States declaring bankruptcy

[i'vegotwinners]

Recent history shows us that liberals give us the opposite. The proposed 2009 stimulus package was initially weighted much more towards building things than what we ended up with. I distinctly remember Speaker Pelosi saying that the administrations proposal created too many "manly jobs". She changed the package by diverting funds from infrastructure to expanded social programs and a wider safety net. The liberal wing of the Democratic party claimed that the best stimulus was transfer payments to those who were unemployed and couldn't buy groceries. Of course that ignores the job and demand creating effects of new construction.

I think you are correct by saying that conservatives have a history of not spending money. I think they have overcome that since Trump took office. Not once during his campaign or administration has the phrase "balance the budget" passed his mouth. Trump has mentioned often passing a huge infrastructure bill as and has redoubled his efforts as he connected infrastructure to post-pandemic stimulus. He isn't proposing any way to pay for it other than issuing more debt. After a years long process, I think my thinking has evolved on this.



I don't understand the difference. Can you explain? It seems to me that all wealth comes from revenue. Take the wealth created by the mortgage backed securities racket. Seemingly that wealth came from creating paper then shuffling it through the investment bankers. But in reality, the wealth depended upon the revenure stream of the mortgage obligors, no?

NO!

the "wealth" created by the MBSs and their derivatives scams was never anything but temporary, and always going to implode taking everything else with it.

100% chance from day 1.

the mortgage "obligors" never had the revenues to support the total scam created wealth to begin with.

that said, any post referencing "liberals" or "conservatives", that doesn't distinguish between social and economic liberals or conservatives, is full of sht, as is the poster who posted it.

tired of the manipulators/outright liars posing these as one in the same, over and over and over and over again.

as for Pelosi, (no economic liberal in the slightest), shifting funds from infrastructure to social safety nets, social safety nets have even more "velocity" of investment money than infrastructure.

that said, the choice shouldn't ever be or ever have been, between money to backstop the poor and money for infrastructure.

it should be between money to backstop the banks, Wall St, and investor class, or for more billion dollar jet fighters and endless benefitless wars, and money for infrastructure.

how in hell was the choice between money for the poor or infrastructure spending, instead of between tax cuts for the rich, the Fed plowing trillions and trillions into the banks for stock buy backs and buying their questionable debt, and trillions for the military industrial complex, or infrastructure spending?????

 

[i'vegotwinners]

If your objective is to decrease wealth inequality (not income inequality) it seems the way forward you propose is contra-indicated. The multi-trillion increases in spending will end up preserving or increasing the value of assets held by the higher wealth institutions and individuals. To be sure, I don’t think this a reason to not spend what it takes to preserve the economy, but I think it’s a mistake to believe that this will make a better life for the little guy. At best it will maintain that status quo while those at the other end will see flourishing asset values.

the key to preserving the economy is to preserve the economic viability of the working class, not funnel trillions to the big banks and Wall St.

massive failure by our elected leaders who served their owners, not their country..

 

[Digressions]

Recent history shows us that liberals give us the opposite. The proposed 2009 stimulus package was initially weighted much more towards building things than what we ended up with. I distinctly remember Speaker Pelosi saying that the administrations proposal created too many "manly jobs". She changed the package by diverting funds from infrastructure to expanded social programs and a wider safety net. The liberal wing of the Democratic party claimed that the best stimulus was transfer payments to those who were unemployed and couldn't buy groceries. Of course that ignores the job and demand creating effects of new construction.

Really? You're going to judge liberals based on 2009? The only chance they've had to govern and it just so happened they were hamstrung with the worst financial crisis since the GD. And you're going to criticize them for getting money to unemployed people who "couldn't buy groceries"?

And you're going to do this less than a month after Trump and McConnell have spent $3T dollars on COVID-19 relief, none of which has gone to infrastructure? I guess that $3T is all Nancy's fault? Next, you'll tell us that Democrats are anti infrastructure, and your proof will be their objection to building "The Wall".

