Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

[Woodsman]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

Sanders seems very popular with Millennials, the largest group of people in the U.S. now, and, if they bother to go out and vote, Sanders has a very good chance of being elected. I do not know of any candidate that is more popular with young Americans.

I think they understand at a gut level that Clinton and Trump, the establishment GOP and Democratic Party, and the media are willing and determined to sacrifice their lives and futures to maintain the status quo.

More and more they are coming to an understanding - especially young women now that they are eligible for combat and will soon be required to register for Selective Service - that to vote for anyone but Sanders is a self-defeating path to misery and an early grave.

[vt]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

Silicom Prairie. You can grow businesses anywhere.

http://www.cbsnews.com/news/silicon-...entrepreneurs/

[GRG55]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

None of these solutions are likely to work on their own. Certainly China's fiscal efforts were in the wake of the financial crisis when a few other jurisdictions went through half-hearted "infrastructure" programs while depending almost entirely on monetary policy to pull them out of the morass. What if the exact same total level of fiscal stimulus that China created since 2009 had been the result of a coordinated effort across all of the major economies in concert? Would that funding have been more effectively deployed and distributed in respect to supporting the global economy?

In some respects the whole world seems a giant version of some of what ails the EU. Globalization has created tremendous economic linkages and dependencies between nations around the world, but the institutions needed to make that work are lacking. The World Bank and the IMF are not satisfying the needs and expectations of the newest EM entrants into the global economic club (G5 becomes G7 becomes G8 becomes G20). Parallel institutions are being created. I wonder where it all leads?

Maybe it is too complex and too premature, and the world needs to retreat into the three trade blocs you identified in a post oh so many years ago jk...

Anybody surprised?

Germany Opposes Any G-20 Fiscal Stimulus; Focuses on Reform

February 25, 2016 — 8:30 PM MST

Germany’s finance minister opposed any fiscal stimulus plan from the Group of 20, whose top economic officials gather Friday, and instead sought to focus on structural reforms to strengthen national growth rates.

Wolfgang Schaeuble, speaking hours before meeting with his counterparts from the G-20 developed and emerging markets, also said that the space for monetary policy has been exhausted. He warned that using debt to fund growth just leads to "zombifying" economies.

"Talking about further stimulus just distracts from the real tasks at hand," Schaeuble said at a conference in Shanghai. German policy makers "do not agree on a G-20 fiscal stimulus package, as some argue in case outlook risks materialize."

Schaeuble’s stance potentially puts him in conflict with other G-20 members. Treasury Secretary Jacob J. Lew said in an interview before heading to Shanghai that the U.S. wants a more serious commitment from other G-20 nations to use monetary policy, fiscal measures and structural reforms to stoke demand. China’s finance chief said that his nation for its part will be expanding its fiscal deficit.

The German finance minister said that the slide in oil prices has already offered a "huge" stimulus for demand. He also said that expansive fiscal policies could lay the groundwork for a future crisis.

[jk]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

Anybody surprised?

Germany Opposes Any G-20 Fiscal Stimulus; Focuses on Reform

February 25, 2016 — 8:30 PM MST

Germany’s finance minister opposed any fiscal stimulus plan from the Group of 20, whose top economic officials gather Friday, and instead sought to focus on structural reforms to strengthen national growth rates.

Wolfgang Schaeuble, speaking hours before meeting with his counterparts from the G-20 developed and emerging markets, also said that the space for monetary policy has been exhausted. He warned that using debt to fund growth just leads to "zombifying" economies.

"Talking about further stimulus just distracts from the real tasks at hand," Schaeuble said at a conference in Shanghai. German policy makers "do not agree on a G-20 fiscal stimulus package, as some argue in case outlook risks materialize."

Schaeuble’s stance potentially puts him in conflict with other G-20 members. Treasury Secretary Jacob J. Lew said in an interview before heading to Shanghai that the U.S. wants a more serious commitment from other G-20 nations to use monetary policy, fiscal measures and structural reforms to stoke demand. China’s finance chief said that his nation for its part will be expanding its fiscal deficit.

