812965Z
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@strypey @sj_zero There are plenty of builders out there who would love to cash in on Canadian home prices. My guess is that governments aren’t allowing it to happen in such a way that those profits would be realized. I doubt that builders are throwing money at tech projects. Someone here mentioned Bitcoin. It is absolutely redeemable for cash, that’s why it has a price and there are plenty of exchanges to do so. The problems are liquidity and volatility. It’s still highly speculative so it’s not safe to throw a significant part of one’s portfolio into it. And the idea of it being an actual currency is still a fantasy for the same reason. How can you price something in a currency that is crazy volatile? As one who deals with international transactions I can tell you it’s been hard doing business recently when normal currencies like the pound and euro have been more volatile than usual. Now try doing business with a currency that can easily move 4 figures a day. Good luck with that. It’s not my game but not because it’s not redeemable.
(DIR) Post #AQCg5mNrdMyG7zXs9I by sj_zero@social.fbxl.net
2022-12-02T17:45:34.500972Z
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https://torontolife.com/real-estate/toronto-highrises/Toronto in particular has more construction than any other city in North America, so money is being spent, but the entire real economy is affected by capital being sucked up by malinvestment and building is no different. Even a booming industry is held back because the best and brightest are being snatched up to work on useless crap because useless crap pays better in this economy.That being said, the housing is also malinvestment. They cost so much because people can borrow so much money they can't afford to borrow and so solid purchases from good customers are being crowded out by investment from companies or individuals flush with borrowed cash. The money being added drives up prices and the prices being driven up drives further money being added.https://www.cbc.ca/news/canada/toronto/investors-in-ontario-real-estate-market-1.6258199The only positive is that with mortgage rates on the rise, prices will crash. Not good for irresponsible borrowers or irresponsible lenders, but good for society because the cost of living we were ignoring because numbers were going up was having massive negative knock on effects financially, economically, and socially.
(DIR) Post #AQCh18wYQldIbL7muu by strypey@mastodon.nzoss.nz
2022-12-02T17:55:43Z
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@sj_zero> There's also the issue of malinvestment caused by debt bubbles.I agree with everything that follows, but calling them "debt" bubbles misdiagnoses the cause. Speculation bubbles happen when too much money accrues to people at the upper end of the wealth spectrum, who have little else to spend it on, and no reason not to risk it on a potential windfall. The crypto and housing bubbles were driven in large part by the 2008 bailout money, again, Freefall has evidence. (1/2)@midway
(DIR) Post #AQClJlLamhUujnyBsm by strypey@mastodon.nzoss.nz
2022-12-02T18:43:40Z
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At the lower end of the spectrum, the same money will mostly be spent on available goods and services, soaking up excess production. This helps Main St avoid wastage, something that drives up prices much more than spending when production meets real demand. They might also spend it servicing debt, freeing up capital that helps Main St maintain production to meet strengthened demand. This is why I was confused by @midway's claims that directing money to Main St raises prices.(2/2)@sj_zero
(DIR) Post #AQCmI7p4LmVVoqXZLc by midway@soapbox.midwaytrades.com
2022-12-02T15:46:22.037868Z
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@strypey @BlinkRape @sj_zero Why create a retail CBDC if the goal isn’t to eliminate cash? Digital money already exists and is used. There is no doubt western governments want the level of control that CDBC would provide and there’s very recent proof that they are more than willing to use that control against their own people as we saw in Canada with the trucker protests. Not only did they freeze the accounts of anyone they thought was there, they froze accounts of people who sent them money, even buying merchandise to support them. So this isn’t theoretical, we literally just watched a western government do this. Now imagine there was no physical cash. The first step will likely by a CDBC that is only used between central banks. That actually makes a certain amount of sense and isn’t really a problem. It’s the retail version where I take issue.
(DIR) Post #AQCmI8CovTVR0VeXMu by strypey@mastodon.nzoss.nz
2022-12-02T18:54:55Z
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@midway> Digital money already exists and is used.There are digital tools for transferring money, but there is no digital equivalent of cash. Existing crypto-tokens can't serve this purpose, for reasons you explained in another post. Freezing accounts of people supporting dissent is only possible because existing digital payment systems are all under corporate control and gathering data about who is paying for what. How could CBDCs improve on this?@BlinkRape @sj_zero
(DIR) Post #AQCq7UkfA0ZBYyfMDA by sj_zero@social.fbxl.net
2022-12-02T19:37:56.019986Z
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https://lotide.fbxl.net/posts/16888The above link is pretty long, but reviews a large number of recessions and shows a few commonalities. The key reason to look at it as a debt bubble is that excess money causes an expansion of credit which runs into certain industries which appear profitable to everyone at the same time, which causes massive over investment in those industries, and later on when it turns out that they can't possibly be profitable enough to justify the overinvestment, and this is the key thing, the value collapses and all of the leveraged investors lose not just the money that they have but the money that they don't have which ends up causing the downward part of the cycle, where Banks lose money on a whole bunch of loans which can cause Bank closures, it causes a reduction in the money supply, it causes tightening of credit, which overall means that there's less money moving around the economy, which leads to recession.The key is leverage. Leverage means that with a relatively small amount of money you can create a relatively large amount of money when things are moving up, but it also means that you can destroy a relatively large amount of money with a relatively small amount of money when things are moving down. In some ways it's like a casino. Nobody ever lost their home gambling money they could afford to lose. People lose their home when they are gambling with debt they can't afford to lose.
