Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
Zero Liability Voters
I thought this was quite good. It wouldn’t be as big of an issue if you had higher interest rates. Now look at all of the debt that the Fed is swallowing. Smart hedge fund guys say that the Fed and the Treasury are one thing now. How can libertarianism and conservatism get any traction in this environment? How is it supposed to work or sell in this environment?
Andrew’s been saying this for years. pic.twitter.com/9x0ikxFYfV
— Rich Weinstein (@phillyrich1) April 3, 2021
.
Published in Politics
I’m for Heinlein’s system in Starship Troopers.
A friend of mine told me recently that interest rates will be going up in the near future. Like, way up. That’s the only way that the fed can control inflation, after the enormous recent increases in the money supply.
He’s a financial guy, so I hesitated to argue with him. He knows his stuff.
But I disagreed, saying that as long as our government’s debt is this mind-bogglingly huge, that there’s no way they’re going to raise interest rates. The US government would default in a matter of months.
My friend than explained to me the difference between the Fed and the Treasury. What a convoluted mess. Who came up with this?
Either way, I don’t see how this can end well.
But what do I know? This is complicated stuff.
But it looks bad. And when you try to simplify it for someone like me, it looks even worse.
To me, it looks like a house of cards. And I can’t tell what’s holding it up.
I really hope I’m missing something here. Maybe I am…
I just watched this this morning. Part of what is going on is, you have 7 trillion in government pensions that need higher interest rates, but that would destroy too many corporations, and obviously the U.S. government can’t afford it. Two hundred twenty basis points higher on the five year treasury and every single western government goes broke.
This all started when Alan Greenspan started blowing bubbles in the mid 90s.
Here is another one. They are both explicit about the non-separation between the Treasury and the Fed. They can’t let the stock market collapse or any company collapse because peoples retirements and welfare depend on it.
Start at 46:00 approximately
I just watched the end from 46:00. This is the summary. Discretionary central banking misallocates capital. This reduces distributed opportunity. That makes people need government. Furthermore it facilitates the growth of government separate from that. Everything moves left all the time and conservatism and libertarianism can’t work or sell under these circumstances.
Act accordingly.
Also, I don’t see how you don’t get serious CPI inflation. It’s the path that has the lowest political problems.
Rashida Tlaib has revived the concept of the platinum trillion-dollar coin. And there is a Nobel Prize winning economist at the NYTimes who supported the idea originally back in 2011. If those two fools are representative of TPTB, we’ll be Venezuela soon.
delete
If we could move more people from negative liability voters to zero liability voters, that would be a good start.
I can’t speak for anyone else, but I just got some more canned hams that are good for at least 5 years.
If you want to understand ‘the system’ this is very good. This guy leans towards statist solutions because he’s trying to keep the dollar hegemony intact, but he lays out all of the problems really well.
https://investresolve.com/podcasts/mike-green-the-fourth-turning-and-reimagining-the-american-dream/
Deficits from spending are OK. I have it on the highest authority that deficits do not matter if caused by excessive spending.
Deficits only matter if they result from tax cuts for the rich.
But the result of tax cuts for the rich is excessive spending…
I once heard a Demo-rat politician say, “We don’t have a spending problem. We have a revenue problem.”
The Federal Reserve retards the revenue. All they do is misallocate capital, put off the day of reckoning, and grow government.
Wow.
That’s amazing.
It shouldn’t be, really. In the primaries for the 2020 Presidential election, Bill de Blasio said during one of the Democrat debates “There is plenty of money in this world, and there’s plenty of money in this country, it’s just in the wrong hands. Democrats have to fix that.”
The issue is, how much capital you have as defined by this article, and what is the yield on it? Then you have to discuss how much of it the government is going to take.
https://mises.org/wire/were-living-age-capital-consumption
Is that the same as 2.2%?
Yes. 2.2 percentage points
The other thing they were saying in that Mike Green interview was, PPE is forgivable. You don’t have to pay it back. What they are doing is the Fed is cutting a check for bonds that pay for PPE, but if the Fed is buying so many bonds including those, it’s literally just the government printing money and giving it to businesses and they are going to eat the cost of it with Monopoly money. Supposedly this is against the law.
I can’t figure out how we made it this far. I’d thought it would all come falling down long before now.
Inflation as measured by Consumer Price Index (CPI) usually lags increase in money supply by 2 years… You are already seeing gasoline prices going up all over the country
FYI, this is the other side of the inflation argument. Since these idiot central bankers have facilitated so much excess debt on the planet, this is very deflationary. When you pay back a loan, that is absorbing money. It’s not going into anything real. What’s worse is, when a loan goes bad it literally destroys dollars. This makes dollars more valuable and it makes the dollar stronger. Then, the strong dollar makes more loans go bad mostly because there are $13 trillion of debt outside of the United States denominated in dollars. A strong dollar is a disaster, so then what do they do? They make interest rates go down to zero and then they use all kinds of tricks because you can’t go negative, basically. Then you can’t get any interest on savings and it kills all of the pensions and insurance companies. The whole thing is insane.
Also, all of this debt makes critical things like shelter, any kind of rent, and education unaffordable. It makes the PE of stocks insane, even though they may go higher.
This is why people are speculating on bitcoin and don’t give a damn if it brings down any government. It’s also why people are becoming radical socialists and populists.
One of Mike Green’s points is, corporations are effectively welfare and security in this country. The Fed and the government can’t allow any creative destruction, which just makes everything worse. Zombi companies.
This just popped into my head. Stock buybacks theoretically are only for when executives can’t find decent projects for capital. That’s not what is happening. They are doing it to cash in on their options. This is another thing that is just retarding growth. They literally float bonds to buy stocks. They cash out. They might as well do this because they know the whole damn system is screwed up, and it’s not illegal to protect yourself in this way. It’s antisocial but nobody is going to do anything about it.
Government Is How We Steal From Each Other™
The can’t let interest rates rise. If they do the national debt explodes as they have to refinance all the short term debt at higher rates.
The total debt itself wouldn’t change, but the cost of servicing it at higher rates could easily wipe out the entire federal budget.
Between a rock and a hard place. If inflation goes higher and other investments pay better, no one will invest in US government securities, and further debt can’t be financed. At least it seems that way to me.