Does anyone still have their Whip Inflation Now (WIN) buttons? If so, toss them in favor of MIN buttons, soon to be the new collectable. 
WIN is So Passee
Whip Inflation Now (WIN) was a 1974 attempt to spur a grassroots movement to combat inflation in the US, by encouraging personal savings and disciplined spending habits in combination with public measures, urged by U.S. President Gerald Ford. The campaign was later described as “one of the biggest government public relations blunders ever”.
People who supported the mandatory and voluntary measures were encouraged to wear “WIN” buttons, perhaps in hope of evoking in peacetime the kind of solidarity and voluntarism symbolized by the V-campaign during World War II.
Forget WIN, It’s Now MIN
Here’s the latest evolution in mandatory and voluntary measures.
Fourteen Kamala Harris Economic Proposals
- New $10,000 tax credit for first-time home buyers.
- As much as $25,000 in down-payment assistance for first-time home buyers whose parents don’t own a home.
- $25,000 in down-payment assistance to working families who paid their rent on time for two years and are buying their first home, regardless of whether they are first-generation buyers.
- Federal ban on alleged corporate price gouging on groceries
- Caps on rent increases
- No tax on tips
- 3 million new housing units
- Tax incentive for companies that build homes for first-time buyers
- Restore the child tax credit of up to $3,600 a child
- New $6,000 child tax credit for the first year of a child’s life
- More Covid stimulus for small businesses
- Elimination of medical debt for millions of Americans
- $40 billion to help local governments develop innovative solutions to the lack of housing supply.
- Ban the use of property-management software that has allegedly been used by landlords to fix apartment rent prices at buildings across the U.S.
The above list compiled from the Wall Street Journal article Harris to Call for Expanded Child Tax Credit, 3 Million New Housing Units
Mercy! What a Disastrous Plan
Team Trump foolishly started the No Tax on Tips idea and is in favor of expanding child tax credits as well.
Lesson of the Day
Dear Team Trump, when you start foolish economic proposals to buy votes, without even saying how you will pay for them, don’t be surprised when Democrats embrace the ideas and expand them much further.
See points 6, 9, and 10.
Homebuying Math
- There are approximately 131,528,000 households as of June 2024.
- The home ownership rate is 65.7 percent.
- The number of rental households is 131.528 million * (1.00 – 0.657) = 45,114,104.
- If everyone became a homeowner at the maximum handout, the cost would be $1.13 trillion. (They won’t. Assume 10 million might want to).
- If 3,000,000 (the new homebuilding proposal) took the maximum handout, the price tag would only be $75,000,000,000.
- If 10 million are on board, the cost would be $250,000,000,000
So, expect the price this boondoggle to cost $75 billion minimum up to $250 billion.
But then we would need to subsidize construction of 10 million homes instead of 3 million homes.
What About the Cost of Homes?
Much More Than This
If three million or more households rapidly try to buy a home, the median price would rise by much more than $25,000 especially on the starter home end.
Restoring the Child Tax Credit
Restoring the child tax credit would cost about $78 billion annually starting 2027 (lead chart).
In addition to restoring the child tax credit, Harris proposes an additional child tax credit of $6,000 per child.
In 2023, there were 3,591,328 births. The cost of the addition would be $22 billion per year assuming a small increase in births due to immigration.
Child tax credit total cost is about $1 Trillion over 10 years. It’s even more if you count interest on debt.
Vance Foolishness
Vance wants a $5,000 child tax credit, $1,400 more than Kamala Harris. If restoration would cost $78 billion at $3,600 per child then the Vance proposal would cost $108 billion per year.
Way to go Republicans (Not).
I am sure Harris will embrace Vance’s idea, so we may as well up her cost proposal right now.
Tax on Tips
Trump started this foolishness but Harris embraced it. Heck she even expanded it by adding minimum wage hikes.
The two ideas could collectively raise the deficit by $100 billion to $200 billion over 10 years, according to an estimate from the Committee for a Responsible Federal Budget.
That’s with honest accounting.
The CRFB says that In practice, exempting tip income from taxation would lead workers and employers to reclassify ordinary income as tip income where possible and could lead to a larger shift toward lower base pay and higher tipped income, more broadly.
OK Vance, is your final bid $108 billion per year or do you care to counter Harris?
What About Groceries?
There is massive gouging according to the above chart.
Excuse me, I meant to say the above chart shows massive economic illiteracy, not massive gouging.
Producer prices rose (PPI), costs to grocery stores rose, and grocery stores raised prices leading to a rise in the CPI.
What About Tariffs?
Trump wants a 60 percent hike in tariffs on China and 10 percent across the board.
Tariffs are a tax hike either on US importers (if they eat the cost) or on consumers if they don’t.
In practice, about 90 percent will be passed on to consumers, and that means prices will go up especially at places like Amazon and Walmart.
But it won’t do a damn bit of good because the cost per job created (if any jobs at all), will be enormous.
Furthermore, it is economic idiocy to believe tariffs can or will replace income taxes. But that is what Trump believes (which means nearly all the MAGA supporters believe that as well).