The German finance minister said that the slide in oil prices has already offered a "huge" stimulus for demand. He also said that expansive fiscal policies could lay the groundwork for a future crisis.

i'm beginning to think the germans are right about fiscal stimulus' lack of potency/value as a solution to global malaise. the japanese and chinese have been there, done that, to little effect.

what the world needs is debt write-downs/write-offs and/or deliberate inflation which boils down to the same thing, along with the liquidation or reform of zombie institutions and the banking system. the world's growth cannot be based on "progress" and growth in financial services.

i don't see the world's monetary and governmental authorities doing any of the things i describe as "what the world needs," because the global oligarchs see such moves as harmful to their personal interests. [i was about to write something about "each nation's oligarchs" when i realized they really transcend the national.]

so i think we are all becoming japanese. the europeans are ahead of the north americans along this path, both because they've skipped japanese or chinese levels of fiscal stimulus in deference to german sensibilities, and because they lack automatic inter-state stabilizers such as exist within the u.s. This hastened the economic deterioration of the pigs/club med states. so european deterioration is quite unevenly distributed among the european states, allowing more advanced states of decay to develop in pockets and then spread through the eu.

u.s. rates continue to decline in spite of repeated "bottom" calls from a variety of "experts." europe and japan have gone to negative rates! i don't think such rates encourage spending. i think they frighten people and cause individuals, pension plans, insurance companies, and endowments to lower their projected earnings on the assets they have already amassed. thus savings go up instead of down in order to compensate for lower expected returns.

so i'm thinking more and more that the global economy and the u.s. economy in particular are headed toward euro[level]sclerosis and then japanese sclerosis "with american characteristics."

[GRG55]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

i'm beginning to think the germans are right about fiscal stimulus' lack of potency/value as a solution to global malaise. the japanese and chinese have been there, done that, to little effect.

what the world needs is debt write-downs/write-offs and/or deliberate inflation which boils down to the same thing, along with the liquidation or reform of zombie institutions and the banking system. the world's growth cannot be based on "progress" and growth in financial services.

i don't see the world's monetary and governmental authorities doing any of things i describe as "what the world needs," because the global oligarchs see such moves as harmful to their personal interests. [i was about to write something about "each nation's oligarchs" when i realized they really transcend the national.]

so i think we are all becoming japanese. the europeans are ahead of the north americans along this path, both because they've skipped japanese or chinese levels of fiscal stimulus in deference to german sensibilities, and they lack automatic inter-state stabilizers such as exist within the u.s. this also hastened their economic deterioration, but made that deterioration quite unevenly distributed among the european states.

u.s. rates continue to decline in spite of repeated "bottom" calls from a variety of "experts." europe and japan have gone to negative rates! i don't think such rates encourage spending. i think they frighten people enough that savings go up instead of down.

so i'm thinking more and more that the u.s. is headed toward euro[level]sclerosis and then japanese sclerosis "with american characteristics."

I am not at all convinced its a foregone conclusion we are all Japanese.

Particularly the USA. It has a number of important, enviable advantages that I believe will allow it to yet escape that fate:

- the exorbitant privilege; USA debt is in a separate category from all other sovereigns at this point in history - is it any wonder with its enormous direct government + SOE debt load (now starting to go sour) that China wants the rules changed?

- Less propensity to maintain zombies; Compared to Europe, Japan and now apparently China also, the USA has far less tendency to support or maintain failed companies and institutions. Enron was allowed to go bankrupt despite Ken Lay's close relations with the Bush family, steel mills, coal mines, nuclear power plants, even the auto bailouts came with requirements to shutter capacity. Shale oil drillers and oil service companies will be this year's example of the same.

- Strongest banks in the world; by far; The global banking industry is shrinking from its peak just before the 2008 financial crisis. Fewer employees, less revenue, more regulations, higher capitalization requirements. The USA has been driving/leading this trend and has done more to force the banking industry to restructure and reform than any other jurisdiction. The USA has never hesitated to allow the regional banks to go under if necessary (recall how the overleveraged S&Ls were treated). In the current environment there's no doubt we will see more regional banks go under from overexposure to energy related debt (including mortgages in oil towns like Midland, TX). The exposure of the large Wall Street banks to energy is too small to be of concern, and on a global basis that's what counts.

