People like Stephanie Kelton, Sanders' economist in 2016, a professor at Stony Brook University, and a proselytizer for this view toward currencies and national economies, argues that the government essentially prints money each time it authorizes new unpaid for programs and that it hasn't hurt the economy by causing runaway inflation.
What keeps politicians in check with what they can promise to voters. Or should there be a brake?
Kelton: The brake is inflation. If policymakers run wild, cutting taxes and pumping money into the economy with reckless abandon, inflation will spike and voters will (presumably) check those politicians at the ballot box.
https://www.cnn.com/2019/01/13/politics/debt-spending-mmt/index.html
Umm, there is an argument that the National Debt doesn't matter. but I don't believe that voters will be any sort of check on government spending. They (if they are recipients of it) will love it. She doesn't address the traditional argument that raising interest rates will be a check on inflation.
I think this is just proclaiming the new pseudo-scientific economic gospel - MMT - and using it as an excuse to increase government spending. She blinded me with science!
Monday, January 14, 2019
Thursday, January 10, 2019
Powell is very worried about the growing amount of US debt
Federal Reserve Chairman Jerome Powell is concerned about the ballooning amount of United States debt. “I’m very worried about it,” Powell said at The Economic Club of Washington, D.C. “From the Fed’s standpoint, we’re really looking at a business cycle length: that’s our frame of reference. The long-run fiscal, nonsustainability of the U.S. federal government isn’t really something that plays into the medium term that is relevant for our policy decisions.” However, “it’s a long-run issue that we definitely need to face, and ultimately, will have no choice but to face,” he added.
Why is he worried? We haven't reached infinity yet. It's too late to do anything about the rising debt and nobody cares. He needs to stop worrying and to love the free lunch.
See also: https://aftermath2022.blogspot.com/2018/10/yellen-says-rising-deficit-is.html
Do rate cuts cause recessions?
I just read an interesting theory that recessions are caused by rate cuts. Usually, you would think that a rate cut would help prevent a recession.
it's not the rate hikes that stifle economic growth and send stocks sliding that traditionally telegraph the start of a recession - it's the first rate cut following a tightening cycle that is usually the trigger. Case in point: the last three recessions were all preceded with the Fed cutting, i.e., the Fed loosened policy within three months before the previous three recessions, cutting by 0.25% in 1991, 1.5% in 2001 and 0.5% in 2007. ... the Fed is now too late to save the economy, to wit: "the Fed eases immediately prior to a recession", which is also why the steepening yield curve we are experiencing now is a far more ominous reversal to the recent flattening trend than if the curve had merely continued to flatten.
https://www.zerohedge.com/news/2019-01-10/chart-convinced-albert-edwards-recession-imminent
Maybe the Fed should just keep hiking until the recession starts instead of trying to predict recessions. (After all, a 2.5% rate isn't that high and by itself won't cause a recession.) Instead the predictions become self-fulfilled prophecies.
it's not the rate hikes that stifle economic growth and send stocks sliding that traditionally telegraph the start of a recession - it's the first rate cut following a tightening cycle that is usually the trigger. Case in point: the last three recessions were all preceded with the Fed cutting, i.e., the Fed loosened policy within three months before the previous three recessions, cutting by 0.25% in 1991, 1.5% in 2001 and 0.5% in 2007. ... the Fed is now too late to save the economy, to wit: "the Fed eases immediately prior to a recession", which is also why the steepening yield curve we are experiencing now is a far more ominous reversal to the recent flattening trend than if the curve had merely continued to flatten.
https://www.zerohedge.com/news/2019-01-10/chart-convinced-albert-edwards-recession-imminent
Maybe the Fed should just keep hiking until the recession starts instead of trying to predict recessions. (After all, a 2.5% rate isn't that high and by itself won't cause a recession.) Instead the predictions become self-fulfilled prophecies.
Friday, January 4, 2019
Is Medicare going to kill us?
Karl Denninger thinks so. Read Cut The Crap - NOW.
There is no "entitlement crisis" in Social Security. It is all in the medical side and it is going to bankrupt the nation and government both at the state and FEDERAL level unless it is stopped right here and now. The truth of the nation from a fiscal perspective is simply this: If the medical monopolist crap is not broken now fiscal collapse at local, state and federal levels is a certainty. There is absolutely no possible way out of this box through higher taxes, cost-shifting, economic "growth", more borrowing or even all of them at once. "Hide the sausage" games just flat-out don't work.
