I am stunned by the collapse of bond prices.

[Catch50]

Sorry to confuse you Catch. I was referring to @m.knox's M2 money supply chart, which is pertinent to the inflation issue. I thought it was in this thread but obviously it is not. I was looking at it prior to responding here. I did not notice that @m.knox had added a chart (above) to debate debt with @JeffClear. My mistake. The problem of debt/GDP, as it relates to inflation, is a little more complicated. It's not where I wanted to take this discussion, but it is certainly pertinent to any response to control inflation.

That said, you could be just a little bit more civil when you respond. It's clear you have a rather poor temperament. I would be surprised if this hasn't held you back in life. You might not even realize it.

I don't know why my use of the word "fair" should get you so riled, but going off the rails with "wimp, idiot, loser" says more about you than it does about me.

Whatever you might think, what happened isn't fair in the least. The government reneged on its mandate to maintain stable pricing. This is seen in bond yields now very pre-pandemic. What happened is huge and could get worse if both the Congress and the Fed do not put on the brakes.

Since I can't find that chart, I will link to a chart that not only shows the money supply, but the year over year % change.

Money Supply Growth Charts

As you can see from the charts, M2 money supply was growing at an annual percentage rate between 4% and 8% year over year (or 2-4 trillion dollars). This accounts for economic growth plus inflation. There was an initial Covid injection of 2.5 trillion (23% year over year increase) in 2020. Then in 2021 we had an increase of about 4 trillion (40% year over year). This came when inflation had already been established and the pandemic was winding down. There was no reason for this spending except to advance the Dem-agenda, and at the worst possible time. For whatever reason, the Fed kept increasing the money supply on top of that spending.

40% is huge. No way that much productivity is in the cards. It is therefore inflationary pressure going forward, another reason for long bond yields to increase. (Bonds get dumped.). Normally the money supply would be kept in concert with production (real GDP) in an economy to produce a stable rate of inflation.

Powell now needs to remove M2 dollars in the same way he created them. (Sell bonds instead of buying them. This puts upward pressure on interest rates to slow economic activity.) Congress could help if it did the same, but we know they won't under Democratic control.


How does this problem affect a pensioner? Let me simplify the calculation again for you with some actual math that is based on expectations built into the bond market. (Hint: They are smarter than you and me.)

Lifetime fixed rate pensions are typically based on bond yields. For a young retiree expecting to live another 30 years we could use the duration and yield for the 30 year bond as a basis for the discounted cash flow -- the effect of inflation. The 30-year bond has risen roughly 1% over pre-pandemic levels. Let’s assume that inflation then runs 1% above the pre-pandemic 2% level, or 3% going forward after experiencing (6+9=15%) inflation initially during the first two years.


I am not going to tell you my monthly annuity, so as before let's just use an example -- a nice round 50K per year for the pension.

Case A is what was expected when the pension was rewarded at retirement (2% inflation). Case B is what actually happened after Congress went on a spending spree and the Fed abandoned its inflation target.

CASE A:
Total purchasing power (in present day dollars): $1,142,219.
Average Annual Value: $38,074

CASE B:
Total payment (in present day dollars): $933,548.
Average Annual Value: $31,118

Total Loss (in today's dollars): $209,671
Annual Loss (in today's dollars): $6,956

You can scale these numbers up or down based on what you think my pension might be. Any way you slice it, this is terrible, and unfair. A person getting a 50 K$ annual pension loses roughly $7,000 in purchasing power in today’s dollars for every year of retirement. Overall, it's like having the government step in and take your house.

You quick to insult first. It's about oil prices. You would see low inflation with the increases in spending but reasonable oil prices. That's history.

 

[KnightWhoSaysNit]

Respond dumbass. You're ignoring high oil and food prices.

What about them? When you grow the money supply beyond GDP people leave the workforce. That creates a supply chain that is broken. Result: High fuel and food prices.

I think you are making yourself out to be the "dumbass" here. Your thoughts don't run particularly deep.

Every economist and analyst I've seen views it through the issue of money supply, in particular, money supply relative to GDP. You operate within a leftwing bubble that cannot see outside of itself.

Did you even look at my example above? Probably not.

