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The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

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Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#31

Post by pcthrowaway »

rayiner wrote: post #4

The denial is amazing. Real wages are down three years into Biden’s presidency: https://jacobin.com/2023/12/real-wages-joe-biden-administrat... . and the loss in purchasing power is understated by CPI, because it has hit areas where people have little flexibility to reduce spending without reducing standard of living: food, transportation, etc. According to Redfin, the house we live in (purchased during the 2016 elec…

Don't forget that the Washington Post is owned by Amazon, of course they're not to be trusted.

They should just stop writing about the employment and labour markets, it's embarrassing for them

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#32

Post by rayiner »

reducesuffering wrote: post #19
rayiner wrote: post #17

Earlier quoted context omitted.

Lack of supply is the cause in some popular metro areas. But that’s not the whole story. Prices are exploding even in places that are experiencing virtually no population growth. Or where growth is below historic trends. The price of my house has doubled, in a country where population growth has been like 1% annually (and it’s a red county with lots of farmland where building housing is relatively cheap and easy). Th…

> The M1 money supply increases from $4 trillion in December 2019 to $20 trillion in June 2022. That’s what’s causing the inflation. M1 didn't include savings accounts in December 2019 and it does now, that's the majority of M1 diff... That makes me think your conclusions are based off talking-head points instead of first principles, as when your conclusion hinges on M1 changes, you'd think you'd do a few minutes sea…

Thank you, I wasn’t aware of that change. I’m trying to make sense of what’s going on, and it’s hard to do since everyone seems to be in the can for one political faction or the other, and money printing is something both parties did so people aren’t talking about it.

According to that source the accounting change is responsible for $11.4 trillion of the change. That means M1 really only went up from $4 trillion to $8.6 trillion in two years from February 2020 to June 2022. So we printed more money in two years of pandemic than in the previous twelve years of quantitative easing. How’s that still not the obvious culprit?

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#33

Post by rayiner »

cko wrote: post #20
reducesuffering wrote: post #19

Earlier quoted context omitted.

> The M1 money supply increases from $4 trillion in December 2019 to $20 trillion in June 2022. That’s what’s causing the inflation. M1 didn't include savings accounts in December 2019 and it does now, that's the majority of M1 diff... That makes me think your conclusions are based off talking-head points instead of first principles, as when your conclusion hinges on M1 changes, you'd think you'd do a few minutes sea…

https://collabfund.com/blog/the-fed-isnt-printing-as-much-mo... Yep it was an accounting change. Though the additional wave of stimmy checks plus continued buying of MBS during 2021 was definitely not good for inflation.

It wasn’t just an accounting change. The money supply still more than doubled over just two years.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#34

Post by rayiner »

defrost wrote: post #24
rayiner wrote: post #17

Earlier quoted context omitted.

Lack of supply is the cause in some popular metro areas. But that’s not the whole story. Prices are exploding even in places that are experiencing virtually no population growth. Or where growth is below historic trends. The price of my house has doubled, in a country where population growth has been like 1% annually (and it’s a red county with lots of farmland where building housing is relatively cheap and easy). Th…

> It’s a textbook outcome from easily identifiable policy choices. There's no wide agreement that either MMT or Fiat currency is that predictable. The case for MMT and "printing money" (right or wrong) is made in popular books such as Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy... and explored in documentaries such as Finding…

I’m actually persuaded that MMT is basically correct. But MMT doesn’t say that money printing doesn’t cause inflation. It says that it won’t cause inflation if there’s slack in the economy, or money is taken out of the economy through higher taxes. The key point of MMT, as I understand it, is that central government budgets don’t need to balance for the sake of it. But taxation is the primary lever for controlling inflation.

What we’re seeing is what MMT would predict. We had essentially full employment in February 2020. Then we more than doubled the money supply, and didn’t raise taxes. We would expect to see massive inflation even under MMT.

