Author Topic: Let Rent-Seekers Fail  (Read 5246 times)

rb

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Re: Let Rentiers Fail
« Reply #10 on: April 28, 2020, 01:22:45 PM »
How else will we generate the much sought after and legendary hyperinflation if we don't bail everyone out?
Deposit 1,000 every month in their account for everyone who has a job and makes under 100k per year and watch that shit fly! Hell that's only about 2.3T of new money PER YEAR. At 2.3T you're a pussy these days and that may only get you inflation. You want high inflation better dial that baby up to 2k per month and index it to inflation. That's still just a paltry 5T or so. See? Easy


SHDL

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Re: Let Rentiers Fail
« Reply #11 on: April 28, 2020, 01:33:19 PM »
My hunch is that this type of political outrage, rather than the market’s ability/willingness to absorb US government debt, will be what ultimately limits the government’s ability to keep the stimulus programs going forever. The day we reach that limit will likely be the “Lehman moment” of this cycle.

scorpioncapital

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Re: Let Rentiers Fail
« Reply #12 on: April 28, 2020, 01:39:19 PM »
The problem is there is no political outrage when you bail out the regular people. They keep asking for more and more. The problem before was Wall Street was bailed out. But I don't think anyone is complaining Main Street is being bailed out. But this kind of populism ends when it becomes obvious to the people that the dollar in their pocket is now worth 25 cents.

rb

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Re: Let Rentiers Fail
« Reply #13 on: April 28, 2020, 01:47:32 PM »
The thing is that it's not main street that is being bailed out. Main street is gonna take it in the ass. They won't understand all the financial mumbo jumbo but they'll feel a pain around the back and will have a pretty good idea where it came from.

DooDiligence

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Re: Let Rentiers Fail
« Reply #14 on: April 28, 2020, 01:51:01 PM »
The problem is there is no political outrage when you bail out the regular people. They keep asking for more and more. The problem before was Wall Street was bailed out. But I don't think anyone is complaining Main Street is being bailed out. But this kind of populism ends when it becomes obvious to the people that the dollar in their pocket is now worth 25 cents.

I doubt the average individual will understand & will in fact be confused by the whole set up.

When I was working overseas, I'd go ashore & there were always crew members who'd get excited when they got 40 or 50 of the local currency in exchange for a dollar & they thought they were getting a deal.

TBF, sometimes we actually were getting a deal because food, drinks & touristy crap were super cheap whether you used local currency or USD (early 90's Venezuela comes to mind).

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Jurgis

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Re: Let Rentiers Fail
« Reply #15 on: April 28, 2020, 02:16:11 PM »
The thing is that it's not main street that is being bailed out. Main street is gonna take it in the ass.

Pretty much this.
"Human civilization? It might be a good idea." - Not Gandhi
"Before you can be rich, you must be poor." - Nef Anyo
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LC

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Re: Let Rentiers Fail
« Reply #16 on: April 28, 2020, 02:35:22 PM »
Oh the irony, this clip from back in 2001:

https://youtu.be/rtnF5gIfhYQ?t=91
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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TwoCitiesCapital

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Re: Let Rentiers Fail
« Reply #17 on: April 28, 2020, 02:43:16 PM »
How else will we generate the much sought after and legendary hyperinflation if we don't bail everyone out?
Deposit 1,000 every month in their account for everyone who has a job and makes under 100k per year and watch that shit fly! Hell that's only about 2.3T of new money PER YEAR. At 2.3T you're a pussy these days and that may only get you inflation. You want high inflation better dial that baby up to 2k per month and index it to inflation. That's still just a paltry 5T or so. See? Easy

If this is funded by the Treasury, I'd argue it's still deflationary long-term. Debt is inflationary upon issuance and deflationary upon service/repayment. 

The only way this type of system successfully raises sustainable inflation would be a system that requires CONSTANT growth in the debt and CONSTANT acceleration in that growth. Otherwise as the debt stock grows, the inflationary impulse of the incremental debt add isn't enough to exceed the deflationary impulse of servicing the debt stock.

This system is ruined by a Fed EVER raising rates or by a gov't ever balancing its budget. Note that this environment is roughly approximate by the U.S. from 2008 - 2017. Massive deficits, on/off acceleration in that deficit growth rate, and a Fed keeping rates low for years on end. And even that was not enough to spur inflation - and as soon as the Fed hit a period of consistently rising rates (2017), the inflation trend dropped off a cliff in 2018 and kept dropping even after the Fed admitted the policy error and cut rates.

I just don't think it's politically or economically feasible for the Treasury to commit to massive deficit spending, massive acceleration in that deficit spending growth, and the Fed committing to keep rates at 0% while it happens. At some point, the deflationary impulse just becomes a black whole and you can't escape it.

rb

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Re: Let Rentiers Fail
« Reply #18 on: April 28, 2020, 03:23:39 PM »
How else will we generate the much sought after and legendary hyperinflation if we don't bail everyone out?
Deposit 1,000 every month in their account for everyone who has a job and makes under 100k per year and watch that shit fly! Hell that's only about 2.3T of new money PER YEAR. At 2.3T you're a pussy these days and that may only get you inflation. You want high inflation better dial that baby up to 2k per month and index it to inflation. That's still just a paltry 5T or so. See? Easy

If this is funded by the Treasury, I'd argue it's still deflationary long-term. Debt is inflationary upon issuance and deflationary upon service/repayment. 

