It's disturbing that Bernie Sanders is actually receiving support for the Presidency

mjvcaj

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Everyone talks about the GOP's ridiculous field, and rightfully so. But, too few talk about Sanders' nutty rants, unsubstantiated claims and severe misunderstanding of how things work in this country.

NYT graciously allowed for what I consider one of the worst Op-Eds I have ever read:
http://www.nytimes.com/2015/12/23/opinion/bernie-sanders-to-rein-in-wall-street-fix-the-fed.html

I have decided to dissect some of Sanders' statements. If only someone could debate him on these points.

To rein in Wall Street, we should begin by reforming the Federal Reserve, which oversees financial institutions and which uses monetary policy to maintain price stability and full employment.

Notice only the latter two are part of the Fed's mandate.

The recent decision by the Fed to raise interest rates is the latest example of the rigged economic system.
Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner.


Who specifically is he referring to? Is he confusing Big Bankers with @IU1 and his cult following of ZeroHedge and Peter Schiff?

What went wrong at the Fed? The chief executives of some of the largest banks in America are allowed to serve on its boards. During the Wall Street crisis of 2007, Jamie Dimon, the chief executive and chairman of JPMorgan Chase, served on the New York Fed’s board of directors while his bank received more than $390 billion in financial assistance from the Fed. Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.

Who understands the financial sector better than those working in the financial sector? Does he understand what a BOD even is?

Board members should be nominated by the president and chosen by the Senate. Banking industry executives must no longer be allowed to serve on the Fed’s boards and to handpick its members and staff.

So, Sanders wants to politicize one of the few independent institutions left in this country? To this I just laugh.Talk about self-serving. He is advocating for more corruption, he just doesn't know it. Perhaps he needs to be reminded how well the SCOTUS nomination procedures work. I'm sure he is a huge fan of Scalia and Thomas and feels they were rightly appointed.

Moreover, it makes you wonder who he would appoint to oversee such a complex area of the economy. We all know how effective lifetime public officials are (see the incompetence of the SEC).

The Fed must also make sure that financial institutions are investing in the productive economy by providing affordable loans to small businesses and consumers that create good jobs.

WTF? Is this a serious statement? Does he remember what the role of the Fed is as previously stated at the top of his own bloggish editorial?

1) He is essentially advocating for the Government to mandate how private institutions lend money. How very communist of him. Perhaps he never read all of the stories of failure with the SBA, USDA, etc.

2) Providing affordable loans to riskier businesses goes against the risk-taking that he proposes in this publication! It goes against Dodd-Frank, the pile of legal restrictions and regulations that Sanders supported.

How? First, we should prohibit commercial banks from gambling with the bank deposits of the American people

Um... the Volcker Rule, part of the D-F bill Bernie voted for, is already in effect. On top of that Basel requirements are more stringent.

Second, the Fed must stop providing incentives for banks to keep money out of the economy. Since 2008, the Fed has been paying financial institutions interest on excess reserves parked at the central bank — reserves that have grown to an unprecedented $2.4 trillion.

What? Does he understand what excess capital requirements means? This is part of the regulation that Bernie voted for.

Third, as a condition of receiving financial assistance from the Fed, large banks must commit to increasing lending to creditworthy small businesses and consumers, reducing credit card interest rates and fees, and providing help to underwater and struggling homeowners.

What the hell is wrong with this guy? This is exactly the type of lending that caused the financial recession and the type of behavior that Bernie himself is ridiculing. Now he wants the banks to make risky loans to those that shouldn't be allowed to get credit? Just makes you wonder if he has an IQ above 100.

We also need transparency. Too much of the Fed’s business is conducted in secret, known only to the bankers on its various boards and committees. Full and unredacted transcripts of the Federal Open Market Committee must be released to the public within six months, not five years, which is the custom now.

Unless I am missing something, FOMC minutes are provided within weeks after the meetings, not 5 years. Did he even bother to check these? Don't even answer that question.

http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

We must reinstate Glass-Steagall and break up the too-big-to-fail financial institutions that threaten our economy.

So would he repeal D-F since there are substantial amounts of overlap? Also, did someone inform Bernie that Bear and Lehman were investment banks only and G-S would have had zero impact on their failure?

In sum, it's pretty sad that this guy has so much support and that the ignorant American public and media (thanks NYT) doesn't even bother to fact check the rhetoric they want to hear. Just goes to show you that it isn't just the far right that has nutjobs and endangers the country.
 
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Rockfish1

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Who understands the financial sector better than those working in the financial sector? Does he understand what a BOD even is?
It's ironic that I read your rant against Bernie's polemic as I'm readying to see "The Big Short". Without time to delve into your specific points, I'll observe only that your take isn't the most self-aware thing I've ever read. Amoral greedheads in the financial sector, after all, very nearly brought on a second Great Depression, as most of us still recall -- and from which many of us will never recover.
 

mike41703

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It's ironic that I read your rant against Bernie's polemic as I'm readying to see "The Big Short". Without time to delve into your specific points, I'll observe only that your take isn't the most self-aware thing I've ever read. Amoral greedheads in the financial sector, after all, very nearly brought on a second Great Depression, as most of us still recall -- and from which many of us will never recover.

