Venezuelan inflation rate nearing 100%.

[fskimospy]

My line is pre vs post spending in terms of recession. The governments that are doing austerity, are doing so in response to the recession to stimulate growth.

Yeah but the reason they are doing it doesn't really matter. (don't get me started on 'expansionary austerity')

My argument is simply that cutting spending and/or raising taxes is still cutting spending and/or raising taxes no matter when you do it. It's just that austerity has gotten a bad name recently and so people try to avoid applying it to their efforts. I mean hell, while we're talking about the UK, its GDP is STILL below pre-crisis levels while the US is nearly 10% above our pre-crisis peak.

You don't have the mindset that all spending just adds to growth, because if you did, then the government should be spending as much money as it can, because it would only make the economy grow faster regardless if the economy is good or bad.

I agree that not all spending is good. That being said, over the last 5 years we have been nowhere close to the cap of what amount of spending would still be good. The stimulus probably should have been at least twice as big, for example. Maybe 3 times as big.

 

[realibrad]

Yeah but the reason they are doing it doesn't really matter. (don't get me started on 'expansionary austerity')

My argument is simply that cutting spending and/or raising taxes is still cutting spending and/or raising taxes no matter when you do it. It's just that austerity has gotten a bad name recently and so people try to avoid applying it to their efforts. I mean hell, while we're talking about the UK, its GDP is STILL below pre-crisis levels while the US is nearly 10% above our pre-crisis peak.



I agree that not all spending is good. That being said, over the last 5 years we have been nowhere close to the cap of what amount of spending would still be good. The stimulus probably should have been at least twice as big, for example. Maybe 3 times as big.

I think the argument for saying it should have been 2-3 times the size implies that there is hard data, and really there isint. There are people have have come up with models that say we should have, but its still a lot of guessing going on. There are many other people have have come up with models that say stimulus does nothing.

 

[fskimospy]

I think the argument for saying it should have been 2-3 times the size implies that there is hard data, and really there isint. There are people have have come up with models that say we should have, but its still a lot of guessing going on. There are many other people have have come up with models that say stimulus does nothing.

I would say that the models that said stimulus would do nothing in the wake of the crisis have been pretty well discredited. The IMF paper that I linked previously is one of many that show that. Multipliers seem to have been well above 1 early on. The results also jibe with common sense. When we have huge quantities of productive resources sitting unused creating more slack just makes the problem worse.

The data we have for relative performance between countries since the crisis is actually pretty good, at least as far as economics data goes.

 

[IGBT]

maybe the Chinese will buy the place.

 

[nickqt]

Interest rates are basically zero.

This is when you "borrow" and build up a modern infrastructure if you're a behemoth country like the US that has let its internal infrastructure rot for the past 50 years because projecting Empire outward with shiny jets and ships is expensive.

But of course, we can't do that, because building a modern infrastructure for virtually nothing, while creating thousands of immediate jobs and many, many future jobs is just socialism, comrades.

Plus, we have to pretend that a sovereign country with a fiat currency has to live like a modern family that can't print money, because Joe Idiot's common sense is reality, rather than, you know, reality reality.

So, while the richest people in the solar system continue their hold on the laws and the government ensuring that they and their families stay rich and retain all the power, we'll all just sit and say that we can't afford to build a modern infrastructure.

Because we're a can't do nation now. We have to ensure maximum tax breaks for our betters, which helps everyone, because they say so on the TV machine over and over and over again. Plus, like screw poor people. Damn moochers and looters.

Also: Freedom.

 

[OverVolt]

Interest rates are basically zero.

This is when you "borrow" and build up a modern infrastructure if you're a behemoth country like the US that has let its internal infrastructure rot for the past 50 years because projecting Empire outward with shiny jets and ships is expensive.

But of course, we can't do that, because building a modern infrastructure for virtually nothing, while creating thousands of immediate jobs and many, many future jobs is just socialism, comrades.

Plus, we have to pretend that a sovereign country with a fiat currency has to live like a modern family that can't print money, because Joe Idiot's common sense is reality, rather than, you know, reality reality.

