I think we are heading into an inflationary super cycle ...

[KnightWhoSaysNit]

Like the one in the 1970s / 80s, except this one will be much worse, and probably bring down the western economies.

Jerome Powell last week let the cat out of the bag in a very subtle way. Everyone has wanted to know what "transitory inflation" means and he let us know last week. It means a step change in inflation followed by his target average 2% inflation. It doesn't mean the target average, to include the last few years, will be 2% when included with the pandemic inflation. This lets the central bankers do whatever they want, such as printing vast amounts of money.

The problem is debt, both public and private. To keep economies moving this must be inflated away. This will screw bond holders, bank depositors, people on pensions, even people with incomes tied to the CPI.

Inflation will not be controllable moving forward. This is because this printed money is not being printed in concert with increases in productivity. It is in fact money printed to cover previous debt. So it will spiral out of control.

The election of Democrats has set this in stone, but Republican administrations are also guilty, mainly by spending to facilitate world police work. This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless. If the market crashes the central banks will be forced to double down and print even more money.

Europe has shown the path with its ultra-low interest rates. Investors had an alternative over the last decade -- the USA -- but the USA is now also turning to socialism while its budget deficits are even worse.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

I'd love to be wrong. Someone convince me that I am wrong, but provide a convincing argument. The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't. It's even exacerbated the problem with open borders and attacking our energy production. The result will be inflation, which we have seen become ignited most recently in a big way.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

So all cash is being forced into the stock markets. Some is going into bonds because the markets are already exceedingly flush with cash by historical norms, and in practical terms, rates can only decrease, given the debt.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes. The middle class will also get hurt, as it is really the most productive part of our economy.

 

[ForesterGump]

Modern Monetary Theory says you can print as much money as you like. It brings in full employment by all the jobs created with the excess cash that govt can provide. You can pay for the Green New Deal, give everyone a monthly income, give everyone housing, etc. No need to worry, since we only owe that money to ourselves. No need to worry about inflation since wages will increase to match it, and they can just print more to offset the increase for those that are on fixed income. It's just like magic.

Note: I didn't say I believed it, but it seems like this is the basis of policy, and has been for several years.

 

[PaoliLion]

Like the one in the 1970s / 80s, except this one will be much worse, and probably bring down the western economies.

Jerome Powell last week let the cat out of the bag in a very subtle way. Everyone has wanted to know what "transitory inflation" means and he let us know last week. It means a step change in inflation followed by his target average 2% inflation. It doesn't mean the target average, to include the last few years, will be 2% when included with the pandemic inflation. This lets the central bankers do whatever they want, such as printing vast amounts of money.

The problem is debt, both public and private. To keep economies moving this must be inflated away. This will screw bond holders, bank depositors, people on pensions, even people with incomes tied to the CPI.

Inflation will not be controllable moving forward. This is because this printed money is not being printed in concert with increases in productivity. It is in fact money printed to cover previous debt. So it will spiral out of control.

The election of Democrats has set this in stone, but Republican administrations are also guilty, mainly by spending to facilitate world police work. This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless. If the market crashes the central banks will be forced to double down and print even more money.

Europe has shown the path with its ultra-low interest rates. Investors had an alternative over the last decade -- the USA -- but the USA is now also turning to socialism while its budget deficits are even worse.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

I'd love to be wrong. Someone convince me that I am wrong, but provide a convincing argument. The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't. It's even exacerbated the problem with open borders and attacking our energy production. The result will be inflation, which we have seen become ignited most recently in a big way.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

So all cash is being forced into the stock markets. Some is going into bonds because the markets are already exceedingly flush with cash by historical norms, and in practical terms, rates can only decrease, given the debt.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes. The middle class will also get hurt, as it is really the most productive part of our economy.

The root cause of the inflation is sectors that experienced a boom as we came-out of lock down. Travel, Gas, etc. What “transitory” means is that spending and supply will normalize after some time. Do we have a problem with deficits - yes. The Baby boomers are going to limp to their death bed, leaving the next generations will a ton of debt. The democrats are the only party with a plan to narrow or eliminate deficits.

 

[NJPSU]

Like the one in the 1970s / 80s, except this one will be much worse, and probably bring down the western economies.

Jerome Powell last week let the cat out of the bag in a very subtle way. Everyone has wanted to know what "transitory inflation" means and he let us know last week. It means a step change in inflation followed by his target average 2% inflation. It doesn't mean the target average, to include the last few years, will be 2% when included with the pandemic inflation. This lets the central bankers do whatever they want, such as printing vast amounts of money.

The problem is debt, both public and private. To keep economies moving this must be inflated away. This will screw bond holders, bank depositors, people on pensions, even people with incomes tied to the CPI.

Inflation will not be controllable moving forward. This is because this printed money is not being printed in concert with increases in productivity. It is in fact money printed to cover previous debt. So it will spiral out of control.

