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2021 - Is inflation finally back in the conversation?


Reagan1k

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We are not close to fiscal instability in the US. Japan’s debt to GDP ratio is more than 250%, yet the Yen remains one of the world’s reserve currencies. 

“Fiscal instability” is what the crooks scare the dum-dums with, while they steal money out the back door. Stop being a dum-dum.

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Posted (edited)
1 hour ago, washparkhorn said:

We are not close to fiscal instability in the US. Japan’s debt to GDP ratio is more than 250%, yet the Yen remains one of the world’s reserve currencies. 

“Fiscal instability” is what the crooks scare the dum-dums with, while they steal money out the back door. Stop being a dum-dum.

IMG_1109.thumb.jpeg.4bfad426c0414d303ddd9b2d7fedf125.jpeg

During fiscal year 2023, the US government borrowed $2.7 trillion. This was about ten percent of GDP. (It is worth noting this is not the reported deficit. Some of you sadly still believe the lies.) This year will see an acceleration, resulting from a number of things but notably a significant steepening of the first derivative of interest expense. When we hit a recession, let's say we see deficits north of $4 trillion, but probably higher or about 20% of gdp. We will  hit your 250% number pretty quickly at that rate.

The federal government borrowed 43 cents of every dollar it spent LAST YEAR. That will only go up moving forward. If the federal government starts to cut trillions on its spending (it has to), it will induce a recession from which we will require decades to recover. 

At some point, these facts will receive mainstream attention and it will be like Enron. Everybody LOVED Enron, until they didn't. I don't think "collapse" is the scenario, nobody wants that, and the plunge protection team will prevent it. However, all that money we borrowed (accelerating future spending into the present) has to be paid, and the public will pay it through massive and unrelenting (but "transitory" LOL) inflation and lower standards of living. I think an "accident" is more likely than collapse. Banks going down one after another. Major companies going bankrupt. Major government programs getting eliminated. I mean, how do you think we get to balance when we need to cut half of federal spending? Devaluation of the currency. Finance becomes musical chairs.

After the supply chain problems resolved, we did not see a reversion to lower prices. Most likely that was due to the massive increase in money supply, and that supply is only getting blown up even more at an accelerating rate. We are now in the steep part of the exponential interest expense, the one that human minds don't readily comprehend.

I've never made a prediction of when, but I will now. It will start within five years. Gird your fucking loins, because we haven't seen anything like this before. Take the existing social chaos and multiply it by massive unemployment and rampant stagflation and let's see what we get. We fucked around, now we will find out. 

Edited by Thetexashammer
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1 hour ago, washparkhorn said:

We are not close to fiscal instability in the US. Japan’s debt to GDP ratio is more than 250%, yet the Yen remains one of the world’s reserve currencies. 

“Fiscal instability” is what the crooks scare the dum-dums with, while they steal money out the back door. Stop being a dum-dum.

IMG_1109.thumb.jpeg.4bfad426c0414d303ddd9b2d7fedf125.jpeg

Is there any debt or deficit level that concerns you?

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1 hour ago, Thetexashammer said:

During fiscal year 2023, the US government borrowed $2.7 trillion. This was about ten percent of GDP. (It is worth noting this is not the reported deficit. Some of you sadly still believe the lies.) This year will see an acceleration, resulting from a number of things but notably a significant steepening of the first derivative of interest expense. When we hit a recession, let's say we see deficits north of $4 trillion, but probably higher or about 20% of gdp. We will  hit your 250% number pretty quickly at that rate.

The federal government borrowed 43 cents of every dollar it spent LAST YEAR. That will only go up moving forward. If the federal government starts to cut trillions on its spending (it has to), it will induce a recession from which we will require decades to recover

At some point, these facts will receive mainstream attention and it will be like Enron. Everybody LOVED Enron, until they didn't. I don't think "collapse" is the scenario, nobody wants that, and the plunge protection team will prevent it. However, all that money we borrowed (accelerating future spending into the present) has to be paid, and the public will pay it through massive and unrelenting (but "transitory" LOL) inflation and lower standards of living. I think an "accident" is more likely than collapse. Banks going down one after another. Major companies going bankrupt. Major government programs getting eliminated. I mean, how do you think we get to balance when we need to cut half of federal spending? Devaluation of the currency. Finance becomes musical chairs.