Where does Harris stand?
She may as well embrace this too, or alternatively attack Trump’s idea as economic nonsense. Either idea might work, and the latter would be accurate for a change.
What About Energy?
Energy is one place you can openly cheer Trump.
The Biden/Harris plan has been an inflationary disaster and Trump will put an end to it.
MIN Now!
I am not sure if MIN should stand for More Inflation Now, or Maximize Inflation Now.
Both parties are on board, to varying degrees but with substantial overlap.
Neither party seems the least bit interested in reducing the deficit. They are more interested in competitive free money vote buying tactics.
Recession Implications
For the near term, a recession will help cool inflation. A recession will also aid Trump especially if unemployment rises substantially.
July 25, 2024: “All Hell Breaks Loose” In the Next Few Months as Recession Bites
August 2: Unemployment Rate Jumps, Jobs Rise Only 114,000 with More Negative Revisions
August 2: 2024: The McKelvey (Sahm) Unemployment Rate Recession Rule Just Triggered
August 15, 2024: Industrial Production Declines 0.6 Percent on Top of Big Negative Revisions
It seems to me that all hell breaking loose.
Enjoy the transitory fall in the rate of increase in inflation. But get those MIN buttons ready. You will need them no matter who wins.
MIN is truly a bipartisan effort.
“Without question, the most important factor was the surge in money supply which was ultimately created by QE.”
Without question that is wrong!
The most significant factor was three rounds of Fiscal Stimulus.
We had mass QE for a decade with little impact on the CPI
It was the combination of free money + QE that did it.
QE mainly impacted financial assets and home prices. That “should” count as inflation but doesn’t.
Inflation took off after the totally unwarranted third and biggest round of fiscal stimulus. Factor in rent and eviction moratoriums, student debt cancellations, etc, and you have the whole picture.
QE goosed things but it was mainly “true helicopter drop” free money stimulus checks.
Yes, but the fiscal stimulus was only made possible by QE. Without the Fed purchasing the debt, there would have been an unacceptable spike in interest rates that would have prevented all the debt issuance and stimulus. This used to be known as bond vigilantes providing discipline to government spending. That ended when they cranked up the printing press in 2008. So QE was a necessary component of the fiscal stimulus.
People can disagree about the accuracy of the CPI and other government statistics but there are hedonic adjustments, substitutions, and other “quality” adjustments that seem to go one way. And you correctly point out that they leave out the most important component which is the cost of housing.
There is definitely a nexus between QE, government spending , interest rates and inflation.
Here is the key issue “When QE is performed by buying bonds that were previously issued, that deficit money has already been spent at a point in the past.”
I take this position:
“QE is simply an asset swap, because from the private sector’s perspective, they are losing one asset (a treasury note, for example) and gaining another (a bank deposit) — no new net funds are added.”
“One thing that QE does do, however, is push down bond yields and put upward pressure on other asset classes across the risk curve. So while QE may be less likely to cause broad-based goods and services inflation than some may have imagined, asset inflation is a different story.”
https://medium.com/@markcwoodworth/is-qe-monetizing-the-debt-and-what-does-that-even-mean-2a6e9dd3b682#:~:text=One%20definition%20is%20that%20any,category%20that%20QE%20falls%20into.
QE money as described above cannot be spent – it already was.
The Fiscal Stimulus, outright monetization can and was, in spades.
The latter was was genuine helicopter drop money to the tune of $4 trillion.
Real Disposable Personal Income and Real PCE
https://i0.wp.com/mishtalk.com/wp-content/uploads/2023/07/Real-Disposable-Personal-Income-and-Real-PCE-2023-05.png?resize=1024%2C703&quality=80&ssl=1Real Disposable Income and real PCE data from the BEA, chart by Mish.
How could that not cause inflation? But the Fed did not see it. Nor did the Fed see that refinancing mortgages at 3% for everyone would also increase demand for goods.
To an extent we may be in violent agreement. I make a distinction between free spendable money and routine QE (not at all spendable) very different things to me.
The latter did little to reported inflation for a decade, but yeah it boosted assets (with the Fed idiotically trying to make up for lack of past inflation) of all ridiculous things.
Completely agree that QE pushes down bond yields and puts upward pressure (big time) on other asset classes which makes it much more than a simple asset swap. It’s a wealth-transfer scheme.
QE simultaneously lowers interest rates and (very importantly) increases the money supply. I tried to explain how QE increases the money supply in my first post. When it enables fiscal stimulus, that will create more goods and services (CPI) inflation. When the new liquidity stays in the finance/investor sector, that generates more asset inflation and unwarranted windfall gains and inequality.
Bottom line, QE enables huge government deficits, creates an unjustified wealth-disparity and produces an increase in money supply which generates inflation. This will obviously have long-term social, political and economic ramifications if not corrected.
The increase in money supply from QE is mostly irrelevant other than bank speculation that led to the collapse of SVB.
QE can’t be spent, and loans do not come from deposits anyway. Deposits come from loans. However, using QE to lower rates does increase the demand for loans so there is an indirect, but not a direct impact.
