Said some guy, quoted in "Recast as ‘Stimmies,’ Federal Relief Checks Drive a Stock Buying Spree/The government set out to prop up the economy. It may also be propping up the market" (NYT).
Analysts at Deutsche Bank recently estimated that as much as $170 billion from the latest round of stimulus payments could flow into the stock market. They conducted a survey of retail traders in which respondents said they planned to put roughly 40 percent of any payment they received — or $2 of every $5 — into the stock market. Traders between the ages of 25 and 34 said they expected to put half of their stimulus check into stocks....
The willingness of millions of Americans to use emergency federal assistance as play money for speculation speaks to the unique nature of the current economic downturn and the government response to it.
Play money? I suppose the government expected us to buy items of merchandise and restaurant meals. I would have thought that saving your money is the most dull, conservative thing to do, and if you save, aren't you supposed to invest and not just leave your money in your bank account?
Also, "propping up the market"? Propping? Didn't look to me like it was sagging.
पोस्ट्स
१२५ टिप्पण्या:
We saw this last time the checks were handed out...
The state would love to be able to tell what to do with your money. The next stimulus will be in EBT cards.
and How Much of the $1.9 Trillion dollar stimulus went to the people's $1,400 checks?
330,000,000people* $1,400/person ==$462,000,000,000== $462Billion==$0.462 Trillion
WHERE'S THE REST? WHERE'S THE OTHER ONE AND A HALF TRILLION Dollars?
Seriously! A trillion here, and a trillion there....Pretty Soon; you're talking REAL Money!
If the NICS checks during those periods after the previous two 'stimmies' are any indication, a lot of people are buying guns. I suspect a lot of people will be using the money to buy more guns and ammo...or silver (which btw as completely decoupled from the comex, paper silver will be worthless in a year and the level of comex buyers standing for delivery right now is unprecedented).
I salute this behavior. Fuck gun control and fuck Biden. Also, fuck the federal reserve.
Just shows that this wasn’t needed.
One doesn’t need a Nobel in Economics to know that this is going to end badly. Big inflation.
Dave Begley, Master of the Universe, says buy commodities and real estate. Equity REITs are good. You can buy farmland REITs.
Stock market?
Joe Biden is president.
This is the same writer that advocated selling your house, and becoming a renter......because understanding finances is hard.
Money can't go into the market. You only buy what somebody else sells. The stock changes hands and the money stays outside.
It is not conservative for you to invest 2 out of every 4 of my dollars into your portfolio.
The Fed has been propping up this market for years.
For those who need help, the $1400 will get 1 mortgage payment- maybe- out of the way. Perhaps rent and some groceries. One time. Then what?
Well, what then is that Nancy Pelosi's faves around the US and the world get to live high off the hog for another 5 years or so. The rest of us are left holding the bag. Your 3 year old granddaughter or grandson will be working their entire lives in a sort of indentured servitude paying the interest on it all.
For others who did not need it, it is play money. I had a friend comment that he was going on a vacation with it. I guess that's kind of a stimulus for the hotel or resort, restaurants, airline he'll be using. I guess. But after a year of a shutdown, with more being talked about, this is not any help for anyone other than the favored groups of the politicos. It is the theft of freedom for the upcoming generations.
tommyesq
Once you give something to someone it is no longer yours.
Your Grandchildren will be cursing the assholes who passed this bill that THEY will be paying for.
My favorite part of the quote is the need to explain that 40% is the same as 2/5.
Also, "propping up the market"? Propping?
The propping up would be by the Fed, who purchased $700 billion in financial assets un 2020. Our obsession with the stock market is a symptom of a much larger problem in our society: the role of the financial industry in the economy and its influence on the political system. We never successfully addressed the structural problems that gave us the 2008 recession. Instead, Wall Street has become structurally dependent on cheap money from the Federal Reserve.
I'm riffin' off of Jeff Foxworthy.......
"You might be Negro, if....."
Ann, I don't think the kids YOLOing their stimmies on shares of Gamestop and AMC think of it as "saving" their money.
Just remember that the stimulus - all stimulus - isn't 'your money' as many say.
No. They spent your money already. They spent it 40-50 years ago. It's long gone. The money you're getting they made up out of thin air. The money you're receiving is worse than an IOU. It's accrued interest on top of accrued interest borrowed in your name and added to a obligatory tab with outrageous vig taken out in your name. And your kid's names. And their kids names.
They spent your money already. You're not receiving anything that's already yours. What you're really receiving is a bill, to be paid at a date later, with outrageous interest, and placed on your tab without asking you while they slide a few peppermints on the check saying "thank you so much for your business!!!"
At my advanced age I’d prefer to pass my...stimmy...on through to the next generation. If only they would’ve shown some small sense of appreciation for the thousands of earned dollars I’ve given to them over the past decades. Maybe some kid in El Salvador could use it to get educated and make El Salvador great again.
“I suppose the government expected us to buy items of merchandise and restaurant meals.”
“The government?” By that you refer to “the Democrats.” The only expectation they have is that you vote for munificent Democrats.
It doesn’t seem likely that they would expect the money to be spent in restaurants given that lockdowns have forced many - particularly locally owned - out of business. Others are having difficulty finding servers due to increases in unemployment benefits.
Democrat do nothing for the good of the country. They serve only the interests of grifters, freeloaders and special interest groups that identify with Their party.
I get that these stimuli should be inflationary. But I look at long term interest rates like a 30 yr fixed mortgage (3-4%) and long term bonds and am not seeing it.
Rather I am seeing expectation of inflation as close to zero. This by pros with the most skin in the game. They've been wrong before of course. Wool be again.
In a growing economy one can print lots of money. If growth of both tracks together, there will be no inflation. We had good growth in the pdjt years thus no inflation. I find it hard to believe we will continue that growth under Biden.
If not, we will get inflation.
Thankfully we will have grownups back in the wh by the end of the year.
John Henry
This use of tax dollars would be a great idea and a true effective stimulus if we did it instead of all the normal wasteful spending, but we still do that too, so remember on your deathbed, if your grandchildren are allowed to visit, to just say "I'm sorry" as your last words. Eventually, they will hate you anyway for what we did. I used to regret never having my own children. Not anymore.
