Economics and current events, no-tweet, no-tiktok: you posted a damn advertisement

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Economics and current events, no-tweet, no-tiktok: you posted a damn advertisement

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The junk collector: Aug 10, 2005; Hey do you want that motherboard?

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:
https://fred.stlouisfed.org/series/FEDFUNDS
and researchers have tracked it prior to that going back to 1928, via newspaper-published rates:
https://www.federalreserve.gov/econres/feds/files/2020059pap.pdf

I was being lazy. That's when the fed created Freddie Mac and they started tracking and publishing the average mortgage rates which is what the quoted chart was.

# ? Oct 2, 2023 03:48

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# ? Jun 8, 2024 15:55

harperdc: Jul 24, 2007

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!

# ? Oct 2, 2023 06:28

bob dobbs is dead: Oct 8, 2017; I love peeps; Nap Ghost

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

# ? Oct 2, 2023 07:13

Baddog: May 12, 2001

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.

# ? Oct 2, 2023 08:08

Busy Bee: Jul 13, 2004

You could get 0.5% to 1% fixed rate 10 to 15 year mortgages in Germany before 2022.

# ? Oct 2, 2023 10:57

street doc: Feb 20, 2019

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.

# ? Oct 2, 2023 14:10

Gucci Loafers: May 20, 2006; Ask yourself, do you really want to talk to pair of really nice gaudy shoes?

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.

# ? Oct 2, 2023 14:20

bob dobbs is dead: Oct 8, 2017; I love peeps; Nap Ghost

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

# ? Oct 2, 2023 14:34

Hadlock: Nov 9, 2004

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

# ? Oct 2, 2023 19:10

bob dobbs is dead: Oct 8, 2017; I love peeps; Nap Ghost

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

# ? Oct 2, 2023 19:27

drk: Jan 16, 2005

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.

# ? Oct 2, 2023 20:00

Hadlock: Nov 9, 2004

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

# ? Oct 2, 2023 20:21

Ghost Leviathan: Mar 2, 2017; Can't post for 2 hours!

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.

# ? Oct 5, 2023 17:53

LanceHunter: Nov 12, 2016; Beautiful People Club

Job report looking stronger than expected...

New York Times posted:

U.S. Job Growth Remains Strong
The labor market showed continued resiliency in September, adding 336,000 jobs last month, a sign that economic growth remains vigorous.

In a sign of continued economic stamina, payrolls grew by 336,000 on a seasonally adjusted basis, the Labor Department said on Friday. The increase, almost double economists� expectations, serves as a confirmation of the labor market�s vitality and the overall hardiness of an economy facing challenges from a variety of forces.

The unemployment rate was 3.8 percent, unchanged from August, as joblessness ticked back near record lows.

September was the 33rd consecutive month of job growth. Hiring figures for July and August were revised upward, with employers adding 119,000 more jobs to the labor market than previously recorded. But wage gains were cooler than expected, with average hourly earnings rising 0.2 percent from the previous month and 4.2 percent from September 2022.

Federal Reserve policymakers have tried to rein in both wages and prices by pulling up interest rates. Some financial analysts believe that continued resilience in wage gains and job growth could hasten a downturn by prompting the Fed to raise borrowing costs further during its next meeting in early November.

The unemployment rate has been below 4 percent since December 2021, a stretch not achieved since the late 1960s.

�This is an economy on fire,� said Samuel Rines, an economist and the managing director of Corbu, a financial research firm.

While the trend of gains remains impressive, experts warn against concluding too much from one month�s data. September figures frequently feature quirks from seasonal adjustments, as teachers return to work and summer workers in leisure and hospitality leave their jobs.

Once again, doomers in shambles.

# ? Oct 6, 2023 16:17

err: Apr 11, 2005; I carry my own weight no matter how heavy this shit gets...

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.

# ? Oct 6, 2023 16:27

bob dobbs is dead: Oct 8, 2017; I love peeps; Nap Ghost

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?

# ? Oct 6, 2023 16:30

pmchem: Jan 22, 2010

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.