The election of Democrats has set this in stone, but Republican administrations are also guilty, mainly by spending to facilitate world police work. This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless. If the market crashes the central banks will be forced to double down and print even more money.

Europe has shown the path with its ultra-low interest rates. Investors had an alternative over the last decade -- the USA -- but the USA is now also turning to socialism while its budget deficits are even worse.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

I'd love to be wrong. Someone convince me that I am wrong, but provide a convincing argument. The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't. It's even exacerbated the problem with open borders and attacking our energy production. The result will be inflation, which we have seen become ignited most recently in a big way.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

So all cash is being forced into the stock markets. Some is going into bonds because the markets are already exceedingly flush with cash by historical norms, and in practical terms, rates can only decrease, given the debt.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes. The middle class will also get hurt, as it is really the most productive part of our economy.

Your blind spot is how long the can will be kicked down the road before your Armageddon scenario plays out.

Also if you own assets you will still own those assets if some type of reset occurs. Guys like Cosmos think the way to protect yourself is to not hold any assets other than cash(the one the government is purposely trying to devalue).

Go live your life and stop worrying so much. If you are wealthy and own assets you will survive.

 

[NJPSU]

My favorite activities cost little or no money. Nature, hiking, gardening, reading, following the markets, watching sports on television.

When you have no debt, plenty of assets, and hobbies that cost little money, you will sleep well at night.

 

[m.knox]

The root cause of the inflation is sectors that experienced a boom as we came-out of lock down. Travel, Gas, etc. What “transitory” means is that spending and supply will normalize after some time. Do we have a problem with deficits - yes. The Baby boomers are going to limp to their death bed, leaving the next generations will a ton of debt. The democrats are the only party with a plan to narrow or eliminate deficits.

LOL.... You really aren't paying attention.

It will take several years to work off the backlog.... Yeah, backlog... Manufacturers have a years worth of backlog and they can't get basic raw materials to chip away at it. They are going backwards.

 

[m.knox]

My favorite activities cost little or no money. Nature, hiking, gardening, reading, following the markets, watching sports on television.

When you have no debt, plenty of assets, and hobbies that cost little money, you will sleep well at night.

Yes, we know you are cheap. Using coupons at Burger King makes you sleep well at night.

 

[LionDeNittany]

My favorite activities cost little or no money. Nature, hiking, gardening, reading, following the markets, watching sports on television.

When you have no debt, plenty of assets, and hobbies that cost little money, you will sleep well at night.

Noone asked how you sleep you self centered twit.

Other people care about future generations and our children.

Many in America are not as selfish as you.

LdN

 

[m.knox]

Noone asked how you sleep you self centered twit.

Other people care about future generations and our children.

Many in America are not as selfish as you.

LdN

LOL... I just posted a thread commenting on the self centered nature of liberals.....

 

[KnightWhoSaysNit]

The "root cause" of inflation is too much money hitting scarce assets. It isn't just travel and gas. It's everything people need -- food, energy, and housing. And energy goes into the production of everything.

Notice that Powell never mentions food inflation -- the worst type of inflation.

Now here is an even bigger kicker. Look at the geo-political situation.

Afghanistan has just fallen and look who is stepping in -- China. The entire Asian Continent, including the "bought" African continent, will become like the old Soviet Union. Except China will call the shots, because it controls the supply chain.

Now imagine the effect on inflation when China's "warfare" involves cutting off the supply chain while we do not have the capacity to produce those products. Forget roads and bridges. We will not have basic essentials.

Inflation will be rampant until production can be established, and that will mean many baby boomers coming out of retirement, especially the ones that just entered retirement thinking they had adequate savings.

Old people will be forced to live with their children, or kicked to the street after working their whole lives and raising families. It's going to get really, really ugly. NJ and Paoli can be at peace with this I guess because they are "owners." I think it will be inhumane.

As I wrote, both political parties are guilty, but the current party is delusional on top of incompetent.

 

[bdgan]

Like the one in the 1970s / 80s, except this one will be much worse, and probably bring down the western economies.

Jerome Powell last week let the cat out of the bag in a very subtle way. Everyone has wanted to know what "transitory inflation" means and he let us know last week. It means a step change in inflation followed by his target average 2% inflation. It doesn't mean the target average, to include the last few years, will be 2% when included with the pandemic inflation. This lets the central bankers do whatever they want, such as printing vast amounts of money.

The problem is debt, both public and private. To keep economies moving this must be inflated away. This will screw bond holders, bank depositors, people on pensions, even people with incomes tied to the CPI.

Inflation will not be controllable moving forward. This is because this printed money is not being printed in concert with increases in productivity. It is in fact money printed to cover previous debt. So it will spiral out of control.

The election of Democrats has set this in stone, but Republican administrations are also guilty, mainly by spending to facilitate world police work. This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless. If the market crashes the central banks will be forced to double down and print even more money.

