tag:blogger.com,1999:blog-2761684730989137546.post6772522277670246974..comments2024-03-29T07:30:30.121-04:00Comments on Mike Norman Economics: Bill Mitchell — US growth surprise will not lastmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger25125tag:blogger.com,1999:blog-2761684730989137546.post-5091295186549095452018-08-01T21:38:32.811-04:002018-08-01T21:38:32.811-04:00Drive out the moderates and then the Libertarians....Drive out the moderates and then the Libertarians. Sounds like a "winning" strategy;<br /><br />Politico has Biden 7 points up on Trump in 2020, and HRC did win the popular vote.<br /><br />The GOP had better focus on the electoral college vote.<br /><br />BTW, HRC wining the popular vote but losing on a technical quirk in the US political system makes a mockery of Russia influencing the election. They knew the key swing states and worked their magic there? Really?Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-21501516298316739242018-08-01T21:32:58.801-04:002018-08-01T21:32:58.801-04:00I was describing how current Fed policy operates u...I was describing how current Fed policy operates using the thinking behind NAIRU and the Phillips curve. They realize that this is not a very good theory for precise forecasting, so they have to rely on discretion.<br /><br />This means as the economy begins to expand after a contraction, there Fed has to begin to raise rates gradually to in anticipation of increasing inflation expectations. There is a lead time for monetary policy to work, since it operates chiefly through the housing channel. But as incomes rise in an expansion, people become more creditworthy or at least don't become less creditworthy. So the Fed needs to get aheads of the curve early on, so that the inflation doesn't explode and they need to go all Volcker.<br /><br />Of course, I am not endorsing this. For one thing it is a flawed analysis from the MMT POV. But this is how they think and operate.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-87300562970954120782018-08-01T21:07:01.139-04:002018-08-01T21:07:01.139-04:00This is how NAIRU operates.
I read this comment n...<i>This is how NAIRU operates.</i><br /><br />I read this comment not as a general endorsement of the NAIRU but rather a contention of what it does actually show (in your opinion)--am I reading you correctly?TofuNFiatRGood4Uhttps://www.blogger.com/profile/16329254725092384096noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72901961273541752232018-08-01T06:28:28.218-04:002018-08-01T06:28:28.218-04:00Bank assets are always increasing:
https://fred.s...Bank assets are always increasing:<br /><br />https://fred.stlouisfed.org/graph/fredgraph.png?g=kIpq<br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-19177807493229948152018-07-31T22:49:16.175-04:002018-07-31T22:49:16.175-04:00BTW, it's also why cb's raise rates gradua...BTW, it's also why cb's raise rates gradually. They want to avoid having to pull a Volcker if they wait too long.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-89665420651598748102018-07-31T22:02:33.737-04:002018-07-31T22:02:33.737-04:00They always seek to increase lending... why would ...<i>They always seek to increase lending... why would they instead “cut back lending”?</i><br /><br />Do you have any friends that are loan officers or have been loan officers. They hate NPL's charged to loans they made. It is a career killer.<br /><br />This is what makes banks effective at credit assessment and contributes to profit by reducing loss exposure.<br /><br />As interest rates rise, more people get turned down for insufficient income, unless wages are rising to support the higher monthly nut.<br /><br />This is dynamic and happening in aggregate at the macro level.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-33865548046408947772018-07-31T21:56:50.147-04:002018-07-31T21:56:50.147-04:00The standard m.o. of the cb when it wants to addre...The standard m.o. of the cb when it wants to address an overheating economy, meaning rising real wages, then it raises the interest rates. This makes current and future borrowing more costly. That reduces the number of people that qualify for loans. This affects big ticket items that drive the economy like housing and vehicle sales. As private debt stops accelerating at the same pace, businesses that had projected increasing future sales find inventories building and reduce quantity, including labor quantity. Those laid off can't meet their debt obligations and NPL increase. Backs keep watch on NPL's and when the increase they take it as a signal to further tighten. Then there is a cascading effect between business and finance. This is how NAIRU operates.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-52065930911468323422018-07-31T21:43:05.715-04:002018-07-31T21:43:05.715-04:00“When the bank's cut back lending”