- Least dependent major economy in the world on exports; No comparison with Japan, Germany or China...not even close.

- Easiest jurisdiction to start a business; Supports a level of entrepreneurism (is that a real word?) that is unrivalled. From capital market support to its extraordinary tolerance for supporting risk and failure and comparatively strong property rights legal structure, the USA is in a league of its own. Try starting a business in France. Canada, by proximity, is somewhat comparable, but the "Hot One" in Ottawa (he who has a family trust funding him) has declared war on small business so I expect we will see a continued migration of capital and a growing trickle of people heading south across the border (if Trump finds out he will want to spend infrastructure money on a wall to halt these inverted wetbacks).

- The world's ultimate consumer. As David Rosenberg says "Get the US consumer right and everything else takes care of itself". More than ever China needs the US consumer, not the other way around.

- One of the most desirable destinations for both capital and economic migrants; Money an people flow into the USA, and its economy benefits from that, continuously. In times of global stress those flows may increase, but unlike the much vaunted China today, it is unheard of for there to be a net outmigration of either from the USA.

I could go on, but I think this is sufficient to set out my views of which nation "wins" in the next 3, 5, 10 years.

[GRG55]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

I am not at all convinced its a foregone conclusion we are all Japanese.

Particularly the USA. It has a number of important, enviable advantages that I believe will allow it to yet escape that fate:

- the exorbitant privilege; USA debt is in a separate category from all other sovereigns at this point in history - is it any wonder with its enormous direct government + SOE debt load (now starting to go sour) that China wants the rules changed?

- Less propensity to maintain zombies; Compared to Europe, Japan and now apparently China also, the USA has far less tendency to support or maintain failed companies and institutions. Enron was allowed to go bankrupt despite Ken Lay's close relations with the Bush family, steel mills, coal mines, nuclear power plants, even the auto bailouts came with requirements to shutter capacity. Shale oil drillers and oil service companies will be this year's example of the same.

- Strongest banks in the world; by far; The global banking industry is shrinking from its peak just before the 2008 financial crisis. Fewer employees, less revenue, more regulations, higher capitalization requirements. The USA has been driving/leading this trend and has done more to force the banking industry to restructure and reform than any other jurisdiction. The USA has never hesitated to allow the regional banks to go under if necessary (recall how the overleveraged S&Ls were treated). In the current environment there's no doubt we will see more regional banks go under from overexposure to energy related debt (including mortgages in oil towns like Midland, TX). The exposure of the large Wall Street banks to energy is too small to be of concern, and on a global basis that's what counts.

- Least dependent major economy in the world on exports; No comparison with Japan, Germany or China...not even close.

- Easiest jurisdiction to start a business; Supports a level of entrepreneurism (is that a real word?) that is unrivalled. From capital market support to its extraordinary tolerance for supporting risk and failure and comparatively strong property rights legal structure, the USA is in a league of its own. Try starting a business in France. Canada, by proximity, is somewhat comparable, but the "Hot One" in Ottawa (he who has a family trust funding him) has declared war on small business so I expect we will see a continued migration of capital and a growing trickle of people heading south across the border (if Trump finds out he will want to spend infrastructure money on a wall to halt these inverted wetbacks).

- The world's ultimate consumer. As David Rosenberg says "Get the US consumer right and everything else takes care of itself". More than ever China needs the US consumer, not the other way around.

- One of the most desirable destinations for both capital and economic migrants; Money an people flow into the USA, and its economy benefits from that, continuously. In times of global stress those flows may increase, but unlike the much vaunted China today, it is unheard of for there to be a net outmigration of either from the USA.

I could go on, but I think this is sufficient to set out my views of which nation "wins" in the next 3, 5, 10 years.

I know I sound like a broken record, but once again I'll reiterate that the USA economy is doing better than most people want to credit.