From which many of us will never recover?

Talk about waaaaaaaaaaaaaaaay over dramatic. Most people were fine within 2 years. If you haven't recovered from 2008 in 7 years, you probably weren't going to make it regardless of what happened.

Maybe I'm misunderstanding your point though since you're so much smarter than everyone.
 

Rockfish1

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From which many of us will never recover?

Talk about waaaaaaaaaaaaaaaay over dramatic. Most people were fine within 2 years. If you haven't recovered from 2008 in 7 years, you probably weren't going to make it regardless of what happened.

Maybe I'm misunderstanding your point though since you're so much smarter than everyone.
Pro tip: Don't lead with your ignorance. Still in the movie. Will get back to you.
 

Rockfish1

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So you check Peegs during a movie and take the time to post, "hold on, I'll be back in a few".

You're a weirdo.

But, hey, I'm sitting on the edge of my seat to hear your condescending response.
As of 2014 (the most recent data available from the St. Louis Fed), median household income was still well below where it was prior to the Great Recession. Meanwhile, the biggest debate in economics has to do with secular stagnation -- whether the long term productive capacity of the global economy has been diminished. Oh, and in 2010 the unemployment rate was 9.6 percent. (I wasn't able to marshall the data in the movie theater.)

You'd get fewer condescending responses from me if you made fewer obviously false claims.
 

Rockfish1

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To rein in Wall Street, we should begin by reforming the Federal Reserve, which oversees financial institutions and which uses monetary policy to maintain price stability and full employment.

Notice only the latter two are part of the Fed's mandate.
You're right about the Fed's mandate. Sanders wants to change that. I don't agree with him, but you're wrong to accuse him of ignorance.
The recent decision by the Fed to raise interest rates is the latest example of the rigged economic system.
Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner.


Who specifically is he referring to? Is he confusing Big Bankers with @IU1 and his cult following of ZeroHedge and Peter Schiff?
Lots of Very Serious People have been saying that inflation was imminent. Some of them have been members of the Fed's board of governors. This notion hasn't been limited to cranks like IU1. And look at the Fed's decision to raise rates. We still have a slack labor market, and inflation has yet to exceed the Fed's 2 percent target -- which makes that "target" look a lot more like a ceiling. It's very hard to believe that the Fed takes its full employment mandate as seriously as it takes its mandate to maintain a stable price level. That bias benefits the banking class a lot more than it benefits the working class.
What went wrong at the Fed? The chief executives of some of the largest banks in America are allowed to serve on its boards. During the Wall Street crisis of 2007, Jamie Dimon, the chief executive and chairman of JPMorgan Chase, served on the New York Fed’s board of directors while his bank received more than $390 billion in financial assistance from the Fed. Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.

Who understands the financial sector better than those working in the financial sector? Does he understand what a BOD even is?
Your suggestion that the financial sector should be allowed to self-regulate is ludicrous. In any event, the President already appoints the seven members of the Fed's central board, subject to Senate conformation. Sanders wants to extend this practice to the 12 regional Fed banks and prohibit banking executives from serving on the regional boards. That doesn't seem crazy to me.
The Fed must also make sure that financial institutions are investing in the productive economy by providing affordable loans to small businesses and consumers that create good jobs.

WTF? Is this a serious statement? Does he remember what the role of the Fed is as previously stated at the top of his own bloggish editorial?
Again, Sanders is arguing that we should change the Fed's role. I don't agree, but he isn't ignorant of the Fed's dual mandate.
1) He is essentially advocating for the Government to mandate how private institutions lend money. How very communist of him. Perhaps he never read all of the stories of failure with the SBA, USDA, etc.
Sanders wants to discontinue the practice that began in 2008 of paying banks interest on excess reserves maintained at the Fed. Instead he wants the Fed to charge banks a fee for that and use the proceeds to extend loans to small businesses. That's not communism.
Second, the Fed must stop providing incentives for banks to keep money out of the economy. Since 2008, the Fed has been paying financial institutions interest on excess reserves parked at the central bank — reserves that have grown to an unprecedented $2.4 trillion.

What? Does he understand what excess capital requirements means? This is part of the regulation that Bernie voted for.
See above.
Third, as a condition of receiving financial assistance from the Fed, large banks must commit to increasing lending to creditworthy small businesses and consumers, reducing credit card interest rates and fees, and providing help to underwater and struggling homeowners.

What the hell is wrong with this guy? This is exactly the type of lending that caused the financial recession and the type of behavior that Bernie himself is ridiculing. Now he wants the banks to make risky loans to those that shouldn't be allowed to get credit? Just makes you wonder if he has an IQ above 100.
You're just hyperbolically mischaracterizing what Sanders said.
We also need transparency. Too much of the Fed’s business is conducted in secret, known only to the bankers on its various boards and committees. Full and unredacted transcripts of the Federal Open Market Committee must be released to the public within six months, not five years, which is the custom now.

