D
Deleted member 15949
Guest
Un hun, lol. Wow, a 2-3% CAGR in beef prices, completely horrific
American Economics Thread
- Thread starter Bernard
- Start date
I actually hope that you are right. But we'll see.
In4ser
Junior Member
Inflation levels are lower than they should be because the following factors: (1) Reserve Currency Status of the Dollar; (2) Reverse Repos; and (3) Debt Ceiling; and (4) COVID are all acting as deflationary pressures on the USD but are not solutions to the excess supply of USD which will cause inflation will rear its ugly head again in the future (i.e. we've just been kicking the can down the road)
1. You should already know which is that the USD is the World Reserve Currency which means that is the most commonly held currency by people around the world as a medium as exchange especially for savings. This allows the USD to have a lot more wiggle room to print money and because when there's volatility in the markets people will always move their money to a safer investment since cash is king and the USD is the reserve currency. This does not mean the US can print its currency indefinitely because the reserve currency status CAN be lost like the UK Pound was replaced by the USD due to unsustainable debt levels from Imperial overreach and two World Wars.
2. Since early this year, Fed has been worried about introducing more than 40% of all USD in existence so, its been trying to get money out of the markets by issuing reverse repos which are repurchase agreements where Banks will buy T-Bills and Bonds from Fed in exchange for Treasuries and Bonds as collateral which they will either resell to the Fed at a higher price in the future. This has been draining credit and liquidity from the markets at the money which helps stem inflation but will cause further issues down the line as once money is created it will not simply disappear but rather get devalued over time.
3. The Debt Ceiling has been reached on July 31, 2021. That means the US government cannot issue any more debt until Congress votes to either extend the limits or faces a shutdown. The Fed is able to keep the lights on until maybe October or November because it has slush funds it hasn't tapped into yet, but nonetheless, it is been slowing the issuing of US debt and shrinking what inflation levels could be.
4. COVID itself is deflationary. As numbers are picking up, people and businesses will become more risk-averse because they don't want to get infected. This means that they will be less likely to spend money which causes inflation because they will not be going out to restaurants, movies, and other venues and instead save money instead.
However, nobody denies there is inflation NOT even the Fed. The debate is whether the Fed's argument that it is 'transitory' (whatever that means) and the inflation that there is inflation due to repressed demand which is finally bubbling up to the surface and making up for the years of failing to reach the target of 2% year over year inflation. Regardless of your position on the Fed and even if you subscribe to MMT, inflation, and its little brother, shrinkflation is clearly visible to average American consumers who have been facing higher food, household goods, and materials prices.
1. You should already know which is that the USD is the World Reserve Currency which means that is the most commonly held currency by people around the world as a medium as exchange especially for savings. This allows the USD to have a lot more wiggle room to print money and because when there's volatility in the markets people will always move their money to a safer investment since cash is king and the USD is the reserve currency. This does not mean the US can print its currency indefinitely because the reserve currency status CAN be lost like the UK Pound was replaced by the USD due to unsustainable debt levels from Imperial overreach and two World Wars.
2. Since early this year, Fed has been worried about introducing more than 40% of all USD in existence so, its been trying to get money out of the markets by issuing reverse repos which are repurchase agreements where Banks will buy T-Bills and Bonds from Fed in exchange for Treasuries and Bonds as collateral which they will either resell to the Fed at a higher price in the future. This has been draining credit and liquidity from the markets at the money which helps stem inflation but will cause further issues down the line as once money is created it will not simply disappear but rather get devalued over time.
3. The Debt Ceiling has been reached on July 31, 2021. That means the US government cannot issue any more debt until Congress votes to either extend the limits or faces a shutdown. The Fed is able to keep the lights on until maybe October or November because it has slush funds it hasn't tapped into yet, but nonetheless, it is been slowing the issuing of US debt and shrinking what inflation levels could be.
4. COVID itself is deflationary. As numbers are picking up, people and businesses will become more risk-averse because they don't want to get infected. This means that they will be less likely to spend money which causes inflation because they will not be going out to restaurants, movies, and other venues and instead save money instead.
However, nobody denies there is inflation NOT even the Fed. The debate is whether the Fed's argument that it is 'transitory' (whatever that means) and the inflation that there is inflation due to repressed demand which is finally bubbling up to the surface and making up for the years of failing to reach the target of 2% year over year inflation. Regardless of your position on the Fed and even if you subscribe to MMT, inflation, and its little brother, shrinkflation is clearly visible to average American consumers who have been facing higher food, household goods, and materials prices.
Forecast for inflation of 2.58% through 2022 and beyond. That’s the highest inflation since the 1990s. The actual impact is more severe for everyday citizens. If you are a single mom raising two kids, you have Covid shutdown, and then inflation, etc..
