I don’t think the US government had any intention of truly getting the US out of the 2008 recession. All it wanted to do was keep the banks afloat and inevitably dilute the mass bailouts that were given via QE. That’s totally different than building from the bottom up, your FDR ‘prime pumping’ of the average American.
Very different motives and one can argue that it wasn’t until COVID that the lower elements of society got help. But even then, they simply got a cash check. No programs to truly stimulate the society were implemented.
Just eliminating credit-card debt for Americans would be society changing.
Yeah, it would ensure nobody ever paid off their credit card again, for one thing... Just wait for the next round of debt elimination, and until then live the good life!
Well, the banks never paid their debt off. So, what’s the difference? Might be a decent idea to give debt amnesty and cap all credit cards to 5k so no one ever falls into irreversible debt.
If you did that, you may not even need to give everyone intense amounts of stimulus cash. Could also set up rent/mortgage limits nationwide. Unfettered capitalism in these areas wingclip the average person.
Could also cap all private colleges to a max 10k a year. I’ve seen things as absurd as 50k a year. I’m not sure why it’s so hard to figure this out, it’s not working for the majority.
The difference: nothing really. It's just that society appears to be able to hold on for a while with dysfunctional banks, while if no one wants to work again because money flows in through credit cards anyway, it seems to me things would go awry pretty damn quickly.
If you want to truly change the housing market, require that the owner of the house lives in that house full time as well. Under this scheme families can own one house, and companies cannot own houses at all. There wouldn't be any rent-seeking at all.
As for private colleges, they are not a necessity, so let them do as they please. Just, maybe, print mandatory yearly statistics about how their graduates are actually doing - that's enough information to tell people whether it's worth enrolling or not.
Let them do as they please as long as you don't hand out government guaranteed loans used to pay them. Colleges should have skin in the game - your graduates can't find decent paying job? - you are on the hook for the loan not the government. The incentives are just not right.
So when I move cities I have to quickly sell my house, or let it stand empty (or maybe let people live rent-free to avoid squatters)? Feels like quite a barrier to employment mobility
I'm pretty sure capping a CC at 5k would not do much.
This is a bit old info but the one I found:
Experian data shows that, as of December 2016, the average credit limit of a consumer with a Deep SubPrime credit score was $1,834. For consumers with SubPrime credit scores, the average credit limit was $2,645. Consumers with NonPrime credit had an average credit limit of $4,674. Those who have Prime credit scores had an average credit limit of $7,593. And consumers lucky enough to have SuperPrime credit scores had an average credit limit of $11,357.
$5k @~19% and the 4% min payment, you pay ~$200 for a total of over $8k over 137 months.
That's a _lot_ of months that you're going without being able to put anything else on your CC, since you're only doing the minimum payments.
What do people do then? Get yet another credit card. According to some quick Googling, the average American has about 4 credit cards.
After the 2008 recession, the government did make some big changes that had an impact.
They passed laws that capped the interchange fees of debit cards, which effectively killed debit cards
They passed a law that prevented banks from changing the interest rate on credit cards in almost all cases - effectively forcing banks to charge high interest rates at the beginning, which then drove consumers to pay off their cards each month, so now most consumers are "transactors" (instead of "revolvers").
You now have SUPER HIGH limits (like $50k) for rich people, but they pay them off each month
I was with your comment until the last part. There is no need to single out people with credit card debt versus not. Aid should be distributed with zero restrictions. Marginal income/wealth taxes will take care of ensuring poor people get more aid than rich people.
> I don’t think the US government had any intention of truly getting the US out of the 2008 recession.
Define "US government":
> I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”
Some people in government were trying to improve the economy, while others were tamping down or even (arguably) sabotaging the recovery for political purposes.
Ever notice how the debt and deficits were bad under Obama, then not a problem under Trump… and now suddenly they are again and there's sudden talk about not raising the debt ceiling under a Democratic president… again.
Take note of all the "economists" who suggested last year that printing tens of trillions of dollars will not result in inflation or recession, and never believe them again. OTOH, who am I kidding. Typical member of US public has the attention span of Dory from "Nemo".
> Take note of all the "economists" who suggested last year that printing tens of trillions of dollars will not result in inflation or recession, and never believe them again.
