Closing the wealth gap

22,104 Views | 526 Replies | Last: 2 mo ago by DiabloWags
DiabloWags
How long do you want to ignore this user?
bearister said:

The US jobs report was a warning sign even before the Omicron surge


https://www.theguardian.com/commentisfree/2022/jan/09/us-jobs-report-warning-sign-even-before-omicron-surge?CMP=Share_iOSApp_Other

Typical opinion piece by Robert Reich.
Never mind that the labor market is extremely tight and jobless claims are still near a 52 year low.
going4roses
How long do you want to ignore this user?
https://vm.tiktok.com/TTPdMHVavb/
Tell someone you love them and try to have a good day
DiabloWags
How long do you want to ignore this user?
going4roses said:

https://vm.tiktok.com/TTPdMHVavb/
He has no idea what he's talking about.

A typical Tik-Tok video filled with misrepresentation and really no understanding of what actually happened under TARP.

There was a total of $633 Billion in U.S. Govt economic federal outflows related to the global financial crisis and the inflows (funds returned to the Treasury as interest, dividends, fees, or stock warrant repurchases) was $755 Billion, for a net profit of $121 Billion.

Of the 789 investments made by the U.S. Treasury, 637 have resulted in a profit.
138 resulted in a loss. 5 are still outstanding.

Of the financial system bailout outflows, roughly 39% went to Banks and other financial institutions, 30% went to Fannie Mae and Freddie Mac (the Govt), 12.6% to auto companies (GM and Chrysler), 10.7% to AIG (given their involvement in the CDS chaos that literally facilitated a global meltdown) and about 8% to other programs.

But the clown on Tik-Tok makes it ALL about bailing-out Lehman Bros.

Bailout Tracker | ProPublica
Anarchistbear
How long do you want to ignore this user?
A lot of job growth has been in low paying service jobs but with childcare and day care, let alone one's own health, impacted by Covid it's not too surprising people are unwilling to take jobs with no or minimal benefits.
wifeisafurd
How long do you want to ignore this user?
DiabloWags said:

bearister said:

The US jobs report was a warning sign even before the Omicron surge


https://www.theguardian.com/commentisfree/2022/jan/09/us-jobs-report-warning-sign-even-before-omicron-surge?CMP=Share_iOSApp_Other

Typical opinion piece by Robert Reich.
Never mind that the labor market is extremely tight and jobless claims are still near a 52 year low.

So Robert Reich, the lawyer who masquerades as economist, has a great headline. So the attachment to the article is the jobs report says there was a 3.7% drop in unemployment SEASONALLY ADJUSTED. This during an inflationary time when wages are increasing faster than prices as will be discussed below. You have unanimous consensus that things are good in the economy by pretty much every liberal and conservative on this board, and that the FED should slow down the economy by laying off QE. Never mind there were massive job increases following vaccinations and fiscal infusions when a large part of the county opened-up that resulted in huge jobs increases. Now Reich say a 200K new jobs and 3.7% reduction in joblessness means the sky is freaking falling. Take back that victory lap Messers. Biden and Powell. The economy sucks. The guys on Fox News must be right.

Everyone one us with a Econ or Business degree (and its everyone left or right), agrees with the FED to start to lay off the QE. I'm sure some nimrod will call us cruel and evil because Polisci Bob says real wages are falling. But, the same report Reich quoted for December job growth also shows wage growth was very striking - the average hourly wages rose by 19 cents, the largest increase observed in many years. On an annualized basis, this increase amounts to 7.3%, which happens to greater than annualized rate of inflation for the annualized inflation rate for the same December period. Why did Polisci Bob say It was just the opposite? Reich likes to use different time periods to say different things. This month is good for quoting numbers for employment, but for real wages I better use the past twelve month average figure that includes a time when temporary Covid shortages increased prices, because using the same two time periods doesn't fit my narrative. But I'm sure Bob can get a bunch of polisci majors to believe him than those stupid PHD economists at the FED and in the White House are clueless. Here is the best part of it. We just had a bunch of posts from people on the left and right saying why QE increases asset values and increases wealth concentration and Bearister and polisci Bob are saying don't stop QE.

Good time for that post on economic literacy again.
dajo9
How long do you want to ignore this user?
wifeisafurd said:

DiabloWags said:

bearister said:

The US jobs report was a warning sign even before the Omicron surge


https://www.theguardian.com/commentisfree/2022/jan/09/us-jobs-report-warning-sign-even-before-omicron-surge?CMP=Share_iOSApp_Other

Typical opinion piece by Robert Reich.
Never mind that the labor market is extremely tight and jobless claims are still near a 52 year low.

So Robert Reich, the lawyer who masquerades as economist, has a great headline. So the attachment to the article is the jobs report says there was a 3.7% drop in unemployment SEASONALLY ADJUSTED. This during an inflationary time when wages are increasing faster than prices as will be discussed below. You have unanimous consensus that things are good in the economy by pretty much every liberal and conservative on this board, and that the FED should slow down the economy by laying off QE. Never mind there were massive job increases following vaccinations and fiscal infusions when a large part of the county opened-up that resulted in huge jobs increases. Now Reich say a 200K new jobs and 3.7% reduction in joblessness means the sky is freaking falling. Take back that victory lap Messers. Biden and Powell. The economy sucks. The guys on Fox News must be right.

Everyone one us with a Econ or Business degree (and its everyone left or right), agrees with the FED to start to lay off the QE. I'm sure some nimrod will call us cruel and evil because Polisci Bob says real wages are falling. But, the same report Reich quoted for December job growth also shows wage growth was very striking - the average hourly wages rose by 19 cents, the largest increase observed in many years. On an annualized basis, this increase amounts to 7.3%, which happens to greater than annualized rate of inflation for the annualized inflation rate for the same December period. Why did Polisci Bob say It was just the opposite? Reich likes to use different time periods to say different things. This month is good for quoting numbers for employment, but for real wages I better use the past twelve month average figure that includes a time when temporary Covid shortages increased prices, because using the same two time periods doesn't fit my narrative. But I'm sure Bob can get a bunch of polisci majors to believe him than those stupid PHD economists at the FED and in the White House are clueless. Here is the best part of it. We just had a bunch of posts from people on the left and right saying why QE increases asset values and increases wealth concentration and Bearister and polisci Bob are saying don't stop QE.

Good time for that post on economic literacy again.


bearister and Robert Reich didn't say anything about QE. You have a habit of taking things people say and then adding things that are convenient for the argument you want to make. You shouldn't do that.
wifeisafurd
How long do you want to ignore this user?
dajo9 said:

wifeisafurd said:

DiabloWags said:

bearister said:

The US jobs report was a warning sign even before the Omicron surge


https://www.theguardian.com/commentisfree/2022/jan/09/us-jobs-report-warning-sign-even-before-omicron-surge?CMP=Share_iOSApp_Other

Typical opinion piece by Robert Reich.
Never mind that the labor market is extremely tight and jobless claims are still near a 52 year low.

So Robert Reich, the lawyer who masquerades as economist, has a great headline. So the attachment to the article is the jobs report says there was a 3.7% drop in unemployment SEASONALLY ADJUSTED. This during an inflationary time when wages are increasing faster than prices as will be discussed below. You have unanimous consensus that things are good in the economy by pretty much every liberal and conservative on this board, and that the FED should slow down the economy by laying off QE. Never mind there were massive job increases following vaccinations and fiscal infusions when a large part of the county opened-up that resulted in huge jobs increases. Now Reich say a 200K new jobs and 3.7% reduction in joblessness means the sky is freaking falling. Take back that victory lap Messers. Biden and Powell. The economy sucks. The guys on Fox News must be right.

