Whoa! October employment report…
What about all the MMT free munnie interest income (to people who are already bazillionaires) from the higher rates somehow creating a Democrat regime economic nirvana? Perhaps not? 🤔
This and the initial 1.2% Q4 from the Atlanta Fed has this thesis not looking too good so far I’d say…
U.S. hiring slowed to 150,000 jobs in October. The unemployment rate rose to 3.9% https://t.co/7dLb8rYpLg
— Real Time Economics (@WSJecon) November 3, 2023
10 comments:
Matt,
If you're going to start slagging off MMT at least do it from a position of understanding.
Then you won't look like a neoliberal who never takes the time to read the literature and see the alternative point of view.
https://new-wayland.com/blog/mmt-basics-interest-rates/
"Eventually, those who benefit from the interest rate increases, who typically have a lower marginal propensity to consume (how much they spend out of every extra $ received), run out of things to buy and pocket the bonuses.
And eventually, the spending cuts from the debtors, particularly lower income mortgage holders, begins to dominate."
The purpose of raising interest rate changes is to create unemployment and screw over the poor - while paying off rich people and ensuring they continue to get their cheap luxury imports.
All while wreaking havoc through the housing production system and the working capital of those businesses on the wrong side of the cash and carry sweet spot.
Every time we do this economic electric shock therapy we end up with a weaker domestic economy, with inbuilt asset shortages that just re-emerge once the central bank takes the electrodes away.
Great for hoarders and rentiers, not great for producers.
This is the crux of the argument between the two sides.
On one side you've got those who believe that interest rate increases will "break something". Usually its a combination of higher rates reducing borrowing power and/or reducing NPV of assets forcing financials to take losses which causes them to shed assets or fire people leading to lower sales, lower investments, etc etc.
On the other side you've got Mosler who believe that interest rate increases at high enough public debt to gdp ratios is basically injecting more and more Net Financial Assets to the already rich that it's enough to forstall any slowdown. (albeit it hugely regressive, or what he calls a distributional issue).
Neil,
They just said “ My prior, of course, is that the interest rates would not significantly reduce growth in the short run, whereas mainstream New Keynesian theory considers interest rate rises to be an effective tool in moderating total spending, and, in turn, reducing inflation. The reality does not support the mainstream proposition. ”
Now UE is increasing and Atlanta has their initial Q4 down to +1.2%… from +5.4% in Q3… Cleveland has CPI for October at +0.07%… if that’s what these people mean by their figure of speech “inflation”…
They are out there everyday claiming the economy is being stimulated by the higher interest rates I guess due to an additional YOY 300 or 400b annual interest income from that paid on UST Bills…
Most recent nowcasts not supporting that thesis…
Saint, yes that seems to be the case…
Strikes. It wasn't a bad number considering. And October saw the resumption of student loan payments. Subtracted from net flows.
Yeah but the interest is +25b per month (on Bills) which I think is more than the increase in the student tax…
"is that the interest rates would not significantly reduce growth in the short run"
Yes. And now we're moving into the medium run - which is what Bill's post and my summary was all about.
RTFBP.
They just called it “regressive fiscal stimulus”…
US quarterly gdp iirc they started increasing rates in March 2022 to help Biden with his “inflation” political problem in that election year…
September 30, 2023 4.90%
June 30, 2023 2.10%
March 31, 2023 2.20%
December 31, 2022 2.60%
September 30, 2022 2.70%
June 30, 2022 -0.60%
March 31, 2022 -2.00%
December 31, 2021 7.00
So growth was 7% right before they started then “in the short term” it went negative …
They held iirc in June now first quarter after they stopped it went up…
So again the data doesn’t support their thesis..,
Bank failures didn’t start until March 2023… that took awhile…
Equity NPVs topped in the quarter before they started the risk free rate increases ofc…
It’s the most regressive policy I’ve ever witnessed in my entire adult lifetime …
They trying to provide political cover for their fellow Democrats with this gaslighting like it’s this fantastic economy or something due to the rate increases providing 25B/mo of free munnie to previous USD savers…
It’s absurd..,
Post a Comment