Money. Doing it Right this Time.

[Integral]

That could make sense, although there were already fairly high expectations that those elections would go as they did before they happened.

Whatever it is, it's not showing up in the 5-year and 10-year spreads. :-/

http://www.clevelandfed.org/research/commentary/2004/nov.pdf

I was alerted to this Fed paper which (I've been explained) argues that TIPS spreads understate inflation expectations because regular treasuries sometimes have a liquidity premium due to conditions under which people look for nominal rather than real revenue, for example to service debts.

I may comment on it further as I analyze it more elaborately.

There are small market frictions that lead TIPS spreads to not perfectly capture inflation expectations, but as long as those frictions aren't countercyclical it shouldn't be a big problem. You can still get a very good estimate by taking the spread.

 

[Monsterzuma]

I'm trying to understand this graph:

http://research.stlouisfed.org/fred2/graph/?g=ewk#

This is US Private Financial Debt - US Federal Debt (the FRED label for federal debt is confusing and can be misinterpreted for "non-financial private debt"; it's probably best to ignore it). Why is there such a stable relation between the two for decades before 1994? In this period it seems like every additional dollar of federal debt is matched by a dollar of financial debt and vice versa. Although at first it may look like some kind of counterparty relation, both parties in this relation are debtors, not creditors.

This graph also makes it look like 1994 was some kind of watershed moment in the financial system. Which event specifically could have led to the breakdown of the consistency between these two variables?

 

[Cutlass]

Private and public debt moved in similar ways because debt as a percentage of GDP was pretty constant in the long run. For federal debt, that went out of whack during wars, and after Reagan's policies kicked in. For private debt, I think 1994 is the time when the financial bubbles really started to take off in the US. Clinton was starting to get a handle on the federal debt, and there was simply too much money chasing too few investment opportunities, and so debt.

 

[Kaitzilla]

Okie dokie, following over from this thead:
http://forums.civfanatics.com/showthread.php?t=485783&page=3

Buying bonds is the main way that monetary policy is executed?

From an earlier post in this thread:
http://forums.civfanatics.com/showpost.php?p=11111518&postcount=117

And so the roles of the Fed became:
Lender of last resort
Promote economic growth and purchasing power
Regulate the banks
Stabilize the economy
Maintain price stability
Act as a clearing house for checks between banks

Sometimes some of these goals are in conflict with others.

I'm assuming that massive bond purchases fall under "stabilizing the economy"?



I would argue that they do the opposite. Lower interest rates encourage the politicians to continue with trillion dollar deficits because the interest payments aren't really biting them.

In 15 years, the debt will probably be north of $30 trillion if we continue as we are going. Every 1% interest on that debt will be $300 billion. Having 1/3rd or half our budget going to interest payments will be disasterous to our country. It will do the total opposite of stabilizing the economy.

Let's look at federal receipts for the last 10 years adjusted for inflation.

http://cdn.pjmedia.com/instapundit/wp-content/uploads/2012/12/bushchart.jpg

Income is flat and spending increased 60% adjusted for inflation.


Printing $85 billion per month buying Treasuries and MBS makes no sense if the goal is to reduce unemployment.
http://www.forbes.com/sites/afontev...b-a-month-until-unemployment-falls-below-6-5/

If interest rates and quality investments are low, there should be plenty of buyers for government debt at moderate rates then. So why is the Fed buying up most all of it? Surely it can't be a lender of last resort function.

I'm very much struggling to understand the reasons behind the $85 billion per month. The scale of it boggles the mind. Will the Fed ever sell them back at some future date to raise rates, or will that cause auction failures and a system collapse?

 

[Cutlass]

Okie dokie, following over from this thead:
http://forums.civfanatics.com/showthread.php?t=485783&page=3

Buying bonds is the main way that monetary policy is executed?

From an earlier post in this thread:
http://forums.civfanatics.com/showpost.php?p=11111518&postcount=117



I'm assuming that massive bond purchases fall under "stabilizing the economy"?

Sure do. The simple money equation that many people have seen goes like this: MV=PQ
Money supply - How much actual base money exists in the economy.
Velocity - The rate at which money circulates through the economy. Every dollar gets spent many times over the course of the year.
Price level. Inflation, to oversimplify.
Quantity of goods and services sold in the economy in a designated time period.

