How are we going to pay for all this shit?

[Tiny]

Originally Posted by eccieuser9500

Reagan had every reason to declare a national emergency as soon as he decided to care.

You mean AIDS? I don't know much about the history of that, but suspect you're right, the Reagan Administration, and our health care system, could have handled that much better than it did.

[Tiny]

Originally Posted by WTF

Let's try and bring all this together.

Raising taxes when the rate is too low is actually what the Laffer Curve illustrates to be the efficient thing to do. Unless of course you want massive debt! So maybe it was 5 out of 5 for Clinton...although to be fair, Clinton did not balance the budget if you were to take the massive surpluses from entitlement programs out of the equation that LBJ combined to hide the growing cost of Vietnam. Clinton in fact still ran deficits.

This has been the jest of my argument. Reagan was such a good salesman that there is this whole generation of Americans who think cutting taxes is ALWAYS a good thing. it is not, unless you want explosives deficits/debt.

The graph lustylad provided shows exactly that. And it started with REAGAN.

Hey WTF, You left out the last part when you quoted me. I'll repeat below. If you look at what was going on when Reagan was president, like the 1981/1982 recession, the cold war, and an uncooperative Congress (see discussion of Stockman, below), it makes sense to cut him some slack in my opinion.

In doing a little reading to reply to your post from sometime back, I found out that Reagan and Congress back in 1983 did a lot to improve the solvency of our social security and Medicare systems, by increasing the withholding rates. I don't believe anyone since has been willing to expend the political capital to do that. This may explain partly why the level of debt held by the public at the end of the Reagan Administration, around 40% of GDP, looks so much better than gross federal debt, around 50% from memory. Perhaps we were actually putting aside significant sums to pay for these programs, which you, like me, are all for. You'd subtract those amounts from gross debt to get the net debt. I'm too lazy to check that out though.

Anyway I believe your view of Reagan deserves reexamining.

Originally Posted by Tiny

You can say the same about Reagan. He

1. Restored pride in America, after four years of Jimmy Carter, your hero, and the Iran fiasco brought us to a new low

2. Shored up social security and Medicare

3. Cut the marginal tax rate from the ridiculous level of 70% even while making the income tax system more progressive

4. Helped end the cold war, and bring freedom and liberty to Eastern Europe and parts of the Soviet Union.

5. Mostly kept us out of foreign wars.

And yes, unfortunately, there was too much deficit spending. Please note that part of this was attributable to the steep recession in 1981/1982. For some reason you blame Reagan but give Obama a pass on the even larger deficits, in terms of % of GDP, run up for years after the 2009 recession. And, as Lusty Lad pointed out previously, perhaps the spending on the military during the Reagan administration, which played a part in ending the cold war, created a peace dividend that enabled Clinton, Gingrich, et al to balance the budget in later years.

I read the Triumph of Politics, Stockman's book, years ago. Yes, Stockman was somewhat frustrated by Reagan and the generals in his efforts to limit military spending. But Reagan was with him in terms of wanting to cut out the pork. Unfortunately Congressional members of both parties wouldn't let that happen. Remember Democrats controlled the House, where spending bills originate, throughout Reagan's terms. So, as reflected in the title of the book, the increase in the debt under Reagan reflects "the Triumph of Politics" over common sense, not failings on the part of Reagan, in my opinion anyway.

[Texas Contrarian]

Originally Posted by Tiny

Since you posted, the Fed announced it will accelerate the taper and raise rates three times next year. So the Fed will continue buying bonds, and we can expect the Fed Funds rate to end 2022 a shade above 0.75%, assuming the rate increases are each 0.25%. Given YoY CPI inflation in November was 6.8%, and the consensus forecast for 2022 is 4.2%, that sounds downright dovish to me.

It does look dovish, but I believe was right in line with expectations and comports with the Fed's recent attempts at messaging. Also, the Fed always seems to like to stick its toe into the water carefully and take measured "baby steps," making it easy to stop or even reverse course if any slight "removal of accommodation" looks like it isn't going as well as hoped.

