The New Gilded Age

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Holman
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Re: The New Gilded Age

Post by Holman »

noxiousdog wrote: Thu Jul 08, 2021 9:13 pm
hepcat wrote: Thu Jul 08, 2021 8:08 pm Without putting measures in place to cap success, there's no way to prevent some from rising above others. I have days where I think capitalism is fine, and others where I don't. But I know enough to realize I have no clue as to how to resolve wealth disparity. It's a far more human issue than I believe most think it is.
Especially when it's random people voting you a billionaire. Effectively, Holman thinks the government should confiscate 99.99% of Bezos's ownership of Amazon because other people like his company. Echo Musk, Buffett, etc.
Your post isn't very clear, so perhaps I'm misinterpreting it, but I don't think the gov't should confiscate Bezo's ownership. I just think he should pay most of his profits above a certain level in taxes.

He'll continue to own his company and continue to gain a huge amount of money day after day, but a large proportion of his huge gains (which were only made possible in the first place by public resources) will go to the public good.

Everyone should be happy with that.
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malchior
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Re: The New Gilded Age

Post by malchior »

It's also important to step back and look at the bigger picture which is the point of the thread IMO. Our version of capitalism has been a great success for a very small population of people. It has been good for many. And it has been horrible for many as well. Big picture it is starting to look like an entire generation is falling hopelessly behind people only 10-15 years older than them and then you have all the marginalized groups. That has broad implications.

Economic policy has been distorted to serve the Bezos of the world at their expense and efforts to address that are ignored or batted away as "inflationary" or unaffordable. These issues are treated as if they are somehow completely disconnected from the fact that the Bezos of the world are sitting on dragon's hoards. Some people will rise above, however currently our economic policy has enabled wealth inequality that is smothering our potential, leading to unrest and discontent, and driving the breakdown in politics that has paralyzed us.
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Re: The New Gilded Age

Post by noxiousdog »

Holman wrote: Thu Jul 08, 2021 9:38 pm
noxiousdog wrote: Thu Jul 08, 2021 9:13 pm
hepcat wrote: Thu Jul 08, 2021 8:08 pm Without putting measures in place to cap success, there's no way to prevent some from rising above others. I have days where I think capitalism is fine, and others where I don't. But I know enough to realize I have no clue as to how to resolve wealth disparity. It's a far more human issue than I believe most think it is.
Especially when it's random people voting you a billionaire. Effectively, Holman thinks the government should confiscate 99.99% of Bezos's ownership of Amazon because other people like his company. Echo Musk, Buffett, etc.
Your post isn't very clear, so perhaps I'm misinterpreting it, but I don't think the gov't should confiscate Bezo's ownership. I just think he should pay most of his profits above a certain level in taxes.

He'll continue to own his company and continue to gain a huge amount of money day after day, but a large proportion of his huge gains (which were only made possible in the first place by public resources) will go to the public good.

Everyone should be happy with that.
How are you going to have him specifically pay "most of his profits"? Over 180 billion of Bezos's worth is Amazon stock.
Black Lives Matter

"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
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LordMortis
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Re: The New Gilded Age

Post by LordMortis »

noxiousdog wrote: Fri Jul 09, 2021 11:33 am
Holman wrote: Thu Jul 08, 2021 9:38 pm
noxiousdog wrote: Thu Jul 08, 2021 9:13 pm
hepcat wrote: Thu Jul 08, 2021 8:08 pm Without putting measures in place to cap success, there's no way to prevent some from rising above others. I have days where I think capitalism is fine, and others where I don't. But I know enough to realize I have no clue as to how to resolve wealth disparity. It's a far more human issue than I believe most think it is.
Especially when it's random people voting you a billionaire. Effectively, Holman thinks the government should confiscate 99.99% of Bezos's ownership of Amazon because other people like his company. Echo Musk, Buffett, etc.
Your post isn't very clear, so perhaps I'm misinterpreting it, but I don't think the gov't should confiscate Bezo's ownership. I just think he should pay most of his profits above a certain level in taxes.

He'll continue to own his company and continue to gain a huge amount of money day after day, but a large proportion of his huge gains (which were only made possible in the first place by public resources) will go to the public good.

Everyone should be happy with that.
How are you going to have him specifically pay "most of his profits"? Over 180 billion of Bezos's worth is Amazon stock.
I'm not going to begin to defend Holman's position but you can start by revamping the tax system to prevent escaping taxes by taking loans or allowing tax sheltered margin purchases against equities. You can move on to look at how wealth is retained with capital deprecation over assets retained and insist that fully depreciated items be disposed of at their depreciated value. The tax code is just designed to allow ultra wealthy to retain the lion's share of their income (wealth building) as if it were retained wealth and not taxable at all.

These are questions for Zarathud which he has spoken of in the past.

https://www.fool.com/investing/2017/11/ ... gains.aspx

https://www.cnbc.com/id/48220824

https://sabr.org/journal/article/the-ro ... to-losses/
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Re: The New Gilded Age

Post by malchior »

Biden is looking to trust bust

Well guess his economists agree with the assessments that our competitive landscape is anything but. Early commentary is that this won't go far but might as well give it a shot even if big money eventually shuts it down.
President Biden signed a sweeping executive order on Friday aimed at spurring competition across the economy, encouraging federal agencies to take a wide range of actions, including more closely scrutinizing the tech industry, cracking down on high fees charged by sea shippers and allowing hearing aids to be sold over the counter.

“What we’ve seen over the past few decades is less competition, and more concentration that holds our economy back,” Mr. Biden said in the White House on Friday, shortly before signing the order, citing the agriculture, tech and pharmaceutical industries. “Rather than competing for consumers, they are consuming their competitors. Rather than competing for workers, they’re finding ways to gain the upper hand on labor.”