If the banks parked QE back at the Fed at short term rates there would have been zero banking issues.
However, the lower interest rates from QE spurred a housing bubble (asset bubbles in general). But economists do not see that as inflation (incorrectly) I think we both would agree.
Thought experiment. The Fed prints a $30 trillion coin and puts it on its balance sheet. Money supply goes up by $30 trillion and the Fed offers unlimited money at the current interest rate. One proviso – on this coin the Fed does not pay any interest on reserve balances.
What happens?
Nothing at all anywhere.
There is no increase or decrease in the demand for money.
QE other than my thought experiment has an indirect impact, but the thought experiment has none because the interest rates don’t change and the fed pays no interest on deposits on this coin.
In contrast, giving people $4 trillion had a massive and immediate direct impact.
Conclusion: Free $4 trillion was the inflationary culprit. That was not the Fed’s fault. The Fed is to blame for its reaction to that and for keeping rates low in the face of it.
Your thought experiment has nothing to do with what is actually taking place. The Fed is purchasing assets (bonds) and giving the sellers of the bonds “cash” which are likely invested in other assets. The Primary Dealers act as the middleman between the Fed and the bond sellers. This creates a huge increase in liquidity (money supply) and drives up asset prices so it isn’t irrelevant at all.
In addition, QE enables the government to spend incredible amounts without high interest rates. Thus, QE is the ultimate source and the stimulus spending is the channel for the surge in money supply and CPI inflation.
Indeed, the $4T was the culprit and the Fed shares responsibility with the Congress as it was the Fed’s printing press that enabled it to happen.
Mish, I totally agree and and am short long dated treausies to the hilt, ala Soros and the Bank of England trade that gave him his wealth. I think a time will come that foriegn buyers will stay home and a Treasury auction will fail.
I would not be short long-dated treasuries here.
I expect recession recession to lower the rate of inflation, temporarily, and long term yields to decline.
How about being long short-dated treasuries?
QE lowers the real rate of interest. It destroys the savings ->investment process. It lowers R-gDp.
It dissipates a large volume of savings in financial transactions, which doesn’t contribute to R-gDp.
Absolutely. The Fed floods banks with liquidity via QE so these banks can buy tons of treasuries during the good times, when the Fed is not buying. It’s creating fake demand. As for CPI, the BLS move away from using prior home sales like was done prior to 1983 is, in part, reducing the real level of housing inflation in CPI.
Often lost in the discussion of interest rates is the concept of opportunity cost.
When money is saved from the excess of income over consumption, it represents something produced, and has real value. To lend that money, a rational person must be rewarded (compensated to justify forgoing consumption). That opportunity cost must compensate for expected inflation and real growth, plus the risk of loss. Ergo, the debt created must earn a return greater than the opportunity cost of the lender.
What is the opportunity cost of stimulus and QE?
The opportunity cost would have been large as they crushed savers, rewarded speculation and dumped understated inflation on the working class and first-time home buyers.
The opportunity cost of QE and stimulus is zero initially–adding zeroes to a faux balance sheet.
However, the Fed’s actions equate to a massive wealth transfer, and dislocation of financial systems. The risk-return tradeoff was trashed, and Wall Street got wealthier. And they still expect bailouts. If ever there was reason for revolution, this is it.
The long-term opportunity cost (as you identify) is far-reaching and largely has yet to be felt.. Consequential thinking is NOT something government or business does.
Elsewhere, I point out the necessity for studying QE and stimulus at the margin. A decade of QE poured water into the reservoir, pushing the dam to its limit. Stimulus was a deluge that created the wave. One without the other, the dam might’ve survived. Now, it’s a question of how much is destroyed.
Well stated and there needs to be a political “revolution” to reform the financial system. Although, it’s difficult to see that on the horizon.
“Without question, the most important factor was the surge in money supply which was ultimately created by QE.”
While I agree with you Mish, in regards to QE “Without question that is wrong!” I don’t want to be short sighted however. I would say specifically it was the final, or third round of totally unwarranted stimulus, of which most of the money went to pet projects, and BS ideology desires and had virtually nothing to do with the Pandemic or needs of such occurring.
While I also agree, It was the combination of free money + QE that did it. I feel more inclined to blame “Where/Whom the Money was Given to as the ultimate destruction of America, and brought us to the mess we are in now.
Who (Prints & Gives their Countries Money away, when they have none to Give, can’t afford to Print, and desperately need it for themselves? Biden Inc. does is Who!!! POS to America!
I would say the “Inflation Reduction (a joke) Act” was one of the Top 5 and most destructive measures to date. I would definitely add in Billions to Ukraine, for a massive cover up, as another Top 5. Of course add in the “Free” Money we gave to Iraq, BS floating barge, Afghanistan debacle which cost our Military Billions, and so many other nonsense debacles like EV’s now a joke and not going anywhere by the looks of it. Same with Solar & Windmills, and thank goodness for environmental integrity and safety.