MV=PQ
As immutably as π = 3.14159...
John Henry
I suppose the government expected us to buy items of merchandise
Sweetheart, guns are items of merchandise.
Maybe some kid in El Salvador could use it to get educated and make El Salvador great again.
Have you ever been to El Salvador?
We never successfully addressed the structural problems that gave us the 2008 recession. Instead, Wall Street has become structurally dependent on cheap money from the Federal Reserve.
Yes, but it will be over soon. Maybe 5 years or less. Hemingway's comment about bankruptcy comes to mind.
Dave Begley, Master of the Universe, says buy commodities and real estate. Equity REITs are good. You can buy farmland REITs.
If I were younger I would be buying farmland. The son of Richard Russell, whose "Dow Theory Letter" I read for years, has been farming in Oregon (I think) for years. Of course, he will need guns, too.
"so remember on your deathbed, if your grandchildren are allowed to visit, to just say "I'm sorry" as your last words."
Hey, it ain't my fault, and it ain't yours either.
The market didn't need any propping up.
Where's my damn check?
"Thankfully we will have grownups back in the wh by the end of the year."
I don't see how that could happen anytime soon. Has anything taken over by the insane left gone back to sanity. I can't think of a single enterprise or institution that has. The rot is total, and we have already gone past the point of safe return. The media and government are so thoroughly dishonest now that most of the people don't even know it's happening, so they could react appropriately. Half the country thinks our problem is white supremacists, which none of us have actually met or seen and who have no positions of power anywhere.
Blogger John henry said..."I get that these stimuli should be inflationary. But I look at long term interest rates like a 30 yr fixed mortgage (3-4%) and long term bonds and am not seeing it.
Rather I am seeing expectation of inflation as close to zero. This by pros with the most skin in the game. They've been wrong before of course. Wool be again."
This has been puzzling for awhile. I think it might be because they see an absolute collapse in the future.
"The willingness of millions of Americans to use emergency federal assistance as play money for speculation ..."
For people who have lost their jobs, $1,400 is a help, but not a big one. To those of us who have not lost our jobs, it's an unexpected lump of money in the bank account. What did they expect me to do with it? Eat it? I'm already putting a quarter of my income into investment funds. Why would I treat this extra cash any differently?
RHHardin:
Money flows into the market through IPOs and equity offerings by established companies. (But flows out in stock buybacks).
Hair:
Forget percentages (math is hard) some people say “one year anniversary” and “five year anniversary” instead of “anniversary” and “fifth anniversary”. Ann is one of them.
I did the math here a few nights ago. At this point in time, the federal government, via one arm or another, has doled out 5 trillion dollars worth of "stimulus"- trillion with a "t". If you had just sent every single American of any age or income level, that would have worked out to $15,000 per person. Now, ask yourself this- how much did your family get per person after you get the latest 1,400 check? My household got $3200/person, and we got the maximum amount one could qualify for. Where do you think the other $11,800 went to?
The country is being looted on an unprecedented scale.
If they're surprised, they must not visit the internet much. I may visit the internet too much, because I'm not seeing support for a wide variety of stocks - just GME and AMC.
It's not all staying in stocks. After some gains, those GME-liking apes (not derogatory, this is what they call themselves) donated over $330k to the Dian Fossey Gorilla Fund. When the donations started coming in, the organization changed their homepage to say "Apes Strong Together", which, of course only got them more donations from WSB redditors.
Diamond hands, to the moon!
"Hey, it ain't my fault, and it ain't yours either."
We didn't stop it. We trusted too much, and maybe that's what always goes wrong. The people of Venezuela, once rich and prosperous, voted for socialism and trusted that the military, the people they voted for, and their neighbors would never let tyranny take over, and we have been just as foolish. We put dishonest, greedy fools in charge. What did we expect in return.
get that these stimuli should be inflationary. But I look at long term interest rates like a 30 yr fixed mortgage (3-4%) and long term bonds and am not seeing it.
As long as there's an interest rate target, it's not printed money. It's converted into debt in open market operations elsewhere.
they are definitely, some of the less capable school of the americas grad were in charge in the attempted 2002 restoration, that forgot the first rule of latin american fight club, don't let your prey go, regardless, one could also fault them from not winnowing out chavez, arias and alcala, the last was the one behind the coup attempt three years ago, cabello who actually runs the country, who gets the lions share of the revenue from the sun cartel, might have been another,
"Where do you think the other $11,800 went to?"
Windmills?
I just got back from Maui. There is an ugly line of windmills going up a beautiful mountainside from the coast. The entire 10 days I was there, I never saw them working. They look very expensive and not in a good way. I think the primary purpose of windmills is not to produce power, but to steal money. They should just make them really small, like maybe a foot high. They would still accomplish their intended purpose.
"We put dishonest, greedy fools in charge. What did we expect in return."
No way I voted for this shit.
seeing as robin hood and their lender, was shorting stocks people were really interested in, one wonders how well this will work,
bagoh20 @ 10:41 AM... Childless wife and I say "oh well" too. Fleecing of America continues. We therefore thank your grandkids in advance, for the ride.
"I suspect a lot of people will be using the money to buy more guns and ammo...
I salute this behavior."
Salute? Not me. Replenishing the ammo supply has been a tough row to hoe.
It should be like Biden says about illegal immigration, Come on, but not NOW!
I'll let you know when I have an adequate stockpile.
THEN buy all you want.
A lot of the ammo is disappearing before it even reaches store shelves. I wouldn't be surprised to learn the US government is buying it from the wholesalers along with a lot of other people.
No way I voted for this shit.
Me either.
Blogger bagoh20 said...
"Thankfully we will have grownups back in the wh by the end of the year."
I don't see how that could happen anytime soon.
++++++++++++++++++++++++++++
Kamala resigns, President Emeritus Trump gets named VP, then Joe resigns.
Perhaps another scenario. In any event it will be PDJT again by the end of the year.
