Is the US economy overheating - Page 4 - Politics Forum.org | PoFo

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#15207931
Steve_American wrote:UM, we disagree. I think you have it backwards.
You have no idea what you're talking about. Neo-liberals have replaced Marxists as the utopian ideologues and have destroyed our economies, because we let them. You have confirmation bias, you desperately want these things you say to be true but they just don't jive, just like Marxists did. If you don't realize that the US economy has been destroyed by Neo-liberalism, that is because you are part of the 10% whose life has improved while the life of the other 90% has crumbled, especially the bottom 50%.

I'm not ideological regarding economics in any way whatsoever. If Marxism or MMT worked i'd support it in a heartbeat. I just want people to eat and flourish. I don't support utopian nonsense that's based on wishful thinking because it will harm society as much or more than neoliberalism, which is also crash. I support a mixed capitalist system with strong social safety net and strong regulation. Why? Because all of the data says that the countries who implement this system prosper more than all of the others. The USA is ideological with their neoliberalism you're right, the gov is filled with corrupt sociopathic fools who suck corporate dongs.
#15207971
@Unthinking Majority,

I wrote:
"UM, we disagree. I think you have it backwards.
You have no idea what you're talking about. Neo-liberals have replaced Marxists as the utopian ideologues and have destroyed our economies, because we let them. You have confirmation bias, you desperately want these things you say to be true but they just don't jive, just like Marxists did. If you don't realize that the US economy has been destroyed by Neo-liberalism, that is because you are part of the 10% whose life has improved while the life of the other 90% has crumbled, especially the bottom 50%."

I want to rewrite it a tiny bit.

Steve_American wrote:
UM, we disagree. I think you have it backwards.
You have no idea what you're talking about. Neo-liberals have replaced Marxists as the utopian ideologues and have destroyed our economies, because we let them. You have confirmation bias, you desperately want these things you say to be true but they just don't jive with the historical record of several nations, like the US and Japan since about 1992, and the EU after the GFC/2008. If you don't realize that the US economy has been destroyed by Neo-liberalism, that is because you are part of the 10% whose life has improved while the life of the other 90% has crumbled, especially the bottom 50%.

That is, in Japan and the US massive deficits since 1992 have not caused inflation over 0.1% in Japan and 2% in the US. Because 2% is the target of the Fed I conclude that there was no high inflation in the US and 0.1% in Japan is no inflation. In the EU there was economic stagnation after 2009 because they didn't and couldn't with out breaking the rules deficit spend enough to dig out of the recession.
. . . Keynes and FDR proved that it takes a lot of deficit spending to end the Great Depression, in fact, IMO it was the more massive deficit spending of WWII that ended the Depression. From that fact, I deduce that FDR should have added 50% to 100% *more* deficit spending to end the Depression by 1939.

UM, you have not (here) provided one scrap of evidence that deficits spending with high unemployment and no shortages (now caused by covid) will cause high inflation. I know what the theory says. I need historical examples. Remember, all the nations in the EU don't have their own fiat currencies. So, their problems don't count. Also, nations with debts in dollars don't count. Germany in the 20s doesn't count because it was paying off reparations in gold.
. . . The Cato Institute study I have linked twice found 47 cases of hyperinflation since 1900 and they said every one was caused by shortages.
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#15208182
Steve_American wrote:. . . Keynes and FDR proved that it takes a lot of deficit spending to end the Great Depression, in fact, IMO it was the more massive deficit spending of WWII that ended the Depression. From that fact, I deduce that FDR should have added 50% to 100% *more* deficit spending to end the Depression by 1939.

You are conflating deficit spending with money supply increase. The problem with the deficits in the 1930s was that government was creating money at the same time the private banking system was destroying it, and it took the massive deficit money printing of WW II to generate sufficient money supply increases to enable the economy to answer the demands of war.
Remember, all the nations in the EU don't have their own fiat currencies. So, their problems don't count.

Well, at least they don't count as examples of failures of sovereign monetary policy.
Also, nations with debts in dollars don't count. Germany in the 20s doesn't count because it was paying off reparations in gold.

Right: debts in money you can issue at will are very different from debts in money you have to somehow get from someone else.
#15208229
Truth To Power wrote:You are conflating deficit spending with money supply increase. The problem with the deficits in the 1930s was that government was creating money at the same time the private banking system was destroying it, and it took the massive deficit money printing of WW II to generate sufficient money supply increases to enable the economy to answer the demands of war.

