by Summary:
Fiscal flows are too strong, at least right now. We should see new highs in the market soon.
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Mike Norman considers the following as important:
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Fiscal flows are too strong, at least right now. We should see new highs in the market soon.
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Mike Norman writes Class
Mike Norman writes Episode 8 (S2) of the Smith Family Manga is now available — Bill Mitchell
Michael Hudson writes Beyond Surface Economics: The Case for Structural Reform
Nick Falvo writes Homelessness planning during COVID
| Fiscal flows are too strong, at least right now. We should see new highs in the market soon. |
First
Hindenburg Omen in play
Have a great weekend
Pump eet! We'll need it…. 7usd loafs of bread ahead…
Trillions of dollars being machine gun blasted all over the pocketbooks of government employees and benefit recipients: Nothing.
The government deciding that it will pay you 2 cents instead of 3 if you lend them 100 dollars for a year: Is this a Zimbabwe?
Govt could pay you as much as they want. They aren't short of USA Dollars.
There's a question if free money and no responsibility is good for the population. Some people inherit a sum from their old folks and it don't go so good.
@dilbertgeg Studies I have seen on UBI suggest that it is only really a good thing. Like, to me, I imagine my ideal economy as "20% of GDP per capita is distributed to each person as UBI, plus there is M4A which gets at least 12% of GDP minimum" and, if our economy is decent, that will pay out a survival level of goods and services. Either you have an internal drive or you don't, really, and either we can feed everyone or we can't. 20% of GDP per capita as a guaranteed minimum is barely poverty. Most people want more than that, if not in material satisfaction, then in the prestige, and will work their ass off to try and get it. For those who won't… whatever. We aren't cavemen any more, and 95% of the labor that produces essential goods and services is just robots being robots.
From everything I have seen on inheritance: you are more likely to earn more money the more inheritance you have, because it tends to come from empowering entitlement. This isn't to say that successive generations can't fall out of wealth: they do, they just tend to fall out of wealth more slowly than lower rung people climb into wealth. And, when they do fall out of wealth: they tend not to fall into poverty. They just fall back into the upper middle class and are perfectly positioned for the next generations to rise back into the upper class.
Real equality of opportunity can't really work here because real equality of opportunity would be to take all kids from their parents as babies and raise them in egalitarian military barracks before they enter the general adult population. So equality of opportunity could only ever be a minimum guarantee: you can luck into rich parents, but you can never unluck into obscenely dirt poor poverty.
What correction.
correct, it was more of a sideways
But I think what we all want to know who do you like in the kelvin gastelum v Jared cannonior fight.
While I hope you are right, I hedged with a SPY 430/425 put spread for October. .98. Good risk reward.
Mike again flip-flops like a little girl.
Did I ever say, “sell” dumbshit? No.
He studies daily the Daily Treasury Statement, his views are not speculation, they are based on the trend in these facts. It is a powerful leading indicator of the economy and thus financial markets. It is real value unlike the Clowns on CNBC (useless).
@Mike Norman MMT Economics Do you understand now that Gold is NOT a Tier 1 Asset,
Not a High Quality Liquid Asset & has been Downgraded to Commodity Status Under Basel 3
LCR & NSFR?
@Mike Norman MMT Economics you said you was a buyer great insight as always Mike??
No offense, but i recalled you said that in March, and it lasted over 3 to 4 weeks.
Wow 250 billion over last yr.. what is that solving world hunger 5x?
Mike, what are your thoughts on the Russell and growth stocks taking a beating since February while the other indices continue hitting new highs… please answer in your next video… seriously, I just want to know you actually read these comments… thanks
Mike, can you define exactly what fiscal flows consist of? Thanks!
Every person and business that gets a check from the govt. There's other benefits, like the existence of laws and a system that allows commerce to happen.
Trump poured money into the economy too, and didn't tax it back out. There wasn't the same kind of normal shopping/demand until a few months ago when restaurants started opening for business. Of course we gonna see shortages in the pipeline of goods & services.
