Used to be there was a "cost" to money. Savers demanded a return from borrowers. Now it seems money should be free or nearly free. The people pushing for "free" money are those who want to cut borrowing costs. Market "longs" who love free money for their margin accounts and other market shenanigans and big debtors. Oh, by the way, who is the biggest debtor again? There was a "market tantrum" once and they bullied the fed. They are trying to run the same game again, bully the fed into lowering rates.
Personally, I don't think 4% to 5% for long term (10 yr.) money as historically expensive. I think if one was (were?) to look back over a longer term than the last 10 or 15 years, it would be borne out. I don't see any reason to cut rates.
Monetary policy is only half of one side of the equation. The other half is fiscal policy. Congress, led by the W.H. want to spend like drunken sailors and try and get the fed to clean the mess up with monetary policy - asinine, moronic, cheap pettifoggery.
Besides, if there are no cuts early, there will be no cuts later as it is an election year and unless the fed wants to look like a complete tool (both definitions) of the admin. they will not cut later.
I built a high rise office building in Austin By God Texas -- One American Center, 6th and Congress -- when the Prime Rate went to 21.5% -- 19 Dec 1980, Merry Christmas, check me.
I never made a mistake when times were tough. I made all my biggest mistakes when I could afford them, when money was cheap.
I remember how Paul Volcker worked inflation down and how interest rates were the major factor.
I lived through the Texas bank bust. That was bloody.
We had it too good for too long and can't remember how shitty things can get.
Does anyone really believe government reports? This is more and more like trying to reading between the lines of Pravda or Izvestia to figure out what's going on during the good old days.
I used to discount this stuff. During the Obama Admin, people said the BLS manipulated numbers. I thought they were conspiracy theorists. Did they manipulate during Trump then? If so, why wouldn't they revise everything lower than it should have been assuming they wanted to torpedo Trump? Seems weird now that the revisions are always lower-but what is funny to me was when we were in recession (6 mos of negative GDP) every mainstream media outlet changed the definition or ignored it.....even today.
I buy into the Biden spent (March 2021) and that spending combined with Covid is running out now. Same as FDR.
For now, I’m gonna stick with my tried and true 2-part formula: 1) scared money don’t make money; 2) buy high/sell low. It has worked just exactly as you all might expect!
Did a little AI test pitting my 16 year old son vs. Google AI on 3 algebra problems involving related rates. My son is pretty good at algebra and went 3/3. Google AI was 0/3 and was off by more than 100x on two of the problems.
Makes me wonder, what is it that corporations are using AI for? Would they be better off hiring a 16 year old rather than dumping millions or hundreds of millions in AI? What if they hired 2 sixteen year olds? Who does corporate fire with AI is off by a factor of 100 on say...yields from a lithium or cobalt mine? Or does corporate just keep investing more money and say that one day it will all work out.
Recalling a study we did internally at Oracle which concluded that IT investment was a net negative for all sorts of ERM up until 1993 or so (sort of coinciding with better PC's and Client-Server networking framework).
Adding graphics to spreadsheets does not strike me as a multi-billion $ innovation. Maybe in 1995 someone could have gotten away with....'NetPEG : The graphic standard for the internet that will sweep away the GIF' and got a $10 Million valuation. We should be beyond that now.
**
Not begrudging the AI promoters who are making money on this stuff. I have a significant investment in an AI company, and they have a proven product. But it isn't quite what is being promoted to the general public.
Suits love the new shiny so others try to concoct ways to use it, whether or not it makes any sense. Definitely a lot of waste.
Someone is pitching “machine learning” to my organization. I know, kind of old at this point, but that’s part of the story. I and one other guy (we both lead info/data/tech teams) have experience with what works and doesn’t in that area; we read the proposal and concluded they don’t understand what they’re talking about and the approach is fatally flawed. Directors frown at our ‘negativity’ and 100 to one it’s going forward. We’ll be cut out of the loop, which is actually okay by me. Life’s too short to work on stupid stuff.
I agree with Jim Iuorio is right. Just look at the revisions for the last couple of months. The Biden administration keeps saying look how many jobs I created 14 or15 million but the forget to tell u we lost 10 million due to covid.
This is the same old song and dance that we have seen way to many times before over the last 40 years. We live in a fiat currency world and all that separates us frankly, from the rest of the world is their perception of our steadiness and greatness. Our dollar and its strength is in the hands of the emotions of the rest of the world. Scary. We have lifelong bueracrats who occupy agencies who produce these numbers, manipulate things and usually always with a political bent to it. Since the patron saints of excessive government have been the Democratic party since Wilson, it is to that party they owe their allegience- who they feel like "commrades" with. Our over-all economic data across the broad spectrum that comes out the BLS is no better then what comes out of Bejing at this point.
Like the fellow with the broken garage door, I have had some embarrassing moments thanks to trading. Several years ago, I attended a wake. I had my mobile device on watching the crude market. When it was my turn to kneel at the casket my device fell out of my hand and into the casket. Not wanting to miss anything, I put my hand down the side of the corpse to retrieve my device. The bereaved were horrified but I put on a position standing next to the casket that made it worthwhile.
