tag:blogger.com,1999:blog-6616959642391988608.post7203698598385064914..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Lower interest rates to the rescueScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-6616959642391988608.post-41527501347296279102022-12-07T11:24:28.823-08:002022-12-07T11:24:28.823-08:00Scott, you say that social security is a transfer ...Scott, you say that social security is a transfer payment in which no goods or services were exchanged. I paid SS/medicare taxes for some 40 years into government trust accounts. what returns back to me now in SS payments and Medicare coverage are not transfer payments, but rather a very poor return on my investment. Christian S. Herzeca, Esq.https://www.blogger.com/profile/09913237226503475709noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-85893116892485700222022-12-07T04:50:38.223-08:002022-12-07T04:50:38.223-08:00Scott, what about the QE “tightening” that is unde...Scott, what about the QE “tightening” that is underway? It too is a significant change in policy. How do you factor that into your outlook?Kennethhttps://www.blogger.com/profile/01366772652626173281noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-23777956174377265182022-12-06T16:55:43.691-08:002022-12-06T16:55:43.691-08:00@Salmo Trutta
If you refer to the huge growth that...@Salmo Trutta<br />If you refer to the huge growth that happened in private credit from 1945 to 1975 (starting from a low level vs GDP) that involved both increased consumption (from a low level) and increased investment into productive endeavors then you have a point.Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-18823930445899138092022-12-06T09:01:38.262-08:002022-12-06T09:01:38.262-08:00@Carl After WWII the nonbanks grew faster than t...@Carl After WWII the nonbanks grew faster than the banks, making the bankers jealous. That's what produced the Golden Age in Capitalism.Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-56336866421180697752022-12-05T18:58:53.502-08:002022-12-05T18:58:53.502-08:00"In fact, after WWII, our debt/GDP ratio plun..."In fact, after WWII, our debt/GDP ratio plunged as the economy boomed. It might seem improbable, but there is no a priori reason it can't happen again."<br />It can happen again, especially on a relative basis compared to other economies. However, when one compares now to the post WW2 world, there are many a priori reasons why it may be difficult and/or take a while.Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-37793745511824993122022-12-05T09:03:17.801-08:002022-12-05T09:03:17.801-08:00Sconie, re Larry Summers: I rarely agree with Larr...Sconie, re Larry Summers: I rarely agree with Larry Summers, but he does make a good point, which is that we're dealing with a very complicated situation and it is difficult to say just how high and for how long rates need to go up. If I have anything novel to offer here it is my emphasis on liquidity, which stems from the Fed's changed operating policy (i.e., paying interest on reserves Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-59748957821130015612022-12-05T08:22:34.198-08:002022-12-05T08:22:34.198-08:00Thank you for a well written post. It is much appr...Thank you for a well written post. It is much appreciated and happy to see the facts without politics.Shanehttps://www.blogger.com/profile/18351212644599139587noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-4975058734179397842022-12-05T06:45:14.324-08:002022-12-05T06:45:14.324-08:00You get higher real rates of interest by tightenin...You get higher real rates of interest by tightening monetary policy and activating monetary savings. <br /><br />The supply side factors that lowered long term interest rates up until August 4, 2020 (which marked the end of the 39-year bond bull market), have ended. I.e., the DIDMCA of March 31st 1980, and the FDIC's rise in deposit insurance to $250,000 per account, and the remuneration ofSalmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-84003163432120950942022-12-04T17:32:41.416-08:002022-12-04T17:32:41.416-08:00A somewhat contrary view, at least in terms of tim...A somewhat contrary view, at least in terms of timing, from Lawrence Summers on the most recent Wall Street Week:<br />https://www.youtube.com/watch?v=CSswzkgtjIM&t=87s&ab_channel=BloombergMarketsandFinance<br />Sconiehttps://www.blogger.com/profile/04730746588678578808noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-68434723401572285192022-12-04T14:01:42.986-08:002022-12-04T14:01:42.986-08:00In the 4th quarter of 2019, prior to Covid, M2/GDP...In the 4th quarter of 2019, prior to Covid, M2/GDP was 0.70.<br />That was about as high as it had ever been.<br /><br />It shot up and is lowering, but at 0.84, it's still significantly greater than it was prior to Covid.<br /><br />Just eyeballing the rate at which M2/GDP is lowering, and I'll guess it will be 2 years until the ratio returns to near 0.70.<br /><br />Not saying that it Andrewhttps://www.blogger.com/profile/01390035459036380103noreply@blogger.com