Well, at least they don't count as examples of failures of sovereign monetary policy.

Right: debts in money you can issue at will are very different from debts in money you have to somehow get from someone else.

TtP, I'm not conflating anything. All I said was that FDR's deficits were not enough to end the Depression, as is proved by the fact that the bigger deficits and mainly foreign arms sales that began in 1939 is what did it. At least until Lend Lease spending began, when it became mostly war spending and men being drafted, so they were not unemployed.

Thanks for agreeing that nations in the EU and nation in S. Am. or otherwise borrow dollars from the IMF, etc. can get into trouble that the US, Japan, Aust., Canada, NZ, etc. can't get into.
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#15208321
Steve_American wrote:All I said was that FDR's deficits were not enough to end the Depression, as is proved by the fact that the bigger deficits and mainly foreign arms sales that began in 1939 is what did it.

Actually, economic growth was rapid beginning in 1933, although there was a hiccup in 1937-8 when private bank lending sagged and money supply growth briefly stopped.
Thanks for agreeing that nations in the EU and nation in S. Am. or otherwise borrow dollars from the IMF, etc. can get into trouble that the US, Japan, Aust., Canada, NZ, etc. can't get into.

Japan, etc. can definitely get into trouble by borrowing US$. It's only the USA that can't (unless it does something stupid).
#15208327
The stock market hit a quadruple top and now it's way down. I sold half my stuff today, wish I had sold sooner of course but this market has been so disconnected from reality that it's hard to make any accurate predictions.

Here's a fun article: [link didn't work]

90 shipping containers looted EVERY DAY at a certain LA port, which is backed up months behind schedule amid the looting.
#15208394
Truth To Power wrote:Actually, economic growth was rapid beginning in 1933, although there was a hiccup in 1937-8 when private bank lending sagged and money supply growth briefly stopped.

Japan, etc. can definitely get into trouble by borrowing US$. It's only the USA that can't (unless it does something stupid).

IIRC, Bill Mitchell said that FDR took his foot off the gas pedal in '36 &37 because Congress had inflation fears. The result ws a minor recession or at least slowing in the growth.

Japan has no need to borrow in US$ because it has a trade surplus with the US and the world. Canada has a trade surplus with the US also, IIRC. Etc.
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#15208395
@Wulfschilde,
Sir, the vast majority of Americans could not care less about the stock Market. They live off their wages and if they have a 401K fund in the stock market they can't access it for years or decades.

I assert that it is obvious that the stock market is in a vast bubble caused by the Fed pumping cash with QE into the top income earners of the economy. IMHO, this has been a huge mistake *IF* the intent was to stimulate the economy, because it didn't do that and just caused stock and real estate prices to increase. OTOH, *IF* the intent was to give money to the top 1% then it is a great success.
. . . After covid it is now obvious that to stimulate the economy the Fed or Gov. needs to add buying power at the bottom 60% of the economy and let the top 40% get it secondhand from those below them. The problem is that the Fed has no way to do that. Giving reserves to banks doesn't help them at all to make more loans to the bottom 50% because they are not credit worthy and banks don't need reserves to make loans anyway.
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#15208401
Steve_American wrote:@Wulfschilde,
Sir, the vast majority of Americans could not care less about the stock Market. They live off their wages and if they have a 401K fund in the stock market they can't access it for years or decades.

I assert that it is obvious that the stock market is in a vast bubble caused by the Fed pumping cash with QE into the top income earners of the economy. IMHO, this has been a huge mistake *IF* the intent was to stimulate the economy, because it didn't do that and just caused stock and real estate prices to increase. OTOH, *IF* the intent was to give money to the top 1% then it is a great success.
.


Some of the most downloaded apps on Google Play Store are crypto trading apps. There's a ton of regular working people playing markets. Also, US stocks are traded by people in virtually every country in the world. These are US markets being inflated by many, many international investors (including me) with their own governments propping up workers by giving them free relief dollars because of lockdowns keeping them home.

I give up, believe whatever you want.
#15208409
Steve_American wrote:@Wulfschilde,
Sir, the vast majority of Americans could not care less about the stock Market. They live off their wages and if they have a 401K fund in the stock market they can't access it for years or decades.

