While Mr. Powell is often called the chairman of Fed he actually is not. He's chairman of the board of governors of Fed. The 12 banks making up the Federal Reserve system are local banks privately owned by the commercial banks in their areas. The board has limited overseeing authority over them. Mr. Powell acts as chairman in the Open Markets Committee which decides the actual monetary policy. Normally the NY Fed is tasked to carry on the market operations to effect those decisions made. The committee having representatives from the 12 local Fed's decides the policy. In most cases the chairman has very high authority but if not then he/she can't define the policy.
Chinese Economics Thread
- Thread starter Norfolk
- Start date
The top policymakers have literally come out and said what I've been saying for years.
If you so dumb as to not recognize that "extreme low price competition" is what drives the PPI deflation in China today, you really ought to get your f'ing brain checked.
The Federal Reserve isn't actually privately owned, it just seems like it because banks are required to purchase "stock" in the federal reserve to operate. However this "stock" in the Federal Reserve isn't like the usual shares you can buy on the stock exchange, it's more like a permit to operate a bank.
Typically stocks can be traded, fluctuate in value, and carry certain ownership privileges such as voting at the annual meeting. Federal Reserve "stock" has none of these important characteristics, banks are not allowed to buy or sell Federal Reserve "stock" as they please, they must hold it as a condition to operate by law, the price is set by law and doesn't fluctuate on the open market, and owning this "stock" doesn't give you any voting privileges or anything like that. So really it's just a misnomer as by law banks must be a part of the Federal Reserve to operate and being a member requires buying this "stock". It should really be seen as more of an operating permit than anything else.
The governors of the Federal Reserve are appointed by the President and confirmed by the Senate. Notice there is no involvement of private shareholders or anything like that. The Federal Reserve is also required to transfer its profits to the Treasury Department. So really the Federal Reserve should just be thought of as a somewhat independent government agency not a private entity. That means yes it is probably going to be increasing politicized by the Trump administration going forward.
Alright, I'm going to give you a warning now to stop using insulting language to other members of this forum, since this is the second report I received today. Please be respectful.
I want to add to this conversation that overt fixation on deflation isn't really worthwhile. If the government wanted to solve the deflation problem, they could create more debt and use it to purchase some of the excess capacity until the price increases to the target level.
The more important metrics to look for would be credit growth/disposable income growth/consumption growth, which are all relatively healthy in China at the moment. Deflation is only bad if it impedes the growth of those other metrics (i.e. through a deflationary spiral)
see Chinese Credit impulse in May as an example:
The more important metrics to look for would be credit growth/disposable income growth/consumption growth, which are all relatively healthy in China at the moment. Deflation is only bad if it impedes the growth of those other metrics (i.e. through a deflationary spiral)
see Chinese Credit impulse in May as an example:
Last edited:
Deflation due to increase efficiency is good because it allows more money to be spent elsewhere, not the same with falling into a deflationary spiral from your biggest company collapsing because they bet on housing prices rising forever. You literally know this because you know Chinese economy is still growing, and you literally just but can't acknowledge that Chinese authorities know what they are doing right now and have things under control.
You talk about others being "too giddy about celebrating the collapse of the US economy", when you are literally betting on Chinese economy collapsing because of deflation for over a year now. and guess what: ITS NOT GOING TO HAPPEN, STOP being so god damn negative.
Why are my posts about the Chinese economy being deleted???
But literally a post up there discussing the US economy WRT Powell/The Federal Reserve is not?
But literally a post up there discussing the US economy WRT Powell/The Federal Reserve is not?
Last edited:
Well, let's see:
You got reported for insulting other members multiple times (at least on 3 separate occasions in the past couple of days).
I posted explicitly wrote in RED BOLDED characters for you to stop posting that. Anyone that has bothered reading the rules of this forum knows that you are explicitly forbidden from responding to any moderator posts in red bolded characters.
This is from our rules of behavior thread on this forum Sinodefence forum rules of behavior
The government already has plenty of debt on a more local level. I doubt they want to “empty their magazines” on the deflation issue when there’s much bigger issues they might need that ammo for.
The deflation issue isn’t imminent or big yet. In my eyes, the Chinese government is responding proportionally to the size of the problem. Over
That’s because you’re not thinking about the suppliers and business. Firms in China are squeezed from both directions. Labor supply is increasingly squeezed, workers are demanding higher wages which either raises labor costs to firms or requires great capital investment.
and from the other side, breakneck competition is forcing prices to be lower. Which in turn drives investment because scale becomes the only way to increase margin. This leads to higher debts… which is not a problem for a very healthy company like BYE. They thrive on this sort of thing. But it can absolutely raise costs for small business.
Now this is all fine, and in some ways it is a virtuous cycle. But at some point, prices will have to rise. There’s only so many cars people need to buy, so even if you keep scaling infinitely, you can’t sell an infinite inventory.
But all these scenarios are on a case by case basis for wach industry and company. Some industries are mature, some are not. Some markets are saturated, some are not. Which is probably why the government is slow or hesitant to make any kind of grand policy.