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Author Topic:   The economy needs a 3% GDP growth to function well
LamarkNewAge
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Posts: 1560
Joined: 12-22-2015


(1)
Message 13 of 50 (820816)
09-27-2017 6:22 PM


Quantitative Easing begins $4.5 tril unload ($10 billion a month now,to $50 a month
The $4.5 trillion in artificial money created to buy mortgage backed securities and treasury bonds(in place of actual humans purchasing them which would have required higher interest rates to get buyers) is not only going to stop but the Federal Reserve is actually going to start selling $10 billion per month of them at first and then increase the sales so that there will be a $50 billion dump per month by the 12th month.

The money the investors pay for the bonds will be liqudated (disappeared from existence - as there was fake money created out of thin air by the fed to buy the treasuries - so the federal government could use it to deficit spend -, and when actual investors buy the actual treasuries with actual money, that actual money will be used to subtract from the FEDs $4.5 trillion QE balance sheet of fake created money).

The federal government (not to be mistaken for the Federal Reserve bank) has been paying interest all along on the treasuries. The magic of the Quantitative Easing program was that the federal government was paying the Federal Reserve interest payments instead of actual investors.

Now that the Federal Reserve is selling the bonds (some of them have been held so long that they have matured, that is reached the end of their life, so the fed will have to use its balance sheet to purchase brand new bonds then sell them to the public investors as well as eventually sell the ones that havn't matured), that means that there will be a lot of investor $$$ to hunt for. The federal government will continue to pay the interest rates, but they will be with higher interest rates (except for the bonds the Federal Reserve sells to investors that haven't matured I suppose)

The national deficit this year is already projected to be at least $700 billion.

The Quantitative Easing won't add to the deficit or debt by itself (this $4.5 trillion Federal reserve balance sheet is part of the $20 trillion in debt the federal government owes or at least the balance of it that involved buying federal treasuries) but the artificial creation of money to buy treasuries enabled the interest rates to be lower since it reduced the amount of (actual) investor purchases of our bonds in past years (essentially preventing the need to raise interest rate yields to get all the required investors)

We already will need to raise interest rates to get the $700 billion in treasury bond purchases to finance the FY 2017 budget deficit.

Now we will need at first $10 billion more per month from investors to purchase (some of)the bonds the Federal Reserve magically bought from 2008 to 2017. The $10 billion will gradually be increased so that a $50 billion target per month is hit in 12 months.

It looks like there will need to be about $300 billion more investor dollars to be wooed in FY 2017 (on top of the $700 billion), and I suppose it will be $50 billion for all 12 months in FY 2018, so that will be an astonishing $600 billion in additional investor purchases of the bonds that year.

Interest rates will have to be increased to get this kind of investment.

The Federal Reserve always promised that this money wouldn't be inflationary because it would eventually be erased from existence. (that is the balance sheet would be reduced eventually)

Now we will see how high interest rates will need to be when we put the promise into practice.

Will we stop reducing the Feds balance sheet (it starts at a high $4.5 trillion) if another recession hits?

What will the bond market think if there isn't significant reduction before we stop reducing the balance sheet?

What if another QE program starts before the old one has seen the money liquidated?

What will investors think about that?

Edited by LamarkNewAge, : No reason given.


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LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 15 of 50 (820983)
09-29-2017 6:01 PM
Reply to: Message 14 by Taq
09-29-2017 5:33 PM


A Universal Basic Income.
The average income in the United States appears to be going toward $59,000 per person for 2017.

The world average should be over $11,000 for 2017 but that depends on how much worse the dollar gets. (Purchasing power in the world will average over $17,000 per person in 2017).

A truly universal (that is worldwide) income right of $250 per month (PPP or purchasing power parity) might be in order if one wants faster economic growth and the (near)end of abject poverty.

Just a start though.

A Universal Basic Income should be tied to the overall average income in the world.