Unless I am missing something, FOMC minutes are provided within weeks after the meetings, not 5 years. Did he even bother to check these? Don't even answer that question.
Yes, the Fed releases carefully edited minutes of its FOMC meetings within 3 weeks. Sanders wants full unedited transcripts released within six months, instead of the customary five years. You're erroneously claiming that Sanders is ignorant about the Fed, but you're demonstrating instead that you're ignorant about Sanders' proposals.
We must reinstate Glass-Steagall and break up the too-big-to-fail financial institutions that threaten our economy.

So would he repeal D-F since there are substantial amounts of overlap? Also, did someone inform Bernie that Bear and Lehman were investment banks only and G-S would have had zero impact on their failure?
I agree that G-S wouldn't have prevented the financial crisis, but we should break up the big banks. If they're too big to fail -- and they are -- then they're too big to exist. They're leveraging all of us, and it ought to stop.
In sum, it's pretty sad that this guy has so much support and that the ignorant American public and media (thanks NYT) doesn't even bother to fact check the rhetoric they want to hear. Just goes to show you that it isn't just the far right that has nutjobs and endangers the country.
It's ironic that you bemoan public ignorance while demonstrating that you didn't even bother to learn what Sanders actually proposes before launching into a hyperbolic rant.
 

Rockfish1

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Lots of Very Serious People have been saying that inflation was imminent. Some of them have been members of the Fed's board of governors. This notion hasn't been limited to cranks like IU1.
Do you know who else holds crank views on inflation? Ostensibly mainstream Republican politicians:

If there's one thing Republicans can agree on, other than tax cuts being the solution to every economic problem, it's that inflation is a dire threat. Never mind that it's actually lower than we want — with prices growing at just 0.15 percent.

During the last debate, Ted Cruz blamed the Federal Reserve's "loose money" policies for the fact that "hamburger prices have gone up nearly 40 percent" and the "cost of electricity is going up" too. The answer, he said, is to focus on "sound money and monetary stability, ideally tied to gold." Nobody on stage voiced a disagreement. And why would they? Rand Paul has been saying the same for years. Jeb Bush might not be sure whether going back the gold standard is a good idea, but he has criticized the Fed for "just printing money like nobody's business." Marco Rubio has all-but-said the Fed should stop worrying about unemployment and just try to keep inflation under control instead. Chris Christie has warned that "the extraordinary printing of money that we're doing ... is going to come home to roost." And Donald Trump and Ben Carson both think the only reason the Fed isn't raising rates right now is that it's trying to help President Obama manage the debt.

. . . The simple story is that whatever Obama has been for, Republicans have been against. Even when it comes to monetary policy. "We've had seven years of zero interest rates and the lousiest recovery in 75 years," said Stephen Moore, a leading conservative economist at the Heritage Foundation and an informal adviser to several GOP candidates. "So that's one reason a lot of us feel like it's time to get off the zero interest rate policy." The implication, he said, is that "zero interest rates haven't helped the economy." All that's happened, he continued, is "Wall Street" has gotten "addicted to zero interest rates like it's crack cocaine," and is "potentially creating another bubble." Now, that sounds like a reasonable enough concern, but it gets cause and effect backward. Rates are low because growth is low, not the other way around. If higher interest rates really wouldn't hurt the economy, then Europe's recovery should have been just as good as our own. It hasn't, not even close: their unemployment rate is still more than double ours. Moore, for his part, attributed Europe's double-dip not to their tight monetary policy, but rather to their "very Keynesian" fiscal policies—never mind that they have cut their budgets more than we have.

. . . It's not just their ideology and their grassroots activists pushing Republicans to worry about inflation. It's their money men too. Now, it's hard to draw a straight line between a rich donor's views and a candidate's, but it turns out that some of the biggest Republican donors have been some of the Fed's biggest critics. Home Depot founder—and Christie benefactor—Ken Langone wants the Fed to raise rates because "money deserves rent" and "an unnatural act, such as giving people money for nothing" will cause "unnatural things to happen." Hedge fund billionaire—and Rubio supporter—Paul Singer thinks the Fed is missing the hyperinflation in the Hamptons (and Aspen, too). Hedge fund billionaire—and Jeb, Christie, and Kasich donor—Stanley Druckenmiller is afraid the Fed is just inflating another bubble. Hedge fund billionaire—and Jeb backer—Ken Griffin says QE has actually cost the economy jobs. And casino billionaire—and Christie contributor—Steve Wynn doesn't see any difference between the Fed's bond-buying and what Bernie Madoff did.

Now, it isn't easy to explain why the billionaire class has turned against the Fed. Easy money is good for assets, and they have plenty of those. They should love QE—but don't. Maybe, as Brad DeLong argues, it's that they think the Fed is manipulating markets in an unsustainable way. Or maybe it's that they aren't as worried about expanding their empires with cheap money as they are about losing it to worthless money. Whatever it is, though, it doesn't really matter to Republican politicians. All they need to know, as Pethokoukis told me, is that "very successful hedge fund managers" who are "out there in the markets and are not some pointy-headed academic types" think "this is bad." That makes an impression, independent of the fact that they can add quite a few zeros to the candidates' Super PACs. It amplifies what they're already hearing from conservative activists: zero interest rates must be destroyed.