The order reflects the administration’s growing embrace of warnings by some economists that declining competition is hobbling the economy’s vitality, raising prices and reducing choices for consumers in key areas, while dampening pay and restricting freedom to change jobs for workers. Progressive groups celebrated it, while some business groups criticized it harshly.

But Mr. Biden may find challenges in addressing that competition decline across diverse sectors of the economy — including Silicon Valley, Wall Street, chain restaurants and large hospital networks — solely through executive action. Experts warn that in many areas, the president will need to work with Congress to change federal laws if he hopes to have more success than former President Donald J. Trump, who also issued competition-focused executive orders and saw limited results from them.
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Holman
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Re: The New Gilded Age

Post by Holman »

noxiousdog wrote: Fri Jul 09, 2021 11:33 am How are you going to have him specifically pay "most of his profits"? Over 180 billion of Bezos's worth is Amazon stock.
I'm not going to pretend to be well-versed in economics, but I do know that for decades we've been re-engineering the economy to redistribute wealth upwards rather than down. I'm sure there are intelligent economists with ideas about how to return to an era before the Reagan Republicans started us on that path.
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Re: The New Gilded Age

Post by noxiousdog »

Holman wrote:
noxiousdog wrote: Fri Jul 09, 2021 11:33 am How are you going to have him specifically pay "most of his profits"? Over 180 billion of Bezos's worth is Amazon stock.
I'm not going to pretend to be well-versed in economics, but I do know that for decades we've been re-engineering the economy to redistribute wealth upwards rather than down. I'm sure there are intelligent economists with ideas about how to return to an era before the Reagan Republicans started us on that path.
When you say distributing the wealth upwards, what you really mean is distributing it to savers.

Entrepreneurs, as soon as it became a thing, have always been at the top. See: Venice, the East India company, Rockefeller, etc. Unless you plan on forcing these folks to sell portions of their company, there's not much you can do to change it. There are certainly ways to do it, but there's not much consensus. My personal idea is to force a percentage of corporate income to be distributed, which would trigger income taxes on the owners.

But don't forget the largest owners of corporations in America is the California teachers Union. Whatever rules you want to drop on Bezos et. al. will need to apply across the board. Maybe it's time for that, but good luck getting any consensus.

Black Lives Matter

"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Sun Jul 11, 2021 12:09 pmWhen you say distributing the wealth upwards, what you really mean is distributing it to savers.
This is an odd take on the economic evidence. Wealth is concentrating. The implication is the people at the bottom aren't savers due to choice when the problem is that their incomes and economic conditions don't support them saving. They're constantly falling behind as cost of living outstrips gains in income vs. productivity. We have pretty conclusive evidence this is the case now.

Edit: In fact, we have a savings rate oddity right now. Many people started saving at much higher rates when the pandemic started, and stayed very elevated as we started carpet bombing money, and it has remained higher. This might indicate they finally had extra money to save above and beyond their baselines. It isn't conclusive but it'll be interesting to see if the rate drops back to baseline in a year or two.
noxiousdog wrote:My personal idea is to force a percentage of corporate income to be distributed, which would trigger income taxes on the owners.
I like this idea too but it is one of many reforms needed. We need legislation to increase business competitiveness, and we need more worker protections for starters.
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Re: The New Gilded Age

Post by Zarathud »

LordMortis wrote: Fri Jul 09, 2021 1:44 pm I'm not going to begin to defend Holman's position but you can start by revamping the tax system to prevent escaping taxes by taking loans or allowing tax sheltered margin purchases against equities. You can move on to look at how wealth is retained with capital deprecation over assets retained and insist that fully depreciated items be disposed of at their depreciated value. The tax code is just designed to allow ultra wealthy to retain the lion's share of their income (wealth building) as if it were retained wealth and not taxable at all.
1. Loans by themselves aren't bad, and there used to be tighter rules prohibiting borrowing against stock and insurance.
2. Capital depreciation over time makes sense, but the Trump tax rules allowing for 100% depreciation of business assets upon purchase are incredibly destructive to tax fairness.
3. Republicans pushed the tax code to favor capital growth and not wage growth. 1/2 tax rates on workers is just wrong, and counterproductive.
4. The Republican war on labor unions has also been destructive, and unfairly promoted capital growth of owners. Strong labor markets where workers can demand higher wages offset the natural power of a business owner. We're seeing that now in restaurants -- enough people with skills have left the industry that owners need to offer a premium hourly wage to get good workers.
5. The problem with tax shelters is that once you depreciate to zero basis, there are major tax liabilities left. If the taxpayer can defer the income tax during their lifetime, an estate tax would force the tax to be collected. But the threshold for paying estate taxes went from $650,000 to $5,850,000 then to $11,700,000 due to Trump. Letting each spouse shelter an extra $11 million is going to allow concentrated capital to pass on for generations.

You're no longer a saver at that point, but won the birth lottery.
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Re: The New Gilded Age

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malchior wrote:This is an odd take on the economic evidence. Wealth is concentrating. The implication is the people at the bottom aren't savers due to choice when the problem is that their incomes and economic conditions don't support them saving.
This is complicated. Yes, there is definitely issues at the lower economic levels. If people can't save, there's clearly an issue. I suspect simply taking health care costs out of personal expenses and treating it as a fundamental right would add huge amounts to the median income. Somewhere around 30% if I remember correctly.

However, all you have to do is look at how many pickup trucks and SUVs are sold and on the road to realize there's a huge savings issue for 60% of the country. Economists #1 recommendation for increased savings is to move 401k defaults to opt in.

I have seen very few studies that track wealth over time. There is a lot of income comparisons, but it's pretty meaningless when you're comparing entry level to 30 year career folk.

All that being said, I'm in favor of a wealth tax of some kind. But that alone isn't going to change much except maybe make us feel better.
Black Lives Matter

"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
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Re: The New Gilded Age

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Zarathud wrote:Letting each spouse shelter an extra $11 million is going to allow concentrated capital to pass on for generations.

