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No one knows how much the government can borrow

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Re: No one knows how much the government can borrow

#101

Post by notyourwork »

jennyyang wrote: post #97

The only time people care is when they care. And you can't predict when that will happen. It's like a flock of birds flying in the air, you can't figure out which individual bird caused the first change in direction, but it quickly spreads across the entire flock. The other fallacy is that inflation is here, it's just not being measured by the Federal Reserve properly. There is crazy inflation in things like house pr…

Are house prices inflation or appreciation? It may be unfounded but is an increase in value always inflation? (Serious question, not disagreeing with your statement.)

Re: No one knows how much the government can borrow

#102

Post by nicoburns »

notyourwork wrote: post #101
jennyyang wrote: post #97

The only time people care is when they care. And you can't predict when that will happen. It's like a flock of birds flying in the air, you can't figure out which individual bird caused the first change in direction, but it quickly spreads across the entire flock. The other fallacy is that inflation is here, it's just not being measured by the Federal Reserve properly. There is crazy inflation in things like house pr…

Are house prices inflation or appreciation? It may be unfounded but is an increase in value always inflation? (Serious question, not disagreeing with your statement.)

Given that a large part of the increase is due to the availability of low-interest mortgages, the description as inflation seems reasonable.

Re: No one knows how much the government can borrow

#103

Post by dboreham »

notyourwork wrote: post #101
jennyyang wrote: post #97

The only time people care is when they care. And you can't predict when that will happen. It's like a flock of birds flying in the air, you can't figure out which individual bird caused the first change in direction, but it quickly spreads across the entire flock. The other fallacy is that inflation is here, it's just not being measured by the Federal Reserve properly. There is crazy inflation in things like house pr…

Are house prices inflation or appreciation? It may be unfounded but is an increase in value always inflation? (Serious question, not disagreeing with your statement.)

What's "appreciation"??

Re: No one knows how much the government can borrow

#104

Post by headmelted »

throw0101a wrote: post #68
njarboe wrote: post #27

Ray Dailo has been thinking about this idea for most of his life. He has had the resources and status to access any scholar on the topic he would like. Smart and motivated to understand the answer, he has written a book about this topic that is coming out soon, but is also available in full on-line for free[1]. I'm half-way through and it is very good so far. [1] https://www.principles.com/the-changing-world-order/#i…

> He has had the resources and status to access any scholar on the topic he would like. So did Bill Gross of PIMCO, one of the largest fixed-income (bond) management firms in the world (AUM: $1.9T): * https://en.wikipedia.org/wiki/PIMCO He bet that interest rates would rise in 2011 after QE(2). Keynesian macroeconomists like Krugman said they wouldn't. Krugam was right: * https://www.businessinsider.com/this-was-the-…

We’re basing the prediction of inflation on the notion that there’s more money “sloshing around out there”.

I’m not convinced that more of it is sloshing. Wage growth has been largely absent for many people in the 12 years since the crisis, and as a result those people haven’t had more money to spend.

The money clearly exists of course given that it’s been printed, but there’s a good chance it just isn’t finding it’s way into people’s pockets.

Re: No one knows how much the government can borrow

#105

Post by XorNot »

trident5000 wrote: post #13
raducu wrote: post #10

Earlier quoted context omitted.

> What happens to your currency in that process is debasement/hyperinflation. Not if the vast majority of population lives paycheck to paycheck and food and basic necessities production are not disrupted. In that/our case, you simply get the inflation of the assets the "elites" who have disposable income choose to spend that disposable income("investing" in real-estate, bitcoin).

The savings rate is a whole other issue. Strictly on the value proposition of the dollar and discussing economics, the savings of common folks in any amount cannot be invested into production assets meaningfully with real yields as prices rise = they are worthless. Meanwhile homes, auto, healthcare, education, all rise and what you are holding has less purchasing power. Inflation is very real even if the price of spe…

How are homes having less purchasing power? The rise in real estate prices in western democracies has been a global phenomenon, and everywhere it's happened the problem is exactly because the value of homes is rising disproportionate to everything else - that's not inflation! If you own a house, you are materially increasing your wealth by a lot because if you could liquidate that asset (and a bunch of people can because they have two or more) then the amount of raw stuff you can buy with the proceeds has gone up and up.

Re: No one knows how much the government can borrow

#106

Post by headmelted »

ashtonkem wrote: post #92
hntrader wrote: post #83

Earlier quoted context omitted.

A fixed income fund manager is a domain expert in this area, even though he was wrong about this prediction. Their full time job is largely to understand and anticipate Central Bank policy.

My time in finance has led me to believe that traders and investors are far more prone to groupthink than they’re willing to admit to. “Hedge fund manager predicted inflation after QE and was wrong” is very low on my list of things that surprise me.

So very much this, all the way down.

The Robinhood impact on the US market makes me incredibly nervous, as it should others. That Cathie Wood can mention CRISPR in a YouTube video and gene therapy stocks rocket that same afternoon should be a fairly sizeable red flag I would have thought.

Re: No one knows how much the government can borrow

#107

Post by XorNot »

trident5000 wrote: post #9

The answer is you can borrow unlimited debt if you pin interest rates at 0% (though eventually you will lose control at the back end of the yield curve without heavy govt intervention). What happens to your currency in that process is debasement/hyperinflation.

The term hyperinflation needs to fall out of the lexicon. In every casual economic discussion it's the favorite apocalypse goto word for people, and every one seems to think it's right around the corner.

It's not going to happen.

Re: No one knows how much the government can borrow

#108

Post by bob33212 »

jennyyang wrote: post #97

The only time people care is when they care. And you can't predict when that will happen. It's like a flock of birds flying in the air, you can't figure out which individual bird caused the first change in direction, but it quickly spreads across the entire flock. The other fallacy is that inflation is here, it's just not being measured by the Federal Reserve properly. There is crazy inflation in things like house pr…

Inflation is intended to measure middle class distress. If gas/food/rent goes up people making under 50k can fall into poverty and bankruptcy. If GME goes up to $2000 the middle class isn't hurt much at all. Just a few hundred or few thousand people get rich.

Re: No one knows how much the government can borrow

#109

Post by analyst74 »

notyourwork wrote: post #101
jennyyang wrote: post #97

The only time people care is when they care. And you can't predict when that will happen. It's like a flock of birds flying in the air, you can't figure out which individual bird caused the first change in direction, but it quickly spreads across the entire flock. The other fallacy is that inflation is here, it's just not being measured by the Federal Reserve properly. There is crazy inflation in things like house pr…

Are house prices inflation or appreciation? It may be unfounded but is an increase in value always inflation? (Serious question, not disagreeing with your statement.)

Modern days, the word "inflation" tend to refer to how government measures price increases based on a basket of core consumer goods. And in that case, appreciation and inflation are completely different things.

But when talking about housing/asset prices in aggregate, a 10% appreciation means you need 10% more money to buy the same asset, thus losing 10% purchasing power. Whether you call that appreciation or inflation doesn't make a difference.

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