Bond purchases are what is called "Open Market Operations". That is one of the most commonly used tools of monetary policy. What happens is that the Fed exchanges bonds for cash, and the banks use that cash to make loans. When people talk about "printing money", this is what they are actually talking about. By buying bond instead of just issuing new money, the Fed balances the accounting of the situation so that the new money doesn't cause much inflationary pressure.

The way this stabilizes the economy is that PQ is the real end of the economy. It is everything people buy and sell and what they pay for it. But by definition it must balance to MV. If it does not, then PQ is forced to change. The Fed targets MV so that the target PQ is met. Except that the Fed has no actual control of V. No one controls V, it is set by the markets. Once upon a time many people assumed that V was not a variable, but rather it was a fixed value. But we know that that is not true, and that V is not only variable, but in fact highly volatile. It changes, frequently very rapidly.

Now in order to have a PQ which hits the targets, MV must hit the targets, and the Fed does not control the value of V, so it must change the value of M to balance the equation at the target. Buying bonds is how that is done.

I would argue that they do the opposite. Lower interest rates encourage the politicians to continue with trillion dollar deficits because the interest payments aren't really biting them.

In 15 years, the debt will probably be north of $30 trillion if we continue as we are going. Every 1% interest on that debt will be $300 billion. Having 1/3rd or half our budget going to interest payments will be disasterous to our country. It will do the total opposite of stabilizing the economy.

Let's look at federal receipts for the last 10 years adjusted for inflation.

http://cdn.pjmedia.com/instapundit/wp-content/uploads/2012/12/bushchart.jpg

Income is flat and spending increased 60% adjusted for inflation.

Why are you blaming the Fed for the actions of Congress? Congress is, by intent and by constitutional design, the senior branch of the US government. Congress, ultimately, runs the show. Congress caused the deficits, and nothing anyone but Congress can do will change them. The Fed is neither causing, nor enabling, Congress to act. In fact, the Fed only acts within the mandate that Congress gave it.

Further, the markets are buying up tons of US bonds as well. You can't make the claim that the bonds would have higher interest rates outside of Fed actions, because the market is very clearly telling you otherwise. US Treasury bonds remain the safest investment in the world, and so in times of turmoil and uncertainty money flocks to Treasury bonds. Even when the Republicans forced a downgrade of the US credit rating last year, that did not cause any increase in the interest rates the market wanted to buy US bonds.

The market has spoken.

Printing $85 billion per month buying Treasuries and MBS makes no sense if the goal is to reduce unemployment.
http://www.forbes.com/sites/afontev...b-a-month-until-unemployment-falls-below-6-5/

Why not? If interest rates rise, there will be less business investment and fewer jobs created. Interest rates are far too high now.

If interest rates and quality investments are low, there should be plenty of buyers for government debt at moderate rates then. So why is the Fed buying up most all of it? Surely it can't be a lender of last resort function.

And there is. There is no shortage of buyers for US bonds. What there is is a a shortage of both borrowers and lenders for business investment.

I'm very much struggling to understand the reasons behind the $85 billion per month. The scale of it boggles the mind. Will the Fed ever sell them back at some future date to raise rates, or will that cause auction failures and a system collapse?

The markets are not doing it. Congress is not doing it. If the Fed does not do it, then the country goes back into recession. It's that simple. Ultimately, Congress, if they were acting in the interest of the country, would be spending the money. But the current Congress just doesn't give a frak about the United States.

 

[Kaitzilla]

Sure do. The simple money equation that many people have seen goes like this: MV=PQ
Money supply - How much actual base money exists in the economy.
Velocity - The rate at which money circulates through the economy. Every dollar gets spent many times over the course of the year.
Price level. Inflation, to oversimplify.
Quantity of goods and services sold in the economy in a designated time period.

Bond purchases are what is called "Open Market Operations". That is one of the most commonly used tools of monetary policy. What happens is that the Fed exchanges bonds for cash, and the banks use that cash to make loans. When people talk about "printing money", this is what they are actually talking about. By buying bond instead of just issuing new money, the Fed balances the accounting of the situation so that the new money doesn't cause much inflationary pressure.