It does not replace working either. (just a universal floor income, and working is irrelevant)


This message is a reply to:
 Message 14 by Taq, posted 09-29-2017 5:33 PM Taq has responded

Replies to this message:
 Message 18 by Taq, posted 10-02-2017 11:22 AM LamarkNewAge has responded

    
LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 16 of 50 (820985)
09-29-2017 6:08 PM
Reply to: Message 13 by LamarkNewAge
09-27-2017 6:22 PM


Correction. Fiscal Yeay 2018 is October 1 2017 to Sept 30 2018
That is the new fiscal year coming up and I described it as FY 2017 by mistake. It is FY 2018 that will see the Federal Reserve begin to reduce its $4.5 trillion balance sheet. The reductions will start at $10 billion per month (starting in December I think) and the amount liquidated will gradually rise to $50 a month in 12 months.

October 1 2018 till September 30 2019 will be FY 2019 (not FY 2018 as I stated above) and that will be the fiscal year where apparently $600 billion will be liquidated.

In addition to huge budget deficits of at least $700 billion, in these 2 years, there will be all this QE liquidation bond selling that will require investors.

Interest rates already have jumped quite a lot just this week alone. I didn't see the yield numbers for yesterday or today (have yet to read my Wall Street Journal for September 29 plus I don't know what happened today), but September 27 say a major increase in the treasury yield. (from like 2.0% up to about 2.3% in just 1 day)


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LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 19 of 50 (821388)
10-06-2017 3:07 PM
Reply to: Message 18 by Taq
10-02-2017 11:22 AM


Re: A Universal Basic Income.
quote:

The statistical Naze in me can't help but point out that this is the median income which is different from the average or mean income.

I can't make to much fun of you because I managed to forget what you seem to have forgotten. I USED to know (the very basic fact) that the median income was a much lower dollar amount than the average income, but it seemed to slip my mind (remember the Brexit thread and PaulK challenging my knowledge on that issue?)

The median is about $18,000 per capita per year while the average is going to be about $59,000 per capita per year.

The median household income will be around $38,000 or something.

For some groups (especially Americans of Indian descent), the median household income is close to the average individual income amount. The Indian household median income situation was what got me confused (in the Brexit thread)between average and median (though I knew exactly what median meant, as you surely do, but I got the dollar amount all confused, and I used to know better LONG ago.

PaulK raised the issue of "well being" being better reflected by the median income level, and I stupidly said that the median was about the same as the average, and he called me on it. How I forgot that, I have no idea.

quote:

I'm not an economic expert, but it seems like a bad idea to dump a lot of cash into an economy since it could create unmanageable inflation/deflation. It also reminds me of a story my grandfather used to tell about his time in the US Army during WW II. There were quite a few guys who liked to gamble and play poker. Within a few days of getting their paychecks a lot of those guys would be broke, but there were a few card sharks that would be flush with money, and it was usually the same guys each month. Just flooding the economy with money seems like a bad idea, but it might work if it is balanced by building infrastructure that would produce good paying jobs in the long term. Otherwise, all of that money moves into the pockets of barons or an economic oligarchy (think Russia) and stays there.

But I could be completely wrong. Again, I'm not an expert in economics.


You seem to be responding to the QE temporary creation of money (to be removed later?)

It made mortgages cheaper and lower interest rates there enabled people to get good monthly payments.

But the wealthy were the biggest winners there.

Lower income folks are hurt by lower mortgage rates because it shoots up housing prices.

That was the mortgage backed security part of the $4.5 trillion in debt purchases.

As for the federal treasury bond purchasing part...

The national debt hasn't been too expensive to finance that's to the QE buying treasury bonds and keeping rates down.

But a massive ton of the debt purchasing was fairly short term maturity bonds, and they will need to be replaced my (much higher yielding) bonds sold to investors in time.

Edited by LamarkNewAge, : No reason given.


This message is a reply to:
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LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 20 of 50 (821390)
10-06-2017 4:07 PM
Reply to: Message 14 by Taq
09-29-2017 5:33 PM


On the Indian issue.
quote:

What I have noticed is that humans need a job. When we don't have jobs and just sit around the results are pretty ugly. To use one example, there are indigenous tribes in Alaska that receive rather large incomes from mineral rights (i.e. oil money). Each person gets as much as $60k a year for nothing more than existing. What do these communities look like? Alcohol and drug abuse are rampant. Quality of life is piss poor. Education for kids is atrocious.