After the supply chain problems resolved, we did not see a reversion to lower prices. Most likely that was due to the massive increase in money supply, and that supply is only getting blown up even more at an accelerating rate. We are now in the steep part of the exponential interest expense, the one that human minds don't readily comprehend.

I've never made a prediction of when, but I will now. It will start within five years. Gird your fucking loins, because we haven't seen anything like this before. Take the existing social chaos and multiply it by massive unemployment and rampant stagflation and let's see what we get. We fucked around, now we will find out. 

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2 hours ago, Thetexashammer said:

During fiscal year 2023, the US government borrowed $2.7 trillion. This was about ten percent of GDP. (It is worth noting this is not the reported deficit. Some of you sadly still believe the lies.) This year will see an acceleration, resulting from a number of things but notably a significant steepening of the first derivative of interest expense. When we hit a recession, let's say we see deficits north of $4 trillion, but probably higher or about 20% of gdp. We will  hit your 250% number pretty quickly at that rate.

The federal government borrowed 43 cents of every dollar it spent LAST YEAR. That will only go up moving forward. If the federal government starts to cut trillions on its spending (it has to), it will induce a recession from which we will require decades to recover. 

At some point, these facts will receive mainstream attention and it will be like Enron. Everybody LOVED Enron, until they didn't. I don't think "collapse" is the scenario, nobody wants that, and the plunge protection team will prevent it. However, all that money we borrowed (accelerating future spending into the present) has to be paid, and the public will pay it through massive and unrelenting (but "transitory" LOL) inflation and lower standards of living. I think an "accident" is more likely than collapse. Banks going down one after another. Major companies going bankrupt. Major government programs getting eliminated. I mean, how do you think we get to balance when we need to cut half of federal spending? Devaluation of the currency. Finance becomes musical chairs.

After the supply chain problems resolved, we did not see a reversion to lower prices. Most likely that was due to the massive increase in money supply, and that supply is only getting blown up even more at an accelerating rate. We are now in the steep part of the exponential interest expense, the one that human minds don't readily comprehend.

I've never made a prediction of when, but I will now. It will start within five years. Gird your fucking loins, because we haven't seen anything like this before. Take the existing social chaos and multiply it by massive unemployment and rampant stagflation and let's see what we get. We fucked around, now we will find out. 

If you are right about the events preceding a collapse or “accident”, my guess is that sentiment will cause unemployment to rise.  Rates will fall rapidly as a result.  The debt, whose inflation adjusted value has already fallen significantly, will be refinanced at the new lower rates, dramatically reducing the debt service.  The end result won’t be a boom, but it will be far from catastrophic.  Now, that’s not to say the debt isn’t an issue, it is, and if it doesn’t get addressed then eventually there will be a collapse.  But I do not think that is only 5 years away.  
 

The great wealth transfer and dramatic demographic shift we are just now starting that will last another 15-20 years will have big time impacts on the economy and government spending.  How we deal with those issues is just as important as how much debt we already have when thinking about how the future looks.

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2 hours ago, lucious leftfoot said:

Is there any debt or deficit level that concerns you?

I worry about traitors choosing to voluntarily default on debt payments.

A single, self-authorized, issuer and net supplier of an unpegged fiat currency can never default on debts payable in its own currency—unless it chooses to do so in a massive act of stupidity.

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14 hours ago, washparkhorn said:

We are not close to fiscal instability in the US. Japan’s debt to GDP ratio is more than 250%, yet the Yen remains one of the world’s reserve currencies. 

“Fiscal instability” is what the crooks scare the dum-dums with, while they steal money out the back door. Stop being a dum-dum.

IMG_1109.thumb.jpeg.4bfad426c0414d303ddd9b2d7fedf125.jpeg

The words were straight from CNBC.. no commentary. You can take it up with them. 

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17 hours ago, Snake Diggity said:

If you are right about the events preceding a collapse or “accident”, my guess is that sentiment will cause unemployment to rise.  Rates will fall rapidly as a result.  The debt, whose inflation adjusted value has already fallen significantly, will be refinanced at the new lower rates, dramatically reducing the debt service.  The end result won’t be a boom, but it will be far from catastrophic.  Now, that’s not to say the debt isn’t an issue, it is, and if it doesn’t get addressed then eventually there will be a collapse.  But I do not think that is only 5 years away.  
 