So, while the richest people in the solar system continue their hold on the laws and the government ensuring that they and their families stay rich and retain all the power, we'll all just sit and say that we can't afford to build a modern infrastructure.

Because we're a can't do nation now. We have to ensure maximum tax breaks for our betters, which helps everyone, because they say so on the TV machine over and over and over again. Plus, like screw poor people. Damn moochers and looters.

Also: Freedom.

Interest rates are never zero. The risk is priced artificially low. This decreases the standard deviation of a risk distribution squishing down the middle and increasing the relative probability of a tail event. Tail events are much more likely now. IE huge crash (Student loans?), huge boom (Oil sands?), huge deflation(Strong dollar?), huge inflation (Buy gold! derp!), huge defaults (Greece), etc.

The reason things feel so tipsy (are we on the eve of hyperinflation or massive defaults or new record highs in stocks!?) is because of artificially low pricing on risk.

If risk were priced appropriately we'd probably be doing a little of everything. Not these wild swings in extremes where ND is booming one second and SOL the next. Instead it would have been harder to get funding but the fields that would have been developed would have been more sustainable at lower oil prices.

etc. etc. etc.

 

[nickqt]

Interest rates are never zero. The risk is priced artificially low. This decreases the standard deviation of a risk distribution squishing down the middle and increasing the relative probability of a tail event. Tail events are much more likely now. IE huge crash (Student loans?), huge boom (Oil sands?), huge deflation(Strong dollar?), huge inflation (Buy gold! derp!), huge defaults (Greece), etc.

The reason things feel so tipsy (are we on the eve of hyperinflation or massive defaults or new record highs in stocks!?) is because of artificially low pricing on risk.

If risk were priced appropriately we'd probably be doing a little of everything. Not these wild swings in extremes where ND is booming one second and SOL the next. Instead it would have been harder to get funding but the fields that would have been developed would have been more sustainable at lower oil prices.

etc. etc. etc.

Shorter you minus the partisan tilt (in my opinion):

The people who profit off of our f-ed up economy are about to make a whole lot more money.

Yes. I see that too.

Firesales are very, very profitable. This is all designed.

The people who own and operate nearly everything are about to make even more money. Own even more property. Wield even more power.

So. Why not spent political capital and call for the reining in of the power of wealth? It's not like wealth has ever actually been persecuted here, not that I'm calling for it.

Why is it that one side is willing to call it like it is, and the other side wants to play semantics?

The people with the wealth and power want to keep it. They don't want competition.

Taxes are competition. Especially when it gets in the way of someone passing on hundreds of millions of wealth to family.

Oh gosh! How horrible that you could only inherit a few million dollars! Freedom!!! Tyranny!!

 

[OverVolt]

Shorter you minus the partisan tilt (in my opinion):

The people who profit off of our f-ed up economy are about to make a whole lot more money.

Yes. I see that too.

Firesales are very, very profitable. This is all designed.

The people who own and operate nearly everything are about to make even more money. Own even more property. Wield even more power.

So. Why not spent political capital and call for the reining in of the power of wealth? It's not like wealth has ever actually been persecuted here, not that I'm calling for it.

Why is it that one side is willing to call it like it is, and the other side wants to play semantics?

The people with the wealth and power want to keep it. They don't want competition.

Taxes are competition. Especially when it gets in the way of someone passing on hundreds of millions of wealth to family.

Oh gosh! How horrible that you could only inherit a few million dollars! Freedom!!! Tyranny!!

Don't know probably bleedover from the other thread 😛.

We had to save wall street because wall street is basically the entire life savings of the baby boomers' retirement tied up in 401k's and such.

There really aren't that many people who are SO GOOD at investing that they always win and never lose.

Currently taxes seem like a bad idea since the rich have the means to avoid them the most effectively. Though I don't care much either way.

 

[nickqt]

Don't know probably bleedover from the other thread 😛.

We had to save wall street because wall street is basically the entire life savings of the baby boomers' retirement tied up in 401k's and such.

There really aren't that many people who are SO GOOD at investing that they always win and never lose.

Currently taxes seem like a bad idea since the rich have the means to avoid them the most effectively. Though I don't care much either way.