D
Deleted member 15949
Guest
Yeah, so very mild.
You misspelled less.
You get the free CTC, free money and a nonexistent COVID shutdown and a booming jobs market.
What sort of study have you done on economics that you are much wiser and knowledgeable than all these Nobel prize winners in economics?
You display some arragant level only people with Dunning-Kruger can display. There are so many wrongs in your assessment of economics.
First of all, you display symptoms of short termism. 2nd, your lack of knowledge actually leads you to look at thing statically. Whereas economics are more dynamic.
Let's take the above quote for example. In your head, You think US has only started to print money in the past year. You don't even know that the U.S. has been increasing its money supply since the last crash. It is last year they have to ramp it up big time.
The reason I said money supply. This just not printing money. This also involved QE
Do you know how QE work? No don't Google it!
We involved creating money in The banking system by adding zeros in the balance sheet. No actual physical printing involved.
During the past year, US has been increasing its borrowings. See the difference.
I'm going to stop here, cause I'm not going to school you. Especially for free. I charge good money to teach my students.
I'm going to leave you in your Dunning-Kruger blessed state.
Everyone is arguing about the CPI inflation, but what about the price of goods and assets not included in the CPI basket?
Median Sales Price of Houses Sold for the United States
The previous high for the median sales price was Q4 2017 at $337,900. This was almost reached in Q3 2020 when the median price reached $337,500. Since then the median price has increased to $374,900 in Q2 2021. That's $37,000 over the previous highest median price. If you have a 20 year mortgage, then that's $1,850 more per year not including interest. If you compare Q2 2021 to Q2 2019, then the difference in median price is $52,400.
Price of houses is not included in the CPI, but rent price is. The problem with rent is that the US has a eviction moratorium in place since 2020. It was supposed to expire last week, but the CDC extended for another 60 days. Nobody is 100% sure how rent prices will change once the eviction moratoriums and rent assistence ends.
Another good not included is the price of new cars. However, the increase in car prices may be caused more by chip shortages, than inflation. The CPI does include used car sales prices though:
CPI for Urban Consumers: Used Cars and Trucks US Average (Index 1982-1984=100, Seasonally Adjusted)
The CPI for used cars hovered at ~137 in early 2020 and reached 197 in Jun 2021. It is more accurate to say that not all goods experienced major inflation during the 2020-2021 period. However, some assets and goods both included and not included in the CPI saw major price increases. Is everthing going to collapse? No. But pretending that CPI gives the whole picture is also not correct.
Median Sales Price of Houses Sold for the United States
| Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | |
| Sales Price (Dollars) | 313,100 | 318,200 | 320,500 | 337,900 | 331,800 | 315,600 | 330,900 | 322,800 | 313,000 | 322,500 | 318,400 | 327,100 |
| Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | |
| Sales Price (Dollars) | 329,000 | 322,600 | 337,500 | 358,700 | 369,800 | 374,900 |
The previous high for the median sales price was Q4 2017 at $337,900. This was almost reached in Q3 2020 when the median price reached $337,500. Since then the median price has increased to $374,900 in Q2 2021. That's $37,000 over the previous highest median price. If you have a 20 year mortgage, then that's $1,850 more per year not including interest. If you compare Q2 2021 to Q2 2019, then the difference in median price is $52,400.
Price of houses is not included in the CPI, but rent price is. The problem with rent is that the US has a eviction moratorium in place since 2020. It was supposed to expire last week, but the CDC extended for another 60 days. Nobody is 100% sure how rent prices will change once the eviction moratoriums and rent assistence ends.
Another good not included is the price of new cars. However, the increase in car prices may be caused more by chip shortages, than inflation. The CPI does include used car sales prices though:
CPI for Urban Consumers: Used Cars and Trucks US Average (Index 1982-1984=100, Seasonally Adjusted)
| Jan 2020 | Feb 2020 | Mar 2020 | Apr 2020 | May 2020 | Jun 2020 | Jul 2020 | Aug 2020 | Sep 2020 | Oct 2020 | Nov 2020 | Dec 2020 | |
| CPI | 137.958 | 137.588 | 138.242 | 137.532 | 137.592 | 135.795 | 139.541 | 147.556 | 155.337 | 156.658 | 154.495 | 153.107 |
| Jan 2021 | Feb 2021 | Mar 2021 | Apr 2021 | May 2021 | Jun 2021 | |
| CPI | 151.743 | 150.370 | 151.197 | 166.374 | 178.505 | 197.227 |
The CPI for used cars hovered at ~137 in early 2020 and reached 197 in Jun 2021. It is more accurate to say that not all goods experienced major inflation during the 2020-2021 period. However, some assets and goods both included and not included in the CPI saw major price increases. Is everthing going to collapse? No. But pretending that CPI gives the whole picture is also not correct.