Everyone one us with a Econ or Business degree (and its everyone left or right), agrees with the FED to start to lay off the QE. I'm sure some nimrod will call us cruel and evil because Polisci Bob says real wages are falling. But, the same report Reich quoted for December job growth also shows wage growth was very striking - the average hourly wages rose by 19 cents, the largest increase observed in many years. On an annualized basis, this increase amounts to 7.3%, which happens to greater than annualized rate of inflation for the annualized inflation rate for the same December period. Why did Polisci Bob say It was just the opposite? Reich likes to use different time periods to say different things. This month is good for quoting numbers for employment, but for real wages I better use the past twelve month average figure that includes a time when temporary Covid shortages increased prices, because using the same two time periods doesn't fit my narrative. But I'm sure Bob can get a bunch of polisci majors to believe him than those stupid PHD economists at the FED and in the White House are clueless. Here is the best part of it. We just had a bunch of posts from people on the left and right saying why QE increases asset values and increases wealth concentration and Bearister and polisci Bob are saying don't stop QE.

Good time for that post on economic literacy again.


bearister and Robert Reich didn't say anything about QE. You have a habit of taking things people say and then adding things that are convenient for the argument you want to make. You shouldn't do that.
Let this be a warning to everyone how you deflect, and the criticism you get for it. QE equals exactly what the Reich article was talking about.

The article specifically starts off: "Friday's jobs report from the Department of Labor was a warning sign about the US economy. It should cause widespread concern about the Fed's plans to raise interest rates to control inflation." As about 7 longs posts INCLUDING YOUR POSTS DISCUSS, the Fed's plans to raise interest rates to control inflation" is the easing of QE. Bearsister did not use QE because he likely doesn't know " that about the Fed's plans to raise interest rates to control inflation is to tax QE. Reich didn't mention it because it would needlessly confuse the audience that reads Guardian (which is a good newspaper, but not aimed at business readers such at the WSJ).

So let me repost in a way the nimrods with the thumbs-up understand:


So Robert Reich, the lawyer who masquerades as economist, has a great headline. So the attachment to the article is the jobs report says there was a 3.7% drop in unemployment SEASONALLY ADJUSTED. This during an inflationary time when wages are increasing faster than prices as will be discussed below. You have unanimous consensus that things are good in the economy by pretty much every liberal and conservative on this board, and that the FED should slow down the economy by laying off the policy of reducing interest rates through FED action. Never mind there were massive job increases following vaccinations and fiscal infusions when a large part of the county opened-up that resulted in huge jobs increases. Now Reich say a 200K new jobs and 3.7% reduction in joblessness means the sky is freaking falling. Take back that victory lap Messers. Biden and Powell. The economy sucks. The guys on Fox News must be right.

Everyone one us with a Econ or Business degree (and its everyone left or right), agrees with the FED to start to lay off policy of reducing interest rates through FED action. I'm sure some nimrod will call us cruel and evil because Polisci Bob says real wages are falling. But, the same report Reich quoted for December job growth also shows wage growth was very striking - the average hourly wages rose by 19 cents, the largest increase observed in many years. On an annualized basis, this increase amounts to 7.3%, which happens to greater than annualized rate of inflation for the annualized inflation rate for the same December period. Why did Polisci Bob say It was just the opposite? Reich likes to use different time periods to say different things. This month is good for quoting numbers for employment, but for real wages I better use the past twelve month average figure that includes a time when temporary Covid shortages increased prices, because using the same two time periods doesn't fit my narrative. But I'm sure Bob can get a bunch of polisci majors to believe him than those stupid PHD economists at the FED and in the White House are clueless. Here is the best part of it. We just had a bunch of posts from people on the left and right saying why QE increases asset values and increases wealth concentration and Bearister and polisci Bob are saying don't stop policy of reducing interest rates through FED action.

wifeisafurd
How long do you want to ignore this user?
dajo9 said:

wifeisafurd said:

DiabloWags said:

bearister said:

The US jobs report was a warning sign even before the Omicron surge


https://www.theguardian.com/commentisfree/2022/jan/09/us-jobs-report-warning-sign-even-before-omicron-surge?CMP=Share_iOSApp_Other

Typical opinion piece by Robert Reich.
Never mind that the labor market is extremely tight and jobless claims are still near a 52 year low.

So Robert Reich, the lawyer who masquerades as economist, has a great headline. So the attachment to the article is the jobs report says there was a 3.7% drop in unemployment SEASONALLY ADJUSTED. This during an inflationary time when wages are increasing faster than prices as will be discussed below. You have unanimous consensus that things are good in the economy by pretty much every liberal and conservative on this board, and that the FED should slow down the economy by laying off QE. Never mind there were massive job increases following vaccinations and fiscal infusions when a large part of the county opened-up that resulted in huge jobs increases. Now Reich say a 200K new jobs and 3.7% reduction in joblessness means the sky is freaking falling. Take back that victory lap Messers. Biden and Powell. The economy sucks. The guys on Fox News must be right.

Everyone one us with a Econ or Business degree (and its everyone left or right), agrees with the FED to start to lay off the QE. I'm sure some nimrod will call us cruel and evil because Polisci Bob says real wages are falling. But, the same report Reich quoted for December job growth also shows wage growth was very striking - the average hourly wages rose by 19 cents, the largest increase observed in many years. On an annualized basis, this increase amounts to 7.3%, which happens to greater than annualized rate of inflation for the annualized inflation rate for the same December period. Why did Polisci Bob say It was just the opposite? Reich likes to use different time periods to say different things. This month is good for quoting numbers for employment, but for real wages I better use the past twelve month average figure that includes a time when temporary Covid shortages increased prices, because using the same two time periods doesn't fit my narrative. But I'm sure Bob can get a bunch of polisci majors to believe him than those stupid PHD economists at the FED and in the White House are clueless. Here is the best part of it. We just had a bunch of posts from people on the left and right saying why QE increases asset values and increases wealth concentration and Bearister and polisci Bob are saying don't stop QE.

Good time for that post on economic literacy again.


bearister and Robert Reich didn't say anything about QE. You have a habit of taking things people say and then adding things that are convenient for the argument you want to make. You shouldn't do that.
Actually Dajo said QE when disagreeing with the points raised in Reich article posted by Bearsiter, to wit:

I [Dajo] think the FED policy of reducing interest rates through FED actions hould have ended summer 2020 when the stock market had fully recovered. It was after that when assets like housing went bonkers. Of course, policy of reducing interest rates through FED action started Fall 2019 so it was never about Covid to begin with. It was always about boosting asset prices.

Fiscal policy has been great and we should continue with BBB and slightly higher interest rates as well as light Quantitative Tightening. If we need to reduce spending we should reduce military spending.

For those who want to play hide and seek with the jargon, I left "Quantitative Tightening" in there which means the FED is raising interest rates which is exactly what Reich condemned in his article. So maybe with that knowledge in hand, those of you that love the Reich article thinks not only does't agree with Professor Reich, but he thinks the FED should ave started have stopped the policy of lowering interest rates in summer and should be increasing interest rates now, he just doesn;t want you to know that by using jargon like I did.

He really should not do that. He has a habit of trying to avoid his prior comments through various strategies, hence the comments about his deflection tendencies.

dajo9
How long do you want to ignore this user?
Here is how I began my discussion of QE on page 8 of this thread:


Quote:

I think we should look at zero interest rate policy (ZIRP) and QE separately.


QE and controlling the Fed Funds rate are, in fact, two separate actions. The distinction is important because they have different outcomes. Reich is talking about the Fed Funds rate. You put words into Reich's mouth about QE. You did the same thing to me upthread about income taxes. That is true, no matter how many paragraphs you write attacking me and rewriting what I wrote.
DiabloWags
How long do you want to ignore this user?
calbear93 said:

DiabloWags said:

Cal_79 said:


Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.



I have enjoyed your posting Calbear '93 and wanted to circle back and touch base on your post above.

There is no doubt that inflation hurts the poor more than the rich. It's obvious, and it flies in the face of people like Robert Reich who dont seem to care about inflation. He just wants more and more cheap money pumped out by the FED so that the unemployment rate can head lower and wages will head higher. Never mind what higher rents, food and energy prices (from inflation) due to the poor.