Well, yeah. That said, at the end of the day, money is money.

 

[fskimospy]

Interest rates are never zero. The risk is priced artificially low. This decreases the standard deviation of a risk distribution squishing down the middle and increasing the relative probability of a tail event. Tail events are much more likely now. IE huge crash (Student loans?), huge boom (Oil sands?), huge deflation(Strong dollar?), huge inflation (Buy gold! derp!), huge defaults (Greece), etc.

The reason things feel so tipsy (are we on the eve of hyperinflation or massive defaults or new record highs in stocks!?) is because of artificially low pricing on risk.

If risk were priced appropriately we'd probably be doing a little of everything. Not these wild swings in extremes where ND is booming one second and SOL the next. Instead it would have been harder to get funding but the fields that would have been developed would have been more sustainable at lower oil prices.

etc. etc. etc.

Why do you think rates are "artificially low"?

 

[Herr Kutz]

Interest rates are basically zero.

This is when you "borrow" and build up a modern infrastructure if you're a behemoth country like the US that has let its internal infrastructure rot for the past 50 years because projecting Empire outward with shiny jets and ships is expensive.

But of course, we can't do that, because building a modern infrastructure for virtually nothing, while creating thousands of immediate jobs and many, many future jobs is just socialism, comrades.

Plus, we have to pretend that a sovereign country with a fiat currency has to live like a modern family that can't print money, because Joe Idiot's common sense is reality, rather than, you know, reality reality.

So, while the richest people in the solar system continue their hold on the laws and the government ensuring that they and their families stay rich and retain all the power, we'll all just sit and say that we can't afford to build a modern infrastructure.

Because we're a can't do nation now. We have to ensure maximum tax breaks for our betters, which helps everyone, because they say so on the TV machine over and over and over again. Plus, like screw poor people. Damn moochers and looters.

Also: Freedom.

U.S. defense spending is fairly low as a percentage of GDP when looking 50 years out. Where is all that extra money going, if not to infrastructure?

 

[Genx87]

U.S. defense spending is fairly low as a percentage of GDP when looking 50 years out. Where is all that extra money going, if not to infrastructure?

https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/

We have decided to spend money on social programs and war instead of infrastructure.

 

[OverVolt]

Why do you think rates are "artificially low"?

High demand for bonds lowers their interest rate. Everybody should know that who cares to know. Bonds are considered expensive if their rate is low. The Fed constantly bidding on bonds pushes down the interest rate they need to offer to entice investors, because the fed is (was) going to buy them anyway. Since banks use the bonds as collateral to make loans, they can also loan money for low interest and still make a profit.

Its artificial because its not genuine demand for the bonds, since they are printing the money. The first thing new money is used on has the most impact. It also pushes everyone into stocks seeking a better return because bonds are expensive.

Just look at JGB's. Keep up the QE if you want 0.80% bonds.

 

[fskimospy]

High demand for bonds lowers their interest rate. Everybody should know that who cares to know. Bonds are considered expensive if their rate is low. The Fed constantly bidding on bonds pushes down the interest rate they need to offer to entice investors, because the fed is (was) going to buy them anyway. Since banks use the bonds as collateral to make loans, they can also loan money for low interest and still make a profit.

Its artificial because its not genuine demand for the bonds, since they are printing the money. The first thing new money is used on has the most impact. It also pushes everyone into stocks seeking a better return because bonds are expensive.

Just look at JGB's. Keep up the QE if you want 0.80% bonds.

The fed has not been buying bonds for quite awhile now and rates have not changed much. Furthermore, when the Fed stopped buying bonds for periods in the past, the rates also did not change much.

Here's a chart of 10 year treasury rates from the day the Fed ended QE to present:

Can you point me to the "artificially low rate" caused by Fed purchases in there?

 

[OverVolt]

The fed has not been buying bonds for quite awhile now and rates have not changed much. Furthermore, when the Fed stopped buying bonds for periods in the past, the rates also did not change much.

Here's a chart of 10 year treasury rates from the day the Fed ended QE to present:

Can you point me to the "artificially low rate" caused by Fed purchases in there?