There is always a lag so I expect the effects of the oil price drop are going to start to be seen and the economy will get a huge boost this year from that alone.

For those looking for "perfection" or the "good old days of the past", let's recall that the 1960s were marked with race riots and political assassinations, the 1970s were a time of stagflation and lining up to buy gas for the car, the 1980s were a time of extraordinarily high interest rates that brought both inflation and the economy temporarily to its knees, the 1990s suffered the Asian crisis, the ruble crisis, LTCM, the committee to save the world, and ended with the tech bust, the 2000s brought us $150 oil and the financial crisis. There's no perfect era.

The Fed's Favorite Indicator Rises by Most in Eight Months

February 26, 2016 — 8:43 AM MST

Consumer purchases climbed in January by the most in eight months, fueled by faster earnings growth that’s being accompanied by rising inflation.

The 0.5 percent advance followed a 0.1 percent gain the prior month, a Commerce Department report showed Friday. The January figure exceeded the 0.3 percent median forecast in a Bloomberg survey. Incomes also climbed 0.5 percent, more than projected.

Steady hiring, cheap gasoline, and rising home values are powering Americans’ ability to boost spending, which accounts for almost 70 percent of the economy. The report also showed the Federal Reserve’s preferred measure of inflation rose by the most since October 2014, illustrating the challenge for U.S. central bankers as they consider tighter monetary policy amid feeble global markets.

“Income growth is solid, so we expect consumer spending to pick up this quarter,” said Michael Gapen, chief U.S. economist in New York at Barclays Plc. “The fear was that the consumer was slowing down at a more pronounced pace than people expected. Today’s numbers show the consumer doesn’t look to be rolling over by any means.”...

[GRG55]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

I know I sound like a broken record, but once again I'll reiterate that the USA economy is doing better than most people want to credit.

There is always a lag so I expect the effects of the oil price drop are going to start to be seen and the economy will get a huge boost this year from that alone.

For those looking for "perfection" or the "good old days of the past", let's recall that the 1960s were marked with race riots and political assassinations, the 1970s were a time of stagflation and lining up to buy gas for the car, the 1980s were a time of extraordinarily high interest rates that brought both inflation and the economy temporarily to its knees, the 1990s suffered the Asian crisis, the ruble crisis, LTCM, the committee to save the world, and ended with the tech bust, the 2000s brought us $150 oil and the financial crisis. There's no perfect era.

The Fed's Favorite Indicator Rises by Most in Eight Months

February 26, 2016 — 8:43 AM MST

Consumer purchases climbed in January by the most in eight months, fueled by faster earnings growth that’s being accompanied by rising inflation.

The 0.5 percent advance followed a 0.1 percent gain the prior month, a Commerce Department report showed Friday. The January figure exceeded the 0.3 percent median forecast in a Bloomberg survey. Incomes also climbed 0.5 percent, more than projected.

Steady hiring, cheap gasoline, and rising home values are powering Americans’ ability to boost spending, which accounts for almost 70 percent of the economy. The report also showed the Federal Reserve’s preferred measure of inflation rose by the most since October 2014, illustrating the challenge for U.S. central bankers as they consider tighter monetary policy amid feeble global markets.

“Income growth is solid, so we expect consumer spending to pick up this quarter,” said Michael Gapen, chief U.S. economist in New York at Barclays Plc. “The fear was that the consumer was slowing down at a more pronounced pace than people expected. Today’s numbers show the consumer doesn’t look to be rolling over by any means.”...

Memo to Yellen: Fed Getting Desired Inflation Ahead of Forecast

February 26, 2016 — 11:07 AM MST

Federal Reserve Chair Janet Yellen and her colleagues are getting exactly what they wished for. Just way faster than they, and most economists, expected this year.

The prices of goods and services consumers buy, excluding food and fuel, rose 0.3 percent in January from December, the biggest gain in three years, figures from the Commerce Department showed Friday in Washington. That pushed costs up 1.7 percent over the past 12 months, already exceeding the 1.6 percent Fed officials forecast for the fourth quarter of 2016.

