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pmchem posted:I'm not sure precisely what you mean by saying the fed started tracking a published rate in 1970, but the fed has certainly provided bank funding with published rates for decades prior to that. The FEDFUNDS series at FRED goes back to 1954:
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# ? Oct 2, 2023 03:48 |
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# ? Jun 8, 2024 21:55 |
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hypnophant posted:even japan has seen some signs of inflation over the last year or two so I wouldn't even bet on that. but the BoJ has been a real thought leader in creative solutions to monetary policy constraints, so if they want money to be easy they'll find a way The difference is the rates don’t really change, that article was from 2018 and when I purchased in 2021 they were similar. I should go check now, but I would be shocked if they went up even half a % point. When we talked with the bank, they said any variable rates only change at 5 year intervals on the (35-year) mortgage, and rarely more than 0.1% up or down each time. And yeah, the inflation here has been Real Bad - spring and summer 2022 was a conga line of food, beverage, and other consumer-facing companies announcing they were raising prices on hundreds of items for the first time in 25+ years - made worse by the BoJ keeping the yen in what I’d call “historically weak” territory (130-140s to $1). It was closer to 110:$1 not long ago, and before Abenomics it was in the 70s!
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# ? Oct 2, 2023 06:28 |
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food specific stuff is still absolutely due to the war. ukraine grew huge amounts of grain for export thats rotting in siloes, russia has huge fertilizer factories failing to run because of dead dudes or because of sanctions and refined fuel shortages, etc etc etc
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# ? Oct 2, 2023 07:13 |
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ultrafilter posted:Prices were lower as others have mentioned, but a lot of people also took variable rate mortgages so as to get relief if interest rates dropped. My first mortgage was an ARM but it was because the rate was much cheaper. The plan was always to refinance (or sell) in 5 years. Either into a 30 year if rates were then lower (likely), or into a new ARM.
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# ? Oct 2, 2023 08:08 |
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You could get 0.5% to 1% fixed rate 10 to 15 year mortgages in Germany before 2022.
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# ? Oct 2, 2023 10:57 |
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This economy feels like some sort of bluffing game. Everyone’s trying to not be the first to flinch and panick sell/go bankrupt. Each industry is trying to buckle down and wait for some other industry to fail first. Weird bluffing game. And then you have the tech giants spending in a war over AI. Microsoft is actually considering private nuclear reactors for their servers, straight out of cyberpunk.
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# ? Oct 2, 2023 14:10 |
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Hasn't it always been that way? At some point, something will give or something will happen. The only question is what and when but that's essentially impossible to predict.
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# ? Oct 2, 2023 14:20 |
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generational population collapse is baked in along with a collapse in immigrations documented or not (mostly from the roni, but its a lagging effect on labor supply) so there will be a secular rise in wages for the first time in 50 years in america, prolly
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# ? Oct 2, 2023 14:34 |
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street doc posted:Weird bluffing game. And then you have the tech giants spending in a war over AI. Microsoft is actually considering private nuclear reactors for their servers, straight out of cyberpunk. Everybody is looking at private nuclear reactors. SMRs haven't been built yet but there's a strong case* for vertically integrating your power generation for stuff like mining oil sands and what not, and not having to pay for utility exec salaries, giant fixed infrastructure costs for the entire region, etc. Poland wants them for Cities: Skylines style district heating that tangentially makes power *Big "IF": if the financials pan out
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# ? Oct 2, 2023 19:10 |
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saying 'nuclear' has been a magic incantation for 400% cost overruns for the last 50 years. see if it doesnt hold for that new poo poo, but if it holds it can't be cheap
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# ? Oct 2, 2023 19:27 |
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Eh, that Microsoft is going to nuclear isnt much of a story On the surface: "gosh our AI is so good and popular that we will have to build our own nuclear reactors just to keep up with demand!" Under the surface: its just a press release saying that Microsoft has agreed to buy output from a 50MW reactor that does not exist, but maybe will in "about 5 years". Even if it is built, it is a tiny amount of power compared to Microsoft's datacenter footprint. And it will certainly be orders of magnitude more expensive than solar+batteries, or other zero carbon energy that could be built today.
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# ? Oct 2, 2023 20:00 |
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drk posted:On the surface: "gosh our AI is so good and popular that we will have to build our own nuclear reactors just to keep up with demand!" I can promise you power execs are saying exactly this over drinks
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# ? Oct 2, 2023 20:21 |
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I'd believe it more that megacorps are hedging their bets given public power infrastructure is decaying to the point of no longer supporting their needs, ala Texas.