You're no longer a saver at that point, but won the birth lottery.
While this is true, and I sympathize, how much difference does it make when 60 year olds are inheriting 85 year olds assets?
Black Lives Matter

"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
malchior
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Sun Jul 11, 2021 4:20 pmHowever, all you have to do is look at how many pickup trucks and SUVs are sold and on the road to realize there's a huge savings issue for 60% of the country.
I mean maybe...but I think the problem is incomes for most - not spending. Housing and healthcare costs are eating folks alive. Sure they could all be driving beaters but that is an issue around the edges of the core issue.
Economists #1 recommendation for increased savings is to move 401k defaults to opt in.
It'd work but the 401K itself has been a problem child. Administering 401K plans is onerous for small businesses and they are rife with all sorts of fees and gotchas in smaller plans. I remember there was talk that Congress was going to allow small companies to pool into 401K plans but it hasn't happened yet.
I have seen very few studies that track wealth over time. There is a lot of income comparisons, but it's pretty meaningless when you're comparing entry level to 30 year career folk.
I mean we have pretty clear evidence that several cohorts are way behind their parents. Not all the reasons are clear but a decade ago we were talking about this as a real problem emerging and it's here. It can't be denied any longer.

Quick indicators of trouble spots:

* The median first time house buyer age is has increased from 28 to 33 since 1981

*The median age of house buyers overall was 31 in 1981 and it's 47 now, etc.

* Household formation spiked with COVID but has been lower and getting older over the last decade

* The median millennial has a net worth 25% less than their parents at the same age.

It appears we're not only concentrating wealth, we are pushing it older and older people (which is a bit natural obviously). Yet the median boomer at 65 has has far, far too little savings to retire. It's all concentrated in very few households.

This means they largely aren't leaving the workforce (at least pre-covid), command higher wages, and limit upward mobility for younger people. Lack of opportunity and promotion opportunities is dragging down incomes below them as well.
All that being said, I'm in favor of a wealth tax of some kind. But that alone isn't going to chantwetge much except maybe make us feel better.
I mean it's a nice idea in theory but it's probably unconstitutional and besides wealth wouldn't let it happen.
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Re: The New Gilded Age

Post by Zarathud »

noxiousdog wrote:
Zarathud wrote:Letting each spouse shelter an extra $11 million is going to allow concentrated capital to pass on for generations.

You're no longer a saver at that point, but won the birth lottery.
While this is true, and I sympathize, how much difference does it make when 60 year olds are inheriting 85 year olds assets?
If I’m creating the trust, the 60 year olds can move assets to the 30 year olds without further estate taxes. Others convince the 60 year olds to give up any claim to the money so the grandkids inherit.
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Re: The New Gilded Age

Post by Kraken »

Today Richard Branson beat Jeff Bezos into "space." While I wasn't hoping for a crash-and-burn, I wasn't rooting for success, either.

(Branson passed the 50-mile altitude that the US considers to be the boundary, but didn't reach the 62-mile mark (100 km) that the rest of the world recognizes. Bezos will do that later this month.)

At least Elon Musk isn't about joyrides for the rich. If you're a billionaire who wants a space program, try to have a bigger point than egoboo.
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Re: The New Gilded Age

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It doesn't bother me. If I had that kind of cash , going to space would definitely be on my bucket list.
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Re: The New Gilded Age

Post by noxiousdog »

malchior wrote: Sun Jul 11, 2021 5:00 pmI mean maybe...but I think the problem is incomes for most - not spending. Housing and healthcare costs are eating folks alive. Sure they could all be driving beaters but that is an issue around the edges of the core issue.
Housing is about the nearest thing we have to an open and competitive market. It's the biggest reason I'm skeptical of universal basic income. People with more money buy more house. If we all have more money, we all buy more house and the prices go up. Median house square footage has risen 15% since 2000.

Healthcare is absolutely a problem and probably the main factor. Take the $10,000 of per capita rise in health care costs (since 1970) and incomes don't look nearly as bad.
Black Lives Matter

"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Mon Jul 12, 2021 10:23 am
malchior wrote: Sun Jul 11, 2021 5:00 pmI mean maybe...but I think the problem is incomes for most - not spending. Housing and healthcare costs are eating folks alive. Sure they could all be driving beaters but that is an issue around the edges of the core issue.
Housing is about the nearest thing we have to an open and competitive market. It's the biggest reason I'm skeptical of universal basic income. People with more money buy more house. If we all have more money, we all buy more house and the prices go up. Median house square footage has risen 15% since 2000.
First, I'd solidly dispute the idea that housing is an open, competitive market. We have a large shortfall of supply tied to various regional issues which interacts with the bigger inequality issues.

In this environment, I think increases in square footage are logically tied to who new houses are being marketed to - older people with more money. I believe that is more indicative of a problem we face in housing affordability. Builders aren't building houses that are affordable for younger people because they aren't buying. And more so it is that they have less ability to buy. There are also restrictive land use problems in some regions and relatively thin margins so they build bigger/more expensive to extract as much profit as possible. It's another system that is unhealthy in our economy. I think that is hardly open and competitive by any stretch of the imagination. At least until somehow supply of affordable housing stock appears. Plus, the pandemic only made the whole situation worse to be honest and we'll be feeling inequality impacts on housing costs for years due to it.

