Kaplan Steps Down as Dallas Fed Chief, Hours After Rosengren

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It was a complete surprise to me that Fed Chiefs could trade individual stocks. And don’t get me started on members of congress. But just because you can doesn’t mean that you should. I think that a much better solution would be that they can only trade in broad based ETFs or index funds.

Just my two cents.


rosenberg is a voting member 2022, and kaplan is a voting member 2023, both of them are hawks. this is an interesting shuffling. Good luck with tapering or rate hike going into 2022-2023.


Nothing surprising that stepping down is the ultimate outcome. When so many leaders are millionaires, the rich will always come first, whether it’s via policies, hiring or otherwise. There is a real systemic class issue going on in the western world.


CNN: Economists slash their forecasts for America’s growth

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Now if/when the US Economy exceeds these arbitrarily lowered expectations, people will rejoice at the growth and the market will rise, creating the illusion of true growth in all aspects.


At this point, growth forecasting has to take into account the incredible uncertainty from COVID, especially in a country (US) with significant vaccine resistance. I’d be willing to bet the variance in guesses falls once vaccines for 5-11 are approved.


If economists could predict the future, they wouldn’t be economists…

I take these forecasts lightly. I prefer to watch real money flow to see how investors are forecasting the future.

If investors begin investing elsewhere (not America), then these forecasts might be a concern.


Screw the current system. Just graduated with dual majors and I do not want to slave away working to perpetuate this bullshit, even if I can make a decent paycheck for myself. We need change.


For the last year and a half people have been, frankly, guessing at estimates for growth. At the start of COVID, everyone knew the economy was going to crash at take 10 years to recover, like in 2008. Once vaccines were available, everyone knew we would catch back up to growth trends like nothing happened. The truth is nobody knows wtf is going on.


Defying the odds: Remittances held up during the COVID-19 pandemic

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Had no choice, either send money or our relatives would starve. Covid screwed their already bad economy worse than it did ours. These people can’t work from home.


Despite early predictions of a large collapse, remittance flows to developing countries have been surprisingly resilient during the COVID-19 pandemic. This column describes how migrants appear to have responded positively to rising COVID-19 infection rates in their home countries despite economic challenges in host countries. Fiscal stimulus in host countries played a role in keeping remittances buoyant. Travel restrictions, on the other hand, seem to have positively affected official remittance flows, suggesting such restrictions led migrants to use formal channels to send remittances instead of informal channels.


Maybe I’m uniformed, but aren’t the sectors of the economy that recent immigrants tend to fill currently going absolute batshit gangbusters good? Given how bad things are in source countries and how crazy good they are in the US, I’m surprised that remittances haven’t doubled.


So that’s where most stimulus money went to, basically foreign aid, bet most of those who received money in foreign countries buy crypto back then.


U.S. government aid helped reduce poverty in 2020, Census data shows

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It will be interesting to see what happens this year when we don’t give out trillions in stimulus. Does the poverty rate revert back to the original rate? Or does it hold?


Government programs do not reduce poverty and likey perpetuate it, possibly incentive it. The free market creates opportunities that people can take advantage of to lift themselves out of poverty. The War on Poverty has been a spectacular failure with trillions wasted to no substantial benefit.


Lmao government reducing poverty !!!!
What a joke. Government can only take resources from the people. Hilarious.

Learn history folks.

Ancient Greece 600-400 BC is a good example as a start.


Audio & Text: Former Slave Explains Personal Debt

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Most slaves in history were debt peons. Once land and cattle could be cultivated, slaves became a valuable resource, but the only slaves available then would be POWs of enemy tribes that couldn’t married in. Once the idea of debts and payments arrived, then the idea of enslaving your fellow tribesmen sprung forth.


A former slave talking about the immorality of debt seems kind of fitting.

Debt is paying in future time for something today. If you want it today, pay for it today. Future time is even more valuable than current time, so it’s a double tax on time and effort. Typically, the return on that investment is low due to future opportunity costs borne from lost future possibilities servicing the debt.


Americans scream that the elites destroyed the economy so that housing will be cheap for illegal immigrants, but maybe the globalists destroyed the economy so that they can weaken the US and kill off the 99%.


Debt-Limit Standoff Could Force Fed to Revisit Emergency Playbook

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Can’t read since it’s WSJ but what does it have left to revisit? They never stopped QE, repo market is at all time highs, and interest rates are almost negative.


Full text for those with paywall:

Credit to u/geahnsun

A crisis-management playbook Federal Reserve officials created years ago could guide their response this fall if the federal government can’t pay all its bills because of a political standoff over raising the federal debt limit.

The options include the Fed buying Treasury securities in default on the open market and selling Treasurys owned by the Fed to counteract potentially severe strains in financial markets, according to the transcript of an October 2013 conference call.

