Economy close to tanking?

[Tiny]

Originally Posted by eccieuser9500

It's great to be back. To showcase the other side of the brain.

I'll try to stay out of trouble as well.

I hope so. I truly hope so Eccieuser. However the next time Mother Fucker's Day rolls around, you'll self destruct. And it will be worth it! The man may die, but the legend will live on.

https://youtu.be/qBTzWGS0Tp8

You're Butch.

Originally Posted by Texas Contrarian

If I have an erection that lasts for more than four hours, I'm not calling my doctor. I'm calling everybody!"

ROTFLMAO

Originally Posted by Texas Contrarian

Precious_b, I certainly hope you haven't left all that cash under your mattress for very long, for it would have lost a large portion of its purchasing power over the last three years.

Since the topic of this thread is whether the Fed "sees something" that caused policymakers to go for a 50-bip cut, I might mention a couple of points to ponder for those interested in the issue.

The latest reports on international capital flows suggest that foreign central bank purchases of new Treasury issuance have markedly slowed over the last couple of months, leaving it up to other institutions and individuals to sustain demand for US debt.

Meanwhile, the government rolls along, continuing to run fiscal deficits of nearly $2 trillion annually, or about 7% of GDP.

Not only that, but our two presidential candidates are vying to show that they can be even more fiscally irresponsible than their opponent by promising all manner of additional tax cuts, subsidies, and other free candy. Our ridiculously unserious candidates couldn't care less about our ballooning federal debt. (It's the campaigning season! Free ice cream for everyone. The fat guy down the street will eat your spinach for you!)

Since interest payments on the federal debt have surged past the trillion-dollar mark, Fed officials naturally would like to suppress interest rates as much as may be practicable in order to reduce the deficit by at least a little bit.

In my view, the most serious public policy imperative over the next 5-10 years is not inflation or unemployment. Though serious concerns, they are by comparison transitory problems; not structural ones.

The gorilla sitting right in the middle of the living room is our gargantuan federal debt and the fact that no one is going to do so much as even lift a finger in an effort to do a damn thing about it until absolutely forced.

I wonder if the best combination for the economy, particularly for controlling deficits, might be a Harris presidency and Republican control of Congress. If Democrats sweep the election, we'll end up with a situation like 2021 and 2022, perhaps worse given that Manchin and Sinema will be gone. Politicians passed legislation that would have added $5 trillion to the national debt. Then in 2023, Kevin McCarthy and a Republican House clawed $1.5 trillion back. The clawbacks made a lot of sense too, to many members of both parties. Maybe we'd have something similar happen with Kamala as president provided she can't get legislation passed without going through a Republican Senate or House. Or even better yet, a golden age, like Clinton's second term when Republicans controlled both houses.

While that may sound like a stretch, Harris is tacking toward the center on some issues like fracking, EV mandates, and the maximum corporate and capital gains tax rates.

I believe she'll use executive orders though to impose regulation. I'd say Trump's far preferable to Harris in that respect, except that he'll use his presidential powers to unwisely jack up tariffs. There's a good editorial on that in today's Wall Street Journal in case you missed it,

https://www.wsj.com/opinion/donald-t...nion_lead_pos1

Republicans didn't do a great job of controlling the deficit in 2017 and 2018 when they controlled the whole ball of wax. While the corporate tax cut was long overdue, they didn't lower the rate of growth in spending.

And Trump as president combined with Democratic control of Congress could be almost as bad as having the Democrats totally in control. Trump showed himself to be a spendthrift, and along with Nancy Pelosi ran up the debt massively in 2020. The only sane ones were Republican Senators, who held back on the pork and the handouts when it was clear we were out of the recession. In addition to the tariffs, Trump is proposing all kinds of tax breaks that don't make a lot of sense, especially if you believe in a fair, efficient tax system.

Anyway the next 4 years or so will be interesting. The economy may be, as Farmstud says, fairly close to truly tanking in the sense that ten or twenty or thirty years isn't a lot of time compared to the USA's 235 years as a Republic. The debt will probably torpedo the economy at some point. I hope the politicians have the balls to control the spending. But that's doubtful.

[Precious_b]

Originally Posted by Texas Contrarian

Precious_b, I certainly hope you haven't left all that cash under your mattress for very long, for it would have lost a large portion of its purchasing power over the last three years. ...

Just finished up with the accountant.
Though I am too lazy to make my $$$ work for me (unless I enlist the service of a fine lady for BCD) I did very well with the amount I had to pay.

So much so, lining up my next encounter

I suggest a bunch of y'all mean spirited souls here with no reviews do the same. Trust me, make a world of difference to you.