 

[m.knox]

What about them? When you grow the money supply beyond GDP people leave the workforce. That creates a supply chain that is broken. Result: High fuel and food prices.

I think you are making yourself out to be the "dumbass" here. Your thoughts don't run particularly deep.

Every economist and analyst I've seen views it through the issue of money supply, in particular, money supply relative to GDP. You operate within a leftwing bubble that cannot see outside of itself.

Did you even look at my example above? Probably not.

Catch isn't an economist. Let's get that straight. He's a low level gubmint employee who has statist dreams and aspirations much like Krugman.

 

[KnightWhoSaysNit]

You quick to insult first. It's about oil prices. You would see low inflation with the increases in spending but reasonable oil prices. That's history.

History doesn't include step increases in money supply like this. That money is out there. You have to account for it. You won't.

Do you think it is fair for someone on a 50 K$ pension to shoulder 7 K$ per year (in today's dollars) for the rest of his retirement. That would be over 10 K$ per year for someone with an average income. This doesn't even include taxes, and it presumes that government doesn't continue on the same path.

Well, do you? It's a simple yes or no that you seem to answer with "wimp, idiot, loser" and now "dumbass." I think it is you that needs to be banned since you will not debate content.

 

[m.knox]

Thanks for retrieving this for me.

Clearly @Catch50 is a head case.

I need to get better at not responding to him. The rub is that every lefty we have here is irrational, so who can you debate? When our lefties try to dig into a problem they inevitably miss the cost of their proposal, including who will pay that cost. They always ignore human nature, that people respond based on incentives. When you corner them about that cost, they blow up into Trump-hate or something else that is irrelevant.

This is what we are up against. How do you change minds like that? I don't think it is possible. This is why the country will continue to slide. It is embracing leftism as it becomes more desperate. They are grabbing a lifeline not attached to the boat, but instead to its anchor.

Sometimes it's like playing with a cat with a string or laser pointer.

 

[JeffClear]

But you don't know if this will happen. Central banks might start support at this level like the Bank of England did today. It could rise from 3700 and you would be left out.

Now I don't think that will happen as I do see lower lows at some point in the next few years. The reason I think that is that, in my view, valuations were about as high as they could be just prior to the pandemic, and the economy, in my view, was beginning to weaken.

So all of what was spent since then is simply inflation. That puts pressure on valuations as interest rates rise. The real issue here is how governments and central banks handle stagflation. Do they ease to prevent recession/depression, or do they raise to control inflation?

This is obviously the worst economic situation for an economy. There really only is one solution and that is to grow the private sector (supply) while cutting the public sector (that has been driving demand).

This is not the worst situation for the economy, not even close. For example 1970's were far worse.
Despite the growth of money supply, the dollar remains strong on the currency markets because foreigners continue to snap up dollars as a hedge against inflation in their own countries.
I think we are in a bit of a rough patch that I think we will get out of next year.
I don't think the Russian war will last much longer, which will ease some of the inflationary pressures.
I also think supply chain issues will work themselves out as well.
No doubt we would be better off if we didn't have so much debt and it is unfortunate we didn't lower the debt when the economy was expanding.
The great thing about the sequester was it imposed discipline on both parties and gave them political cover because they could always blame the cuts on the sequester.
If Clinton had won, I have no doubt that the sequester would have survived because the republicans controlled congress.

 

[KnightWhoSaysNit]

This is not the worst situation for the economy, not even close. For example 1970's were far worse.
Despite the growth of money supply, the dollar remains strong on the currency markets because foreigners continue to snap up dollars as a hedge against inflation in their own countries.
I think we are in a bit of a rough patch that I think we will get out of next year.
I don't think the Russian war will last much longer, which will ease some of the inflationary pressures.
I also think supply chain issues will work themselves out as well.
No doubt we would be better off if we didn't have so much debt and it is unfortunate we didn't lower the debt when the economy was expanding.
The great thing about the sequester was it imposed discipline on both parties and gave them political cover because they could always blame the cuts on the sequester.
If Clinton had won, I have no doubt that the sequester would have survived because the republicans controlled congress.