Um, the 4 Trillion in bonds that were bought? Lol.

They really let their cable bill get out of control there.

If someone were to hypothetically buy $1.8 billion worth of Coke (KO) stock over 18 months, $100 million per month. The price of the stock would go up, even after they stopped buying. Because they'd be sitting on 1% of the shares outstanding. And thats a mild example really, because the fed monetized more than 1% of the bond market.

You can make the market with that kind of bidding activity. That was the point. I don't think you are capable of critical thinking. Just being honest.

The stock buybacks that corporations are doing right now are orders of magnitude smaller than that and hugely positive.

You don't 'get' how markets work and you really shouldn't be part of any of these discussions, in my opinion.

 

[fskimospy]

Um, the 4 Trillion in bonds that were bought? Lol.

They really let their cable bill get out of control there.

If someone were to hypothetically buy $1.8 billion worth of Coke (KO) stock over 18 months, $100 million per month. The price of the stock would go up, even after they stopped buying. Because they'd be sitting on 1% of the shares outstanding. And thats a mild example really, because the fed monetized more than 1% of the bond market.

You can make the market with that kind of bidding activity. That was the point. I don't think you are capable of critical thinking. Just being honest.

The stock buybacks that corporations are doing right now are orders of magnitude smaller than that and hugely positive.

You don't 'get' how markets work and you really shouldn't be part of any of these discussions, in my opinion.

Interesting. Apparently the former chairman of the Fed doesn't 'get' how markets work either as he doesn't think the 'artificially low' rate thing holds water either:

http://www.brookings.edu/blogs/ben-bernanke/posts/2015/03/30-why-interest-rates-so-low

A similarly confused criticism often heard is that the Fed is somehow distorting financial markets and investment decisions by keeping interest rates “artificially low.” Contrary to what sometimes seems to be alleged, the Fed cannot somehow withdraw and leave interest rates to be determined by “the markets.” The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere. So where should that be? The best strategy for the Fed I can think of is to set rates at a level consistent with the healthy operation of the economy over the medium term, that is, at the (today, low) equilibrium rate. There is absolutely nothing artificial about that! Of course, it’s legitimate to argue about where the equilibrium rate actually is at a given time, a debate that Fed policymakers engage in at their every meeting. But that doesn’t seem to be the source of the criticism.

If you want I'll email Ben and tell him you don't think he 'gets' markets.

So for your argument you have a hypothesis that Fed activity is keeping rates "artificially low" that you can't provide empirical evidence for. In fact, the available evidence shows exactly the opposite of what you're arguing as I already showed you. Additionally, this low rate environment exists in other countries that weren't/haven't engaged in quantitative easing.

In the future you might want to think twice before trying to tell someone they aren't capable of critical thinking when your argument is based on that. (feel free to tell me when the bond market will return from it's 'artificially low' rate though, haha)

EDIT: Not to mention if the rates were actually 'artificially low' we should see significant inflation, and as we all know there hasn't been any.

 

[OverVolt]

Interesting. Apparently the former chairman of the Fed doesn't 'get' how markets work either as he doesn't think the 'artificially low' rate thing holds water either:

http://www.brookings.edu/blogs/ben-bernanke/posts/2015/03/30-why-interest-rates-so-low



If you want I'll email Ben and tell him you don't think he 'gets' markets.

So for your argument you have a hypothesis that Fed activity is keeping rates "artificially low" that you can't provide empirical evidence for. In fact, the available evidence shows exactly the opposite of what you're arguing as I already showed you. Additionally, this low rate environment exists in other countries that weren't/haven't engaged in quantitative easing.

In the future you might want to think twice before trying to tell someone they aren't capable of critical thinking when your argument is based on that. (feel free to tell me when the bond market will return from it's 'artificially low' rate though, haha)

EDIT: Not to mention if the rates were actually 'artificially low' we should see significant inflation, and as we all know there hasn't been any.

Only inflation for what is commonly purchased with credit, which is exactly what is observed in autos, housing and tuition.

 

[fskimospy]

Only inflation for what is commonly purchased with credit, which is exactly what is observed in autos, housing and tuition.