The lesson, then, is that bashing bureaucrats is good politics in the Republican primaries. Especially when you're saying that savers should get better returns from higher interest rates. But it's awful economics. Everything that's happened the last seven years has shown that inflation fears couldn't have been more wrong, but everything that's happening in the Republican Party is pushing them to continue to worry about inflation.

The only thing we've had to fear was fear of inflation itself—and, as the Republicans are showing us, we still do.​
 

crazed_hoosier2

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Did you see where Bernie Sanders put out a tweet asking why it is that interest rates were higher for student loans than they are for mortgages?

Talk about a "Duh" moment. He may as well ask why it is that the lowly Titans would be spotted points at the sportsbook in a matchup against the Panthers.

With people like this in positions of power, is it any wonder that our policymakers foolishly reduced home lending standards and touched off the subprime crisis?
 
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mjvcaj

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Did you see where Bernie Sanders put out a tweet asking why it is that interest rates were higher for student loans than they are for mortgages?

Talk about a "Duh" moment. He may as well ask why it is that the lowly Titans would be spotted points at the sportsbook in a matchup against the Panthers.

With people like this in positions of power, is it any wonder that our policymakers foolishly reduced home lending standards and touched off the subprime crisis?

Don't worry, I'm sure Rockfish will have a sound rebuttal for that. And this is the guy that wants to have more control over monetary policy, the only policy that is currently working in this country.
 

TheOriginalHappyGoat

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Did you see where Bernie Sanders put out a tweet asking why it is that interest rates were higher for student loans than they are for mortgages?

Talk about a "Duh" moment. He may as well ask why it is that the lowly Titans would be spotted points at the sportsbook in a matchup against the Panthers.

With people like this in positions of power, is it any wonder that our policymakers foolishly reduced home lending standards and touched off the subprime crisis?
Oh, for gods' sake. He's making a rhetorical point. He's suggesting that student loan rates are too high.

Surely you understand this.
 

crazed_hoosier2

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Oh, for gods' sake. He's making a rhetorical point. He's suggesting that student loan rates are too high.

Surely you understand this.

Here's the tweet itself:

You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?​

Well, it makes perfect sense, of course -- to anybody in possession of a modicum of economic common sense, that is. Interest rates aren't just invented out of thin air, Goat. Surely you understand this.

Rates are always a function of risk. Saying they're "too high", in order to make a populist political point, is just sophistry.
 

mjvcaj

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mjvcaj

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Here's the tweet itself:

You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?​

Well, it makes perfect sense, of course -- to anybody in possession of a modicum of economic common sense, that is. Interest rates aren't just invented out of thin air, Goat. Surely you understand this.

Rates are always a function of risk. Saying they're "too high", in order to make a populist political point, is just sophistry.

Where is Bernie getting those numbers? If someone is paying those, they are either in graduate school (6.84%) or decided to use private loans.
 

TheOriginalHappyGoat

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Here's the tweet itself:

You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?​

Well, it makes perfect sense, of course -- to anybody in possession of a modicum of economic common sense, that is. Interest rates aren't just invented out of thin air, Goat. Surely you understand this.

Rates are always a function of risk. Saying they're "too high", in order to make a populist political point, is just sophistry.
So what? I'm just pointing out that it's obvious to anyone with three brain cells to rub together what point he's trying to make, and your original criticism was disingenuous.
 

Rockfish1

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So what? I'm just pointing out that it's obvious to anyone with three brain cells to rub together what point he's trying to make, and your original criticism was disingenuous.
We're having an inane discussion about a tweet because Bernie has caused some of the board's conservatives to slip a cog. The actual policy proposal (if anyone cares) is here.
 

Rockfish1

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Don't worry, I'm sure Rockfish will have a sound rebuttal for that. And this is the guy that wants to have more control over monetary policy, the only policy that is currently working in this country.
Oh my. I've really got into your head. How'd you let that happen?
 

TheOriginalHappyGoat

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We're having an inane discussion about a tweet because Bernie has caused some of the board's conservatives to slip a cog. The actual policy proposal (if anyone cares) is here.
Perhaps if Twitter weren't limited to 140 characters, he could have followed his rhetorical question with. "Of course, we can't force banks to lower interest rates, but that's why we should make college free, and remove the crushing burden of debt from our recent graduates."

And the then the board's conservatives wouldn't have had to flip out.

Or they would have flipped out for a different reason. Whatever.
 

mike41703

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As of 2014 (the most recent data available from the St. Louis Fed), median household income was still well below where it was prior to the Great Recession. Meanwhile, the biggest debate in economics has to do with secular stagnation -- whether the long term productive capacity of the global economy has been diminished. Oh, and in 2010 the unemployment rate was 9.6 percent. (I wasn't able to marshall the data in the movie theater.)