Remember what happened during the last "Powell pivot" in 2018-2019? It didn't go very well and was soon reversed.

In 2018, the economy seemed to have established a slightly better growth trajectory and the unemployment rate was coming down fairly nicely. There began to be some talk of inflation fears, and bond yields were rising. So the Powell Fed decided it was time to "normalize" policy, slowly returning the policy rate to the 2.25-2.50% target range in multiple steps. But by midyear 2019, it was clear that the economy was markedly slowing down and Powell reversed course. Remember the repo freakout of September 2019? The NY Fed had to suddenly inject several hundred billion dollars into the system to avoid further panic and a worse crisis, so the Fed balance sheet increased once again. And by late 2019, a number of private sector economists were already quietly speaking of going on "recession watch." (That was several months before the pandemic panicked the nation.)

What if the Fed quits asset purchases and starts planning a series of 25-bip hikes right into the face of a huge wind-down of the effects of the multitrillion-dollar carpet-bombing of cash into household accounts? I think the probability that this will not go nearly as well as Powell thinks is very high.

If the economy wasn't good enough to withstand a return to monetary policy normalization in Q3 and Q4 of 2019, does anyone seriously believe that it is now? The US employs about four million fewer full-time workers now than it did then, and also now faces prospects of tax hikes, suppression of domestic energy production, ramped-up regulatory burdens, and a burgeoning debt burden hanging around the economy's neck like dead albatross.

.

[Texas Contrarian]

Originally Posted by Tiny

I've never paid attention to the relationship between Fed announcements and inflation expectations, and don't know how to do that, although I'm sure there must be a way with TIPS or something else. I have paid attention to forex rates and the Fed. Following what you said, many times the dollar strengthens at the mere hint that U.S. interest rates will increase. Not so this week. The dollar weakened after Powell spoke, then rebounded a bit and ended the week about flat.

.

One thing that's very useful to watch is the movement of the breakevens and the forwards in response to what might reasonably be construed as changes likely to affect inflation expectations.

There's an easy way to do this, as the St. Louis Fed (among others) puts out a data compilation that tracks the market values of TIPs vs. nominal debt securities.

For instance, current trading indicates expectations that the average inflation rate over the next 5 years will be about 2.65%:

https://fred.stlouisfed.org/series/T5YIE

But now look at traders' inflation expectations for the 5-year period beginning 5 years from today. That is called the "5-year, 5-year forward" inflation expectation rate:

https://fred.stlouisfed.org/series/T5YIFR

The interesting thing here is that trading in TIPs securities reflects expectations that whatever inflation we may experience during the next 10 years will be "front-loaded" into the very near future.

Much has been written about "prediction markets" and how they are likely to be more accurate than any individual "expert" or forecaster. These markets, more than anything else, act like a prediction market for inflation.

Note also that participants in these markets are not Robinhood/Reddit/WSB Gen Zers or Millennials playing with covid relief money. Many are big-money players balancing, counterbalancing, or hedging risks in loan or other portfolios.

Of course, the bond markets may be wrong, and sometimes are. But they do have a way of sniffing out problems before anyone or anything else.

(I wrote the above three months ago in another forum, editing only to change the current interest rate forecasts shown in the links.)

.

[WTF]

Originally Posted by Tiny

Hey WTF, You left out the last part when you quoted me. I'll repeat below. If you look at what was going on when Reagan was president, like the 1981/1982 recession, the cold war, and an uncooperative Congress (see discussion of Stockman, below), it makes sense to cut him some slack in my opinion.