The great wealth transfer and dramatic demographic shift we are just now starting that will last another 15-20 years will have big time impacts on the economy and government spending.  How we deal with those issues is just as important as how much debt we already have when thinking about how the future looks.

3.4 percent today. 

Yes, they will go to zirp and abandon the 2% target because high rates don't impact fiscal irresponsibility.

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21 hours ago, Thetexashammer said:

After the supply chain problems resolved, we did not see a reversion to lower prices. Most likely that was due to the massive increase in money supply, and that supply is only getting blown up even more at an accelerating rate.

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23 hours ago, washparkhorn said:

We are not close to fiscal instability in the US. Japan’s debt to GDP ratio is more than 250%, yet the Yen remains one of the world’s reserve currencies. 

“Fiscal instability” is what the crooks scare the dum-dums with, while they steal money out the back door. Stop being a dum-dum.

IMG_1109.thumb.jpeg.4bfad426c0414d303ddd9b2d7fedf125.jpeg

Your continued defense of indefensible deficits using that big brain of yours is one of the great mysteries of surly. 

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12 minutes ago, Dbeasy said:

Your continued defense of indefensible deficits using that big brain of yours is one of the great mysteries of surly. 

 

19 hours ago, washparkhorn said:

I worry about traitors choosing to voluntarily default on debt payments.

A single, self-authorized, issuer and net supplier of an unpegged fiat currency can never default on debts payable in its own currency—unless it chooses to do so in a massive act of stupidity.

I wasn't asking about defaulting on the debt or any of the political games around the debt ceiling.

 

I'll rephrase the question. Do you see any potential negative consequences related to our current debt and/or deficit levels?

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3 hours ago, lucious leftfoot said:

I'll rephrase the question. Do you see any potential negative consequences related to our current debt and/or deficit levels?

Spending is subject to limited real resources/the inflation restraint. 

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Posted (edited)
16 minutes ago, Neonmoon said:

Or as the richest nation on earth, we could raise taxes 

 No. Taxes can only go down*, because of something JFK said in 1962. God appeared to Arthur Laffer in the form of a wild conjecture and gave him a cocktail napkin sketch showing that as tax rates approach zero, revenues rise vertically, QED.  
 

 

 

 

Spoiler

* except on middle class people and below.  Because fuck them

 

Edited by Bozo_Casanova
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10 hours ago, washparkhorn said:

Spending is subject to limited real resources/the inflation restraint. 

The problem, as MMT devotees are apt to ignore, is that there is no hard constraint, there is a soft constraint.  But Congress is not a rational actor bound by soft constraints.  This is a problem inherent with fiat currency systems which have a rich history of eventual failure.  2% inflation targeting (soon to be 4% because the Fed is trapped) is complete bullshit and immoral planned value destruction of the currency that accelerates wealth disparity as asset bubbles favor asset owners while everyone else drowns.

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2 hours ago, Neonmoon said:

Or as the richest nation on earth, we could raise taxes 

Taxes drain inflationary liquidity and, when targeted at inflationary behavior (price gouging, greedflation, . . .), de-incentivize those behaviors. 

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1 hour ago, washparkhorn said:

Taxes drain inflationary liquidity and, when targeted at inflationary behavior (price gouging, greedflation, . . .), de-incentivize those behaviors. 

That makes entirely too much sense. Can't we just cut more spending on useless things like schools and roads?

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1 hour ago, washparkhorn said:

Taxes drain inflationary liquidity and, when targeted at inflationary behavior (price gouging, greedflation, . . .), de-incentivize those behaviors. 

Your problem is that to whatever extent these things exist, politicians are not willing to address them because they either benefit from them directly or are afraid of political blowback. So you're left with broadly raising taxes. Politicians want to do that less than ever it seems. This is partially due to the belief that we can just print the money becoming more pervasive, imo. 

 

39 minutes ago, Captainant said:

That makes entirely too much sense. Can't we just cut more spending on useless things like schools and roads?