 

[CO. Hoosier]

Really? You're going to judge liberals based on 2009? The only chance they've had to govern and it just so happened they were hamstrung with the worst financial crisis since the GD. And you're going to criticize them for getting money to unemployed people who "couldn't buy groceries"?

And you're going to do this less than a month after Trump and McConnell have spent $3T dollars on COVID-19 relief, none of which has gone to infrastructure? I guess that $3T is all Nancy's fault? Next, you'll tell us that Democrats are anti infrastructure, and your proof will be their objection to building "The Wall".

Not exactly. I don’t for one minute criticize the needed safety net. But I do criticize the spending priorities the Speaker showed which went beyond the existing safety net. For example, some of the social services the stimulus provided were gone the moment federal funds ran out. State and local government chose not to pick up the added expense. On the other hand, if those same funds were directed to infrastructure, that infrastructure would presumably still exist and be providing general benefits.

 

[Digressions]

Not exactly. I don’t for one minute criticize the needed safety net. But I do criticize the spending priorities the Speaker showed which went beyond the existing safety net. For example, some of the social services the stimulus provided were gone the moment federal funds ran out. State and local government chose not to pick up the added expense. On the other hand, if those same funds were directed to infrastructure, that infrastructure would presumably still exist and be providing general benefits.

I agree, but it shouldn't be an either/or.

And what about the 8 years of Bush tax cuts? Even if the top .1% received only $10B(...idk off the top of my head what they received), wouldn't that money have been better off spent on infrastructure? Didn't that $10B go towards creating an asset bubble that subsequently popped. Wasn't that $10B just gone, along with the other $17T that was lost? Wouldn't that $10B(maybe someone could help me out with the real number?) of infrastructure still be around and providing general benefits?

And even with the luxury of hindsight, Republicans turned around and cut taxes again. Even when a lot of the Republicans on this board were against tax cuts for the richest of Americans. And where did the richest Americans put that money? ..."the greatest economy the world has ever seen." An economy that was built by $1T deficits and one in which a large percentage of Americans couldn't afford to miss a paycheck.

And what will be our remedy? More deficits and more tax cuts.

 

[i'vegotwinners]

Not exactly. I don’t for one minute criticize the needed safety net. But I do criticize the spending priorities the Speaker showed which went beyond the existing safety net. For example, some of the social services the stimulus provided were gone the moment federal funds ran out. State and local government chose not to pick up the added expense. On the other hand, if those same funds were directed to infrastructure, that infrastructure would presumably still exist and be providing general benefits.

any dollar the govt gives to the poor is recirculated by the next day, so again i fail to see why you promote an infrastructure vs social safety net false choice.

i notice you didn't respond to my question in a previous response to you in this thread, as to why the choice isn't between infrastructure and trillion dollar military spending on billion dollar jet fighters and endless benefitless wars.

or between infrastructure spending, or trillions from the Fed to Wall St banks to buy their questionable debt and fund stock buy backs.

you seem laser focused on any and all infrastructure spending only coming out of social programs that recirculate 100% of the money back into the economy literally the next day.

 

[Rockfish1]

The bond market isn't a great proxy right now....as the Fed is buying up everything with a giant, infinite mop. It's the right thing to do....as the total lack of demand has killed the velocity of money in the system. Money creation through the traditional model (credit) is non- existent... so Fed printing of money through bond buying (and they are buying every bond imaginable).... is basically keeping the system balanced. They are easily able to reverse course and tighten by simply dropping bonds off their balance sheet if inflation concerns creep up in a couple years.

Central bankers have leaned a lot over the last 100 years... and particularly within the last decade.

I don't think it provides carte blanche for the govt to deficit spend without any thought. But it's not a short term concern.

That’s basically what the proponents of austerity argued in 2009. They were wrong, and though we’re entering uncharted territory, I think your focus is similarly misplaced. I think we should be listening to people like Krugman, who lays out the basic macro here:

 

[Cortez88]

That’s basically what the proponents of austerity argued in 2009. They were wrong, and though we’re entering uncharted territory, I think your focus is similarly misplaced. I think we should be listening to people like Krugman, who lays out the basic macro here:

View embedded media

Interesting read. This mirrors my own personal experience. Fortunately both my wife and I are still working and getting paid. But because we are zealously abiding by the stay home order, our spending on nonessential items has dropped dramatically. On the other hand, our spending on essential items has risen quite a bit. And yes, liquor is essential.

