One more day...
"Economics is not accounting, let me make that clear." - Lacy Hunt
So much going on…here’s some Tuesday morning desk-cleaning…lots more in the queue. This period feels for me a lot like early 2000 - hard to keep up with it all.
Someone asked what my “process” was. Unless there’s a topic I want to dive deep into - look at some of my past posts, or this - I read a lot, and as I read I email myself the links, and then go through those emails later - basically in chronological order, which is why I jump around a lot, although I try to order things.
Anyway, it mostly looks like this:
Havenstein’s Razor: Never attribute to malice that which is adequately explained by stupidity, unless it keeps happening over and over.
Remember, I'm not an economist, so I don't know what the wrong answer is.
US income and wealth inequality grew worse faster than ever before after 2010 due to the one thing that dramatically changed that year: the way the Federal Reserve set monetary and regulatory policy.
“The housing market, the stock market and the bond market, all overpriced at the same time. If the Fed knew what it was doing it would not allow bubbles of this magnitude to take place.”
- Jeremy Grantham
“Inflation doesn’t work for anyone. Maybe there are a few, but most people are very seriously hurt by that, and that process is ongoing, and the Fed’s job is still not done.”
- Lacy Hunt, my favorite “deflationist”
The winners in our inflation were big-business men in the cities...the great losers were the working class and above all the middle class, who had the most to lose.
Remember, Jerome Powell told us in September 2021 that "inflation rates for next year and 2023" would be "2.2% and 2.1%."
It took 30,000 highly-compensated geniuses to be this wrong.
A fave: The Fed As Drug Dealer
I like to say that we injected cocaine and heroin into the system, and now we're maintaining it on Ritalin. How's that?
[LAUGHTER]
- former Dallas Fed President Richard "Dick" Fisher (now at Barclays), March 9, 2016
“Financial assistance is the Chekhov’s gun of banking: mention it and it is very likely that it will be used before the end of the play.” - JÉRÔME LEGRAS
Now I’m worried about commodity markets: Commodity markets likely to escape banking crisis fallout, traders say
Could there be a run on the Comex? e.g., Hey, I’d like some actual gold please!
On cue, Leon’s back, but not yet crying: “They have to save the system.”
"When the Fed engages in QE...they give a signal to the corporate managers that financial asset prices and financial liquidity is protected...this causes a greater and greater share of corporate resources to be channeled into the financial markets rather than into the real economy…" - Lacy Hunt
August 2007: Richmond Fed Bank President Jeffrey "Lacker told risk managers yesterday that the Fed's district banks would even accept boat loans as collateral. It's up to the banks to establish a value for the assets as they make the loan, he said."
"Stock ownership is not broad enough...there is a presumption if somehow we get the stock market going up, and the Wall Street reports are good every night, that this somehow heals the economy. It doesn't. The stock market is a lousy economic indicator." - Lacy Hunt on Realvision, 2020
There were some who saw it coming...While the whole world was having a big ol’ party, a few outsiders and weirdos saw what no one else could.
The Big Short (movie, not book)
Sept. 2021
The fact that a large group of people need to break up a 20 dollar phone charger into four installments is a sign of just how bad things are. I keep seeing these buttons on more and more websites, and for items that cost $20 or even less.
- thorosaurus
How is it possible that Glenn Hubbard is still treated as some sort of “expert”?
Lacy Hunt on MMT, August 2020: "...policy has failed and so we’re going back to the government asking for more of the same types of policy, but we’re getting off into areas where the results could be even more catastrophic..."
Thank God Japan has achieved a nicely higher cost of living, with rates negative out to three years.
The Bank of Japan is a joke - a parody of central banking.
Never admit failure or get out of the way. The answer's always to do moar.
Keeps otherwise unemployable people relevant. Gradually, then suddenly people will realize this. This is from 2018:
Having grabbed almost half of the bond market and 75% of ETF investment in Japanese equities, Kurodanomics must get creative. That could mean gorging on mortgage-backed and asset-backed securities to diversify stimulus targets. The BOJ could load up on corporate debt.
"The private sector has a high multiplier, the government sector in my view is negative, and so as you shift further and further into command and control, you diminish your possibility for growth." - Lacy Hunt
JPMorgan and Deutsche Bank must face Jeffrey Epstein claims, judge rules “allows plaintiffs to proceed with allegations the banks ‘knowingly benefited’ from crimes.” Probably nothing.
"The conventional wisdom,
which is anchored by the Fed, Wall Street, the IMF, is, um,
basically always wrong."
Lacy Hunt
I grew up reading Hazlitt, Hayek and Friedman., so I'm biased, but... These demonic motherfuckers know exactly what they are doing. This is a game of enrich the vested interests (politicians, business leaders) to keep my job safe and my family rich.
Sounds like every other oligarchy.
Excellent, not only a source of factual information but also a good comedy read!