Idk, I just watched the house financial services meetings with JPOW and he kept saying "no for sure we pretty much all agree inflation will be transitory". So whoever the economists employed by the Fed are.
> Idk, I just watched the house financial services meetings with JPOW and he kept saying "no for sure we pretty much all agree inflation will be transitory".
Your quote states quite clearly that inflation was indeed expected.
At most, the claim was that the impact on inflation would not be permanent, which is a blatant truism. Nevertheless, that is not OP's claim.
You have been making these pedantic semantic arguments on all the replies in this thread. It’s pretty annoying. We all know that the NYT has been downplaying inflation concerns, lockdown concerns, etc. since the start of the pandemic. Just because what was posted doesn’t literally line up with OPs exact wording in every way doesn’t make the underlying sentiment wrong.
> The NYTimes regularly publishes articles such as "179 Reasons You Probably Don’t Need to Panic About Inflation"[0] with highlights such as:
And how much of the inflation statistics we're seeing are due to "money printing" (which, by the way, is done by private banks through credit creation, and not the Fed).
Was the spike in inflation due to a rise in prices in (used) cars due to demand-pull inflation of too much money? Or supply-push because of shortage of available stock?
The price of oil (futures) went negative last year and benchmarks like WTI plummeted, so is it any surprises that as people move more the price has rises YoY:
Is money printing the cause of bottlenecks at ports and the shortage of shipping containers?
Folks were saying that (a) we need government cash as a form of disaster relief (née 'stimulus'), (b) this may/will cause a spike in inflation, and (c) this is fine:
Would the US rather have an economy that is "too hot" with inflation or a recovery that falters and people lose their jobs (again)? Some would rather potentially run hot for a little while:
> There are risks both ways. If the Fed waits, inflation might become embedded, and bringing it back down again could be painful — though doable. On the other hand, if the Fed raises rates to head off an inflation problem that proves exaggerated, it could damage the economic recovery in ways that are hard to reverse. (Interest rates are still very low, so there would be little room for cuts if the economy weakens.)
> So wait-and-see looks like the prudent thing to do. I think current inflation is transitory, but I’m not sure. I am, however, confident that tightening monetary policy based on what we know now would be a big mistake, because the risks of moving too soon and moving too late are highly asymmetric.
> The NYTimes regularly publishes articles such as "179 Reasons You Probably Don’t Need to Panic About Inflation"[0] with highlights such as:
OP's claim was "Take note of all the "economists who suggested last year that printing tens of trillions of dollars will not result in inflation or recession".
Your own quotes state quite clearly that inflation was expected.
There's always Paul Krugman, who's always wrong about everything. But you don't need to go very far. Just turn on CNN and watch them say it on air. Alternatively, read WaPo or NyTimes. The official position of the White House, voiced from the podium by Jen Psaki is that inflation is pretty great, and indicates you're "buying more stuff". I wish I was joking, but I'm not. Enjoy that 6% yearly pay cut, folks. And pray to god it doesn't turn into 6% _monthly_ pay cut, like it did in Russia in the 90s.
I'm curious as I see this thrown around a lot; how does the slowdown in production and labor not factor into inflation, too? It seems to me like those are much stronger contributions, as the CPI items that are up the most are directly tied to those:
- Chip slowdown leading to more used car purchases
- Travel backpressure leading to more rental cars
- Labor shortage leading to food shortages
None of these seem to be directly tied to "printing tens of trillions of dollars" in my mind.
I rather like this section if the byline:
“He is not an economist, which is probably why he's been able to develop a working model of the global monetary system. His research is unique and informative in ways an economist would never consider.”
I’d like to learn more about the context behind that.
37 comments
[ 2.3 ms ] story [ 124 ms ] threadVery different motives and one can argue that it wasn’t until COVID that the lower elements of society got help. But even then, they simply got a cash check. No programs to truly stimulate the society were implemented.
Just eliminating credit-card debt for Americans would be society changing.
If you did that, you may not even need to give everyone intense amounts of stimulus cash. Could also set up rent/mortgage limits nationwide. Unfettered capitalism in these areas wingclip the average person.
Could also cap all private colleges to a max 10k a year. I’ve seen things as absurd as 50k a year. I’m not sure why it’s so hard to figure this out, it’s not working for the majority.