Europe has shown the path with its ultra-low interest rates. Investors had an alternative over the last decade -- the USA -- but the USA is now also turning to socialism while its budget deficits are even worse.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

I'd love to be wrong. Someone convince me that I am wrong, but provide a convincing argument. The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't. It's even exacerbated the problem with open borders and attacking our energy production. The result will be inflation, which we have seen become ignited most recently in a big way.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

So all cash is being forced into the stock markets. Some is going into bonds because the markets are already exceedingly flush with cash by historical norms, and in practical terms, rates can only decrease, given the debt.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes. The middle class will also get hurt, as it is really the most productive part of our economy.

I think part of the inflation is due to pent up demand and restarting supply chains from the pandemic. I think it will settle down a bit but it won't go back to sub 2% like it was pre pandemic. Maybe more like 3.5%.

Of course this all changes when the Fed raises interest rates and stops buying bonds (much less starts selling off their balance sheet). That's when the economy falters and stock prices decline. That's also when the Fed will be between a rock and a hard place. They want a good economy and low inflation but they're unlikely to have both.

 

[KnightWhoSaysNit]

Noone asked how you sleep you self centered twit.

Other people care about future generations and our children.

Many in America are not as selfish as you.

LdN

This is where people are wrong. It will not be "our children."

Our children will survive a tough time but will have time to recover. This is happening very quickly, because central banks have "learned" from the past, and we have a pandemic.

The people who will get crushed are the old people who think they can live on the earnings from savings -- even if invested. Real earnings will be zero or maybe even negative, after inflation.

The CPI is bogus in the base case. Notice that even the CPI is now in the same ballpark as the "increase" in GDP. This will only get worse with more public spending versus private enterprise.

 

[KnightWhoSaysNit]

I think part of the inflation is due to pent up demand and restarting supply chains from the pandemic. I think it will settle down a bit but it won't go back to sub 2% like it was pre pandemic. Maybe more like 3.5%.

Of course this all changes when the Fed raises interest rates and stops buying bonds (much less starts selling off their balance sheet). That's when the economy falters and stock prices decline. That's also when the Fed will be between a rock and a hard place. They want a good economy and low inflation but they're unlikely to have both.

China controls the supply chain, but now has a middle class to consume its production capacity. It is against our ideology, or what it used to be. End of story. We cannot even get face masks.

Powell (privately) answers to Yellen who answers to Congress.

The Fed cannot raise interest rates sufficient to curb inflation because our debt is out of control. Where are we now, 130% of GDP ??? And rising rapidly as people retire and a less productive, less educated, less skilled generation takes over. Education standards are pitiful.

This can only be reversed with a balanced budget, but that's impossible now (without inflation) now that the manufacturing production capacity is in China.

 

[PaoliLion]

LOL.... You really aren't paying attention.

It will take several years to work off the backlog.... Yeah, backlog... Manufacturers have a years worth of backlog and they can't get basic raw materials to chip away at it. They are going backwards.

Better start reversing the trade constraints that Trump put in place

 

[NJPSU]

Noone asked how you sleep you self centered twit.

Other people care about future generations and our children.

Many in America are not as selfish as you.

LdN

Wow…Grumpy this morning.

Ever heard of lead by example? Follow my model and you will be fine too.

 

[bdgan]

China controls the supply chain, but now has a middle class to consume its production capacity. It is against our ideology, or what it used to be. End of story. We cannot even get face masks.

Powell (privately) answers to Yellen who answers to Congress.

The Fed cannot raise interest rates sufficient to curb inflation because our debt is out of control. Where are we now, 130% of GDP ??? And rising rapidly as people retire and a less productive, less educated, less skilled generation takes over. Education standards are pitiful.

This can only be reversed with a balanced budget, but that's impossible now (without inflation) now that the manufacturing production capacity is in China.

I agree with you until your last sentence. A lot of the inflation we currently see is due to tons of money being injected into the economy. Thousands in stimulus payments to people who didn't lose jobs. Thousands for each kid. Eliminating the requirement to pay rent. Student loan deferral and eventually forgiveness. 2.5% interest rates caused a run up in demand for housing, home improvements, autos, etc. Hundreds of billions for states and schools. Paying people more not to work. Once that stuff runs out the demand will drop and that will be deflationary. When the Fed stops buying bonds and hikes interest rates that will reduce demand even further.

I think the economy slows quite a bit when all of this happens.

 

[HartfordLlion]

The root cause of the inflation is sectors that experienced a boom as we came-out of lock down. Travel, Gas, etc. What “transitory” means is that spending and supply will normalize after some time. Do we have a problem with deficits - yes. The Baby boomers are going to limp to their death bed, leaving the next generations will a ton of debt. The democrats are the only party with a plan to narrow or eliminate deficits.

LOL. Blame the Boomers. That is one I have heard in awhile. You know why??? Millennials, XYZ gens don't really care about deficits, they only care about deficits when it isn't spend on them. And Democrats??? I've seen two that seem to care about deficits, and they are the two progressive Dems hate because they are standing in the way of their massive spending proposals in the Senate.

