Here’s a block of Tweets from this past week that I bookmarked. Many different authors and subjects. Open discussion.
Delinquency Rates Shooting Up
Money Supply
Recession
New Definition of Stable Prices
A More Reasonable View of Inflation
Credit Standards
China’s Debt
A Year-Over-Year Mirage in Rent Prices Adds Rate Hike Pressure on the Fed
Regarding the Tweet above on core PCE plus rent, it has been a serious mistake to look at new lease prices with expectation of falling rent prices on rent renewals.
For discussion, please see A Year-Over-Year Mirage in Rent Prices Adds Rate Hike Pressure on the Fed
Also see, Core Inflation is Much Stickier Than the Fed Expected, Now What?
From 1966 until about 1964 core pce was 2.5% or higher. Even 1994-onward it fluctuates about 2.0%. To be alarmed that it is now trending closer to 3% so soon after the recent inflation seems misguided, especially when looked at in context of past inflationary cycles.
Core PCE is 4.6 percent!
It was a ridiculous substitution that took it to 3 percent
Multi parameters charts : very different colors, not multi shades of blue, lines, dotted lines, dashed lines…because the parameters are close to each other, compressed.
Bright very different colors, not so much pastels.
Industrial recession. Yet, industrial CMBS delinquency rate is below multi, at
nadir for 3 years, flat, hugging zero rate.
Like the tweets of the day. This new site is much more functional and I’m back to doing more visits to the site
Does everyone like these “Tweets of the Day Idea” ?
Should I do them more often?
Since you are asking, what this blog needs is balance. The conversation often seem very one sided here and always leans toward some level of recession or economic collapse that will probably never come.
I like the tweets of the day but they should balance out the views. wolfstreet had a good post today title “Our drunken sailors are in no mood to stop spending” and he provides some good analysis on where the money is coming from and the trends which don’t bode well for a recession but things can change.
Who says it has to be balanced?. Is the budgets balanced. You think yaks fake war coverage is balanced. Is the truth always balanced?
I disagree with MPO on this.
Compared to others, this blog has never really seemed like the stark and doom-filled cesspool that others love (happens with both sides of the aisle). Mish is pretty straight forward and tries to present multiple econ perspectives (along with his viewpoints).
It’s less clickbait articles and more on the hashed out analysis.
I agree with MisesRUs wholeheartedly.
MISES RU never knew about the Anti Regulatory Act of 2006 that allows the Fed to raid in other people banks accounts, trade and doubled your money without printing. No printing.
The Fed borrowed your money without your knowledge and permission (borrowed your shares in a short position), paid dividends and doubled your money in the last 3 years.
Well as a data driven investor, I have math on my side. There is a box with a magnifying glass on the top right corner. I typed the word “recession” in the box and see 1347 posts. I typed “expansion” and 420 posts came out. That is a 3:1 ratio of “recession” over “expansion.”
Over the last 15 years there has been far more economic expansion than recession so mathematically speaking, the results of my search should be opposite. Try it out with whatever key words you want…data doesn’t lie. Data analysis clarifies biases people may hold without even realizing it.
And if you still don’t believe it, write a script to download all the posts and have it analyzed from a statistical point of view. At some point, an AI bot will be able to do all of this for you but for now, it requires some elbow grease.
I found 775 for “collapse” but only 7 for “Armageddon.”
A ratio exceeding 100 to 1.
I guess we’re safe.
My comment has nothing to do with your post; only your screen name. I was once a hardcore student and fan of Von Mises and Rothbard and the Austrian School of Economics. But then I realized they were teaching a completely incorrect description of money creation and banking. The Mises crowd still pushes the debunked “fractional reserve” and “money multiplier” models of banking. They pretend that banks cannot lend a dime until they obtain mythical “high-powered” money from a central bank. And they pretend the Central Bank is part of the government. And they pretend that the money being loaned by a bank must exist in an account before the borrower arrives. And then they combine these three fantasies to conclude that government creates inflation. This is all incorrect. In fact, banks create new, digital money to lend AFTER the borrower signs the loan contract. And banks create new money with no need for prior reserves or deposits. And government doesn’t “print and spend” any money into existence; government gets all revenue from taxation and borrowing. And every dollar of government revenue is created by a private bank. (Proofs at bank LIES dot ORG)
I have contacted several people at mises.org and asked for them to correct their mistakes or provide proofs that defend their positions. Most of them just brushed me off, but in a recent e-mail exchange with Bob Murphy, he directed me to a recent publication of his. Buried in the middle of a long paper on the mechanics of money creation, he quietly described the creation of new, digital money by private banks with no need for prior reserves or deposits. He never openly admitted that the models being taught for decades by the Austrians were incorrect; he just quietly admitted the truth in one or two sentences, probably hoping that no one would call him out for his countless lectures and papers that contained complete lies.