Among the officials who said those steps shouldn’t be ruled out were Jerome Powell —the central bank’s current chairman who was then a Fed governor—and Janet Yellen —the current Treasury secretary who was then Fed vice chairwoman.

Mr. Powell called some measures “loathsome” and others called them “repugnant” or “beyond the pale” for two main reasons. First, they would pierce the Fed’s institutional preference to avoid directly financing the government, often referred to as its independence from fiscal policy. Second, Fed officials worried if such contingency planning became public, elected officials might feel less urgency to raise the debt limit.

“These are decisions you really, really don’t ever want to have to make,” Mr. Powell said on the call. “The institutional risk would be huge. The economics of it are right, but you’d be stepping into this difficult political world and looking like you are making the problem go away.”

Ms. Yellen said, “I wouldn’t be eager to do them, but I wouldn’t say, ‘never.’”

Others sharing that view included Boston Fed President Eric Rosengren and then-San Francisco Fed President John Williams, who is now president of the New York Fed.

Congress faces another political standoff over how to raise the debt ceiling before the Treasury Department is unable to pay bills over the next month or so. Lawmakers agreed in August 2019 to suspend the borrowing limit for two years, and it took effect again last month at around $28.5 trillion. The Treasury has been relying on cash-conservation measures since then to manage payments.

Similar standoffs in the past have often been resolved after going down to the wire, and some analysts say that has bred complacency that obscures the growing risks of a misjudgment this fall. One worry this time is a game of chicken in which markets stay placid because they assume Congress will act, and lawmakers don’t act because they see no alarm in markets. Top Republicans have said they won’t help Democrats raise the limit this year.

Mr. Powell declined at a press conference last week to elaborate on the Fed’s contingency plans, but he warned of severe damage to the economy and financial markets if Congress waits too long to act. “It’s just not something we should contemplate,” he said. “No one should assume the Fed or anyone else can fully protect the markets or the economy in the event of a failure.”

In 2011, Standard & Poor’s downgraded the U.S. triple-A credit rating for the first time ever, after the Treasury came within days of being unable to pay certain benefits such as Social Security. In 2013, during another standoff, the U.S. government shut down for 16 days until Congress passed a bill funding the government and raising the debt limit.

As the federal debt and budget deficits grow in Washington, it’s unclear whether Democrats and Republicans are concerned. WSJ’s Gerald F. Seib examines where each party stands on the issue. Photo illustration: Todd Johnson

Both times, Fed policy makers debated behind closed doors what they would do if the gridlock led to the government defaulting on its debt payments or to broader financial-market instability, according to transcripts released with the usual five-year lag. A Fed spokeswoman declined to comment.

Mr. Powell, a Republican who oversaw debt-management policy as a top Treasury Department official in the early 1990s, made his return to public service in 2011 by warning against the consequences of default to Republicans who used it as leverage to seek spending cuts from President Barack Obama. As an unpaid analyst at a Washington think tank called the Bipartisan Policy Center, Mr. Powell modeled government cash flows to produce a so-called “X Date” after which the Treasury would run out of money to pay bills as they came due.

After that standoff was resolved, Mr. Obama’s advisers recommended Mr. Powell’s nomination to the Fed’s board of governors, and he was confirmed in 2012. He became Fed chairman in 2018.

Last week, the think tank’s director of economic policy, Shai Akabas, released projections showing the “X Date” would fall between Oct. 15 and Nov. 4. Friday could be a particularly difficult date for federal finances, he said, because of a large payment owed to a trust fund for veterans’ retirement benefits. Financial and economic risks could accelerate from that point, he wrote.

Fed officials agreed in 2011 on a process for managing government payments that would allow the Treasury to give priority to paying principal and interest on government debt ahead of other obligations, the transcripts show. They were also prepared to tell banks that they could count defaulted Treasurys toward their regulatory capital buffers and that they wouldn’t necessarily penalize banks that faced a drop in capital ratios due to unusual cash demands from customers.

On Oct. 16, 2013, then-Fed Chairman Ben Bernanke convened a conference call for officials to review potential options as the Treasury Department neared the exhaustion of its emergency borrowing authority, according to a transcript of the call.

Fed staff economists had prepared a memo outlining nine steps the central bank could consider to manage the fallout from any missed payments.

Officials broadly agreed on several measures, including lending against defaulted Treasurys at their emergency borrowing window and accepting defaulted Treasurys in a separate bond-buying stimulus program—albeit at potentially reduced market prices, so long as it was certain that the government would quickly make full payments after the debt ceiling was lifted.

Mr. Bernanke warned the Fed wouldn’t be able to remove defaulted securities from the market “in any kind of comprehensive way given the size of the Treasury market.”

They also agreed to steps that could flood lending markets with cash, including by extending very-short-term loans made between financial institutions called repurchase agreements, which could also relieve pressures on money-market mutual funds.