Great points. Post hoc revisions to numbers from last month, last quarter, & last year was a regular game in both Obama administrations, as I recall. No surprise that v3 is pulling the same tricks, over and over, and of course also without being held accountable.
I feel like the Fed is very politicized. After all, Powell gets canned if this Trump fellow gets elected. Is he capable of talking his own book, saving his job? Yes.
I also think inflation will continue to slide for the same reason you do -- oil prices will not have any upward movement though our great pals -- Prince Bonesaw's bunch -- Saudi Arabia and Russia will pretend to lower output to drive prices higher.
Russia -- already taking a 30% haircut on Urals Crude from India and China -- cannot afford to reduce production. They are an economic basket case. How does one know? Because those liars keep crowing how good everything is going.
The US economy may be in pretty decent shape by Election Day. Biden will still be 80, an old 80, feeble, infirm, inarticulate, unencumbered by the truth, and confused. The voters are going to clean house.
The biggest indictment of the improvements in the employment market is the fact that more than half of all new jobs are GOVERNMENT JOBS!
These are wildly inflationary because, unlike private industry, nobody ever gets fired.
The Man From Argentina has the right idea -- take a machete to it all. Cut, cut, cut government Jabba the Hutt bloat.
I agree that deficits are not always inflationary, but when you have massive, gargantuan deficits that are spent on silly nonsense -- those babies are always inflationary.
Not a politician in the whole US has a plan to begin to reduce the deficit and repay even $1 of the national debt.
Gotta go with J Minch on this one Mr Carter. I think the Fed, as in every other Federal branch, is heavily politicized already! "The voters are going to clean house". From your lips to God's ear!
Used to be there was a "cost" to money. Savers demanded a return from borrowers. Now it seems money should be free or nearly free. The people pushing for "free" money are those who want to cut borrowing costs. Market "longs" who love free money for their margin accounts and other market shenanigans and big debtors. Oh, by the way, who is the biggest debtor again? There was a "market tantrum" once and they bullied the fed. They are trying to run the same game again, bully the fed into lowering rates.
Personally, I don't think 4% to 5% for long term (10 yr.) money as historically expensive. I think if one was (were?) to look back over a longer term than the last 10 or 15 years, it would be borne out. I don't see any reason to cut rates.
Monetary policy is only half of one side of the equation. The other half is fiscal policy. Congress, led by the W.H. want to spend like drunken sailors and try and get the fed to clean the mess up with monetary policy - asinine, moronic, cheap pettifoggery.
Besides, if there are no cuts early, there will be no cuts later as it is an election year and unless the fed wants to look like a complete tool (both definitions) of the admin. they will not cut later.
My two cents.
I built a high rise office building in Austin By God Texas -- One American Center, 6th and Congress -- when the Prime Rate went to 21.5% -- 19 Dec 1980, Merry Christmas, check me.
I never made a mistake when times were tough. I made all my biggest mistakes when I could afford them, when money was cheap.
I remember how Paul Volcker worked inflation down and how interest rates were the major factor.
I lived through the Texas bank bust. That was bloody.
We had it too good for too long and can't remember how shitty things can get.
Paid a lot of expensive tuition to learn that.
JLM
www.themusingsofthebigredcar.com
Does anyone really believe government reports? This is more and more like trying to reading between the lines of Pravda or Izvestia to figure out what's going on during the good old days.
I used to discount this stuff. During the Obama Admin, people said the BLS manipulated numbers. I thought they were conspiracy theorists. Did they manipulate during Trump then? If so, why wouldn't they revise everything lower than it should have been assuming they wanted to torpedo Trump? Seems weird now that the revisions are always lower-but what is funny to me was when we were in recession (6 mos of negative GDP) every mainstream media outlet changed the definition or ignored it.....even today.
I buy into the Biden spent (March 2021) and that spending combined with Covid is running out now. Same as FDR.
For now, I’m gonna stick with my tried and true 2-part formula: 1) scared money don’t make money; 2) buy high/sell low. It has worked just exactly as you all might expect!
Did a little AI test pitting my 16 year old son vs. Google AI on 3 algebra problems involving related rates. My son is pretty good at algebra and went 3/3. Google AI was 0/3 and was off by more than 100x on two of the problems.
Makes me wonder, what is it that corporations are using AI for? Would they be better off hiring a 16 year old rather than dumping millions or hundreds of millions in AI? What if they hired 2 sixteen year olds? Who does corporate fire with AI is off by a factor of 100 on say...yields from a lithium or cobalt mine? Or does corporate just keep investing more money and say that one day it will all work out.