It better happen. I can't afford to lose $5 to the brussel sprout king. It is not the money so much as the question of honor.
In the long run, we're all dead. I'm in my late seventies so it's not such a long run either. I've been more bemused than enraged by the current administration. To date it hasn't been anywhere near as disastrous as I feared. Maybe it's a case of "apres moi, le deluge", but so far so good. In any event, I shall die with granite counters in my kitchen and a new bathroom.....Apparently the laws of gravity don't have anything to do with how quantum physics work. Maybe something similar happens with deficit financing when you do it and deficit financing when the government does it. I don't understand why there's no inflation, but there's no inflation just now. Maybe later.....DeBlasio ended stop and frisk. The crime rate didn't go up. For a few years. Then it did. Maybe something like that is happening now. The axle keeps turning after the wheels fall off--for a few revolutions.
Imagine, if you will, that your mortgage bank sent you a check for $1400, with the assurance that there’s just an unspecified but rather larger amount added on to your principal at an interest rate to be determined later. (Depending on whether other people pay their debts). Sorry but you have no say in the matter.
Actually in my case the “bank” just gave the money to other people and increased my debt.
As with everyone else who’s not in cahoots with the “bank” of course.
the stores seem to be having trouble coming up with the primers as well as the powders, that may because of bug rules, but perhaps other things,
"I don't understand why there's no inflation, but there's no inflation just now."
The inflation is there, William, it just shows up in financial assets first. Eventually people try to convert those financial assets into consumables en masse, then and only then will it show up big time in consumer prices. My sister and her husband have been trying to get a house built on a piece of property they purchased and cleared in 2019, but the prices and availability of construction materials is insane and scarce respectively. As long as the Fed focuses on the CPI measures only, they and everyone else misses the actual inflation that is occurring.
https://tomknighton.substack.com/p/the-war-on-the-right-continues
People who go short on tomorrow can write words too. I smell that in this.
Trouble is, the bubble nature of this market is no illusion. It's like picking up dimes in front of a steamroller by now. The market's not getting bigger, the dollar is shrinking. The fact that other currencies are shrinking faster doesn't change that.
The permanent government, the legacy media, and our monopoly social networks and retailers own this completely. After the fall, they'll be trying to convince us it never happened, or alternately, that is was Trump's fault and Russia was in cahoots. I think that's what all this Russia talk has been prepping the whole time, actually.
I'd also pay attention to how TPTB are insulating themselves from the coming storm.
Blogger bagoh20 said...
I just got back from Maui. There is an ugly line of windmills going up a beautiful mountainside from the coast. The entire 10 days I was there, I never saw them working. They look very expensive and not in a good way. I think the primary purpose of windmills is not to produce power, but to steal money.
Yup. About 5 miles from my house we have a wind farm, 18 windmills. Hurricane Maria tore up the blades of most of them, blew the head off one.
3-1/2 years later, nothing has been done to repair them, even though all they need is blades and a bit of refurbishment. Perhaps 10-20% of the original cost. Yet repair is not justified. All the profit in windmills is in building them, not in operating them. Even with a contract for 18 cents a KWH.
A few mile further on there is a 40 MW (nominal) solar farm. Since Maria the dept of energi has stopped publishing information on energy generation by source. So I can't be sure but I don't think it is generating power at all even though it is completely rebuilt since Maria.
I say this because shrubs and weeds are growing up over some of the panels shading perhaps 10-20% of the total. If it was generating revenue, one would think it would be economical to chop them back.
And OT but the other day I heard Shumer say that the US would have all electric cars, powered by renewables, by 2050. I did a back of the envelope calculation and got about 43,000 square miles of solar panels required. Just for gasoline powered vehicles. Doesn't include diesel. Strictly BOE and I would not defend it within +/-20% but that is still a Hell of a lot of land to take out of production. It is slightly less than Ohio, slightly more than Virginia.
43,000 fewer square miles of plants, shrubs and trees. 43,000 square miles of solar insolation not hitting the earth. What is THAT going to do to climate? Nobody ever wants to discuss that.
Ditto windmills. Wind that is converted to energy is no longer wind. Put enough windmills and you destroy wind patterns and quantities. I attended an energy conference about 10 years ago where someone presented a paper on the predicted effect of large quantities of windmills on the North Dakota climate. It was not pretty. Nor, as you point out, are windmills themselves.
John Henry
"As long as the Fed focuses on the CPI measures only, they and everyone else misses the actual inflation that is occurring."
I don't know how (I know about CPI) or where inflation is being measured, but a lot of everyday items seem to have gone up a lot in price over the past few months.
Gas, of course, has gone up a lot in my area and is already over $4 for premium and will probably be that price for regular by summer.
My Togo's sandwich is 25% more than a couple of months ago.
Just two examples from my everyday life...
Yeah, but the BLS assumes you will substitute some other food item that hasn't gone up in price for your Togo Sandwich, like, for example, road-kill stew.
It really is lies all the way down. It is the thing government officials are most qualified to do, lie.
All the profit in windmills is in building them, not in operating them. Even with a contract for 18 cents a KWH.
No, it is in the tax subsidies for doing so. No incentive to repair or maintain.
churchill told us as much, now cd prospekt probably deserved a downgrade for that terribly rushed cyberpunk 2077
Blogger Yancey Ward said...
but the prices and availability of construction materials is insane and scarce respectively.
But that is NOT inflation. That is a price increase in construction materials. That is a function of market demand.
You, like many people, may be using the wrong definition of inflation.
Inflation is a GENERAL rise in prices.
If construction costs are going up, it means that something else is going down. (in a non-inflationary/deflationary) economy.
Inflation can only occur when there is an increase in the money supply or velocity relative to economic activity. The money supply can increase in several ways, mostly by govt actions.
Velocity is how fast money turns over. If people see inflation in the future, they spend money as soon as they get it before inflation takes away the value. This increased velocity effectively increases the money in circulation, causing inflation which then increases velocity causing more inflation and so on. It is why inflation, once started, is so hard to stop.
The expectation of inflation causes inflation.