You'd get fewer condescending responses from me if you made fewer obviously false claims.

Thanks for the reply. So, I didn't misunderstand what you said initially. It was an overdramatic statement on your part to say some people may never recover from the recession. Note that I didn't say wholly untrue, just overdramatic. Your linked chart is a weak attempt at making your case. What's your point? You found a chart, picked two points and drew a poor conclusion. That same chart shows median household income increasing since 2012. It also shows an overall decline beginning with the dip in 2001 so why blame it all on the Great Recession? It's incredibly poor evidence that some people will never recover solely based on the Great Recession, at best. And like I said in my original response if people can't recover in 7 years they weren't going to make it regardless of what happened in the world. They have other issues.
 

Sope Creek

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Oh my. I've really got into your head. How'd you let that happen?

Yup. All you did was use facts and logic to strip away the facade that he knows something about economics or finance - and now he's looking to support from Ladoga, one of the posters that mj has derided for years.

Didn't take much . . . .
 

CO. Hoosier

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The only thing we've had to fear was fear of inflation itself—and, as the Republicans are showing us, we still do.

Serious questions about inflation . . . .

Is inflation even a real number these days and why is it important for government know it or rely on it?

As a preface, it is my understanding that we have changed what we mean by inflation over the years. Now the inflation rate is simply the output of a computer algorithm that is itself is full of assumptions about data, adjustments and other modifications about data, and imputed data.

In the old days, inflation rates were based upon comparing the change in price to a basket of consumer goods between two fixed points in time. Nowadays inflation has something to do with cost of living that is not necessarily related to the cost of consumer goods. For example, if the price of beef goes up 10% but consumers eat 10% less beef as a result, inflation would be seen as zero. Also if a price of a car goes up 10% but the car is better and has more safety features that are the reason for the 10% increase, then inflation is again seen as zero. It seems to me that the inflation rate is a malleable number and depends on a multitude of adjustments that seemingly are made on the fly with no standardization. Am I right? If this is the case, then when politicians talk about the significant increase in the price of beef and food, they are talking about something that is not necessarily inflation.

This is important for social security recipients who largely live hand to mouth. If social security increases are suppressed with this modern view of inflation, I think that really hurts those at the bottom of the scale who have little flexibility in their spending.

 

mjvcaj

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Perhaps if Twitter weren't limited to 140 characters, he could have followed his rhetorical question with. "Of course, we can't force banks to lower interest rates, but that's why we should make college free, and remove the crushing burden of debt from our recent graduates."

Does he really believe that Goat? In his OpEd he was advocating for forcing banks to make the types of loans that fit his agenda.
 

Sope Creek

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Serious questions about inflation . . . .

Is inflation even a real number these days and why is it important for government know it or rely on it?

As a preface, it is my understanding that we have changed what we mean by inflation over the years. Now the inflation rate is simply the output of a computer algorithm that is itself is full of assumptions about data, adjustments and other modifications about data, and imputed data.

In the old days, inflation rates were based upon comparing the change in price to a basket of consumer goods between two fixed points in time. Nowadays inflation has something to do with cost of living that is not necessarily related to the cost of consumer goods. For example, if the price of beef goes up 10% but consumers eat 10% less beef as a result, inflation would be seen as zero. Also if a price of a car goes up 10% but the car is better and has more safety features that are the reason for the 10% increase, then inflation is again seen as zero. It seems to me that the inflation rate is a malleable number and depends on a multitude of adjustments that seemingly are made on the fly with no standardization. Am I right? If this is the case, then when politicians talk about the significant increase in the price of beef and food, they are talking about something that is not necessarily inflation.

This is important for social security recipients who largely live hand to mouth. If social security increases are suppressed with this modern view of inflation, I think that really hurts those at the bottom of the scale who have little flexibility in their spending.

So, if a car provides more value because it is "better", has more safety features and presumably more consumer-preferred features, isn't the adjustment in the relative value an attempt at the standardization that you're saying doesn't exist? Products aren't necessarily static . . . even the "same" fungible good product, such as an ear of corn, can be vastly different from year to year because of new varieties that may provide advantages, such as insect or fungus resistance, but which are purchased as the "same" product by consumers . . . . Norming for those changes is needed to provide a reasonable apples-to-apples comparison.
 

crazed_hoosier2

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Perhaps if Twitter weren't limited to 140 characters, he could have followed his rhetorical question with. "Of course, we can't force banks to lower interest rates, but that's why we should make college free, and remove the crushing burden of debt from our recent graduates."

And the then the board's conservatives wouldn't have had to flip out.

Or they would have flipped out for a different reason. Whatever.

Yeah, I do tend to flip out anytime a politician tries to sell people a free lunch -- it's political snake oil, and always has been. We all should, really.