This also brings up that there is another odd pattern. Let's assume that houses are being built aimed generally at the upper end of the market, you'd think there would be a conveyor of older people upgrading to these bigger, more expensive homes and free up stock for younger people to get in the market. Except that isn't happening. It's tied to inequality. Wealth is concentrating, certain populations of generally older people are upgrading and people in their own demographic are snatching them up. Sometimes to turn around and rent to the people who can't afford to buy. That is indicated in the median house buyer age increase stat I posted above. In other words, I would surmise that any aggregate increase in square footage is being driven far more by the fact that housing has transformed into a bit of a luxury market than anything else.
Healthcare is absolutely a problem and probably the main factor. Take the $10,000 of per capita rise in health care costs (since 1970) and incomes don't look nearly as bad.
Yup - though it is just one of many issues that has really had outsized impact on people say 35 and below at the moment. Many of us just missed the trouble though even my higher education costs were quite high in the mid-90s.
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Re: The New Gilded Age

Post by noxiousdog »

US home ownership is 65% of the population. That's about as not concentrated at the top as you can get.
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"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
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Re: The New Gilded Age

Post by Isgrimnur »

It's almost as if people are the problem.
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Mon Jul 12, 2021 11:55 am US home ownership is 65% of the population. That's about as not concentrated at the top as you can get.
Beyond what Isgrimnur dropped in which illustrates the generational gap but homes are not all the same price or in the same condition. It is correlated with more wealth but you need to look at a whole lot more to get the full picture.

The point I was making though was that new homes are being built to serve the market where wealth is concentrating. Is that universal? Probably not but it's easily could be a good rule of thumb. And while any building does increase supply, it is becoming clear it is not at a level we need or targeted at who we need to sell homes to if we are going to increase the percentage of 35 and below crowd into home owners in a sustainable fashion. I expect over time that graph is going to distort more and more to the right as well if the present trend continues. Especially if incomes keep dragging and cost of living issues continue present trends.
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Re: The New Gilded Age

Post by Zarathud »

We used to have a cycle — ramshackle homes get bought up for new affordable housing, while current affordable neighborhoods gentrify. That’s happening less as a cycle and regions are getting left out at the top/bottom.
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Re: The New Gilded Age

Post by Smoove_B »

RE: Housing -


We need to deal with the shortage of affordable housing in America. With my Build Back Better Agenda, we’re going to make a historic investment in affordable housing — increasing and improving the housing supply by building or rehabilitating more than 2 million homes.
Maybe next year, maybe no go
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Re: The New Gilded Age

Post by noxiousdog »

Smoove_B wrote: Mon Jul 12, 2021 1:31 pm RE: Housing -


We need to deal with the shortage of affordable housing in America. With my Build Back Better Agenda, we’re going to make a historic investment in affordable housing — increasing and improving the housing supply by building or rehabilitating more than 2 million homes.
It's a great idea, but 2 million homes is less than 1 % of the housing market or about 16 months of new supply.
edit: only 500,000 will be built and/or rehabilitated... so, 4 months of supply.

It also does nothing to change pricing.

Be honest, who here is going to take less when they sell their house so that young people can have something affordable?
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"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
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Re: The New Gilded Age

Post by malchior »

The answer is affordable housing would be targeted in location/quality and overall price to achieve ... an affordable price. Incentives to stop only building McMansion's. They'd need to craft a whole lot of targeted policy but it seems possible to build some framework that would in the short-term provide disconnected relief from the overall size of the market. They should be looking to prime the pump for younger folks. That'd mean potentially mean higher density, less land, less quality, etc. but they can start to build wealth instead of funneling it upward to landlords.
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Re: The New Gilded Age

Post by noxiousdog »

malchior wrote: Mon Jul 12, 2021 1:51 pm The answer is affordable housing would be targeted in location/quality and overall price to achieve ... an affordable price. Incentives to stop only building McMansion's. They'd need to craft a whole lot of targeted policy but it seems possible to build some framework that would in the short-term provide disconnected relief from the overall size of the market. They should be looking to prime the pump for younger folks. That'd mean potentially mean higher density, less land, less quality, etc. but they can start to build wealth instead of funneling it upward to landlords.
I just don't buy it. There isn't an AT&T, Amazon, Wal-mart of housing. It's 80 million separate people buying and selling. There's literally hundreds of home builders.

You'll have as much luck at stopping the McMansion market as you do the SUV market.
Black Lives Matter

"To wield Grond, the mighty hammer of the Federal Government, is to be intoxicated with power beyond what you and I can reckon (though I figure we can ball park it pretty good with computers and maths). Need to tunnel through a mountain? Grond. Kill a mighty ogre? Grond. Hangnail? Grond. Spider? Grond (actually, that's a legit use, moreso than the rest)." - Peacedog
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Mon Jul 12, 2021 2:02 pm
malchior wrote: Mon Jul 12, 2021 1:51 pm The answer is affordable housing would be targeted in location/quality and overall price to achieve ... an affordable price. Incentives to stop only building McMansion's. They'd need to craft a whole lot of targeted policy but it seems possible to build some framework that would in the short-term provide disconnected relief from the overall size of the market. They should be looking to prime the pump for younger folks. That'd mean potentially mean higher density, less land, less quality, etc. but they can start to build wealth instead of funneling it upward to landlords.
I just don't buy it. There isn't an AT&T, Amazon, Wal-mart of housing. It's 80 million separate people buying and selling. There's literally hundreds of home builders.

You'll have as much luck at stopping the McMansion market as you do the SUV market.
I'm not suggesting we stop it. I'm suggesting government policy could be crafted to encourage or mandate a portion or build out communities that are affordable. We often pay lip service to it but we have a huge problem right now. It is one of the many issues we should try to chip at.

Now is the part why I'll be realistic and say it likely won't happen. We're too dysfunctional to do 'big things' anymore. That is part of why I think we are heading for big society wide problems. The people at most risk long-term are watching a world be built without much opportunity or hope. This is intensely unhealthy for our nation. But perhaps people will wake up and realize that disenfranchising millions of young people is nothing less than a recipe for disaster.
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Re: The New Gilded Age

Post by noxiousdog »

malchior wrote: Mon Jul 12, 2021 2:08 pmI'm not suggesting we stop it. I'm suggesting government policy could be crafted to encourage or mandate a portion or build out communities that are affordable. We often pay lip service to it but we have a huge problem right now. It is one of the many issues we should try to chip at.