I guess I am getting at the fact, that you cannot pin it on one thing, as it has been a “Free Money” give away to nearly everyone, at the total cost to Taxpayers, and right as we are entering a recession, and our citizens are broke, and now so is the Country… Nicely Done!
Man I can’t wait until November!!! At least we will know if we are toast as a Country, or have a fighting chance still… we shall ALL soon see
There was nothing wrong about my comment. Definitely, the massive stimulus spending caused the huge spike in CPI inflation. However, it was QE which permitted and enabled this huge increase in spending.
As I explained in my initial post below, QE enables the government to run gargantuan deficits without high interest rates. Therefore QE was ultimately the cause of the inflation as it gave rise to the stimulus spending.
This is much more than semantics because you are never going to get spending, deficits and inflation under control until the idea of QE is removed from the market.
Mish,
Thanks for getting my account figured out, so I can post.
Best regards,
Jay
Like those Vietnam Era helicopters which dumped money over Wall Street and Big Corps.
The 3 fiscal stimuli were monetized by the FED and created the largest expansion of the money stock in U.S. history. And the “swaps” were mostly dissipated in financial investment (the transfer of title to goods, properties, or claims thereto), which are leakages from the main income stream.
$4 trillion without monetization may have crashed the global economy.
Was the student debt “canceled” or was it paid by the government? If students were allowed to default on the debts and let the creditors foreclose on the women’s studies degree, I’d think we could all agree that is fair.
Horrible policies but if you own your stuff it’s actually great. My properties will go up in value. Do I care that the new poor homeowners can’t afford the property taxes and the maintenance costs? No. I do not care. None of my business. My business is selling properties. I take zero responsibility for their stupidity.
Ever since Republicans and Democrats have stopped compromising (i.e. changed the game type in game theory from cooperative to non-cooperative), which happened after George W. Bush, the country has mostly gotten the stupidest ideas from each party instead of the best ideas.
Aren’t housing and illegal immigration linked? I mean, they say 4 million new homes must be built, but they let in over 7 million new people?
I want let you all in on a secret. You know the economic plans from Trump and Harris—tariffs, price gouging, no tax on tips, 3 million new houses, etc.?
None of it is going to happen. It’s just empty, meaningless campaign talk.
Now you know.
No tax on tips means you need only tip 10%
Dr. Daniel L. Thornton, May 12, 2022:
“However, on March 26, 2020, the Board of Governors reduced the reserve requirement on checkable deposits to zero. This action ended the Fed’s ability to control M1.”
The system is easing.
What ever happened to a chicken in every pot and a car in every garage promises?
Sinwar has no reason to deal with Bibi on the cusp of an Iranian attack. If the IDF eliminates him, the man who started this mess, a ceasefire might be reached within days, preventing a regional war. Biden will start Kamala Harris with a clean slate, before the Nov election.
Dems should upgrade to Tiffany Henyard.
Yep! Inflation as far as the eye can see. The young generations will buy the housing support promises so it is smart politically but in practice is not economically sound, will cause yet more housing inflation.
Most important election evah!
“There Will Always Be An England”
https://m.youtube.com/watch?v=MV0O2Y9xto4
Whoocoodanoode???!
Why spend money helping out American families when we can instead give $ Billions to Urkaine and Israel and open our borders when we need more serfs to labor for our wonderful and noble overlords?
The effects of most ‘things’ are best analyzed as changes at the margin, amplified by other factors. For example, QE and stimulus affected various economic sectors, and were amplified by interest rates and banking practices, etc. Decades of QE raised the level to ‘unsustainable.’ Failure was just a matter of time. Stimulus, and the economic shock of Covid did the rest, and likely made it worse. Time will tell.
Meanwhile, back at the tip jar…
If tips are nontaxable, should they be considered gifts, and therefore nondeductible as business expenses?
The 14 proposals – this is a crazy list.
Harris would be like Biden on steroids.
She was not the right pick.
The child credit is FAR more the better option for keeping up population and work force numbers than is Open Borders.
I understand the election year “buy votes” competition. But, on the way to work in the morning, when I see a young gal standing at the corner with a toddler, waiting for the bus, presumably to get to daycare ($1000+/mo after taxes) and then work ($20-25/hr before taxes), I feel the urge to roll the window down and exclaim “Thank you for your service”.
We need her to raise a non-wife beating, tax paying, no trouble with the law, productive citizen…and vibrant consumer of goods and services!
I’ve had childless friends whine about paying taxes for schools. I point out that at great trouble and expense I’ve raised my kids so that someone will pay their worthless butts social security.
In Oct 2023, after Hamas invaded Israel, US10Y was 5%. It dropped. In Apr 14 Iran, Hezbollah and the Hooties attacked Israel. It dropped after the US showed its customers that only the US can protect them. Last year China foreign minister dared to mediated between Iran and MBS. Blinken got a heart attack. Iran and Hezbollah are planning to attack Israel again. Biden sent upgraded F-22, F-18 and F-15 carrying new SM6 anti ballistic missiles missile, aircraft carriers and nuke subs to protect Israel. Exogenous “events”, sent the 10Y down to 3.67%, not the CPI. The DOD is testing new weapon systems. The top 1% escaped the bond massacre. Sinwar has no reason to prevent a strike on Israel, bc Iran have learnt the lesson of the failed Apr strike.
