Let's start with scary.
Click to enlarge.
Note that the high price of oil suddenly doesn't seem all that high. Let's not dwell on it when there is a scarier chart to show though.
Click to enlarge.
Linear trends don't fit this chart. I had to move to a 2nd order polynomial. Once again, let's not dwell on it. There is an even scarier chart to show.
Click to enlarge.
Based on the long-term implications of this last chart, what are the odds that the Fed's expansionary monetary policies will save this economy over the long-term? In general, how well have the policies worked since 2000? In my opinion, not that well.
The most merciful thing in the world... is the inability of the human mind to correlate all its contents. - H.P. Lovecraft
See Also:
Trend Line Disclaimer
Source Data:
St. Louis Fed: Oil Price / MZM Money Stock
St. Louis Fed: Oil Price / Total Credit Market Debt Owed
St. Louis Fed: Oil Price / Compensation of Employees: Wages & Salary Accruals
I too, have yelled at the trees at DeLong's site about inflation not being necessarily a good thing.
ReplyDeleteI guess the Fed's move is a bypass of our frozen political system, to get some more velocity back into the paycheck economy (like what it was enjoying 2004-2006, and also to do a backdoor tariff by attempting to weaken the dollar.
http://research.stlouisfed.org/fred2/graph/?g=aMD
hmm. What can one say??? A stronger dollar should not persist with trade deficits.
http://research.stlouisfed.org/fred2/graph/?g=aMG
compares real trade surplus (blue) with the dollar index (red).
True story:
My best job ever was as an arcade game attendant/game mechanic back in college. I didn't deal with the money -> quarters changer at all, but my first year there we were having a problem with the changer "losing" money.
We'd put $1000 in quarters in but only get $900 of bills out. Problem!
The manager's solution to this -- which I saw with my own eyes -- was to take an empty pitcher from the cafeteria, fill it with quarters from one of our big earning games -- about $100 -- and just dump it in the changer.
The manager was fired for this not too long after, but the principle is valid. If you money machine is leaking, just add more money!
Troy,
ReplyDeleteThat's a great leaking money machine story, lol.
I have an arcade story to go with it.
A friend and I wandered into an arcade in Spokane (we generally played on the college campus in nearby Cheney). There was a game of the week that paid $5 if you got the high score and a $25 game of the month as well. I played Joust once. My friend played Robotron once. We came back a week later to pick up our $30 in winnings ($25 for me, $5 for him).
We were paid in quarters. The person behind the counter asked if we had any intentions of spending the quarters there. We said we were sorry but we didn't. She knew we weren't regulars and were well past the point where arcade games or pinball machines cost big bucks to play.
The local college newspaper somehow found out about it. I have no idea how. A "reporter" came into the college arcade and asked if he could take my picture (while I was playing a game). I said okay. He brought a cup of quarters with him and proceeded to line up them all up on my machine. I couldn't believe it. I tried to explain that I didn't spend anywhere near that much money in a given day. That did not apparently make a good story though. The picture in the paper was even better. Streams of light were added and were coming out of the video game in a most sensationalized fashion.
That was my first personal taste of hard hitting investigative journalism. We've come so far since the 1980s, lol. Sigh.
P.S. About the only way we would have needed to spend more than 50 cents to win $30 would have been if my friend had not asked me to not play Robotron. I was definitely better than him at Joust but we were fairly closely matched at Robotron. It could have been quite a battle over the next few hours. It would have raised our total costs 50% though (from 50 cents to 75 cents, lol). Good times. :)
Midway was kicking ass in the early 1980s, LOL. They had licensed Pac Man in 1980 and were going to ship my favorite arcade game, Spy Hunter, in 1982
ReplyDeletebtw, I remember now that the reason the manager had to add the quarters via QE was that we used the bills to buy more quarters from the central cash management office.
Thinking about where the money is actually going and what it's doing there is kinda important, but not part of the current debate at all.
Capital is this magical manna that hovers over us, requiring the proper rituals and obeisance to its priests to receive its Immanence.
I swear this nation needs a proper econ sim game, demonstrating in clear dynamics these forgotten, yet elemental ideas.
Bunten's Seven Cities of Gold was kinda good about this, there was an economy game in there that you had to understand.
Troy,
ReplyDeleteI swear this nation needs a proper econ sim game, demonstrating in clear dynamics these forgotten, yet elemental ideas.
We're living the dream in real-time, lol. Sigh.
Oh, wait. Perhaps you wished to simulate what will happen in the future? Nothing but good things I assure you! Now stop thinking and start spending lest the entire system falls apart! ;)