241–250 of 262 posts
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That’s a great way to collapse the banking system and screw over millions of people
> collapse the banking system Exactly. > screw over millions of people People who loaned their money to the banks. Why shouldn't there be consequences for lenders?
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Purchasing a bond is effectively just loaning money. I don't know why your distinction would have any relevency
It make a huge difference if the bond fails. Bob the bank buys a bond from Alice. Criss at the central bank in charge of QE buys if from Bob. Alice goes bankrupt and Bob doesn’t care. Bob the bank buys a bond from Alice. Criss at the central bank loans Bob money . Alice goes bankrupt and Bob’s bank fails.
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> Defense spending doesn't contribute not even a little bit to how inflation (CPI) is being calculated, because the DoD is spending money on stuff that doesn't affect the general population. Unless everyone is trying to buy an F22, of course, and that finds its way into the CPI. That's completely wrong. When the government spends on defense that money is not put into a large pit somewhere at Lockheed HQ and then lit…
Defense spending more than doubled from 2000 to 2019, from ~320B to ~730B, while inflation grew on average 2.10% per year during the same time period. It is true that defense money gets redistributed across the population and into the economy, but that has always been the case and inflation was in check. The fact that you are insinuating that this has anything to do with the current inflation problem is misleading. I…
No. I'm stating that medicare+defense spending is far larger than either covid relief or student loan forgiveness. By an order of magnitude per year.
The fact that you don't think the thing that's 10x bigger can cause inflation, but you think the minor foonote that is covid spending can, shows that this is 100% ideology-driven and not fact-driven.
Even basic back of the envelope economics shows you're completely off.
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Defense spending more than doubled from 2000 to 2019, from ~320B to ~730B, while inflation grew on average 2.10% per year during the same time period. It is true that defense money gets redistributed across the population and into the economy, but that has always been the case and inflation was in check. The fact that you are insinuating that this has anything to do with the current inflation problem is misleading. I…
> The fact that you are insinuating that this has anything to do with the current inflation problem is misleading. In 2023 we are dealing with the fallback of Covid fiscal policies, not defense spending. No. I'm stating that medicare+defense spending is far larger than either covid relief or student loan forgiveness. By an order of magnitude per year. The fact that you don't think the thing that's 10x bigger can caus…
What a weird comparison.
If it's true that something doesn't cause inflation, then if you make it 10x as big it still probably won't cause inflation. That's not an illogical position at all.
10 times zero being zero is not holding ideology over facts.
And even if we say defense spending was a significant part of the 2% inflation, that doesn't mean it also caused the huge spike we just had.
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It’s a loan, not QE. QE is no strings attached money injected into the market. QT is still ongoing as of last week, however, I don’t see it lasting. I do think a .25 rate hike will still happen.
It's all a loan, whatever name you attach to it they have to borrow to print money. Reality check: US debt to GDP ratio is over 120% and the US doesn't have the credit to borrow anymore. We're looking at hyperinflation and a long depression unless they stop printing money and we experience massive austerity/spending cuts. We are literally in an economic death spiral (that's what a debt to GDP ratio of > 120% means) a…
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It make a huge difference if the bond fails. Bob the bank buys a bond from Alice. Criss at the central bank in charge of QE buys if from Bob. Alice goes bankrupt and Bob doesn’t care. Bob the bank buys a bond from Alice. Criss at the central bank loans Bob money . Alice goes bankrupt and Bob’s bank fails.
Except that Alice here is the government, and in both scenarios Adam The Average Guy loses purchasing power, which is the whole point. The distinction here is purely nitpicking.
As a rule these banks just don’t own that many government bonds the returns suck.
So here's what I'm confused by. The writing was on the wall a year ago for rapid interest rate hikes. This has well-known and predictable effects on long-term bond holdings. Why didn't banks liquidate their long-term bond holdings a year ago? I can guess the answer: they wanted to protect executive bonuses and share prices. They hoped they could just stick their heads in the sands and hold those bonds to maturity. An…
> Why didn't banks liquidate their long-term bond holdings a year ago? Who do "the banks" sell them to? A bank can sell them to another bank. Someone is still sitting on it. We can't sell mortgage bonds to space aliens yet AFAIK, and other banks in other countries can also see that they don't want to touch them in a rising rate environment, and they'll have their own problems back home. Economics 101 is learning that…
So here's what I'm confused by. The writing was on the wall a year ago for rapid interest rate hikes. This has well-known and predictable effects on long-term bond holdings. Why didn't banks liquidate their long-term bond holdings a year ago? I can guess the answer: they wanted to protect executive bonuses and share prices. They hoped they could just stick their heads in the sands and hold those bonds to maturity. An…
I think the main thing is that holding long bonds was a way to get profits and pay interest. Despite being doomed long term, there were a couple reasons banks did it - they couldn't make money by making conventional business loans, profitable loan opportunities weren't available and most banks expected to be bailed out when things went bad (Silicon Valley Bank and Signature had each been previously bailed out). The r…
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ETH has extreme problems to the point where it's worse than fiat, there's no good reason to be grouping it in with BTC. Even something like Dogecoin, which need I remind you was invented as a joke, has a stronger case for replacing fiat than ETH.
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That's a funny way of saying that 'supply and demand meet in Japan' which you can do but decreasing demand or increasing supply. It really is that simple. When supply and demand are allowed to meet, prices stabilize. Otherwise please explain to me why you think that this is the one asset on earth not affected by supply and demand. And you could really use a solid citation. Thought exercise. There are 140,000,000 hous…
The price of a house in the middle of nowhere is labor + materials. The closer you get to a population center (where people want to be) it becomes labor + materials + property value, where property value increases non-linearly. At the center it becomes labor + materials + property value + zoning overhead. Zoning overhead grows as more people are involved in the process. I don't think you'll ever get much cheap housin…
Zoning ‘overhead’ is people trying to control perceived negative effects and assert boundaries on what they will and will not accept.
Building more freeways doesn’t result in lower traffic for any length of time, because traffic increases based on available capacity in high demand areas.
If we put a billion houses on Manhattan (somehow), there would still be ‘in’ and ‘out’ areas with high prices and restrictions, with those high prices driven by managed scarcity.
Because being selective is a large part of HOW an area becomes and stays desirable. It’s not possible for one to stay that way for long without some attempt to defend itself, in my experience.
Saying ‘prices wouldn’t be high and we could all have what we want if we just got rid of zoning’ doesn’t reflect what is really going on.
Now, busting the worst offenders with artificial scarcity, like monopoly/trust busting, could easily have a lot of value as it has gotten over the top in a lot of areas.
But frankly, remote work and increasing costs of funding should do a lot of that anyway here soon.