That said, my beef with Bernie's tweet has less to do with the prospect of the feds forcing banks to lower interest rates than his utter disregard for the disparities in risk inherent in home lending and student lending. I don't know if he's just that ignorant or if he's hoping other people are. Really, it could well be that this man simply does not understand why such a disparity might exist -- like my wife asking me why the Panthers would have to outscore the Titans by 20 points in a (hypothetical) matchup in order for a bet on the Panthers to payoff.

"How is it that the Panthers could win the game and I could still lose a bet I placed on them?"

I could hear her ask that question. And, in her case, I'm quite sure it would be asked out of genuine ignorance. But, then, my wife's not trying to become chief bookmaker at the Mandalay Bay sportsbook.
 
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TheOriginalHappyGoat

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Yeah, I do tend to flip out anytime a politician tries to sell people a free lunch -- it's political snake oil, and always has been. We all should, really.

That said, my beef with Bernie's tweet has less to do with the prospect of the feds forcing banks to lower interest rates than his utter disregard for the disparities in risk inherent in home lending and student lending. I don't know if he's just that ignorant or if he's hoping other people are. Really, it could well be that this man simply does not understand why such a disparity might exist -- like my wife asking me why the Panthers would have to outscore the Titans by 20 points in a (hypothetical) matchup in order for a bet on the Panthers to payoff.

"How is it that the Panthers could win the game and I could still lose a bet I placed on them?"

I could hear her ask that question. And, in her case, I'm quite sure it would be asked out of genuine ignorance. But, then, my wife's not trying to become chief bookmaker at the Mandalay Bay sportsbook.
Again, SO WHAT?

Bernie wasn't genuinely asking why student loan rates are higher. He was suggesting that we shouldn't accept that they need to be. That it would be better for the country if they weren't.

Again, I'm sure you're smart enough to get that. That's why I called your criticism disingenuous.
 

CO. Hoosier

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So, if a car provides more value because it is "better", has more safety features and presumably more consumer-preferred features, isn't the adjustment in the relative value an attempt at the standardization that you're saying doesn't exist? Products aren't necessarily static . . . even the "same" fungible good product, such as an ear of corn, can be vastly different from year to year because of new varieties that may provide advantages, such as insect or fungus resistance, but which are purchased as the "same" product by consumers . . . . Norming for those changes is needed to provide a reasonable apples-to-apples comparison.

I think you are unnecessarily looking for an argument with me

I don't object to "norming" the statistics for any rational purpose. My point is that, because of this norming, the inflation rate doesn't mean what it used to mean. So nowadays, what good is the inflation rate, especially since it is not a simple calculation but the result of a computer model?

A couple of observations. First, for those who are at the bottom of the income ladder, they may want to spend their money on groceries instead of anti-collision devices in their vehicles. This norming hides the cost impact of that. Secondly and related, this kind of norming hides the real cost to consumers of more government regulation. If the cost of food goes up because of GMO segregation and labeling requirements, is that cost increase to be excluded from the inflation calculation? I would think so, but I dunno, maybe you know this.
 

TheOriginalHappyGoat

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I think you are unnecessarily looking for an argument with me

I don't object to "norming" the statistics for any rational purpose. My point is that, because of this norming, the inflation rate doesn't mean what it used to mean. So nowadays, what good is the inflation rate, especially since it is not a simple calculation but the result of a computer model?

A couple of observations. First, for those who are at the bottom of the income ladder, they may want to spend their money on groceries instead of anti-collision devices in their vehicles. This norming hides the cost impact of that. Secondly and related, this kind of norming hides the real cost to consumers of more government regulation. If the cost of food goes up because of GMO segregation and labeling requirements, is that cost increase to be excluded from the inflation calculation? I would think so, but I dunno, maybe you know this.
I don't understand your problem with computer models. Computer models are calculations. The only difference is we use a computer instead of a pencil and paper to figure them out. Why does that bother you?

Is this part of your problem with climate science, too? Would you take it more seriously if climate models were simplistic enough to be figured out by hand, instead of by computer?
 

CO. Hoosier

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That's why I called your criticism disingenuous.

Good greif goat

Must you argue about EVERYTHING?

Sanders quote shows his considerable naiveté. That is a legit criticism. But even if you disagree with CH's criticism, his criticism certainly isn't disingenuous. It might be irrelevant to your individual view of Sanders, but that is a different thing.
 

Sope Creek

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Yeah, I do tend to flip out anytime a politician tries to sell people a free lunch -- it's political snake oil, and always has been. We all should, really.

That said, my beef with Bernie's tweet has less to do with the prospect of the feds forcing banks to lower interest rates than his utter disregard for the disparities in risk inherent in home lending and student lending. I don't know if he's just that ignorant or if he's hoping other people are. Really, it could well be that this man simply does not understand why such a disparity might exist -- like my wife asking me why the Panthers would have to outscore the Titans by 20 points in a (hypothetical) matchup in order for a bet on the Panthers to payoff.

"How is it that the Panthers could win the game and I could still lose a bet I placed on them?"

I could hear her ask that question. And, in her case, I'm quite sure it would be asked out of genuine ignorance. But, then, my wife's not trying to become chief bookmaker at the Mandalay Bay sportsbook.