In doing a little reading to reply to your post from sometime back, I found out that Reagan and Congress back in 1983 did a lot to improve the solvency of our social security and Medicare systems, by increasing the withholding rates. I don't believe anyone since has been willing to expend the political capital to do that. This may explain partly why the level of debt held by the public at the end of the Reagan Administration, around 40% of GDP, looks so much better than gross federal debt, around 50% from memory. Perhaps we were actually putting aside significant sums to pay for these programs, which you, like me, are all for. You'd subtract those amounts from gross debt to get the net debt. I'm too lazy to check that out though.

Anyway I believe your view of Reagan deserves reexamining.

I left it out and was going to get back to it and will.

First let me congratulate you on finally coming around to what I've been saying.

Reagan did raise taxes on the middle class and poor with his entitlement rate increase.

All he did was spend more on the military.

So for a quick wrap.

He lowered the tax rate. Increased the entitlement tax rate. Increased defense spending. Increased gross debt. Fooled a bunch of folks into thinking that slight of hand was some sound accounting.

We now have a bunch of IOU's in SS/Medicare. Hege Debt. And a bunch of folks that still do not understand cutting taxes when they are already low is not a good thing if you care about the debt.

[WTF]

Originally Posted by Tiny

You can say the same about Reagan. He

1. Restored pride in America, after four years of Jimmy Carter, your hero, and the Iran fiasco brought us to a new low

2. Shored up social security and Medicare

3. Cut the marginal tax rate from the ridiculous level of 70% even while making the income tax system more progressive

4. Helped end the cold war, and bring freedom and liberty to Eastern Europe and parts of the Soviet Union.

5. Mostly kept us out of foreign wars.

And yes, unfortunately, there was too much deficit spending. Please note that part of this was attributable to the steep recession in 1981/1982. For some reason you blame Reagan but give Obama a pass on the even larger deficits, in terms of % of GDP, run up for years after the 2009 recession. And, as Lusty Lad pointed out previously, perhaps the spending on the military during the Reagan administration, which played a part in ending the cold war, created a peace dividend that enabled Clinton, Gingrich, et al to balance the budget in later years.

I read the Triumph of Politics, Stockman's book, years ago. Yes, Stockman was somewhat frustrated by Reagan and the generals in his efforts to limit military spending. But Reagan was with him in terms of wanting to cut out the pork. Unfortunately Congressional members of both parties wouldn't let that happen. Remember Democrats controlled the House, where spending bills originate, throughout Reagan's terms. So, as reflected in the title of the book, the increase in the debt under Reagan reflects "the Triumph of Politics" over common sense, not failings on the part of Reagan, in my opinion anyway.

1) Restored pride to who? The Iranians when he sold them weapons? So I obviously disagree with this one.

2) Yes he'd did , while robbing the excess with IOU's for military spending.

3) This was a good thing. He got that part of the Laffer Curve right.

4) Or you could say he helped Osama become a rock star in the Middle East and the fall of the Soviet Union was short lived and Putin is now capable of influencing our elections with his ability to influence the price of oil.

5) That he did. He ran like Lightening out of Lebanon after they bombed our Marine barracks. He sold arms to Iran. Can't fault him there. He took that money and financed upheaval in Central America that were still dealing with in the form of border security. But he did keep us out of any major war.

Next...I do not give Obama a pass. I've said Trump is the worst President, Obama next because of how much debt they piled on. Reagan is 2l3rd not because of the amount of debt but because of his fooling an entire generation of folks into thinking we get something for nothing. I may have to move him back to first if I think about it for long! Bush Jr is 4th.

I have high praise for Carter and Bush Sr.

Though I must admit that neither could sale their better policies to the public.

[Tiny]

Originally Posted by CaptainMidnight

It does look dovish, but I believe was right in line with expectations and comports with the Fed's recent attempts at messaging. Also, the Fed always seems to like to stick its toe into the water carefully and take measured "baby steps," making it easy to stop or even reverse course if any slight "removal of accommodation" looks like it isn't going as well as hoped.

Remember what happened during the last "Powell pivot" in 2018-2019? It didn't go very well and was soon reversed.