 

[bdgan]

Ever heard of lead by example? Follow my model and you will be fine too.

You have always supporting taxing the rich because they save instead of spending their money back into the economy. You keep saying that you're saving. I assume you think that means you should pay more in tax.

My point is you don't even follow your own example.

 

[HartfordLlion]

I think part of the inflation is due to pent up demand and restarting supply chains from the pandemic. I think it will settle down a bit but it won't go back to sub 2% like it was pre pandemic. Maybe more like 3.5%.

Of course this all changes when the Fed raises interest rates and stops buying bonds (much less starts selling off their balance sheet). That's when the economy falters and stock prices decline. That's also when the Fed will be between a rock and a hard place. They want a good economy and low inflation but they're unlikely to have both.

The Fed is already in a hard place. The M2 money supply which is a proxy for liquidity in the economy has gone negative, liquidity is drying up and they have even began to taper which will dry up liquidity.

 

[NJPSU]

We as humans need to examine what it means to be happy. American’s don’t need a new iPhone every 9 months and $50k pickup truck that gets 12 mpg. Theres so much fat in the typical American’s budget. A little haircut might do them good.

It really costs next to nothing to feed yourself in an emergency situation. Maybe the American consumer needs a nice reset.

 

[bdgan]

I've seen two that seem to care about deficits, and they are the two progressive Dems hate because they are standing in the way of their massive spending proposals in the Senate.

They only care a little bit about deficits. They voted for $1.9 trillion to bail out states, pay off teachers, and pay people not to work. Then they voted for $1.2 trillion infrastructure. Their next show about caring for deficits will be when they refuse to vote for Biden's $3.5 trillion package but agree to support a $2.5 trillion package. That will be $5.6 trillion in less than 8 months.

It's like saying you're frugal because you wanted a Bugatti but settled for a Ferrari in order to save money.

 

[NJPSU]

By the way Knight you are my favorite right leaning poster. I enjoy your economic commentary.

 

[KnightWhoSaysNit]

The Fed is already in a hard place. The M2 money supply which is a proxy for liquidity in the economy has gone negative, liquidity is drying up and they have even began to taper which will dry up liquidity.

So, where is all the money that the Fed printed (or "keypunched") when it bought the bonds that the Treasury issues?

Is it in a bad place now? China?

 

[LMTLION]

LOL. Blame the Boomers. That is one I have heard in awhile. You know why??? Millennials, XYZ gens don't really care about deficits, they only care about deficits when it isn't spend on them. And Democrats??? I've seen two that seem to care about deficits, and they are the two progressive Dems hate because they are standing in the way of their massive spending proposals in the Senate.

The boomers and even the prior generations took us off the gold standard throughout the 20th century and gradually farmed out our manufacturing base to Asia. Gen X, Millennials, etc inherited this mess. Unnamed generations in the future will have to fix it.

 

[Jerry]

Like the one in the 1970s / 80s, except this one will be much worse, and probably bring down the western economies.

Jerome Powell last week let the cat out of the bag in a very subtle way. Everyone has wanted to know what "transitory inflation" means and he let us know last week. It means a step change in inflation followed by his target average 2% inflation. It doesn't mean the target average, to include the last few years, will be 2% when included with the pandemic inflation. This lets the central bankers do whatever they want, such as printing vast amounts of money.

The problem is debt, both public and private. To keep economies moving this must be inflated away. This will screw bond holders, bank depositors, people on pensions, even people with incomes tied to the CPI.

Inflation will not be controllable moving forward. This is because this printed money is not being printed in concert with increases in productivity. It is in fact money printed to cover previous debt. So it will spiral out of control.

The election of Democrats has set this in stone, but Republican administrations are also guilty, mainly by spending to facilitate world police work. This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless. If the market crashes the central banks will be forced to double down and print even more money.

Europe has shown the path with its ultra-low interest rates. Investors had an alternative over the last decade -- the USA -- but the USA is now also turning to socialism while its budget deficits are even worse.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

I'd love to be wrong. Someone convince me that I am wrong, but provide a convincing argument. The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't. It's even exacerbated the problem with open borders and attacking our energy production. The result will be inflation, which we have seen become ignited most recently in a big way.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

So all cash is being forced into the stock markets. Some is going into bonds because the markets are already exceedingly flush with cash by historical norms, and in practical terms, rates can only decrease, given the debt.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes. The middle class will also get hurt, as it is really the most productive part of our economy.

Knight, I'm not as versed in economics and finance as you, NJ, and others here, but seat-of-the-pants common sense says that when the government floods out trillions of dollars in deficit spending even while the economy is heating up, continues to purchase assets in Treasuries and mortgage bonds (despite a red-hot housing market) to the tune of $120 billion a month, and artificially suppresses interest rates for the benefit of privileged investors at the expense of the majority without the means to be winners in the new Ruling Class economy...the result will be...wait for it...big-time INFLATION!!