Why would businesses choose to be greedy under a Democrat administration?
Que up the band to play Songe d’Automne to mark the end of the American Empire.
No one interested in working to build for future generation, idiocy our one shared value.
Our society needs/deserves a hard reset.
Good article.
I always like when the government starts banning things. Then you know everything is really about to go tits up.
WTF is this supposed to be? Banning Excel files? Programs made to follow rent payments on due time? What?
I think madness will only stop when a really bad things happen and we are all in deep shit with economy collapsing.
Points #1,#2, #3 and #7 : 3,000,000 new units, mostly in suburban areas. Point #5 : cap on rent rise. Home prices and rent in suburban areas will plunge due to new zoning and cheaper supply. A flood of black and latinos will live in upper middle class enclaves. That’s the Hakeem Jeffries/Obama plan to invade the suburbs. The spread between the upper middle class and the rest will shrink. Those who rent will have an opportunity to own properties in suburban areas. It will be financed by D top 1% moneymen and the banks.
Long physical Gold and Silver? For you’all sake I hope so
Where are the thoughtful proposals to reduce the cost of producing housing? Not subsidizing the market price of houses, but reducing the total cost-to-build.
People fundamentally cannot afford housing that costs more to build than those people will earn. But housing costs are kept artificially high by all sorts of regulatory permits and other inefficiencies (some well-meaning, others less so)…
Well done Mish ty
“Bring back Common Sense”
Excellent!!!!
China Coal Production Hits New All Time High For July
https://www.reuters.com/business/energy/chinas-thermal-power-generation-falls-third-month-july-despite-record-heat-2024-08-15/
Jeff Green is on suicide watch
That’s cause they are gearing up to make 70 million EV’s a year. How much in 70 million you wonder? Well that’ 26 million *more* than the global car market for all vehicles. So they might be getting ready to give everyone a free EV by 2030 🙂
https://home.treasury.gov/news/press-releases/jy2455#_ftn9
Hot damn — ‘magine the amount of coal we’ll have to burn to power all them there EVs hahaha
We’ll be choking on smog!!!
There is nothing “free” about the market for rental properties, at least in those regions that use common online apps, such as “rentcafe.com” and the like. GOPers may not want to look under the hood, but it is a case of information asymmetry run amok. I recently rented an apartment in the Foxridge community in Southwestern Virginia. 54 page contract, every provision “nonnegotiable”. Then, after it was finally countersigned by the faceless “management”, I was presented with disclosures regarding “move out” procedures. The management effectively shifted all the cost of maintenance and repair of their asset onto the unwitting tenant. Example: All departing tenants must pay a $125 “inspection fee”, at time their maintenance people will examine what “damage” has resulted. “Blinds not washed: $50”, too much wax buildup on vinyl floors? $50 Carpets must be shampooed before leaving, but even so, there is a $150 fee attached to carpet cleaning for an apartment with ‘standard’ wear and tear. $5 (and up) for every nail hole in the walls. $25 and up for “two sided tape removal”. The rents may be competitive locally, but the poor sap (me) who failed to ask about ‘move out’ procedures before signing can easily expect to pay an extra month’s rent or more. Think you can avoid this by going to a different complex in town? Try again… the hedge funds who’ve been buying up these rental communities are all using the same software. And once ‘surveillance pricing’ becomes ubiquitous, the numbers on the screen will change according to Big Data’s deep data file on your level of desperateness to sleep indoors. Capitalism converges into information monopolism. Ptui!
Wow, that’s outrageous. Anybody douche bag hedge fund or landlord doing that to their tenants can go straight to hell. I’d almost rather live in my car.
Maybe I’ve been lucky with tenants but over 40 years of renting properties I’ve never kept a penny of the tenants security deposit
Definitely not the norm for corporate owned rentals. Check Yelp reviews for any apartment complex and you’ll find horror stories around security deposits.
Housing is a supply problem created by selfish NIMBYs – who happen to mostly be boomers. Japan solved it decades ago by taxing property inheritance and not letting locals block redevelopment. https://youtu.be/d6ATBK3A_BY?si=Tg-ORc0TxCKfoFaK
It isn’t rocket science…
Japan has a huge housing problem. Deaths outnumber births by 2 to 1 and there are 10 million empty homes. Outside the big cities there are so many empty homes that there are thousands of nice houses for sale at well below $50,000 and many habitable homes under $10,000 in rural villages.
Now the US has allowed in tens of millions of illegals and that has increased the population requiring housing. How does a young couple compete in renting when the illegals can fit 10 adults to a rental?
Don’t know about you, but I feel very broke.
It was slow at first, but then it was suddenly.
Not me I expatriated in 2015 and bought properties that appreciated ALOT plus I’ve been busy stacking Gold and Silver Feeling OK this morning 😀
WOO HOO! I said what CFRB did, but before they did.
