Almost universally, the comeback is always QE. Whenever trying to discuss the bond market’s unmovable pessimism in 2021, especially now about six months after reflation ended, people just don’t want to hear about such low (and lower) growth and inflation expectations in nominal yields. No, that’s not deflationary potential, they’d say, it was and is the Fed buying bonds which [...]
At the very least, you have to recognize the correlation. If you aren’t willing to consider causation, in part, there’s troubling coincidence in every place around the world between huge government deficits and less growth (therefore the constant inflation "puzzle"). You can argue that the former causes the latter, and that’s absolutely a valid case; when things get rough, neo-Keynesians [...]
Following up on the whole subsidy issue, GDP versus GDI though here with a determined eye on the Net Operating Surplus (NOS). The way this stuff is accounted for in the government’s (BEA) scheme makes it very confusing; the subsidies are subtracted from indirect taxes, therefore they reduce GDI. The more subsidies, the less aggregate income?It’s not done on purpose, [...]
There are two parts behind the inflation mongering. The first, noted yesterday, is the Fed’s balance sheet, particularly its supposedly monetary remainder called bank reserves. The central bank is busy doing something, a whole bunch of something, therefore how can it possibly turn out to be anything other than inflationary?The answer: the Federal Reserve is not a central bank, not [...]
Hold all the congratulations. Jay Powell is, with a huge assist from the financial media, trying to pre-empt what comes next by taking a premature victory lap. The Fed isn’t just your central bank it is your friend. The amount of pure propaganda being put out lately is understandable if still disgusting. March was a good month to include [...]
Critics of government debt, a group which really should include every taxpayer, like to point out how governments prefer to pay back that debt with hugely inflated currency. You don’t pay it off so much as inflate it away. Change the convertibility number for your local currency and, voila, a much more manageable credit profile emerges. Only, there are often [...]
Last week, the CBO updated some of its calculations and methods for estimating the effects of “automatic stabilizers” on the deficit. These are Keynesian concepts whereby the government increases spending or redistribution (redundant) without discretion as the economy falls into the downside of a cycle. For the CBO’s purposes, the agency measures automatic stabilizers not on their effects, intended effects [...]
The macro-economic parallel to my earlier post regarding the dramatic decline in borrowing pace is that there is an urge to include the “improving economy” as a factor driving better fiscal fortunes. Unfortunately, like so many earnings reports, the budget deficit is enthralled by a series of “one-off” factors compelling the treasury toward what only appears like responsibility. There was [...]
It is easy to simply narrow the paradigm of the government showdown into party politics, thus pitting Democrats squarely against only Republicans. But that is only helpful in gauging political implications, should there actually be any (were there after 2011?). Rather than order the spectrum in terms of politics, it is more useful, for our purposes here, to align them [...]
Stay In Touch