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Fed prediction: It's going to keep sucking for awhile

Discussion in 'Sports and News' started by RickStain, Nov 23, 2010.

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  1. RickStain

    RickStain Well-Known Member

    The link in the article that started this thread has the Federal Reserve predicting that growth and unemployment will remain unimpressive for the next 5-6 years. And they are on the bullish side of most predictions.

    Germany entered the recession with much less debt than we had, and even now have about 1/3rd less relative to their GDP. They had room to maneuver. We don't.
     
  2. amraeder

    amraeder Well-Known Member

    Well, at this point, I'm just going to agree to disagree on the fact that we don't have room to maneuver. I think we can well survive another round of stimulus, and I think it's in our best interest. (and, I'll add that I assume, though don't know, that the projections by the Fed don't involve any future stimulus, and that stimulus would change the outlook for their unemployment projections).
     
  3. RickStain

    RickStain Well-Known Member

    Also, I'd like to see how "real government consumption" compares to total stimulus. I'm getting a little out of my depth here, but wasn't a large part of the U.S. stimulus in forms other than straight-up government consumption? It seems like arbitrarily focusing on a small part of stimulus.
    IIRC, there was significant disagreement between the United States and Germany during one of the big economic meetings recently, where the U.S. thought Germany was being too timid with borrowing for stimulus and the Germans didn't want to take any bigger risks.
     
  4. amraeder

    amraeder Well-Known Member

    It definitely wasn't a large part of the overall stimulus package, in the first part, which was kind of the point I was trying to make. Overall government consumption is what is "good" stimulus" it's having a direct impact on the economy. Other parts of the stimulus package, like giving money to the states so they can stay afloat, and tax cuts, don't provide the same impact on the economy.
     
  5. The Big Ragu

    The Big Ragu Moderator Staff Member

    Unemployment up to 9.8 percent after most recent jobs reports yesterday. No more census jobs to fudge the numbers with and the Obama handouts from the spending bill are running thin, so local governments have been laying people off. Meanwhile, the private economy remains in a massive recession.

    What exactly again, has the Fed's policy of running the printing presses 24/7 accomplished?

    And what are going to be the consequences?

    We are looking at stagflation. No matter how you slice it. China is already facing an inflationary environment and there is no way that doesn't infect the rest of the world. And our clueless central bankers have been doing everything they can to stoke inflation, at the same time. Meanwhile, the economy remains stagnant, even though the stated goal (and they are full of it--they really want to inflate away the debt our lawmakers have hit us with) of the monetary policy (and the stated goal of our lawmakers' fiscal policy in the first place) was to somehow stimulate economic activity. It's done squat, just created debt and a weak dollar.

    High unemployment + inflation = stagflation. That is likely what we are headed for. 1979/1980 all over again. That should set Ben Bernanke off running around in circles chasing his tail to a degree we haven't seen yet.
     
  6. Lugnuts

    Lugnuts Well-Known Member

    And yet corporations are posting all-time highs in profits.

    Trickle down, baby!
     
  7. poindexter

    poindexter Well-Known Member

    Unemployment up to 9.8 percent after most recent jobs reports yesterday.

    That number may as well be coming from Pravda. I have as much faith in that number as I do the government telling us Jessica Lynch hero stories.
     
  8. Boom_70

    Boom_70 Well-Known Member

    Or that Pat Tillman died in a fire fight vs al queda
     
  9. The Big Ragu

    The Big Ragu Moderator Staff Member

    I kind of laugh when I see this / saw this during the last round of earnings reports. Corporate profits hit new highs all the time in an expanding economy. It's what is expected and what you typically see EVERY year, except when we are in a deep recession (shrinking economy). If our economy didn't grow and companies didn't earn more money each year, things would be really sorry in the U.S. Our economy is growing, even if it is not growing fast enough to offset the shock it took in 2008. Secondly, those "all-time high profits" reports are not adjusted for inflation. Real profits are below peak. It's true that on a productivity per employee basis, companies seem to be doing better than ever. But there is so much uncertainty--compounded by what our government and central bank has been doing--that they are afraid to invest.

    The signs are good. Profits are rising. Capital expenditures were even picking up, albeit on a tentative basis. And most sectors have been beginning--slowly--to back away from stockpiling cash and liquid assets. But there is still way too much fear out there. Corporate profits right now, like just about everything else, are reflecting an incomplete recovery from the recession. My guess is that goes on for a while longer.

    And back to the Fed, let's say we see that for a year or more -- my fear is what kind of damage the Fed, and separately, our politicians, can inflict during that time to 1) derail the recovery and 2) stoke inflation to such a degree that they create a new bigger problem.
     
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    http://www.nytimes.com/2011/04/24/business/economy/24fed.html

    So back when they announced bond buybacks, everyone was in agreement about what a stimulus to the economy it is as a tool. Now they are coming out of the woodworks to say, "Well shoot, it doesn't work. And oh, how the Fed's balance sheet is bloated as a result." I'll admit that a big part of the reason it hasn't worked is that at the same time the Fed is buying back bonds and taking a loss, Congress was issuing more debt. It has to the most moronic mix of fiscal and monetary policy ever. But that was part of the point above, and in other posts. The Fed exists to try to cover up the spending of Congress. They either lower interest rates abnormally to inflate away the debt, or in the case of where we are now, with rates effectively being zero since 2008 (and not reviving the economy, of course), they shit all over the currency to tacitly allow the Congress to KEEP issuing more debt.

    We are all having debates about Federal spending. And they are valid. But I wish they'd kill off central banks. They cause more grief for the world than any other entity I can think of.
     
  11. TigerVols

    TigerVols Well-Known Member

    [​IMG]

    Surprised to be left off your list.
     
    Last edited by a moderator: Dec 15, 2014
  12. MartinonMTV2

    MartinonMTV2 New Member

    What a shock. You didn't get it, even though you feel the need to issue these periodic lectures.

    The point, Alexander Hamilton Jr., is that companies are recording these profits while unemployment remains high. Yes, there's expansion after a recession. That's by definition, you dunderhead. The recession doesn't technically end until there is expansion. Maybe that wasn't covered on the back of the cereal box where you get your economic facts.

    Once again, it's time to bring out the quote from The Kennedys: You have a stunning grasp of the obvious that does us absolutely no good.
     
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