(DIR) Post #AQDDc4eoWhJyYWTqzI by midway@soapbox.midwaytrades.com
2022-12-02T21:42:33.651586Z
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I won't speak for NZ or any other place but here in the US it was done very poorly. They did 2 things:1. Sent out checks to everyone who's income the previous year was under a certain threshold whether they were affected or not.2. Increased unemployment benefits for those who were out of work such that many near the bottom had a higher income sitting home.This lead to lots of problems, mostly around most people who received money in one way or another had more money than they would have had otherwise. They sent checks to retirees, people on welfare, those who didn't lose their job. All of that plus paying lots of people more money than they had working caused a lot of dollars to chase fewer goods and services since a lot was shut down. There wasn't much in the way of excess production. So you had inflation coming from both supply and demand side. Most of Main St who got money either didn't actually need it because they weren't affected financially by the pandemic or they were paid more than they made working. Regardless, it caused a surge in the active money supply during a time of reduced production. This is why we have the worst inflation in nearly 50 years in the US right now. In theory, it sounds like a great idea. But the reality proved otherwise.
(DIR) Post #AQHmy5ssv3G1lB8Yds by strypey@mastodon.nzoss.nz
2022-12-05T04:56:08Z
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@sj_zero> excess money... sitting in the bank...> causes an expansion of creditIf it's moving through the economy facilitating transactions, as it ought to be, it doesn't. This is why bailing out the banks pumped up multiple bubbles post-2008, whereas feeding stimulus to Main St wouldn't have. Let's revisit this in 5 years and see how the post-2020 stimulus compares.@midway
(DIR) Post #AQHn1fpLjyL26VBrxA by strypey@mastodon.nzoss.nz
2022-12-05T04:56:46Z
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@sj_zero> excess money... sitting in the bank...> causes an expansion of creditIf it's moving through the economy facilitating transactions, as it ought to be, it doesn't. This is why bailing out the banks pumped up multiple bubbles post-2008, whereas feeding stimulus to Main St wouldn't have. It will be intriguing to revisit this in 5 years and see how the post-2020 stimulus compares.@midway
(DIR) Post #AQIdRy9FRQiy4SMEgC by midway@soapbox.midwaytrades.com
2022-12-05T06:01:34.615697Z
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@sj_zero @strypey Except that much of the 2008 bailout did just stay in the banks to safeguard their reserves. And consumer credit standards were tightened due to 2008. That’s why we didn’t see much in the way of retail inflation. We had some asset inflation especially in tech but at least in the US, most corporate debt is not bank debt but rather bonds by the companies themselves. Because treasury interest rates were super low that helped keep corporate bonds low at least by historic standards since treasuries weren’t paying much. Tech companies live on debt for R&D low interest/low inflation is the best part of the economic cycle for them. We have already seen the results of 2020/21. We have real retail inflation not seen (again speaking for the US) in nearly 50 years. Was it 100% from the welfare? No. But that was a big part of it. If it were not the case it would be dropping like crazy as suppliers came back online. Supply was certainly a part of it, but the demand side is definitely there. It’s not a coincidence that the last time we had inflation like this came right after the US cut all ties to the gold standard and … wait for it … printed a ton of money. That plus an energy supply problem due a Middle East oil embargo. Sound familiar? History doesn’t actually repeat itself but it does rhyme.
