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The Pandemic Boom Goes Bust

therossreport.substack.com

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Re: The Pandemic Boom Goes Bust

#81

Post by eru »

callmeal wrote: post #56
thrown_22 wrote: post #7

I am as far from an inflation hawk as you can get. I basically think that any government can both print money and avoid inflation bar external shocks with a modicum of common sense, e.g. don't pay people not working to piss off the French and Belgians: https://www.theholocaustexplained.org/the-nazi-rise-to-power... Yet we did just that. People not working being paid for existing at a time when the real economy went i…

>People not working being paid for existing at a time when the real economy went into cardiac arrest by every measure of actual productivity. Are people still on this canard? As a reminder, if people were paid by their measure of actual productivity, minimum wage would be $24/hr (see: https://www.counterpunch.org/2020/01/24/what-the-minimum-wag... ) Another reminder, these are the relief payments made to Americans ov…

> As a reminder, if people were paid by their measure of actual productivity, minimum wage would be $24/hr

Huh? What does one have to do with the other? Minimum wage just means that jobs that pay less than a certain amount are forbidden. It has nothing to do with productivity per se.

In Singapore our minimum wage is 0. Yet people are still paid. And paid rather well actually. When productivity changes over time, we don't adjust that figure. But wages do adjust, thanks to market forces.

The only relationship minimum wage laws have with productivity is that if you raise minimum wage much faster than productivity, your economy is gonna have a really bad time. The reverse is not a problem.

Re: The Pandemic Boom Goes Bust

#83

Post by eru »

thisisnotatest1 wrote: post #76
eru wrote: post #75

Earlier quoted context omitted.

Monetary stimulus went pretty well, and it's essentially free and reversible. Fiscal stimulus was a waste of real resources. Fiscal tightening doesn't do anything about inflation. See eg the fiscal cliff of 2013 for an example.

Monetary and fiscal are largely equivalent specially when the central bank has the tendency to print money to buy government debt, so public solvency is never an issue

You can easily reverse monetary stimulus: just sell those assets that the central bank bought.

You can't really reverse fiscal stimulus. Once you paid people to dig holes and cover them again, you can't really get that money back.

Yes, public solvency is not an issue for governments that borrow in their own currency. But that's a separate concern.

Re: The Pandemic Boom Goes Bust

#84

Post by throw0101a »

eru wrote: post #75
pjc50 wrote: post #20

This is missing a very important graph, unemployment. Here's an example: https://www.bbc.co.uk/news/business-52938993 And its not-quite-mirror, labor force participation: https://www.bls.gov/charts/employment-situation/civilian-lab... The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes i…

Monetary stimulus went pretty well, and it's essentially free and reversible. Fiscal stimulus was a waste of real resources. Fiscal tightening doesn't do anything about inflation. See eg the fiscal cliff of 2013 for an example.

Seems the opposite to me, especially when if you add post-2010 to the data set:

There was hardy any useful stimulus in the US post-2008 because Obama (D) was in the Whitehouse and the GOP-controlled Congress didn't want to help him out. So it was mostly just monetary policy (Fed) that did things, and it was a long slog of pain to get unemployment down and get the economy going.

With COVID we had monetary policy (as before) but also fiscal policy (Treasury), and I think that fewer people suffered economically. Especially since the Fed can only work 'internal' to the financial system, but it takes the Treasury to get cheques-in-hands.

(Certainly the two scenarios are not directly compatible, but it seems obvious to me that fiscal can have more direct impact on regular people's lives, e.g., average savings rate increased.)

Re: The Pandemic Boom Goes Bust

#85

Post by throw0101a »

MisterSandman wrote: post #26
boboche wrote: post #15

Stopped reading at “tesla is a car company”. When I read that, it shows how little research has been done and not trusting anything else. Hate and downvote all you want, anyone who did basic research on the company, IP, and execution knows how bad that narrative will age. Its not about loving or hating Elon, its simple business. While the P/E compression during a recession is completely normal, and yes, Tesla is over…

I agree with everything else you said except your first sentence. Saying that Tesla is a car company isn't untrue and there's no reason for you to have such a visceral reaction to it. Tesla has made no indication that they'd ever license their self-driving or sensor tech to others. Pretty much every other project Tesla has suggested is vaporware. The one and only thing they'll successfully produce and launch, possibl…

> Tesla has made no indication that they'd ever license their self-driving or sensor tech to others.