So, when I went to law school mortgage rates were at 10% plus and government subsidized student loan rates were at about 7.2%. Was the investment in education more risky at that time than a mortgage loan? If so, why were interest rates reversed of what you would expect using your logic?

Part of your response might be based on the expansion of the student loan market to provide loans to the virtually fraudulent "private" college industry that has sprung up outside of traditional private colleges and erstwhile state-funded universities - and I would agree with that. I just don't think there's high quality education being provided for a most of the high dollar loans that are now being funneled to those schools.

In addition, a college education's return is now considered speculative in terms of its lifetime income return, which is hugely different from what one could expect with a degree for previous generations. So I'm not a fan of Bernie's free-tuition-for-everyone policy . . . but I could see where subsidization of tuition can be advisable for certain fields of study that either are in high demand - STEM related careers particularly - or which statistically is likely to result in successful entrepreneurship, for job creation purposes.
 
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TheOriginalHappyGoat

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Good greif goat

Must you argue about EVERYTHING?

Sanders quote shows his considerable naiveté. That is a legit criticism. But even if you disagree with CH's criticism, his criticism certainly isn't disingenuous. It might be irrelevant to your individual view of Sanders, but that is a different thing.
No, it doesn't. It shows his populism. And CH clearly has a problem with populism. Especially leftist populism. And that's fine. I disagree, but that's fine. But it doesn't show anything about naivete. And everyone reading that Tweet knows that. That's why I called it disingenuous. He was criticizing him for something he damn well knew he wasn't saying.
 

Rockfish1

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So, I didn't misunderstand what you said initially. It was an overdramatic statement on your part to say some people may never recover from the recession. Note that I didn't say wholly untrue, just overdramatic.
No, it's not overly dramatic. We may have something like a million previously employed people who will effectively never be employed again -- and that's mostly just their bad luck. The median American household is unlikely to ever recover all of the wealth lost during the Great Recession. And this doesn't even account for the human misery.
Your linked chart is a weak attempt at making your case. What's your point? You found a chart, picked two points and drew a poor conclusion. That same chart shows median household income increasing since 2012. It also shows an overall decline beginning with the dip in 2001 so why blame it all on the Great Recession? It's incredibly poor evidence that some people will never recover solely based on the Great Recession, at best.
Weak? What's my point? Real median household income is the best single measure of economic well-being I can think of, and it still hasn't recovered.Yes, it's growing again, but even when it finally regains its prior level families will still be many years behind where they were and many years more from where they would have been. And that's the median household. Half of all households will do worse than that. That's very strong evidence that many won't ever recover. What sort of evidence would you accept? More appropriately, what sort of evidence would you offer in rebuttal?
And like I said in my original response if people can't recover in 7 years they weren't going to make it regardless of what happened in the world. They have other issues.
Yeah, that's what you said. Based on nothing. Or actually, you first said that everyone who was going to recover would have recovered by 2010, when the unemployment rate was still 9.6 percent and there were about five unemployed people per available job -- which was just flat dead wrong.
 

CO. Hoosier

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I don't understand your problem with computer models. Computer models are calculations. The only difference is we use a computer instead of a pencil and paper to figure them out. Why does that bother you?

Is this part of your problem with climate science, too? Would you take it more seriously if climate models were simplistic enough to be figured out by hand, instead of by computer?

I don't understand your comment either

And computer models are not simple calculations. Spreadsheets are calculations. Models apply human created assumptions, manipulations, proxies and imputations--and THEN the computer does the calcuation.
 

crazed_hoosier2

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Again, SO WHAT?

Bernie wasn't genuinely asking why student loan rates are higher. He was suggesting that we shouldn't accept that they need to be. That it would be better for the country if they weren't.

Again, I'm sure you're smart enough to get that. That's why I called your criticism disingenuous.

It's not disingenuous at all, Goat. There are very valid reasons that they're higher. People moving politically in such a way that they no longer are wouldn't mitigate those reasons. Instead, such a thing would simply serve as yet another well-intentioned, but ultimately stupid and destructive, market intervention.

This exact conversation is why I think it's incredibly important that we learn the right lessons from the subprime meltdown. But clearly, many of us haven't. They're still trying to create outcomes that they'd prefer, but which fly directly in the face of economic common sense.

We should stop doing that.
 
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Rockfish1

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No, it doesn't. It shows his populism. And CH clearly has a problem with populism. Especially leftist populism. And that's fine. I disagree, but that's fine. But it doesn't show anything about naivete. And everyone reading that Tweet knows that. That's why I called it disingenuous. He was criticizing him for something he damn well knew he wasn't saying.
Obviously you're right, but this sort of inanity is inevitable when we're debating a tweet instead of policy.
 

Rockfish1

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I think it's incredibly important that we learn the right lessons from the subprime meltdown. But clearly, many of us haven't.
So, what lessons should we learn from what you call "the subprime meltdown"? (Hint: if they have anything to do with the CRA and GSEs, you've learned the wrong lessons.)
 