One thing we are trying to do to help support essential businesses is to buy direct from local farms. This includes produce and meat. Many of the smaller local farms are suffering with restaurant closures. I’d suggest you guys give it a try. Everything tastes better and the prices have been comparable.

 

[Spartans9312]

Interesting read. This mirrors my own personal experience. Fortunately both my wife and I are still working and getting paid. But because we are zealously abiding by the stay home order, our spending on nonessential items has dropped dramatically. On the other hand, our spending on essential items has risen quite a bit. And yes, liquor is essential.

One thing we are trying to do to help support essential businesses is to buy direct from local farms. This includes produce and meat. Many of the smaller local farms are suffering with restaurant closures. I’d suggest you guys give it a try. Everything tastes better and the prices have been comparable.

Are you buying 1/4 beef, 1/2 hog when buying local?

 

[Cortez88]

Are you buying 1/4 beef, 1/2 hog when buying local?

No because I don’t have freezer space.

 

[UncleMark]

 

[Marvin the Martian]

That’s basically what the proponents of austerity argued in 2009. They were wrong, and though we’re entering uncharted territory, I think your focus is similarly misplaced. I think we should be listening to people like Krugman, who lays out the basic macro here:

View embedded media

Until there is a vaccine, or at least serious testing, I am starting to think a W or a U would be a best possible outcome. I think we are solid in an L.

I saw a story this morning using Iowa. In the week before Iowa had government action, they lost 70-80% of their economic activity. That is a sign that government cannot just turn on the economy by proclamation. The study was done with cell phone data, people just stopped going to non-essential businesses. I have yet to find it on the web, but I see this https://www.desmoinesregister.com/amp/5149756002

I do not know that massive infrastructure will tilt that L upward but I am certain we need to try something to get the L out.

 

[CO. Hoosier]

That’s basically what the proponents of austerity argued in 2009. They were wrong, and though we’re entering uncharted territory, I think your focus is similarly misplaced. I think we should be listening to people like Krugman, who lays out the basic macro here:

View embedded media

Moving to the present day. Trump advocates for your long-favored policy of using public debt to build infrastructure while interest rates are so low. I guess that makes you a Trump supporter now.

 

[Marvin the Martian]

Moving to the present day. Trump advocates for your long-favored policy of using public debt to build infrastructure while interest rates are so low. I guess that makes you a Trump supporter now.

There you go, another example of me admitting Trump is right on something.

 

[Sope Creek]

Moving to the present day. Trump advocates for your long-favored policy of using public debt to build infrastructure while interest rates are so low. I guess that makes you a Trump supporter now.

With the economy in free fall, how would one know whether the current rates are low or high? Nominally, they look low based on historical standards for the last 40 years . . . but are they for the current and near-term economic environment?

The article linked below is from a couple of weeks ago, but with the economy still in major flux and uncertainty, the commentary in it remains as valid today:

The Fed’s actions [ed: purchasing large quantities of all sorts of bonds to prevent a liquidity disaster] distorted credit spreads in the bond market, essentially eliminating the key “signaling process” that the market uses in normal times to gauge value, Saperstein explained.

With that signaling gone from the market as fundamentals deteriorate and downgrades increase, “investors have to be incredibly cautious on issues, and sectors going forward,” said Saperstein.

“The Fed has changed the price but not the fundamentals,” said Crit Thomas, global market strategist at Touchstone Investments, who also participated in the online panel.

https://www.thinkadvisor.com/2020/0...tion-has-saved-but-distorted-the-bond-market/

 

[CO. Hoosier]

With the economy in free fall, how would one know whether the current rates are low or high? Nominally, they look low based on historical standards for the last 40 years . . . but are they for the current and near-term economic environment?

I don't understand this.