On another note, I have learned over the years (since I started trading stock-options back in 1980 while living in the dorms at Cal, after having sucked my middle class Dad into opening a small joint-trading account) that markets dont necessarily have to CRASH after a long period of loose monetary policy. One of the primary reasons that this current Bull Market has had such amazing "legs" in my mind, is because of the incredible amount of ROTATION that has occurred.

As you well know, that ROTATION was in full display in February of 2021, when high-tech, high-growth, companies with tremendous cash burn were sold and rotated out of in favor of the economic "re-opening" trades made in the "value" stock universe of cyclical names. I believe that the FAANGs started to be sold in the Fall of 2020 in anticipation of the economy re-opening, but the ROTATION really became apparent in February of 2021. In fact, many of the growth names that I focus on (in Medical Diagnostics) have been in an 11 month Bear Market since February of 2021. These companies are now trading at extremely attractive price to sales multiples and in my opinion and at some point, there will be a ROTATION back into them; perhaps when the economy slows down. They (in my opinion) will actually become another "re-opening" trade as soon as doctor's offices open back up to field reps and patients feel more confidence that Covid is no longer an issue, especially our seniors.

In any event, I'm not surprised that some of those "stimulus" checks found their way into a Robinhood trading account and wound up sending highly speculative companies with crappy management teams (like Gamestop and AMC) to the Moon. When you hand-out free money to people (some of my younger restaurant worker friends) already sitting on the couch watching Netflix all day long who are making $55,000 annually from additional supplemental unemployment benefits during Covid (thank you Golden State!), it's just human behavior to want to explore maximizing your earnings. Unfortunately, those who participated in this bubble using margin (which Robinhood pushed) got a very expensive lesson taught to them.

My point is that this kind of speculation was a primary result of FISCAL policy and not monetary policy.

PS. My BA-133 Investments course taught by Professor Hoag at Haas was a waste of time. We used a book on Modern Portfolio Theory and the Efficient Market Hypothesis by William Sharpe to learn about how everything was already "priced" into the market. What a horrible class. There is no better way to learn about the markets than actually having a little bit of "skin" in the game and reading the WSJ every day. I'm eternally grateful for my Dad giving me that chance at such a young age.





calbear93
How long do you want to ignore this user?
DiabloWags said:

calbear93 said:

DiabloWags said:

Cal_79 said:


Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.



I have enjoyed your posting Calbear '93 and wanted to circle back and touch base on your post above.

There is no doubt that inflation hurts the poor more than the rich. It's obvious, and it flies in the face of people like Robert Reich who dont seem to care about inflation. He just wants more and more cheap money pumped out by the FED so that the unemployment rate can head lower and wages will head higher. Never mind what higher rents, food and energy prices (from inflation) due to the poor.

On another note, I have learned over the years (since I started trading stock-options back in 1980 while living in the dorms at Cal, after having sucked my middle class Dad into opening a small joint-trading account) that markets dont necessarily have to CRASH after a long period of loose monetary policy. One of the primary reasons that this current Bull Market has had such amazing "legs" in my mind, is because of the incredible amount of ROTATION that has occurred.

As you well know, that ROTATION was in full display in February of 2021, when high-tech, high-growth, companies with tremendous cash burn were sold and rotated out of in favor of the economic "re-opening" trades made in the "value" stock universe of cyclical names. I believe that the FAANGs started to be sold in the Fall of 2020 in anticipation of the economy re-opening, but the ROTATION really became apparent in February of 2021. In fact, many of the growth names that I focus on (in Medical Diagnostics) have been in an 11 month Bear Market since February of 2021. These companies are now trading at extremely attractive price to sales multiples and in my opinion and at some point, there will be a ROTATION back into them; perhaps when the economy slows down. They (in my opinion) will actually become another "re-opening" trade as soon as doctor's offices open back up to field reps and patients feel more confidence that Covid is no longer an issue, especially our seniors.

In any event, I'm not surprised that some of those "stimulus" checks found their way into a Robinhood trading account and wound up sending highly speculative companies with crappy management teams (like Gamestop and AMC) to the Moon. When you hand-out free money to people (some of my younger restaurant worker friends) already sitting on the couch watching Netflix all day long who are making $55,000 annually from additional supplemental unemployment benefits during Covid (thank you Golden State!), it's just human behavior to want to explore maximizing your earnings. Unfortunately, those who participated in this bubble using margin (which Robinhood pushed) got a very expensive lesson taught to them.

My point is that this kind of speculation was a primary result of FISCAL policy and not monetary policy.

PS. My BA-133 Investments course taught by Professor Hoag at Haas was a waste of time. We used a book on Modern Portfolio Theory and the Efficient Market Hypothesis by William Sharpe to learn about how everything was already "priced" into the market. What a horrible class. There is no better way to learn about the markets than actually having a little bit of "skin" in the game and reading the WSJ every day. I'm eternally grateful for my Dad giving me that chance at such a young age.






Diablo - you are absolutely right about rotation and market crash. And you clearly have a lot more experience in the markets than I do, and the way I have been successful is willing to listen to people like you who are smarter than me on specific topics and ignore the morons who are posing.

Just to give you some background, I am an attorney by trade and not even an economic major (Rhetoric at UC Berkeley). I went to law school because I didn't have marketable skills. I also come from a very low income background, growing up in South Gate, Lynwood and Long Beach with parents who were laborers and eventually small business owners. I am still very lucky because my parents raised me in a very loving, religious setting even if we barely put food on the table, and, because they wanted me to have a better life than they did, they made sure I did not compromise my education. But my knowledge of the financial market started only at Harvard during law school. Before then, as you had mentioned was the case with most people, I had minimal education on finances. Then when I summered at Wachtell after my second year in law school, I felt as if I was drinking from a firehose. Even my last stint as a principle at a hedge fund with some of my friends was more in the role of a compliance and COO role than investment.

One thing I will say about the first two rounds of stimulus. I believe a big chunk of that initially went into debt reduction and savings. So, I didn't think that stimulus would create immediate inflationary pressure. Of course, spending all of those savings, together with the pent up demand and lack of labor from the pandemic and disruption in manufacture and transportation are now leading to empty shelves and high prices for basics. But I am always in favor of people, especially the poor who are most exposed to exploitation, reducing debt.

I generally think that experimental monetary policies like QE and normal monetary policies like low interest rate have the bigger impact on asset bubbles and speculation, especially from institutional investors as opposed to retail, because it artificially changes the risk / reward between bonds and equities, with loose monetary policies always favoring equities. But happy to learn more about my rudimentary theories.
calbear93
How long do you want to ignore this user?
dajo9 said:

Here is how I began my discussion of QE on page 8 of this thread:


Quote:

I think we should look at zero interest rate policy (ZIRP) and QE separately.


QE and controlling the Fed Funds rate are, in fact, two separate actions. The distinction is important because they have different outcomes. Reich is talking about the Fed Funds rate. You put words into Reich's mouth about QE. You did the same thing to me upthread about income taxes. That is true, no matter how many paragraphs you write attacking me and rewriting what I wrote.
Not sure why you think QE and controlling the Fed Funds rate have different outcomes. QE is usually reserved for when zero interest rate is not having enough stimulus on economy, but is intended for the same outcome. When you reduce interest rate to zero, you will artificially discourage bonds and encourage investments in equity, the same result you will see when you flood the market with liquidity, with equity winning out and people like Musk and Bezos gaining wealth from their equity ownership.
DiabloWags
How long do you want to ignore this user?
Well said Calbear 93

dajo9
How long do you want to ignore this user?
calbear93 said:

dajo9 said:

Here is how I began my discussion of QE on page 8 of this thread:


Quote:

I think we should look at zero interest rate policy (ZIRP) and QE separately.


QE and controlling the Fed Funds rate are, in fact, two separate actions. The distinction is important because they have different outcomes. Reich is talking about the Fed Funds rate. You put words into Reich's mouth about QE. You did the same thing to me upthread about income taxes. That is true, no matter how many paragraphs you write attacking me and rewriting what I wrote.