Huge surprise!

The government has knowingly and intentionally rigged the markets and the economy against the Average Citizen, in the process vastly increasing the gap between Haves and Have-Nots. The result will be disaster. It's not a question of if...only when and how.

All this has to be understood in the context of the Big Picture, which is one of decadence and decline.

The people who brought you the Afghanistan implosion are now running our government, culture, and economy. Before they're done, you're going to see much worse than run-away inflation.

 

[rumble_lion]

Modern Monetary Theory says you can print as much money as you like. It brings in full employment by all the jobs created with the excess cash that govt can provide. You can pay for the Green New Deal, give everyone a monthly income, give everyone housing, etc. No need to worry, since we only owe that money to ourselves. No need to worry about inflation since wages will increase to match it, and they can just print more to offset the increase for those that are on fixed income. It's just like magic.

Note: I didn't say I believed it, but it seems like this is the basis of policy, and has been for several years.

That is completely wrong. Please stop posting garbage about stuff you have no idea about.

According to MMT, the only limit that the government has when it comes to spending is the availability of real resources, like workers, construction supplies, etc. When government spending is too great with respect to the resources available, inflation can surge if decision-makers are not careful.​

 

[NJPSU]

Knight, I'm not as versed in economics and finance as you, NJ, and others here, but seat-of-the-pants common sense says that when the government floods out trillions of dollars in deficit spending even while the economy is heating up, continues to purchase assets in Treasuries and mortgage bonds (despite a red-hot housing market) to the tune of $120 billion a month, and artificially suppresses interest rates for the benefit of privileged investors at the expense of the majority without the means to be winners in the new Ruling Class economy...the result will be...wait for it...big-time INFLATION!!

Huge surprise!

The government has knowingly and intentionally rigged the markets and the economy against the Average Citizen, in the process vastly increasing the gap between Haves and Have-Nots. The result will be disaster. It's not a question of if...only when and how.

All this has to be understood in the context of the Big Picture, which is one of decadence and decline.

The people who brought you the Afghanistan implosion are now running our government, culture, and economy. Before they're done, you're going to see much worse than run-away inflation.

Trump used to beg the Fed to do more of the policies you just railed against.

Of course you were silent then.

 

[rumble_lion]

Knight, I'm not as versed in economics and finance as you, NJ, and others here, but seat-of-the-pants common sense says that when the government floods out trillions of dollars in deficit spending even while the economy is heating up, continues to purchase assets in Treasuries and mortgage bonds (despite a red-hot housing market) to the tune of $120 billion a month, and artificially suppresses interest rates for the benefit of privileged investors at the expense of the majority without the means to be winners in the new Ruling Class economy...the result will be...wait for it...big-time INFLATION!!

Huge surprise!

The government has knowingly and intentionally rigged the markets and the economy against the Average Citizen, in the process vastly increasing the gap between Haves and Have-Nots. The result will be disaster. It's not a question of if...only when and how.

All this has to be understood in the context of the Big Picture, which is one of decadence and decline.

The people who brought you the Afghanistan implosion are now running our government, culture, and economy. Before they're done, you're going to see much worse than run-away inflation.

to the tune of $120 billion a month, and artificially suppresses interest rates for the benefit of privileged investors at the expense of the majority without the means to be winners in the new Ruling Class economy...the result will be...wait for it...big-time INFLATION!!

You think we are going to have huge inflation and super low interest rates? Well I must say the will be interesting to see......

What we are seeing right now is large disruption in production due to trying to restart very long and complex supply chains that were shut down by covid. Plus in the US we decided to separate tens of millions of people from their jobs for 15 months. Then we though we could flip the switch and get all those people back to their jobs. Ooops that didn't work out so well. Who could could seen that coming?

 

[meanmiJ01]

My favorite activities cost little or no money. Nature, hiking, gardening, reading, following the markets, watching sports on television.

When you have no debt, plenty of assets, and hobbies that cost little money, you will sleep well at night.

So more and more by your lefty Ilk you are rich…. Time to tax you more because you have been too fortunate.

 

[KnightWhoSaysNit]

The boomers and even the prior generations took us off the gold standard throughout the 20th century and gradually farmed out our manufacturing base to Asia. Gen X, Millennials, etc inherited this mess. Unnamed generations in the future will have to fix it.

They did not inherit anything yet.

The boomers are still alive and will be around for a long time, certainly long enough to have their savings and retirement checks inflated away or cut.

 

[junior1]

Like the one in the 1970s / 80s, except this one will be much worse, and probably bring down the western economies.

Jerome Powell last week let the cat out of the bag in a very subtle way. Everyone has wanted to know what "transitory inflation" means and he let us know last week. It means a step change in inflation followed by his target average 2% inflation. It doesn't mean the target average, to include the last few years, will be 2% when included with the pandemic inflation. This lets the central bankers do whatever they want, such as printing vast amounts of money.