Many officials expressed concern that financial markets might face a severe disruption even before the Treasury stopped paying all its bills if the U.S. government failed to find enough buyers in an auction of Treasury debt to replace maturing securities with new ones.

Mr. Powell pointed to the risk of a failure of the Treasury to sell short-term bills that would mature at a point where the government’s borrowing authority might be exhausted. “The real risk is of a failed auction—a loss of market access at any price,” he said.

Mr. Powell worried that the ideas with the broadest support were ineffective to address that problem. He later agreed that in an extreme crisis, the most unappetizing measures shouldn’t be ruled out. “I don’t want to say today what I would and wouldn’t do if we actually deal with a catastrophe on this,” he said.

Mr. Bernanke said only Congress could fully resolve any impasse. “What we are talking about…are steps that the Federal Reserve could take to mitigate on the margin the potential effect of such a default, but obviously, this is not a problem that we could eliminate, by any means,” he said.


Can someone explain to me procedurally why the democrats can’t just increase the debt ceiling as part of reconciliation since they wouldn’t need republican votes to do that? Why are they trying to do it outside of reconciliation where they will need 60 votes to stop a filibuster?


America’s debt ceiling is a disaster, though fiscal rules can help

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Ultimately, fiscal rules don’t have to be the same in Germany or Eurozone nations compared to the USA because the USA issues bonds and the currency used to purchase them when it needs. Germany is stuck relying on the Euro that isn’t issued by their government so they can’t just meet their obligations with money they create like the USA. The USA has fiscal space so far as inflation constraints allow, or political constraints as we see with this ‘self harming’ debt ceiling situation.

It’s like Europe wants the USA to be mired in a state of low growth the way they’ve been for the last decade. Misery loves company?


America’s debt ceiling is like the parental lock on the Nintendo switch. America keeps calling dad for the code to unlock it and he always gives it. The point of the debt ceiling is to limit debt. But it’s never adhered to so essentially it’s pointless. Raise the roof!


The disaster is the incapability of balancing a budget and leaving more and more debt burden for the future generations to baghold.

Pure selfishness.


Cargo Delays Are Getting Worse- WSJ (Unpaywalled)

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Ever notice that these news sources rarely approach workers themselves for inquiry? Instead, they just replace that with drivel like “worker shortages” and macroeconomic statistics like CPI & unemployment.


My country has a key position in logistics, yet is all the way around. Here truckers went on strike recently because the multinational shipping companies are putting them out of business by lowering the freight costs. The worst part is that the government has sided with the shipping co. in detriment of more than 200k of workers that depend on it.


“Excessive reliance on international trade leading to stagflation when things get slightly out of whack” is possibly the most unexpected event of my lifetime. It literally flies in the face of everything I’ve learned about economics going back to Adam Smith and David Ricardo.


Other constraints hold up truckers, who end up getting the blame. Many dispatchers are no longer former drivers but fresh-out-of-college kids reading off a computer rather than learning the route. Oftentimes, drivers get to the docks & find their loads are inaccessible but can’t find a worker to move it. Or, they get to their location & there’s not enough workers to unload so they can be on their way. From what I’ve heard from dock workers (who are also working doubles & triples rn), the hold up is there’s not enough crane operators. & the supply of crane operators are further constrained; IIRC, for safety reasons, crane operators only work 4hrs/d (this was a decade ago & things may have changed in recent yrs). It’s v difficult to get into that job – you practically have to know somebody.


Our supplier of a particular auto part had a container of the parts sitting on the dock in Long Beach for two months. He could track the container and see that it was there . He called the shipping company to see why it was not being delivered to his location in Northern California. He was told that the truckers were only being paid $400 to deliver the container, so they could not get any trucking company to deliver it. He told the shipper that the first trucker to deliver the container would get $500 cash bonus upon delivery. He had the container at his location the next day.


Natural-gas prices are spiking around the world

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Hope ya’ll get comfortable wearing a jacket inside your home because it’s going to be one expensive winter. Especially with many utility companies increasing their prices as well to increase energy output.


Not just gas price. Everything is going up. This is the result of a massive increase in money supply and supply chain getting all messed up. Until they raise rates or supply chain gets back to normal, prices will keep going up. In this scenario, people who have assets will get richer and people who have no assets suffers.


Fed Economist Bemoans ‘Criminally Oppressive’ Social Order

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I read the paper. He quantifies ‘expectations’ using a single University of Michigan survey. Then arrogantly proceeds to attack 50 year old line graphs.

The bigger issue I think he should be explaining is the empirical backing for the Fed maintaining the largest monetary expansion in history with inflation nearly triple target and asset prices entirely dependent on negative real interest rates.

Where is the empirical evidence for forcing negative real mortgage rates late in the real estate cycle?

This is how you get a cushy economics job: spin some nonsense to justify printing unjust amounts of money.