Now is the part why I'll be realistic and say it likely won't happen. We're too dysfunctional to do 'big things' anymore. That is part of why I think we are heading for big society wide problems. The people at most risk long-term are watching a world be built without much opportunity or hope. This is intensely unhealthy for our nation. But perhaps people will wake up and realize that disenfranchising millions of young people is nothing less than a recipe for disaster.
Let's assume we had the will do to it. These are the complications that I see:

There's no city/state owned land left. Do you imminent domain entire sections of the city? Do you ignore the big cities and concentrate on suburbs? How can you build dense property (which is the only way it would work with transit and retail hubs), without condos which typically don't retain their value?

How do you stop these communities from becoming the government housing projects of the 60s and 70s?

I'm asking out of genuine curiosity as I need to reconcile housing costs to UBI in order to fully endorse UBI. Currently, I only see this working with mass gentrification which presents a completely different (and more dangerous) set of problems.
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Re: The New Gilded Age

Post by Pyperkub »

noxiousdog wrote: Sun Jul 11, 2021 12:09 pm
Holman wrote:
noxiousdog wrote: Fri Jul 09, 2021 11:33 am How are you going to have him specifically pay "most of his profits"? Over 180 billion of Bezos's worth is Amazon stock.
I'm not going to pretend to be well-versed in economics, but I do know that for decades we've been re-engineering the economy to redistribute wealth upwards rather than down. I'm sure there are intelligent economists with ideas about how to return to an era before the Reagan Republicans started us on that path.
When you say distributing the wealth upwards, what you really mean is distributing it to savers.

Entrepreneurs, as soon as it became a thing, have always been at the top. See: Venice, the East India company, Rockefeller, etc. Unless you plan on forcing these folks to sell portions of their company, there's not much you can do to change it. There are certainly ways to do it, but there's not much consensus. My personal idea is to force a percentage of corporate income to be distributed, which would trigger income taxes on the owners.

But don't forget the largest owners of corporations in America is the California teachers Union. Whatever rules you want to drop on Bezos et. al. will need to apply across the board. Maybe it's time for that, but good luck getting any consensus.
Not "Savers", Investors (and tax dodgers/tax "influencers" buying favorable policy). Saving as a concept truly disappeared as interest rates dropped to effectively zero for anyone interested in saving as the entire banking model around saving changed (and the S&L industry went belly up). Saving for just about every American is now in the stock market, other financial tools or a house (which dovetails with the affordable housing stuff mentioned between ND's post and this reply - if one's primary vehicle for "saving" equity is one's house, then NIMBY affordable housing takes are huge with regards devaluing that "saved" asset and attempting to protect it - both vs property devaluation from affordable housing neighborhoods and from the supply/demand side.

FWIW, I really don't like the idea of a wealth tax (though currently, that's effectively what property taxes are). But, if the current path of tax cuts and bailouts for the wealthy continue the imbalance will continue to get worse and worse and the re-balancing will need to get more and more extreme - a wealth tax may well end up the only way to avoid a violent re-balance at some point (or just the new serfdom/slavery/slave-rebellions).

PS and don't pretend that income tax cuts have any impact on working people, as most of their taxes are now payroll taxes, and they don't get cut AND the rich (effectively) don't pay them. When looking at federal tax burdens, the payroll tax portion needs to be included in the math.
Black Lives definitely Matter Lorini!

Also: There are three ways to not tell the truth: lies, damned lies, and statistics.
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Mon Jul 12, 2021 3:05 pmLet's assume we had the will do to it. These are the complications that I see:

There's no city/state owned land left. Do you imminent domain entire sections of the city? Do you ignore the big cities and concentrate on suburbs? How can you build dense property (which is the only way it would work with transit and retail hubs), without condos which typically don't retain their value?
I think this is the wrong framing. It isn't necessarily about 'confiscating' the land. I think the problem is around builder's profit extracted in any particular unit of land. I did some very light research and a new house built in 1980-ish cost approximately 250K in 2021 dollars. A new house built in 2021 costs 408K. The profit margin on a project is 18% which is way higher than I thought but put it aside. For every unit they produce they make an average 73K. That is obvious some average size packed into some average space. We'd need some way through tax incentives, subsidies, investment programs, etc. so that maybe they can make that 73K on a perhaps 300K build. In effect boost the 18% return to a 24% return. That'd be about 20K a unit.

Heck one idea that pops into my head is turn that 20K into a loan from the government that is paid back over 30-years directly to the government. It could be seen as an investment opportunity for the government. This is just some back of envelope stuff. Obviously there would be implications for zoning, density, and all that to worry about. It would be more complicated but the back of the envelope math isn't so daunting to make it impossible. If this program built 2M homes that'd be a $40-60B program. We're spending a couple of trillion modernizing our nuclear arsenal. We have the ability to invest in ourselves. It just takes some imagination but America doesn't have much of it left.
I'm asking out of genuine curiosity as I need to reconcile housing costs to UBI in order to fully endorse UBI. Currently, I only see this working with mass gentrification which presents a completely different (and more dangerous) set of problems.
I don't understand this connection. I see UBI as the solution to different problem sets. One example would be digitization/AI/advanced automation starts chopping away at jobs and really start concentrating wealth.
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Re: The New Gilded Age

Post by noxiousdog »

malchior wrote: Tue Jul 13, 2021 8:13 amI don't understand this connection. I see UBI as the solution to different problem sets. One example would be digitization/AI/advanced automation starts chopping away at jobs and really start concentrating wealth.
You have some good ideas, but the complications are regional. Those numbers you're throwing are dense city numbers. 400k is a 3000+ sq ft house in a good school district in Houston (or in a dense old established rich neighborhood in Houston proper). That's great, but where does the land come from to build the new housing?