The problem is debt, both public and private. To keep economies moving this must be inflated away. This will screw bond holders, bank depositors, people on pensions, even people with incomes tied to the CPI.

Inflation will not be controllable moving forward. This is because this printed money is not being printed in concert with increases in productivity. It is in fact money printed to cover previous debt. So it will spiral out of control.

The election of Democrats has set this in stone, but Republican administrations are also guilty, mainly by spending to facilitate world police work. This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless. If the market crashes the central banks will be forced to double down and print even more money.

Europe has shown the path with its ultra-low interest rates. Investors had an alternative over the last decade -- the USA -- but the USA is now also turning to socialism while its budget deficits are even worse.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

I'd love to be wrong. Someone convince me that I am wrong, but provide a convincing argument. The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't. It's even exacerbated the problem with open borders and attacking our energy production. The result will be inflation, which we have seen become ignited most recently in a big way.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

So all cash is being forced into the stock markets. Some is going into bonds because the markets are already exceedingly flush with cash by historical norms, and in practical terms, rates can only decrease, given the debt.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes. The middle class will also get hurt, as it is really the most productive part of our economy.

Paul Krugman in his Sunday article says there is nothing to fear with inflation!
He's never been wrong has he?

 

[junior1]

to the tune of $120 billion a month, and artificially suppresses interest rates for the benefit of privileged investors at the expense of the majority without the means to be winners in the new Ruling Class economy...the result will be...wait for it...big-time INFLATION!!

You think we are going to have huge inflation and super low interest rates? Well I must say the will be interesting to see......

What we are seeing right now is large disruption in production due to trying to restart very long and complex supply chains that were shut down by covid. Plus in the US we decided to separate tens of millions of people from their jobs for 15 months. Then we though we could flip the switch and get all those people back to their jobs. Ooops that didn't work out so well. Who could could seen that coming?

I would submit that providing funding to people not working might contribute to the problem of getting people back to work

 

[indynittany]

The Fed is already in a hard place. The M2 money supply which is a proxy for liquidity in the economy has gone negative, liquidity is drying up and they have even began to taper which will dry up liquidity.

A hard place of its own creation!

 

[rumble_lion]

I would submit that providing funding to people not working might contribute to the problem of getting people back to work

Any company that really needs employees can simply offer more money. It's not rocket science.

 

[m.knox]

Better start reversing the trade constraints that Trump put in place

Actually, that won't help either. There simply isn't enough capacity, and I doubt any business will add some given the inflationary environment.

 

[Cosmos]

This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless.

Message for NJPSU. Stop gloating about your portfolio gains. It only sets you up for a steeper fall.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

As you know the government officially defaults when it can no longer service its debt (i.e., pay the interest on borrowing). Forget about us ever reducing the fiscal deficit. So default is triggered when investors other than the Treasury stop buying bonds at prevailing interest rates. When foreign and private investors demand a higher ROI and get it elsewhere. Once investors find an alternative to US Treasuries it's lights out! Life's greatest mystery is who will that be. China? That's like getting into bed with the syndicate. Once in you never get out. Suffice it to say we are still the cleanest shirt in a dirty load of laundry. I believe Jim Cramer said it during the mortgage crisis.

The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't.

I disagree. Perhaps not raising income taxes so much as finding alternative sources, such as taxing Net Worth. I know, it requires an overhaul of the IRS. But for real estate investors the value of their holdings is readily available at the local taxing authority, so the feds taxing real estate is low-hanging fruit. Lookout those of you who live in SALT states. I can't fathom how the feds can avoid raising taxes on capital gains despite the intensive lobbying efforts against it. Congress is facing the River Rubicon on that one.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

I agree. And our indoctrination err, education system only exacerbates the situation by churning out product that knows only CRT. China is perfectly content with it. The flag of the PRC will be the first on Mars.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

It's a fallacy, is it not. Admittedly, I'm long-in-the-tooth and an accountant by trade but from what I remember from my econ classes is you can have one or the other.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

I'm not sure our productivity was maxed out under Trump. Please explain.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes.

Nope. Everybody's going to pay. It's just that some have further to fall than others. The majority of Americans are already there. Washington, Wall Street and Silicon Valley just doesn't acknowledge them. How do you suppose a populist president, who's not exactly the most effervescent person in the world, got elected in 2016. That's a rhetorical question.

The root cause of the inflation is sectors that experienced a boom as we came-out of lock down. Travel, Gas, etc. What “transitory” means is that spending and supply will normalize after some time. Do we have a problem with deficits - yes.

At least you acknowledge the hospitality and leisure industry is overleveraged. Newsflash: it's big enough to bring down the economy because we don't make anything anymore. So I'd watch the transitory part.

The Baby boomers are going to limp to their death bed, leaving the next generations will a ton of debt.

Not hardly. The boomers are going to blowout their kids' inheritance. They're going to party like it's 1999!

