Am I late to the game, or was there an unscheduled “emergency” meeting of the federal reserve on October 4? Apparently, this meeting was unpublished and unscheduled.
See their calendar link here: https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
The press release for the meeting is dated October 11 and can be seen here or by clicking the html button on the calendar link above: https://www.federalreserve.gov/newsevents/pressreleases/monetary20191011a.htm
Apparently, there was an unscheduled (emergency/secret) meeting on October 4 and the press release did not occur until October 11. How often do these “unscheduled” meetings occur? Is there some sort of crisis? (tongue in cheek)
…the “growth” in the economy will come from helicopter money payouts (UBI, et al.) that go directly into people’s hands. It will be immediately spent, and with inflation in consumer goods, in nominal dollar value, the economy will “grow”… Allowing TPTB to keep things floating maybe another 5-15 years. All that spending will go to McDonalds and Walmart and Netflix and Amazon and so on, as opposed to growing and building real businesses, repairing infrastructure, upgrading technology (electrical grid and renewables, etc.).
Not loving these ideas, but it solves a few of the problems TPTB have in terms of “keeping the game” going. Although I’m probably missing some important detail or important major point. Ain’t too proud to be wrong…
VIVA — Sager
The Fed dropped $100 BN into liquidity markets today. Dude, something has to be breaking for them to be throwing this much money at the ““market.””
...posted this 2 weeks ago but it got missed...behind the scenes in the housing market. I have not heard anyone talking about this...would love to hear what you all think!Yeah, it's a fair overview by an expert. I don't disagree with KJ's facts, just his brains. Yes, the Government is continuing to bail out housing and prevent inventory and price discovery. Yes, they won't foreclose. Yes, people have been living for free for nearly decade in homes they should have been booted from. 2008-2018 (25 million mortgages have been in "workout". What's funny is that KJ even acknowledges all this has been working for a decade! How Services still refuses to boot out the bums living for free. That is: everyone is playing ball. They saw what happened to Lehmans... Yet what KJ thinks is somehow "terrifying" facts so "sell sell sell!" I find exactly the opposite. OF COURSE the housing market hasn't "recovered". It's a permanent bailout, dude. Are all boomers this naive? What pol is gonna allow housing to tank? Was he sleeping through 2008? Does anyone really think the Democrats will? Trump? The FED? Snort. If only. The problem I have with KJ's is that he thinks like the free market is still active & 10% returns are what should expect, when we should be happy to just keep what we have, and real estate is at lease something physical. I know I sound bitter; I prepared for the 2008 crash & didn't get a penny from real estate because the government bailed it all out. I learned my lesson in 2008. KJ clearly never did. There is no free market. What KJ also forgets: the US has a LOT of financial rope to deploy here in bailout heaven. The world's largest trade deficit; we can bring the jobs home overnight and scare the crap out of any country that doesn't play ball. The most oil production. Most nukes. Huge coal. Huge nuclear. Huge breadbasket. Huge NG. Reserve currency. Lots of gold (who knows how much is in Knox). No, the government will spend. They will never let the lenders pay the price, nor the voting public, until they absolutely have to. When will that be? Well, we have a lot of countries to invade and lots of assets and resources to plunder first :-)...
Without the fed in the repo market there would be a run on the bank tomorrow!
The deficit is already on course to overrun the GDP within five years. As systems break down (outside in) , the GDP is going to suffer, while the deficit accelerates. When deficit exceeds GDP, then outflow exceeds inflow.
I don’t think hanging on for 15 years is likely.
Speaking of outside in, we have already seen a number of countries go down in the Arab Spring. Then there’s Venezuela and Cuba, now Chile and Ecuador. Could we start plotting a graph?
I am still astounded at what the world of money is getting away with. I never would have thought that 25 million mortgages in default would not get foreclosed on… never ever would have thought that possible (possible but not doable). It is a world of bandits and thieves with no ethics and it is pervasive. How will this end? I am so astounded I do not have imagination enough to figure out how this will all play out. Oil, I get… this financial world, I am speechless.
Karen
Zimbabwe was not “monetarily sovereign”. Debts were denominated in currencies other than the ZD
Economies consist of resources, labor and goods.
If there is slack in labor (un or underemployment) or excess stuff, fiscal operations won’t create inflation.
in my opinion, good government policy is in choice of what to demand - bombers? Clean water? Health care?
if resources are available then “paying for it” is not a relevant issue.
The description of how money is created in Modern Money Theory is not theoretical, it’s just reality. Policy consequences depend on values.
I’d rather have public goods managed by a government than by a profit seeking entity because I believe that incentives can be aligned.
see e.g. private prisons
I disagree with the Job Guarantee as “core” MMT - it’s a policy choice
but can’t disagree with the fact that the US cannot become insolvent except by congressional stupidity.