Profit margins for the largest homebuilders run about 13% over the last 5 years per etrade sector data.

Most "disposable" income goes to buying more home. If you add UBI across the board.. which is how it's designed .. it's going to put even more pressure on the housing market.

I'm of a mind for there to be a national property tax which is significantly progressive. That's where you can really hit the multi-billionaires and while many of them lease, someone is still holding the deed somewhere.
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Tue Jul 13, 2021 10:20 am
malchior wrote: Tue Jul 13, 2021 8:13 amI don't understand this connection. I see UBI as the solution to different problem sets. One example would be digitization/AI/advanced automation starts chopping away at jobs and really start concentrating wealth.
You have some good ideas, but the complications are regional. Those numbers you're throwing are dense city numbers.
Sorta. That is the national median price. I suspect that is because most building is in wealthier metros though. It was just the easiest reliable stat to pull on.
400k is a 3000+ sq ft house in a good school district in Houston (or in a dense old established rich neighborhood in Houston proper). That's great, but where does the land come from to build the new housing?
Right and pulling on the regional thread you won't find much new housing built in my neck of the woods under 750K. That's the thing we need to build incentives to build but we'd also have to figure out zoning changes, break the back of nimby-ism. I still can't get over that I have seen a 1.5 year+ struggle to stop a goddamn gas station on a highway near my house. And it's a game that wealthier people do here in the richer states. It is a pretty common topic in affordable housing discussions in economic journals right now. Land use issues are rife in this whole problem. I would argue land's existence isn't the issue. It is the "availability" for usage.
Profit margins for the largest homebuilders run about 13% over the last 5 years per etrade sector data.
The builder trade associations said it jumped to 18% this year which is where I pulled it but the idea is there is some number which we could target as a baseline incentive level to make up profit to drive builder behaviors. I'd expect it'd be regionalized to be effective.

So where does the land come from? The idea would be to incentivize build forward behavior. The idea would be replace luxury house building with affordable house building. They'll build where they were going to build those luxury houses. That's what the incentives might achieve. The owner of the land is going to need a return that meets the market price. The government would in my loose, loose idea act as an investor to bridge the gap.
Most "disposable" income goes to buying more home. If you add UBI across the board.. which is how it's designed .. it's going to put even more pressure on the housing market.
UBI being across the board would introduce pressure across the board. Maybe not uniformly and there is a decent chance some flows would be more into houses. The thought experiment would be that if something that was unaffordable was suddenly affordable you'd expect inflows but again I don't think any theoretical UBI model is intended to solve for *this problem*. At least not without some comprehensive framework.
I'm of a mind for there to be a national property tax which is significantly progressive. That's where you can really hit the multi-billionaires and while many of them lease, someone is still holding the deed somewhere.
I mean that might work but it still doesn't break the incentive to build luxury housing which I think is one of the major problems we face.
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Re: The New Gilded Age

Post by noxiousdog »

malchior wrote: Tue Jul 13, 2021 11:01 am
I'm of a mind for there to be a national property tax which is significantly progressive. That's where you can really hit the multi-billionaires and while many of them lease, someone is still holding the deed somewhere.
I mean that might work but it still doesn't break the incentive to build luxury housing which I think is one of the major problems we face.
It depends I suppose. It's not like there aren't non-luxury home builders. Even the big nationals do stuff like have their 'entry level' branded differently than the luxury.

Of course, this might be a developer problem and not a homebuilder problem.

Ironically, this might be a side effect of their not being a wal-mart of housing.
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Re: The New Gilded Age

Post by malchior »

Lacking a better place to drop this - Manchin scared of inflation. Now he is making big noise about too much economic stimulus. Really. He is demonstrably an idiot. I'll reiterate what I've been saying for months. Inflation isn't even close to an issue right now. It's probably blinking a slow yellow warning right now. He's right it is the highest increase in 30 years but fails to mention that inflation has been a historically low for...about 30 years. Should we watch it? For sure, but that he is worried about it because of an overheating economy? Sheesh. It sounds like the Republicans brainwashed him with their crap economic theories while they were partying on his house boat last weekend.

Edit: It strikes me this is probably the opening gambit to influence reconciliation to protect his wealthy buddies from higher taxes.
Sen. Joe Manchin on Thursday urged Federal Reserve Chair Jerome Powell to pare back economic stimulus to avoid stoking inflation, in a rare rebuke of the central bank by a Democratic lawmaker.

The West Virginia senator said in a letter to Powell that he is “increasingly alarmed” that the Fed continues to buy $120 billion in U.S. government debt and mortgage-backed securities each month even after Congress injected trillions of dollars of aid into the economy during the pandemic. The purchases help keep borrowing costs low as the Fed tries to coax the economy into full recovery.


“The record amount of stimulus in the economy has led to the most inflation momentum in 30 years, and our economy has not even fully reopened yet,” Sen. Joe Manchin said in a letter to Jerome Powell. | Patrick Smith/Getty Images

By VICTORIA GUIDA

08/05/2021 05:28 PM EDT

Sen. Joe Manchin on Thursday urged Federal Reserve Chair Jerome Powell to pare back economic stimulus to avoid stoking inflation, in a rare rebuke of the central bank by a Democratic lawmaker.

The West Virginia senator said in a letter to Powell that he is “increasingly alarmed” that the Fed continues to buy $120 billion in U.S. government debt and mortgage-backed securities each month even after Congress injected trillions of dollars of aid into the economy during the pandemic. The purchases help keep borrowing costs low as the Fed tries to coax the economy into full recovery.


“The record amount of stimulus in the economy has led to the most inflation momentum in 30 years, and our economy has not even fully reopened yet,” Manchin said. “I am deeply concerned that the continuing stimulus put forth by the Fed, and proposal for additional fiscal stimulus, will lead to our economy overheating and to unavoidable inflation taxes that hard working Americans cannot afford.”


