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Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

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Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#81

Post by samsonradu »

It’s quite an old trick in the book for any administration, whichever color it has, to try to push the can down the road until it gets re-elected. After that, it’s buyer beware.

Something to consider is that in times like these money are flowing in the wrong direction, instead of going from developed countries (US, EU, JP) to developing countries with better return rates (Emerging markets) it is the other way around, going into developed countries estates, bonds and stocks even with low returns which look already overvalued. That would normally read that there is way more liquidity than actual growth and the valuations are not accurate.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#82

Post by adventured »

salviasloth wrote: post #72
maxxxxx wrote: post #66

Earlier quoted context omitted.

" 2020: policies put in place under this administration will come home to roost during the next administration, which will get the blame." That has often been the case. Bush suffered through Clinton's internet bubble. then Obama suffered through Bush's real estate bubble. Trump now benefits from Obama's policies. We'll see what happens after Trump.

Clintons internet bubble?

During the second half of the Clinton Admin, there was an extreme stock market bubble, which began to crash at the end of his second term.

Bush inherited a guaranteed recession, and then 9/11 occurred on top of that context.

Which then led the Fed to make stupid mistakes on interest rates, which helped spur immense asset inflation in the real estate sector, which then collapsed, which led to the great recession, which got Obama elected with a Dem super majority to go with it, which delivered the ACA.

Then the Fed lowered interest rates to basically zero, or below zero when QE is considered, for the better part of a decade to combat the great recession, which spurred / enabled extreme corporate debt binging, extreme government debt binging, and re-inflated both the stock market and real estate asset bubbles. The debasement of the dollar due to the Fed's abusive interest rate policies during the ~2001-2004 period also dramatically spiked both healthcare costs and college costs, while eroding US purchasing power and the US standard of living (represented by the simultaneous global skyrocketing of GDP in all other nations, as well as being represented in the epic commodity bubble (commodities are mostly priced in dollars)).

Now we're waiting for the fallout from another round of idiotic Fed policies.

All in the name of initially trying to avoid or skate around a rather mild recession in the GW Bush first term - because no politician can tolerate a recession these days - the assholes at the Fed delivered more than a decade of immense suffering with more to come.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#83

Post by ForRealsies »

maxxxxx wrote: post #66
mhneu wrote: post #46

2020: policies put in place under this administration will come home to roost during the next administration, which will get the blame. This lag between economic policy and outcomes is a big reason the US has such a disingenuous public debate. Getting what you can in the short term, while being deceptive about long term effects, has become a good strategy. [1] [1] https://mobile.nytimes.com/2017/12/18/opinion/republi…

" 2020: policies put in place under this administration will come home to roost during the next administration, which will get the blame." That has often been the case. Bush suffered through Clinton's internet bubble. then Obama suffered through Bush's real estate bubble. Trump now benefits from Obama's policies. We'll see what happens after Trump.

[dead]

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#84

Post by dv_dt »

coliveira wrote: post #38
smallnamespace wrote: post #5

The combination of tax repatriation, tax cuts, and large-scale deficit spending (fiscal expansion) late in the economic cycle (recessions typically happen every 8 years or so, and the current expansion has been going on for ~10 yrs now) while the Federal reserve is raising interest rates (monetary 'contraction') is more or less unprecedented (we've never seen it happen in modern times in the US or any other large dev…

The so called business cycle is created by the FED itself. Left uncontrolled, the market will disconnect from reality and create bubbles that can destroy the economy, as it did in 1929. The unrecognized work of the FED is to increase the interest rates periodically to force these bubbles to pop and create a minor recession before they can collapse the economy. The real risk of this cycle is that the FED has already l…

This management of bubbles also seems to completely contain real wage growth.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#85

Post by salviasloth »

maxxxxx wrote: post #75
salviasloth wrote: post #72

Earlier quoted context omitted.

Clintons internet bubble?

During Clinton's time there was a huge run-up in the stock market fueled b a lot of internet companies. Clinton got all the credit for the growth during that time and then Bush suffered through the predictable collapse.

He was making it sound like the bubble was caused by specific Clinton era policies. I'm pretty sure the dot com bubble was largely just a speculative bubble.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#87

Post by mindcrime »

“The economy is already at full employment.”

I'm not sure that's actually true. Yes, the govt. reported "official" unemployment number is 3.8% or whatever. BUT... that comes with a couple of big, big caveats:

1. Those numbers by definition don't include job-seekers who have left the market and quit being job-seekers. IOW, people who became so despondent that they gave up. But, there's nothing specific that stops these people (or some portion of them) from re-entering the job market to fill demand.

2. These numbers don't reflect underemployment where someone has "a job" but the job doesn't require the skills the individual actually possesses and pays significantly less than they would expect to earn in a "normal" position.

3. Wage growth is still very low, which suggests that the economy is not being hamstrung (yet) by lack of available workers. At some point, if demand exceeds supply by enough, you're inevitably going to see wage growth. A significant jump in wages would, IMO, be the best sign that there's an actual gap between labor supply and labor demand.

Note that I'm not saying that Bernanke's theory is wrong, but this one little point jumped out to be as something that's at least somewhat questionable.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#88

Post by mhneu »

maxxxxx wrote: post #75
salviasloth wrote: post #72

Earlier quoted context omitted.

Clintons internet bubble?

During Clinton's time there was a huge run-up in the stock market fueled b a lot of internet companies. Clinton got all the credit for the growth during that time and then Bush suffered through the predictable collapse.

Luckily for us, Clinton moved the budget toward balance during a good economy. So when the bubble burst, Bush was able to stimulate the economy and cut taxes.

The current tax cut increases the national debt during a good economy. So this irresponsibility limits America’s options when this bubble (if it exists) bursts.

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#89

Post by frockington »

mhneu wrote: post #46

2020: policies put in place under this administration will come home to roost during the next administration, which will get the blame. This lag between economic policy and outcomes is a big reason the US has such a disingenuous public debate. Getting what you can in the short term, while being deceptive about long term effects, has become a good strategy. [1] [1] https://mobile.nytimes.com/2017/12/18/opinion/republi…

For who will get the blame: Trump will get all the blame for when the stock market goes down and Obama will get all of the credit when it goes up. Look at this Februarys headlines for evidence of that

Re: Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020

#90

Post by pascalxus »

coliveira wrote: post #38
smallnamespace wrote: post #5

The combination of tax repatriation, tax cuts, and large-scale deficit spending (fiscal expansion) late in the economic cycle (recessions typically happen every 8 years or so, and the current expansion has been going on for ~10 yrs now) while the Federal reserve is raising interest rates (monetary 'contraction') is more or less unprecedented (we've never seen it happen in modern times in the US or any other large dev…

The so called business cycle is created by the FED itself. Left uncontrolled, the market will disconnect from reality and create bubbles that can destroy the economy, as it did in 1929. The unrecognized work of the FED is to increase the interest rates periodically to force these bubbles to pop and create a minor recession before they can collapse the economy. The real risk of this cycle is that the FED has already l…

Yes, but they should have started increasing interest rates at least several years before they started. They kept the party going too long. And when we get the next hangover, the interest rates will already be too low to zero.
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