In 2018, the economy seemed to have established a slightly better growth trajectory and the unemployment rate was coming down fairly nicely. There began to be some talk of inflation fears, and bond yields were rising. So the Powell Fed decided it was time to "normalize" policy, slowly returning the policy rate to the 2.25-2.50% target range in multiple steps. But by midyear 2019, it was clear that the economy was markedly slowing down and Powell reversed course. Remember the repo freakout of September 2019? The NY Fed had to suddenly inject several hundred billion dollars into the system to avoid further panic and a worse crisis, so the Fed balance sheet increased once again. And by late 2019, a number of private sector economists were already quietly speaking of going on "recession watch." (That was several months before the pandemic panicked the nation.)

What if the Fed quits asset purchases and starts planning a series of 25-bip hikes right into the face of a huge wind-down of the effects of the multitrillion-dollar carpet-bombing of cash into household accounts? I think the probability that this will not go nearly as well as Powell thinks is very high.

If the economy wasn't good enough to withstand a return to monetary policy normalization in Q3 and Q4 of 2019, does anyone seriously believe that it is now? The US employs about four million fewer full-time workers now than it did then, and also now faces prospects of tax hikes, suppression of domestic energy production, ramped-up regulatory burdens, and a burgeoning debt burden hanging around the economy's neck like dead albatross.

.

Thanks for taking the time to write this. It makes good sense. Like I thought, I'd lose the argument. But what else could I expect, arguing with Captain Midnight and Jay Powell?

There was a chart in the WSJ the other day, which showed personal savings. Basically the number shoots up from 1.2 trillion at the end of 2019 to 6.4 trillion on 4/30/2000, then comes down to 2.2 trillion before spiking again to 5.8 trillion on 3/31/2021, presumably as a result of more funds from the American Rescue Plan and prior COVID stimulus being released.

Anyway personal savings are now back down to 1.3 trillion, about where they were before the start of COVID! We're a bunch of spendthrifts!

Anyway, this fits well with your comment, "What if the Fed quits asset purchases and starts planning a series of 25-bip hikes right into the face of a huge wind-down of the effects of the multitrillion-dollar carpet-bombing of cash into household accounts? I think the probability that this will not go nearly as well as Powell thinks is very high."

I read about the September, 2019 events in the repo market on Wikipedia -- interesting. It sounds like it had the potential to turn into a black swan event. It's a little unnerving that economists don't exactly understand what caused the shortage of cash.

Will have more later, about your other post.

WTF, Will get back with you too.

[lustylad]

Originally Posted by Tiny

Here's a comparison between my "basket case", Turkey, and the USA:

Real interest rate, using short term benchmark rate and November CPI -
USA: -6.7%
Turkey: -7.3%

Current Account Deficit as % GDP -
USA: -3.2%
Turkey: -2.35%

External Debt as % GDP:
USA: 107%
Turkey: 56%

Annual Exports as % External Debt -
USA: 11%
Turkey: 530%

Budget Balance as % GDP
USA: -11.5%
Turkey: -1.45%

Tiny - You might want to check the 530% I highlighted. It would mean Turkey exports more than its entire GDP lol.

Never mind, I just looked it up - Turkey's GDP will be roughly $740 billion this year. Last year exports were $170 billion and external debt was around $450 bn. So exports as a % of external debt would have been 38%.

[lustylad]

Originally Posted by WTF

Lustylad and now Tiny are wanting to spend while we true fiscal conserative (sic) are pulling the curtain off Oz...

You're truly, truly, truly an idiot.

The title of this thread is "How Are We Going to Pay for All This Shit?"

Tiny started this thread out of exasperation with the reckless runaway spending being proposed by the Biden/Bernie crazies. Almost every comment posted by either Tiny or me has been in opposition to this irresponsible Build Back Better spending blowout.

Only a genuine idiot like you would say Tiny and I are "wanting to spend" - when anyone with the slightest bit of reading comprehension can see we wrote several hundred posts explicitly NOT wanting to spend!