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# ? Oct 5, 2023 17:53 |
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Job report looking stronger than expected...New York Times posted:U.S. Job Growth Remains Strong Once again, doomers in shambles.
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# ? Oct 6, 2023 16:17 |
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isn't that not good? fed is going to need to raise rates more. 150k part time positions added, 21,000 full time positions lost. Slight uptick on multiple job holders. (Table A9) 61,000 of jobs created were at restaurants and bars. Government jobs up 70,000. Vast majority of job gains are in lower pay service sectors. Or jobs in government largely due to government stimulus.
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# ? Oct 6, 2023 16:27 |
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rates bein high or low is not good or bad. high fucks over borrowers but is soccour to the lender: low the opposite. are you a lender or borrower?
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# ? Oct 6, 2023 16:30 |
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Regarding US debt and yields, I’m curious to hear people’s takes on Dalio’s debt crisis scenario, as discussed by Ed Yardeni here: https://www.linkedin.com/pulse/debt-crisis-scenario-edward-yardeni Wall of text so you don’t have to go to linkedin: quote:The following is an excerpt from the October 4, 2023 Yardeni Research Morning Briefing. tl;dr — dalio/others worry that demand side for treasurys cannot keep up with issuance and it will get worse if we go into recession (lower tax collection) without pulling back on fiscal budgets. The high yields on new bonds mean interest payments may create a runaway deficit and runaway yields that is only solved through major financial crisis and deflation. Yardeni is more skeptical but concedes that it’s troubling to have huge/rising deficits as the economy is still slowly expanding. It is kinda hard to see an easy path out of this while the fed is restrictive.
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# ? Oct 6, 2023 16:42 |
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bob dobbs is dead posted:rates bein high or low is not good or bad. high fucks over borrowers but is soccour to the lender: low the opposite. are you a lender or borrower? Rates being high is bad when you're particularly concerned about inflation.
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# ? Oct 6, 2023 16:47 |
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pmchem posted:Regarding US debt and yields, I’m curious to hear people’s takes on Dalio’s debt crisis scenario, as discussed by Ed Yardeni here: The path is obvious to me - don't wait for a recession to raise taxes, do it now. Depressingly absent from these sorts of articles is any note of the massive tax cuts the republicans have repeatedly enacted in the past decades, largely for the wealthy. Unfortunately, there is no clear path to raising taxes on the wealthy while the republicans control the house and can use an effective filibuster in the senate. So instead, we'll continue to see the deficit expand.
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# ? Oct 6, 2023 17:00 |
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Some pundits are now beating the drum for a bipartisan fiscal commission to start looking at the deficit, hyping up a bill by from a California democrat and a Michigan republican to form such a commission. The logic being that the commission will lay the groundwork to make some counter-cyclical economic moves (raising taxes, cutting spending) that aren't possible now but might be after the 2024 election.
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# ? Oct 6, 2023 17:05 |
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That essay is pretty interesting, are they suggesting at ~4% yield the Treasury Bond Market doesn't have enough buyers to sustain government debt spending? And the two solutions would be either tell the Fed to lower rates to maintain spending, or, I'm not really clear on option B, bad things happen and solve for itself? How close to this scenario are we really The tech job market stalled last year and into this summer (particularly this spring) but everyone seems to have adjusted expectations on slimmer margins and have recommitted to hiring again Leperflesh posted:The path is obvious to me - don't wait for a recession to raise taxes, do it now. I'm not wholly convinced Republicans control the house, democrats just voted the Republican speaker of the house out of office despite having a narrow minority. It's almost like we have a fledgling three party system, if not actually in name yet
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# ? Oct 6, 2023 18:40 |
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Big thanks to everyone for continuing to link to primary sources and follow the Golden Rule of the thread: Don't link to Tweets in this thread It's a crazy rule but so far seems to be working and has continued support so going to stick with it for the foreseeable future
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# ? Oct 6, 2023 18:43 |
My understanding is that the downgrade was over concern that the Republicans would cause a debt crisis, not the debt or deficit size itself.
