Nine quarters of productivity decline does no auger well for the future of the economy. How much of this is the decarbonization/increase in energy costs effect, one might ask? How much is the big government effect? Declining gross national income and the skewing of what remains to the rich? Looks like 1929 to me and I am pretty sure that JK Galbraith would agree if he were around to comment. Banks pushing credit card interest rates above 20% looks like desperation or is it simply opportunity and greed.
Great read; thank you. The sleight of hand the public permits the Fed to get away with here is stunning. "QT" is embarassingly NOT underway with an $8T balance sheet, 2x what it was pre-Covid and an amazing 8x the pre-GFC level. Vaporizing this liquidity will keep rates higher for longer regardless of the FFR lever. Those expecting a pause and cut best be careful what they wish for.
Others argue that the majority of the recent fiscal stimuli that will be disbursed thru non- Federal governments are still awaiting commitments to projects- meaning there is a constant drip- feed until their commitment cliff around 2025.
Interesting while I watched Dr Lacy's Wealthion interview I was thinking about your interview stating the 40+ year playbook to position in longer duration Treasurys was on vacation!
Agreed during failed US TREASURY AUCTION (by September) initial Flight to Safety will be explosive yet an extremely short opportunity...similar to when the gavel dropped passing The TARP ACT!
And the other crazy factor regarding massive federal deficits is the fact that enormous sums of interest payments will go to the holders of government debt. This is certainly not going to benefit the lower income brackets who obviously don’t own much government debt. Large amounts will go to insurance companies and pension funds and bond fund holders etc. Not exactly the most productive capital allocaters!
But in an unusual way, this massive interest payment flow from government to private sector will be somewhat stimulating to certain sectors of the economy.
That first chart is very interesting. Nonfinancial interest costs of US corporations may be depressed due to financing of growth out of retained earnings, especially in the 'growth stock domain'. So, here is an instance of a change in the structural arrangements. History may not repeat itself in the same way as in the past. But when the amount of leverage in both the private and public domain starts to unravel the decline in asset values could be swift. What does the rate of insolvencies look like?
On the metastasizing credit card balances, do we know how much of that is rolled over month to month and thus accruing 20% interest vs. balances paid off each month? Are credit card delinquencies remaining stable?
Households paying off 100% each month would not add to the parabolic increase in total debt unless collectively they are continually increasing MoM household expenses at the same upward trajectory %s.
Nine quarters of productivity decline does no auger well for the future of the economy. How much of this is the decarbonization/increase in energy costs effect, one might ask? How much is the big government effect? Declining gross national income and the skewing of what remains to the rich? Looks like 1929 to me and I am pretty sure that JK Galbraith would agree if he were around to comment. Banks pushing credit card interest rates above 20% looks like desperation or is it simply opportunity and greed.
China Calling.
Great read; thank you. The sleight of hand the public permits the Fed to get away with here is stunning. "QT" is embarassingly NOT underway with an $8T balance sheet, 2x what it was pre-Covid and an amazing 8x the pre-GFC level. Vaporizing this liquidity will keep rates higher for longer regardless of the FFR lever. Those expecting a pause and cut best be careful what they wish for.
Others argue that the majority of the recent fiscal stimuli that will be disbursed thru non- Federal governments are still awaiting commitments to projects- meaning there is a constant drip- feed until their commitment cliff around 2025.
Interesting while I watched Dr Lacy's Wealthion interview I was thinking about your interview stating the 40+ year playbook to position in longer duration Treasurys was on vacation!
Agreed during failed US TREASURY AUCTION (by September) initial Flight to Safety will be explosive yet an extremely short opportunity...similar to when the gavel dropped passing The TARP ACT!
And the other crazy factor regarding massive federal deficits is the fact that enormous sums of interest payments will go to the holders of government debt. This is certainly not going to benefit the lower income brackets who obviously don’t own much government debt. Large amounts will go to insurance companies and pension funds and bond fund holders etc. Not exactly the most productive capital allocaters!
But in an unusual way, this massive interest payment flow from government to private sector will be somewhat stimulating to certain sectors of the economy.
That first chart is very interesting. Nonfinancial interest costs of US corporations may be depressed due to financing of growth out of retained earnings, especially in the 'growth stock domain'. So, here is an instance of a change in the structural arrangements. History may not repeat itself in the same way as in the past. But when the amount of leverage in both the private and public domain starts to unravel the decline in asset values could be swift. What does the rate of insolvencies look like?
On the metastasizing credit card balances, do we know how much of that is rolled over month to month and thus accruing 20% interest vs. balances paid off each month? Are credit card delinquencies remaining stable?
Households paying off 100% each month would not add to the parabolic increase in total debt unless collectively they are continually increasing MoM household expenses at the same upward trajectory %s.