You are making assumptions that the strong dollar RELATIVE TO OTHER FIATS is a good thing. That actually spells greater inflationary pressure in the future, not less, unless the trend continues and currencies do not return to pre-pandemic parity.

There is a big difference between today and the 1970s. DEBT, Factor that in. You mention it but then refuse to account for it. We are talking about debt payments in excess of a trillion annually to reign in this level of inflation. This government spending is not sustainable, much less something that can grow.

 

[KnightWhoSaysNit]

This is not the worst situation for the economy, not even close. For example 1970's were far worse.
Despite the growth of money supply, the dollar remains strong on the currency markets because foreigners continue to snap up dollars as a hedge against inflation in their own countries.
I think we are in a bit of a rough patch that I think we will get out of next year.
I don't think the Russian war will last much longer, which will ease some of the inflationary pressures.
I also think supply chain issues will work themselves out as well.
No doubt we would be better off if we didn't have so much debt and it is unfortunate we didn't lower the debt when the economy was expanding.
The great thing about the sequester was it imposed discipline on both parties and gave them political cover because they could always blame the cuts on the sequester.
If Clinton had won, I have no doubt that the sequester would have survived because the republicans controlled congress.

What do you think? Catch won't answer for the Left. Is it fair to "come out of this" by taxing a 50 K$ fixed pension at 7 K$ per year in today's dollars for the entire length of retirement?

 

[JeffClear]

You are making assumptions that the strong dollar RELATIVE TO OTHER FIATS is a good thing. That actually spells greater inflationary pressure in the future, not less, unless the trend continues and currencies do not return to pre-pandemic parity.

There is a big difference between today and the 1970s. DEBT, Factor that in. You mention it but then refuse to account for it. We are talking about debt payments in excess of a trillion annually to reign in this level of inflation. This government spending is not sustainable, much less something that can grow.

The strong dollar shows there is still a strong demand for dollars and it is lowering inflationary pressures by making imports cheaper.
As for the debt, it was more of a problem in the 70's and early 80's because interest on the debt, (due to high interest rates) consumed a large chunk of federal spending.
With interest rates rising, government borrowing is getting more expensive and something will have to be done or we could end up in a situation like the rally 80s.
In the 80's interest on the debt was about 16 percent of the budget, it's roughly half that now.
But again this could change if interest rates continue to go up.
The worrying thing is neither party is taking the debt seriously, they are not talking about it this election season anyway.
I'm hoping with the pandemic ending both sides can agree on new sequester legislation.

 

[KnightWhoSaysNit]

I'm hoping with the pandemic ending both sides can agree on new sequester legislation.

If you are voting for Democrats then you are dreaming about the statement you just made. You can't seriously be this disconnected with The Party.

And you did not answer my question. You need to answer if you are going to be a leftist with credibility. Even if government doesn't make things worse than they already are, is it fair to see a pension pay for government spending like that? I remember what happened after the 70s and pensions were wiped out despite the government's ability at the time to fight inflation. This government is doing it willfully. That's the people you voted into office.

 

[JeffClear]

If you are voting for Democrats then you are dreaming about the statement you just made. You can't seriously be this disconnected with The Party.

And you did not answer my question. You need to answer if you are going to be a leftist with credibility. Even if government doesn't make things worse than they already are, is it fair to see a pension pay for government spending like that? I remember what happened after the 70s and pensions were wiped out despite the government's ability at the time to fight inflation. This government is doing it willfully. That's the people you voted into office.

I vote for democrats if the Republican candidate is a Trumper.
Oz is a good example of this, I am not voting for a Trumper even if it means voting for a guy who lives in his parents' basement.
And the GOP seems more concerned with bathroom usage and library books than the debt.
And Trump's record on the debt is poor.
And I'm not sure what question you are asking?

 

[KnightWhoSaysNit]

I vote for democrats if the Republican candidate is a Trumper.
Oz is a good example of this, I am not voting for a Trumper even if it means voting for a guy who lives in his parents' basement.
And the GOP seems more concerned with bathroom usage and library books than the debt.
And Trump's record on the debt is poor.
And I'm not sure what question you are asking?