They alway...“When the bank's cut back lending”<br /><br />They always seek to increase lending... why would they instead “cut back lending”?Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-60002200415317697892018-07-31T21:38:08.783-04:002018-07-31T21:38:08.783-04:00Income would just have to stay the same in order t...Income would just have to stay the same in order to service existing debt it doesn’t have to increase... you just said you need the income FIRST...<br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-67154258622357741602018-07-31T20:50:41.095-04:002018-07-31T20:50:41.095-04:00At the same time? You just said you need the incom...<i> At the same time? You just said you need the income FIRST to get the loan at all.... </i> <br /><br />Its' dynamic.<br /><br />See Irving Fishers's debt-deflation theory of depression. <br /><br />When the bank's cut back lending, then the economy contracts but the loans outstanding remains on the same terms unless restructured, which banks are not usually wont to do.<br /><br />If means that in aggregate, income becomes less and less sufficient to meet existing credit obligations and non-preforming loans rise and defaults increase.<br /><br />This is pretty much how the finance cycle corresponds to the business cycle.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-48291618121557991262018-07-31T20:37:29.836-04:002018-07-31T20:37:29.836-04:00Are you long the home builder stocks or something?...Are you long the home builder stocks or something?Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-31228345316107557882018-07-31T20:36:34.902-04:002018-07-31T20:36:34.902-04:00So what is wrong with living with mom?
You soun...So what is wrong with living with mom? <br /><br />You sound like you’ve been watching Fox News...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-49840995498529019912018-07-31T20:35:14.816-04:002018-07-31T20:35:14.816-04:00And this now:
“Indeed, the BEA informed users tha...And this now:<br /><br />“Indeed, the BEA informed users that it has conducted a comprehensive revision of the National Accounts which includes more accurate data sources and better estimation methodologies. So I had to revise my entire dataset today”<br /><br />Now they are going to blame the data revisions for being bearish for like the last 5 years... <br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-52790708354764129012018-07-31T20:32:08.937-04:002018-07-31T20:32:08.937-04:00CNBC (10 May 2018)
A growing share of millennials ...CNBC (10 May 2018)<br /><a href="https://www.cnbc.com/2018/05/10/nearly-25-percent-of-millennials-live-with-their-mom-.html" rel="nofollow">A growing share of millennials are living with mom</a><br /><br /><i> Nearly 23 percent of millennials live with mom, up from 13.5 percent in 2005.<br /><br />Aaron Terrazas, senior economist at Zillow, blames rising housing costs and relatively lackluster wages.</i> Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-38780362433282364382018-07-31T20:31:09.945-04:002018-07-31T20:31:09.945-04:00“Incomes have to rise to support the creditworthin...“Incomes have to rise to support the creditworthiness needed for loans.”<br /><br />Right but then how can one say this:<br /><br />“incomes must also grow for the increased debt to be sustainable over time”<br /><br />At the same time? You just said you need the income FIRST to get the loan at all....<br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-36139573181107576212018-07-31T20:22:41.429-04:002018-07-31T20:22:41.429-04:00What are they living in their cars?What are they living in their cars?Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-12525182026778811582018-07-31T20:08:57.428-04:002018-07-31T20:08:57.428-04:00Maybe millennials can't afford rent let alone ...Maybe millennials can't afford rent let alone ownership. <br /><br />Except it's not "maybe". From 2000 to 2016, real median home prices increased by 29%, but young adult per capita real incomes increased only 1%.<br />Noah Wayhttps://www.blogger.com/profile/12012500819097539976noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-37625560910583088122018-07-31T19:10:25.559-04:002018-07-31T19:10:25.559-04:00Maybe millennials don’t want the maintenance respo...Maybe millennials don’t want the maintenance responsibility that comes with home ownership... they might rather spend their off time enjoying themselves....