Manchin's letter — the first example of a congressional Democrat urging the Fed to reverse course on current easy money policies — came as President Joe Biden weighed whether to reappoint Powell as chair of the central bank. It signaled potential opposition to Powell from the moderate wing of the party. It also represented a strong break with Biden's own economic team, which has tried to make the case that inflation will dissipate and Congress needs to pump trillions of more dollars into infrastructure and social spending.
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Re: The New Gilded Age

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I agree that the Fed's measures are counterproductive if the infrastructure bill and the reconciliation bill both pass. Those on top of the covid relief bills are going to be all the stimulus this economy can handle -- we spent something like $3T on covid relief; infrastructure is going to be 0.5T, and reconciliation is somewhere in the ballpark of $3T -- even if that gets compromised down closer to $2T, that's a shit-ton of Keynesian goodness. The way I see this, Manchin telling the Fed to lay back indicates that he's on board with both of the spending bills. Inflation becomes a real problem if the Fed keeps on suppressing interest rates in the face of all this. Rates need to return to historically normal levels. IDK if that's what Manchin's actually thinking, but he's right.
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Re: The New Gilded Age

Post by malchior »

Kraken wrote: Fri Aug 06, 2021 12:03 am I agree that the Fed's measures are counterproductive if the infrastructure bill and the reconciliation bill both pass. Those on top of the covid relief bills are going to be all the stimulus this economy can handle -- we spent something like $3T on covid relief; infrastructure is going to be 0.5T, and reconciliation is somewhere in the ballpark of $3T -- even if that gets compromised down closer to $2T, that's a shit-ton of Keynesian goodness. The way I see this, Manchin telling the Fed to lay back indicates that he's on board with both of the spending bills. Inflation becomes a real problem if the Fed keeps on suppressing interest rates in the face of all this. Rates need to return to historically normal levels. IDK if that's what Manchin's actually thinking, but he's right.
This could be true except it doesn't factor in the past/current output gap and the time frames for the spending bills.

Just to show the work at a rough level. Output gap for 2020 (lost economic output) as estimated in March 2020 was as bad as $4-5T for the balance of 2020 (25% of GDP) aka Great Depression type economic impact. Hence the sharp stock market sell off in March. The government opened the spigot and by the 2nd quarter they brought the gap down to a little over 10% of GDP in Q2 at $550B which was just Great Recession type impact at that point. They spent $3T to reduce the output gap to about 5% in Q3 and 4% in Q4. But still a gap. Not inflationary. That staved off severe systemic DEFLATION which was the real risk. All along Fed was buying distressed assets in mixed tranches via QE.

So the economic butcher's bill (output gap of lost economic output) was collectively about -$1T with $3T added to the Federal debt. In 2021, Q1 output gap was about another $100B. The government said that GDP returned to 2019 numbers. However, since economics is a dismal science there is no consensus on the look forward on output gap. It is estimated somewhere between $500 - 1.5T for 2021 and similar for 2022 even with the American Rescue Plan.

As an aside, I pulled all these numbers from the Committee for a Responsible Federal Budget (here) if anyone cares to check the work.

Anyway, here is a running total of the potential output gaps estimated - this all assumes no reconciliation bill for illustrative purposes:

2020 (actual): $-1T
2021 (projected): $-0.5T to $-1.5T (with ARP spending of $1.2T or so allocated)
2022 (projected): $-0.5T to $-1T (with no federal support)

Total potential output gap through 2022 is estimated right now at $-2T to $-3.5T. That is table stakes when you are talking about spending.

So where are we on spending. $4.2T or so allocated. Some is unspent and some of that unspent dollars are being rolled forward into the bipartisan infrastructure bill. Some is that undistributed ERAP money, etc. Money that still needs to be worked into the economy. The important takeaway about the bipartisan infrastructure bill is that the money is allocated over 10 years. So roughly +$100B each year.

The reconciliation bill being bandied about is as mentioned about $3.5T which aligns up nicely with the potential top of the range above. That is likely why it is the target. Note that even if the reconciliation bill comes in at $3.5T then the bipartisan infrastructure bill figures in at a rounding error in the whole thing (something like 0.5% of the entire economy in 2020 dollars).

Anyway, as can be seen they are filling a gap. It is hardly a recipe for inflation. That there is signaling that these are the numbers to be spent is why the market is steady. That is why long-term T-bills aren't signaling inflation. The economists have this pretty well buttoned up. The math here is pretty straightforward. Instead current observed inflation is most likely a byproduct of disruptions and changes in the economy. The fluctuations in pricing are and should be expected. Core CPI has been higher than normal, some severely disrupted goods have way higher prices, and that'll continue as all this "stuff" works itself out through market forces. Think of them like ripples in a pond after a meteor hit it. It's what the Fed WANTS to happen to make sure the economy can digest the changes happening. Long-term we'll all be dead and prices will have normalized. :) There are risks they get it wrong on scale but it's probably better to be a bit high than a lot low.

And this all above is why Manchin is dead wrong. We will still have waves of evictions no matter what probably. There will be systemic forces pressuring the banking system as foreclosures rise and some assets become stressed. The Fed is buffering all that with QE right now. That he focused on QE in his statement is baffling. QE happens to be neither inflationary or deflationary. He is kicking around a zombie idea from the Great Recession when QE was thought to be about to spur an era of Weimar republic style hyperinflation. Congress got spooked and underspent which prolonged the economic wreckage of the financial crisis. We risk repeating that same mistake if we listen to his brand of uninformed economic opinion.