The way this stabilizes the economy is that PQ is the real end of the economy. It is everything people buy and sell and what they pay for it. But by definition it must balance to MV. If it does not, then PQ is forced to change. The Fed targets MV so that the target PQ is met. Except that the Fed has no actual control of V. No one controls V, it is set by the markets. Once upon a time many people assumed that V was not a variable, but rather it was a fixed value. But we know that that is not true, and that V is not only variable, but in fact highly volatile. It changes, frequently very rapidly.

Now in order to have a PQ which hits the targets, MV must hit the targets, and the Fed does not control the value of V, so it must change the value of M to balance the equation at the target. Buying bonds is how that is done.





Why are you blaming the Fed for the actions of Congress? Congress is, by intent and by constitutional design, the senior branch of the US government. Congress, ultimately, runs the show. Congress caused the deficits, and nothing anyone but Congress can do will change them. The Fed is neither causing, nor enabling, Congress to act. In fact, the Fed only acts within the mandate that Congress gave it.

Further, the markets are buying up tons of US bonds as well. You can't make the claim that the bonds would have higher interest rates outside of Fed actions, because the market is very clearly telling you otherwise. US Treasury bonds remain the safest investment in the world, and so in times of turmoil and uncertainty money flocks to Treasury bonds. Even when the Republicans forced a downgrade of the US credit rating last year, that did not cause any increase in the interest rates the market wanted to buy US bonds.

The market has spoken.







Why not? If interest rates rise, there will be less business investment and fewer jobs created. Interest rates are far too high now.





And there is. There is no shortage of buyers for US bonds. What there is is a a shortage of both borrowers and lenders for business investment.





The markets are not doing it. Congress is not doing it. If the Fed does not do it, then the country goes back into recession. It's that simple. Ultimately, Congress, if they were acting in the interest of the country, would be spending the money. But the current Congress just doesn't give a frak about the United States.

I appreciate the nice reply

I've bolded what bugs me the most.

I don't see any jobs creation from very low interest rates.
http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CE_cesbref1

I do see how it destroys Seniors' income flows from their lifetime savings.
80% of the jobs created in the last 5 years have gone to Seniors trying to work part time thanks to Zero Interest Rate Policies by the Fed.

Of course interest rates would be higher without the Feds actions. When the guy with the printing press says he will loan you money at 1% interest, you tell all the regular people wanting to loan it at inflation+tiny bit more to go to hell.

A great many things are pointed out by this article.
http://online.wsj.com/article/SB10001424052702303561504577497442109193610.html


We blew a huge debt bubble for 30 years and then refused to allow bankruptcies to fix the problem.
Now we are stuck in a permanent zombie state where the debt can't clear and normal economic activity can never resume until the bad debt clears.

The longer this continues, the more certain everyone becomes that there is no future, only endless interest payments.

Why should companies invest, workers be hired, in a situation in which there is no future?

The Fed is accounting for everything but human nature with its blind faith in its math formulas. I don't see moral hazard in that equation either. How many decades of terrible results will it take before we admit that central economic planning has flaws? The Fed should absolutely allow M to contract with bankruptcies instead of buying $1 trillion in bonds yearly from people using the money for yachts and toilets on the moon.

Making terrible loans and then selling the turd loan to the Fed should not be allowed to become a business model.

 

[Cutlass]

I appreciate the nice reply

I've bolded what bugs me the most.

I don't see any jobs creation from very low interest rates.
http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CE_cesbref1

I do see how it destroys Seniors' income flows from their lifetime savings.
80% of the jobs created in the last 5 years have gone to Seniors trying to work part time thanks to Zero Interest Rate Policies by the Fed.

Of course interest rates would be higher without the Feds actions. When the guy with the printing press says he will loan you money at 1% interest, you tell all the regular people wanting to loan it at inflation+tiny bit more to go to hell.

A great many things are pointed out by this article.
http://online.wsj.com/article/SB10001424052702303561504577497442109193610.html


We blew a huge debt bubble for 30 years and then refused to allow bankruptcies to fix the problem.
Now we are stuck in a permanent zombie state where the debt can't clear and normal economic activity can never resume until the bad debt clears.

The longer this continues, the more certain everyone becomes that there is no future, only endless interest payments.

Why should companies invest, workers be hired, in a situation in which there is no future?