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-59956820400557102882018-07-31T18:06:44.449-04:002018-07-31T18:06:44.449-04:00Regardless of how much banks are willing and able ...Regardless of how much banks are willing and able to lend at the absolute level, the relative level is dependent on creditworthiness and income is a key determinant of this. Incomes have to rise to support the creditworthiness needed for loans.<br /><br />In addition, housing a primary driver of economic growth. As interest rates rise, fewer and fewer people qualify for the monthly nut base on income unless incomes rise to support the higher monthly.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-77289407121438049792018-07-31T16:08:34.988-04:002018-07-31T16:08:34.988-04:00“On net, we can say that the economy is likely get...“On net, we can say that the economy is likely getting some near-term boost from the tax cut,”<br /><br />Wrong....<br /><br />Again from Mikes report:<br /><br />“Corporation taxes, $203.5 bln, down $53.2 bln y-o-y.”<br /><br />So the Trump tax increase on previous retained foreign earnings was 250b (incl 30b+ for banks) and mike has the data here showing they are only saving at most 50b in the 6 months since ...<br /><br /> so far a net 200b tax increase and is causing the shitty 2018 so far... won’t leave the trailing 12 months data until after 4Q 2018 reports... so we may be screwed for the rest of the year due to Trumps “pay fors”...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-35756958221687396162018-07-31T15:33:19.843-04:002018-07-31T15:33:19.843-04:00Just have the public buy some bank shares...Just have the public buy some bank shares...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-90998470687880478752018-07-31T14:40:47.221-04:002018-07-31T14:40:47.221-04:00... this can foment higher levels of bank credit ....<i>... this can foment higher levels of bank credit ...</i> Franko<br /><br />More accurately: <br /><br /><i>... this can foment higher levels of <b>the public's credit but for private gain</b>...</i>Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-73129940159355087322018-07-31T14:19:59.378-04:002018-07-31T14:19:59.378-04:00From Mikes latest report :
“Fiscal flows
Spending...From Mikes latest report :<br /><br />“Fiscal flows<br />Spending for the month of July thru July 26 was $276.7 bln. That is up $22.1 bln vs same time last year.<br />Total spending for the fiscal year thus far, $3.88T, up $126.8 bln over last year and growing at 3.4% y-o-y. This is just off the highest spending rate all year, but spending continues to trend higher as you can see from the graph on page 8.”<br /><br />Fiscal is up over 3.4% YoY not too shabby... this can foment higher levels of bank credit...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-81075883154019134372018-07-31T10:56:45.803-04:002018-07-31T10:56:45.803-04:00The increased savings over investment would imply ...<i>The increased savings over investment would imply that owners expect a better return from financial investment than productive investment</i><br /><br />There is very little "financial investment" as opposed to "productive investment" absent the fiat funny money system. One need not worry about inflation hedges if there is no inflation. There will be very few investment bubbles if funny money is not there to blow them up. Absent the funny money, the only profits available must come from satisfying consumer demands.<br /><br />Of course, since the free market does not lead to monopoly, unemployment or stagnation, there is never a good excuse for violent government intervention in the market. Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46906945017672705792018-07-31T10:40:29.792-04:002018-07-31T10:40:29.792-04:00To the degree that the consolidated domestic priva...<i>To the degree that the consolidated domestic private sector is driving growth, growth of private debt is the key driver.</i> Tom Hickey<br /><br />The issuance of common stock is another way to finance growth and without debt and profit taking. But why share equity when a government-privileged usury cartel allows one to use what is in essence then, the public's credit but for private gain?<br /><br /><i>Growth based on expanding private debt is income-dependent, and incomes must also grow for the increased debt to be sustainable over time.</i> Tom Hickey<br /><br />A Citizen's Dividend is a straightforward, ethical means, beyond normal deficit spending by the monetary sovereign for the general welfare, to provide the aggregate interest required for private debt. How to finance? By negative yields and interest on the inherently risk-free debt of the monetary sovereign, including bank reserves, but with a negative-interest-free exemption for individual citizen checking/debit accounts at the Central Bank itself.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.com