We are all de facto MMT believers now, insofar as nobody is willing and able to balance the budget. That shows the policy failure of this administration. MMT would say that we need to raise taxes to take money out of the economy. We especially need to raise taxes on the upper middle class, who are responsible for the lion’s share of consumer spending. But Biden has stuck to this ridiculous $400,000 floor for raising taxes.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#35

Post by Hock88sdx »

BriggyDwiggs42 wrote: post #21
rayiner wrote: post #4

The denial is amazing. Real wages are down three years into Biden’s presidency: https://jacobin.com/2023/12/real-wages-joe-biden-administrat... . and the loss in purchasing power is understated by CPI, because it has hit areas where people have little flexibility to reduce spending without reducing standard of living: food, transportation, etc. According to Redfin, the house we live in (purchased during the 2016 elec…

It was hilarious to me that they described it as easy to get a job, as I’ve recently watched several friends and my partner struggle to get minimum wage jobs. I refuse to believe that the numbers aren’t carefully chosen to save face.

WaPo is using data that government published. Your annedoctal observations are insignificant to what Joe instructed the bureau to write the data even if it is "inaccurate". I foresee WaPo will do a surprise pikachu face sometime in Q3.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#36

Post by defrost »

rayiner wrote: post #34
defrost wrote: post #24

Earlier quoted context omitted.

> It’s a textbook outcome from easily identifiable policy choices. There's no wide agreement that either MMT or Fiat currency is that predictable. The case for MMT and "printing money" (right or wrong) is made in popular books such as Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy... and explored in documentaries such as Finding…

I’m actually persuaded that MMT is basically correct. But MMT doesn’t say that money printing doesn’t cause inflation. It says that it won’t cause inflation if there’s slack in the economy, or money is taken out of the economy through higher taxes. The key point of MMT, as I understand it, is that central government budgets don’t need to balance for the sake of it. But taxation is the primary lever for controlling in…

I'm not in or from the US so that's a strong "What do you mean 'we', Ke-mo sah-bee?"

> But Biden has stuck to

My impression of the US system is there's an excess of players able to throw sticks in bicycle wheels and unbalance most plans and Biden (regardless of his age, cognitive slips, and US left or right party affiliation) appears to be one of the rare few who can manage to steer some bicycles through the chaos ..

I don't know enough of the gory details you have going on there, my first thought would be that he's not aiming higher as his political gut might be telling him it would never get anywhere if it did.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#37

Post by reducesuffering »

rayiner wrote: post #32
reducesuffering wrote: post #19

Earlier quoted context omitted.

> The M1 money supply increases from $4 trillion in December 2019 to $20 trillion in June 2022. That’s what’s causing the inflation. M1 didn't include savings accounts in December 2019 and it does now, that's the majority of M1 diff... That makes me think your conclusions are based off talking-head points instead of first principles, as when your conclusion hinges on M1 changes, you'd think you'd do a few minutes sea…

Thank you, I wasn’t aware of that change. I’m trying to make sense of what’s going on, and it’s hard to do since everyone seems to be in the can for one political faction or the other, and money printing is something both parties did so people aren’t talking about it. According to that source the accounting change is responsible for $11.4 trillion of the change. That means M1 really only went up from $4 trillion to $…

It's probably some of the culprit. But we've had 20% CPI since 2020, so it doesn't wholly explain everything in a "double the money, double the inflation" way. And a higher money supply doesn't mean that quality of life is worse either, since I'm sure you wouldn't want to go back to the 1930 US economy with vastly less money supply. If we could 2x the money supply again and get 1.1x goods & services for it, we should. Ultimately, I'm still not saying that recent inflation / money supply was good, just that you can't simply conclude that "because money supply went up, it's worse for people now."

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#38

Post by hollerith »

reducesuffering wrote: post #19
rayiner wrote: post #17

Earlier quoted context omitted.