55% of black and 51% of latinos don’t own a house. They either rent or clustered together, working, saving money. Between 2016 and 2022 blacks and latinos bought
a house more than whites (ex asians, American indians and all other races). Zoomers
and most millennials bought more than any other groups. Since 50% of them are non white, blacks and latino bought the most. In construction additional 3,000,000 units along with $10,000 tax jubilee ==> deflation. Another blow to the top 1%.
Well my black neighbor in Sag Harbor owned three houses plus a Manhattan townhouse but that was Ninevah home to many wealthy black people including Ron Browns widow who was a lovely woman
“ What About Energy?
Energy is one place you can openly cheer Trump.
The Biden/Harris plan has been an inflationary disaster and Trump will put an end to it.”
Nope. Trump will not affect energy production or prices. Energy companies will no longer over-produce to lower prices and cut their own throats.
The sticky CPI, ex food and energy, is down from 6.5% to 4.1%. If energy cost will rise the sticky CPI might reach 8%/10%, or breach it. The sticky usually keeps going until recession’s end. When Kamala Harris 3,000,000 housing units will be in construction and completed ==> the sticky CPI will plunge.
“Nope. Trump will not affect energy production or prices. Energy companies will no longer over-produce to lower prices and cut their own throats.”
You missed what I though was the obvious point. Very inflationary EV and Green energy policy will end under Trump.
No it won’t. Pre-election political promises don’t mean much. Trump was going to put all the coal miners back to work when he first got elected. Then, during his term 13,000 more of them lost their jobs.
In addition:
1. Most of the IRA money for green energy projects went mostly to Red states. So I doubt he does much there.
2. I know you like to talk about Biden’s green energy mandates. But most mandates never happen. Cancelling something that’s never going to happen equates to no change.
3. Musk will do what he can to ensure Trump doesn’t kill the EV business and other green initiatives that Musk likes. And Trump will listen to him.
4. Trump doesn’t care about killing green or any other “policies”. It’s just a popularity contest to him. And the prize is the Presidency.
“Energy companies will no longer over-produce to lower prices and cut their own throats.”
It was the abundant supply made possible by fracking that lowered prices. Now some energy companies might choose to withhold production having had their throats recently cut by Democrats, but after Trump wins they will have to compete in an environment governed by a little law In economics, called supply and demand.
Yes. And the frackers got hit hard when prices crashed from overproduction. Which is why they are more disciplined now.
Plus the large companies are already buying up the small ones; and then putting production curbs and efficiency measures in place. They already make decisions based on supply and demand. That doesn’t change based on who is in the White House.
If Trump wins; nothing changes.
No, frackers were hit hard because of the Biden admin crackdown on the industry, prohibiting them from fracking in many circumstances.
Lol! Where did you get that from! Links please!
Fracking has been booming to new record levels under Biden.
What world do you live in?
Biden wanted to end our use of fossil fuels on the campaign trail. His agenda was clear and backed up by sweeping regulations. He intended to put the oil industry in America out of business in the long term. His administration actively discouraged investment in new infrastructure and restricted future supply and demand for oil through increased fees, litigation and regulations on long-term investment, exploration, production, consumption, and pipeline construction and operation. If you think this didn’t have an affect on the industry, then you’re kidding yourself.
Fracking hit record levels despite his efforts, not because of them.
Is one Mish not aware that we already have DEFLATION ? To that deflation one has to look at the Money supply. that’s already shrinking. why DEFLATION ?? Then one has to look at the dynamics in the Mortgage markets.
Yeah, they have done some QT which is good. We’re back to around Nov 2020, but that still isn’t even half the money printing they did since covid. The problem is the huge deficit spending that keeps piling up the debt and what have these banksters and supposed representatives done over the long term with debt? Monetize it. I sure hope they don’t start that crap again but they might say some BS like if we don’t debate, it’ll be a crisis, which is total horsesh*t because any bailout debt QE crap just makes it all worse and the next recession or depression that much bigger. If these losers screwing up the free market celebrate the 4th of July, they are hypocrite liars ’cause that’s communism.
Is that you Harry?
Unlikely. To understand macro you have to realize that banks don’t lend deposits. There’s been a substantial impetus to gdp generation by the reversal in ratio of savings / investment type accounts to demand deposits.
The “alleged” deflation is a reduction in QE which as discussed above did not contribute to inflation as measured.
We have no deflation now in any meaningful sense.
The Gold market reacted appropriately.
Expect more of the same.
“Bang, zoom!!”
I am that’s why I will be a buyer of ANY dip
Unleash Stimunculus!
It should be obvious to anyone that #1, #2 and #3 are going to do to home buying what government loans did to college costs.
That is, they are going to raise home prices because everyone realizes there is free money being handed out and so of course they are going to charge more in the same manner that colleges charged more for tuition.
The housing proposal will be much worse than government loans. The balance between housing supply and demand often moves prices dramatically in the short run. A sudden spike in demand from free money can make prices increase substantially in tight housing markets.
It will be exactly like college costs once Kamala bails out mortgage holders. Because everyone should have free college and a free house and free…
And an almost free electric car with that sweet $4000 clean air rebate. Just plug, charge and go!