Debt Crisis I: A Plausible Scenario? �We�re going to have a debt crisis in this country,� Ray Dalio, the founder of hedge fund Bridgewater Associates, warned in an interview with CNBC�s Sara Eisen that aired last Thursday. The two were speaking at a fireside chat at the Managed Funds Association. �How fast it transpires, I think, is going to be a function of that supply-demand issue, so I�m watching that very closely.�

Melissa and I referenced Dalio�s debt crisis scenario yesterday. It�s a simple plot that makes sense. We�ve been covering the story but haven�t concluded that it must end as badly as Dalio expects. Consider the following:

(1) Fiscal policy is out of control, as evidenced by the rapidly widening federal government budget deficit. Over the past 12 months through August, the deficit totaled $2.0 trillion, up from a recent low of $1.0 trillion through July 2022 (Fig. 1). It�s simple arithmetic: The trend in outlays is steeper than the trend in revenues (Fig. 2).

In the past, the federal budget deficit was counter-cyclical. As a percent of nominal GDP, it widened when the economy fell into recessions and narrowed during expansions (Fig. 3). As a percent of nominal GDP, outlays rose during recessions and fell during expansions (Fig. 4). Receipts tended to do the opposite of outlays.

So it is disturbing to see that outlays are rising while receipts are falling during the current economic expansion.

(2) It is widely assumed that the recent widening of the federal deficit is mainly attributable to the spending programs enacted by the Biden administration during 2022. In fact, the recent widening is mainly attributable to inflation, which has boosted federal government outlays on Social Security and net interest (Fig. 5).

Net interest totaled $634 billion over the past 12 months through August (Fig. 6). It has doubled since April 2021. It is the fastest growing of the federal government outlays categories (Fig. 7). We calculate that the federal government is currently paying about 2.50% on its outstanding debt held by the public (Fig. 8). The 2-year Treasury note is currently above 5.00%.

The biggest contributor to the bulging deficit in recent months has been a decline in individual income tax revenues during the current fiscal year after they were boosted last year when investors sold lots of their stocks that had capital gains during the 2022 bear market. They paid lots of capital gains taxes.

(3) Outlays will get boosted even more in coming years by all the spending Congress approved last year. In addition, the net interest expense of the federal government will continue to soar, as it has been doing ever since the Fed started raising interest rates aggressively in 2022.

(4) The Treasury supply issue came to the fore during the past summer, when the Treasury securities outstanding held by the public jumped by a whopping $1.4 trillion from June through August (Fig. 9). Fitch Ratings downgraded the federal debt from AAA to AA+ on August 1 on concerns about the mounting federal debt and the lack of political will in Washington to do anything to rein in the deficit. That announcement really marked the start of the Treasury bond market�s concern about too much supply relative to demand. The 10-year bond yield was 4.05% on August 1. Now it is almost 4.80%.

(5) So the bond market is adjusting yields upward to clear the market, i.e., to boost demand to meet the increased supply. The risk is that the market yield will crowd out the credit demands of the private sector. That would amount to a credit crunch, which would cause a recession.

In the debt crisis scenario, a recession attributable to excessive fiscal deficits would require the federal government to reduce spending and increase taxes, which would exacerbate the credit crunch and the recession. In a worst-case scenario, it could unleash a deflationary debt default spiral. In this scenario, the Fed might be forced to lower interest rates and to terminate its quantitative tightening.

Debt Crisis II: It Doesn�t Have To End Badly. Okay, now let�s come up for some air from these lower depths. So far, the Treasury bond yield has essentially normalized to the yield levels of 4.00% to 5.00% that prevailed from 2003 to 2007, before the �New Abnormal� (Fig. 10). That was the period from the Great Financial Crisis through the Great Virus Crisis, when the major central banks worried about deflation and obsessed about raising the inflation rate up to their 2.0% targets. During that period, interest rates were abnormally low and quantitative ease proliferated.

So far, the economy has proven remarkably resilient in the face of the three-year jump in the bond yield from a record low of 0.52% on August 4, 2020 to almost 4.80% currently. This raises the possibility that the economy can live with the bond yield back to its old normal level.

Then again, the velocity of the rate backup has been head-spinning, as it took only three years to fully reverse the decline in the bond yield during the 12 years of the New Abnormal. Depressing lagged effects on the economy are likely still to emerge. However, they might continue to play out as a rolling recession rather than an economy-wide recession. The rolling recession is currently rolling into the commercial real estate market.