As long as foreign governments and foreign citizens and institutions keep lending the US money, then this is sustainable. And since China is not a clear alternative the World won't change it's mind on investing or trading or lending to the US... that is until the realities of American demographics are finally realized through 3rd world tier productivity loss, institutional degradation, and economic stagnation.
Clearly for now, the amount being borrowed (at very low rates) exceeds the economic losses in intellectual ability and work ethic that the US has been experiencing. This is not going to last for too long though.
The mean IQ of the new US generation (18-24 age group) is 93-94. This number will keep going down with each passing year. Demographics are destiny and America is living on borrowed time, but like I said the origin of this collapse won't be excess speculation or excessive lending, it'll be the demographics finally being understood to be calamitous when it's reflected in the economic reports.
I think it will be realized before the end of the decade. In the meantime any corrections, recessions, etc. that come about will likely be temporary and rebound to new highs. But, when we get to the layman's realization of the existential US intellectual/behavioral change and it's permanency, the US will correct over time to a standard of living, industrial capacity, output, innovative ability, etc. that is closer to Brazil than anywhere else.
The one exception is that perhaps there will be a higher concentration of extremely outlier talent in the US, even after it declines to being a slightly bigger Brazil, so it will still be far more capable at the higher end than such a country. Reasons for this are cultural, even in a shitty America, many people would rather live there than China (not that China is going to make it that simple for Indians or Germans to live in China anyway).
Still, a USA which is just a moderately bigger Brazil with maybe 10x more talent at the far-right end of the intellectual spectrum isn't much to be proud of. The institutional degradation would be akin to a country like South Africa, where they have plenty of extremely talented people which can't get anything done since the government is controlled by extremely corrupt and incompetent people.
So, the Elon Musk of this world will still occasionally immigrate to the US at very high rates, but will find it much harder to be successful because they are surrounded by morons.
I really don't see any possible reality where China is not the absolute power in every domain, except perhaps cultural/entertainment but who cares about that anyway. While America has multiple unalterable existential risks, China as far as I can see has either one or two. One is the fertility rates (which the government is now trying to reverse so good for them), the other is arguably a return to outright Marxist/Maoist/Communist doctrine. I don't think this latter one is an existential risk though, that's assuming it's even true. A country can always reverse paths again. The only real existential risks are demographic change (especially of the racial-ethnic kind) and possibly climate change.
Clearly for now, the amount being borrowed (at very low rates) exceeds the economic losses in intellectual ability and work ethic that the US has been experiencing. This is not going to last for too long though.
The mean IQ of the new US generation (18-24 age group) is 93-94. This number will keep going down with each passing year. Demographics are destiny and America is living on borrowed time, but like I said the origin of this collapse won't be excess speculation or excessive lending, it'll be the demographics finally being understood to be calamitous when it's reflected in the economic reports.
I think it will be realized before the end of the decade. In the meantime any corrections, recessions, etc. that come about will likely be temporary and rebound to new highs. But, when we get to the layman's realization of the existential US intellectual/behavioral change and it's permanency, the US will correct over time to a standard of living, industrial capacity, output, innovative ability, etc. that is closer to Brazil than anywhere else.
The one exception is that perhaps there will be a higher concentration of extremely outlier talent in the US, even after it declines to being a slightly bigger Brazil, so it will still be far more capable at the higher end than such a country. Reasons for this are cultural, even in a shitty America, many people would rather live there than China (not that China is going to make it that simple for Indians or Germans to live in China anyway).
Still, a USA which is just a moderately bigger Brazil with maybe 10x more talent at the far-right end of the intellectual spectrum isn't much to be proud of. The institutional degradation would be akin to a country like South Africa, where they have plenty of extremely talented people which can't get anything done since the government is controlled by extremely corrupt and incompetent people.
So, the Elon Musk of this world will still occasionally immigrate to the US at very high rates, but will find it much harder to be successful because they are surrounded by morons.
I really don't see any possible reality where China is not the absolute power in every domain, except perhaps cultural/entertainment but who cares about that anyway. While America has multiple unalterable existential risks, China as far as I can see has either one or two. One is the fertility rates (which the government is now trying to reverse so good for them), the other is arguably a return to outright Marxist/Maoist/Communist doctrine. I don't think this latter one is an existential risk though, that's assuming it's even true. A country can always reverse paths again. The only real existential risks are demographic change (especially of the racial-ethnic kind) and possibly climate change.
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house & property counted as assets, but rentals account for nearly one third of cpi, there's a time lag, we'll see the impact soon, and it's sticky because of contract.