tag:blogger.com,1999:blog-6616959642391988608.post5881702695054768733..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Recession LiteScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-6616959642391988608.post-77318348246408534432022-08-15T11:09:30.728-07:002022-08-15T11:09:30.728-07:00Hello Salmo Trutta:
I love reading you comments, e...Hello Salmo Trutta:<br />I love reading you comments, even if, as I am not an economist, I need to re-read and go to your references to better understand.<br />Can I ask if you could, uhh .. in laymen terms, say exactly why you think inflation/interest rates have remained so low - until recently, despite the huge increase in Fed balance sheet/reserves over the last 13 years. I know you believe Richard H.https://www.blogger.com/profile/11837604197337217284noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-48669719017420581992022-08-08T07:49:11.967-07:002022-08-08T07:49:11.967-07:00A great many Americans are about to lose everythin...A great many Americans are about to lose everything...McKibbinUSAhttps://www.blogger.com/profile/10545798495680527622noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-58135150262049919022022-08-06T12:17:28.994-07:002022-08-06T12:17:28.994-07:00From the standpoint of the system, and not an indi...From the standpoint of the system, and not an individual bank, the commercial banks do not loan any existing deposits, demand or time; nor do they loan out the equity of their owners, nor the proceeds from the sale of capital notes or debentures or any other type of security. <br /><br />It is absolutely false to speak of the commercial banks as financial intermediaries not only because they are Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-42563139645061570242022-08-06T12:06:48.150-07:002022-08-06T12:06:48.150-07:00re: "A fascinating aspect is that the growth ...re: "A fascinating aspect is that the growth (real growth) of all credit at commercial banks is becoming negative"<br /><br />No, that was predictable. The welfare of the banks is dependent on the welfare of the nonbanks. The pundits think banks are intermediaries. That's why the FED eliminated reserve requirements, eliminated Reg Q ceilings, etc. <br /><br />Banks don't Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-37245116295002738582022-08-06T11:33:22.155-07:002022-08-06T11:33:22.155-07:00I took a long road trip last week, and stopped in ...I took a long road trip last week, and stopped in a small midwestern town.<br /><br />I looked it up and it had lost about 25% of its population (~3000) in the past 40 years.<br /><br />I went into three businesses and two of the three appeared to either have AC problems or they were purposely not cooling all of the building due to the high cost. I am pretty sure at least one of them was wkevinwhttps://www.blogger.com/profile/17600473578823788550noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-68179064454851161062022-08-06T05:14:41.295-07:002022-08-06T05:14:41.295-07:00^The linked article, in numbers, explain the sourc...^The linked article, in numbers, explain the sources of M2 growth in the last few years. As mentioned several times in the last few months:<br />-the most important component was QE, which is not a significant factor in consumer inflation<br />-the second most important factor was the accelerating commercial banks' intake of government-debt securities (printing a deposit and effectively Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-10724313898100609142022-08-06T03:29:32.461-07:002022-08-06T03:29:32.461-07:00Scott-
IMHO, I agree with you.
Government bumbl...Scott-<br /><br />IMHO, I agree with you. <br /><br />Government bumbling (or worse) on the C19 situation created a first-class mess. Toss in Ukraine, and some bad luck with OPEC+, the usual government clogging, and you have the present circumstance.<br /><br />I will say it again: America's large private-sector (public) companies are the best-run large organizations on the planet, maybe in Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-85988422082759994692022-08-05T12:15:11.410-07:002022-08-05T12:15:11.410-07:00Thanks Benjamin for that link. It does a fairly go...Thanks Benjamin for that link. It does a fairly good job of describing how M2 grew by such an enormous amount. It is also consistent with my concerns (which began in late 2020 and intensified in mid-2021) that the huge increase in M2 had lots of inflationary potential. In short, M2 grew because the public's demand for money surged in the wake of the Covid-era panic. But since the end of 2021Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-47009533775236667812022-08-05T04:07:56.071-07:002022-08-05T04:07:56.071-07:00Carl-
I dunno. Just what the Fed says. They didn&...Carl-<br /><br />I dunno. Just what the Fed says. They didn't run it by me before publishing. <br /><br />What do you think of it?Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-20223024969815828942022-08-04T05:15:15.368-07:002022-08-04T05:15:15.368-07:00"Well, this is what they say."