Inflation is very hard to measure and very imprecise. we should try but will never be very good at it and must look at it as a very rough measure.
Look at long term interest rates. These reflect what the people responsible for loaning money AND getting it back think inflation will do. Right now, they think inflation for the foreseeable future (20-30 years) is about zero.
MV=PQ
Increase M (money supply) while decreasing V (velocity) and holding Q (number of transactions) stable and P (average price per transaction) will remain stable.
That's average price. Something, like construction materials, will go up, something else, like electronics, will go down. Think how much a terabyte of memory cost just 20 years ago. Tens of thousands of dollars. Now, 3TB for $80 at Costco. The average price for all goods will stay the same.
I've seen a lot of explanations for the cause of inflation over 45 years of studying, reading, discussing and occasionally teaching economics. Most of them use a lot more words. All of them without exception boil down to MV=QP
John Henry
Blogger John henry said...
But that is NOT inflation. That is a price increase in construction materials. That is a function of market demand.
Clarification:
Actually other factors including market demand but also supply, regulation, transportation costs, weather and more.
But it is not "inflation". Or even inflationary unless in the indirect sense that people see 2X4 prices go up and, expecting inflation, increase their spending velocity. Increased velocity does cause inflation.
John Henry
There’s a certain kind of guy who calls stimulus checks “stimmies,” job benefits “bennies,” the family pet “doggo,” and so on.
In a word, “unmanly.”
No, John Henry, inflation doesn't have to be general to be called inflation. As you yourself note, prices in one area can be offset by declines elsewhere. Now, you can invoke the velocity argument, but even there financial asset purchases are not counted. My point is that the CPI as calculated is missing the actual inflation that is occurring, and the CPI is also missing the actual rise in consumer prices that is starting to show up after 5 trillion in stimulus and a disruption in supply chains. I suspect, but will have to look to prove, that the rise in the cost of building houses is somehow discounted out of the CPI because the rise of house prices is manufactured into some sort of asset for the purchaser.
History is full of warnings and all showing the same mistakes, but our people are maleducated.
From the Washington Examiner via Instipundit:
"Back in the 1970s, the nation of Chile embarked on one of the boldest sets of free market economic reforms in history. The government called in the Chicago Boys, as they were called, led by Milton Friedman and other University of Chicago free market economists.
They were given a free hand to redesign the Chilean economic system with property rights, a low flat tax, privatization of the Social Security system, and industry deregulation. In 1991, Friedman wrote that Chile now has “the three freedoms: economic freedom, political freedom, and human freedom. It will be interesting to see if they can keep it.”
For four decades, the experiment worked better than anyone could have imagined. According to a study by economist Axel Kaiser for the Cato Institute: “Between 1975 and 2015 per capita income in Chile quadrupled to $23,000, the highest rate in Latin America (CNP 2016). As a result, from the early 1980s to 2014, poverty fell from 45 percent to 8 percent (CNP 2016).” Chile became one of the wealthiest nations in South America. And it happened in three decades, an eye blink of history.
The Marxists and intellectual class of Latin America always hated the free market reforms. They disparaged the Chicago boys as “fascists.” They spent decades attacking the policies (with the stooges in the American media echoing their protests) even as Chile became the jewel of South America.
The Marxists invented a narrative of “inequality,” “the rich were getting richer, and the poor were getting poorer,” and capitalism is evil.
They infiltrated all of Chile’s cultural institutions: the media, the schools, the universities, the Catholic Church, the arts, the unions, and even the corporate boardrooms. They spread their poisonous creed of collectivism to the populace.
Is any of this sounding familiar to our situation today?
Eventually, the leftists pulled off a political coup. In 2013, the Left won the Chilean presidency. The free market reforms were systematically replaced with “spread the wealth” platitudes. In October 2020, voters approved a rewrite of the constitution, and now property rights and the rule of law are in danger.
Chile is now in economic free fall. The poor are getting crushed. The rich are pulling their money out of the country. They have arrived at “equality.” Nearly everyone is suffering.
Meanwhile, back in America, we have an economic transformation of our own going on. The Biden administration promises to help the middle class by handing out trillions of dollars of free money to citizens and paying people more money for not working than working. We will borrow trillions of dollars and pray that the Chinese continue to buy up our bonds and that our currency holds up.
Many of our constitutional protections and congressional rules of behavior, such as the filibuster, which protects the rights of the minority, may be headed to the shredder. The election laws are getting rewritten to benefit, significantly, the party now in power — the Democrats. The House has passed a bill requiring millions of working-class people to join unions and pay dues. The Left is saying, don’t worry, this compulsion is going to help the working class. Sure.
A sock-it-to-the-rich tax increase is coming that will make the productive class and the job creators pay their “fair share” with tax rates of 50%, 60%, and 70%.
Will this story have a happy ending?"
Funny how the personal saving rate skyrocketed after the previous 2 stimulus payments.
From the second quarter of 2019 to the second quarter of 2020, employee compensation declined 2.7% and personal outlays declined 9.8%, but personal disposable income from net government transfers increased 16.7%.
https://research.stlouisfed.org/publications/economic-synopses/2021/02/12/personal-saving-during-the-covid-19-recession
“Kamala resigns, President Emeritus Trump gets named VP, then Joe resigns.
Perhaps another scenario. In any event it will be PDJT again by the end of the year.”
QAnon ravings.
We had good growth in the pdjt years thus no inflation. I find it hard to believe we will continue that growth under Biden.
And they will say Joe "inherited" it.
why he's enabling everything they need to have done,
yes even with pinera, they mounted this offensive via caracas and other places,
A 2019 IRS analysis shows that Americans report on their taxes less than half of all income that is not subject to some form of third-party verification like a W-2. Billions of dollars in business profits, rent, and royalties are hidden from the government each year. By contrast, more than 95% of wage income is reported.
Unreported income is the single largest reason that unpaid federal income taxes may amount to more than $600 billion this year, and more than $7.5 trillion over the next decade. A proposal to aid enforcement of tax laws and crack down on cheaters among business owners includes requiring banks to provide the IRS with an annual report on a business' "inflows and outflows" to compare with their individual tax filings.