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# ? Oct 6, 2023 20:18 |
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pmchem posted:Regarding US debt and yields, I’m curious to hear people’s takes on Dalio’s debt crisis scenario, as discussed by Ed Yardeni here: I've heard similar things from other sources recently as well, and I think the whole scenario is a morality play from spending hawks who are still clinging to austerity economics. A couple points in no particular order: As Leperflesh points out, the fiscal deficit isn't actually very hard to solve - except politically. Just raise taxes. We can easily afford current spending levels, and even pay for desperately needed transition infrastructure and other programs, by raising the top marginal rate and squeezing capital gains harder. This will increase revenues substantially and will not cause a recession, nor will it deter long-term investment. There's no basis in economics to believe the US is anywhere close to a tax level that will have those effects. Next, the "debt crisis scenario." The example that deficit hawks tend to point to is Argentina or Venezuela. It is completely absurd to think that the US will ever look like Argentina. The very simple reasons I think this are: 1. Like Argentina, the US borrows in dollars. Unlike Argentina, the US can print dollars, and collects dollars as tax revenue. The US doesn't need to get dollars by exporting goods and services, and will therefore never have a shortage of dollars to repay its debts; 2. The US economy is very isolated relative to Argentina (and every other developed country); 3. Most US debt is owed to US citizens, unlike Argentina where it's mostly owed to foreigners. 2 and 3 mean that there's no real way for debt repayment to impact prices and cause a cost of living crisis like in Argentina. Most of the things we buy are priced in dollars, so there's no exchange rate risk to worry about, and debt repayments mostly end up in American hands getting spent on American goods. Then we have the technical details about how yields going up plus the strong dollar is bad, actually, and will ultimately lead to the aforementioned debt crisis through some rube goldbergian mechanism, which if you dig down often involves BRICS somehow. My alternative hypothesis is that the ten-year yield is up because investors finally believe the fed will keep rates higher for longer - i.e., the thing the fed's been saying since October - meaning there's less pressure to lock in those high rates now. This is where I think these guys are really going astray. They thought the Fed's action would cause a recession that would force the Fed to lower rates again. That recession hasn't arrived and they're starting to lose credibility, so now they're pivoting to an alternative explanation of why there's still going to be a recession and it's still going to be the Fed's fault and rates are still going to have to go back down. It stinks of motivated reasoning to me - all the evidence right now is pointing to a soft landing, unbelievable though that is to Fed-haters, so they need to explain away the evidence or find some reason why it confirms what they've been saying all along, actually. Discendo Vox posted:My understanding is that the downgrade was over concern that the Republicans would cause a debt crisis, not the debt or deficit size itself. Completely accurate. It would be better if we could avoid a crisis but if the alt-right do manage to force one, it'll be resolved very quickly when everyone agrees to hang Matt Gaetz in the street. It has nothing to do with the fundamental solvency of the US government, or its capability (not political will) to raise tax revenue. hypnophant fucked around with this message at 20:53 on Oct 6, 2023 |
# ? Oct 6, 2023 20:24 |
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Eventually they'll have to do what every dying empire does, devalue the currency (via inflation). Monetary policy can only do so much and at 5% interest rates servicing our existing $33T debt is already an over $1 trillion yearly budgetary expense expense, more than we currently spend on the military. And that will keep compounding because not only is our existing debt high but our budgets will keep getting more in the red every year. Meanwhile our government is senile and corrupt. There will be no drastic fiscal changes in either tax revenues or controlling future expenses. They'll just keep passing continuing resolutions. Politicians might make noise about cutting government spending but austerity is a no go with the voter. They'll try to keep raising rates to control inflation until global banking crisis 2 hits or our government becomes functionally broke from debt spiral eating ever bigger parts of the yearly budget. Then they'll give up, bring back QE and the money printer, and inflation will probably hover around double digits for many years.
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# ? Oct 6, 2023 21:06 |
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zero reason to believe any of that unless you also think bond vigilantes are about to blow up US federal securities as soon as debt-to-GDP ratio passes
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# ? Oct 6, 2023 21:30 |
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didnt we have a fairly decent administrative change on mere enforcement of tax law?
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# ? Oct 6, 2023 21:30 |
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Look back by virtually any metric normalized as percentage of GDP and it's looking bleak. Even the idea that our tax rates are low, which I assumed to be true remarkably doesn't seem to be the case. Tax revenue as a percentage of yearly GDP is currently around 20%, but it has been in a pretty consistent 15-20% band going all the way back to WW2. Tax Revenues estimated for 2023: $4.8t Spending: Entitlements: $3.8t Defense $0.8t all other discretionary spending: $0.9t debt interest: previously est $0.8t, but probably over $1t Meanwhile the $33t blob of existing debt keeps getting locked in at higher ~5% rates as it circles back due. If literally all government spending was eliminated except entitlements and servicing the existing debt, the budget might just barely balance for the year and not increase existing debt. Which gives a glimpse of the scope of the problem.