Rent caps always lead to low supply and high prices of rental homes. It’s failed every single time in history. Thus we need more of it.
Maybe we can offset with cuts in defense budget, welfare and aid to foreign countries (Israel).
Better yet, cut those things and don’t piss away any money on Kamalomics.
Good luck with that Trump won’t be any different Listen to old videos of George Carlin to get a clue what’s REALLY going on Doning Silver foil hat now
But Israel is not just any foreign country It’s OUR base in the Middle East don’t ya know So that’s not happening get over it
Good point. And from that base, we defend the flow of oil … to Israel.
And to think these programs are thought up to combat the problems the very same people started.
Mr. Ford wanted inflation down, yet the Vietnam War caused most of the expansion of money in the system, as war always does. Nixon abandoned the gold system because gold was set at $35.00 an ounce, but Congress kept printing more dollars without adding more gold. That won’t work, and it didn’t.
Adding a little hyperbole, perhaps the problem is Congress, and doing without an abusive Federal government and its bureaucracy would solve the inflation problem.
would this be bullish for stocks?
for homebuilders yes it should be; but really 25000 is not that much help in buying a house
Not at all. Communism eventually leads to asset seizures.
She is so very evil.
She forgot $100,000 grants to help women of color open hair salons. All would be well if every black woman owned her own hair salon.
Regarding #’s 2 & 3: contrary to popular myth, there is not a big pool of well-qualified, would-be home buyers who are only lacking down payment money. Most people with zero money don’t earn enough to pay a mortgage, don’t have decent credit, jump around from job to job and/or have personal pathologies that make them incapable of owning and maintaining a home.
I don’t know why I’m even bothering to bring up reality, though. People’s feeling are all that matters. People who believe that obesity is caused by “food deserts” and a lack of government educational programs about nutrition will believe anything. She might as well promise everyone a unicorn.
There is an obvious unstated scam here waiting to happen.
Lets say either the man or the woman in a relationship has never officially been on a deed. At that point they can apply to buy the home backed by the partner who has previously owned a home and they will be eligible for the these credits.
There are easily 3,000,000 people who don’t have enough for a down payment where $25,000 would give them enough.
I don’t know why I’m even bothering to bring up reality, though because some people won’t accept it.
But here’s the math: $15,000 savings + $25,000 free money = $40,000 Down Payment and that will go far in many places
Most of the people I’m talking about don’t have $15,000 savings and never will. BTW, one can still buy with a 3% down conventional loan. $15,000 of this theoretical “saved money” is 3% of a $500k purchase. Admittedly, it’s not easy to get a 3% down offer accepted – especially when the seller is also being asked to cover the buyer’s closing costs. I am quite familiar with existing down payment assistance programs and most of the people who use them are disasters. Poor and ignorant people’s problems can’t be solved by giving them money.
Do I have to live in the United States 6 months or more a year to take advantage of this house deal?
You have to be undocumented
Hello hyperinflation NOT good to know ya
Nothing says failure like a 14 point economic proposal to fix the economy that you created.
If mortgage rates are lowered by 1 percentage point, a typical/average/median mortgage holder will pay $75,000 less than they do now. That same buyer would save $250,000 if rates were rolled back to the Trump days.
But instead of creating sound economic policies, Harris is taking a problem of her own making (inflation and higher interest rates) and making it worse by throwing more money at it.
So you want lower interest rates and don’t think that will cause more inflation ?
I want a Trump economy where a mortgage is $250,000 less than it is in a Kamala economy.
Exactly The very last thing we need is looser monetary policy
An interest rate determined by the free market is neither loose nor tight. It’s just right. And that doesn’t result in inflation.
End the Fed.
Duh! Why do you think interest rates are what they are today?
During the Trump admin, we had lower interest rates AND much lower inflation.
Neither party seems the least bit interested in reducing the deficit. They are more interested in competitive free money vote buying tactics.
—
The deficit and debt have no constituents. Reducing the debt and deficit will only happen if an outside force decides to liquidate their dollar holdings and trade them in for something more valuable (e.g. gold) . Then you will start seeing double digit % rises in interest payments on debt and double digit declines in the stock market on a single day. This is what happen to Japan a couple of Mondays ago. I expect that 2025 will be the year that some capitulation occurs regardless of who wins. The path the politicians have taken us down is not sustainable.
“liquidate their dollar holdings and trade them in for something more valuable (e.g. gold) .”
Except for the fact that gold, and every other readily available investment, is in bubble territory. At least RE is less volatile.
Timeless quote from H.L. Mencken – “Every election is a sort of advance auction sale of stolen goods”. Can the “land of the free” (or is it land of the FREE STUFF) survive both boneheaded campaigns raising their bids?
Idiocracy.
Before implementing more counterproductive solutions, it is important to understand how all this (underreported) inflation came about. Without question, the most important factor was the surge in money supply which was ultimately created by QE. The money supply (M2) has declined modestly but is still up a staggering $14T since 2008 with $6T generated in the last 5 years. Clearly, the increase in money supply produces a bidding pressure that results in higher prices for goods, services and assets.