Quote:

Not sure why you think QE and controlling the Fed Funds rate have different outcomes. QE is usually reserved for when zero interest rate is not having enough stimulus on economy, but is intended for the same outcome.
It may be "intended" for the same outcome but QE directly inflates assets primarily held by the wealthy, while Fed Funds interest rate adjustments changes the cost of financed consumption and / or investment. There is no way that such different mechanisms are going to have the same outcome.


Quote:

When you reduce interest rate to zero, you will artificially discourage bonds and encourage investments in equity, the same result you will see when you flood the market with liquidity, with equity winning out and people like Musk and Bezos gaining wealth from their equity ownership.
Changes to the Fed Funds interest rate have impacts beyond just what happens with assets. It has a much broader impact on the economy and more direct impacts on the poor and middle class. I also take issue with your use of the word "artificial". Let me rephrase what you said in a way that I think is more correct:

Quote:

When you reduce interest rates to below the equilibrium interest rate*, you will artificially discourage bonds and encourage investments in equity,
The number zero is just a number. The equilibrium interest rate is usually above zero but from the time of the Great Recession until sometime in 2021 it was negative. Therefore a zero interest rate was still too high during that time, which is why it was not providing enough stimulus to the economy. The appropriate response in that situation is not QE, in my opinion, it is fiscal spending - which we finally did in 2020 / 2021 and we finally brought the equilibrium interest rate above zero.

* The equilibrium interest rate is a theoretical interest rate at which the demand for money equals the supply of money.
calbear93
How long do you want to ignore this user?
dajo9 said:

calbear93 said:

dajo9 said:

Here is how I began my discussion of QE on page 8 of this thread:


Quote:

I think we should look at zero interest rate policy (ZIRP) and QE separately.


QE and controlling the Fed Funds rate are, in fact, two separate actions. The distinction is important because they have different outcomes. Reich is talking about the Fed Funds rate. You put words into Reich's mouth about QE. You did the same thing to me upthread about income taxes. That is true, no matter how many paragraphs you write attacking me and rewriting what I wrote.


Quote:

Not sure why you think QE and controlling the Fed Funds rate have different outcomes. QE is usually reserved for when zero interest rate is not having enough stimulus on economy, but is intended for the same outcome.
It may be "intended" for the same outcome but QE directly inflates assets primarily held by the wealthy, while Fed Funds interest rate adjustments changes the cost of financed consumption and / or investment. There is no way that such different mechanisms are going to have the same outcome.


Quote:

When you reduce interest rate to zero, you will artificially discourage bonds and encourage investments in equity, the same result you will see when you flood the market with liquidity, with equity winning out and people like Musk and Bezos gaining wealth from their equity ownership.
Changes to the Fed Funds interest rate have impacts beyond just what happens with assets. It has a much broader impact on the economy and more direct impacts on the poor and middle class. I also take issue with your use of the word "artificial". Let me rephrase what you said in a way that I think is more correct:

Quote:

When you reduce interest rates to below the equilibrium interest rate*, you will artificially discourage bonds and encourage investments in equity,
The number zero is just a number. The equilibrium interest rate is usually above zero but from the time of the Great Recession until sometime in 2021 it was negative. Therefore a zero interest rate was still too high during that time, which is why it was not providing enough stimulus to the economy. The appropriate response in that situation is not QE, in my opinion, it is fiscal spending - which we finally did in 2020 / 2021 and we finally brought the equilibrium interest rate above zero.

* The equilibrium interest rate is a theoretical interest rate at which the demand for money equals the supply of money.

OK, agree with what you wrote.
dajo9
How long do you want to ignore this user?
calbear93 said:

dajo9 said:

calbear93 said:

dajo9 said:

Here is how I began my discussion of QE on page 8 of this thread:


Quote:

I think we should look at zero interest rate policy (ZIRP) and QE separately.


QE and controlling the Fed Funds rate are, in fact, two separate actions. The distinction is important because they have different outcomes. Reich is talking about the Fed Funds rate. You put words into Reich's mouth about QE. You did the same thing to me upthread about income taxes. That is true, no matter how many paragraphs you write attacking me and rewriting what I wrote.


Quote:

Not sure why you think QE and controlling the Fed Funds rate have different outcomes. QE is usually reserved for when zero interest rate is not having enough stimulus on economy, but is intended for the same outcome.
It may be "intended" for the same outcome but QE directly inflates assets primarily held by the wealthy, while Fed Funds interest rate adjustments changes the cost of financed consumption and / or investment. There is no way that such different mechanisms are going to have the same outcome.


Quote:

When you reduce interest rate to zero, you will artificially discourage bonds and encourage investments in equity, the same result you will see when you flood the market with liquidity, with equity winning out and people like Musk and Bezos gaining wealth from their equity ownership.
Changes to the Fed Funds interest rate have impacts beyond just what happens with assets. It has a much broader impact on the economy and more direct impacts on the poor and middle class. I also take issue with your use of the word "artificial". Let me rephrase what you said in a way that I think is more correct:

Quote:

When you reduce interest rates to below the equilibrium interest rate*, you will artificially discourage bonds and encourage investments in equity,
The number zero is just a number. The equilibrium interest rate is usually above zero but from the time of the Great Recession until sometime in 2021 it was negative. Therefore a zero interest rate was still too high during that time, which is why it was not providing enough stimulus to the economy. The appropriate response in that situation is not QE, in my opinion, it is fiscal spending - which we finally did in 2020 / 2021 and we finally brought the equilibrium interest rate above zero.

* The equilibrium interest rate is a theoretical interest rate at which the demand for money equals the supply of money.

OK, agree with what you wrote.
The opportunities for 2022 must be limitless
wifeisafurd
How long do you want to ignore this user?
dajo9 said:

Here is how I began my discussion of QE on page 8 of this thread:


Quote:

I think we should look at zero interest rate policy (ZIRP) and QE separately.


QE and controlling the Fed Funds rate are, in fact, two separate actions. The distinction is important because they have different outcomes. Reich is talking about the Fed Funds rate. You put words into Reich's mouth about QE. You did the same thing to me upthread about income taxes. That is true, no matter how many paragraphs you write attacking me and rewriting what I wrote.

1, Your post that I quoted calls for increasing interest rates, the opposite of what Reich calls for.
2. I literally quoted Reich's exact words verbatim right out of the story.
3. The FED has not cut the Fed Funds Rate since Mach 2020. instead it embarked on QE buying bonds to address C1-19What did the Fed do in response to the COVID-19 crisis?https://www.brookings.edu research fed-response-to...As noted Quantitative Easing is a strategy that seeks to ease, or lower, borrowing rates to help stimulate growth in an economy. In this case the FED went into to the market to buy bonds

4.. Reich didn't once mention or reference the Fed Funds rate nor did you in the post I quoted.
5. Most importantly, Reich's exact words are: " It should cause widespread concern about the Fed's plans to raise interest rates to control inflation" which given that the FED did not indicate is plans to change to Fed Funds Rate, but rather taper QE, which makes your reference to Federal Funds rates idiotic. With inflation still hot, the Fed takes a step towards rate hikeshttps://www.npr.org 2021/12/15 inflation-hot-federal-...Given that the FED has only (recently) committed to end QE and set no policy on Federal Funds rate changes, unless Reich is basing his comments on imaginary FED minutes, means you are back to your old modus operandi of basically making crap-up. Reich could have only been talking about ending QE, which is what I said - and you said I made up, now twice. So far, that is the only policy change.

You once again try to deflect from your past comments. Also you are the one putting words in Reisch's by saying he is talking about some FED policy change that does not exist.


