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Bond yields rose today but this is not likely the start of a sustained rise.
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Mike Norman considers the following as important:
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Bond yields rose today but this is not likely the start of a sustained rise.
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Mike Norman writes Class
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| Bond yields rose today but this is not likely the start of a sustained rise. |
how is the treasury market still auctioning treasuries when they're at the debt ceiling?
Supreme video just like always
At 8:21, Einstein never said that, and it isn't the "definition" of insanity (although it could be a symptom of it).
I hate that expression so much lol
They're pushing mask mandates again here in California. Who knows, maybe they'll push for shut downs again.
Hey Mike, this makes sense. However, is there a possibility where inflation goes down if interest rates are up higher than returns in the market? If market returns average 8 to 10% and you put interest rates at 12 to 15% or more, instead of buying goods wouldn't the smart money just deposit and make money at no risk?
That scenario implies an economy already in recession, which is deflationary
Hey man, I don’t know what your problem is with Zero Hedge as you rip them quite often. I read this article and, from someone who lives in Hawaii for over 20-years, this guy is spot on with this analysis about what’s going down over here. You live in New York with larger population so maybe you don’t see many things going on at a lower tier level. Just want say something since you rip ZH often. Also, BTW you voted for Biden and you talked frequently during the election how we need a change in leadership etc. A guy like you could see Biden/Harris better than us serfs, right. So, you know better. I have a niece stuck in Afghanistan so you can go fuck yourself!
So you're saying raising rates would be inflationary – wow. Say more
@Dupre of Trinsic yea, but these payments due to incresing rates would only go to ultra-wealth, not the general populatoon. Demand from the general population is what causes the inflation, not extra currency in the hands of the ultra wealthy. In fact, they would sit on it and earn interest…
@Tom S It is a contrarian view. But you can't deny the logic: making credit more expensive adds costs to the production of goods and services. Making goods and services more expensive to produce and provide makes them more expensive for the consumer.
It's just that the deflationary pressure created by impeding commerce through higher rates may provide more deflationary pressure than the inflationary pressure created by increasing the costs of goods and services.
Higher rates means that the elites have MORE money to spend, as higher rates equate directly to their incomes, giving them more money to spend thanks to increased interest payments to them.
High rates have winners and losers, low rates have winners and losers. Changing rates just changes how income is distributed. High rates = better for elites that have the money to lend or who hold bonds. Low rates = better for everyone who doesn't already have all the money.
And yes, Central Bankers are often clueless or even more often constrained by politics. If 99% of the country believes a largely false narrative about how rates work, they cannot implement the needed policies because they fear offending investors like you who have the mechanism exactly backwards. Mike gave examples of countries getting this precisely backwards.
Understand how the macroeconomics of sovereign fiat currencies actually works and this will all make more sense to you.
@Mike Mac Yes, exactly what I said in the comment I just posted. Rate changes have winners and losers. High rates are guaranteed income for Elites and institutions holding bonds.
Elites do create inflation in certain sectors: housing, stocks, etc. You think housing is expensive now? Wait until Banks reinvest even more of those interest payments into cash purchases of homes nationwide to bundle into the rental businesses and Mortgage Backed Securities.
Most of the CPI increase lately has been due to Used Car prices and Used Car prices are high because of limited supply, not too much demand. Most of the inflation we are seeing is indeed transitory.
@Dupre of Trinsic That's fair – I guess the question is…wtf do we do now? Interest rates will never rise…
@Mike Mac The natural rate of Interest is Zero. Interest rates don't have to rise. Low rates aren't a disaster, particularly for the working class.
So true….I hear you Mike
and south korea just hiked
I hope idiot professors will teach wrong economics which is misleading. Let them make mistakes and ignore the right way of economics. We will take all the money. ……………….. Ignorance should be inconvenient, otherwise the so-called "people" will never learn anything, at least the majority.
Put Mike in Japan. I know he can do it. Have fun in CA.
Someone wrote that a strong stock market is far from a good indicator of the strength of an economy. That Venezuela had the best performing stock market two years running now
Great info. Thanks, Mr. Norman!
Great work Mike! HOORAH!!!
Loved the MMT Report!!! Excellent work!!!!
Mike I dont understand…..didnt Volcker raise rates in the early 80s to tame the inflation of the 70s? Also…if we raised rates today wouldnt assets get crushed? Homes/stocks would get crushed and people would have less disposable income because the are paying more servicing debt…how can this then be inflationary? I'm not saying you're wrong but I do not understand the mechanics of it.
Volker pushed rates up to 12 then eventually 18 and then peaking at 21.5%. you'd have to look up what mortgages and car loans were at that point. Laws against usury had to be repealed. At that extreme degree, yes savers received more income and did well, but if I recall that paralyzed credit dependent industries, especially housing, and to some extent cars.
That also destroyed some 55 million small businesses. That's how Volker tamed inflation.
Warren Mosler suggested that all it was really necessary was the unions had to do some concessions on cost of living allowance raises, in light of rising Saudi oil prices, but also executives needed to absorb some of that inflation cost too, instead of pushing up wholesale and retail. Basically a one-time reset to reflect Saudis doubling or tripling the price per barrel of oil.
In the early 1980s, the US also shifted more to Natural gas, or other forms of energy, and that broke the Saudi oil embargo stranglehold, then prices came down.
Again, it was monopolist price setters, the FED for interest rates plus Saudis for energy.