We've gone over the math here. Hitting the rough historical ceiling on tax collection means $500B revs.  Leaves $1.2T deficit still per annum. So where are the cuts?

It's all a tired argument.

 

Elevated inflation over the medium to long term is best case scenario. Losing reserve currency status or otherwise somehow upending the dollar based system is worst case. 

 

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52 minutes ago, lucious leftfoot said:

Your problem is that to whatever extent these things exist, politicians are not willing to address them because they either benefit from them directly or are afraid of political blowback. So you're left with broadly raising taxes. Politicians want to do that less than ever it seems. This is partially due to the belief that we can just print the money becoming more pervasive, imo. 

 

We've gone over the math here. Hitting the rough historical ceiling on tax collection means $500B revs.  Leaves $1.2T deficit still per annum. So where are the cuts?

It's all a tired argument.

 

Elevated inflation over the medium to long term is best case scenario. Losing reserve currency status or otherwise somehow upending the dollar based system is worst case. 

 

You raise a good point

American culture is based on self-centeredness. There is no path to have people contribute more, the only path is to take away healthcare and social security. 

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Call me crazy, but the fact that we spend 3X more on defense than any country on earth, and are a long way from the most populous country, well . . . maybe we should look at that, among other things.

You're not a patriot!

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50 minutes ago, jimmyjazz said:

Call me crazy, but the fact that we spend 3X more on defense than any country on earth, and are a long way from the most populous country, well . . . maybe we should look at that, among other things.

You're not a patriot!

This might have been on Shaggy but in a predecessor version of this conversation @Bozo_Casanova made the point that what we think of as “defense” is an enormous government program combining actual defense, a jobs program both in the DoD directly and via procurement (all of which has to be sourced in the US and often is located in mid-size or smaller population centers), a retirement and healthcare system, etc.  

 

I’m sure he had some other points to describe the leviathan but I think the main idea was that a lot of what we call defense spending is just a transfer payment by another name.

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I'm sure he was right to some extent, but in my career prior to entering the private sector, I did a lot of research for ARPA/DARPA/etc., and wrote several successfully-funded proposals.  The way projects were strung along with funding piled on funding even when goals weren't remotely met (performance/schedule/both) was disgusting.  I was glad to get out.  There is a lot of waste in that world.  All of defense?  No idea.  Where I was?  Absolutely.

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Posted (edited)
11 hours ago, Captainant said:

That makes entirely too much sense. Can't we just cut more spending on useless things like schools and roads?

Roads and schools aren’t funded by Fed income taxes. You’re completely disingenuous 

Edited by Incredulity
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17 hours ago, Neonmoon said:

Or as the richest nation on earth, we could raise taxes 

Can you imagine if we raised taxes, made the rich pay their fair share, and then made the freeloaders actually contribute something? Anything at all. Like $300. We could be out of debt in a coupe of years.  

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1 hour ago, fattyflattie said:

Can you imagine if we raised taxes, made the rich pay their fair share, and then made the freeloaders actually contribute something? Anything at all. Like $300. We could be out of debt in a coupe of years.  

I'm not sure you've done the freeloader math there, Lou.  Let's say we generously consider half of Americans "freeloaders".  That's what, 165 million people?  At $300 a pop, that's roughly $50B annual.  We're including children here, which is laughable, but I know you think they should be pulling their own weight (the little shits), so let's go with that.

Our budget deficit is $1.7 TRILLION each year.  Your idea would put a 3% dent in that number.  Maybe we need to be looking towards the wealthy and the corporations that pay a far lower annualized tax rate than I do, huh?

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37 minutes ago, jimmyjazz said:

I'm not sure you've done the freeloader math there, Lou.  Let's say we generously consider half of Americans "freeloaders".  That's what, 165 million people?  At $300 a pop, that's roughly $50B annual.  We're including children here, which is laughable, but I know you think they should be pulling their own weight (the little shits), so let's go with that.

Our budget deficit is $1.7 TRILLION each year.  Your idea would put a 3% dent in that number.  Maybe we need to be looking towards the wealthy and the corporations that pay a far lower annualized tax rate than I do, huh?