I assert that it is obvious that the stock market is in a vast bubble caused by the Fed pumping cash with QE into the top income earners of the economy. IMHO, this has been a huge mistake *IF* the intent was to stimulate the economy, because it didn't do that and just caused stock and real estate prices to increase. OTOH, *IF* the intent was to give money to the top 1% then it is a great success.
. . . After covid it is now obvious that to stimulate the economy the Fed or Gov. needs to add buying power at the bottom 60% of the economy and let the top 40% get it secondhand from those below them. The problem is that the Fed has no way to do that. Giving reserves to banks doesn't help them at all to make more loans to the bottom 50% because they are not credit worthy and banks don't need reserves to make loans anyway.
.

You're probably right about the stock market but it's not a coincidence that inflation is rising faster than wages?
#15208619
Unthinking Majority wrote:Some of the most downloaded apps on Google Play Store are crypto trading apps. There's a ton of regular working people playing markets. Also, US stocks are traded by people in virtually every country in the world. These are US markets being inflated by many, many international investors (including me) with their own governments propping up workers by giving them free relief dollars because of lockdowns keeping them home.

I give up, believe whatever you want.

UM, I'm not sure what you mean by "giving up". I'll take it to be giving up on convincing me and the lurkers that you are right the MMT is BS and that modern mainstream economic theories are just fine and true.

Well, since you only ever made assertions to that effect, and never did either of the 2 things I would have done in your shoes, I can see why you might give that project up (because you can't think of one thing to say to refute my 2 main points. These points are

1] That modern mainstream economic theories are all based on just logic and not on historical economic facts and data. This would be fine, BUT you can't prove things logically if you use false assumptions that you assert are true. An example of one such is "Everyone in the relevant 'Market' knows everything relevant about the thing being sold." There are many other such assertions.
. . . UM, you never denied this is true about econoic theories.

2] You never provided any historical economic data to back up you claims and to refute mine. I asserted that if the money supply theory of inflation was true then the deficits by Reagan, Bush I, and Bush II should have created massive inflation in the US economy. The fact is that it 1981 when Reagan took office the US national debt was just about $1 T. And when Bush II left office it was about $10 T. Yet inflation had cooled under Reagan and Bush I, down from its highs in the 70s and 80s, and then been low from 1992 to 2008.
. . . I also asserted that Japan's economic history is a perfect example that a national debt at 240% of GDP does not always cause inflation.
. . . UM, you never asserted that my facts were wrong or something to refute their significance.
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#15208621
Wulfschilde wrote:You're probably right about the stock market but it's not a coincidence that inflation is rising faster than wages?

When shortages cause inflation it is totally normal for wages to lag behind inflation. This is almost universally is what happens.

So, it isn't really evidence that the deficit spending and QE made the current inflation worse.

Also, there is no longer a free market in the US in the sense that Adam Smith meant in "Wealth of Nations," 1776. He meant a market free of monopoly power to increase prices at will. Today the massive corps we have do have monopoly pricing power and have increased their profits with it.
. . . That is my evidence. If corps had just increased the prices of what they sold to replace their increased costs, then their profits would not have gone up or up just a little. BUT, if fact they have gone up a huge amount. This proves that they have monopoly pricing power and that they are using it to screw over the American public in this time of crisis. The American people should be outraged, I hope they grok this point.
#15208839
Steve_American wrote:When shortages cause inflation it is totally normal for wages to lag behind inflation. This is almost universally is what happens.

So, it isn't really evidence that the deficit spending and QE made the current inflation worse.

Also, there is no longer a free market in the US in the sense that Adam Smith meant in "Wealth of Nations," 1776. He meant a market free of monopoly power to increase prices at will. Today the massive corps we have do have monopoly pricing power and have increased their profits with it.
. . . That is my evidence. If corps had just increased the prices of what they sold to replace their increased costs, then their profits would not have gone up or up just a little. BUT, if fact they have gone up a huge amount. This proves that they have monopoly pricing power and that they are using it to screw over the American public in this time of crisis. The American people should be outraged, I hope they grok this point.

Yeah I'm gonna have to strongly disagree with this one. Something like 40% of all the US dollars in existence were printed during the COVID pandemic. That's the nice way to phrase it, another way to phrase it is that they almost doubled the money supply in order to hide the fact that we've been in an artificially-induced recession for about two years. The idea that doubling the money supply won't cause inflation is laughable to me.