Sope Creek

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For example, if the price of beef goes up 10% but consumers eat 10% less beef as a result, inflation would be seen as zero.

I could see an argument that the total amount of money spent on a product isn't higher because of the 10% reduction in volume sold in the face of a 10% price increase. . . and so the price of the total basket might not be affected - at least not affected as much - because someone's substituting chicken or beans for beef as their source of protein/entertainment.

Similarly, if people choose to eat less quality food in order to spend a higher percentage on new goods/services - like cable TV, internet and mobile phones/services - how do you account for the new goods/services?

Which is more accurate: (1) calculations based on the same products, or (2) calculations based on what people are actually buying? There has to be some fluidity there, in order to accommodate changes in the products and services that make up the economy - and the consumer basket being measured. That certainly seems more accurate than a static basket.

Do you disagree?
 

Sope Creek

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I think you are unnecessarily looking for an argument with me

I don't object to "norming" the statistics for any rational purpose. My point is that, because of this norming, the inflation rate doesn't mean what it used to mean. So nowadays, what good is the inflation rate, especially since it is not a simple calculation but the result of a computer model?

A couple of observations. First, for those who are at the bottom of the income ladder, they may want to spend their money on groceries instead of anti-collision devices in their vehicles. This norming hides the cost impact of that. Secondly and related, this kind of norming hides the real cost to consumers of more government regulation. If the cost of food goes up because of GMO segregation and labeling requirements, is that cost increase to be excluded from the inflation calculation? I would think so, but I dunno, maybe you know this.

I'm not looking for an argument . . . I'm looking to see what you're really saying, as it wasn't all that clear from your post, and then to test my understanding of it in relation to what you intended to say to see whether we agree or have gaps in what we're each saying. If you interpret that as an argument, well, that's on you.

Regarding your comment about those at the bottom of the income ladder, I think their decision-making regarding cars mitigates the effect of technological advancements because - from my experience and observation anyway - the folks at the bottom of the income ladder buy older used cars, and the price premiums for the new technologies have generally been wrung out of the car's value by then, largely because of other newer technologies in newer cars that render the technologies in older cars relatively obsolete.

Regarding the cost of governmental regulation and whether norming hides that . . . I don't know. Do you have evidence that it occurs? I don't have evidence either way, and am not presuming a result on that question, so I don't have any analysis/policy change to offer on that point.
 

CO. Hoosier

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I could see an argument that the total amount of money spent on a product isn't higher because of the 10% reduction in volume sold in the face of a 10% price increase. . . and so the price of the total basket might not be affected - at least not affected as much - because someone's substituting chicken or beans for beef as their source of protein/entertainment.

Similarly, if people choose to eat less quality food in order to spend a higher percentage on new goods/services - like cable TV, internet and mobile phones/services - how do you account for the new goods/services?

Which is more accurate: (1) calculations based on the same products, or (2) calculations based on what people are actually buying? There has to be some fluidity there, in order to accommodate changes in the products and services that make up the economy - and the consumer basket being measured. That certainly seems more accurate than a static basket.

Do you disagree?

The cost of living and the cost of goods are two different things

So there is really nothing to agree or disagree about…

If we see the inflation rate as a basket of goods, then price variations can be more readily seen as the result of economics and the result of supply and demand. If we see inflation rate of the cost of living, then what we are really saying is that a decrease in the standard of living (e.g. buying ground chuck instead of ground sirloin) caused by economic conditions is of no concern to the fed or to those who must pay attention to inflation rates as part of their job description. So, for the social security recipient, having to buy different and cheaper goods is not part of the calculation of reasons for an inflationary increase in benefits.

Once again, my concern is that by introducing these factors into the inflation rate calculation enables the government to manipulate the rate. Some of that manipulation might be justified, as we both agree, but some of it might be calculated solely for budget purposes.
 

Rockfish1

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Serious questions about inflation . . . .

Is inflation even a real number these days and why is it important for government know it or rely on it?

As a preface, it is my understanding that we have changed what we mean by inflation over the years. Now the inflation rate is simply the output of a computer algorithm that is itself is full of assumptions about data, adjustments and other modifications about data, and imputed data.

In the old days, inflation rates were based upon comparing the change in price to a basket of consumer goods between two fixed points in time. Nowadays inflation has something to do with cost of living that is not necessarily related to the cost of consumer goods. For example, if the price of beef goes up 10% but consumers eat 10% less beef as a result, inflation would be seen as zero. Also if a price of a car goes up 10% but the car is better and has more safety features that are the reason for the 10% increase, then inflation is again seen as zero. It seems to me that the inflation rate is a malleable number and depends on a multitude of adjustments that seemingly are made on the fly with no standardization. Am I right? If this is the case, then when politicians talk about the significant increase in the price of beef and food, they are talking about something that is not necessarily inflation.

This is important for social security recipients who largely live hand to mouth. If social security increases are suppressed with this modern view of inflation, I think that really hurts those at the bottom of the scale who have little flexibility in their spending.
Here is a pretty good explainer from BLS.