The central bank’s goal is to get total inflation up to 2 percent, a level consistent with a healthy economy because anything less threatens to mire the U.S. in the type of too-low price pressures that have hobbled countries like Japan for decades. The jump in prices makes it more likely that members of the policy-making Federal Open Market Committee, who next meet in March, will continue to raise interest rates. The trick, though, will be to time those increases in a way that keeps economic growth humming while preventing prices from overshooting their goal.

“Overall, the committee is going to see this as good news and will be less worried about inflation being too low,” said Roberto Perli, a former Fed official who’s now a partner at Cornerstone Macro LLC in Washington. “It is closer to the sweet spot. This is consistent with a gradual policy path. It gives them room to raise rates, but again very slowly. I don’t think it puts March in play.” Perli expects the next rate increase in June...

...Even including food and fuel, which is the measure preferred by Fed officials, prices over the past 12 months climbed 1.3 percent compared with a 0.7 percent increase at the end of 2015. As oil prices stabilize, the gauge is likely to keep marching toward 2 percent...

[chene]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

For those looking for "perfection" or the "good old days of the past", let's recall that the 1960s were marked with race riots and political assassinations, the 1970s were a time of stagflation and lining up to buy gas for the car, the 1980s were a time of extraordinarily high interest rates that brought both inflation and the economy temporarily to its knees, the 1990s suffered the Asian crisis, the ruble crisis, LTCM, the committee to save the world, and ended with the tech bust, the 2000s brought us $150 oil and the financial crisis. There's no perfect era.

Some may acknowledge that the good old days had been made possible (through all difficulties, indeed) by the rise of the babyboomer generation fueled by private debt.







Two factors that aren't available anymore:

- I can not see the rational of an economic development with an aging population
Immigration could offset this but Trump is a sign that this trend may not last...

- I can not see an increase in private debt to much higher level ...

Before 1940 the stock was not doing much : 1900 -> 1940 : 0%

[Fiat Currency]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

Abundance

Posted February 25, 2016 by Joshua M Brown

The only way to save the economy is to crash it.

There’s too much of everything and it’s not good for anyone. It’s hurting everyone. Paradoxically, abundance is now the enemy. This sets us apart from virtually every other society throughout history.

You can blame the Federal Reserve’s loose money policies if you’d like. There is over-investment in every industry. It’s killing confidence. Nothing is worth what it used to be. We haven’t adjusted to this reality yet.

Unlimited music, nine dollars a month.

Unlimited movies and TV shows, thirteen dollars a month.

Unlimited news and journalism, zero dollars a month.

Facebook is free. Twitter is free. Snapchat is free. Instagram is free. Youtube is free. Video game apps are free. Texting is free. Sexting is free. Skyping is free. Chatting is free. Why would you spend money on anything? Where do you think people spend their time now? Endless entertainment and content, for almost nothing.

Oil costs almost nothing too. We have so much there’s no where to even store it. Natural gas supplies are overflowing, they’re burning it off at the wellhead. Coal demand is going extinct. Copper prices, iron ore prices – it’s going bidless. No one wants it, they keep producing more regardless. Why? “I don’t know, it’s what we do.”

Portfolios are free. “Give us a billion dollars, we’ll lose money on the cost of managing it for you.” Online asset management firms are spending $600 to acquire a customer that will pay them $60. Their financial backers love it. “It’s user growth!”

What’s the business model? “We go public or get bought out by someone with the opposite problem – too much profit, not enough user growth.” The business model is an exit for the investors. “BlackRock will eat it. They’ll eat anything.” No one cares how many actual business models get wrecked in the process. How many useful jobs are lost in the process. The new fixed income or currency trader on Wall Street will never need health care, or take a vacation or grab a female co-worker’s ass. It’s a chip on a server. Much cheaper to employ, much easier to manage.

Automate everything, outsource the rest – it’s cheaper for the customers. “But now there are no customers left, no one has the money to be a customer anymore.”
Congrats on your efficiency.

