Joij21
🔥Deny, Defend, Depose!🔥
More guns, less butter.
By the way how did Pelosi's trip go? Is it worthy of a thread? China, Taiwan thread perhaps?
Is the USA in recession?
- Thread starter Hygro
- Start date
More guns, less butter.
By the way how did Pelosi's trip go? Is it worthy of a thread? China, Taiwan thread perhaps?
Specifically in the United States, the government invests (in the traditional sense) a lot more than people realize and contribute to success a lot more than people realize. The weakness of the system is that they don't have a good mechanism for participating in the rewards of that success.
The algorithm that eventually became Google was invented under a grant from the National Science Foundation. Calculating the commodified benefit that the American government gets from Google is hard to calculate, but the NSF budget is about $10 billion.
(And for those that want a fun zinger. Robert Malone (The inventor of the mRNA vaccine!) did his foundational work on the discovery under an NIH Grant.
The algorithm that eventually became Google was invented under a grant from the National Science Foundation. Calculating the commodified benefit that the American government gets from Google is hard to calculate, but the NSF budget is about $10 billion.
(And for those that want a fun zinger. Robert Malone (The inventor of the mRNA vaccine!) did his foundational work on the discovery under an NIH Grant.
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Hygro
soundcloud.com/hygro/
I read an article that Amazon is cutting 100k jobs.
My friend at google said they got word today that a lot of positions are being cut and offshored.
More of this and we'll have some real unemployment and a real recession. Not yet known if it will be big or small. Lots of signs point small but I'm not reading all the signs so who knows. There's no sign of a global financial crisis and those are the real killers.
My friend at google said they got word today that a lot of positions are being cut and offshored.
More of this and we'll have some real unemployment and a real recession. Not yet known if it will be big or small. Lots of signs point small but I'm not reading all the signs so who knows. There's no sign of a global financial crisis and those are the real killers.
Hygro
soundcloud.com/hygro/
We had one in 2020, for frequency’s sake.
Covid-19 masked one that was probably about to happen. China has to go through a deleveraging event. The United States was about to undergo a fairly large rearrangement because of the shift in state spending after the SALT deduction changes started rolling through budgets. The United Kingdom was confusing with regards to being a source of trade. Canada needs to undergo a deleveraging, and had just elected a tightening government to Alberta's legislature.
The start stop of Supply constraints are a hiccup, but there is a massive amount of new money in the system. That money takes time to move, so if there's a recession caused by a small drawdown of Central Bank Reserves, predicting what the rest of those dollars is going to do isn't easy.
The start stop of Supply constraints are a hiccup, but there is a massive amount of new money in the system. That money takes time to move, so if there's a recession caused by a small drawdown of Central Bank Reserves, predicting what the rest of those dollars is going to do isn't easy.
My mistake; should have clarified:
Partly this.
The extremely low interest rates that central banks and governments implemented since 2008-ish, solved some problems, but caused new ones as well. They were never intended to last more than 2-3 years; the consequence is accumulation of cheap debt (that is only cheap so long interest rates are kept artificially low) and property prices and the housing market running amok (again), since it was almost free to borrow money for more than a decade.
In my opinion, we still haven't truly seen the markets correct themselves due to the imbalances in fiscal policies, housing markets, stock markets etc. yet; it's still to come.
In mid June the S&P hit is low point so far at about 3650. Today it closed at 4155. A successful test of that low point in the coming months would likely signal the bottom. The estimated earnings for the S&P 500 for 2023 is currently ~$240. At a 20x multiple that puts the upper end of the S&P next year at about 4800. Good news if you are not in a hurry.
Hygro
soundcloud.com/hygro/
"Correct" is a funny word. We use "correction" to means "goes down" but generally an error in clearing markets that causes a financial crash/crisis/hiccup/whatever is not a correction but puts the economy in an incorrect state relative to its potential and readiness.
Like I see "interest rates were artificially low", but from an economics standpoint, interest rates have been artificially high. The interest rate for full employment for much of the 2010s was below 0%, but was kept at 0% because the central banks are not open to lending to other banks at negative interest rates.
I'm not clear what imbalance you believe there is. What's the other wing to make it balanced look like? What are the conditions for that other wing, and why is balanced "balanced"?
Like I see "interest rates were artificially low", but from an economics standpoint, interest rates have been artificially high. The interest rate for full employment for much of the 2010s was below 0%, but was kept at 0% because the central banks are not open to lending to other banks at negative interest rates.
We should remember that interest rates are lowered by giving money to the wealthy people. Unless, of course, the central bank is purchasing long duration bonds from the government, and then we don't know until when or if those bonds are rolled over. I don't know how to calculate the total amount of money given if there is both going on at the same time.
Low interest rates also create a much larger spread between the market price of your asset and the value of your asset during any type of Correction. This will disproportionately hurt poor people, obviously. If I borrowed to increase my farm output, and prices drop, then someone richer than me can borrow at a lower interest rate to scoop up my assets. The higher volatility hurts me. Especially if some of the low interest rate is being maintained because regulations force pension plans to purchase a certain percentage of government bonds
So much of all this depends on how those deficit dollars are being spent. I don't think you can just look at the natural interest rate to make that determination.
Low interest rates also create a much larger spread between the market price of your asset and the value of your asset during any type of Correction. This will disproportionately hurt poor people, obviously. If I borrowed to increase my farm output, and prices drop, then someone richer than me can borrow at a lower interest rate to scoop up my assets. The higher volatility hurts me. Especially if some of the low interest rate is being maintained because regulations force pension plans to purchase a certain percentage of government bonds
So much of all this depends on how those deficit dollars are being spent. I don't think you can just look at the natural interest rate to make that determination.
Hygro
soundcloud.com/hygro/
Or they give credit to those not inside the monopoly club.
Hygro
soundcloud.com/hygro/
To be clear, there is no natural interest rate, there's only a highest-rate-for-the-most-employment rate.
Hygro
soundcloud.com/hygro/
Unemployment drops, companies keep hiring above expectations https://www.independent.co.uk/news/...tter&utm_source=reddit.com#Echobox=1659703073
Yeah, that's what I meant about natural rate. But my warning is that it might not be the best number to look at if unemployment isn't optimal. It's just one dial. And it's just one dial that gives money to rich people
Hygro
soundcloud.com/hygro/
I mean you can argue low rates are good for rich people and you can argue high rates are good for rich people. Central banks don't have other dials and the rate of interest against involuntary unemployment is nearly the foundation of the past 90 years of macroeconomics, aka its birth. You can do the entire equation on interest rates and unemployment. It's clearly a powerful and simple way to adjust the economy. What other numbers would you suggest to look at if unemployment isn't optimal?
I want to point out that maybe you've pivoted to just tools the Central Bank has? In Eva's original comment, they were discussing the central bank and government doing things together that created a problem. So when I said there was more than one dial, I was including the dials government could control as well.
Is this actually true? As in is the only decision that central banks make that has any influence on the economy the rate at which they lend to other banks? If so, why does the Bank of England pay over a thousand people big pay packets to just come up with one number every month?
Hygro
soundcloud.com/hygro/
They have a bunch of other functions that privy them to the source of data, so maybe it just makes more sense they do it than anyone else?
Lexicus
Deity
They have to collect a *lot* of data, and try to collect it as close to real time as they can