 

[UncleMark]

With the economy in free fall, how would one know whether the current rates are low or high? Nominally, they look low based on historical standards for the last 40 years . . . but are they for the current and near-term economic environment?

So do you expect Treasury to "time the market"?

 

[Sope Creek]

So do you expect Treasury to "time the market"?

Beats me. If the Fed is making the market, what assets would Treasury use to place its bets?

 

[Sope Creek]

I don't understand this.

Hmmm . . . think in terms of real interest rates (roughly the nominal interest rate less inflation) rather than in terms of nominal rates only.

With a free falling economy prices can deflate (negative inflation), which means that real interest rates at even a half-percent nominal rate could be quite high. For example, if there's no cash in the system, and prices are declining at 5% per year, a one-half percent nominal interest rate would result in roughly a 5.5% real interest rate . . . and that real interest rate would increase as prices continue to decline.

Borrowing when real interest rates are low is a great deal. Borrowing when the dollars you pay back are more valuable than the dollars you borrowed because of deflation is . . . irrational, even at low nominal rates . . . .

 

[JamieDimonsBalls]

I think we should be listening to people like Krugman,

 

[JamieDimonsBalls]

Are you saying I can go around cannibalizing my neighbors?

 

[Standard Issue]

Are you saying I can go around cannibalizing my neighbors?

Only if you live next to COH or VSM.

 

[Digressions]

Hmmm . . . think in terms of real interest rates (roughly the nominal interest rate less inflation) rather than in terms of nominal rates only.

With a free falling economy prices can deflate (negative inflation), which means that real interest rates at even a half-percent nominal rate could be quite high. For example, if there's no cash in the system, and prices are declining at 5% per year, a one-half percent nominal interest rate would result in roughly a 5.5% real interest rate . . . and that real interest rate would increase as prices continue to decline.

Borrowing when real interest rates are low is a great deal. Borrowing when the dollars you pay back are more valuable than the dollars you borrowed because of deflation is . . . irrational, even at low nominal rates . . . .

Which is one of many reasons we should be (and are) printing money. Currency is relative to inflation and other currencies.

Let's not forget, one of our biggest weaknesses, before, during, and probably still after COVID-19, is a strong dollar. We have printed how many trillions? And what has happened to the strength of the dollar?

So we're experiencing deflation, printing trillions of dollars, and other countries can't/won't stop us, but we would rather borrow money that we will be obligated to pay back, rather than taking the free square?

The only problem with using the printing press, is that we need to find a way to "launder" the money through banks and to the individuals who need it the most.

 

[JamieDimonsBalls]

Let's not forget, one of our biggest weaknesses, before, during, and probably still after COVID-19, is a strong dollar

Curious why you think that it affected the US more than other developed economies.

 

[Sope Creek]

Which is one of many reasons we should be (and are) printing money. Currency is relative to inflation and other currencies.

Agreed.

Let's not forget, one of our biggest weaknesses, before, during, and probably still after COVID-19, is a strong dollar. We have printed how many trillions? And what has happened to the strength of the dollar?

I would caution that your last question is incomplete . . . it should have a "so far" at the end of it.

Raoul Pal agrees with you: https://www.marketwatch.com/story/e...gnal-to-sell-stocks-is-coming-soon-2020-04-27

The only comment I can offer in response is that it's always the bartender - the one with the gun you don't see - that ends up killing you. There is no inherent reason why the dollar has to be so strong, or to be the world's reserve currency. The dollar has those statuses because the US has had incredible political stability and economic performance for the last 80 years or so . . . but there's nothing in the physics of the universe that says that's the way things have to be. And if we don't take care of our political stability and economic performance . . . .

So we're experiencing deflation, printing trillions of dollars, and other countries can't/won't stop us, but we would rather borrow money that we will be obligated to pay back, rather than taking the free square?

We may be forced to take the free square because our political stability is shaky and our economic performance is out of balance . . . which means that there might not be enough political and economic power to continue the free square for very long before another country's currency - or the euro - begins to look attractive by comparison. We need to stop taking those things for granted and take care of our political stability and economic performance . . . .