Printing money to purchase bonds (QE) simultaneously lowers interest rates and increases the money supply. QE increases the money supply by 1) paying an above free-market amount to the ultimate seller of the bonds and 2) monetizing the government’s debt which allows for larger deficit spending than would otherwise be achievable without causing an unacceptable spike in interest rates.
When the Fed prints money to purchase bonds from the Primary Dealers, the PD’s often do not have enough bonds to sell and therefore go into the market place and bid up the price of these bonds in order to acquire them. Thus, the bond held by the private seller is converted to “cash” upon the transaction which increases the money supply. Importantly, the Fed is giving a huge gift (straight from the helicopter) to the sellers of the bonds by paying a much higher price than the free market would have paid.
Now that the market moving effects of QE have been well established, these transactions don’t even have to take place to move rates. The mere announcement of QE now would cause an instantaneous surge in bond prices (and windfall gift to bond holders) as the “market” front runs the Fed.
As mentioned above, QE also increases the money supply by allowing the government to spend more than it would be able to otherwise without sparking a bond market revolt. This was especially true when QE was paired with ZIRP which is essentially a debt cancellation scheme. The Fed purchases the government’s debt. The Treasury pays interest to the Fed on the purchased bonds. And during ZIRP, the Fed remits most of the received bond payments back to the Treasury. It is ultimately a method of canceling debt without paying it back. This allows the government to run colossal deficits without high interest rates. The tradeoff is a debased currency.
In any event, there is way too much focus being placed on how much the Fed is going to cut interest rates and not enough on the money supply. Interest rates act as an accelerator or decelerator but it is the level of money supply that is the definitive driver of inflation.
In summary, QE led to a surge in money supply which has produced crippling inflation for the less affluent while generating a lopsided and pernicious wealth-distribution within the nation. Yes, when you print trillion$ to purchase financial assets, it will benefit those with the most financial assets
If either political party is serious about tackling inflation, they should address the money supply.
“It is ultimately a method of canceling debt without paying it back.”
It effectively eliminates the interest but when the note/bond matures the government must pay the Fed the principal, which is not income to the Fed and will not be remitted. Instead the Fed balance sheet will contract as they lose the note/bond asset and the equivalent amount goes poof in the Fed’s TGA liability.
Most of the debt is getting rolled over in an ongoing QE and the Fed’s balance sheet is still enormous at over $7T.
QT is still in place. They re-invest only to manage the pace of the decline. That’s not QE. They are not injecting new funds, net of all their actions.
The balance sheet is still enormous but it is very slowly shrinking as the Fed allows a net roll-off of securities and it is around $1 trillion less than it was a year ago. The pace has been cut but QT is still in play.
When the Fed stops contracting its balance sheet what you are describing will be true, though it still wouldn’t be QE if they simply rolled securities to maintain balance sheet size.
The Fed has already indicated that they are going to keep a large balance sheet for “ample reserves.”
Yes, when they roll over the bonds. it’s not new QE but a continuation of prior QE. They are buying (rolling over) new bonds so the existing QE is effectively ongoing as it was never extinguished with QT.
We’ll see how far they get with QT, but the Fed seems committed to keeping a large balance sheet.
False – See pinned comment
Remember the late ’70s. In 1978 the money supply report, specifically the M2 increase, was the only report with the most potential to move the market.
The federal government would mail you a teal ?pamphlet containing each of the Federal reserve monetary figures monthly. Seemed important then.
Yeah, they’ve swept the importance of the money supply under the rug. Some even claim that the huge growth in money supply is not inflationary because it has low “velocity” where that metric is calculated by dividing GDP by the money supply.
Thus, according to this theory, if we had infinite money supply, there would be zero velocity and therefore no inflation. In other words, if we gave everyone an infinite amount of money in their checking accounts, It would not be inflationary because of the velocity calculation. It’s an absurd concept.
How the money supply is distributed (with most of it going to the top) may affect inflation, but that can’t be determined by the velocity calculation.
If the Fed minted a $20T coin and buried it – what would happen?
N O T H I N G
True. But if they put the $20T into checking and money market accounts (M2), it would cause a surge in inflation as we’ve seen. QE was the source and the stimulus spending was merely the conduit for the money-supply growth and inflation.
They are in charge right now. Yet she will only try to fix after the election? Are people this stupid? 4 years of this we’ve just had. Now we will put out the fire we started. Wtf
1) Yes 2) DEFINITELY Yes
Yeah I’ve seen more than one person ask why aren’t you doing these things now if they are good for American families.
The only sound you hear is crickets.
Biden won’t let her because he’s a racist. Isn’t that obvious?
You don’t know how things work do you?
The Vice President isn’t in charge of practically anything.
Learn Civics 101.
You don’t have to know civics to understand our figurehead president and dei vice president have never been in charge of anything for over three and a half years.
Will I get the option to vote for those who are?
Neither is potatohead oops I mean grandpa Joe His handlers( bankster) are He who holds the Gold right ?