He might be on to something, so I'll bite. Question: How much did the government spend on Medicare (not including Medicaid) in November? This is an easy answer to find: $77 billion, found on page 3 of the Monthly Treasury Statement. This is the second highest government outlay, behind Social Security, which however is mostly funded with taxes. The corresponding number for Medicaid isn't easy to find, besides which Medicaid is partially paid by the states. So I will just focus on Medicare.
Since this number is so easy to find, I think I will update it monthly.
Update: Here is a related article- Revolt Or Collapse: Pick One
The people of this nation have the ability to put a stop to what is otherwise going to be a certain collapse -- not just in asset markets but of the government itself. This is not going to happen in 2024 when Medicare cannot pay it will happen before that date because in the history of the world markets have never allowed an actual end date to be reached before they throw up all over the impending disaster. To expect otherwise is to claim that literally everyone in the world is stupid beyond words.
May I point out that when Medicare's funds are exhausted that $1.1 trillion dollar expenditure (and rising) from last year will be immediately reduced by 75%? That's right -- they took in just $260 billion last fiscal year in Medicare taxes but spent four times that amount. If you think the government can immediately add $800 billion to the deficit without interest rates spiking to 10% or more overnight -- which instantly crashes the markets and government both -- you have rocks in your head.
Exactly when the markets will blow up is not determinable in advance but that it will happen is an absolute certainty. Once it happens there will be no orderly path available to the government or anyone else to stop or mitigate the damage since the entire problem with the market throwing up on such an event is that confidence in the ability and desire of government to address the issue will have been irretrievably lost.
There is no "entitlement crisis" in Social Security. It is all in the medical side and it is going to bankrupt the nation and government both at the state and FEDERAL level unless it is stopped right here and now. The truth of the nation from a fiscal perspective is simply this: If the medical monopolist crap is not broken now fiscal collapse at local, state and federal levels is a certainty. There is absolutely no possible way out of this box through higher taxes, cost-shifting, economic "growth", more borrowing or even all of them at once. "Hide the sausage" games just flat-out don't work.
He might be on to something, so I'll bite. Question: How much did the government spend on Medicare (not including Medicaid) in November? This is an easy answer to find: $77 billion, found on page 3 of the Monthly Treasury Statement. This is the second highest government outlay, behind Social Security, which however is mostly funded with taxes. The corresponding number for Medicaid isn't easy to find, besides which Medicaid is partially paid by the states. So I will just focus on Medicare.
Since this number is so easy to find, I think I will update it monthly.
Update: Here is a related article- Revolt Or Collapse: Pick One
The people of this nation have the ability to put a stop to what is otherwise going to be a certain collapse -- not just in asset markets but of the government itself. This is not going to happen in 2024 when Medicare cannot pay it will happen before that date because in the history of the world markets have never allowed an actual end date to be reached before they throw up all over the impending disaster. To expect otherwise is to claim that literally everyone in the world is stupid beyond words.
May I point out that when Medicare's funds are exhausted that $1.1 trillion dollar expenditure (and rising) from last year will be immediately reduced by 75%? That's right -- they took in just $260 billion last fiscal year in Medicare taxes but spent four times that amount. If you think the government can immediately add $800 billion to the deficit without interest rates spiking to 10% or more overnight -- which instantly crashes the markets and government both -- you have rocks in your head.
Exactly when the markets will blow up is not determinable in advance but that it will happen is an absolute certainty. Once it happens there will be no orderly path available to the government or anyone else to stop or mitigate the damage since the entire problem with the market throwing up on such an event is that confidence in the ability and desire of government to address the issue will have been irretrievably lost.
Thursday, January 3, 2019
New mersenne prime
It is 282,589,933-1 having 24,862,048 digits. It is the 51st Mersenne Prime.
See https://www.mersenne.org/.
This is an enormous number. And each increase in the power of two means a number twice as big. I wouldn't be surprised if this is the last Mersenne Prime number found for a long, long time. Of course it was less than a year between discovery of the 50th and 51st mersennes, so who knows.
See https://www.mersenne.org/.
This is an enormous number. And each increase in the power of two means a number twice as big. I wouldn't be surprised if this is the last Mersenne Prime number found for a long, long time. Of course it was less than a year between discovery of the 50th and 51st mersennes, so who knows.
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