He has a course for purchase on his website (Understanding the Daily Treasury Statement) where he goes into detail explaining this.
Thanks for sharing your work, Mike!
Mike , could you give more insights on the move in silver and gold again?
USD strength seem to be capping its upside
The stock market is NOT the economy
Steven Van Metre says financial conditions are tightening due to the Fed smashing the yield curve. But yet Mike says the fiscal flows are strong (for now). Don't know who to believe, but then again it's a bull market in equities until it isn't.
The most important thing to understand about the role of the Fed is that an increase in reserve balances of the banks (accounts managed on the fed's computers) is counted as "the money supply" but it is not dollars that ever flow to people's spendable income — NOT in the sense that social security payments or federal contractor payments DO become consumer spending and business spending (as well as net savings of the private sector).
I don't know that the Fed is "smashing the yield curve" by not acting to drain reserves (by leaving more T Bonds out there) and not pushing up interest rates.
At that point, lower rates ostensibly encourage people and businesses to go to Banks to get more credit created (by signed loan contracts and keystrokes adding Loans to accounts, not by multiplying reserves), so that doesn't create "net" dollars or "net" savings, but overall credit expansion does increase the overall number of dollars in play.
The biggest overall credit expansion is loans on housing, which is really land value, which means mortgage loans. Corporate loans and cars are also in there, as well as student loans. Credit cards are in there too. All such loans are hard linked to the obligation to a-mort-ize over time, i.e. pay them back. This is unlike federal spending which never has an obligation to be paid back, except when idiots are trying to balance the federal budget and strangle the economy. (It's like the US imposes economic-financial sanctions, but instead of imposing those on enemy countries, Congress imposes those sanctions on Americans when they insist on fiscal responsibility and balance the budget.)
On the other hand, interest payments on T bonds ARE direct fiscal flows going to Banks and capital firms and going to investors including retirement funds and others that hold Treasuries, so higher interest rates INCREASES that fiscal flow of those new dollars from govt to private sector.
@dilbertgeg If government spending goes overboard, then inflation will result. Inflation hurts the poor more than the wealthy.
@HumbleTrader001 "goes overboard" like on a boat?
Govt spending in World War 2 was the equivalent of $8 Trillion today? Was there hyperinflation in 1942-45?
Inflation cases we talk about today where the result of a supply shortage or some other broken situation, like losing a war in all productive capacity is captured or destroyed (Germany after World War II) (and they were also forced to export everything they could produce to pay reparations to the allies) or kicking out all the white farmers in Zimbabwe and food shortages got extreme.
There are supply shortages today. Covid response caused that. Mike Norman also mentioned the rise of "Just in Time manufacturing" policy which means warehousing and the pipeline of interim and final goods was empty when the economy began to be reopened. It's taking time for Supply to catch up with Demand.
The quantity theory of money argument is based on the assumption that productive capacity is 100% maximized and no increase is possible, in which situation, any increase in spending power of consumers and/or government can only drive up prices but, by an algebraic equation that is a mathematical tautology.
When was the last time the United States truly stretched to reach maximum Supply capacity? That was world War II maybe or definitely World War I when the US government instituted rationing tickets for scarce resources so consumers didn't buy up materials that the government needed for the war effort. They wanted people to wait for the end of the war before buying new cars and oil and durable goods made of metals.
@HumbleTrader001 in another answer to your question, I remember years ago when most major factories in America (like automakers) were running three shifts, 24 hours a day, to keep up with demand. How many factories today have three shifts of workers or even two shifts?
The correction has never started. Watch before you make such headlines what is the definition of a correction. On top of the Hindenburg omen flashed. There will be certain a lot of volatility in the coming weeks. And keep in mind we didn't have a 5 % for 200 days. So the likelihood is there.
Thanks Mike!?
My prime source for fundamental analysis. Brilliant as always good sir.