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You are talking about the 1970's-1980's, not today. The fed could not even get the fed funds rate to 2.5% before crashing the stock market in late 2018. I do not know if we are going to have hyperinflation or not, but I do know that the fed could not raise rates like they did in the past to rein it in if it does occur.
I am also going to post an alternative viewpoint for everyone that you will not find in the mainstream media. I have followed this guy for years, and he has been the most accurate. He is the only guy that I follow who predicted Trump would win in 2016. I did not believe it myself and was shocked when he won. I only include Trump not to discuss politics, but to discuss accuracy in predictions.
Define “crashing the stock market.” Raising rates will induce some economic harm. There is no doubt about it. Volcker’s move in the 1980s created a recession, but it stopped runaway inflation. My point here is that if there is inflation that is exceeding what is healthy, The Fed can curb it.
Where I don’t agree with this guy’s assessment is that on one hand he says that all the money that is being printed is going in the hands of banks and corporations, and on the other he is saying that it will create runaway inflation. If the money doesn’t enter circulation, it doesn’t create inflation. 2008 proved that. When it sits in private equity bank accounts or on bank balance sheets as reserves, it doesn’t have near the inflationary power of cash in hands of people who are actually going to spend it.
Define “crashing the stock market.” Raising rates will induce some economic harm. There is no doubt about it. Volcker’s move in the 1980s created a recession, but it stopped runaway inflation. My point here is that if there is inflation that is exceeding what is healthy, The Fed can curb it.
Where I don’t agree with this guy’s assessment is that on one hand he says that all the money that is being printed is going in the hands of banks and corporations, and on the other he is saying that it will create runaway inflation. If the money doesn’t enter circulation, it doesn’t create inflation. 2008 proved that. When it sits in private equity bank accounts or on bank balance sheets as reserves, it doesn’t have near the inflationary power of cash in hands of people who are actually going to spend it.
In late 2018 the stock market started to crash and the fed had to lower the fed funds rate to stop the crash. I don't agree with everything Brandon says, but he is right more than he is wrong. My assessment would be this. I agree with what you posted regarding 2008. This time, the money is not only going to banks and corporations, but to the people directly through the stimulus and additional $600 a week unemployment. I suspect the end result on inflation will be different than 2008 for this reason.
In late 2018 the stock market started to crash and the fed had to lower the fed funds rate to stop the crash. I don't agree with everything Brandon says, but he is right more than he is wrong. My assessment would be this. I agree with what you posted regarding 2008. This time, the money is not only going to banks and corporations, but to the people directly through the stimulus and additional $600 a week unemployment. I suspect the end result on inflation will be different than 2008 for this reason.
I agree with that assessment as do most economists I’ve listened to. They project 5% at the top end. Not raging, out of control inflation and economic ruin that people in this thread are talking about.
The COVID-19 pandemic will be fully in the past by New Year's Day 2022. The economy will be pretty much recovered. Daily life will be pretty much indistinguishable from 2019 (with the exception of 2-3 years of new technology).
The COVID-19 pandemic will be fully in the past by New Year's Day 2022. The economy will be pretty much recovered. Daily life will be pretty much indistinguishable from 2019 (with the exception of 2-3 years of new technology).
Sorry but Covid has put a permanent stop to the euphoric drunken debt party of 2019. Those "good ol' days" are never coming back.
Deflation would totally destroy the system, which is why they'll never allow it.
Ultimately though the economic forces really want there to be a deflation. So it will happen and nothing the central banks will do will be able to stop it.
This is what will happen: hyperinflation in nominal terms, hyper-deflation in real terms.
Demand needs to be stimulated right now.
Look at the tens of millions of jobs lost. That is classic demand destruction. Tens of millions of people have little income to spend, and no idea when or if they'll work again. With the exception of certain products, there isn't a supply problem right now.
What infuriates me about the whole shutdown situation was that the government effectively terminated the livelihoods of tens of millions of people, then won't effectively backstop their wages. A person may not see unemployment for weeks or even months when the need for income is immediate. The one-time $1,200 stimulus is completely inadequate for someone in a HCOL area with bills to pay. After July, the $600/week unemployment enhancement from the CARES Act ends.