Of course I didn't attempt any math.  Just a reminder of the sheer amount of net takers in our society.  We can bitch all we want about the "rich", but there's a whole lot of nothing being contributed by a whole lot of people. 

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Posted (edited)
11 minutes ago, fattyflattie said:

Of course I didn't attempt any math.  Just a reminder of the sheer amount of net takers in our society.  We can bitch all we want about the "rich", but there's a whole lot of nothing being contributed by a whole lot of people. 

I think it might be instructive to consider the revenue that might be generated if the top 5% of income earners paid, say, 40% marginal income tax.  Beyond that, consider the vast amount of wealth being accrued tax-free (or at least tax-deferred).

Edited by jimmyjazz
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5 minutes ago, jimmyjazz said:

I think it might be instructive to consider the revenue that might be generated if the top 5% of income earners paid, say, 40% marginal income tax.  Beyond that, consider the vast amount of wealth being accrued tax-free (or at least tax-deferred).

They need to pay too.  For sure/ 

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7 hours ago, fattyflattie said:

Can you imagine if we raised taxes, made the rich pay their fair share, and then made the freeloaders actually contribute something? Anything at all. Like $300. We could be out of debt in a coupe of years.  

“The poorest people each paying $300/yr more in taxes is the answer to our debt crisis” is the most fatty thing yet.  Fucking idiot.

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11 hours ago, LCHorn said:

This might have been on Shaggy but in a predecessor version of this conversation @Bozo_Casanova made the point that what we think of as “defense” is an enormous government program combining actual defense, a jobs program both in the DoD directly and via procurement (all of which has to be sourced in the US and often is located in mid-size or smaller population centers), a retirement and healthcare system, etc.  

 

I’m sure he had some other points to describe the leviathan but I think the main idea was that a lot of what we call defense spending is just a transfer payment by another name.

Not only that,  it’s also our most essential  and strategic provider of 

1) vocational training
2) Leadership and management development 
3) infrastructure 
4) healthcare 

 

So when we consider how to spend less on “defense,” what we are really asking is:

“Can we reduce our economic dependence on defense by redirecting funds to education, infrastructure and healthcare?”

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10 hours ago, Brisketexan said:


Texas schools receive billions in federal funding.
Texas highways receive billions in federal funding.


lol.  You think the feds only get money from income tax?

https://www.taxpolicycenter.org/briefing-book/what-highway-trust-fund-and-how-it-financed#:~:text=Revenue from the federal excise,use tax on those vehicles.

 

Public schools are over 92% state and local funded

https://usafacts.org/articles/how-are-public-schools-funded/#:~:text=In the 2019-2020 school,about 7.6% of school funding.

 

 

 

 

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2 hours ago, Bozo_Casanova said:

Not only that,  it’s also our most essential  and strategic provider of 

1) vocational training
2) Leadership and management development 
3) infrastructure 
4) healthcare 

Which does lead to the question "what percentage of other world powers' defense budgets are similarly allocated?"

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39 minutes ago, NotActuallyALonghorn said:

The DOD can't account for 1.9 trillion dollars worth of assets. Maybe we should start holding them accountable for the money we give them and go from there when we set their budget. 

Why do you hate us? Is it because we’re free?

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On 5/15/2024 at 9:28 PM, washparkhorn said:

IMG_1117.thumb.jpeg.526593134ba00eaebf85e2c9ac8aa53a.jpeg

This is a terrific example of a knowledgeable person not being able to see the forest for the trees. We all read about academics with no common sense and here is a great example. 

Yes, you are technically correct. The government can avoid default by just printing money. But that’s not the point, obviously. The point is that the inflation risk produced by out of control deficits threatens the entire system. There are many reasons Japan hasn’t imploded. The US is not Japan.  And oh by the way they’ve had a pretty miserable 20-30 years anyway. 

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On 5/17/2024 at 7:05 PM, Dbeasy said:

The US is not Japan.  And oh by the way they’ve had a pretty miserable 20-30 years anyway. 

While excessive money printing can lead to inflation, it is not the sole determinant. Advanced economies like the US (Japan, GB, Australia. . .) have multiple tools and mechanisms to control inflation, including monetary actions by the Federal Reserve (such as adjusting interest rates and open market operations). US demonstrates inflation can be managed even when significant amounts of money are injected into the economy, such as during the quantitative easing periods following the 2008 financial crisis.

