The orange thumb demanded that the feds drop rates asap. What do you think? Good or bad for inflation? Good for housing costs? Is it to offset the price of eggs?
The Chosen One’s demand to drop interest rates
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Trump wants to end Fed independence. Just like he intends to end DOJ independence. And all federal agency independence. Etc., etc.
None of this should come as a surprise. He talked about this shit on the campaign trail, and much of it is in that 900-page policy document/manifesto, written by key administration officials and staffers, that he insisted he knew nothing about.
Read the portion with the subheading, "Trump's Options for Gaining Control."
He's going to fvck with the Fed and destroy its independence, which is what he wants to do with every federal agency. FTC, FCC, FDA, EEOC, etc. Spelled out in P2025.
And all the idiots who claimed P2025 was irrelevant because Trump alternately referred to portions of it as "ridiculous" and then claimed to know nothing at all about it. Because, of course, Trump has a stellar history of telling the truth.
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Going to be... a long... four years... And it's going to be beautiful.
Sure if you like chaos.
He's going to provide plenty of posting material, that's for sure. That will be fun.
You know what's funny as hell and sad at the same time? None of you guys are able to defend any of this shit on the merits. You're just in lockstep with whatever he wants/does.
Complete loss of independent/critical/rational thinking. The mind is a terrible thing to waste.
. . . . For cardiologists, dealing with all the coronary events.
How you guys have unbridled confidence in a man so undeserving is so confusing. Are you looking for a dictator? Seems like it. The Fed needs to be independent.
The concern should be that DJT has demonstrated- on multiple occasions -that his only concern regarding interest rates are that interest rates should be based on what benefits him politically in the short term. Low interest rates are expansionary and therefore good for the short term. The opposite holds. Those are the only two things he understands.
Trump knows they're not lowering them at the next meeting. However, he will use them as the scapegoat for inflation, which has been running hotter the past several months.
Trump should abolish the FED.
"Inflation is the Fed's fault because they refuse to lower interest rates."
How many people will believe that? Serious question. 🤔
I don’t think it needs to be abolished.
I do think we’d benefit from reducing the human element (and thus the politics) from its policy decisions.
95 percent of the county has zero understanding of the relationship between interest rates and inflation.
Sadly less than half this country could pass a very basic financial acumen quiz.
I've said for years that we need to rethink our approach to K12 education on matters of personal finance and economics. Our kids' parochial school has done this and I've been pleased with what they've picked up.
The economics curriculum doesn't need to be anything beyond the basics. In fact, going into more complex economics would just lose most HS aged kids.
But teaching personal finance should prepare kids for how to manage their own finances in a practical sense. Prepare them for having incomes, how to do budgeting, best practices for major expenditures like housing and transportation, saving and investing, why to avoid things like gambling (a growing problem), etc.
Not sure. Trump loves to control the narrative and give himself an out. If the economy flounders, he will be on his bully pulpit screaming at the FED for not cutting rates. Saying it's Powell's fault. If the economy hums along, he'll take full credit for it 🤣
I've yet to encounter the first prominent politician who doesn't deflect blame for bad things and claim credit for the good things.
However, nobody that I can recall has done this to the degree that Donald Trump does.
No worries. I'm a hardcore free market Bitcoin maximalist. I know most people disagree with me 🤣
We @JamieDimonsBalls have discussed the ramifications of the Bush tax cuts wrt the ratio of investment to consumption and the resulting asset bubbles. I might go from A-Z in a hurry here for times sake, but please stay with me.
Dynamics have changed. Inflation is up. Interest rates are up. Labor market is tight. In the interest of predicting how high the markets could go before the next crash, how do you see the proposed changes effecting the markets? The proposals: lower tax rates, increased world oil production, tarrifs, decreased regulations, ect.
Taking into account that stock prices are independent of the value of the underlying asset, there are many changes that have come about inside of that equation. Stock buy backs,and the resulting changes to earnings per share effect the trendline of the aggregate floor.
Wrt the strength of an individual company and asset price/earnings, there is another factor. Given inflation we say nominal gdp is much higher, so let's look at real gdp. Can we do that to earnings/share? Because inside these numbers is yet more factors.
For instance, if we all buy Target stock the price will rise independent of how many people walk through the door. Yet, we can measure relative strength by looking at earnings per share. But how is the amount of goods inside the cart measured and what effect does that have on the economy in the aggregate?