The only way this type of system successfully raises sustainable inflation would be a system that requires CONSTANT growth in the debt and CONSTANT acceleration in that growth. Otherwise as the debt stock grows, the inflationary impulse of the incremental debt add isn't enough to exceed the deflationary impulse of servicing the debt stock.

This system is ruined by a Fed EVER raising rates or by a gov't ever balancing its budget. Note that this environment is roughly approximate by the U.S. from 2008 - 2017. Massive deficits, on/off acceleration in that deficit growth rate, and a Fed keeping rates low for years on end. And even that was not enough to spur inflation - and as soon as the Fed hit a period of consistently rising rates (2017), the inflation trend dropped off a cliff in 2018 and kept dropping even after the Fed admitted the policy error and cut rates.

I just don't think it's politically or economically feasible for the Treasury to commit to massive deficit spending, massive acceleration in that deficit spending growth, and the Fed committing to keep rates at 0% while it happens. At some point, the deflationary impulse just becomes a black whole and you can't escape it.
Hey buddy, where did I ever talk about Fed raising rates or gov'ts balancing budgets. You can't do that while constantly depositing money into consumers' accounts. In fact I specifically mentioned an indexing of that amount to inflation. That's how you get yourself some nice inflation. A good 'ol wage-price spiral.

The fact was that we never did inflationary shit. What the fed did was mostly asset side balance sheet stuff. During 2008-2014/5 the fed gov't did run some deficits but that was to replace some consumer demand deficit during deleveraging. Smart, generally inadequate, and nothing too revolutionary. Boring textbook stuff. Once the Tremendous Trump comes in and we really run some deficits again that's on the asset side. Give money to rich folks that buy stocks/bonds, blah. Give lots of money to corporations that buy back stock. All asset side yawn.

Oh and while all this shit is going down the Fed is busy sanitizing all this supply via bank reserve requirements. Mopping all the slosh they generated all over the place. The fact is that the Fed has been very careful not to generate inflation. Which is very pertinent to this thread because rentiers hate inflation.

So you want real inflation? You need to engage the P&L baby. You need to have more money out there chasing so many goods that the economy cannot produce. You give money not to some stiff suit but some Duck Dynasty Arkansas hillbilly motherfuckers that don't know what a Robinhood is. Inflation index that shit and then watch the sparks fly.

TwoCitiesCapital

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Re: Let Rentiers Fail
« Reply #19 on: April 28, 2020, 05:38:02 PM »
How else will we generate the much sought after and legendary hyperinflation if we don't bail everyone out?
Deposit 1,000 every month in their account for everyone who has a job and makes under 100k per year and watch that shit fly! Hell that's only about 2.3T of new money PER YEAR. At 2.3T you're a pussy these days and that may only get you inflation. You want high inflation better dial that baby up to 2k per month and index it to inflation. That's still just a paltry 5T or so. See? Easy

If this is funded by the Treasury, I'd argue it's still deflationary long-term. Debt is inflationary upon issuance and deflationary upon service/repayment. 

The only way this type of system successfully raises sustainable inflation would be a system that requires CONSTANT growth in the debt and CONSTANT acceleration in that growth. Otherwise as the debt stock grows, the inflationary impulse of the incremental debt add isn't enough to exceed the deflationary impulse of servicing the debt stock.

This system is ruined by a Fed EVER raising rates or by a gov't ever balancing its budget. Note that this environment is roughly approximate by the U.S. from 2008 - 2017. Massive deficits, on/off acceleration in that deficit growth rate, and a Fed keeping rates low for years on end. And even that was not enough to spur inflation - and as soon as the Fed hit a period of consistently rising rates (2017), the inflation trend dropped off a cliff in 2018 and kept dropping even after the Fed admitted the policy error and cut rates.

I just don't think it's politically or economically feasible for the Treasury to commit to massive deficit spending, massive acceleration in that deficit spending growth, and the Fed committing to keep rates at 0% while it happens. At some point, the deflationary impulse just becomes a black whole and you can't escape it.
Hey buddy, where did I ever talk about Fed raising rates or gov'ts balancing budgets. You can't do that while constantly depositing money into consumers' accounts. In fact I specifically mentioned an indexing of that amount to inflation. That's how you get yourself some nice inflation. A good 'ol wage-price spiral.

The fact was that we never did inflationary shit. What the fed did was mostly asset side balance sheet stuff. During 2008-2014/5 the fed gov't did run some deficits but that was to replace some consumer demand deficit during deleveraging. Smart, generally inadequate, and nothing too revolutionary. Boring textbook stuff. Once the Tremendous Trump comes in and we really run some deficits again that's on the asset side. Give money to rich folks that buy stocks/bonds, blah. Give lots of money to corporations that buy back stock. All asset side yawn.

Oh and while all this shit is going down the Fed is busy sanitizing all this supply via bank reserve requirements. Mopping all the slosh they generated all over the place. The fact is that the Fed has been very careful not to generate inflation. Which is very pertinent to this thread because rentiers hate inflation.

So you want real inflation? You need to engage the P&L baby. You need to have more money out there chasing so many goods that the economy cannot produce. You give money not to some stiff suit but some Duck Dynasty Arkansas hillbilly motherfuckers that don't know what a Robinhood is. Inflation index that shit and then watch the sparks fly.

Wasn't saying you did, but also don't think it's politically or economically feasible to do $2000/month without raising taxes or rising rates - both if which would reduce the inflationary impulse.

That was kind of the point. Not just enough to spend. Have to constantly spend , constantly increase spending, and prevent rising rates from slowing down the economy at the same time.