Ending QE earlier has already started changing some interest rates upward. As noted in the NPR article, ending QE eventually gives the Fed more flexibility to raise interest rates sooner, if necessary, to keep prices from spiraling out of control. The FED said previously it wanted to stop its bond purchases before considering raising interest rates. FED Members have discussed generally the possibility of interest rates down the road if necessary, but never discussed the mechanism to do so, such as the more commonly used open market transactions or changing the Federal Funds rate. But let's see how you deflect from the Fed's actual actions so more.
calbear93
How long do you want to ignore this user?
DiabloWags said:

Well said Calbear 93

My learning "curve" started out with penny mining stocks (on the pink sheets) during the end of the inflationary boom when Paul Volker decided to jack rates up to kill off inflation in 1980. It was the tail-end of all kinds of speculation in the market (ie. Gold, Silver, the Hunt Brothers, Oil & Gas Drilling, etc), and some of these penny mining stocks were still "popping". I would buy something called XYZ Oil & Gas at 0.47 cents and try and sell it at 0.85 cents on a "spike" that most likely came from some rumor in a Denver bar. I believe that the FED actually got the Fed Funds rate as high as 20% in June of 1981. Inflation wound up peaking at 14.9% in March of 1980 and it fell below 3% a few years later by 1983. - - - I actually heard of people that had Auto Loans at 21% back then!.

Once a week, the William O'Neill chart books were delivered from Los Angeles to the brokerage office that I hung out at and I would run to the copying machine to make copies of my favorite stocks and their charts. As an undergrad, I carried these charts around as though they were my school books. I was trying to soak up as much technical analysis as I could. I was camping out in my Dad's broker's office during every summer vacation and school holiday while I was an undergrad at CAL trying to learn as much as I could. My broker didnt mind, cause he was just as enthusiastic about "trading" as I was (as opposed to pure money management and running the typical conservative "balanced" portfolio of 60/40 bonds to stocks) - - - AND he was making some commissions off of me. - - - This was back in the days when everyone was tracking the M1 and M2 money supply measures to figure out if Fed Chairman Volker was done with his "tightening" phase. We would all sit there in front of the little floor mounted News Tape machine and wait till 1:10PM on every Thursday for the Money Supply numbers to be announced. Of course, there was still 5 minutes of stock-index futures trading left (they traded 15 minutes after the NY close) and the Value Line, S&P 500, and NYA futures would invariably go BONKERS in those last 5 minutes reacting to the Money Supply numbers. This was my first lesson of just how powerful the FED was.

When I graduated in 1982, we were in a terrible recession and the only firms that were hiring back then were the Big 8 accounting firms. I hated accounting and didnt concentrate on it at Haas. My roommate had emphasized Accounting and places like Touche-Ross were starting people out at $19,000 a year. My roomie was tall and had played on a Championship team over at Campolindo High in Moraga, so they offered him close to $21,000 because they also wanted him on their Basketball Team. Through a friend of my broker, I was able to get a job on the Pacific Coast Stock Exchange (Los Angeles) as a clerk for a market-maker, making $1,000 a month. I was literally sleeping on the couch of a friend of mine's Mom's place in Westwood. She was in management in IBM and working 60+ hour weeks. But it dawned pretty quickly on me that I wasnt going to be able to find a place of my own in LA that fit my budget, so within just a few months I packed it in and high-tailed it back up I-5 and to my parents place in NorCal.

One day, I read an interview in Barrons about a trader in NYC named Victor Sperandeo, aka Trader Vic.

I called him up out of the blue and introduced myself. He loved mentoring people and told me to stay in touch. He was actually in the mode of hiring a bunch of young guys and placing them in various stock-option pits on the AMEX and in the stock-index futures pit of the NYFE in NYC. It wasnt before long, that I had more stock-index futures trading under my belt. I may have done just a tad better than break-even over the course of 6 months, but he liked what he saw and invited me to move to NYC and start working for him as a trader in a 50/50 deal. - - - I wound up spending the next 14 years in NYC.

Fast forward and after a decade or two of "trading" I eventually got to the point of getting away from short-term scalping and swing trading. Some of it had been successful. And some of it had not been successful. Mistakes were made along the way and I definitely underwent a learning "curve". But as I got older, I began getting more involved in a "fundamental" approach and away from the technical analysis that I had grown up on. I realized that the only real way to genuinely generate wealth was to take a page out of the book of Stanley Druckenmiller and put a lot of eggs in one basket, and watch that basket carefully. It was the complete opposite of investing in a well-diversified portfolio. Of course the risk was exponentially higher doing so, but if you did the homework there was also the opportunity for great reward.




Good stuff, Diablo.

The interest rate during Carter / Volker was incredible. When you can get 10% return on savings, why invest in equities? Houses may have been cheap back then, but paying 18% on mortgage rates made it not as appealing as the prices may indicate.

Even though I represented clients in some of the larger M&A transactions and securities offerings in the late 90s, I didn't really get into equity investments until my first big fundamental bet in early 2000s. I didn't really invest too much during the internet bubble, had paid off my student loans with bonuses, and had way too much cash from year-end bonuses and salary, especially when I was living like I was still a student while working at one of the best paying NY law firms. I guess that is one lesson I learned from my parents - always live below my means and avoid debt as much as possible. I had met Larry Culp at one of the Harvard events. Following that meeting that left me thoroughly impressed, I looked more into Danaher, the two brother founders, the Danaher Business System borrowed from the Toyota System, and their aggressive acquisition theories, generating significant free cash flow to acquire high quality assets with bad management and turn them into cash generating machines that funds future acquisitions. I applied all of the new learnings on reading financial statements from working on securities offerings to do my first large fundamental analysis and put what was then almost all my savings into Danaher. My friends in Wall Street know Danaher, but most people have no idea who they are or who Larry Culp or the Rales brothers are. I have never sold, and will never sell, a single share of Danaher. Most professionals would be horrified by my take, but I feel like I am playing with house money. Even though the decrease in elective surgery during the pandemic will challenge medical device companies (it's funny that I went in investing in an industrial company and now I am big in medical device/life science company as a result), one thing I am certain of is that Danaher will always compete well.

I also rely on people smarter than me. During the late 2000s, one of my friends from my Wall Street days who is a true visionary on disruptive technology (he is the one who continues to teach me what to look for when investing in tech companies - I trust people who made ridiculous wealth from their smarts and insight and not people who post Google articles) told me about why he was betting big on Apple. This was when the first iPhone came out. I always loved Apple products, but I viewed them more as makers of artsy and reliable computers. When he explained why the iPhone is not really a phone but a handheld computer and it will change how we live, he convinced me to bet really big on Apple. Have not sold a single share since then. All house money at this point.

During my roles as an executive and with outsized equity grants, I have relied on my money manager to help me plan for my future. He planned when to adopt 10b5-1 plans to liquidate my equity grants and help me diversify. I also relied on others to suggest real estate investments, especially in investments with my brother who is much smarter than I am. So, I don't want to pretend that I am anything but an amateur investor who just knew enough to spend much less than what I make, save a lot and invest wisely (did not buy a new car even when I was an executive officer with outsize equity grants or in hedge fund because hated the thought of putting money in an asset that depreciates so quickly - bought my first luxury car when we bough a Tesla X for myself and for my wife when I retired).

Now, I am retired without having to worry or think about money, have enough for my kids, and am able to take care of my parents. Came from a poor background but feel fortunate that I can be in a country that allows someone like me without any privileges to succeed. Believe in hard work, helping the less fortunate directly instead of expecting others to help, and realize all of this does not matter in the end when we meet our Creator and we have no answer when He asks what we did to help others with His blessings.

Love this country, love the Constitution, hate Trump and my former party, but also hate socialism and entitlement. Not sure where I belong anymore, but I just know that I want to leave a better world for others than what I found.
wifeisafurd
How long do you want to ignore this user?
calbear93 said:

dajo9 said:

Here is how I began my discussion of QE on page 8 of this thread:


Quote:

I think we should look at zero interest rate policy (ZIRP) and QE separately.


QE and controlling the Fed Funds rate are, in fact, two separate actions. The distinction is important because they have different outcomes. Reich is talking about the Fed Funds rate. You put words into Reich's mouth about QE. You did the same thing to me upthread about income taxes. That is true, no matter how many paragraphs you write attacking me and rewriting what I wrote.
Not sure why you think QE and controlling the Fed Funds rate have different outcomes.
They can have the same and different outcomes. Both reduce the effective interest rate, and the interest does not have to be zero. The FED has been using QE during C-19, even when rates were positive. The history was QE originally was implemented as a policy, when the interest rate approached zero. Dajo is right that it went below zero, thus banks arguably could arbitrage just borrowing and going to their best customers and giving them "points' to borrow at nominal rates. Know this first hand. Dajo is right when he says the different methods to increase liquidity and reduce the effective rates for stimulus have different impacts besides their impacts on interest rates.