[Texas Contrarian]

If farmstud's concerns, expressed in his opening post, about the Fed wishing to preempt crises or anticipated challenges, I think the most likely worry could be about the risk of a bond market sell-off, raising interest rates -- and thereby future deficits -- to even more alarming levels.

Originally Posted by Tiny

I wonder if the best combination for the economy, particularly for controlling deficits, might be a Harris presidency and Republican control of Congress. If Democrats sweep the election, we'll end up with a situation like 2021 and 2022, perhaps worse given that Manchin and Sinema will be gone.

I agree, and am afraid that without at least some version of divided government, the debt accumulation outlook will worsen. Perhaps the only thing that would save the nation in the (thankfully unlikely!) event of a Blue Team sweep is that after the 2021-22 spending blowouts, and consequent inflation spike, the electorate has little appetite for an encore performance, and most Democrats in positions of power know that full well.

Originally Posted by Tiny

Republicans didn't do a great job of controlling the deficit in 2017 and 2018 when they controlled the whole ball of wax. While the corporate tax cut was long overdue, they didn't lower the rate of growth in spending.

No, they sure didn't! Between FY2016 and FY2019, the budget deficit rose from about 3% to just a little less than 5%, or almost two percentage points of GDP -- and for no good reason, as the economy was nearing full employment. In fact, the year before the covid outbreak is the point at which the budget deficit approached the trillion-dollar mark.

But this year, even after the need for covid recovery spending recedes into the historical record, Democrats are saying -- in effect -- trillion dollar deficits are just terrible. Weak tea. We can double that!

Originally Posted by Tiny

And Trump as president combined with Democratic control of Congress could be almost as bad as having the Democrats totally in control...

I believe that could end up being the case, but think there's another possible outcome.

What if a Democratic House majority decides that slowing the economy or pushing it into a recession would be their best chance of deep-sixing the possibility of Vance being elected in 2028, and suddenly decide that it's time for austerity?

In any event, we're sure to hear an incessant drumbeat of how the main reason for the large deficit is Trump's tax cuts for big corporations and the wealthy. (Despite the obvious disingenuousness of such claims. But why let facts get in the way when you have a poolitical axe to grind?)

Originally Posted by Tiny

Anyway the next 4 years or so will be interesting. The economy may be, as Farmstud says, fairly close to truly tanking in the sense that ten or twenty or thirty years isn't a lot of time compared to the USA's 235 years as a Republic. The debt will probably torpedo the economy at some point. I hope the politicians have the balls to control the spending. But that's doubtful.

That's for sure!

[1blackman1]

So in other words Farmer Trump and the myriad of Fox News pundits (pretending to be economists) were wrong. The economy is doing just fine. Good even. Y’all can skip the paragraphs upon paragraphs and make the admission.

[Tiny]

Originally Posted by 1blackman1

So in other words Farmer Trump and the myriad of Fox News pundits (pretending to be economists) were wrong. The economy is doing just fine. Good even. Y’all can skip the paragraphs upon paragraphs and make the admission.

Yes, like the economy was doing just fine in Argentina in 2003 and Greece and Italy in 2006. Government debt there as a % of GDP was over 100%. And they tanked, big time. There are lots of other examples. And examples of countries with high debt to GDP ratios that aren't going through crises but where growth is anemic.

Deficits in the USA are running around $2 trillion a year, or 7% of GDP. Federal debt held by the public is now 95% of GDP. And the politicians including your beloved Democrats, especially your beloved Democrats, aren't going to put a stop to the insanity. We're fucked.

[1blackman1]

Lots of talk Tiny but the reality is the US economy is doing just fine.

[txdot-guy]

Tiny is not wrong. Eventually we’ll need to get our house in order. But it’s going to require more immigrants, more taxes and more efficient spending. I’m not sure if our politicians or our corporate leaders are going to support the changes necessary to fix our debt crisis.

[Tiny]

Originally Posted by 1blackman1

So in other words Farmer Trump and the myriad of Fox News pundits (pretending to be economists) were wrong. The economy is doing just fine. Good even. Y’all can skip the paragraphs upon paragraphs and make the admission.

Originally Posted by 1blackman1

Lots of talk Tiny but the reality is the US economy is doing just fine.

Please do a little reading so you can make more substantive posts on the U.S. economy.

This might be a good place to start,

https://www.amazon.com/Free-Choose-S.../dp/0156334607

If you want to take the other side of the argument and say deficits don’t matter, or a Trump presidency would be best for controlling the deficit, you’re going to need to up your game or you’ll just sound silly.

[NTXGUYBIGBOB]

Originally Posted by txdot-guy

You clearly don’t understand the primary purpose of the feds interest rate.

Lowering the rates is intended to have the opposite effect. To increase borrowing, growth, and employment. It inhibits savings in favor of investment.

Why would lowering rates indicate that the economy is “tanking “?

You answered your own question.