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# ? Oct 6, 2023 21:41 |
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are you now gonna something something bitcoin or gold
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# ? Oct 6, 2023 21:45 |
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ibonds and TIPS because their yields rise with inflation
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# ? Oct 6, 2023 22:04 |
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Subvisual Haze posted:Look back by virtually any metric normalized as percentage of GDP and it's looking bleak. this amounts to another bad argument for austerity policy. sensible economists ought to regard austerity as completely debunked by now; recent exemplars include the UK under Truss and Germany, currently enjoying being the subject of another round of "sick man of Europe" discussions. IMO the idea that government spending crowds out investment is completely suspect, but that's a theory debate: the evidence is that cutting your way to growth never works, but there's no evidence in economic data for any "tipping point" at which either a stock or flow variable (debt-to-GDP or fiscal deficit, respectively) becomes "unsustainable" - an ambiguous concept in itself. Subvisual Haze posted:ibonds and TIPS because their yields rise with inflation you think the federal government is going to become insolvent, so you want to lend more money to... the federal government?
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# ? Oct 6, 2023 22:22 |
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Subvisual Haze posted:Tax revenue as a percentage of yearly GDP Hmm that's a new one on me Leperflesh fucked around with this message at 22:34 on Oct 6, 2023 |
# ? Oct 6, 2023 22:32 |
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hypnophant posted:you think the federal government is going to become insolvent, so you want to lend more money to... the federal government? Solvency is never a risk unless the US GOV actively decided to default, because our debt is denominated in our own currency. But if the currency loses real purchasing power as measured by CPI or PCE or whatever, then TIPS are profitable investments if held to maturity. We… just went through all this? See for example, a similar comp with VTIP vs VGSH for the most recent period matching VTIP’s duration: https://stockcharts.com/freecharts/perf.php?VTIP,VGSH&n=625&O=011000
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# ? Oct 6, 2023 22:34 |
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Looks to me like tax revenue as a percentage of GDP is (and has been, consistently for decades) well below OECD averages and is currently (as of 2021) 32nd out of 38 OECD countries. Looks to me like we could easily raise taxes by 8 to 10 percent of GDP without harming the country. Let's see. US GDP: ~24 trillion. 8% of that would be a bit less than 2 trillion. Total US fiscal deficit: ~1.38T. Oh.
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# ? Oct 6, 2023 22:39 |
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How much of that pandemic relief was outright stolen again? I think I've seen 10% conservatively. Fraud and waste seems endemic throughout every system right now. If we had some decent leadership, think we could shake a half trillion (less than 10% of the annual 6.5T spend) out of the tree pretty easily.
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# ? Oct 6, 2023 22:48 |
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These are nice ideas. I would even approve of them. Do you perceive these things as likely to happen?
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# ? Oct 6, 2023 22:50 |
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Today? No. But the premise we started with is that the US empire is doomed to an inflationary death spiral and collapse, and I think raising taxes (and fighting fraud within the system) will be far more politically viable if/when we find ourselves hard up against that possibility. The prediction that the government will engage in Subvisual Haze posted:raising rates to control inflation until global banking crisis 2 hits or our government becomes functionally broke from debt spiral eating ever bigger parts of the yearly budget. Then they'll give up, bring back QE and the money printer, and inflation will probably hover around double digits for many years. is implausible to me compared to the much more straightforward remedies of raising taxes and/or cutting spending.
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# ? Oct 6, 2023 23:01 |
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I don't think we're going to raise income taxes by 8% across the board, but I also subscribe to the MMT idea that debt isn't a meaningful fiscal constraint so it doesn't matter. However, I do think the influence of tax protestors on fiscal policy is past its peak. We'll find out in another month and a half but I don't see a way for the eight dumbest republican congresspersons to force through massive, and massively unpopular, cuts. They might be able to force a voluntary default, and I expect that will be the end of any meaningful career they have in congress.
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# ? Oct 6, 2023 23:05 |
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It's not difficult to return to a highly prosperous government via higher tax bracket for wealthy individuals. There is plenty of historical precedence for doing so. We're stuck because of bought politics where they imagine this idea won't pass, not because of some stupid Ray-Dalio doomerism on the USA, which has been his thing since forever. Deficit is increasing because people are saving a lot, for now.
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# ? Oct 6, 2023 23:09 |
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# ? Jun 8, 2024 21:55 |
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I admire the purity of heart and faith many of you have in the eternal economic growth of America.
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# ? Oct 6, 2023 23:13 |