The Fed is accounting for everything but human nature with its blind faith in its math formulas. I don't see moral hazard in that equation either. How many decades of terrible results will it take before we admit that central economic planning has flaws? The Fed should absolutely allow M to contract with bankruptcies instead of buying $1 trillion in bonds yearly from people using the money for yachts and toilets on the moon.

Making terrible loans and then selling the turd loan to the Fed should not be allowed to become a business model.

Absolutely wrong. The problem here is that economics tells you that the response to this type of economic problem is supposed to be a fiscal response. Not a monetary one. If the Fed allowed M to contract, or even to remain the same, then what would happen would be a Great Depression. 10s of millions of jobs would be destroyed. 100s of 1000s of businesses would be destroyed. The savings of most people would be destroyed.

How do you justify destroying all of that, of all of those people who never did anything wrong, just to punish those few 1000 banks and Wall St firms that caused all of the problems in the first place?

You fundamentally do not have any right to do that to people.

 

[Hygro]

Yes we blew a 30 (or 40) year debt bubble and it hasn't totally popped either.

The debt bubble came from over supply. Reversing where the government prioritizes its money (from finance to industry and labor, or just the people in general) would completely change this equation. We had a supply side expansion that basically resulted in massive household debt and appropriation of wealth from the many to the few. But America is in the forefront of world economies and we are much better served by demand side policies.

In other words, it's not a zombie economy, it's an economy that just needs some antibiotics and drug rehab.

 

[Kaitzilla]

Absolutely wrong. The problem here is that economics tells you that the response to this type of economic problem is supposed to be a fiscal response. Not a monetary one. If the Fed allowed M to contract, or even to remain the same, then what would happen would be a Great Depression. 10s of millions of jobs would be destroyed. 100s of 1000s of businesses would be destroyed. The savings of most people would be destroyed.

How do you justify destroying all of that, of all of those people who never did anything wrong, just to punish those few 1000 banks and Wall St firms that caused all of the problems in the first place?

You fundamentally do not have any right to do that to people.

People are drowning in debt. Let's give them more loans!

We are already in a depression. If the U.S. government balanced its budget today, the economy would instantly contract 10% and we'd see it.

That tax raise they just passed with the fiscal cliff deal just now? Already spent the money on a $50 billion Sandy stimulus package. And yet I keep hearing economists hem and haw about GDP contracting this year. Such magical thinking.


All the QE up until Twist was probably justified, but the time has come to stop printing more money/credit which is simply making the needed correction more and more painful.

$1 trillion per year worth is simply unreal.
http://www.zerohedge.com/news/2012-09-22/fed-now-owns-27-all-duration-rising-over-10-year

Someone who argues the other side says it is reasonable
http://delong.typepad.com/sdj/2012/...isky-but-cannot-intelligibly-explain-why.html


I frankly don't see the exit strategy. All I see is endless intervention in the markets and the Fed owning 50% of everything in a few decades.

**Edit**
As for the humanity side of stopping attempts to inflate M, I'd bite the bullet if I was in charge if it meant future generations wouldn't be hopelessly screwed with our continued course. That's another Great Depression ya. At least it would be 10 years and done instead of smeared out over 100.

 

[Kaitzilla]

Moral Hazard exhibit A:
http://www.cnbc.com/id/100335415/Global_Investing_Advice_Don039t_Fight_Your_Central_Bank

In a world where virtually every major economy is being flooded with cheap liquidity, investment professionals can only muster one solution: don't fight your central bank.

The practical application of this philosophy means that investors should invest their money in markets where these central banks are most active –or markets that stand to benefit the most from massive monetary easing – rather than trying to reap returns elsewhere.

The Federal Reserve is leading the charge with its unlimited bond buying targeted toward mortgage markets, its third iteration of quantitative easing in four years. Meanwhile, the European Central Bank, the Bank of England and the Bank of Japan are taking similar actions, all in an effort to re-inflate stagnant economies.

"Respect what the Fed, ECB and BoJ are telling us," Pimco CEO Mohammed El-Erian told CNBC this week. "They are all in, and they are going to be in there supporting asset valuations." (Read more:'Fiscal Cliff' Deal Won't GuaranteeGrowth: El-Erian.)

So what exactly does the 'central bank trade' resemble? In a normal world, stock and bond prices would not be rising in tandem. This being the new normal, however, both asset classes are being inflated by monetary policy –which means investors should go along for the ride, analysts say.