• Start up
• Cash in
• Sell out
• Bro down

“Let’s take a product or service that people used to charge for, make a worse version and give it away for free!” Why would we do that? “Bro down.”

Clay Christensen’s book on disruption, ‘The Innovator’s Dilemma’, has been twisted into an entirely different book. It was once the Bible, now it’s the Necronomicon – the book of the dead.

Even money is free. The people and firms with the least need to borrow it can borrow it with abandon. Apple can have as much money as it wants, virtually free. They have no idea what to do with it. The US and German and Japanese governments can borrow for free. Then what? There is nowhere to put the money and no will to risk using it for the future. The electorate is old. They don’t care about the future. They don’t have one, just a present. We live in their basement. We live in their extended past.

Malinvestment is everywhere. The capital markets runneth over. “Give us something with an income stream to put our money into! Even the promise of an income stream will suffice.”

Here’s the perfect business idea for this environment: Open a Hundred Dollar Bill Store™. You sell hundred dollar bills for ninety dollars each. You’ll lose ten dollars per transaction but you’ll do a trillion in revenues in year one. Maybe you show an ad to everyone who walks into the store and you break even. User growth with be on the order of 1000% per month. A billion users. You’ll be the biggest IPO of all time when Goldman’s underwriters get wind of that growth rate. Go public and let someone else worry about a competitor selling hundred dollar bills for eighty-five.

When you can have anything at any time, is anything worth anything?
Here are the results: You can get a job but there’s nowhere you can afford to live that is anywhere near that job. You can create your own job but, absent access to capital markets, you can’t compete with those who have it. Plenty of hiring in New York and San Francisco. Good luck living there.

What a difference a year makes. Today is my 39th birthday. A year ago I was writing about scarcity. There is no such thing.

Today there is too much of everything and no demand for it. Abundance is wrecking the economy. Too much oil, too much gas. Too many websites and shows and streaming services and apps. Too many subcultures and verticals and genres. How can anyone be heard or seen? How can anything rise above the din?

We used to have a pop culture. The biggest song on the radio, the biggest movie in theaters, the number one show on television, the best-selling book. Now we have 50 different pop cultures. Microcultures within subcultures within cultures. There is no agreement on anything.

If you’re wondering why the fringe candidates are the mainstream candidates in this election cycle it’s because there is no mainstream. It’s because only the most extreme views can be heard across all of the cultures and platforms and verticals and genres. You have to sound like a ******* insane person. Kanye knows this. Kim taught him. Trump knows this – instinctively. “I can be anything to any group I’m speaking to.” He was born for this moment in time.

Sanders figured this out accidentally. For god’s sake he is tied with a Clinton for the Democratic party’s nomination and running on a Castro plan for the economy. His message is extreme enough to get through the noise, like Trump’s. How else can you reach the stoners, burnouts, communists, veterans, social justice warriors, union members, #blacklivesmatter, truthers, birthers, health goths, TED talkers, money guys, values voters, evangelicals, patriots, gun nuts, tweeters, tweakers, Tea Partiers, retirees, millennials, boomers and crossfitters?

We’re electing maniacs. We’re more connected than ever and it’s making everyone feel more alone. Connectivity is giving us a constituency of the like-minded. When you can find think-alikes online, there’s no reason to even have a conversation with anyone who thinks differently. We’re retreating back into our subcultures. The only consensus is that there isn’t one.

What do we do with all this everything that we have? All the abundance that’s holding us back?

I don’t have any answers other than what I began with – we need a washout. A recession would be plenty, no need for anything worse. It’s got to be flushed from the system. Bad business models that were never designed to succeed outside of raising capital to continue must not be allowed to continue. No need for legislation, the cycle will clean it up. It always does. The best thing that could happen here is for a return of the cycle. We’re in year seven of an “expansion” and no one is happy. It’s time for a contraction. It’s long overdue.

Large pools of money need to be drained so that they can no longer be a source of malinvestment on an epic scale. Some people have to suffer for the benefit of the whole. Spock told Kirk this: “Logic clearly dictates that the needs of the many outweigh the needs of the few.”