It seems to me that we humans derive our sense of worth from working. When that is taken away we tend towards destructive behaviors. So how do we supply people with work in a society without money and without a need for people making stuff?


American Indians are interesting.

There is a lot of interest in (generally fundamentalist) Christianity despite the well known past imposition. Indians are interested in a lot of issues and frankly, a societal resurgence (as if it ever surged in the past) in the liberal arts might attract lots of Indians.

Indians in the United States might not be the best examples if one expects to see what typical results will be.

I don't know.

I know that a number of working Indians do have issues with liquor, but most are deeply offended if "their people" are singled out as having worse vices with addiction than whites and blacks. They are very vocal on that note. (dunk Indians often shout out against whites and "their drugs"). Drunk and sober Indians alike dismiss their being singled out as any different.


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LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 22 of 50 (825667)
12-17-2017 12:46 AM


Since 2008, the distribution of income wealth has become more even?
An AP story was just printed today in my local paper

Here is a link from another paper

https://www.abqjournal.com/...er-unless-policies-change.html

quote:

Report: Rich will get still richer unless policies change

By Elaine Kurtenbach and Christopher Rugaber / Associated Press

Published: Friday, December 15th, 2017 at 1:24pm

TOKYO — Global income inequality has worsened over the past four decades, a report finds, with the wealthiest 1 percent of the world’s population capturing twice as much income growth as the bottom half.

....

The World Inequality Report 2018 is based on an interactive collection of data compiled by an international team of researchers that includes renowned economists Thomas Piketty and Emmanuel Saez. Their previous research drew attention to widening inequality in the United States by highlighting the disproportionate income gains enjoyed by the richest 1 percent since 1980.

The new report argues that countries can reduce inequality through more progressive taxation and by subsidizing education. It points out that the United States and Western Europe had similar levels of inequality in 1980, with the top 1 percent holding about 10 percent of income. But by 2016, the top 1 percent in Europe held a 12 percent income share, compared with 20 percent in the U.S.

....

The World Inequality Report shows that income gaps soared after 1980, though they leveled off after 2008 after the financial crisis. The richest 1 percent of the world’s population saw its share of global income slip from about 22 percent in 2008 to just above 20 percent in 2016. At the same time, the share of global income going to the bottom 50 percent rose slightly in the same period, to just under 10 percent, thanks to gains in populous and fast-growing China and India.

The share of income earned by the bottom 50 percent of Americans sank from more than 20 percent in 1980 to 13 percent in 2016, it said.


A fall from 22% down to 20% seems like a roughly 10% income share drop for the top 1%.

I did not see the exact numbers for the bottom 50% but it looks like an almost 10% income share is an improvement from 2008 to 2016 at least.

I don't know what the numbers were when looked at from a broader perspective (from 1980 to 2008, and even for 2008 I don't know the numbers).

There is an anti free trade bias from the study authors it seems (and the AP article does seem to uncritically assert that globalization has somehow hurt the bottom 50% of Americans). I would call that erroneous.

Well, what to make of this?


    
LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 26 of 50 (825785)
12-17-2017 10:04 PM
Reply to: Message 25 by RAZD
12-17-2017 3:52 PM


Re: Wealth -- what is it? (what about health or spiritual issues?)
The Netherlands has the world's tallest people, so perhaps they have the best diet?

Or is spiritual health the best measure?

What about those spiritual issues?

Could the unreal explosion of vegetarians/vegans in Israel in JUST the past decade (or broadly speaking ALMOST decade and a half) be signs of spiritual growth and thus be a sign of a (growing) successful society?

What about India?

On related moral concerns, consider the following:

Moral poverty in the United States (especially the unhealthy south) might be an issue to consider.

The black community of Alabama saw the fight against Roy Moore (and his sphere of - ironically - faux "moral" supporters) as a spiritual battle against Satan himself (and I should point out that his chasing of younger girls isn't what I am concerned about here, and I doubt that was the main concern from black voters though I assume they cared somewhat about his sex life while I don't give a rat's rear end).

Moral poverty must be considered, to some extent, a drag on lifespans and economic health.