The only problem with using the printing press, is that we need to find a way to "launder" the money through banks and to the individuals who need it the most.

Banks will get the money to those who make them the most money; their use of the money from the government will exacerbate the wealth and income inequality in the US. That ain't taking care of our political stability and economic performance . . . in the long run, those bankers' short term interests are at odds with the long term interests of the US and its political stability and economic performance.

 

[ButHerEmails]

He does appear to have some potential, doesn't he?

Too analytical, rational and evidence-based for this board.

 

[Digressions]

Curious why you think that it affected the US more than other developed economies.

Shooting from the hip on this one, but I'm sure that other developed economies have suffered. Although, with so many currencies pegged to the dollar, and with currency manipulation that seems focused on manufacturing (China) and Agriculture (Brazil), other developed countries at least have the opportunity for relief through their own floating currency.

What do you think?

 

[Digressions]

Banks will get the money to those who make them the most money; their use of the money from the government will exacerbate the wealth and income inequality in the US. That ain't taking care of our political stability and economic performance . . . in the long run, those bankers' short term interests are at odds with the long term interests of the US and its political stability and economic performance.

This is another reason why a more progressive income tax (and should include JDB's means tested capital gains) is so important.

Everyone is quick to point out that increasing the money supply will help(read: has helped) the wealthy. We know the solution.

This also demonstrates the relationship between fiscal and monetary policy. To oversimplify: if monetary policy controls the supply, tax brackets control the distribution...at least over the long run.

 

[JamieDimonsBalls]

Shooting from the hip on this one, but I'm sure that other developed economies have suffered. Although, with so many currencies pegged to the dollar, and with currency manipulation that seems focused on manufacturing (China) and Agriculture (Brazil), other developed countries at least have the opportunity for relief through their own floating currency.

What do you think?

Maybe, though I'm not sure to what degree. Currency strength/weakness is a function of inflation expectations and interest rate policy. The U.S. was much quicker to embark on QE, which you and others have criticized. As a result, once we were able to halt the program and then begin tightening monetary policy, we were significantly ahead of other markets that lagged in recovery (EU, Japan). Therefore, I'm not sure how the pegs and world's reserve currency status impacts things.

 

[Digressions]

Maybe, though I'm not sure to what degree. Currency strength/weakness is a function of inflation expectations and interest rate policy. The U.S. was much quicker to embark on QE, which you and others have criticized. As a result, once we were able to halt the program and then begin tightening monetary policy, we were significantly ahead of other markets that lagged in recovery (EU, Japan). Therefore, I'm not sure how the pegs and world's reserve currency status impacts things.

I don't remember ever criticizing QE?

 

[JamieDimonsBalls]

I don't remember ever criticizing QE?

My apologies. I thought, based on your current stance regarding the Fed's monetary policy, you were also against QE.

 

[Digressions]

My apologies. I thought, based on your current stance regarding the Fed's monetary policy, you were also against QE.

I'm arguing for more QE.

 

[TheOriginalHappyGoat]

My apologies. I thought, based on your current stance regarding the Fed's monetary policy, you were also against QE.

That's exactly the opposite of how I'm reading him. But I'm not a expert on monetary policy, so you guys could actually be talking about model train sets, for all I know.

 

[JamieDimonsBalls]

I'm arguing for more QE.

Sorry confused QE for Repo operations.

 

[Digressions]

Sorry confused QE for Repo operations.

Even then I wasn't criticizing the Fed. I was trying to figure out exactly what was wrong with the repo market.

The Fed has done a good job of staying out of our f'd up politics. I didn't like the optics or timing of Powell lowering rates after Trump's criticism, but it worked out.

 

[Rockfish1]

Moving to the present day. Trump advocates for your long-favored policy of using public debt to build infrastructure while interest rates are so low. I guess that makes you a Trump supporter now.

Since Trump's efforts to build infrastructure have consisted entirely of sporadic announcements that it's "infrastructure week" again, you are full of shit as usual.

 

[sglowrider]

Warning: Lots of industrial language for those who might melt from it.