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I think we all need to be reading Mosler's latest posts very carefully.
Seems he's solved a mystery that's been bugging me for quite a while. Which is, why has the US Economy continued to recover (at a very modest paste)despite the tax hikes, sequester, etc .... all of that fiscal drag?
And the answer is: The domestic oil production boom. That's the thing that has caused the domestic private sector to spend more than its income, thus offsetting the gov't imposed austerity.
But all of that is about to end, because the Saudi's have lowered the oil price, very specifically to put those operations out of business.
If he's right (and I think he very well may be), we could be in for another recession, probably a bad one.
That's a terrible thing. But my cynical side wonders, now that I understand this thing that few others seem to realize yet ... how to profit from it? I feel slimy even asking that ...
Nobody I know thinks the lower pump prices are "bad news..."
If people save the difference between their new monthly fuel bill and their old one then I could see how this oil drop could be generally bad, but if people keep spending the same monthly amounts of their income as they spent before only now on other consumer items besides oil products, then we should continue on as before at the system level I'd think..
Top line govt spending is approx status quo and there has been no major tax changes in a while...
Sucks for you if you are in the oil business but they have had it pretty good for like 6 years now...
Yes, the drag of austerity was somewhat offset by increasing investment and that was chiefly energy. Now that this seems to be over, continued austerity will take its toll. A lot of the debt may seriously unwind, making matters much worse than a decrease in investment. It's unclear yet what the impact will be, but some are speculating it could provoke another crisis.
Warren has also been focusing in the anemic housing market. Historically, housing is a key component of investment and a housing recovery is a necessary component for economic recovery. That's not happening yet. The strength that has been there has come from multi-unit construction owing to an expanding rental market, but that's not sufficient investment to constitute a housing recovery.
Half the problem with these changes is that it is only clear what was the driver after the fact.
Other than that I'm with Mike on this one. Probably the only way we're going to make progress is if we studiously extract all the money from those people making bets based upon bad thinking.
The economy is slowing down because the deficit is shrinking. The economy is slowing down because the deficit is shrinking. The economy is slowing down because the deficit is shrinking. The economy is slowing down because the deficit is shrinking....
And this:
The euro will go up until it's worthless. The euro will go up until it's worthless. The euro will go up until it's worthless. The euro will go up until it's worthless.
NOT!!!!!!
If you were short stocks and long the euro you are ruined listening to him.
10 comments:
I think we all need to be reading Mosler's latest posts very carefully.
Seems he's solved a mystery that's been bugging me for quite a while. Which is, why has the US Economy continued to recover (at a very modest paste)despite the tax hikes, sequester, etc .... all of that fiscal drag?
And the answer is: The domestic oil production boom. That's the thing that has caused the domestic private sector to spend more than its income, thus offsetting the gov't imposed austerity.
But all of that is about to end, because the Saudi's have lowered the oil price, very specifically to put those operations out of business.
If he's right (and I think he very well may be), we could be in for another recession, probably a bad one.
That's a terrible thing. But my cynical side wonders, now that I understand this thing that few others seem to realize yet ... how to profit from it? I feel slimy even asking that ...
Don't feel slimy. The powers that be have given us no other choice, but to play this casino game.
And careful on giving too much credit to Mosler. He's been wrong for two years.
????
Nobody I know thinks the lower pump prices are "bad news..."
If people save the difference between their new monthly fuel bill and their old one then I could see how this oil drop could be generally bad, but if people keep spending the same monthly amounts of their income as they spent before only now on other consumer items besides oil products, then we should continue on as before at the system level I'd think..
Top line govt spending is approx status quo and there has been no major tax changes in a while...
Sucks for you if you are in the oil business but they have had it pretty good for like 6 years now...
rsp,
@ Ken
Yes, the drag of austerity was somewhat offset by increasing investment and that was chiefly energy. Now that this seems to be over, continued austerity will take its toll. A lot of the debt may seriously unwind, making matters much worse than a decrease in investment. It's unclear yet what the impact will be, but some are speculating it could provoke another crisis.
Warren has also been focusing in the anemic housing market. Historically, housing is a key component of investment and a housing recovery is a necessary component for economic recovery. That's not happening yet. The strength that has been there has come from multi-unit construction owing to an expanding rental market, but that's not sufficient investment to constitute a housing recovery.
Half the problem with these changes is that it is only clear what was the driver after the fact.
Other than that I'm with Mike on this one. Probably the only way we're going to make progress is if we studiously extract all the money from those people making bets based upon bad thinking.
Money is power - particularly in the US.
Still wondering what Mike thinks Warren got wrong over the last two years?
Charles, do you read his posts?
The economy is slowing down because the deficit is shrinking. The economy is slowing down because the deficit is shrinking. The economy is slowing down because the deficit is shrinking. The economy is slowing down because the deficit is shrinking....
And this:
The euro will go up until it's worthless. The euro will go up until it's worthless. The euro will go up until it's worthless. The euro will go up until it's worthless.
NOT!!!!!!
If you were short stocks and long the euro you are ruined listening to him.
Why/what does WM spend on research?
You know what??? It's Christmas. I'm gonna let this go. But I don't think that's fair and friendly criticism of Warren.
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