IOW, because of inflation, earnings/share might stay higher/consistent because the price of each item is higher, but the number of goods in the cart are greatly reduced. Should the amounts of goods and services be taken into account rather than looking only at monetary value? The divide between investment and consumption might be higher because of those hidden factors.
@twenty02 your thoughts as well, please? I also have something to add to our thoughts in our "no panacea" discussion.
Dynamics have changed. Inflation is up. Interest rates are up. Labor market is tight. In the interest of predicting how high the markets could go before the next crash, how do you see the proposed changes effecting the markets? The proposals: lower tax rates, increased world oil production, tarrifs, decreased regulations, ect.
Taking into account that stock prices are independent of the value of the underlying asset, there are many changes that have come about inside of that equation. Stock buy backs,and the resulting changes to earnings per share effect the trendline of the aggregate floor.
Wrt the strength of an individual company and asset price/earnings, there is another factor. Given inflation we say nominal gdp is much higher, so let's look at real gdp. Can we do that to earnings/share? Because inside these numbers is yet more factors.
For instance, if we all buy Target stock the price will rise independent of how many people walk through the door. Yet, we can measure relative strength by looking at earnings per share. But how is the amount of goods inside the cart measured and what effect does that have on the economy in the aggregate?
IOW, because of inflation, earnings/share might stay higher/consistent because the price of each item is higher, but the number of goods in the cart are greatly reduced. Should the amounts of goods and services be taken into account rather than looking only at monetary value? The divide between investment and consumption might be higher because of those hidden factors.
@twenty02 your thoughts as well, please? I also have something to add to our thoughts in our "no panacea" discussion.
Well, yes. But this ratio -- between goods (and services, but I'll just use "goods" for shorthand) and the number of dollars chasing them -- is the reason that "inflation is, always and everywhere, a monetary phenomenon." Many factors can affect prices of certain goods or categories of goods. But wholesale inflation can really only be gauged by looking at the entire range of dollar-denominated goods relative to the money supply.
When central banks increase money supply to facilitate government spending that can't be paid for but for this expansion, rather than as a response to growth in the other elements of Aggregate Demand (AD = C + I + G + (X-M)), then we are going to see rates of inflation higher than the historical target. If money supply is expanded commensurate only with these other elements, then it will be tracking production in a healthy and rational way.
Until and unless our policymakers get their arms around the growth of government expenditures -- and/or the reduction of current tax revenues used to pay for them -- then we should expect higher rates of inflation going forward. There is virtually no way that productivity gains are going to fill the gap we have, let alone the gap we're headed toward. I do think that advancements in AI will help immensely . But they probably aren't going to be enough to get us where we need to be on the major metrics.
The entire industrialized world should be watching Argentina closely. Few countries have recently experienced these problems to the degree that they have. And the early results of their reforms are very promising, and very instructive for all nations that have worked their way into intractable public debt situations.
On that note, did you ever figure out how/ what I was talking about wrt the FFS schedule and why hospitals and providers wouldn't be as worse off as you thought?
I'm currently setting in the elevator line, but I started to add up the costs...I will report back, but over the past 10 years it has cost us like 2.5 trillion dollars...just to the debt. And that number is set to grow exponentially over the next 10.
I read and understood the argument. But I don't agree with it. It's not the intended consequences of these kinds of changes that I'm concerned about.
If we want to get healthcare costs down, without just creating new problems or exacerbating current ones, then we need to start by getting our incentive matrix in line (or at least more in line) with where it is for all other markets and industries that don't chronically suffer from high prices, tight supplies, poor quality, etc.
We've displaced it in search of a unicorn -- which is something that doesn't exist in the real world. And we've convinced ourselves that healthcare can't operate like that because we can't treat triple bypass surgeries the way we treat consumer electronics (or whatever). There is some truth to that, of course.
But, for instance, where is the connection between lifestyle choices, general wellness, and health insurance cost? We take it for granted that, for instance, smokers are going to pay higher premiums for life insurance than non-smokers. Of course they should. Why don't we follow the same logic for health insurance? Not just with smoking, but with general fitness metrics like BMI...etc.? Shouldn't somebody who is likely to incur more healthcare costs also have higher insurance premiums?
Instead, what many are trying to do is make healthcare insurance premiums a function of.....income.
Why do you say tax revenue needs to be reduced? I get and agree with reducing spending. Tax wise, looking at G20 countries, we have some of the lowest rates in most categories. Income and Corporate or both towards the bottom.