What do y..."Well, this is what they say."<br />What do you mean by "this" and "they"?<br />The "note" is simply a simple presentation of basic numbers without ideological or political interpretation?Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-73967737298319825412022-08-04T02:06:06.694-07:002022-08-04T02:06:06.694-07:00Scott-
https://www.federalreserve.gov/econres/not...Scott-<br /><br />https://www.federalreserve.gov/econres/notes/feds-notes/understanding-bank-deposit-growth-during-the-covid-19-pandemic-20220603.htm<br /><br />Well, this is what they say. <br /><br /><br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-25179905953452950522022-08-03T11:05:29.393-07:002022-08-03T11:05:29.393-07:00Frozen, re whether US money growth created inflati...Frozen, re whether US money growth created inflation everywhere. It didn't. A quick check of Eurozone M2, UK M2, Japan M2, and Canada M2 shows that M2 grew at an unusually rapid pace in all of these economies, beginning in the second quarter of 2020 and lasting for at least a year. The US wasn't the only government trying to make up for economic shutdowns by flooding their economy with Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-31518500122671761052022-08-03T08:36:29.995-07:002022-08-03T08:36:29.995-07:00" OK yes maybe but does it mean that the addi..." OK yes maybe but does it mean that the additional cash injected into the US Economy created inflation on the whole planet?"<br /><br />Global markets in various items means that ~local inflation gets globalized. For example, many broad commodity indices have more than TRIPLED since their 2020 recession lows. That's a spectacular addition to inflation.<br /><br />Remember that wkevinwhttps://www.blogger.com/profile/17600473578823788550noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-89593768258249281772022-08-02T14:26:07.395-07:002022-08-02T14:26:07.395-07:00Scott your point in cash injection creating inflat...Scott your point in cash injection creating inflation. OK yes maybe but does it mean that the additional cash injected into the US Economy created inflation on the whole planet? I mean sure, I am Canadian, I get that you export your inflation to us, but in Europe too. <br /><br />There's something wrong with your argument, I think, it takes too little account of the ROW. But again, maybe Frozen in the Northhttps://www.blogger.com/profile/04901959687094626879noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-90216714788691371672022-08-02T03:42:18.231-07:002022-08-02T03:42:18.231-07:00Data point: Here in SoCal, the real estate market ...Data point: Here in SoCal, the real estate market has gone into hibernation. Wife kitteh is currently trying to sell a friend's condo in a very attractive location. Two months ago, it would have seen a bidding war after the first weekend on the market. Now, it's been on the market for almost a month, almost no showings and no bids. Other realtors are reporting the same.K T Cathttps://www.blogger.com/profile/10259428595745509790noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-5404497008555391912022-08-01T09:52:46.015-07:002022-08-01T09:52:46.015-07:00Frozen / Carl - thoughtful comments - thanks. The...Frozen / Carl - thoughtful comments - thanks. The comment about confusing productivity with lower costs from off shoring, and how that looks in reverse seem right on. randyhttps://www.blogger.com/profile/16368254229927808998noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-20437282391474963712022-08-01T07:43:09.840-07:002022-08-01T07:43:09.840-07:00Scott, according to GAO, “The federal government m...Scott, according to GAO, “The federal government made direct payments to individuals totaling $931 billion to help with COVID-19” but I assume you are referring not just to stimulus checks but the entire panoply of covid-relief spending. In any event, here’s my concern: in the 9 years preceding the pandemic, the deficits totaled $6.997 T, averaging out to $777.4 B/yr. But in the next 9 yrs, the Jon Shttps://www.blogger.com/profile/14582676211958095524noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-27686104249154371562022-07-31T18:13:43.193-07:002022-07-31T18:13:43.193-07:00Jon: the evidence is pretty clear that the Covid-r...Jon: the evidence is