And a happy, healthy and prosperous 2022 to all of you.
wifeisafurd
How long do you want to ignore this user?
calbear93 said:





Love this country, love the Constitution, hate Trump and my former party, but also hate socialism and entitlement. Not sure where I belong anymore, but I just know that I want to leave a better world for others than what I found.
It is commendable you were able to retire at such a young age. I went a different direction which included a stint as CFO of a NYSE company and law, and then into real estate. Real estate is something from which you never retire, and it is amazing how much it it impacted by economic and other governmental polices. But I'm still working. My wife is a Republican, we both dislike Trump, and my wife hates it when I vote for a Democrat, which happens, and screams at me every time that I just increased our taxes! While I love the country and the economic freedom it still provides, I'm willing to admit our county isn't always fair. Both my wife and I have family members who are minorities. My wife's family now has a more latin flavor and believe it or not, LDS/Poly, while mine is now in part Asian and Black. We both find abhorrent what seems to be a growing tolerance of prejudice is some circles, and perhaps overstating things, blame Trump.

I want the next generations of my family to not be shackled by a Sanders like socialist government. Much of this board when it talks about inequality, sees only two ways of governing a country. One is the Sanders Socialist way in which what matters is not the people but the government in which decisions affecting people's lives are taken from them, instead of being taken by them. A government, borrowing here from a former politician, in which property, profit and savings are taken from the people instead of being held among them, and even in the most absurd ways of taxing are contemplated such as taxing phantom income. A place in which directives from EU-like technocrats replace incentives and make decisions as to which elites will be allowed to thrive and who will not. It is sold to people who look at individual success and achievement with disdain. The other is a free economic system, which not only is supposed to guarantee the freedom of each individual citizen, it has historically been the way to increase the prosperity of this nation as a whole, even while providing some form of safety net, whether that be private of government funded. It is not perfect, but it is better than the socialist alternative.


calbear93
How long do you want to ignore this user?
wifeisafurd said:

calbear93 said:





Love this country, love the Constitution, hate Trump and my former party, but also hate socialism and entitlement. Not sure where I belong anymore, but I just know that I want to leave a better world for others than what I found.
It is commendable you were able to retire at such a young age. I went a different direction which included a stint as CFO of a NYSE company and law, and then into real estate. Real estate is something from which you never retire, and it is amazing how much it it impacted by economic and other governmental polices. But I'm still working. My wife is a Republican, we both dislike Trump, and my wife hates it when I vote for a Democrat, which happens, and screams at me every time that I just increased our taxes! While I love the country and the economic freedom it still provides, I'm willing to admit our county isn't always fair. Both my wife and I have family members who are minorities. My wife's family now has a more latin flavor and believe it or not, LDS/Poly, while mine is now in part Asian and Black. We both find abhorrent what seems to be a growing tolerance of prejudice is some circles, and perhaps overstating things, blame Trump.

I want the next generations of my family to not be shackled by a Sanders like socialist government. Much of this board when it talks about inequality, sees only two ways of governing a country. One is the Sanders Socialist way in which what matters is not the people but the government in which decisions affecting people's lives are taken from them, instead of being taken by them. A government, borrowing here from a former politician, in which property, profit and savings are taken from the people instead of being held among them, even in the most absurd ways of taxing are contemplated such as taxing phantom income. A place in which directives from EU-like technocrats replace incentives and make decisions as to which elites will be allowed to thrive and who will not. It is sold to people who look at individual success and achievement with disdain. The other is a free economic system which not only guarantees the freedom of each individual citizen, it has historically been the way to increase the prosperity of this nation as a whole, even while providing some form of safety net, whether that be private of government funded. It is not perfect, but it is better than the socialist alternative.



No matter whether you or I call ourselves Republicans or Democrats, we seem to have similar views on government and economics.

When I say I am against bigger government, it isn't that I do not believe in the obligation of all of us individually to care for the most needy. It is that I do not see any evidence of the government leaders under this toxic, pay-for-service (whether corporations, unions, etc.) having better understanding of efficient and effective use. For example, when I consider charitable organizations, I look at how much of my money goes to those who are the intended beneficiary as opposed to administrative expenses. I also spent a long time interviewing and screening out the firm that manages my wealth. I considered their common sense, their integrity, their actual results, etc. Can you imagine entrusting your money to someone like many of those leaders who are promoting bigger government as your financial advisor? Can you imagine any of them running a large market cap company? So, I would rather trust myself to allocate my wealth that I earned under the same circumstances that were available to everyone else and help those I believe need it the most. It won't be those who complain about student loans while drinking at Starbucks everyday and studying French literature. It will be those who are homeless, those who are running away from an oppressive government, it will be kids in the inner city who need better alternatives and education. I feel as if I am the steward of my wealth to spend it as I believe will benefit those who need it without worrying about pork, corruption, inefficiency, etc. I probably would say that my standard of living is at about 10% of what I can afford because I don't view my money as my own. Don't get me wrong, I live a very privileged life that I earned after coming from a very low income upbringing. There is a portion that I will pass on to my kids. However, I view my wealth as not belonging to the government or to me. I will continue to spend what I view as what God entrusted to me. But it does not belong to those who envy what I earned, it does not belong to the government who wants more power and wants to be the lord over us all, and it does not belong to me to spend solely for my own benefit. If I fail to spend as God intended, I am accountable only to Him. To anyone who presumes to spend what they did not earn or presumes how I should support what they want without them ever sacrificing themselves, I say go earn it yourself and donate what you earned as you see fit.

So, I believe we are very alike in our thinking.
wifeisafurd
How long do you want to ignore this user?
Latest on the FED:

CCAiC0tqbW1DMmtuSUNNmAEB

Comments on his prepared text. Let's see what Powell actually says tomorrow in testimony.
[url=https://news.google.com/articles/CCAiC0tqbW1DMmtuSUNNmAEB?hl=en-US&gl=US&ceid=US%3Aen][/url]
Cal_79
How long do you want to ignore this user?
calbear93 said:



Not sure where I belong anymore, but I just know that I want to leave a better world for others than what I found.
The enemy of lifeā€¦ is indifference. Let's stand together and share our gifts so as many of us as possible get it right!
bearister
How long do you want to ignore this user?
Cancel my subscription to the Resurrection
Send my credentials to the House of Detention
I got some friends inside
DiabloWags
How long do you want to ignore this user?
wifeisafurd said:

Latest on the FED:

CCAiC0tqbW1DMmtuSUNNmAEB

Comments on his prepared text. Let's see what Powell actually says tomorrow.



Jan Hatzius, said in a note Sunday that he now figures the Fed to enact four quarter-percentage point rate hikes in 2022, representing an even more aggressive path than the central bank's indications of just a month ago. Hence, this morning's massive sell-off with the S&P off 90+.

Believe it or not, M2 has increased an astounding 41% over the past 2 years. Thats more than TWICE the pace of monetary expansion following the financial crisis of 2008 - 2009 and substantially greater than the money printing of the inflationary 70's.

Powell will no doubt be Hawkish.
Big C
How long do you want to ignore this user?
wifeisafurd said:

calbear93 said:





Love this country, love the Constitution, hate Trump and my former party, but also hate socialism and entitlement. Not sure where I belong anymore, but I just know that I want to leave a better world for others than what I found.
It is commendable you were able to retire at such a young age. I went a different direction which included a stint as CFO of a NYSE company and law, and then into real estate. Real estate is something from which you never retire, and it is amazing how much it it impacted by economic and other governmental polices. But I'm still working. My wife is a Republican, we both dislike Trump, and my wife hates it when I vote for a Democrat, which happens, and screams at me every time that I just increased our taxes! While I love the country and the economic freedom it still provides, I'm willing to admit our county isn't always fair. Both my wife and I have family members who are minorities. My wife's family now has a more latin flavor and believe it or not, LDS/Poly, while mine is now in part Asian and Black. We both find abhorrent what seems to be a growing tolerance of prejudice is some circles, and perhaps overstating things, blame Trump.