Unfortunately, mises.org makes no effort to openly correct their past misdeeds on this subject; it is like pulling teeth to get even an indirect admission that they’ve been pushing economic nonsense for over a century!
I challenge you to contact mises.org and ask for proof that the fractional reserve banking and money multiplier models taught by Austrians actually exist. Ask for research papers and peer-reviewed, empirical studies of banks during the loan funding process. After you experience their intellectual dishonesty on this subject like I did, you may want to change your screen name.
“They pretend that banks cannot lend a dime until they obtain mythical “high-powered” money from a central bank. ”
That is nonsense. But please show me articles that allege what you say. You do know my position. There is no high powered money. Lending create deposits.
But the concept of fractional reserves exists, just in a slightly different form. SVB proves it. It took money available on demand and invested it. The money was not available on demand. Lending (or investing) money allegedly available on demand, is in my opinion fraudulent.
I like them.
It was certainly more useful to me than some of the other articles.
You should be aware that your audience is not limited to America.
I am British and am an economic refugee in the Far East.
The US information is useful in so far as see what might affect the UK and Asia. It’s good that you are including the China angle (but it’s not the only one, SEAsia is actually weathering the situation a lot better than NEAsia at the moment).
The UK might be in a bad state these days, but it still plays an important role as a faciliatator of global finance for America and also for the ROI in the form of Eurodollars. Mike Green has some useful things to say on the topic, as well as Jeff.
I would like to see your site be more interested in how what happens inside the US affects the world outside the US, all the major other central banks and economies, and regions. Many Seppos might not appreciate how the UK mortgage market works (it’s pretty awful really, people can only dream of long fixed rate mortgages, and they are currently staring into the abyss of the impact of bond markets pushing BoE rates to levels that (shouldn’t be, but) are eyewatering. Sasha Yanshin had a witty take.
Jeff Green?
i personally find twitter annoying. more like mean girls form of communicating(most of the amerikans i know seem to be mean girls). but i also have no problem with it. it’s a whiney self absorbed culture. idiocracy was a documentary which nailed our empire. pax dumbphucistan forever.
Yes but now that Elon has blocked access to all Twitter feeds unless you have a twitter account of your own (which I don’t) you can’t click twitter links any more and read anything.
So you’ll have to cut/paste the entire quote and no longer rely on links to tweets if you want some of us to be able to see the quote. Or we need a universal burner account that we can all log into from this blog and see the twitter posts.
I like them, please keep them coming. I don’t have time to monitor the tweets but I do have time to read a summary from someone I respect 🙂
In 2020 Trump Fed raided in bank accounts, saving accounts and CDs creating a
money tsunami. Your money doubled within 2 years. Noninterest bearing accounts were up $2,5T, from $3T to $5.5T. It’s down 28%, but plenty is left. // Bank accounts, money markets, CD and treasuries are the fuel left in the tank. The 2020 raids might protect us in the next downturn. Student loans payments might pressure prime age worker, but they will work hard and buy less Chines bs. Trillions of extra fuel might keep us running in the next 2-3 years. The crybabies politicians want your money, student loans money.
NDX Lazer : Oct 2011 to Feb 2016 lows. Parallel from Nov 2014 high. NDX 1M closed
on the resistance line.
KRE, regional banks, 3M : half size bar on much higher vol. Closed slightly below Jan 2023 bar, leaving behind a large buying tail. KRE might shrink their lending, sell their held to maturity, but tripled their charges.