pretty clear that the Covid-related "stimulus" checks (totaling 4-5 trillion dollars) were somehow monetized and thus became the fuel for rising inflation (i.e., the checks represented newly-minted money). The same does not hold for fiscal deficits prior to Covid, however. But do I worry that another round of deficit-funded spending could end up pushing inflation Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-42509998063300602622022-07-31T12:56:32.436-07:002022-07-31T12:56:32.436-07:00Scott, in your post from 7/26 you wrote in re the ...Scott, in your post from 7/26 you wrote in re the expansion of the money supply: “Fed policy did not create it; massive fiscal deficits did. And since those deficits have all but disappeared, the money supply is coming back to earth.” I commented a few weeks back on this, but think it is important again to repeat the warning with Manchin reverting to form and the two new bills (chips + Jon Shttps://www.blogger.com/profile/14582676211958095524noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-82196382473674511482022-07-31T08:39:04.032-07:002022-07-31T08:39:04.032-07:00The unemployment rate is always going to be “too l...The unemployment rate is always going to be “too low”. See: “The Great Demographic Reversal” by Charles Goodhart and Manoj Pradhan.<br /><br />But secular stagnation is the deceleration in velocity stemming from the impoundment and ensconcing of monetary savings (beginning in 1981). Contrary to the morons of this world, banks don't lend deposits, deposits are the result of lending. All Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-32668361776462188722022-07-31T05:21:17.229-07:002022-07-31T05:21:17.229-07:00"what is the natural rate of growth for Ameri..."what is the natural rate of growth for America's GDP?"<br />Tough question.<br />An easier answer is the clear developing trend of lower growth and productivity due to population aging and debt growth and thereby lower 'natural' rates of growth.<br />It's bewildering to see the collective drive for more debt to solve issues as population aging requires more productivityCarlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-60310022923555393592022-07-30T01:02:56.556-07:002022-07-30T01:02:56.556-07:00Any chance Manchin will run for POTUS?Any chance Manchin will run for POTUS?Royhttps://www.blogger.com/profile/09325498485905547125noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-84673136286087220822022-07-29T12:25:42.367-07:002022-07-29T12:25:42.367-07:00The Chart #1 is fascinating. As a suggested enhan...The Chart #1 is fascinating. As a suggested enhancement: could you re-plot the chart with the Y-axis as GDP divided by working age population? This would be a variation on GDP/capita but would tease out the boomer retirements. Or if there is a way to calculate GDP per employed adult, that might tell a different story than the aggregate GDP does. Or maybe not, but I think it would be Anonymoushttps://www.blogger.com/profile/09917808033248806211noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-40107373252933992242022-07-29T10:31:44.537-07:002022-07-29T10:31:44.537-07:00Your question on the natural rate of growth of the...Your question on the natural rate of growth of the economy is interesting. If we take China as an example, we all agree that for several years a rate of 10% per annum was the "natural rate of growth". In the case of China, underinvestment for decades explains the catch-up. Nobody today would think that a 10% GDP growth is reasonable for China -- it has more than caught up (it's Frozen in the Northhttps://www.blogger.com/profile/04901959687094626879noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-80508668799462188332022-07-29T09:26:40.787-07:002022-07-29T09:26:40.787-07:00Princeton Professor Dr. Lester V. Chandler, Ph.D.,...Princeton Professor Dr. Lester V. Chandler, Ph.D., Economics Yale, theoretical explanation was: 1961 – “that monetary policy has as an objective a certain level of spending for gDp, and that a growth in time (savings) deposits involves a decrease in the demand for money balances, and that this shift will be reflected in an offsetting increase in the velocity of demand deposits, DDs.”<br /><br />Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.com