That is what is so frustrating about these issues to me. The WH is spending tons of effort and political capital to essentially set down the corner stone on a fucking rounding error in the economy because of nitwits like Manchin/Sinema and the chorus of 'very serious people'. I get they are trying to prove a point that we can get things done "together" but the bipartisan bill is such small change. While the GOP is tearing up voting rights. I'll roll out the trademark phrase - we are not a serious nation anymore. It is all kabuki theater. That is why I think Manchin could be a preening moron who loves to be the center of attention or maybe he is the voice of the oligarch who loves to be the center of attention. It is hard to tell anymore.

Edit: I noticed I didn't talk about interest rates. Well that is because they are a side show to the whole thing. The brake available if things get too hot. Which is unlikely when we are talking about a gap though there are misallocation risks (aka business cycle risks). The Fed needs to lag the economy on that and ham-fisted chasing them while the economy is rippling is a dangerous game. I trust the experts on this.
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Re: The New Gilded Age

Post by noxiousdog »

Malchior, I still side with you on this, but I do think it bears a close eye. Generally I'm a big picture person on inflation. Just because certain sectors see it, doesn't mean that everyone sees it.

However, I've see a lot of anecdotal evidence that I haven't seen. Housing, in particular is through the roof. Energy is up. Food is up. Salaries are rising. I have a commodity based mutual fund and it hasn't been this high since 2015 (previously falling from 2011-2020).

Sure, it's possible all these things have external factors and most likely they do. But I'm not as quick to dismiss it today as I was a year ago.

At the same time, Manchin needs to shut it. The Fed has done a great job for as long as I can remember. Let them handle it.
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Re: The New Gilded Age

Post by Zarathud »

Housing, energy and food should be up. Housing is an adjustment where people want to live after quarantine— basically +1 or 2 bedrooms. Energy should be up after everyone stopped working from home. Food is up due to harvest/supply chain disruption.

We’ve had inflation in capital — the rest of the market can catch up.
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Fri Aug 06, 2021 9:15 am Malchior, I still side with you on this, but I do think it bears a close eye. Generally I'm a big picture person on inflation. Just because certain sectors see it, doesn't mean that everyone sees it.
Right and we should also keep in mind that prices go up. We want a level of positive inflation. Deflation is a dangerous creature. Way more dangerous than even above normal inflation which is why the bias the Fed has adopted is in *that direction*.
Food is up.
I didn't want to get too much into the micro stuff but this one in particular is interesting to me because the inflationistas are lying about it. They want us to focus on specific crops with volatile price swings (corn) and ignore that overall Food is running +2.4% YoY (June to June). Practically the target! And that is a volatile sector. We are often flooded with economic information tantamount to propaganda to propagate economic policy that enriches the very few. My policy is to always question it.

I was educated in economics as part of my business degree. While I'm not going to be computing forecast output gaps, instead I'll trust in the PhDs. However, I know how to add it up and interpret it. And the picture is pretty clear here barring the usual vagaries of forecasting. Like I said the markets are acting the way they are for a reason. Not that they are infallible but they are calm because the outline of the size of the reconciliation package generally makes sense.
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Re: The New Gilded Age

Post by noxiousdog »

malchior wrote: Fri Aug 06, 2021 10:14 am
noxiousdog wrote: Fri Aug 06, 2021 9:15 am Malchior, I still side with you on this, but I do think it bears a close eye. Generally I'm a big picture person on inflation. Just because certain sectors see it, doesn't mean that everyone sees it.
Right and we should also keep in mind that prices go up. We want a level of positive inflation. Deflation is a dangerous creature. Way more dangerous than even above normal inflation which is why the bias the Fed has adopted is in *that direction*.
Food is up.
I didn't want to get too much into the micro stuff but this one in particular is interesting to me because the inflationistas are lying about it. They want us to focus on specific crops with volatile price swings (corn) and ignore that overall Food is running +2.4% YoY (June to June). Practically the target! And that is a volatile sector. We are often flooded with economic information tantamount to propaganda to propagate economic policy that enriches the very few. My policy is to always question it.

I was educated in economics as part of my business degree. While I'm not going to be computing forecast output gaps, instead I'll trust in the PhDs. However, I know how to add it up and interpret it. And the picture is pretty clear here barring the usual vagaries of forecasting. Like I said the markets are acting the way they are for a reason. Not that they are infallible but they are calm because the outline of the size of the reconciliation package generally makes sense.
FWIW, I have been running a budget since 2014, and my monthly spending on groceries is up 25% over 2018. The timing is very coincidental with COVID and if it had dropped the months since we were vaccinated, I'd understand it. But it hasn't. Maybe I'm subject to specific products, but I have definitely felt it.

Also, I think what you're looking at is a lagging indicator. Producer prices have been going up for a while.
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Re: The New Gilded Age

Post by malchior »

noxiousdog wrote: Fri Aug 06, 2021 4:21 pmFWIW, I have been running a budget since 2014, and my monthly spending on groceries is up 25% over 2018. The timing is very coincidental with COVID and if it had dropped the months since we were vaccinated, I'd understand it. But it hasn't. Maybe I'm subject to specific products, but I have definitely felt it.
Yeah I get that. FWIW the government looks at everything when they tally it all over and publish it month-after-month. It is by definition lagging and usually a month lookback with a YoM and YoY number as the standard. I mean if you dig in to the data - "food eaten at home" is up less than a percent YoY while "food away from home" is up 4.2%
Also, I think what you're looking at is a lagging indicator. Producer prices have been going up for a while.
FWIW - this is what I called out when I mentioned it. They are focusing on soybean and corn prices. Those are staples but there are substitutes and people and producers often switch to them in the United States. BTW I'm not calling the IMF inflationistas but more so they are looking it through a particular lens as a provider of backstop capital to impoverished nations. Those nations can't easily substitute or have little market control/power. Though this is exactly why I try to avoid micro when talking policy because there is always some 'look over here' confounder. You can easily get lost in the sea of details and substitution effects. Policy has to made at a macro level. I only called out food because at the macro level inflation has been 'normal' individual results aside.
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