Oh jesus. Now you're cherry picking.

Regardless, let's go take tuition for example:

Odd that with such an artificially low rate that tuition inflation would actually be equal to or lower over the last 10 years than it had been in previous periods. Can you explain this?

Any comments about how the former chair of the Fed is apparently included in people you think don't 'get' markets? He pretty much said your argument was nonsense. Also, any prediction for when interest rates will stop being "artificially low" and by what mechanism they will stop?

 

[OverVolt]

Oh jesus. Now you're cherry picking.

Regardless, let's go take tuition for example:

Odd that with such an artificially low rate that tuition inflation would actually be equal to or lower over the last 10 years than it had been in previous periods. Can you explain this?

Any comments about how the former chair of the Fed is apparently included in people you think don't 'get' markets? He pretty much said your argument was nonsense. Also, any prediction for when interest rates will stop being "artificially low" and by what mechanism they will stop?

You mean the three biggest uses of credit, okay, cherry picking.

Ben did a goob job of calming the markets. Ben is a bad example because he's been taking entirely opposite positions now that he isn't the chairman anymore.

 

[fskimospy]

You mean the three biggest uses of credit, okay, cherry picking.

Ben did a goob job of calming that markets. Ben is a bad example because he's been taking entirely opposite positions now that he isn't the chairman anymore.

No, I mean that you just decided to discount the entire rest of the market because it is evidence against what you're trying to say.

So now we've got no major movement in bond rates after QE ended, no general inflation (which is usually associated with too-low interest rates), and the old chair of the fed saying your argument is nonsense.

Your response has been to declare that rates won't move anyway (wut), that we can only look at inflation in very specific sectors (wut, also at least one was just wrong), and that the chair of the fed doesn't count because you say so.

I will again suggest that you might want to be careful in the future before saying that people aren't capable of critical thinking.

 

[OverVolt]

No, I mean that you just decided to discount the entire rest of the market because it is evidence against what you're trying to say.

So now we've got no major movement in bond rates after QE ended, no general inflation (which is usually associated with too-low interest rates), and the old chair of the fed saying your argument is nonsense.

Your response has been to declare that rates won't move anyway (wut), that we can only look at inflation in very specific sectors (wut, also at least one was just wrong), and that the chair of the fed doesn't count because you say so.

I will again suggest that you might want to be careful in the future before saying that people aren't capable of critical thinking.

The market is almost always wrong because of the credit cycle. Overindulge and oversell. Over and over and over again. Most people buy when its expensive and sell when its cheap. The fed has zero power to stop the credit cycle. So I don't see why anyone would much care what they say except for the fact that they want to make money off the movements in fed policy.

Seriously... buying $4 Trillion or so worth of bonds has priced them out of the market as a viable investment option for all but the banks who need them as collateral. Its like you need the term "priced out of the market" defined for you. Since you still obviously don't get it. You aren't correct, for your sake you should probably never, ever handle money.

 

[OverVolt]

I wouldn't expect major movements in bond rates. The fact that you think I would is what tells me you can't tell up from down.

I also wouldn't expect house prices to increase by much. Naturally... house prices would have fallen much worse than they did before stimulus. Its a miracle even if they stay flat. Considering that wages are stagnant this is only enabled by lower interest rates enabling people to buy "more house" on the same stretched monthly income.

Kudos to the banks to be honest because they were smart enough to restrain from liquidating houses during the worst of the crisis. Although I don't think it was due to being clever I just think they were terrified at how wrong they were to 'assume' house prices can never go down and thus it would be safe to lend to someone they know could never actually pay off the house.

 

[fskimospy]

When all else fails ignore the presented evidence, logical problems with your position, and expert opinion and simply repeat your original discredited premise.

You're full of shit and you know it. Just stop.

 

[OverVolt]

When all else fails ignore the presented evidence, logical problems with your position, and expert opinion and simply repeat your original discredited premise.

You're full of shit and you know it. Just stop.

Have fun losing your retirement.

 

[fskimospy]

Have fun losing your retirement.

A compelling and graceful argument, filled with facts as always.

You got called out for being full of shit, just accept it and move on.