The few will be just fine, even if they have to lose a few dollars.

The many will not be fine until the current cycle turns and we wring out some of the excess.

And then we begin again. Less abundance of resources will demand more ingenuity. The system will be back on track.

The present situation cannot stand.

• Start up
• Cash in
• Sell out
• Bro down

What the hell are we selling? Time-wasters and profit-shrinkers in place of companies and industries. Schumpeter didn’t have the current version of creative destruction in mind when he coined his phrase. This is destructive destruction.

The abundance is killing us.

[GRG55]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

Some may acknowledge that the good old days had been made possible (through all difficulties, indeed) by the rise of the babyboomer generation fueled by private debt.

So, based on the above chart we've had "bad times" pretty well continuously since about 1957, because birth rates have been falling or flat pretty well constantly since then? It's almost as though people knew the 1973 oil embargo was going to happen and presciently stopped producing children well ahead of those economic bad times of gasoline line ups.

Two factors that aren't available anymore:

- I can not see the rational of an economic development with an aging population
Immigration could offset this but Trump is a sign that this trend may not last...

- I can not see an increase in private debt to much higher level ...

The reality is that USA population growth rates have been relatively constant at about 0.8% to 0.9% per annum for some time. Trump, or any other President, isn't going to be able to change that appreciably either way.

Private debt does two things - it allows consumption to be brought forward (buy today, pay tomorrow) and it promotes the inflation of goods and services prices (more immediate demand for the available supply). I note the USA economy has continued to expand despite the recent decline in personal debt levels (deleveraging of household balance sheets) recently.

Before 1940 the stock was not doing much : 1900 -> 1940 : 0%

So what? Before 1940 the US Dollar was not the official reserve currency either.

[Woodsman]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

...So what? Before 1940 the US Dollar was not the official reserve currency either.

And how many dead did it take to make it the reserve currency? And how many have to die to maintain the exorbitant privilege? It's a fair observation and a fair question, considering folks like me and mine will have to do most of the dying. It sounds like snark, but it's not because I believe EJ when he says increasing growth to 4%+ is the only way to close the output gap and avert a global war.

Originally Posted by EJ
That leaves either a major war not on US soil or my idea:

1. Write down a significant portion of the credit bubble era debt and boost private sector with tax policy that directs investment way from the FIRE Economy and toward the Productive Economy, with a focus on energy efficiency.

Not likely. The debt represents a flow of payments to the creditor class that runs the country.

2. Continue to use public funds to grow the money supply as private sector borrowing remains too weak to do so and monetary policy became ineffective long ago.

This implies a political stalemate that causes the US to continue to crawl through the output gap by moving private debt to public account ala Japan since 1992 until we run out of public credit.

But before that happens, the US needs a way out.

That way out is a conflict in Asia over oil that is developing now as Cold War II in the Middle East and North Africa, that will develop into a hot war as the Peak Cheap Oil Cycle takes its political toll.

We are gearing for war and unless we alter the status quo and do what we know will work to bring us back to the sort of growth we need, we will get more of war than the planners and profiteers ever bargained for.

[santafe2]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

Even money is free. The people and firms with the least need to borrow it can borrow it with abandon. Apple can have as much money as it wants, virtually free. They have no idea what to do with it. The US and German and Japanese governments can borrow for free. Then what? There is nowhere to put the money and no will to risk using it for the future. The electorate is old. They don’t care about the future. They don’t have one, just a present. We live in their basement. We live in their extended past.

Like listening to grandpa Simpson..."back in my day"...

The writer is a doomer and doomers should at least get their facts correct. The median age of the electorate in the US is 45. There are nearly as many potential voters in the 12 years under 30 as there are over 60.

[GRG55]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

And how many dead did it take to make it the reserve currency? And how many have to die to maintain the exorbitant privilege? It's a fair observation and a fair question, considering folks like me and mine will have to do most of the dying. It sounds like snark, but it's not because I believe EJ when he says increasing growth to 4%+ is the only way to close the output gap and avert a global war.

