by Summary:
She's gone full monetarist zombie.
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Mike Norman considers the following as important:
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She's gone full monetarist zombie.
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Michael Hudson writes Beyond Surface Economics: The Case for Structural Reform
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Mike Norman writes Wishful Thinking
| She's gone full monetarist zombie. |
That's like the IMF saying the same crazy shit like a recession is coming, and this is after they predicted Covid would cause another depression.
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The problem is that few trillions $ are in the hands of China, Japan etc., which the federal gov. has to pay them billions in interest.
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its not a problem because: the fed has trillions more just by itself, making it the largest holder of US treasuries by far,
yes they pay billions in interest, but they still sold trillions,
and no its not a problem because it's not your normal coffee for 2 bucks transaction, it's government lending using currencies and central banking powers for budgeting purposes. There is no financial gain to be made here except "printing" and "de printing" money.
Foreign manufacturers earned US dollars by laboring to create and sell products and services to us corporations and consumers.
Where did those dollars go? They aren't shipped over the Pacific in boats. They are numbers in checking account at the Fed, in which the central bank or Treasury in those countries are the account holder or owner.
This isn't called national debt until the dollars they own are moved from checking to savings accounts. That is, moved from Reserve accounts at the Fed to US Securities accounts also at the Fed.
All this consist of nothing more than moving numbers around on a spreadsheet, using addition and subtraction. Interest payments use addition to add small numbers to bigger numbers.
There's no burden from doing arithmetic.
And??
Thanks for the vid and website announcement. Cant wait to signup.
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Looking next weeks MMT Report for sure!!
Absolutely killing it! If you haven't joined MMT Trader by now, you're missing out! Imo
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Great work as always Mike!!!!
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I think the FED created the 1929 "boom".
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I don't know how much Mike would agree or disagree on this. Dozens of books have been written.
Coolidge pushed tax cuts. His treasury secretary was for low interest rates. The Roaring Twenties were pushed up by speculation on real-estate and stock-market assets, pushed up by cheap credit. ALSO by real industrial expansion after the war and real consumer spending on new appliances. Also by projections. ALL credit driven speculative bubbles must peak eventually. When they peak, they come crashing down faster than they grew.
You can't have capitalism without credit.
When credit is available, the difference between investment and speculation is conceptual, in quality, overall conditions. You can't draw a sharp line between investing vs. speculation.
Asset prices are driven up by a combination of good profits, low P/E ratios, plus speculative buying of "growth" industries that typically lead NASDAQ. Google, Amazon, Facebook, Apple, Tesla. (At what point is growth and value realistic and at what point does it become fantasy?)
(In the 1920s, it was probably General Electric and Westinghouse leading the pack on growth industries.)
It becomes a judgment call when you have to decide if it makes sense to borrow on margin to buy stocks that are driven up by leverage of other buyers that multiplies gains.
Same for housing. When we began seeing banks offer loans with no proof of income, stated income, and 120% LTV ratio, and this was accelerating, how in retrospect everyone should have known that this was reaching a peak, and that Buy-and-Flip was not sustainable.
Nobody in a policy position addressed anything before the housing bubble began to DEFLATE. Then it required emergency response.
If they had reacted sooner under Bush, there still would have been a crash and a downturn, but it wouldn't have been as extreme.
Hey genuine question here mike, if interest rate transfers are going to the wealthy and institutions and that increases the water in the pool and therefore economy, how in this case is it different from trickle down economics and do you believe trickle down works or are they completely different?Hope that makes sense. Thanks for all the great info!
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Trickle down, or supply side posits that tax cuts are more efficient at stimulating the economy than spending when it comes to gov fiscal policy – it’s a matter of efficiency. These income transfers aren’t trickle down, because it’s not a tax cut, it’s a fiscal transfer, a positive spending flow.
@Damn exactly, the economic benefit for the average person of interest rate transfers is more economic activity, more spending from institutions and companies into jobs, raising stock prices etc. More opportunity
@Damn thanks that makes sense but doesn’t trickle down imply that if the rich have more money they will spend more and therefore stimulate the economy?
Trickle-down is a colloquial term for some variation of supply-side economics. Several related argument oppose that.
One, conservative Paul Craig Roberts (economist and assistant Treasury Secretary) said that the supply-side proposal that he designed and pushed on Democrats, and ended up getting enacted under Reagan, was only intended for short-term conditions.
Roberts noted a condition of Supply shortages that he felt was driving up prices. Supply Side tax cuts was his proposal to boost Supply and reduce inflation. (He also thought Unions had grabbed too much power.)
The outcome at the time was not investment in retooling US manufacturing, as Roberts expected, but early moves to shift manufacturing to Latin America and China and other cheap labor locations.
Yet Americans DO get cheap imports if we suffered falling wages.
Another point is that the USSR system was a Supply Side economy. A market economy is Demand-side, with more power in consumer choices, at least wear those choices are constricted by government mandates or what amounts to monopoly.
The Soviet Union Central Party decided how much of everything was to be made, and made many of the decisions about style of manufacturing, so everything was pretty much the same. Govt, not consumers, drove Supply. Somewhat like the first Ford cars were available in any colors you liked as long as your favorite color was black.
FDR did Demand-side economics. He was not against business, but the government hired workers for public projects, and it was their paychecks that also helped businesses recover by increasing Demand.
isn't wood a shit investor? i don't follow her…. speakin'of shit are you talkin about your pitbull economics site i mentioned 2x in last 4=5 months or so? i know last wk i posted under 1 of your vids what i was directed to, not sure if you got it. it worked out the same way months previous.
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Great stuff Mike! We need more coffee updates too!
Number above
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You said today is June 13?
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Hahahahahaha
Its all about the flows, although they can be overshadowed by market sentiment and drastic fed measures. Which is why we went down last few months.
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Great stuff Mike thank you
I’ve tried buying your class, and couldn’t. will email you
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I think inequality matters because the interest rate hikes are "Minskifying" the economy: by making savers richer and putting more burden on borrowers, you are creating more fragility once the rate hikes are reversed. Private sector debt has been crawling up after the relief that were the pandemic cheques.
Glad you're getting the website fixed. It's well worth reading the comments to your videos – your followers are on your side. For instance, I've posted so many comments for months about the DTS course link not working and forwarding to a malware or phishing site.
Yes Mike
Please get your site fixed.
Cathie Wood is still very bullish on Crypto. (She's also buying Coinbase stock). But she did offload some other stocks indeed.
Fair enough about iniquity, since aggregate EPS for the SP500 has been skyrocketing since the 80s and doesn't look like stopping. We've already far outstripped the peaks pre-covid.