Is US Fed the only central bank in the world that actually withdraws liquidity?

[jk]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

So far as the fiscal deficits go, maybe it's a two step? In the US the postwar federal spending norm for the last 50 years fluctuated between 17-23% of GDP. The Great Recession spiked it at about 25%, the 2013 sequester kicked it back down to 21%. Revenue stays between 15-20% during this same time period. The size of the gap fluctuates a good bit year to year, but the overall trend is rather surprisingly consistent--a 2 to 4% of GDP deficit when you smooth things out.

those projections assume we will not have a recession in the next 6 years. the u.s. is now running increasing deficits in spite of [supposedly] record low unemployment and a historically prolonged [2nd longest so far] period of continued growth. add the effects of the tax bill and the pressures of demographics on entitlement spending and it's hard to see how things proceed in the absence of a sharp rise in inflation/dollar devaluation. it's all part of the process of the u.s. turning into a banana republic.

[touchring]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

those projections assume we will not have a recession in the next 6 years. the u.s. is now running increasing deficits in spite of [supposedly] record low unemployment and a historically prolonged [2nd longest so far] period of continued growth. add the effects of the tax bill and the pressures of demographics on entitlement spending and it's hard to see how things proceed in the absence of a sharp rise in inflation/dollar devaluation. it's all part of the process of the u.s. turning into a banana republic.

Sometimes, it's easy to be misled by MSM.

The US imports $2.2trillion of goods a year, just raise import tax by 20% and you can wipe out half of the US budget deficit and trade deficit at the same time while boosting the local manufacturing industry which will in turn lower imports even further!

What's so difficult?

It's a 100% win situation that the bankers don't want you to know.

America won't collapse or become a banana republic just because a laptop costs $120 more after a 20% tax. Do you know that "Made in China" clotheing, laptops and even the iphone costs more in China than in the US because of taxes?

https://www.quora.com/Are-iPhones-mo...nsive-in-China

[thriftyandboringinohio]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

...The US imports $2.2trillion of goods a year, just raise import tax by 20% and you can wipe out half of the US budget deficit and trade deficit at the same time while boosting the local manufacturing industry which will in turn lower imports even further...

It's interesting to see the talk of dramatically higher taxes (tarrifs) giving economic benefits.

[GRG55]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

It's interesting to see the talk of dramatically higher taxes (tarrifs) giving economic benefits.

It won't.

This solution is right out of President Trump's campaign speeches. Scrap NAFTA, put tariffs on imported cars and air conditioners, blame your trade partners, build walls...the whole bit.

Admittedly the USA is the one major economy in the world that is least dependent on trade and probably could pull off a Fortress America trade policy if it wished. But the belief that it's all benefit and no cost is a complete fantasy. If anybody in the USA is concerned about becoming a banana republic economy, this will hasten it.

World Bank and OECD figures for % of GDP represented by trade (imports + exports):

USA 27 in 2016, up from 9 in 1960
China 37, up from 9
France 60, up from 27
Mexico 78, up from 20
Japan. 31, up from 21
S Korea. 78, up from 15
Australia. 40, up from 27
Canada. 64, up from 35 (significant oil exporter to USA)
UK. 59, up from 42
Sweden. 84, up from 46 (that's a LOT of flat pack furniture!)

OECD. 55, up from 24
EU. 83, up from 39
North America 30, up from 12
South Asia. 39, up from 13
World. 56, up from 24

[touchring]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

It's interesting to see the talk of dramatically higher taxes (tarrifs) giving economic benefits.

Why not? I can quote many examples of high tariffs that yield economic benefits.

Japan has very high import tariffs on many food products, a few hundred percent for many produce, but yet they still have a vibrant food industry and Japan exports a lot of quality produce worldwide.

Singapore has the highest import tariffs on cars, 500%, but this hasn't undermined the economy.

Import tariffs are bad for some businesses, so admittedly many would oppose it. Of course, there are ways around it, such as tariffs can be waived if you are importing the goods for making into stuff for export purpose. There could also be exemptions for government projects, military projects, alternative energy, technology use, etc.

There are plenty of tricks - just read - https://www.arcjournals.org/pdfs/ijhsse/v4-i5/10.pdf

[touchring]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

duplicate

[jk]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

credit delinquencies and auto loan defaults are rising while the u.s. is at "full employment." wtf? if you raise tariffs you raise prices for a populace whose every extra dollar is going to pay for rising healthcare, rising education, rising local taxes, rising rents. the savings rate has been going down after a brief rise following the financial crisis, so the only thing keeping consumption going is dis-saving and increased borrowing. so it's hard to see how e.g. a 20% tariff on imported goods is going to do good things for the economy. you'll raise a few more dollars via the tariffs, while raising consumer prices without increasing incomes, thus crashing the economy into deep recession, lowering tax receipts [lower incomes and fewer capital gains since the stock market will go down with the economy], raising unemployment benefits and other countercyclical spending. you will in the process increase, not decrease, the deficit.

[GRG55]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

credit delinquencies and auto loan defaults are rising while the u.s. is at "full employment." wtf? if you raise tariffs you raise prices for a populace whose every extra dollar is going to pay for rising healthcare, rising education, rising local taxes, rising rents. the savings rate has been going down after a brief rise following the financial crisis, so the only thing keeping consumption going is dis-saving and increased borrowing. so it's hard to see how e.g. a 20% tariff on imported goods is going to do good things for the economy. you'll raise a few more dollars via the tariffs, while raising consumer prices without increasing incomes, thus crashing the economy into deep recession, lowering tax receipts [lower incomes and fewer capital gains since the stock market will go down with the economy], raising unemployment benefits and other countercyclical spending. you will in the process increase, not decrease, the deficit.

i believe the theory is the tariffs force a reduction in overall consumption and living standards, as everyone is forced to shift to buying from overpriced domestic suppliers protected from competition.