I didn't say tax revenue needs to be reduced. In fact, I was saying the opposite. Maybe it wasn't worded clearly.
Policymakers need to get spending down, revenues up, or some combination thereof.
But why do you think my proposal wouldn't work specifically?
I will try to finish crunching the numbers, but guessing:
2.5T reduction in debt from 2014-2024
7T reduction over next 10 years
5T tax cut equivalent from 14-24
10T tax cut equivalent next 10 years.
Why specifically?
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Because it leaves the primary source of the problem in place.
As such, just putting pressure on prices through public policy - a light form of price control - will result in providers having no other choice but to pare those things which constitute supply in order to adjust.
Why do you think so many healthcare systems in the world suffer from the classic symptoms of shortage?
Based on your response, you don't understand. Price controls that include compounding interest IS the primary problem.
And everything in healthcare has that same problem. That is why every graph you come across is a compounding interest curve. Everything.
The idiot is you.
Studies have shown that the US Federal Reserve/CentralBank is among the very lowest in the world in independence.
Dincer & Eichengreen 2014:
Studied 4 indices of Central Bank independence for 89 countries. The US ranked 82nd, 83rd, 84th, and 87th.
Garriga 2016:
Studied 2 additional indices for 179 countries.
The US ranked 136th and 158th.
Look at Binder & Spindel 2019:
Effect of political pressure upon Fed/Central Bank decisions.
Do you EVER research even a tiny bit prior to to your invariably misinformed bloviating?
You’re just arguing for even harsher price controls. It won’t solve the issue.
Start on the fiscal side if you want to automate. The Fed govs are ten times smarter than your average Congressmen
I understand compounding. You’re proposing reducing the annual growth rate of FFS, which leads the reimbursement rates of private insurers.
Is that a fair summation of your view?
Yet you are ok with fiscal decisions being made despite pork barrel and political implications?
It would be great. It would also be virtually impossible. Appropriating money is the primary source of their power. And they’d have to be the ones to forfeit it to something else.
Hard to fathom.
Frankly, it’s hard to fathom Congress taking this power away from the FOMC. But it’s at least easier to fathom than them stripping themselves of their most lucrative power.
Yes and no. We agree that these tax cuts were positively correlated, but my interpretation is that the coefficient was low, relatively to many other pro-bubbilicious contributors (interest rates, Fannie and Feddie underwriting changes, proliferation of MBS, etc.).
Hard to say because they all have individual and combined implications. In other words, increased oil production would seem to put pressure on prices and underlying inflation, given shipping/logistics costs can be factors in inflationary problems and ultimate collapse in demand (see prior to GFC).
Several of those are also inflationary in nature (lower taxes, higher tariffs) - so hard to weigh in collectively because of magnitude, timing differences, etc. Besides, if I knew, I'd be managing a fund.
Stock prices are a factor of two things - the underlying earnings per share and the valuation (P/E) that someone ascribes to an earnings stream. We can argue all day if stocks are overvalued because earnings haven't kept up with prices, but neither of us is right or wrong because we aren't the market. In aggregate, investors determine value and continuously reevaluate that multiple. That's the beauty of the markets.
I don't get this comment. We look at Real GDP all of the time - that's the quoted figure. EPS is also inclusive of inflation for two reasons. Either margins get compressed because input costs (material, labor) rises faster than a company can raise prices or a margins grow because it can raise prices by more or faster than its costs increase. Either way, those concepts are reflected in earnings.
This is also measured by investors, analysts, etc. Don't you remember the concern about subscriber growth with Netflix or user growth with Facebook? Everyone monitors the number of phones that Apple is selling, not just the Revenue line.
If goods get more expensive, volumes go down for producers of those goods (Target's suppliers) and retailers of those goods. We know that higher levels of inflation reduces aggregate demand. It's a mathematical and logical fact.
I assume institutional investors are doing this, which may lead them to sell a stock or value Target at less than Walmart in an inflationary environment. I don't understand why: A) you don't think this is being monitored and factored into valuations and B) why it matters vs. what real GDP growth looks like. If the economy is growing, including the impact of inflation, that's a net positive, right?
Is there a thread on missed on this topic? I'd enjoy catching up on it.
I agree, but just because one thing is easier than the other doesn't necessarily mean that you should endorse it. An algorithm can be optimized, but it can also be influenced and I have no doubt that the influencers are going to be biased. At least the FOMC can disagree or fight back.