The democrats are the only party with a plan to narrow or eliminate deficits.

You've got to be $hitting me! Are you on mushrooms or something.

Also if you own assets you will still own those assets if some type of reset occurs. Guys like Cosmos think the way to protect yourself is to not hold any assets other than cash(the one the government is purposely trying to devalue).

You've got to watch that Cosmos, fella. He might be up to something.

Funny thing about your stock portfolio. It's denominated in dollars. You just have further to fall. Get a parachute.

Go live your life and stop worrying so much. If you are wealthy and own assets you will survive.

I agree wholeheartedly. Live life to its fullest because the train we're riding is going to derail.

Yes, we know you are cheap. Using coupons at Burger King makes you sleep well at night.

For the life of me I don't know why that's an embarrassment. I "clip" coupons all the time. Even as a young man in my prime earning years. Perhaps it's the Scot in me coming out, I dunno. And who doesn't like bragging about getting a deal. Anyone who doesn't is being disingenuous.

Notice that Powell never mentions food inflation -- the worst type of inflation.

Yep. It would be political suicide. Even though the Chairman of the Federal Reserve is supposed to be apolitical.

Afghanistan has just fallen and look who is stepping in -- China. The entire Asian Continent, including the "bought" African continent, will become like the old Soviet Union. Except China will call the shots, because it controls the supply chain.

China has to step into Afghanistan. Read: the Uyghurs. It's not like they have a choice. But I agree with your sentiments on the supply chain.

Now imagine the effect on inflation when China's "warfare" involves cutting off the supply chain while we do not have the capacity to produce those products. Forget roads and bridges. We will not have basic essentials.

And that warfare will begin when our consumer can no longer afford to buy their product. Then there will be a fire sale of US Treasuries as they dump them. Yes, we can forget about infrastructure. I envision the Balkans. We'll be organized into tribes, occupying regions and fighting for what natural resources are left. The Great Lakes will have the upper hand due to the fresh water supply. Much of the southwest will be in deep kimchee. Anyway, I plan on becoming a highwayman. I've been a prepper for years now so I'm better prepared than most.

Old people will be forced to live with their children, or kicked to the street after working their whole lives and raising families. It's going to get really, really ugly. NJ and Paoli can be at peace with this I guess because they are "owners."

How's that going to work when children are already living with their parents. But to your point, there's going to be an abrupt reset to out standard of living. NJ and Paoli will hardly be at piece as they rush to mitigate the hemorrhaging. So long as they're denominated in dollars it is so.

Of course this all changes when the Fed raises interest rates and stops buying bonds (much less starts selling off their balance sheet). That's when the economy falters and stock prices decline.

Exactly! It's all about debt-servicing. At the first inkling the Fed can't tame rates it's over with.

Powell (privately) answers to Yellen who answers to Congress.

Really? I thought the Chairman of the Federal Reserve answers to bankers. Now I remember Hank"Crash" Paulson on his knees before Pelosi but he was Treasury Secretary not Fed Chair.

The Fed cannot raise interest rates sufficient to curb inflation because our debt is out of control. Where are we now, 130% of GDP ??? And rising rapidly as people retire and a less productive, less educated, less skilled generation takes over. Education standards are pitiful.

It's at WWII levels and we got it back under control. How. By becoming the world's factory. We converted from making tanks and planes to consumer product for export. Back then you didn't need a college degree to work the assembly line; in fact, most assembly line workers made more than teachers. Also back then we had education standards. No coincidence that it began to change starting October 19, 1979.

Better start reversing the trade constraints that Trump put in place

Why would you cutoff your nose to spite your face. Oh, that's right. Because of TDS!

LOL. Blame the Boomers. That is one I have heard in awhile. You know why??? Millennials, XYZ gens don't really care about deficits, they only care about deficits when it isn't spend on them.

Yep. Young people have pretty much given up on ever accumulating the wealth that boomers have. Just like they don't think Social Security will be there for them. So why not live in the moment. Moreover, they don't seek monetary reward. They seek fulfillment. It's a different mindset.

We as humans need to examine what it means to be happy. American’s don’t need a new iPhone every 9 months and $50k pickup truck that gets 12 mpg. Theres so much fat in the typical American’s budget. A little haircut might do them good.

I could not agree more with you, NJ. Only what we're heading towards is not a little haircut. We can agree an economic reset is long overdue. The longer it's delayed the more severe it will be.

It's like saying you're frugal because you wanted a Bugatti but settled for a Ferrari in order to save money.

Well said!

What we are seeing right now is large disruption in production due to trying to restart very long and complex supply chains that were shut down by covid.

I don't know about that. I do the shopping for my family. While I see higher prices across-the-board I don't see empty shelves, like we had n the winter of 2020. Even lumber has normalized relatively speaking. Chips are still a problem. So what supply chains beside labor?