What would it take to stop the Treasury bond yield from climbing well above 5.00% other than a deflationary debt debacle? Possibly the �immaculate disinflation� we expect. That is, we think inflation can continue to fall without an economy-wide recession. We also expect to see a slowdown from Q3�s consumer-led boomlet, with real GDP rising to between 4.0% and 5.0%. We think that Q4 real GDP growth will be back down to 2.0%. In this scenario, demand for Treasuries should absorb the supply with the yield south of 5.00%.

Be warned: If we see the yield soaring well above 5.00%, we (along with everyone else) will have to conclude that Dalio�s debt crisis might have started.

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.

# ? Oct 6, 2023 16:42

Lockback: Sep 3, 2006; All days are nights to see till I see thee; and nights bright days when dreams do show me thee.

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.

# ? Oct 6, 2023 16:47

Leperflesh: May 17, 2007

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:
https://www.linkedin.com/pulse/debt-crisis-scenario-edward-yardeni

Wall of text so you don�t have to go to linkedin:

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.

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.

# ? Oct 6, 2023 17:00

LanceHunter: Nov 12, 2016; Beautiful People Club

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.

# ? Oct 6, 2023 17:05

Hadlock: Nov 9, 2004

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.

Unfortunately, there is no clear path to raising taxes on the wealthy while the republicans control the house

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

# ? Oct 6, 2023 18:40

Hadlock: Nov 9, 2004

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

# ? Oct 6, 2023 18:43

Discendo Vox: Mar 21, 2013; This does not make sense when, again, aggregate indicia also indicate improvements. The belief that things are worse is false. It remains false.

My understanding is that the downgrade was over concern that the Republicans would cause a debt crisis, not the debt or deficit size itself.

# ? Oct 6, 2023 20:18

hypnophant: Oct 19, 2012

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:
https://www.linkedin.com/pulse/debt-crisis-scenario-edward-yardeni

Wall of text so you don�t have to go to linkedin:

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.

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

Subvisual Haze: Nov 22, 2003; The building was on fire and it wasn't my fault.

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.

# ? Oct 6, 2023 21:06

hypnophant: Oct 19, 2012

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 ~~90%~~ ~~100%~~ ~~120%~~ 140%

# ? Oct 6, 2023 21:30

bob dobbs is dead: Oct 8, 2017; I love peeps; Nap Ghost

didnt we have a fairly decent administrative change on mere enforcement of tax law?

# ? Oct 6, 2023 21:30

Subvisual Haze: Nov 22, 2003; The building was on fire and it wasn't my fault.

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.

# ? Oct 6, 2023 21:41

bob dobbs is dead: Oct 8, 2017; I love peeps; Nap Ghost

are you now gonna something something bitcoin or gold

# ? Oct 6, 2023 21:45

Subvisual Haze: Nov 22, 2003; The building was on fire and it wasn't my fault.

ibonds and TIPS because their yields rise with inflation

# ? Oct 6, 2023 22:04

hypnophant: Oct 19, 2012

Subvisual Haze posted:

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.

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?

# ? Oct 6, 2023 22:22

Leperflesh: May 17, 2007

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

pmchem: Jan 22, 2010

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

# ? Oct 6, 2023 22:34

Leperflesh: May 17, 2007

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.

# ? Oct 6, 2023 22:39

Baddog: May 12, 2001

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.

# ? Oct 6, 2023 22:48

Subvisual Haze: Nov 22, 2003; The building was on fire and it wasn't my fault.

These are nice ideas. I would even approve of them. Do you perceive these things as likely to happen?

# ? Oct 6, 2023 22:50

Leperflesh: May 17, 2007

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.

# ? Oct 6, 2023 23:01

hypnophant: Oct 19, 2012

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.

# ? Oct 6, 2023 23:05

notwithoutmyanus: Mar 17, 2009

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.

# ? Oct 6, 2023 23:09

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# ? Jun 8, 2024 15:55

Subvisual Haze: Nov 22, 2003; The building was on fire and it wasn't my fault.

I admire the purity of heart and faith many of you have in the eternal economic growth of America.

# ? Oct 6, 2023 23:13

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Economics and current events, no-tweet, no-tiktok: you posted a damn advertisement

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