Japan's experience demonstrates that a country with its own currency can maintain high debt levels without triggering hyperinflation or economic collapse. Japan's debt-to-GDP ratio is significantly higher than that of the US, yet it has managed to avoid hyperinflation and maintain economic stability. This is largely because Japan, like the US, has control over its currency and can conduct monetary policy to mitigate inflationary pressures.

While Japan has experienced periods of low growth and deflation, labeling the entire period as "miserable" is an oversimplification. Japan has maintained a high standard of living, low unemployment rates, and technological advancements. Japan's economic issues are complex and not solely attributable to its monetary policies—demographic challenges and other structural factors also play significant roles.

Inflation is just one of many economic factors that need to be managed. Fiscal deficits can be sustainable if they are used to finance productive investments that boost economic growth. Moreover, in times of economic downturn, running deficits can be necessary to stimulate demand and avoid deeper recessions. The real threat to economic stability is not necessarily the size of the deficit or the act of money printing, but rather the mismanagement of economic policies overall.

Like propaganda from Peterson think tanks, you overly simplifies complex economic relationships and ignores the evidence that monetary sovereign countries, like the US and Japan, have managed to control inflation despite high deficits. 
 

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4 minutes ago, washparkhorn said:

While excessive money printing can lead to inflation, it is not the sole determinant. Advanced economies like the US (Japan, GB, Australia. . .) have multiple tools and mechanisms to control inflation, including monetary actions by the Federal Reserve (such as adjusting interest rates and open market operations). US demonstrates inflation can be managed even when significant amounts of money are injected into the economy, such as during the quantitative easing periods following the 2008 financial crisis.

Japan's experience demonstrates that a country with its own currency can maintain high debt levels without triggering hyperinflation or economic collapse. Japan's debt-to-GDP ratio is significantly higher than that of the US, yet it has managed to avoid hyperinflation and maintain economic stability. This is largely because Japan, like the US, has control over its currency and can conduct monetary policy to mitigate inflationary pressures.

While Japan has experienced periods of low growth and deflation, labeling the entire period as "miserable" is an oversimplification. Japan has maintained a high standard of living, low unemployment rates, and technological advancements. Japan's economic issues are complex and not solely attributable to its monetary policies—demographic challenges and other structural factors also play significant roles.

Inflation is just one of many economic factors that need to be managed. Fiscal deficits can be sustainable if they are used to finance productive investments that boost economic growth. Moreover, in times of economic downturn, running deficits can be necessary to stimulate demand and avoid deeper recessions. The real threat to economic stability is not necessarily the size of the deficit or the act of money printing, but rather the mismanagement of economic policies overall.

Like propaganda from Peterson think tanks, you overly simplifies complex economic relationships and ignores the evidence that monetary sovereign countries, like the US and Japan, have managed to control inflation despite high deficits. 
 

IMG_0805.thumb.jpeg.2b3f877700ff41ef720059b7caaaeac7.jpeg

“How can I try to justify outrageous government spending and deficit behavior by arguing that it hasn’t yet destroyed another country’s entire economic foundation” - washparkhorn. 

Your blatherings really are an embarrassment. There is zero justification for the way our government (Congress and executive branch) is operating. They aren’t using monetary policy to smooth out downturns. They are mortgaging our future for personal financial gain. Your viewpoint is really ridiculous. 

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36 minutes ago, washparkhorn said:

Inflation is just one of many economic factors that need to be managed. Fiscal deficits can be sustainable if they are used to finance productive investments that boost economic growth.

 

29 minutes ago, Dbeasy said:

There is zero justification for the way our government (Congress and executive branch) is operating. They aren’t using monetary policy to smooth out downturns.

I think you gents are in more agreement than the tone of your posts might suggest…

I think Washpark is trying to rebut the idea that “deficits=always bad” rather than justify the current budget.  
 

Also, @Dbeasy, if I might quibble, neither Congress nor the executive branch sets monetary policy.  They do set fiscal policy, however.  I don’t really blame them—apparently getting elected to any Federal office is better than cocaine for a certain personality type.  It’s the electorate that’s really to blame.    

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