Is it fair to inflation-tax a 50 K$ pension at a rate of 7 K$ per year (in today's dollars) for every remaining year of that person's retirement? This is in addition to taxes paid to the IRS? That's what the group that you elected started and seems to be advocating going forward. That's a high price for Trump-hate.

Simple question. Yes or no?

 

[KnightWhoSaysNit]

And actually, if Dems remain in office, that 7 K$ number likely gets worse. The Fed can't stop inflation without cratering the economy as the government increases spending.

 

[KnightWhoSaysNit]

No answer from @Catch50 as well. He must be actually working today. An answer should not be difficult. You can base it on feelings.

 

[LionDeNittany]

I vote for democrats if the Republican candidate is a Trumper.
Oz is a good example of this, I am not voting for a Trumper even if it means voting for a guy who lives in his parents' basement.
And the GOP seems more concerned with bathroom usage and library books than the debt.
And Trump's record on the debt is poor.
And I'm not sure what question you are asking?

If it isn't a 'Trumper' whatever that means you still won't vote republican.

Why are you lying to yourself?

Oz is a Oprah candidate. Same as Obama.

 

[m.knox]

The strong dollar shows there is still a strong demand for dollars and it is lowering inflationary pressures by making imports cheaper.
As for the debt, it was more of a problem in the 70's and early 80's because interest on the debt, (due to high interest rates) consumed a large chunk of federal spending.
With interest rates rising, government borrowing is getting more expensive and something will have to be done or we could end up in a situation like the rally 80s.
In the 80's interest on the debt was about 16 percent of the budget, it's roughly half that now.
But again this could change if interest rates continue to go up.
The worrying thing is neither party is taking the debt seriously, they are not talking about it this election season anyway.
I'm hoping with the pandemic ending both sides can agree on new sequester legislation.

The dollar is strong, in part, because it is the world's reserve currency. Every country in the world needs USD.

 

[JeffClear]

Is it fair to inflation-tax a 50 K$ pension at a rate of 7 K$ per year (in today's dollars) for every remaining year of that person's retirement? This is in addition to taxes paid to the IRS? That's what the group that you elected started and seems to be advocating going forward. That's a high price for Trump-hate.

Simple question. Yes or no?

Yes, we all are subjected to the winds of the market.
Prices, ie inflation are largely determined by market forces. Is government debt making inflation worse, I'm sure it is, but it is small compared to supply chain and fuel costs.
But fuel costs are coming down and the supply chain issues should work themselves out too.
There is a lot going on in the world, to blame the democrats for inflation is simplistic.
You blame the democrats but Trump did nothing to reduce the debt during a time when debT levels should have been falling.
In fact if Trump had done nothing, things would be better and the debt would be lower..
Instead, he abolished the sequester, cut taxes, increased spending and ballooned the debt.
But Biden isn't off the hook, he's president now, he needs to deal with the debt.
He needs to take a lesson from Obama, Obama remained popular despite living under the sequester.
Some on the far left will squeal but what are they going to do, vote for Trump?

 

[JeffClear]

The dollar is strong, in part, because it is the world's reserve currency. Every country in the world needs USD.

It's been the reserve currency for a while, its recent strength is due to global inflation and the dollar is more stable than the alternatives.
Rising interest rates is also contributing towards its strength as foreigners buy dollars to take advantage of the higher bond yields.

 

[KnightWhoSaysNit]

Yes, we all are subjected to the winds of the market.
Prices, ie inflation are largely determined by market forces. Is government debt making inflation worse, I'm sure it is, but it is small compared to supply chain and fuel costs.
But fuel costs are coming down and the supply chain issues should work themselves out too.
There is a lot going on in the world, to blame the democrats for inflation is simplistic.
You blame the democrats but Trump did nothing to reduce the debt during a time when debT levels should have been falling.
In fact if Trump had done nothing, things would be better and the debt would be lower..
Instead, he abolished the sequester, cut taxes, increased spending and ballooned the debt.
But Biden isn't off the hook, he's president now, he needs to deal with the debt.
He needs to take a lesson from Obama, Obama remained popular despite living under the sequester.
Some on the far left will squeal but what are they going to do, vote for Trump?

