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It’s mostly a demand shock, not a supply shock, and it’s everywhere

bridgewater.com

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Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#231

Post by tsimionescu »

qPM9l3XJrF wrote: post #183
JamisonM wrote: post #178

Earlier quoted context omitted.

"I rather listen to the hedge fund guys, at least they have skin in the game, don't they?" Not really, right? They make a lot of money even after they get it wrong? "Right now, it feels like the supply issue cannot be remedied or solved because of heavy regulations and a stagnant productivity." This supply issue has existed for, what, a few months? We can literally see the containers piled up on the coasts, is there…

>Not really, right? They make a lot of money even after they get it wrong? If they get it wrong clients may move their money elsewhere

If the 2008 crisis taught us anything, it is that hedge funds can get it arbitrarily wrong and still profit tremendously overall.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#232

Post by clavicat »

anm89 wrote: post #65
dustintrex wrote: post #13

The article doesn't answer the obvious question though: what next? The various pandemic subsidy packages are by and large being wound down, which implies that demand should start dropping quite soon as well.

Bridge water is very much on the record saying what they think comes next. Inflation, low rates, poor performance for bonds, poor performance for many assets.

That was my thesis all summer long, but bond yields have remained stubbornly low and the stock market just had a blowout October even as inflationary pressures picked up amidst the Evergrande crisis and the debt-ceiling crisis. I’ve given up thinking that there is anything that can bring down this market and will no longer fight the trend.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#233

Post by fallingknife »

MeinBlutIstBlau wrote: post #219
evergrande wrote: post #29

Earlier quoted context omitted.

Actually, that's a good point. Inflation would be even worse if that cash was going into physical goods and services. The government now has an incentive to leave crypto alone aside from providing clarity.

until the bubble bursts and bankrupts shittons of people causing bank runoffs and failures...like in 1929 and 2008...

Banks don't have any significant portion of their assets in crypto, so no.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#234

Post by throwaway34241 »

Jensson wrote: post #226
throwaway34241 wrote: post #218

Earlier quoted context omitted.

Most of the economy isn't tradeable though, including major sectors like housing, education, health care etc. If other countries get sick of buying US bonds, the relative value of the currency might depreciate. But as long as it doesn't happen all of a sudden that might not be catastrophic - other countries having stronger currencies might reduce US imports and increase exports (narrowing the trade deficit). Plus inc…

But the cost of all of those things are tied to trade prices. Lets say we halve the value of a dollar, then we effectively halve the salary of every American worker relative to the rest of the world, and also halve the value of the American consumption market. That would massively reduce the stock value of all companies that mainly sells to the American market, which includes most big American companies. It would als…

I agree that it would affect the US's relative dominance but I don't see why the living standards of Americans would be massively reduced. For things like medical care, housing, education etc those costs are mostly domestic so it seems like the cost of buying foreign currency wouldn't make a huge difference there. The stock market is denominated in USD so at least nominally you'd think it would be OK (although exporters would benefit over importers). Of course it would raise the price of imports, and it looks like imports average around 15% of GDP [1] and exports are around 12% of GDP [2].

So we'd need to manufacture a few % of GDP more in the US for it to balance out. That might make certain things like TVs more expensive, but technology trends have often made those sort of things dramatically less expensive, so overall (and with increased automation) hopefully that wouldn't affect the standard of living too much.

Certainly it might make it harder to attract foreign talent. But hopefully that would mostly be because of increases to the standard of living elsewhere rather than decreases to the US one.

[1] https://www.statista.com/statistics/259096/us-imports-as-a-p...

[2] https://www.statista.com/statistics/258779/us-exports-as-a-p...

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#235

Post by fallingknife »

PaulDavisThe1st wrote: post #177
kovacs wrote: post #142

Earlier quoted context omitted.

Organic demand growth is what we want, not this Frankenstein economy that's been created since at least 2008 if not earlier. Demand doesn't boost GDP, producing real goods and services boosts GDP. You can't spend your way to prosperity despite what any of the insane MMT economists might say. I agree that wage growth is good but not in the manner it's happening right now, through insanely easy money policies creating…

> Demand doesn't boost GDP, producing real goods and services boosts GDP. You can't spend your way to prosperity despite what any of the insane MMT economists might say. I appreciate that you feel strongly on this matter. However, the strength of your feelings are less relevant than the fact that different people (who all know quite a lot about this sort of thing) do not agree with you (or with each other). Calling M…

MMT does sound like those radio commercials they had back in the 90s saying they would teach you how to "borrow your way out of debt" though.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#236

Post by salt-licker »

arthurcolle wrote: post #10
throwaway2331 wrote: post #6

For anyone scratching their head on what "MP3" is: monetary policy 3, i.e. "helicopter money," i.e. "the government be handin out them stimmies," i.e. the government injected COVID-19 relief funds into the economy, giving an across-the-board increase in demand for goods & services, but there aren't enough "goods & services" to keep up with this demand.

Thank god we have crypto & NFTs to help people use all this free cash

Which contribute to a chip shortage making cars more expensive, seemingly pure financial instruments directly causing inflation for everyday people, there is no escape

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#237

Post by fallingknife »

tsimionescu wrote: post #231
qPM9l3XJrF wrote: post #183

Earlier quoted context omitted.

>Not really, right? They make a lot of money even after they get it wrong? If they get it wrong clients may move their money elsewhere

If the 2008 crisis taught us anything, it is that hedge funds can get it arbitrarily wrong and still profit tremendously overall.

What are you even talking about? Bet you can't give even one example.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#238

Post by nuerow »

okaram wrote: post #94
arthur5005 wrote: post #68

What this doesn’t really address is the why? Yeah there’s more money floating around, so perhaps more people want to spend it, but why? Most people aren’t getting materially more stuff or even need that much more stuff, consumption’s already god damn conspicuous. Maybe everyone can afford a jet ski all of a sudden? No, the stims didn’t really do /that/ kind of wealth expansion. To me, this still looks like the bullwh…

I may be wrong, but I don't think we need anything special to explain this, other than COVID. Covid came, the economy died. No travel, restaurants, theaters etc, plus work clothes, beauty products ... Now covid is less of a problem every day, and those things are coming back ... we have a huge demand shock.

> Now covid is less of a problem every day, and those things are coming back ... we have a huge demand shock.

I suspect that stimulus checks may have also played a role. Those who fall below the poverty line finally found themselves with a little disposable income to spend on basic everyday things, thus driving up demand. Stimulus check detractors prefer to spin this as inflation but you only get that with a generalized increase in demand for basic consumer goods and services.

My personal theory is that this effect is driven mainly by poor people finally getting a break. Those who were already well-off tend to either not change their consumer patterns with small changes in disposable income, or tend to spend it with one-off expenses such as luxury goods and services, or even dump it in risky investments like crypto as we've been seeing in the ongoing bull run.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#239

Post by [deleted] »

nuerow wrote: post #224
rsj_hn wrote: post #214

Earlier quoted context omitted.

I'm not the one ranting here. Biden has 1) put a moratorium on oil and gas leases in Federal lands and waters 2) cancelled one pipeline already and is about to cancel another (which means prices go up as trucks need to ship in the fuel) The above makes oil and gas more costly to extract and to ship, which raises the price. Moreover he is lobbying to remove all investment tax deductions for Oil and Gas (even though ot…

> The above makes oil and gas more costly to extract and to ship, which raises the price. I'm not sure if you're just expressing your personal concerns over what you believe can hypothetically happen, or whether you're grossly misinformed. Meanwhile, even though gas prices are breaking records all over the world, in the US they are still below the prices from 2010, back in the days no one in the US was concerned abou…

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