Recalling a study we did internally at Oracle which concluded that IT investment was a net negative for all sorts of ERM up until 1993 or so (sort of coinciding with better PC's and Client-Server networking framework).
https://www.oneusefulthing.org/p/reshaping-the-tree-rebuilding-organizations
Adding graphics to spreadsheets does not strike me as a multi-billion $ innovation. Maybe in 1995 someone could have gotten away with....'NetPEG : The graphic standard for the internet that will sweep away the GIF' and got a $10 Million valuation. We should be beyond that now.
**
Not begrudging the AI promoters who are making money on this stuff. I have a significant investment in an AI company, and they have a proven product. But it isn't quite what is being promoted to the general public.
Suits love the new shiny so others try to concoct ways to use it, whether or not it makes any sense. Definitely a lot of waste.
Someone is pitching “machine learning” to my organization. I know, kind of old at this point, but that’s part of the story. I and one other guy (we both lead info/data/tech teams) have experience with what works and doesn’t in that area; we read the proposal and concluded they don’t understand what they’re talking about and the approach is fatally flawed. Directors frown at our ‘negativity’ and 100 to one it’s going forward. We’ll be cut out of the loop, which is actually okay by me. Life’s too short to work on stupid stuff.
I agree with Jim Iuorio is right. Just look at the revisions for the last couple of months. The Biden administration keeps saying look how many jobs I created 14 or15 million but the forget to tell u we lost 10 million due to covid.
This is the same old song and dance that we have seen way to many times before over the last 40 years. We live in a fiat currency world and all that separates us frankly, from the rest of the world is their perception of our steadiness and greatness. Our dollar and its strength is in the hands of the emotions of the rest of the world. Scary. We have lifelong bueracrats who occupy agencies who produce these numbers, manipulate things and usually always with a political bent to it. Since the patron saints of excessive government have been the Democratic party since Wilson, it is to that party they owe their allegience- who they feel like "commrades" with. Our over-all economic data across the broad spectrum that comes out the BLS is no better then what comes out of Bejing at this point.
Like the fellow with the broken garage door, I have had some embarrassing moments thanks to trading. Several years ago, I attended a wake. I had my mobile device on watching the crude market. When it was my turn to kneel at the casket my device fell out of my hand and into the casket. Not wanting to miss anything, I put my hand down the side of the corpse to retrieve my device. The bereaved were horrified but I put on a position standing next to the casket that made it worthwhile.
Seinfeld moment!
Great points. Post hoc revisions to numbers from last month, last quarter, & last year was a regular game in both Obama administrations, as I recall. No surprise that v3 is pulling the same tricks, over and over, and of course also without being held accountable.
I agree more with you than your wife does. Well played.
On the heels of my annual predictions: https://themusingsofthebigredcar.com/predictions-2024/ I do think the Fed will lower interest rates by mid-year due to political expediency.
I feel like the Fed is very politicized. After all, Powell gets canned if this Trump fellow gets elected. Is he capable of talking his own book, saving his job? Yes.
I also think inflation will continue to slide for the same reason you do -- oil prices will not have any upward movement though our great pals -- Prince Bonesaw's bunch -- Saudi Arabia and Russia will pretend to lower output to drive prices higher.
Russia -- already taking a 30% haircut on Urals Crude from India and China -- cannot afford to reduce production. They are an economic basket case. How does one know? Because those liars keep crowing how good everything is going.
The US economy may be in pretty decent shape by Election Day. Biden will still be 80, an old 80, feeble, infirm, inarticulate, unencumbered by the truth, and confused. The voters are going to clean house.
The biggest indictment of the improvements in the employment market is the fact that more than half of all new jobs are GOVERNMENT JOBS!
These are wildly inflationary because, unlike private industry, nobody ever gets fired.
The Man From Argentina has the right idea -- take a machete to it all. Cut, cut, cut government Jabba the Hutt bloat.
JLM
www.themusingsofthebigredcar.com
I am holding out idealistically that the Fed is NOT politicized the way the DOJ/FBI are. https://www.grumpy-economist.com/p/fiscal-narratives-for-us-inflation?utm_source=post-email-title&publication_id=2178684&post_id=140371376&utm_campaign=email-post-title&isFreemail=true&r=ixt4&utm_medium=email This is a great explanation of inflation....TL:DR Deficits don't expressly matter as long as there are expectations that future surpluses can pay them. Hence, deficits by themselves are not inflationary. BUT, that doesn't mean it is okay to run deficits ad infinitum.
Look for the Democrats to try and push a BIG infrastructure bill this year. They need the government to spend
I agree that deficits are not always inflationary, but when you have massive, gargantuan deficits that are spent on silly nonsense -- those babies are always inflationary.
Not a politician in the whole US has a plan to begin to reduce the deficit and repay even $1 of the national debt.
JLM
www.themusingsofthebigredcar.com
Gotta go with J Minch on this one Mr Carter. I think the Fed, as in every other Federal branch, is heavily politicized already! "The voters are going to clean house". From your lips to God's ear!
https://x.com/LibertarianDuty/status/1743087460693717094?s=20 Milei is the best
Most empires end after approximately 250 years.
Prepare yourself.