And you STILL can't answer the question. It was a YES or NO.

That expense in my view is disproportionate and based on government reneging on its mandate.

You answer it as if we all have to suffer. Doesn't that seem extremely disproportionate to you for something that is supposed to be "safe?" Others can recoup their losses. That doesn't happen in this case.

 

[KnightWhoSaysNit]

Yes, we all are subjected to the winds of the market.

And by the way. This wasn't "the market." It was corruption of the market.

 

[m.knox]

Instead, he abolished the sequester, cut taxes, increased spending and ballooned the debt.

And women, minorities and the middle class all got ahead. All while debt to GDP barely budged. All while the fed raised the rate 7 times.........

Should be a learning moment for you Jeff.

And notice how I use spaces between paragraphs?

 

[KnightWhoSaysNit]

And women, minorities and the middle class all got ahead. All while debt to GDP barely budged. All while the fed raised the rate 7 times.........

Should be a learning moment for you Jeff.

And notice how I use spaces between paragraphs?

Would have been even better had Congress cut spending.

 

[m.knox]

Would have been even better had Congress cut spending.

No argument here. Water under the bridge though. Jeff seems to think it is highly relevant to Biden and the Fed over stimulating the economy the last year and a half.

 

[KnightWhoSaysNit]

Crickets from the lefties, just like the media when it chooses to ignore bad news that implicates bad behaviors and policies.

This is why we are in trouble.

 

[JeffClear]

Would have been even better had Congress cut spending.

Trump and congress are responsible for that. Trump more so because he submitted the budget and he was the leader of the GOP, which controlled both congress and the whites house.
But it is water under the bridge but the sequester needs to come back.

 

[JeffClear]

And women, minorities and the middle class all got ahead. All while debt to GDP barely budged. All while the fed raised the rate 7 times.........

Should be a learning moment for you Jeff.

And notice how I use spaces between paragraphs?

Barely budged ha! And if Trump hadn't spent so much on stupid stuff and got into useless trade wars maybe rates wouldn't have gone up.

 

[m.knox]

Barely budged ha! And if Trump hadn't spent so much on stupid stuff and got into useless trade wars maybe rates wouldn't have gone up.

Barely budged is 105.2 to 106.8.

That is the very definition of barely budged.

Remember Jeff...............

It’s Official: Trump Unleashed A Middle-Class Boom That Benefited Women, Minorities Most​

 

[KnightWhoSaysNit]

Barely budged ha! And if Trump hadn't spent so much on stupid stuff and got into useless trade wars maybe rates wouldn't have gone up.

Blame it on Trump all you want. Your party is in power and they are fixing nothing. What they ARE doing is making everything worse, a lot worse.

 

[JeffClear]

Barely budged is 105.2 to 106.8.

That is the very definition of barely budged.

Remember Jeff...............

It’s Official: Trump Unleashed A Middle-Class Boom That Benefited Women, Minorities Most​

Trump increased the deficit from $665 billion to billion to $983 billion by the end of 2019. In two years Trump increased the deficit by almost 50 percent.
And I'm sure you don't want to talk about the debt at the end of Trump's term.
But you are quite the good little liberal, arguing that high deficits and high government spending improved the lives of minorities.

 

[m.knox]

Trump increased the deficit from $665 billion to billion to $983 billion by the end of 2019. In two years Trump increased the deficit by almost 50 percent.
And I'm sure you don't want to talk about the debt at the end of Trump's term.
But you are quite the good little liberal, arguing that high deficits and high government spending improved the lives of minorities.

Stop it Jeff.... You have no legs in this argument. Show me Trump's contribution. You have yet to enumerate anything because it would prove you wrong,

 

[m.knox]

Trump and congress are responsible for that. Trump more so because he submitted the budget and he was the leader of the GOP, which controlled both congress and the whites house.
But it is water under the bridge but the sequester needs to come back.

You will have no issue convincing the GOP of this. Your challenge is convincing your party.

 

[KnightWhoSaysNit]

You will have no issue convincing the GOP of this. Your challenge is convincing your party.

The question is simple. Which party is more likely to do what Jeff thinks needs to be done?

He simply will not admit it.