If you want to truly change the housing market, require that the owner of the house lives in that house full time as well. Under this scheme families can own one house, and companies cannot own houses at all. There wouldn't be any rent-seeking at all.
As for private colleges, they are not a necessity, so let them do as they please. Just, maybe, print mandatory yearly statistics about how their graduates are actually doing - that's enough information to tell people whether it's worth enrolling or not.
This is a bit old info but the one I found:
$5k @~19% and the 4% min payment, you pay ~$200 for a total of over $8k over 137 months.That's a _lot_ of months that you're going without being able to put anything else on your CC, since you're only doing the minimum payments.
What do people do then? Get yet another credit card. According to some quick Googling, the average American has about 4 credit cards.
They passed laws that capped the interchange fees of debit cards, which effectively killed debit cards
They passed a law that prevented banks from changing the interest rate on credit cards in almost all cases - effectively forcing banks to charge high interest rates at the beginning, which then drove consumers to pay off their cards each month, so now most consumers are "transactors" (instead of "revolvers").
You now have SUPER HIGH limits (like $50k) for rich people, but they pay them off each month
Define "US government":
> I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”
* https://krugman.blogs.nytimes.com/2009/01/06/stimulus-arithm...
* https://archive.is/3zNYD
Some people in government were trying to improve the economy, while others were tamping down or even (arguably) sabotaging the recovery for political purposes.
Ever notice how the debt and deficits were bad under Obama, then not a problem under Trump… and now suddenly they are again and there's sudden talk about not raising the debt ceiling under a Democratic president… again.
Can you provide any example?
Your quote states quite clearly that inflation was indeed expected.
At most, the claim was that the impact on inflation would not be permanent, which is a blatant truism. Nevertheless, that is not OP's claim.
> most products are actually seeing very modest inflation.
> the inflationary surge might be “transitory,” or fade quickly on its own.
> As we move past the worst of the Covid-19 crisis, such base effects will fade.
> For now, inflation is well contained
[0] https://www.nytimes.com/interactive/2021/08/18/opinion/infla...
And how much of the inflation statistics we're seeing are due to "money printing" (which, by the way, is done by private banks through credit creation, and not the Fed).
Was the spike in inflation due to a rise in prices in (used) cars due to demand-pull inflation of too much money? Or supply-push because of shortage of available stock?
The price of oil (futures) went negative last year and benchmarks like WTI plummeted, so is it any surprises that as people move more the price has rises YoY:
* https://www.cnbc.com/2020/04/20/oil-markets-us-crude-futures...
Shipping costs are over four times higher than the January 2019 baseline:
* https://www.oecd.org/economic-outlook#GDP-growth-projections...
Is money printing the cause of bottlenecks at ports and the shortage of shipping containers?
Folks were saying that (a) we need government cash as a form of disaster relief (née 'stimulus'), (b) this may/will cause a spike in inflation, and (c) this is fine:
* https://www.piie.com/blogs/realtime-economic-issues-watch/in...
Would the US rather have an economy that is "too hot" with inflation or a recovery that falters and people lose their jobs (again)? Some would rather potentially run hot for a little while:
> There are risks both ways. If the Fed waits, inflation might become embedded, and bringing it back down again could be painful — though doable. On the other hand, if the Fed raises rates to head off an inflation problem that proves exaggerated, it could damage the economic recovery in ways that are hard to reverse. (Interest rates are still very low, so there would be little room for cuts if the economy weakens.)
> So wait-and-see looks like the prudent thing to do. I think current inflation is transitory, but I’m not sure. I am, however, confident that tightening monetary policy based on what we know now would be a big mistake, because the risks of moving too soon and moving too late are highly asymmetric.
* https://www.nytimes.com/2021/10/15/opinion/us-economy-inflat...
* https://archive.is/V3KWI
OP's claim was "Take note of all the "economists who suggested last year that printing tens of trillions of dollars will not result in inflation or recession".
Your own quotes state quite clearly that inflation was expected.
None of these seem to be directly tied to "printing tens of trillions of dollars" in my mind.
I’d like to learn more about the context behind that.
https://www.macrovoices.com/macro-voices-research/podcast-tr...
https://seekingalpha.com/article/4076760-bitcoins