Do you mean self-driving or "self-driving"?

Re: The Pandemic Boom Goes Bust

#86

Post by cs702 »

pjc50 wrote: post #20

This is missing a very important graph, unemployment. Here's an example: https://www.bbc.co.uk/news/business-52938993 And its not-quite-mirror, labor force participation: https://www.bls.gov/charts/employment-situation/civilian-lab... The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes i…

> The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes is smiling. In exchange for that we've got only 5%ish inflation, driven partly by a newly-tight labour market in which people can actually negotiate incomes upward, and partly by a big spike in natural gas prices? I would absolutely take it.

Me too. I would take that deal again.

As I recall, for a few weeks in early-to-mid 2020, the world was in the grip of fear, consumers everywhere had drastically cut their spending, and businesses everywhere were in free fall. Government intervention stopped the free fall. I know of several small and midsize businesses that briefly considered Chapter 11 and of one billionaire who had his lawyers draft personal bankruptcy filings during those few weeks. Every CEO and business founder I know took out a PPP loan -- and no one repaid it. The moment government money started flowing, everyone changed their tune. I'm 100% sure that, had it not been for all that government intervention (fiscal and monetary), we would be in the throes of a horrific Great Depression right now.

That said, I think there will likely be two significant costs to all the "mopping up" to be done by central banks (stopping their purchases of government bonds to replace holdings that mature, reducing the pool of capital available for buying government bonds, and raising rates): (1) asset prices are likely to decline, perhaps significantly (that is what has happened in other periods of voluntary/involuntary monetary tightening throughout history), and (2) we will likely have to suffer through a normal recession -- much better than a Great Depression, but still, not fun.

Re: The Pandemic Boom Goes Bust

#87

Post by giantg2 »

throw0101a wrote: post #77
giantg2 wrote: post #36

Earlier quoted context omitted.

"Unless people start getting physically in the way of each other more people on a site means the project gets done faster." Have you worked construction? If they're clueless, then they will slow you down with mistakes and questions/training. Not to mention many parts of construction require skilled trades (electric, plumbing, carpentry, masonry, etc), some of which require licenses.

> Not to mention many parts of construction require skilled trades (electric, plumbing, carpentry, masonry, etc), some of which require licenses. There's smaller and smaller areas of construction that is unskilled nowadays AFAICT. Unless you're just there to lift stuff and/or literally dig ditches (which is often done with machines), there's not much that can be done by some rando off the street. Even the day laboure…

At lot of the inspectors are a joke, so you have to mess up pretty bad to fail.

I had an inspector come out to verify my generator hookup and interlock switch. He asked a few basic questions, but that was it. He didn't ask nor look at how the legs of the panel were balanced or anything. Later he sent me a letter saying I needed to mark the generator receptacle with the max wattage. Um yeah, that was already on there...

It's all about the permit money.

Re: The Pandemic Boom Goes Bust

#88

Post by kwertyoowiyop »

nebula8804 wrote: post #18
thrown_22 wrote: post #7

I am as far from an inflation hawk as you can get. I basically think that any government can both print money and avoid inflation bar external shocks with a modicum of common sense, e.g. don't pay people not working to piss off the French and Belgians: https://www.theholocaustexplained.org/the-nazi-rise-to-power... Yet we did just that. People not working being paid for existing at a time when the real economy went i…

>Were I a betting man I'd say that the reason for doing this was to discredit left leaning economic policy for another 40 years, like happened after the stagflation of the 70s. You see this is what I have been thinking as well. We have the corruption and rot being exposed on a daily basis by all the new Left media. Do we honestly think the capital class is that stupid that they haven't thought of some way to extingui…

Every generation does have this fear. I was sure outsourcing would seriously damage Silicon Valley…in 1990.

Re: The Pandemic Boom Goes Bust

#90

Post by galangalalgol »

iso1631 wrote: post #55
swagatkonchada wrote: post #53

Earlier quoted context omitted.

inflation is 7%ish, not 5%ish. but generally translates to much higher cost of living increases for the middle class

And massive payrises to boot

For those able to change jobs or find jobs in the <1yr window yes, for the rest, pay adjustment largely didn't meet inflation, so they got a pay cut. And those that were saving to buy a house or car saw the price of those things shoot away from their efforts while those savings lost value. I also worry that those who took jobs for massive raises will be on shakey ground afterwards. And those that hired in before or after resenting them for it.
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