 

[Catch50]

Is it fair to inflation-tax a 50 K$ pension at a rate of 7 K$ per year (in today's dollars) for every remaining year of that person's retirement? This is in addition to taxes paid to the IRS? That's what the group that you elected started and seems to be advocating going forward. That's a high price for Trump-hate.

Simple question. Yes or no?

What a stupid question. Only a pussy would say it's not fair. It has nothing to do with Trump hate.

 

[Catch50]

History doesn't include step increases in money supply like this. That money is out there. You have to account for it. You won't.

Do you think it is fair for someone on a 50 K$ pension to shoulder 7 K$ per year (in today's dollars) for the rest of his retirement. That would be over 10 K$ per year for someone with an average income. This doesn't even include taxes, and it presumes that government doesn't continue on the same path.

Well, do you? It's a simple yes or no that you seem to answer with "wimp, idiot, loser" and now "dumbass." I think it is you that needs to be banned since you will not debate content.

You started with the insults.

 

[Catch50]

Sometimes it's like playing with a cat with a string or laser pointer.

I may have to admit I don't know how to "play" with whiners like NIT.

 

[KnightWhoSaysNit]

I may have to admit I don't know how to "play" with whiners like NIT.

You don't know how to play because you can't debate the issues with reasoning and logic. That is your problem, not mine.

I worked a realistic example in detail, then tried to bring the issue down to the level of "fairness" so that you might think about it at a human level. Not to be. You cannot even do this. Just more of the same angry tone. You are likely married to someone who is similar because you cannot see the error in your ways. There are no mirrors in your house.

As I see it, your responses tend to become disgusting when you get backed into a corner.

Probably best to just put you back on Ignore.

 

[Catch50]

You don't know how to play because you can't debate the issues with reasoning and logic. That is your problem, not mine.

I worked a realistic example in detail, then tried to bring the issue down to the level of "fairness" so that you might think about it at a human level. Not to be. You cannot even do this. Just more of the same angry tone. You are likely married to someone who is similar because you cannot see the error in your ways. There are no mirrors in your house.

As I see it, your responses tend to become disgusting when you get backed into a corner.

Probably best to just put you back on Ignore.

My reasoning and logic is based on history. Let me say that I would concentrate on commodities like oil unless I had much better evidence that fed policy or spending was causing inflation.

 

[KnightWhoSaysNit]

My reasoning and logic is based on history. Let me say that I would concentrate on commodities like oil unless I had much better evidence that fed policy or spending was causing inflation.

Show us a period in history where the year over year increase in money supply matches that of the last two years. Saying this is not a factor does not make it so, especially when most economists think that it is the cause. They would not be pointing at M2 so much if this were not true. I don't think that you nor I are smarter.

Second, when government spends, sending more money into the economy, M2 increases unless the Fed sells bonds (raising interest rates) to destroy that cash. They can manipulate the bond yield curve through bond sales/purchases.

At some point holders of cash will not spend it and leave the money in the bank, but not if it is depreciating. If it devalues the incentive is to spend it, thereby spiraling inflation even higher. This is called "unanchored" inflation, a nightmare for central banks, particularly when they are fighting a fiscal side that is adding to the M2 problem.

TIPS yields are finally positive, which means there is now an incentive to save for longer term needs. But the short duration end (cash) yields are still negative. So if someone has a dollar, and a secure job, they would be inclined to spend that money as fast as possible rather than leave it in the bank. For lack of a commensurate increase in the supply of goods (call it GDP), the result is inflation.

The best answer to fight inflation is to increase supply. But matching supply to this massive M2 increase is infeasible.

 

[PSUEngineer89]

Blah blah blah.
Yeah, you People have all the ****ing answers - more tax cuts, less worker empowerment, and shit on everyone that doesn't look or act like you out on the horse farm. How's your Maga-boi Brett Favre doing with his tweets for Mississippi welfare $$?

Clown world. Look at you.

Your heroes absolutely fvcked this country.

Now you have the nerve to say that we think we have the answers.

 

[JeffClear]

You will have no issue convincing the GOP of this. Your challenge is convincing your party.

I disagree since it was Trump and the GOP that killed it.