I want the next generations of my family to not be shackled by a Sanders like socialist government. Much of this board when it talks about inequality, sees only two ways of governing a country. One is the Sanders Socialist way in which what matters is not the people but the government in which decisions affecting people's lives are taken from them, instead of being taken by them. A government, borrowing here from a former politician, in which property, profit and savings are taken from the people instead of being held among them, and even in the most absurd ways of taxing are contemplated such as taxing phantom income. A place in which directives from EU-like technocrats replace incentives and make decisions as to which elites will be allowed to thrive and who will not. It is sold to people who look at individual success and achievement with disdain. The other is a free economic system, which not only is supposed to guarantee the freedom of each individual citizen, it has historically been the way to increase the prosperity of this nation as a whole, even while providing some form of safety net, whether that be private of government funded. It is not perfect, but it is better than the socialist alternative.




wifeisafurd, with deference to your knowledge and expertise in this area, I'd like to take issue with two ideas in your second paragraph above...

Lesser issue: When you describe the "Sanders Socialist way" you make it sound like it resembles Marxist Socialism, when, in fact -- correct me if I'm wrong -- it much more closely resembles Western European democratic socialism, in which basically, the government taxes more and provides more services. Yes, some other differences as well, but much closer to our system than Marxist Socialism.

Greater issue: The way you present the choices, you make it seem like there are only two. Either a "Sanders like socialist government", or a "free economic system". To the extent that you mean that, it is either a simplification or a mischaracterization, It is not an either/or, but rather a continuum, with any number of landing spots in between. Take taxes, for example: By varying the tax sources and/or the tax rates, virtually anything is possible. Same with the role of government and with government expenditures.

Which is where someone like me comes in: I would choose a path somewhere between your two scenarios. I believe that a regulated free market is the best way of allocating resources and I also believe in personal responsibility, but I also think that we should do more to provide opportunity to all of our citizens. Yes, this might involve many people paying more taxes, but not a lot more, hopefully. (I would also love to cut defense spending and government waste, but easier said than done.) I agree with you and others that a wealth tax is not feasible, so we would have to look for other ways.

Sorry if you would have to pay more taxes (I would, too) and especially if your wife would scream at you. My wife has screamed at me on occasion (whose hasn't). No fun! I would not want to raise anyone's taxes a ridiculous amount, but I feel like many people (like me) can pay a little more and some can even pay a little more than that,
dajo9
How long do you want to ignore this user?
Big C said:

wifeisafurd said:

calbear93 said:





Love this country, love the Constitution, hate Trump and my former party, but also hate socialism and entitlement. Not sure where I belong anymore, but I just know that I want to leave a better world for others than what I found.
It is commendable you were able to retire at such a young age. I went a different direction which included a stint as CFO of a NYSE company and law, and then into real estate. Real estate is something from which you never retire, and it is amazing how much it it impacted by economic and other governmental polices. But I'm still working. My wife is a Republican, we both dislike Trump, and my wife hates it when I vote for a Democrat, which happens, and screams at me every time that I just increased our taxes! While I love the country and the economic freedom it still provides, I'm willing to admit our county isn't always fair. Both my wife and I have family members who are minorities. My wife's family now has a more latin flavor and believe it or not, LDS/Poly, while mine is now in part Asian and Black. We both find abhorrent what seems to be a growing tolerance of prejudice is some circles, and perhaps overstating things, blame Trump.

I want the next generations of my family to not be shackled by a Sanders like socialist government. Much of this board when it talks about inequality, sees only two ways of governing a country. One is the Sanders Socialist way in which what matters is not the people but the government in which decisions affecting people's lives are taken from them, instead of being taken by them. A government, borrowing here from a former politician, in which property, profit and savings are taken from the people instead of being held among them, and even in the most absurd ways of taxing are contemplated such as taxing phantom income. A place in which directives from EU-like technocrats replace incentives and make decisions as to which elites will be allowed to thrive and who will not. It is sold to people who look at individual success and achievement with disdain. The other is a free economic system, which not only is supposed to guarantee the freedom of each individual citizen, it has historically been the way to increase the prosperity of this nation as a whole, even while providing some form of safety net, whether that be private of government funded. It is not perfect, but it is better than the socialist alternative.




wifeisafurd, with deference to your knowledge and expertise in this area, I'd like to take issue with two ideas in your second paragraph above...

Lesser issue: When you describe the "Sanders Socialist way" you make it sound like it resembles Marxist Socialism, when, in fact -- correct me if I'm wrong -- it much more closely resembles Western European democratic socialism, in which basically, the government taxes more and provides more services. Yes, some other differences as well, but much closer to our system than Marxist Socialism.

Greater issue: The way you present the choices, you make it seem like there are only two. Either a "Sanders like socialist government", or a "free economic system". To the extent that I am reading your point correctly, that is either a simplification or a mischaracterization, It is not an either/or, but rather a continuum, with any number of landing spots in between. Take taxes, for example: By varying the tax sources and/or the tax rates, virtually anything is possible. Same with the role of government and government expenditures.

Which is where someone like me comes in. I would choose a path somewhere between your two scenarios. I believe that a regulated free market is the best way of allocating resources and I also believe in personal responsibility, but I also believe we should do more to provide opportunity to all our citizens. Yes, this might involve many people paying more taxes, but not a lot more, hopefully. (I would also love to cut defense spending and government waste, but easier said than done.) I agree with you and others that a wealth tax is not feasible, so we would have to look for other ways.

Sorry if you would have to pay more taxes (I would, too) and especially if your wife would scream at you. I know from personal experience that that is no fun! I would not want to raise anyone's taxes a ridiculous amount, but I feel like many people (like me) can pay a little more and some can even pay a little more than that,


Yes, of course, what many of us want is something like what Harry Truman ran on in 1948. More progressive taxes than what we have now, national healthcare, virtually free college opportunities, higher minimum wage.

Big Marxist that Harry Truman was.
DiabloWags
How long do you want to ignore this user?
For those that dont think we spend enough.

Gov. Newsom unveils a record $213 Billion Dollar Budget
A 9.1% increase over last year.

Flush With Cash, California Has Problems That Are No Quick Fix - Bloomberg

A ten-fold increase to clean up homeless encampments - $500 million.

Earmarked an additional $750 million in spending on drought mitigation, never mind that voters passed a State Bond proposition back in 2014 for $7.5 Billion to address the water crisis and yet no storage projects have begun.

Another $255 million in grants to local law enforcement and a new "Smash and Grab Enforcement Unit".

He just loves to go for the "all-sizzle" approach, doesnt he?

Throw a bunch of money at what he perceives to be issues with the voters . . . as opposed to actually doing things that can change the dynamic.

A $45 Billion Dollar Budget Surplus, with $20.6 Billion that can be used for discretionary purposes.

And yet there are people on this thread that still believe that TAXES NEED TO GO HIGHER.


82gradDLSdad
How long do you want to ignore this user?
Forgive this tangential post...I watch CNBC every morning. Today I get to watch Fed chairman Powell field questions from senators. It reinforces why smart people don't want to hand over to these people any more tax money than they have to. Blowhards, buffoons, senile, etc. pick your own words to describe most of these folks. It's hard to watch. Luckily, a sane, rational, smart, bipartisan person gets to do most of the speaking: Powell. You may not like all of his actions but I wish more folks like him were in charge of the government rather than the grandstanders that are asking the questions. It's embarrassing to our country.
dajo9
How long do you want to ignore this user?
82gradDLSdad said:

Forgive this tangential post...I watch CNBC every morning. Today I get to watch Fed chairman Powell field questions from senators. It reinforces why smart people don't want to hand over to these people any more tax money than they have to. Blowhards, buffoons, senile, etc. pick your own words to describe most of these folks. It's hard to watch. Luckily, a sane, rational, smart, bipartisan person gets to do most of the speaking: Powell. You may not like all of his actions but I wish more folks like him were in charge of the government rather than the grandstanders that are asking the questions. It's embarrassing to our country.
I'm not watching the hearing but Powell is not somebody I want in charge of anything. He uses QE to boost assets which mainly benefits the wealthy and has contributed to pricing out the middle class from housing. He began this round of QE before Covid-19 existed - back in Fall 2019 to protect asset prices. It's no wonder that a bunch of retail investors have recklessly invested in the market when the Federal Reserve provides a completely rational expectation that they will not allow stock valuations to drop.

