No one knows how much the government can borrow • Hacker News Board

Re: No one knows how much the government can borrow

#41

Post by Supermancho » Sat, Jan 23, 2021, 8:49 PM UTC

farseer wrote: post #37

drtillberg wrote: post #14

> Remember that some people thought that government borrowing ... facilitated by quantitative easing (Fed bond-buying) ... was going to lead to substantial inflation. But it didn’t. Every time someone says "but where's the inflation" I sigh. Look at literally any financial asset, SP500, stocks, real estate, even bond values (the inverse of interest rates). There is your inflation. Maybe we like asset inflation, maybe…

For the average Joe, inflation is usually the price of milk, bread and eggs going up. America being an agricultural colossus with plenty of farm subsidies mean the price of essentials will not rise. Hence the unique manifestation of inflation in asset prices will not bring masses on the streets unlike most other countries. Coupled this with the fact that other countries are also printing money and are in worse shape…

https://chapwoodindex.com/

There are resources outside the CPI or individual verticals, to measure inflation.

Re: No one knows how much the government can borrow

#42

Post by Jommi » Sat, Jan 23, 2021, 8:50 PM UTC

drtillberg wrote: post #14

> Remember that some people thought that government borrowing ... facilitated by quantitative easing (Fed bond-buying) ... was going to lead to substantial inflation. But it didn’t. Every time someone says "but where's the inflation" I sigh. Look at literally any financial asset, SP500, stocks, real estate, even bond values (the inverse of interest rates). There is your inflation. Maybe we like asset inflation, maybe…

You're right and wrong. You're talking more specifically about asset price inflation.

Read this: https://www.valuewalk.com/2014/11/central-banks-asset-vs-pri...

Btw it's an incredibly good topic and if anyone wants to talk more about it I would love to start a clubhouse room.

Re: No one knows how much the government can borrow

#43

Post by jonas21 » Sat, Jan 23, 2021, 8:51 PM UTC

trident5000 wrote: post #35

MrRiddle wrote: post #29

Earlier quoted context omitted.

How can you have inflation while most of the services and commodities people are using are not increasing in price? Sure, you have equities rising, but that’s about it. Inflation because call options are flooding the market? Bonds are going down, real estate market is stagnant.

Wages are stagnant which means they dont need to raise the price of goods on the other side, theres your uptick in inflation.

I don't get it. If wages are stagnant and prices are stagnant, isn't that by definition zero inflation?

Re: No one knows how much the government can borrow

#44

Post by CryptoGhost » Sat, Jan 23, 2021, 8:52 PM UTC

howeyc wrote: post #32

This misconception needs to die. The government doesn't borrow money. The government doesn't need your money. The government prints money. They could stop accepting taxes tomorrow and still be able to keep spending. They print the money. Treasuries exist as an accounting fantasy for people to believe the government needs to borrow, they don't. Any treasuries outstanding today basically just represent dollars to be pr…

Your point is accurate that true borrowing isn't really an apt description since they just alter the effective supply of money but technically they do need to borrow because they don't have complete control of the Federal Reserve. Granted congress could change that if they wanted to if the Fed angers them enough. But exactly how such a drama would play out is complicated.

Re: No one knows how much the government can borrow

#45

Post by snomad » Sat, Jan 23, 2021, 8:52 PM UTC

MrRiddle wrote: post #29

drtillberg wrote: post #14

> Remember that some people thought that government borrowing ... facilitated by quantitative easing (Fed bond-buying) ... was going to lead to substantial inflation. But it didn’t. Every time someone says "but where's the inflation" I sigh. Look at literally any financial asset, SP500, stocks, real estate, even bond values (the inverse of interest rates). There is your inflation. Maybe we like asset inflation, maybe…

How can you have inflation while most of the services and commodities people are using are not increasing in price? Sure, you have equities rising, but that’s about it. Inflation because call options are flooding the market? Bonds are going down, real estate market is stagnant.

A McDonalds double cheeseburger meal costs $8.

I remember when that was 3.99 not too long ago. Somehow I doubt that price difference is captured by the official 1 - 2% inflation rate.

Re: No one knows how much the government can borrow

#46

Post by trident5000 » Sat, Jan 23, 2021, 8:53 PM UTC

jonas21 wrote: post #43

trident5000 wrote: post #35

Earlier quoted context omitted.

Wages are stagnant which means they dont need to raise the price of goods on the other side, theres your uptick in inflation.

I don't get it. If wages are stagnant and prices are stagnant, isn't that by definition zero inflation?

Prices are not stagnant. You can see that quite clearly from the average price of a big mac over the years.