But if the government is set on a total inflow/outflow verification of cash, individual taxpayer data would also need to be verified. If this plan happens to work, government deficits could be halved in a decade as tax collections soar, so not only will higher-rate taxpayers pay more in tax, bank fees will likely increase by some huge factor due to this "shorthair" data grab. So then can we expect a run to crypto-currencies? Perhaps now is the time to invest in bitcoin using "gummint freebee" dollars.
"Play money?"
Well, yeah, if you start sending checks to people who aren't poor.
"Also, "propping up the market"? Propping? Didn't look to me like it was sagging."
Well, yeah, but the MSM can't say that the market did very well under Trump.
"Will this story have a happy ending?"
We're headed for a bad place.
Sexual harassment?
Yancey,
You can call a dog a cat, a man a woman or your dear Aunt Fanny "inflation" if you like.
Calling it inflation doesn't make it so.
The only generally accepted definition of inflation is "A general increase in prices".
Consumer Price Index, Producer Price Index (Which does measure the price of construction materials, BTW) and other indexes, attempt to quantify how much of an increase there has been based on a survey of selected items in selected markets. It is, as I noted, an imperfect measure and at best a proxy or guess at the inflation rate.
But that does not change the definition of inflation. It is a GENERAL rise in prices. You will get quite a lot of disagreement about causes, but when you actually listen to the disagreements, they boil down to Too much money (or Velocity) relative to the economy.
MV=QP is an iron law, just like gravity. No way around it.
If you think inflation is something else, find me a reputable economics, financial, or banking source that defines it differently.
John Henry
Blogger grimson said...
Funny how the personal saving rate skyrocketed after the previous 2 stimulus payments.
Which at least partially explains why no inflation. Putting the money in the bank, means slower velocity.
Also, because of kung flu, fewer transactions. And, in the reverse corollary of expectation of inflation leading to increased velocity and inflation, worries about the future reduce velocity, leading to less inflation or even deflation.
Goose M, lower V & Q, and P, prices, stay the same. (Average prices across all goods and services) MV=QP, QED
John Henry
@bagoh20:
The Marxists invented a narrative of “inequality,” “the rich were getting richer, and the poor were getting poorer,” and capitalism is evil.
They infiltrated all of Chile’s cultural institutions: the media, the schools, the universities, the Catholic Church, the arts, the unions, and even the corporate boardrooms. They spread their poisonous creed of collectivism to the populace.
Is any of this sounding familiar to our situation today?
If people on the right would read less Oswald Spengler and more Karl Marx, they would have a much clearer understand of our present condition. That "narrative" was not "invented." It was an accurate description of what was happening. That pattern happens everywhere neoliberal reforms are enacted. Market liberalization introduces a tremendous amount of volatility and uncertainty into people's lives. Also, having a large percentage of your population dependent on wages paid by business owners for survival can easily lead to exploitation.
Every significant country has a mixed economic system. Friedman's free market, free trade, small state, classical liberalism is a fantasy. It's never existed and never can exist. The most liberal country in the 19th century was Great Britain. Did it have a small state? No, it had a global empire. In a world full of powerful centralized states, no state is going to dismantle itself. Doing so would open it to domination by state powers. In the modern world you either have a state of your own or be a part of someone else's.
It is the business class that most benefits from the state. The driving force for a centralized national government in the early Republic was the northeastern industrialist and merchant class, typified by Alexander Hamilton. The driving force for a decentralized state was the southern agrarian class, typified by Thomas Jefferson and later Andrew Jackson. The industrialists decisively won in the second half of the 19th century. The national government engaged in a number of economic modernization programs designed to assist commerce and create and develop markets. The end result is a small group of financial elites who posses a tremendous amount of power in society that they wield for their benefit and at the expense of the lower socioeconomic classes.
Is any of this sounding familiar to our situation today?
Perhaps members of the working class were noticing this social arrangement of wealthy oligarchs controlling state power, and perhaps it was this privileged, insular economic elite that was driving resentments and dissatisfaction in the society rather than some amorphous group of nameless "Marxists" who "infiltrated all of Chile’s cultural institutions: the media, the schools, the universities, the Catholic Church, the arts, the unions, and even the corporate boardrooms." The world "infiltrated" doesn't even make sense in that context.
"The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood." -Karl Marx, The Communist Manifesto
I have done pretty well predicting the economic winds during most of my life, but the times that I got it wrong were always in underestimating the power of Americans to rally economically through business big and small.
In Vegas, everything if filling up again, shows are restarting, and they are sold out in advance. Flying to Hawaii and back, our flights were completely full on every leg. Florida and Texas seem to be taking off. Pent up demand is fueling a fast return where things have opened up. Structurally though, we are very weakened from a year of taking money and avoiding work and education, and now reinstalling all the failed policies of the past and doubling down on the stupid. Our system is badly broken, but our people are hungry, although some have been broken by the shutdowns and easy money. I'm not confident long term, but if they let things open up, we will have at least a short term wave of American animal spirits. It's almost impossible to restrain it at this point, which will let the Democrats do a lot of long-term damage under the cover of that rally. They keep throwing rocks in our backpack, and we keep trudging forward.
Farmer, we are not heading toward a mixed economy, we are heading away from it.
How many businesses have you built, people have you employed, products brought to market, taxes paid? In short, how much free market experience do you have? I don't think you speak from experience, but from reading instead the perspectives of people who didn't do much of that.
Blogger Inga said...
QAnon ravings.
Do you follow QAnon, Inga?
I don't and have not heard this theory, kamala resigning etc, anywhere else. I thought I was original.
Got any sources for anyone else saying anything similar? PEDJT back in office by legitimate constitutional process.
I think even you would agree, no matter how far fetched it might seem today, my prediction passes all legal and constitutional muster. Or do you have doubts it would be legal to appoint PEDJT VP should Kamala resign? Or for VPDJT to succeed Biden if he resigned?
I have seen some theories by others of how PEDJT could take back the oval. All of them seem of questionable constitutionality.