If the government is going to take away someone's ability to make a living, you better damn sure you make them whole. There's really not even been an illusion of that. They've forced businesses to close, likely consigned millions to bankruptcy and poverty, and destroyed confidence for who knows how long. Virtually all of the elected officials of both parties and a big chunk of the unelected bureaucracy needs to be replaced. The government has so thoroughly dropped the ball that we need totally new people. Start over at this point.
Things are going to get ugly later in the summer if we don't get people back to work ASAP or start throwing money at people in a meaningful fashion.
The COVID-19 pandemic will be fully in the past by New Year's Day 2022. The economy will be pretty much recovered. Daily life will be pretty much indistinguishable from 2019 (with the exception of 2-3 years of new technology).
Quote:
Originally Posted by Serious Conversation
Demand needs to be stimulated right now.
Look at the tens of millions of jobs lost. That is classic demand destruction. Tens of millions of people have little income to spend, and no idea when or if they'll work again. With the exception of certain products, there isn't a supply problem right now.
What infuriates me about the whole shutdown situation was that the government effectively terminated the livelihoods of tens of millions of people, then won't effectively backstop their wages. A person may not see unemployment for weeks or even months when the need for income is immediate. The one-time $1,200 stimulus is completely inadequate for someone in a HCOL area with bills to pay. After July, the $600/week unemployment enhancement from the CARES Act ends.
If the government is going to take away someone's ability to make a living, you better damn sure you make them whole. There's really not even been an illusion of that. They've forced businesses to close, likely consigned millions to bankruptcy and poverty, and destroyed confidence for who knows how long. Virtually all of the elected officials of both parties and a big chunk of the unelected bureaucracy needs to be replaced. The government has so thoroughly dropped the ball that we need totally new people. Start over at this point.
Things are going to get ugly later in the summer if we don't get people back to work ASAP or start throwing money at people in a meaningful fashion.
The problem is the government can never support the people. The people support the government, not the other way around.
If we had a sound economic system with sound money that encouraged prudence and conservation rather than debt fueled consumerism and profligacy, it would be no big deal for individuals to go a few months with no paycheck, or for businesses to go a few months without revenue. It's because of the government and Federal Reserve that our financial system is so sick that its on the verge of collapse after a couple months of slowed activity.
The government has no money to give out. Whatever funds the government has, it must get by taxing the people, either directly or indirectly. Indirect taxation (inflation ie "printing money") is in the long run a far more expensive way to pay for government.
The problem is the government can never support the people. The people support the government, not the other way around.
If we had a sound economic system with sound money that encouraged prudence and conservation rather than debt fueled consumerism and profligacy, it would be no big deal for individuals to go a few months with no paycheck, or for businesses to go a few months without revenue. It's because of the government and Federal Reserve that our financial system is so sick that its on the verge of collapse after a couple months of slowed activity.
The government has no money to give out. Whatever funds the government has, it must get by taxing the people, either directly or indirectly. Indirect taxation (inflation ie "printing money") is in the long run a far more expensive way to pay for government.
“Can never” is not accurate. “Indefinitely” is accurate. A temporary program is perfectly feasible.
“Can never” is not accurate. “Indefinitely” is accurate. A temporary program is perfectly feasible.
As I said before, the government has nothing it doesn't first take from the people. The most helpful thing for the government to do in a crisis is cut spending and bureaucracy, reduce the burden of government on the people and the economy.
“Can never” is not accurate. “Indefinitely” is accurate. A temporary program is perfectly feasible.
Is it?
I wonder how many businesses are going to realize they can still turn a profit with 20-50% of their former staff working remotely and divesting in their commercial real estate assets? If that ends up being the case, a lot of the jobs lost are never coming back.
My wife's workplace laid off about 60% of its staff. They're looking to bring back about a third of those laid off, about 20 out of the 60%, when they re-open. However, it's likely they never bring back the entirety of the old corps. The general plan is to work the remaining staff harder. I suspect this is what a lot of firms are going to do.
The markets may recover, but this is going to be a "jobless" recovery. I suspect that there will be more and more calls for a UBI and a New Deal- government-funded jobs program, because the private sector is going to divest in jobs. The service sector was backstopping the gross inequality that existed in the economy in the BeforeTimes. To the extent you could get a job easily, restaurants were where it was at. Now the service sector is basically destroyed.
Last edited by redguard57; 05-21-2020 at 11:18 AM..
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