Democratically elected representatives may not always be perfect but in general, they do a better job for us than technocrats like Powell.
82gradDLSdad
How long do you want to ignore this user?
dajo9 said:

82gradDLSdad said:

Forgive this tangential post...I watch CNBC every morning. Today I get to watch Fed chairman Powell field questions from senators. It reinforces why smart people don't want to hand over to these people any more tax money than they have to. Blowhards, buffoons, senile, etc. pick your own words to describe most of these folks. It's hard to watch. Luckily, a sane, rational, smart, bipartisan person gets to do most of the speaking: Powell. You may not like all of his actions but I wish more folks like him were in charge of the government rather than the grandstanders that are asking the questions. It's embarrassing to our country.
I'm not watching the hearing but Powell is not somebody I want in charge of anything. He uses QE to boost assets which mainly benefits the wealthy and has contributed to pricing out the middle class from housing. He began this round of QE before Covid-19 existed - back in Fall 2019 to protect asset prices. It's no wonder that a bunch of retail investors have recklessly invested in the market when the Federal Reserve provides a completely rational expectation that they will not allow stock valuations to drop.

Democratically elected representatives may not always be perfect but in general, they do a better job for us than technocrats like Powell.


Sure they do.
wifeisafurd
How long do you want to ignore this user?
Big C said:






wifeisafurd, with deference to your knowledge and expertise in this area, I'd like to take issue with two ideas in your second paragraph above...

Lesser issue: When you describe the "Sanders Socialist way" you make it sound like it resembles Marxist Socialism, when, in fact -- correct me if I'm wrong -- it much more closely resembles Western European democratic socialism, in which basically, the government taxes more and provides more services. Yes, some other differences as well, but much closer to our system than Marxist Socialism.

Greater issue: The way you present the choices, you make it seem like there are only two. Either a "Sanders like socialist government", or a "free economic system". To the extent that I am reading your point correctly, that is either a simplification or a mischaracterization, It is not an either/or, but rather a continuum, with any number of landing spots in between. Take taxes, for example: By varying the tax sources and/or the tax rates, virtually anything is possible. Same with the role of government and government expenditures.

Which is where someone like me comes in. I would choose a path somewhere between your two scenarios. I believe that a regulated free market is the best way of allocating resources and I also believe in personal responsibility, but I also believe we should do more to provide opportunity to all our citizens. Yes, this might involve many people paying more taxes, but not a lot more, hopefully. (I would also love to cut defense spending and government waste, but easier said than done.) I agree with you and others that a wealth tax is not feasible, so we would have to look for other ways.

Sorry if you would have to pay more taxes (I would, too) and especially if your wife would scream at you. I know from personal experience that that is no fun! I would not want to raise anyone's taxes a ridiculous amount, but I feel like many people (like me) can pay a little more and some can even pay a little more than that,
DiabloWags
How long do you want to ignore this user?
dajo9 said:


I'm not watching the hearing but Powell is not somebody I want in charge of anything. He uses QE to boost assets which mainly benefits the wealthy and has contributed to pricing out the middle class from housing. He began this round of QE before Covid-19 existed - back in Fall 2019 to protect asset prices. It's no wonder that a bunch of retail investors have recklessly invested in the market when the Federal Reserve provides a completely rational expectation that they will not allow stock valuations to drop.

Democratically elected representatives may not always be perfect but in general, they do a better job for us than technocrats like Powell.

Just to clarify.

The "QE" (as you call it) back in October of 2019 was not conducted as a monetary stimulus operation to protect asset prices, as you have claimed above.

It was an effort to increase liquidity amongst banks, given that the interest rate on REPOS had spiked in September and had continued to stay elevated for months. A combination of events had sucked dollars out of the financial system. The FED bought TREASURY BILLS (not bonds). And by expanding its balance sheet, the FED increased the financial system's supply of bank reserves, which in doing so, helped take pressure off of the REPO rate.

QE is used by the FED to help set market expectations.
The purchase of T-Bills in the Fall of 2019 was a technical operation to fix part of the "plumbing" of the financial system.
There's a big difference.

DiabloWags
How long do you want to ignore this user?
82gradDLSdad said:

Forgive this tangential post...I watch CNBC every morning. Today I get to watch Fed chairman Powell field questions from senators. It reinforces why smart people don't want to hand over to these people any more tax money than they have to. Blowhards, buffoons, senile, etc. pick your own words to describe most of these folks. It's hard to watch. Luckily, a sane, rational, smart, bipartisan person gets to do most of the speaking: Powell. You may not like all of his actions but I wish more folks like him were in charge of the government rather than the grandstanders that are asking the questions. It's embarrassing to our country.
Agreed 100%

Can you imagine if the Clowns in Congress had gotten involved when it came to AIG and putting it through some kind of receivership process?

It would have taken forever!
TARP nearly did.

Meanwhile, the entire WORLD economy would have melted-down to ZERO.

Thankfully, Ben Bernanke used his independence and his brains to guarantee all counter-party risk.

Anyone thinking that our elected representatives in Congress had a clue about what was going on at the time (let alone what to do about it), is falling prey to pure fantasy.

Hell, just 10 years later AIG used the hearing room of the House Ways & Means Committee to host a "centennial congressional reception" to mark the NY based company's first century in business.

Ways and Means Committee Chairman Richard Neal (D-Mass.) presided over the event, which featured AIG CEO Brian Duperreault and other company leaders.

A decade after massive bailout, AIG celebrated on Capitol Hill - POLITICO

You just cant make this stuff up!




dajo9
How long do you want to ignore this user?
DiabloWags said:

dajo9 said:


I'm not watching the hearing but Powell is not somebody I want in charge of anything. He uses QE to boost assets which mainly benefits the wealthy and has contributed to pricing out the middle class from housing. He began this round of QE before Covid-19 existed - back in Fall 2019 to protect asset prices. It's no wonder that a bunch of retail investors have recklessly invested in the market when the Federal Reserve provides a completely rational expectation that they will not allow stock valuations to drop.

Democratically elected representatives may not always be perfect but in general, they do a better job for us than technocrats like Powell.

Just to clarify.

The "QE" (as you call it) back in October of 2019 was not conducted as a monetary stimulus operation to protect asset prices, as you have claimed above.

It was an effort to increase liquidity amongst banks, given that the interest rate on REPOS had spiked in September and had continued to stay elevated for months. A combination of events had sucked dollars out of the financial system. The FED bought TREASURY BILLS (not bonds). And by expanding its balance sheet, the FED increased the financial system's supply of bank reserves, which in doing so, helped take pressure off of the REPO rate.

QE is used by the FED to help set market expectations.
The purchase of T-Bills in the Fall of 2019 was a technical operation to fix part of the "plumbing" of the financial system.
There's a big difference.


I know this history.

Around that time the S&P 500 dropped about 5% and the 10 year yield dropped from about 2.0% to 1.5%. There was a flight to safety in progress indicating further falls in equity. The Fed expanded its balance sheet 10% even though before that action they had been tapering. The decline in stocks dropped.

I'm more interested in outcomes than I am in technical explanations. There is always a "reason" to take unusual actions with the Fed balance sheet.
 
×
subscribe Verify your student status
See Subscription Benefits
Trial only available to users who have never subscribed or participated in a previous trial.