Also, isn't corporations increasing their prices literally what inflation is?
#15208955
Wulfschilde wrote:Yeah I'm gonna have to strongly disagree with this one. Something like 40% of all the US dollars in existence were printed during the COVID pandemic. That's the nice way to phrase it, another way to phrase it is that they almost doubled the money supply in order to hide the fact that we've been in an artificially-induced recession for about two years. The idea that doubling the money supply won't cause inflation is laughable to me.

Also, isin't corporations increasing their prices literally what inflation is?

I said that corps with monopoly procing power had increased their profits.

Of course price increases are what inflation is.

However, huge profit increases only show that the people are being gouged or screwed over.

My reply to your 1st point is that most of the money created went directly into the pockets of the rich and the 1%. They don't effect the prices of the things people buy evert day. At least not by buying them. If they effect the inflation of most things it is through their monopoly pricing power. And their monopoly pricing power exists totally independent from the amount of cash they have in assets. AFAIK.
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#15208959
Wulfschilde wrote:
Yeah I'm gonna have to strongly disagree with this one. Something like 40% of all the US dollars in existence were printed during the COVID pandemic. That's the nice way to phrase it, another way to phrase it is that they almost doubled the money supply in order to hide the fact that we've been in an artificially-induced recession for about two years. The idea that doubling the money supply won't cause inflation is laughable to me.

Also, isn't corporations increasing their prices literally what inflation is?



First, most money is never printed. Most of it stays in the digital realm. A minor point, but I find it interesting.

Second, a lot of the inflation is temporary. Indeed, some sectors are already dropping. However, the weaknesses in the global market are making for slow changes in pricing.

Some companies, like Nvidia are doing what we used to call price gouging. They are talking advantage of the shortage to squeeze every dollar they can out of people. The top of the consumer market used to be roughly a grand. Nvidia has the 3080, which is about that, and uses the same chip as the more expensive cards. There are people that have been waiting for over a year for one. But instead of trying to end the shortage by making a lot of 3080s, they are making matters worse by making cards with the same chip that cost $2K to $3K.

Anyway, most economists thought the economy needed a boost, even if that would increase inflation for a while. A lot of what governments do is manage risk. And that was the best option they had.
#15209788
Wulfschilde wrote:Yeah I'm gonna have to strongly disagree with this one. Something like 40% of all the US dollars in existence were printed during the COVID pandemic. That's the nice way to phrase it, another way to phrase it is that they almost doubled the money supply in order to hide the fact that we've been in an artificially-induced recession for about two years. The idea that doubling the money supply won't cause inflation is laughable to me.

Also, isn't corporations increasing their prices literally what inflation is?

I going to have to strongly dis agree with you on that.
Where in the world did you find it that about 40% of all the dollars in the world were created in the last 2 years?
If this were true, then over 1/3 of all dollars were created in the last 2 years. This would mean that the so-called national debt had increased by 50% in the last 2 years. Since it was over $24 T at the end of 2019, that would be over $12 T.

It came to me the other day what the basic problem with the money supply theory as the cause of inflation is. It is that the competition theory of pricing holds that competition for sales will cause prices to fall to the minimum that provides a sufficient profit for the corps to survive. This true in an "Adam Smith type" "free market". i.e., a market free from monopoly pricing power. [Neo-liberals have suppressed the teaching of the history of economic thinking, so they could redefine Free Market as a market free of Gov. interference.] AFAIK, these 2 theories contradict each other. One holds that a free market will have corps increasing production to suck up extra dollars in the economy because they can't just increase prices without losing sales; and the other theory holds that corps can increase prices and not lose sales when there is more money in an economy. They have both been proved with the logic that is used to prove economic theories, but they both can't be true.

I claimed that the current inflation is caused by shortages. The existence of shortages shows that corps can't increase production for some reason. So, if people still need or strongly want to buy some class of products, then the price will increase as the market does its thing and determines who gets to buy the products. It does this by increasing the price. So, there is temporary inflation.
. . . I also, claimed that the 2nd cause of the inflation is the monopoly pricing power that corps like Apple and Amazon as well as OPEC have to increase their prices. So, we are seeing inflation. Oil is in everything, so oil price increases will increase the price of everything.

BTW --- banks also print money with every loan and every credit card purchase. During covid, many middle class people used their stimulus checks to pay down their credit card balances. This destroyed the money that their bank had created when they (the card holder) ran the total they owed up. You didn't include this in your calculation of money created, did you?

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