Lack of supply is the cause in some popular metro areas. But that’s not the whole story. Prices are exploding even in places that are experiencing virtually no population growth. Or where growth is below historic trends. The price of my house has doubled, in a country where population growth has been like 1% annually (and it’s a red county with lots of farmland where building housing is relatively cheap and easy). Th…

> The M1 money supply increases from $4 trillion in December 2019 to $20 trillion in June 2022. That’s what’s causing the inflation. M1 didn't include savings accounts in December 2019 and it does now, that's the majority of M1 diff... That makes me think your conclusions are based off talking-head points instead of first principles, as when your conclusion hinges on M1 changes, you'd think you'd do a few minutes sea…

OK, but the fact that the definition of M1 changed right around the time Biden took office makes me wonder what Biden policies the change might have been intended to obscure.

(I know the Fed is not under the direct control of the White House, but the change might've been made by decision-makers at the Fed whose sympathy with Biden overrode their commitment to impartially reporting monetary information to the public.)

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#39

Post by reducesuffering »

hollerith wrote: post #38
reducesuffering wrote: post #19

Earlier quoted context omitted.

> The M1 money supply increases from $4 trillion in December 2019 to $20 trillion in June 2022. That’s what’s causing the inflation. M1 didn't include savings accounts in December 2019 and it does now, that's the majority of M1 diff... That makes me think your conclusions are based off talking-head points instead of first principles, as when your conclusion hinges on M1 changes, you'd think you'd do a few minutes sea…

OK, but the fact that the definition of M1 changed right around the time Biden took office makes me wonder what Biden policies the change might have been intended to obscure. (I know the Fed is not under the direct control of the White House, but the change might've been made by decision-makers at the Fed whose sympathy with Biden overrode their commitment to impartially reporting monetary information to the public.)

The sibling comment's linked article answers this.

"If you put money in a checking account, regulators make banks set aside a cushion as reserves in case they get into trouble. But if you put money into a savings account, regulators tell banks they don’t have to reserve anything. The catch is that it’s only considered a savings account if the consumer is allowed to make no more than six withdrawals per month.

It’s worked that way for years.

But then Covid hit, and regulators realized that having trillions of dollars in savings accounts with limited withdrawals was a burden as 22 million people lost their jobs.

So last April the Fed changed the rules and eliminated the six-withdrawal limit on savings accounts. It wrote:

    The interim final rule allows depository institutions immediately to suspend enforcement of the six transfer limit and to allow their customers to make an unlimited number of convenient transfers and withdrawals from their savings deposits at a time when financial events associated with the coronavirus pandemic have made such access more urgent.
It was an obvious and nearly risk-free way to help people. Just let them have easier access to their savings.

But it changed the relationship between M1 and M2.

Savings accounts are measured in M2 and left out of M1. But once the six-withdrawal rule was removed, every savings account suddenly became, in the eyes of regulators and people who make these charts, a checking account.

So M1 exploded higher. Not because the Fed printed a bunch of money, but because trillions of dollars in savings accounts were reclassified as checking accounts."

https://collabfund.com/blog/the-fed-isnt-printing-as-much-mo...

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#40

Post by tim333 »

rayiner wrote: post #4

The denial is amazing. Real wages are down three years into Biden’s presidency: https://jacobin.com/2023/12/real-wages-joe-biden-administrat... . and the loss in purchasing power is understated by CPI, because it has hit areas where people have little flexibility to reduce spending without reducing standard of living: food, transportation, etc. According to Redfin, the house we live in (purchased during the 2016 elec…

As a UK resident who visits the US from time to time I was shocked by the cost of everything. In the past it's usually been cheaper than the UK. Now something basic like a mediocre sandwich bought in a shop is like twice as much as London. And when I bought my $8.50 sandwich in a shop in Austin and tried eating it I was followed down the street by a woman saying she was hungry would I give her some so I did and she really was hungry. In London we have beggars saying "I'm hungry" but they all just want money and are not interested in food. Something's not quite right.
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