(DIR) Post #AQIdRyv6ZV0OSskSH2 by sj_zero@social.fbxl.net
2022-12-05T14:44:14.409825Z
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One important thing to keep in mind is that they're lying about inflation.Over time, they've changed the way they calculate inflation to reduce the number without reducing inflation itself. There's a few different ways. For one, lets say you can't afford steak anymore because it gets too expensive so you move to chicken, but then later you can't afford chicken so you buy organ meats. Things have gotten way more expensive, but they twist it so technically there was no inflation because you're paying the same!For another, let's say that you bought a smart phone 10 years ago for $400, but today the smart phone is $1200. Well, they just say "Yeah but the new one is way better!" so despite your objective cost of living going way up, there was no inflation!Yet another, let's say your rent goes up 400% and house prices go up 400%. It's totally cool because instead of looking at rents or house prices, they go to a homeowner and ask "hey, hypothetically if you had to rent a replacement for your home, how much would you expect to pay?", and the homeowners consistently guess way lower than the real value so there was no inflation!If we were to use the old method of calculating inflation, we had fairly high inflation after 2008, and presently we are experiencing some of the highest inflation in history, forget the past 40 years. http://www.shadowstats.com/alternate_data/inflation-chartsDoing that completely changes the conversation. When you account for the actual rises in cost of living rather than the doctored cost of living, the true cost of the constant bailouts becomes obvious. It's not just the cost of the bailouts, but the reduction in virtually everyone's cost of living. If you're an oligarch who owns assets that only go up then you're fine, but if you're someone who earns a wage then the inflation tax robs you of your wages forever from the moment it takes effect.There's somthing in finance called the "rule of 72" where if you divide 72 by the growth rate of a thing you see how long until prices double in years. If inflation was really 2% then prices would only double every 36 years. If inflation is really 7%, then prices would double every 10 years. I know many of my bills have doubled in the past 10 years. Groceries have far more than doubled. Rent has far more than doubled. energy has almost doubled. Many cars have doubled in MSRP. Most technology has more than doubled in price. Like... What's left? Everyone from the poorest of the poor to the the upper middle class of wage earners are paying the inflation tax every year watching their wages disintegrate, meanwhile fighting just to get 2% raises.Don't bail out main street, don't bail out the banks. Return to responsibility and let the good investments succeed and the bad investments fail, and let people be responsible for taking care of themselves because they're going to do a better job than the government has, clearly.
(DIR) Post #AQJG3lIPTEeHTN5hcu by midway@soapbox.midwaytrades.com
2022-12-05T15:56:04.594426Z
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No doubt the formula for the official value has been changed over the years to make things look better than they were. The truth is that the US government needs a certain amount of inflation to help with its debt. However, that has also assumed historically low interest rates. That would have been a great opportunity to become more solvent, but that's not what voters want...they want more welfare so more welfare they will get, thus we are where we are today.While I agree that ideally we would not bail out anyone, that's just not reality. Given that, I'd rather bail out institutions like banks than individuals because it's has done less damage. Not zero, but less. Doing nothing with the banks in 2008 was a true risk of a 1930s style depression. That doesn't help normal people either. Indiscriminately doling out tons of welfare, mostly to people who were not suffering makes no sense. But that's what we did.
(DIR) Post #AQJG3lgs0IDMhEXEki by sj_zero@social.fbxl.net
2022-12-05T21:56:51.838283Z
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If we keep on bailing out people who make bad decisions, then they will continue to make bad decisions. They will continue to need bigger and bigger bailouts, and that's what we're seeing, until it doesn't matter because there won't be anything left to bail anyone out with. I think we're pretty much there now.
(DIR) Post #AQJZAgc3BAyc6WIEEq by midway@soapbox.midwaytrades.com
2022-12-06T01:30:45.780077Z
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You won't get much of an argument from me on this. But a giant nanny welfare state is what ultimately happens when you grant universal suffrage. Those societies eventually go bankrupt and revert to an authoritarian regime. It's just a matter of how long. This is why the founder of the US didn't grant universal suffrage. We messed that up.
(DIR) Post #AQJZOelYqF98QnP3IG by sj_zero@social.fbxl.net
2022-12-06T01:33:32.432524Z
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It's not pretty, but it's correct. You have two classes of people: Net Tax providers and net tax consumers. If you let the net tax consumers vote, then they will inevitably vote for more things for the net tax providers to pay for. From there, the only option is for the leadership to try to make more and more people net tax consumers to placate them and buy their votes.
(DIR) Post #AQJd2QheqXOIGHEacS by midway@soapbox.midwaytrades.com
2022-12-06T01:41:20.235830Z
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Exactly. Universal suffrage sound like a great idea. But it doesn't work long term in reality. So many think it'll be different this time. It won't.
(DIR) Post #AQJd2RH6ijkO2DotsG by sj_zero@social.fbxl.net
2022-12-06T02:14:20.342429Z
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It could potentially work if you had a unified culture that was incredibly stringent on supporting the common good, but by definition we're not that. It appears that we don't want to be that either, and that's ok, but it does mean there needs to be less universality to the universal.
(DIR) Post #AQJdwDekXdLG0vTboe by midway@soapbox.midwaytrades.com
2022-12-06T02:21:08.772388Z
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@strypey @sj_zero I have yet to see that happen though. I mean look at Japan. They are one of the most unified cultures out there. But they are broke from too much spending and are currently doing QE forever as the BOJ has thrown in the towel and said they will buy Japanese bonds as much as needed to keep the rates down.
(DIR) Post #AQJdwE7onYatT54p7o by sj_zero@social.fbxl.net
2022-12-06T02:24:25.269528Z
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That's a good point. The ideological idea might say you can get some hypothetical society that is immune, but if the data shows the Japanese can't escape it what society possibly could?