I think that moral and spiritual issues can be seen as a sign (or signs) of society's growth and thus could be a harbinger for the future (if not the present). We should be able to agree that health indicators are important.

But perhaps all of the above issues are symptoms of the respective societies success? But are we looking at results that represent the respective societies as a whole or is a lot of top-loaded (like the top 1% or top 10% or top 20% or top 50%) success skewering the overall numbers?

Then we have to consider the fact that there aren't going to be the same definitions of "happy", "moral", "spiritual", and (perhaps even) "healthy".


This message is a reply to:
 Message 25 by RAZD, posted 12-17-2017 3:52 PM RAZD has responded

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LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 27 of 50 (825795)
12-18-2017 12:40 AM
Reply to: Message 26 by LamarkNewAge
12-17-2017 10:04 PM


Possible correction on Roy Moore issue.
I assumed the only thing he did was date teenage girls in a manner of common consent (one was 14 I think).

I forgot that there were other accusations (including him touching people against their will and issue like that). I was just reading another thread, and a post.

I didn't follow the discussion of his sexual accusation issues closely.

So, just scratch out what I said above. I am not interested in the issue, but perhaps I went too far when I said I didn't give a rats behind. (and I actually care a lot about rats anyway, and think mammal eating snakes should be illegal pets plus I oppose the legality of inhumane rodent traps)

(edit: I just understated what I think should be illegal when it comes to killing animals but moving on)

I only mentioned the issue because I was trying to point out that his sexual issues weren't the "moral" issue in black voter's minds.

I was trying to make a point about morality being subjective and I was thinking of racism of the right being "evil" to some while abortion and homosexuality seem evil to others (like Moore supporters).

Southerners present themselves as happy and moral even though they are physically unhealthy.

My point was that people can skew happiness indicators.

Perhaps my whole point was weak from the get go.

Edited by LamarkNewAge, : No reason given.


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LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 39 of 50 (826042)
12-21-2017 12:57 AM
Reply to: Message 38 by RAZD
12-18-2017 11:57 AM


Re: The Desirable direction.
quote:

Indeed, and by carefully manipulating the value of the money in circulation they could ensure a 3% GDP growth every year, so the economic news would always be rosy, people could be given "cost of living" raises so that their earnings increased every year.

A job would be found for everyone, as there will always be cleanup needed, with anti-litter laws and campaigns managed to preserve the current levels so that job opportunities are provided, especially for the convict class task forces.

Rosy.

So when you wrote this you sat
ire pouring from your post at
republican economics
scams and dirty tricks
while rich greedy gluttons get fat


I'm not sure inflation is a Republican trick.

But mayor Bill de Blasio is attacked for job training proposals for the homeless.

https://www.city-journal.org/...e-reform-reversal-13718.html

(I am having trouble finding the article I am looking for. try various keywords. But don't use "homeless" in the search because it will yield trillions of articles attacking the mayor)

keywords:

city journal new york bill de blasio job training 2015 job david dinkins www.city-journal.org

Universal job training is a controversial issue, and homeless can't even get any training. It is considered a "waste".


This message is a reply to:
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Replies to this message:
 Message 40 by RAZD, posted 12-21-2017 8:19 AM LamarkNewAge has not yet responded
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LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 48 of 50 (849438)
03-10-2019 1:59 AM


Economy grew 2.9% in 2018. (revision is possible)
Fully 0.1% was lost due to shutdown.

Trade wars cost even more growth than the shutdown.

Republicans really needed 3.0% growth (so they could top Obama'a best year performance).


    
LamarkNewAge
Member
Posts: 1560
Joined: 12-22-2015


Message 50 of 50 (849462)
03-10-2019 9:04 PM
Reply to: Message 49 by Thugpreacha
03-10-2019 10:56 AM


Corey Booker has a plan that goes way beyond job training.
He actually has a bill that guarantees a job to everybody who wants one.

Fellow Presidential candidates Harris, Gillibrand, and Warren signed on.

I have no idea if it will cost the government money for the jobs.

Booker has his arguments, and I encourage you to look at the various costs issues (benefits to society included).


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