El-Erian suggests that for investors, shorter and intermediate term Treasuries are a worthwhile investment bet, even though ultra-accomodative policies will mean investors will not reap the benefit of high yields.

"The front end will be more stable anchored both by purchases by the Fed and the [policy statement] language about keeping interest rates at zero," the bond guru said. "The long end is going to be more volatile and more dangerous, so it depends where on the curve you look."

I wonder what happened to price discovery and risk? Screw that, invest in the areas with the most central bank activity! That will end well.

 

[Kaitzilla]

Yes we blew a 30 (or 40) year debt bubble and it hasn't totally popped either.

The debt bubble came from over supply. Reversing where the government prioritizes its money (from finance to industry and labor, or just the people in general) would completely change this equation. We had a supply side expansion that basically resulted in massive household debt and appropriation of wealth from the many to the few. But America is in the forefront of world economies and we are much better served by demand side policies.

In other words, it's not a zombie economy, it's an economy that just needs some antibiotics and drug rehab.

If we were not a zombie economy, then investing in banks would be an OK idea. Oh wait...

http://www.theatlantic.com/magazine/archive/2013/01/whats-inside-americas-banks/309196/

Some four years after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as “black boxes” that may still be concealing enormous risks—the sort that could again take down the economy.

Yet the limits to big investors’ enthusiasm are clearly reflected in the data. Some four years after the crisis, big banks’ shares remain depressed. Even after a run-up in the price of bank stocks this fall, many remain below “book value,” which means that the banks are worth less than the stated value of the assets on their books. This indicates that investors don’t believe the stated value, or don’t believe the banks will be profitable in the future—or both. Several financial executives told us that they see the large banks as “complete black boxes,” and have no interest in investing in their stocks. A chief executive of one of the nation’s largest financial institutions told us that he regularly hears from investors that the banks are “uninvestable,” a Wall Street neologism for “untouchable.”

We are basically walking the well worn path of Japan at this point.

Most all of our big banks would be gone by now without government bailouts and accounting rule changes to mask their bankruptcy.

 

[Cutlass]

People are drowning in debt. Let's give them more loans!

We are already in a depression. If the U.S. government balanced its budget today, the economy would instantly contract 10% and we'd see it.

That tax raise they just passed with the fiscal cliff deal just now? Already spent the money on a $50 billion Sandy stimulus package. And yet I keep hearing economists hem and haw about GDP contracting this year. Such magical thinking.


All the QE up until Twist was probably justified, but the time has come to stop printing more money/credit which is simply making the needed correction more and more painful.

$1 trillion per year worth is simply unreal.
http://www.zerohedge.com/news/2012-09-22/fed-now-owns-27-all-duration-rising-over-10-year

Someone who argues the other side says it is reasonable
http://delong.typepad.com/sdj/2012/...isky-but-cannot-intelligibly-explain-why.html


I frankly don't see the exit strategy. All I see is endless intervention in the markets and the Fed owning 50% of everything in a few decades.

Again, you are confusing what Congress should be doing with what the Fed is doing. The Fed has the choice of either ignoring it's legal mandate and, BTW, ignoring all economics, morality, and human decency, or to act as it has been acting. Congress could choose to do the right thing. But is too conservative to do so. The Fed's actions are forced to a large extent by the irresponsibility of Congress. But your argument should be with Congress, not with the Fed.

 

[Kaitzilla]

Again, you are confusing what Congress should be doing with what the Fed is doing. The Fed has the choice of either ignoring it's legal mandate and, BTW, ignoring all economics, morality, and human decency, or to act as it has been acting. Congress could choose to do the right thing. But is too conservative to do so. The Fed's actions are forced to a large extent by the irresponsibility of Congress. But your argument should be with Congress, not with the Fed.

You are entirely correct.
Congress is ultimately responsible and my anger is x100 against them than the Fed. The Fed is trying to make the best out of a bad situation and getting it mostly right, but veering into the wrong as time goes by in my opinion.

I got a pretty good rant out against Congress in this thread:
http://forums.civfanatics.com/showthread.php?t=480536&highlight=Punishment

I merely want the Fed to stop buying so darned many Treasuries before Congress gets the wrong idea.