Debt matters. But how it matters is in the details of inflationary pressures, not “how to pay for X”
Looks like the Fed is upping the quantity for Repo’s again. This just can’t be good.
https://www.wsj.com/articles/fed-to-increase-temporary-liquidity-available-to-markets-11571867401
davyd said:
If there is slack in labor (un or underemployment) or excess stuff, fiscal operations won’t create inflation.Not true for two reasons. 1) You are ignoring resource shortage issues. If oil runs out, you will have both unemployment and high inflation. If you print a bunch of money to "solve the unemployment problem", it won't solve anything because the limiting factor remains oil. Even if you have control over the printing press, you can't print up more oil. Inflation will occur even in a high employment scenario if you have a resource shortage. 2) If confidence in the government snaps, inflation will occur. In real life, money moves in anticipation of events. If people-with-money lose confidence in the government, money will flee (some out of the country, some into "real things") and if the loss of confidence is bad enough, hyperinflation will result.
in my opinion, good government policy is in choice of what to demand – bombers? Clean water? Health care?You are not factoring in corruption. You are "assuming good, responsive government." Which we don't have. Rules for Rulers - and common sense - tells us that our leadership (in control of funding) will direct funding at the people who got them elected - their "keys to power." They won't direct funding at "what is good government policy", but rather at a) the donors who paid for their campaign and b) the groups who can make sure to keep them in office. Without first providing public funding for elections, and eliminating the bribery-after-office of the "revolving door", MMT is yet another recipe for seeing a firehose of cash fired straight at the already-wealthy donor class. Moreover, there is (in MHO) a very significant risk that Big Money will flee ahead of the implementation of MMT, and this flight-in-advance will result in a surprising currency devaluation, a flight out of US debt instruments, and cost-push inflation as everything we import will get more expensive. In our current corrupt environment, MMT is a recipe for disaster - a whole lot of money directed at a small group, accompanied by a loss in confidence that will lead to a currency crash. And of course it can't fix the resource issue either. So - current MMT model is seriously flawed. Of course, if you can assure that corruption in government won't happen any more - say by funding elections using public money - confidence may not fail if MMT is enacted. So I encourage you to run off and get elections to be funded publicly, and once you do that, we can talk about MMT. I do think MMT might have utility if we get into a deflationary depression. Then money will be the thing that is in short supply. But we're so far from that it isn't even funny.
Anyone read Pam Martens at Wall Street On Parade?
https://wallstreetonparade.com/2019/10/fed-ups-its-wall-street-bailout-to-690-billion-a-week-as-media-snoozes/
davyd wrote: Zimbabwe was not “monetarily sovereign”. Debts were denominated in currencies other than the ZDdavyd, Monetary sovereignty refers to a country's ability to print its own currency and have others recognize it as such. As an example, countries in the European Union who use the Euro have given that right away. As a result, they are not monetarily sovereign. During the time of the Zimbabwe hyperinflation, Zimbabwe was in fact monetarily sovereign and abused the privilege. The hyperinflation should be proof enough. Just in case you aren't moved by this argument, let's look at your argument "debt denominated in currencies other than the ZD" Frankly, I'm not knowledgeable about Zimbabwe's debt structure. Either the debts were significant or they weren't. If the debts were insignificant, your point is moot. Assuming the debts were significant, they occurred before the excessive printing occurred or after the excessive printing commenced (or both.) If the debts were incurred before excessive printing occurred, why couldn't Zimbabwe simply print enough of their currency to buy the other currency and extinguish the debt? After all, they were monetarily sovereign. Didn't others understand how important they were? If the debt occurred after excessive printing occurred, it shows the abject failure of printing too much. Not only couldn't they print their way to prosperity, they impoverished millions of people in their vain attempt. (The graph I posted should be sufficient evidence for anyone higher than dolt status.) The bottom line is that monetary sovereignty isn't the silver bullet. If a country abuses its privilege, currency traders will punish them severely. Monetary Sovereignty is just a dressed up version of MMT. Charles Hugh Smith penned a great article on Peak Prosperity about MMT. Could Modern Monetary Theory (MMT) Actually Save Us? Here's a spoiler - NOPE! Apparently, only some of the people can be fooled all the time. Of course, I may have misunderstood Rodger's theory. Since he doesn't feel compelled to defend it, perhaps you can point out where I'm missing his big picture. (Isn't that what an acolyte does?) Oh, and please expound on your reply. A single line isn't going to cut it. The rest of your post was pretty well shredded by davefairtex. (BTW, I agree with Dave's points.) I look forward to seeing you shred his (and my) points as well. (I won't hold my breath.) Grover
Yeah, Grover, that’s good.
If Zimbabwe was forced to denominate its debts in a foreign currency, that is direct evidence of a pre-existing loss of monetary sovereignty due to a collapse of confidence in the government of Zimbabwe.
This says that you only retain monetary sovereignty if you retain confidence.
Mechanically, MMT all works fine. In the real world, where corruption is a pervasive issue, and a major tool of power perpetuation? MMT will almost certainly end up being a disaster.
I’m guessing that in Zimbabwe, the “government” used MMT to apportion cash flows to the leader’s key supporters (c.f. Rules for Rulers, #2: control the treasure). At some point along the way, Big Money lost confidence in the government, and refused to buy any more ZD-denominated bonds, so they had to go to USD bonds. Zimbabwe lost monetary sovereignty at that point - as a direct result of a Big Money confidence loss. But the MMT operations continued to pay off those key supporters, and it kept going and going, then ordinary people lost confidence, and hyperinflation was the inevitable result.
Was it inevitable? Perhaps the government felt it had to keep paying those key supporters (via MMT) or else face losing power. Without being on the inside, who can say for sure?
Regardless, the equation is: Corruption + MMT = hyperinflation.