Point taken Woodsman. But my point, not well stated obviously, was that the market is not the economy - before or after 1940. Other factors were likely at play and I suggested one possibility.

It has now well past being amusing or even absurd that our Central Banks, our multi-millionaire elected officials and a large swath of our business leaders concern themselves more with the minutia of stock market movements at the expense of the broader economies. Absurd to the point Central Banks now directly purchase equities to prop the markets while actively promoting the destruction of investment capital accumulation with negative interest rates. Absurd to the point that "wealth effects" are more important than breaking a sweat to create some real societal wealth. Absurd to the point that the executives of even our largest companies remain preoccupied with "making the quarterly numbers" pegged by no-nothing analysts than they are with actually running their business to attract, serve and keep a customer for years (isn't that why GM & Chrysler needed to be bailed out?). Absurd to the point that even after the global financial crisis the only voices that still seem to count are rock star bankers and hedge fund managers - shills and mountebanks that promote the manias and leave no room for critics or doubters.

Up here our worthless politicians have established a state of public finance that leaves our communities desperately dependent on revenues from continued property bubbles and gambling (the ultimate tax on the poor). From this week's Ontario budget:

"...Net income from the Ontario Lotteries and Gaming is estimated to be $159 million higher than projected in last year's budget, with higher-than-projected sales in national lotteries cited for the boost..."

We are gearing for war and unless we alter the status quo and do what we know will work to bring us back to the sort of growth we need, we will get more of war than the planners and profiteers ever bargained for.

The necessity for, and glorification of war seems to be a constant throughout history for any Imperial power. When I was living in London I was struck by the number of monuments and public places commemorating Britannia's foreign adventures - everything from a statue of the Duke of Wellington in Hyde Park Circle to the large public square named after Horatio Nelson's final, fatal battle. The most memorable of all, however, was a small inscription in the entrance to St. Mary Abbots by parents whose son was slaughtered in the Crimea. To this day the UK economy remains highly dependent on the financial sector centred in London that financed those adventures.

Seems a lot of parallels since Wilson's Fourteen Points.

Perhaps the fact the USA seems to be losing it's sole Imperial power status is a positive, and time to retire Wilsonianism once and for all. A good start would be to let Russia have Syria, and wish them good luck.

[Fiat Currency]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

The writer is a doomer and doomers should at least get their facts correct. The median age of the electorate in the US is 45. There are nearly as many potential voters in the 12 years under 30 as there are over 60.

Well I didn't write it - but if pointing out that there is an abundance/bubble of almost everything due to cheap Fed fiat, misallocation of capital, first access to cheap money, and a cornucopia of business models that wouldn't exist without it is "doomer" thinking - then colour me doomer. Of course, you have to show up and actually vote, no matter how many voters are in your demographic ...

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[chene]

Re: Central Banks finally out of Bullets? QE=Fail, NIRP=Fail

Demographic can not be summarized by one number only : the population growth...

US (and the developed world) had a positive demographic shock due to the change in the structure of the population: the young baby-boomer cohort after the war.




But the most important factor is that "post-WWII" everything has to be rebuilt in Europe and private debt level was very low.That was a great opportunity for US industry.

We are not post-WWII in that matter GRG55 !

The reality is that USA population growth rates have been relatively constant at about 0.8% to 0.9% per annum for some time. Trump, or any other President, isn't going to be able to change that appreciably either way.

Immigration enable to keep the population growth steadily. The country has always been open to immigration ... contrary to Japan for instance.

When 40% of population growth comes from immigration, yes, the policy about immigration may have an impact.

I note the USA economy has continued to expand despite the recent decline in personal debt levels (deleveraging of household balance sheets) recently.

The change in private debt had been positive recently.

As steve Keen showed unemployment seems clearly related to the variation of change in private debt
The current absolute level of private debt makes very unlikely a sustainable positive acceleration in private debt on the long run. The trend will have to reverse to deflate private debt and the unemployment will rise again...


The current level of private debt is a MAJOR issue. That has to be solve.

For sure you are a contrarian GRG55 to thing we may be post-WWII