Would you care to make it interesting? I've got $5 says he is back in the oval before January 3. Can you afford to cover that?
In the event of Harris, Biden or Trump dying, the bet is off. Also not betting on method, though I can't see any other. Just betting that he is legitimately president by the end of the year.
John Henry
@John Henry:
MV=QP is an iron law, just like gravity. No way around it.
It's not an "iron law." It's a tautology. See the definition of velocity. What does it consider money supply (M)?
"Friedman's free market, free trade, small state, classical liberalism is a fantasy."
Huge strawman, as is often the case. Nobody argues for what you are arguing against.
"“Between 1975 and 2015 per capita income in Chile quadrupled to $23,000, the highest rate in Latin America (CNP 2016). As a result, from the early 1980s to 2014, poverty fell from 45 percent to 8 percent (CNP 2016).” Chile became one of the wealthiest nations in South America. And it happened in three decades, an eye blink of history."
Did that not happen? Would you have predicted such a fantasy? I doubt it. You can't even accept it after it happened.
J Farmer,
Iron law, tautology, call it what you like, and I admit iron law is a bit of hyperbole.
Great question. Just what is "money"? And what is the money supply?
Is bitcoin "money"? I would argue probably not, since it relies on destruction rather than creation of value. OTOH, you can use it as a store of value, medium of exchange and all the other things you can do with money.
Should we count just M1? Or M1, M2 and all the other Ms that the govt and others use? Is a farmer's corn stored in a silo "money"? I would say that it meets all the requirements to be "money". There are better forms of money of course, but that doesn't make corn not money.
We could have a veeeerrrrrry long discussion on what is money.
But in response to your question, I think the short answer is M is whatever units are used in the other parts of the equation.
John Henry
I never heard anybody in regular life mention QAnon, Proud Boys, or Boogaloos. I only see it from people who need a boogieman justifying all sort of hatred for common Americans. As soon as you bring them up, it means you don't understand what's going on in the country, or do not want others to.
"So you think that money is the root of all evil?" said Francisco d'Anconia. "Have you
ever asked what is the root of money? Money is a tool of exchange, which can't exist
unless there are goods produced and men able to produce them. Money is the material
shape of the principle that men who wish to deal with one another must deal by trade and
give value for value. Money is not the tool of the moochers, who claim your product by
tears, or of the looters, who take it from you by force. Money is made possible only by
the men who produce. Is this what you consider evil?
"When you accept money in payment for your effort, you do so only on the conviction
that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears not all the guns in the world
can transform those pieces of paper in your wallet into the bread you will need to survive
tomorrow. Those pieces of paper, which should have been gold, are a token of honor--
your claim upon the energy of the men who produce. Your wallet is your statement of
hope that somewhere in the world around you there are men who will not default on that
moral principle which is the root of money, Is this what you consider evil?
"Have you ever looked for the root of production? Take a look at an electric generator
and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try
to grow a seed of wheat without the knowledge left to you by men who had to discover it
for the first time. Try to obtain your food by means of nothing but physical motions--and
you'll learn that man's mind is the root of all the goods produced and of all the wealth that has ever existed on earth."
-Francisco Domingo Carlos Andres Sebastián d'Anconia
Read the whole thing
Atlas Shrugged, that is.
John Henry
I'm old enough to remember the Fed throwing a bunch of money at a strong economy to "prepare" for Y2K.
The aftermath was unpleasant. Unless you were net short. Which I was. Paid for my first house with the profits.
Thanks Alan!
Unreported income is the single largest reason that unpaid federal income taxes may amount to more than $600 billion this year, and more than $7.5 trillion over the next decade. A proposal to aid enforcement of tax laws and crack down on cheaters among business owners includes requiring banks to provide the IRS with an annual report on a business' "inflows and outflows" to compare with their individual tax filings.
>>
And y'all will have wished you heeded my advice, posted right here at the end of 2020.
Offshore bank account.
Second passport.
at a minimum.
Do it before you lose it.
Putting a -y or an -ie to the end of words (hoodie for sweatshirt, pittie for pitbulls) is yet another stupid ghetto affectation on par with "baby bump" and leaving the sticker on your baseball cap.
I never heard anybody in regular life mention Antifa. I only see it from people who need a boogieman justifying all sort of hatred for common Americans. As soon as you bring them up, it means you don't understand what's going on in the country, or do not want others to.
I never heard anybody in regular life mention Antifa.
My God you're fucking stupid.
Jack Klompus said...My God you're fucking stupid.
Based on her comment about Antifa, I am wondering if it is something more serious. She is obviously delusional and I wonder if the cause is organic or psychiatric.
the black bloc, murder cops, destroy store fronts, tear down monuments, yes regular folk,
Jack,
We kind of know that. But is she stupid enough to bet me $5?
John Henry
I'm proposing a new currency called bullet-coin.
Buy as much as you can now.....cause in the future.....it will be freely exchanged!!
“Based on her comment about Antifa, I am wondering if it is something more serious. She is obviously delusional and I wonder if the cause is organic or psychiatric.”
Dr. Lecter, aka Francisco D, who said he wants to eat my sexual organs and Ritmo’s brain about two years ago in these comments sections,when he was drunk as a skunk, I’d say he’s mostly always drunk. Or he’s a dry drunk. Or he’s a psychopath. He has numerous times in the past mentioned sexual mechanical devices and has made sexual comments regarding sex online to me, a 69 year old woman. If he would be of normal psychological functioning, it would stand to reason he would know better than to be such a vile pig.
"I never heard anybody in regular life mention Antifa. ..."
You're lying again.
The worst and most widespread rioting in the country's history was all over the news and the internet for an entire year, and continues today. It was all surrounded by BLM and ANTIFA flags and signs. Arson, looting, assault, and murder - hours and hours of it on video by these two groups. How much of that do we have with your boogiemen waving their flags and Hawaiian shirts? Pure dishonest stupidity.
“I never heard anybody in regular life mention QAnon, Proud Boys, or Boogaloos.”
You’re lying or you live under a rock.