 

[bdgan]

Knight, I'm not as versed in economics and finance as you, NJ, and others here, but seat-of-the-pants common sense says that when the government floods out trillions of dollars in deficit spending even while the economy is heating up, continues to purchase assets in Treasuries and mortgage bonds (despite a red-hot housing market) to the tune of $120 billion a month, and artificially suppresses interest rates for the benefit of privileged investors at the expense of the majority without the means to be winners in the new Ruling Class economy...the result will be...wait for it...big-time INFLATION!!

Huge surprise!

The government has knowingly and intentionally rigged the markets and the economy against the Average Citizen, in the process vastly increasing the gap between Haves and Have-Nots. The result will be disaster. It's not a question of if...only when and how.

All this has to be understood in the context of the Big Picture, which is one of decadence and decline.

The people who brought you the Afghanistan implosion are now running our government, culture, and economy. Before they're done, you're going to see much worse than run-away inflation.

People like Paoli think stock prices grow in the long run because they are popular like meme stocks but the reality is that stock prices are a function of earnings which are really good right now. Near zero interest rates don't leave investors with many options so stocks trade at a higher PE than normal. But ultimately it comes down to earnings.

The goal of near zero interest rates isn't to help the rich but it certainly helps drive up stock prices for as long as it lasts. It hurts people who want a steady income without taking the risk of the stock market. Seniors are especially hurt. They aren't typically buying new houses and cars so they don't get the benefit from low rates. High inflation makes everyday purchases more expensive and they don't get squat on their CDs or bonds.

 

[CoastGuard2018]

Like the one in the 1970s / 80s, except this one will be much worse, and probably bring down the western economies.

Jerome Powell last week let the cat out of the bag in a very subtle way. Everyone has wanted to know what "transitory inflation" means and he let us know last week. It means a step change in inflation followed by his target average 2% inflation. It doesn't mean the target average, to include the last few years, will be 2% when included with the pandemic inflation. This lets the central bankers do whatever they want, such as printing vast amounts of money.

The problem is debt, both public and private. To keep economies moving this must be inflated away. This will screw bond holders, bank depositors, people on pensions, even people with incomes tied to the CPI.

Inflation will not be controllable moving forward. This is because this printed money is not being printed in concert with increases in productivity. It is in fact money printed to cover previous debt. So it will spiral out of control.

The election of Democrats has set this in stone, but Republican administrations are also guilty, mainly by spending to facilitate world police work. This is why the stock market has been soaring. Investors know that money is worthless and will be made to become even more worthless. If the market crashes the central banks will be forced to double down and print even more money.

Europe has shown the path with its ultra-low interest rates. Investors had an alternative over the last decade -- the USA -- but the USA is now also turning to socialism while its budget deficits are even worse.

People often think about default. That term was used even as far back as the 1990s. But we know that since leaving the gold standard money can be printed. So "default" now will come in the form of hyper-inflation.

I'd love to be wrong. Someone convince me that I am wrong, but provide a convincing argument. The government in power at this time has shown no spending restraint, and it will not raise taxes to cover the spending, because it can't. It's even exacerbated the problem with open borders and attacking our energy production. The result will be inflation, which we have seen become ignited most recently in a big way.

The central banks say they have the tools to contain inflation -- essentially central bank "austerity." But in practice those tools are politically infeasible, as this would cause high unemployment among those with marginal skills, and especially among marginal people, such as criminals.

So all cash is being forced into the stock markets. Some is going into bonds because the markets are already exceedingly flush with cash by historical norms, and in practical terms, rates can only decrease, given the debt.

Social programs are not feasible for a country that is already in a massive deficit spending situation. If those programs are enacted then high employment with low inflation becomes impossible. One must be chosen over the other. This is why Powell's mandate has become "dual," whereas it used to be only about inflation control. Now he is supposed to achieve "full employment." That's impossible with propped up wages and low inflation.

America lost its way when it became a consumer economy and allowed imports to far exceed exports, thereby killing its own production capacity. Investment is needed, but where will that money come from? Printed money? Investment needs to come from productivity in the private sector, which was maxed out just before the pandemic under the previous administration.

Who will pay? I think it will be retirees, especially old people on marginal, fixed incomes. The middle class will also get hurt, as it is really the most productive part of our economy.

Don’t worry we have the right man for the job now to lead us through the pending calamity🤮 and a top notch VP too🤣

 

[junior1]

Any company that really needs employees can simply offer more money. It's not rocket science.

True, but in a world of inflation, sometimes just increasing wages contributes to wage inflation which leads to further increases in overall inflation. Did you live through the carter years by chance?

 

[junior1]

The root cause of the inflation is sectors that experienced a boom as we came-out of lock down. Travel, Gas, etc. What “transitory” means is that spending and supply will normalize after some time. Do we have a problem with deficits - yes. The Baby boomers are going to limp to their death bed, leaving the next generations will a ton of debt. The democrats are the only party with a plan to narrow or eliminate deficits.

If they have a plan, would they tell the rest of us? This years deficit is going to be pretty high!