Re: No one knows how much the government can borrow

#47

Post by trident5000 » Sat, Jan 23, 2021, 8:55 PM UTC

jldugger wrote: post #23

Seems like they can easily borrow 100 billion in one shot. Tendered Accepted Primary Dealer $77,850,000,000 $10,790,550,000 Direct Bidder $6,350,000,000 $2,009,150,000 Indirect Bidder $20,935,350,000 $12,193,340,000 Total Competitive $105,135,350,000 $24,993,040,000 https://www.treasurydirect.gov/instit/annceresult/press/prea...

Because institutions like pension funds are mandated to buy them.

Re: No one knows how much the government can borrow

#48

Post by SpicyLemonZest » Sat, Jan 23, 2021, 8:55 PM UTC

Supermancho wrote: post #41

farseer wrote: post #37

Earlier quoted context omitted.

For the average Joe, inflation is usually the price of milk, bread and eggs going up. America being an agricultural colossus with plenty of farm subsidies mean the price of essentials will not rise. Hence the unique manifestation of inflation in asset prices will not bring masses on the streets unlike most other countries. Coupled this with the fact that other countries are also printing money and are in worse shape…

https://chapwoodindex.com/ There are resources outside the CPI or individual verticals, to measure inflation.

This index doesn't pass the sniff test. 10% annual inflation would mean that someone making $100k today has the same standard of living as someone making $40k in 2010.

Re: No one knows how much the government can borrow

#49

Post by newacct583 » Sat, Jan 23, 2021, 8:55 PM UTC

trident5000 wrote: post #20

pessimizer wrote: post #15

Earlier quoted context omitted.

> Theres no free lunch, you don't get to just print unlimited money and have no consequences. I think you're arguing the opposite. We are printing money, yet inflation stays stubbornly low. We borrow money, but don't have to offer any interest; in fact, in some circumstances people pay us to loan us money. That's the definition of a free lunch.

Inflation is not low, have you checked stock market lately? Have you seen home prices up 15% yoy? Education costs rising, auto, etc. There is a left and right tail of the inflation bell curve. High impact items are increasing in price rapidly while things like flat screen tv's stay low from certain market dynamics. Also because wages are not rising, inflation is rising faster than people understand even on left tail…

Asset price increases and inflation are entirely different things. The former represents growth, the latter is a dilution (sort of "good" vs. "bad", but not really, economics is complicated, yada yada).

Education costs are indeed part of inflation, as are car prices. And yes, those are rising, but they're being offset on balance by other things (phones, say) getting cheaper.

Look, inflation indexes are complicated and there's room for argument about exactly how you want it computed. But statements like "inflation is not low" don't really capture the truth.

Re: No one knows how much the government can borrow

#50

Post by throw0101a » Sat, Jan 23, 2021, 8:57 PM UTC

Supermancho wrote: post #41

farseer wrote: post #37

Earlier quoted context omitted.

For the average Joe, inflation is usually the price of milk, bread and eggs going up. America being an agricultural colossus with plenty of farm subsidies mean the price of essentials will not rise. Hence the unique manifestation of inflation in asset prices will not bring masses on the streets unlike most other countries. Coupled this with the fact that other countries are also printing money and are in worse shape…

https://chapwoodindex.com/ There are resources outside the CPI or individual verticals, to measure inflation.

> There are resources outside the CPI or individual verticals, to measure inflation.

No, there are not. CPI is about measuring consumables that one needs to live: food, shelter (either rent or mortgage carrying costs), utilities, clothing, etc. If you want to measure something outside of this basket of goods, then use another word, because "inflation" / CPI is already taken and you're overloading it and causing confusion by conflating different things.

This "index" is garbage. Please see "Inflation Truthers":

> But if we take away the outlier 2020 data points, the average real annual GDP growth from 2010-2019 was 2.3%. The inflation rate in that time averaged roughly 1.8% per year.

> If you’re one of the conspiracy people who believe inflation has actually been running at 5-6% per year, that would assume the economy has been contracting by 1-3% per year over the past 10 years.

> And if you’re a full tinfoil hat person who assumes inflation is actually 10-12% per year, that’s like saying we’ve been in a full-blown depression and the economy has lost 80% of its value.

* https://awealthofcommonsense.com/2021/01/inflation-truthers/

* https://news.ycombinator.com/item?id=25644580

So if the GDP grew "only" ~2.5%, then any inflation above that (as the 'truthers' claim), would mean were actually in a recession/depression for the last decade… which makes no sense. If inflation is >5% (per the truthers), then the economic growth would have had to been on top of that, for a nominal growth rate of >7%.

Has anyone been claiming a US GDP growth of 7% or more?