 

[Cutlass]

You are entirely correct.
Congress is ultimately responsible and my anger is x100 against them than the Fed. The Fed is trying to make the best out of a bad situation and getting it mostly right, but veering into the wrong as time goes by in my opinion.

I got a pretty good rant out against Congress in this thread:
http://forums.civfanatics.com/showthread.php?t=480536&highlight=Punishment

I merely want the Fed to stop buying so darned many Treasuries before Congress gets the wrong idea.

Saying that the Fed should act utterly irresponsibly just because Congress acts utterly irresponsibly is like demanding that Obama act utterly irresponsibly just because Congress acts utterly irresponsibly. Somebody has to be the grownup. If Congress refuses to do so, you have no legitimate gripe when others try to do so.

 

[Kaitzilla]

Saying that the Fed should act utterly irresponsibly just because Congress acts utterly irresponsibly is like demanding that Obama act utterly irresponsibly just because Congress acts utterly irresponsibly. Somebody has to be the grownup. If Congress refuses to do so, you have no legitimate gripe when others try to do so.

Others much more knowledgable than me have criticized the unending QE, although not for my reasons.
http://www.goldalert.com/2012/12/fed-hawks-warn-on-qe4-inflation-fiscal-policy/

I consider stopping further QE to be the responsible thing at this point.

 

[Cutlass]

Others much more knowledgable than me have criticized the unending QE, although not for my reasons.
http://www.goldalert.com/2012/12/fed-hawks-warn-on-qe4-inflation-fiscal-policy/

I consider stopping further QE to be the responsible thing at this point.

Why? You are linking a gold site. You'll never get anything responsible out of goldbugs. It's like asking for geography lessons from the Flat Earth Society.

QE can stop when other people pick up the slack. The Fed is the only thing keeping the economy afloat at this point. They don't have the right to stop.

 

[Kaitzilla]

Why? You are linking a gold site. You'll never get anything responsible out of goldbugs. It's like asking for geography lessons from the Flat Earth Society.

QE can stop when other people pick up the slack. The Fed is the only thing keeping the economy afloat at this point. They don't have the right to stop.

Ok, I'll link pretty much the same story from somewhere more respectable.

http://www.nytimes.com/2013/01/09/b...he-fed-hoping-his-doubts-are-wrong.html?_r=1&

“We’re at the limits of our understanding of how monetary policy affects the economy,” Mr. Lacker said in a recent interview in his office atop the bank’s skyscraper here. “Sometimes when you test the limits you find out where the limits are by breaking through and going too far.”

Mr. Lacker, 57, often uses the word “humility” in describing his views. He means that the Fed should recognize that its power to stimulate the economy is limited, both for technical reasons and because it should not encroach on the domain of elected officials by picking winners and losers.

As he sees it, the Fed’s current effort to reduce unemployment by purchasing mortgage-backed securities crossed both lines. He sees little evidence that it will help to create jobs. And he says that buying mortgage bonds is a form of fiscal policy, because it lowers interest rates for a particular kind of borrower.

People and the economy will never pick up the slack with $1 trillion being printed yearly. They will position themselves as close as possible to the money hose.

 

[Cutlass]

Well, I agree that we're at the limit of what monetary policy can do. This is a fiscal policy issue. We should spend an extra $trillion or 2 a year until unemployment is back to normal.

But in the absence of sound fiscal policy, there is no choice but to use monetary policy. If the only tool in the tollbox is a hammer, you use the hammer.

 

[Hygro]

If we were not a zombie economy, then investing in banks would be an OK idea. Oh wait...

http://www.theatlantic.com/magazine/archive/2013/01/whats-inside-americas-banks/309196/





We are basically walking the well worn path of Japan at this point.

Most all of our big banks would be gone by now without government bailouts and accounting rule changes to mask their bankruptcy.

Aaand once again the problem is a demand shortage relative to supply. Investing in banks means putting supply money into a supply firm. Of course it's a bad idea. We are on the path of Japan, indeed. They refused inflation and refused sufficient stimulus for two decades now. Half-hearted quarter measures here and there. Kind of like us.

We could go for an austere capital reset, but to actually succeed that means not just destroying deadweight physical capital but also deadweight human capital. I for one think that spending our way out is the preferable method, for these reasons
1) It's faster
2) It's long-term stronger
3) It's better for real life living people.

 

[Cutlass]

And in the long run, it even costs less.