"I never heard anybody in regular life mention QAnon, Proud Boys, or Boogaloos."
"You’re lying or you live under a rock."
Not necessarily. If it's literally 'mention' as in 'spoken,' then I don't doubt it at all.
People aren't getting face-to-face much these days, and even if they were, my circle of friends would have no idea who those groups/people are.
Now on the internet? Hard to avoid there.
If you watch news outlets that talk more about QAnon than Antifa, then you probably think most Blacks are being killed by cops, Trump colluded with Russia, and Biden was blown down three times by a slight breeze.
OK, that last one is at least believable.
@John Henry:
But in response to your question, I think the short answer is M is whatever units are used in the other parts of the equation.
The equation of exchange is useless. You have to adjust assumptions about velocity in order to equalize the equation. Velocity is a useless construct, necessary only to balance the equation. Even assuming a "quantity of money" could be determined, all you end up saying is something akin to total payments equal total receipts.
Sure, the equation always works, but that doesn't tell us very much useful information about the real world. Human behavior drives price levels, and humans do not act in mechanistic ways. The macro economy is an emergent phenomenon of social interaction and is not well understood, certainly in no way that could be described in terms of a simple mathematical model. The macroeconomic profession relies on a lot of complicated-sounding mathematics to hide the fact that it is political philosophy masquerading as science.
"You’re lying or you live under a rock."
Unlike you, I have not been hiding in my house for the last year getting all my info and human interaction through a screen, and being told how Andrew Cuomo is a sexy genius and Fauci is a reliable source. I've actually been talking to real people, working with them, dining with them and traveling. Still never heard anyone mention those groups. Seems unlikely that they would be destroying the country and my conservative friends are following them, but never mention them at all. When was the last time you even saw a real human in person?
Russia Collusion Dead Ender Truther Inga: "You’re lying or you live under a rock."
The people who supposedly hear alot about the Proud Boys, boogaloo-ers and Qanon (No one has ever provided a single link to any Qanon type message/posting/commentary) are the very same people who saw:
- The non-existent russian/Trump collusion
- Saw the "truth" in every debunked hilarious lie in the hoax dossier (where the author admitted under oath there was not a single verified assertion...and still isnt to this very day)
- Saw the non-existent treasonous traitorous spying by Flynn/Carter
-Saw the non-existent money laundering of russian oligarch cash supposedly by Trump
- Saw Brett Kavanaugh lead a mass rape gang for 2 decades...
...you get the gist.
And yes, there is no one more emblematic of those lunatic conspiracy theories than our resident dolt Inga.
Did you know that just weeks ago Inga doubled down on every one of those lunatic claims?
LOL
Her new hope lies in Cy Vance's old office of democratical henchmen.
Good times, good times.
Meanwhile, child traffickers everywhere are rejoicing at the Inga-approved, "spark of divinity' Biden Earpiece Open Borders For Sex Traffickers policy.
Just grab any kid in a border town and walk across the border and claim to be a "family" and the democraticals will salute you and send you on your merry way...after which you can sell the poor child into Inga-approved "spark of divinity" sex slavery.
I suppose the government expected us to buy items of merchandise and restaurant meals.
I repeat myself -- I have enough crap. I don't need to buy more. In fact, most people have too much.
If people on the right would read less Oswald Spengler and more Karl Marx, they would have a much clearer understand of our present condition.
I could not agree more. If there’s one thing that unites Republican and Democratic elites, it’s the desire to replace existing working-class American citizens with cheaper illegal-immigrant labor and pocket the savings. On this Marx's prophecy has been proved correct even if he could not envision the exact details.
J. Farmer,
"The most liberal country in the 19th century was Great Britain. Did it have a small state? No, it had a global empire. "
Oh good grief. Large or small compared to what?
Stimulus money won't stimulate anything if it is sitting in a low interest rate bank account. Spend and multiply!
It is prudent not to suffer fools, however wise you may think you be by doing so.
“It is prudent not to suffer fools, however wise you may think you be by doing so.”
I so agree. One of the reasons I no longer respond at all to Drago.
Spend and multiply!
Be fruitful and multiply. Too many Ases, dysfunctional orientations, Gaiaists, and Pro-Choicers. One step forward, two steps backward.
Stimulus money won't stimulate anything
Redistributive change, first, refundable credits, and public smoothing functions (e.g. welfare). It stimulates inflation.
Meanwhile, child traffickers everywhere are rejoicing at the Inga-approved, "spark of divinity' Biden Earpiece Open Borders For Sex Traffickers policy.
Child traffickers. Rape-rapists. Human mules. Drug (e.g. fentanyl, Floyd RIP) peddlers. Democratic gerrymandering. Collateral damage at both ends of the bridge and throughout. Violations of civil rights, and crimes again humanity, in progress.
J Farmer,
I don't see what you are getting at. Are you saying the concept of velocity of money flow is bogus? Or that it never changes? You certainly don't need it to make the equation work. If velocity were constant, you could take it out of the equation. Then M=PQ and the equation still works just fine.
But money does have a velocity and it changes. Usually fairly gradually, occasionally pretty quickly.
If it makes you more comfortable, call it turnover. How many times does a dollar get spent in a year. One dollar spent in 20 transactions a year is worth as much as $20 spent once in a year.
When people feel worried about the future, are they going to have a job? whatever, they will tend to be more cautious with their money, making fewer transactions and smaller transactions. Assuming they are not worried about inflation, of course.
Or, they are locked down and have fewer opportunities or need to eat out, travel, drive in their cars, go to movies, shop etc. This also means that the money is circulating more slowly, lower velocity, in effect, stuck under a mattress.
Since the money is not being spent, it can't cause inflation.
On the other hand, when people think they see inflation, or think they see it coming, they spend their money as fast as possible on the fear that it will be worth less tomorrow. That drives velocity up and causes prices to rise. Most basic econ texts talk about "Too much money chasing too few goods" which is just another way of saying the same thing. As prices rise, people see inflation and spend their money even faster, driving prices up, causing people to spend faster, driving prices up and... rinse and repeat. It is why inflation, once started, is so hard to stop. How do you convince people it is going to stop?