Wtf is wrong with you, anyway?

[lustylad]

Originally Posted by Tiny

HAHAHAHAHA! Have you been taking lessons from Trump in how to alter people's perception of reality? That's ass backwards, the exact opposite of the truth. LustyLad said nothing about social security or Medicare. My only comment was that government securities held by social security trust funds are not included in public debt.

^^^ Lookee here, folks!

Even Tiny is getting fed up with wtf's penchant for attributing arguments to others they never made, and - worse yet - claiming people said the EXACT OPPOSITE of what they actually wrote.

Anyone else tired of watching wtf congratulate himself for refuting a straw man argument that nobody made?

[The_Waco_Kid]

Originally Posted by lustylad

^^^ Lookee here, folks!

Even Tiny is getting fed up with wtf's penchant for attributing arguments to others they never made, and - worse yet - claiming people said the EXACT OPPOSITE of what they actually wrote.

Anyone else tired of watching wtf congratulate himself for refuting a straw man argument that nobody made?

countdown to another WTF post that starts with "I already told you ..."




BAHHHAHHAAAA

[lustylad]

Originally Posted by CaptainMidnight

...it now appears that my side of the debate (the belief that high inflation will only be about a 2-year story) is trailing about 13-9 in a forum where I'm discussing this very topic with a group of private equity managers and key principals. And all of them, by way of academic and/or professional background, not only have reason for developing a keen interest in this issue, but would be expected to have at least a fair understanding of it.

Is the Great Krugtron in your forum? In case you missed it, he just wrote a flaky NYT column on this very topic. After summarizing both sides of the inflation argument, he flaked out this way:

"Maybe the real takeaway here should be how little we know about where we are in this strange economic episode. Economists like me who didn’t expect much inflation were wrong, but economists who did predict inflation were arguably right for the wrong reasons, and nobody really knows what’s coming."

Not the first time Krugman admitted he got a forecast wrong but then deflected by taking a swipe at those who got it right!

https://www.nytimes.com/2021/12/16/o...nomy-2021.html

[WTF]

Originally Posted by lustylad

The title of this thread is "How Are We Going to Pay for All This Shit?"

Tiny started this thread out of exasperation with the reckless runaway spending being proposed by the Biden/Bernie crazies. Almost every comment posted by either Tiny or me has been in opposition to this irresponsible Build Back Better spending blowout.

Only a genuine idiot like you would say Tiny and I are "wanting to spend" - when anyone with the slightest bit of reading comprehension can see we wrote several hundred posts explicitly NOT wanting to spend!

Wtf is wrong with you, anyway?

My involvement in this thread is to say it is about time you supply side lovers started worrying about how to pay for shit.

You've looked the other way for forty years....starting with Reagan in 1980 and once again ( with success) starting in 94 I believe.

In 2000 you went back to your spending ways of 1980.

My point....that you and others have made for me over and over and over is that this spending trend...the debt to GDP ratio has INCREASED for the last 40 years!

[WTF]

Originally Posted by The_Waco_Kid

countdown to another WTF post that starts with "I already told you ..."




BAHHHAHHAAAA

Look....you flip flopping fool...

I remember the days when all you and Trump talked about was the stock market.

That said...seeing how there are no professional writers in this forum and none are taking a test on what they've read, it is normal for folks to misinterpret what was written.

But nobody can misinterpret the fact that I have accused the supply side lovers of starting this insane spending problems....starting with RR.

[The_Waco_Kid]

Originally Posted by WTF

Look....you flip flopping fool...

I remember the days when all you and Trump talked about was the stock market.

That said...seeing how there are no professional writers in this forum and none are taking a test on what they've read, it is normal for folks to misinterpret what was written.

But nobody can misinterpret the fact that I have accused the supply side lovers of starting this insane spending problems....starting with RR.

no, it's normal for you. only the Very Skeptical Munchman pulls the liar game more than you.