Thursday, July 9, 2015

Yet Another Future Fed Chairman in the Making



More liquidity? You got it boss! QE1! QE2! QE3! QE4! I'll flood the whole #%^*ing system if I have to! OMG! Bank run! More! More! More! I'll stop spraying when you stop running! I swear! Mwuhahaha!

5 comments:

Joseph Constable said...

In the future when FED directly buying stocks like they did with bonds is seen as a failure, they will resort to inducing serious inflation. Besides being deemed masters of the universe, the FED actually has no choice by law but to destroy the financial system to save it.

Troy said...

I suspect a future regime of MMT will make today's economy look as anemic as one where nobody was allowed to borrow money at all would look to the current status quo.

Even with the trillions of intervention, we still think of money as hard stuff that can't be manufactured.

https://research.stlouisfed.org/fred2/graph/?g=1qmQ

real per-capita MZM

I think we can print a la MMT and Weimar/Zimbabwe won't show up. Just give everyone $500/mo to spend and watch the economy boom like 2005.

https://research.stlouisfed.org/fred2/graph/?g=1qmW

real per-capita consumer debt take-on, monthly

$500/mo debt take-on isn't sustainable, but $500/mo redistributive printing is, I suspect, other than the issue of this added spending power just driving up the cost of housing, but we have that problem now anyway, and have since 1970 or whatever.

https://research.stlouisfed.org/fred2/series/MANEMP

Goods production is not capital or worker constrained, just limited by consumer demand. This is trivial to address.

Food consumption would not expand much from now under MMT, we're already a nation of fatsos.

Stagflationary Mark said...

Like Troy, I'm not picturing the conditions for serious inflation any time soon.

However, I won't be holding my breath for the $500 redistributive printing any time soon either. I think pretty much everything else needs to fail first, and even then it will be a hard sell politically. The haves are in power and have convinced the have nots that redistribution is not American.

Troy said...

Actually I guess MMT is just distributive, not redistributive . . .

I think it's stupid, addressing symptoms and not root causes, but the cancer has gotten too deep here to fix now.

Dose us up!

Being a Japanese speaker, the prospect of having Japan as a backup is alternatively fascinating and frightening.

It's kinda a nice place but has frictions and pain points that don't exist here in the US. Their declining population will I hope put their own housing cost treadmill in reverse, permanently.

https://research.stlouisfed.org/fred2/graph/?g=1qnZ

shows their working-age population is back to 1980 levels, while ours is 40% greater.

30% of our economic problems are simply housing price inflation, but real estate is never on anyone's radar, both because we're all bought into the ponzi aspect and also because it surrounds us so completely we can't actually notice its dynamics on our lives.

I'd be happiest on 20 acres of forest and a mountain cottage. Japan has an oversupply of these, but w/o a Trader Joe's to reprovision at, life would suck a little.

Stagflationary Mark said...

I'd be happiest on 20 acres of forest and a mountain cottage.

You have almost perfectly described my sister's place. I kid you not. She lives half way up a local mountain in Eastern Washington with her horses and dogs, on roughly that much land.