Fear of inflation also increases borrowing, further exacerbating inflation. I had little problem with a 10.5% mortgage in 1983 because 1) It was a lot better than the 17% mortgage I had at the time and 2) I knew inflation would make me whole by inflating the house price and my income.
One problem with ending lockdowns is that this will dramatically increase velocity. People will go out and spend money they are not spending now. That will goose the economy, soaking up some, a lot? of the extra spending. But enough to prevent inflation? That is the danger.
So when you say velocity is not a thing (is that what you are saying?) I say bullshit.
John Henry
So Inga, do we have a bet or not? Strangely quiet on this you are being.
John Henry
---we have been just as foolish. We put dishonest, greedy fools in charge. [bagoh2O]
Or did we? I get your larger point. But on this one statement, recall that Biden got an extraordinary record number of votes but their House candidates flamed out. Because they didn't print the ballots marked down past "Joseph Biden."
They put themselves in charge and are waiting fearfully for the insurrection they know is due, overdue.
Our move, then. I think there is going to be one, but I have no idea what provokes the specific upheaval. Some piece of tinder will be one insult too far, to the Constitution or to the populace at large who are still astonished or disbelieving thet there was an actual theft of the Presidency.
---I don't understand why there's no inflation, but there's no inflation just now. [William]
Stocks are the most inflated in history. Those putting their stimmies into the stock market are taking incredibly poor odds.
@Darkisland:
Then M=PQ and the equation still works just fine.
So when you say velocity is not a thing (is that what you are saying?) I say bullshit.
It is a thing. It's a metric, an accounting identity, a ratio that connects two variables, prices and the money supply, which is what the theory claims in the first place. Hence, a tautology. It does not describe anything significant in the real world. It cannot predict prices as it has no causal relationship to prices, which can rise, fall, or stay the same regardless of velocity.
@Kirk Parker:
J. Farmer,
"The most liberal country in the 19th century was Great Britain. Did it have a small state? No, it had a global empire. "
Oh good grief. Large or small compared to what?
Compared to every other state in existence at the time. For example, Great Britain adopted a formal policy that the Royal Navy would be at least equal in size to the next two largest navies combined. It's also captured in the concept of Pax Britannica.
Of course J. Farmer is going to misunderstand the discussion. No one here was saying Britain didn't govern more territory than anyone else. I was, rather, making the claim that they did so with a relatively tiny state apparatus.
Consider this, which Churchy laFemme contributed to the "Brains" discussion:
British rule from the time after the mutiny is often called the Raj. During this period a tiny number of British officials and troops (about 20,000 in all) ruled over 300 million Indians.
@Kirk Parker:
Of course J. Farmer is going to misunderstand the discussion. No one here was saying Britain didn't govern more territory than anyone else. I was, rather, making the claim that they did so with a relatively tiny state apparatus.
Consider this, which Churchy laFemme contributed to the "Brains" discussion:
I always love being told that I "misunderstand the discussion" by someone who doesn't understand what I was talking about. By "relatively tiny state apparatus," you mean relative to contemporary states, and that's obviously true.
But did Great Britain have a "tiny state apparatus" compared to other states at the time, even the so called "great powers"? You bring up "officials and troops" but leave out the Royal Navy. Was it "relatively tiny" compared to contemporary navies? Which state had more power in the 19th century, Great Britain or Qing China?
Inga said...He has numerous times in the past mentioned sexual mechanical devices and has made sexual comments regarding sex online to me, a 69 year old woman. If he would be of normal psychological functioning, it would stand to reason he would know better than to be such a vile pig.
Yes. The delusions definitely stem from psychiatric causes. Poor thing.
Being ugly and stupid is a tough way to go through life. No wonder she is so resentful of people on this blog who have normal lives.
“Inga said...He has numerous times in the past mentioned sexual mechanical devices and has made sexual comments regarding sex online to me, a 69 year old woman. If he would be of normal psychological functioning, it would stand to reason he would know better than to be such a vile pig.”
“Yes. The delusions definitely stem from psychiatric causes. Poor thing.
Being ugly and stupid is a tough way to go through life. No wonder she is so resentful of people on this blog who have normal lives.”
I’m not surprised Dr.Lecter, aka Francisco D, denies that he has behaved as a vile pig toward me numerous times over the years. I am not surprised he is not ashamed of his behavior. That is NOT normal. He should’ve not have gotten so drunk that he made such disgusting statements to me, a 69 year old grandmother of 5. If Dr.Lecter thinks he behaved normally and lives a “normal life”, he is a very poor representation of a psychologist.
What I’ve observed about him is that he has sadist tendencies, that he often comments under the influence, or if he isn’t under the influence he has mental problems. One does not speak to a person on the internet or anywhere for that matter, in a such a vulgar sexual manner. It doesn’t matter if he doesn’t agree with me politically, he should have internal monitors that would prohibit him from speaking to me about my sexual body parts, online sex pick ups, sexual mechanical devices, and eating my sexual body parts, not even in jest or black out drunkenness. He claims his wife is a life long liberal, if he speaks to her in like manner and so disrespectfully I feel very sorry for her.
Francisco, I’m warning you that the internet is forever. And the disrespectful vulgar comments you’ve made to me are still there. I’d suggest getting some therapy or going to AA. Every other Trumpist or conservative that comments here can manage not to be a sexual deviant toward liberal women on these threads. I will call you out on your behavior every time I need to.
J. Farmer,
You bring up "officials and troops" but leave out the Royal Navy. Was it "relatively tiny" compared to contemporary navies?
Um. Britain had a large navy because it's an island state. Chesterton went nuts on this subject during the Great War, but he was right: Germany wanted a nice big navy b/c Britain had one, but the cases simply aren't comparable. Germany had land defense, as was proper to it; the UK had naval defense, as was proper to it.
I, in turn, love it when people commit own goals while they are trying to straighten you out. Look, if you want to change the question from "who had the larger state apparatus" to "who had more power", we can certainly do so.
Layne Staley
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