The wealthy will of course just pay the tariffs to maintain their access to French wines, German cars and Italian fashions (just as they do in China). The shrinking middle class slides another rung or two down the ladder as choices narrow and life gets more expensive still. Say goodby to your LG appliances and Samsung televisions, if you think as a former food producer/exporter you'll be able to buy something of similar quality at the same price made in the USA, good luck. But there will be more soy beans for all. It's for the greater good apparently.

[touchring]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

i believe the theory is the tariffs force a reduction in overall consumption and living standards, as everyone is forced to shift to buying from overpriced domestic suppliers protected from competition.

The wealthy will of course just pay the tariffs to maintain their access to French wines, German cars and Italian fashions (just as they do in China). The shrinking middle class slides another rung or two down the ladder as choices narrow and life gets more expensive still. Say goodby to your LG appliances and Samsung televisions, if you think as a former food producer/exporter you'll be able to buy something of similar quality at the same price made in the USA, good luck. But there will be more soy beans for all. It's for the greater good apparently.

Oh, that television argument. I'm still using a Philips 40 inch LED TV that I bought for $350 6 years ago. It's still working very well. As a rule, I buy the cheapest model of the best brand that meets my minimum requirement, and use it until it breaks.

Never mind about the trade argument, we shall see how maintaining status quo would lead us where in another 5 to 10 years.

[jk]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

i believe the theory is the tariffs force a reduction in overall consumption and living standards, as everyone is forced to shift to buying from overpriced domestic suppliers protected from competition.

The wealthy will of course just pay the tariffs to maintain their access to French wines, German cars and Italian fashions (just as they do in China). The shrinking middle class slides another rung or two down the ladder as choices narrow and life gets more expensive still. Say goodby to your LG appliances and Samsung televisions, if you think as a former food producer/exporter you'll be able to buy something of similar quality at the same price made in the USA, good luck. But there will be more soy beans for all. It's for the greater good apparently.

this makes me think we should have a contest. can anyone here come up with policies, fiscal and/or monetary, that would be MORE conducive to inequality than the actual policies that have been implemented in the last decade or so?

[dcarrigg]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

this makes me think we should have a contest. can anyone here come up with policies, fiscal and/or monetary, that would be MORE conducive to inequality than the actual policies that have been implemented in the last decade or so?

That's too easy. All you'd have to do is copy and paste whatever the Mecatus Center or the Manhattan Institute have up there now. It'll probably involve instituting more regressive sales and income taxes, abolishing the corporate and estate taxes, completely deregulating finance, finding new ways to abolish unions and pensions people already earned, slashing teacher and other public worker pay, adding new tolls to everything from roads and parking meters to internet bandwidth, or anything else you can dream up, more tax credits and public-private partnerships and charter schools where public coffers are raided for the private gain of a few, destroying or abolishing occupational licensing or any other means professionals have of demanding higher wages, offering free H1-Bs to anyone, abolishing the minimum wage, undoing Lochner v. New York and re-establishing constitutional rights to contract, expansion of non-compete and non-disclosure agreements as preconditions for employment, abolishing child labor restrictions, abolishing overtime, taking social security away, and these sorts of things that they have been pushing for since the American Liberty League geared up to undo the New Deal in the 1930s.

[jk]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

That's too easy. All you'd have to do is copy and paste whatever the Mecatus Center or the Manhattan Institute have up there now. It'll probably involve instituting more regressive sales and income taxes, abolishing the corporate and estate taxes, completely deregulating finance, finding new ways to abolish unions and pensions people already earned, slashing teacher and other public worker pay, adding new tolls to everything from roads and parking meters to internet bandwidth, or anything else you can dream up, more tax credits and public-private partnerships and charter schools where public coffers are raided for the private gain of a few, destroying or abolishing occupational licensing or any other means professionals have of demanding higher wages, offering free H1-Bs to anyone, abolishing the minimum wage, undoing Lochner v. New York and re-establishing constitutional rights to contract, expansion of non-compete and non-disclosure agreements as preconditions for employment, abolishing child labor restrictions, abolishing overtime, taking social security away, and these sorts of things that they have been pushing for since the American Liberty League geared up to undo the New Deal in the 1930s.

you win. i was too blinkered in saying what i did. otoh they did do partial versions of just about everything you list.

[dcarrigg]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

you win. i was too blinkered in saying what i did. otoh they did do partial versions of just about everything you list.

Hahahaha....no doubt. They don't blow millions per month pushing an agenda for nothing. We're getting closer and closer to "the dream" all the time.

Really, though, I wonder why they don't really push the envelope and start pushing for the return of primogeniture and entails...

[GRG55]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

you win. i was too blinkered in saying what i did. otoh they did do partial versions of just about everything you list.

The best I could think of after reading dcarrigg's prior post was "holy crap, it REALLY could be worse after all"
Wow...

[GRG55]

Re: Is US Fed the only central bank in the world that actually withdraws liquidity?

Another iconic casualty of overleverage combined with rising rates? I doubt it was cheap Chinese substitutes that brought this one down.

https://www.rollingstone.com/music/n...ruptcy-w519726