Can KRE close May 11/18 2020 open gap : yes !
Testing.
Headline in the Daily Mail:
More gloomy news from Biden! White House says it’s open to plan that would BLOCK sunlight from hitting surface of the Earth in bid to limit global warming
My comment:
It poses an interesting question. Where can we get enough material to cover all the surface from the sun? Oh yes, I have it! We will just have the ‘Federal’ Reserve actually print the full amount of fiat dollars they have created to maintain our inflation! That should cover it all easily, probably 3 or 4 deep.
That sort of idea [probably spreading gas or dust at low orbitals] is incredibly dangerous.
If CAGW theory is wrong, could possibly accelerate any cyclical cooling, with horrible consequences.
For the record, I think cooling has already started. Try looking at the Greenland surface Mass Balance this year.
A bunch of big mylar sheets would be fairly easy to deploy and collect. I don’t know if solar wind has enough of an effect to move them around. Might even be able to have some granular control of weather… Texas sure could use some shade right now.
If it’s done competently, it seems like our best hope. Nobody’s going to burn any less oil than they possibly can, and the scale of the carbon capture efforts is infinitesimal. Worst case, we have to send a vehicle up there to collect the sheets.
Natural habitat restoration would work better by restoring the intended balance. It would be more successful, cost effective, and beautiful.
“If it’s done competently, it seems like our best hope.”
Nope. Not even close. Ditching the sweater for a t-shirt beats it hands down.
We are building a new house and was tied up all day at the site. Nearly finished. Been landscaping all week and delayed in approving some comments.
Not quite sure the comment rules. I think comments with links require approval from me. I am fine with that because I have deleted a bunch of spam junk.
I have asked for up-down thumb on comments and I have ability to delete trash which I did not have before.
This is a much better setup, at least for me, and I have requested features that some of you have asked for.
Perhaps some sort of flow graphics or notation in replies so it is evident which post is being replied to.
Serious Question
Do you think inflation will go down to 2%?
I read lot of stuff from different people and my brain is completely scrambled.
Thanks
Good question – Quite slowly – might depend on fiscal policies. Little chance if Democrats are in control.
Nearly every Biden policy is inflationary.
I think the secular low in the30-year long bond is in.
Hey Mish: In previous posts, you’ve demonstrated that the link between money supply and inflation is weak. So that begs the question: If money supply is not the cause of inflation, what is?
Have you looked for a link between inflation and debt levels? Is it possible that the ever-increasing interest payments get built-into prices and passed onto consumers?
Several smart people have come to the conclusion that snowballing debt costs are the true cause of inflation.
Swiss economist Peter Bernholz studied every hyperinflation of the 20th century and found they all shared a common trigger: government debt-servicing costs exceeding 40% of total expenditures.
And the late German Professor Margrit Kennedy studied the subject and estimated that interest charges passed on to consumers make up about half of most prices (A one dollar widget price includes about fifty cents of interest fees built in from many points along the supply chain).
Since private banks create almost the entire money supply, and there is never enough money in existence to repay all loan principal plus interest, borrowers are forced to borrow more and more from private banks. The inevitable effect is that prices must rise for borrowers to avoid default and pay all the interest charges to the bankers. (Proofs at bank LIES dot ORG).
I wish you would explore this subject and write about it.
this is from shadow stats and i concur. inflation is always cumulative, until we get outright deflation, which has no signs of have happened or happening soon. the money shot from shadowstats. Noted previously, Fed easing appeared to continue in the weekly Monetary Base detail up to and including the June 28th numbers, on track for a monthly increase. Separately, inflation pressures continued surface, with the May 2023 Money Supply reflecting still-extreme flight to liquidity. The most-liquid “Basic M1” (Currency-plus-Demand Deposits) held 119.2% above its Pre-Pandemic Level and was increasing year-to-year with intensifying inflation pressure, versus the Aggregate M2 Money Supply holding up by 34.7%, but declining year-to-year, amidst no signs of an overheating economy.”
I will cover this in a post
“Several smart people have come to the conclusion that snowballing debt costs are the true cause of inflation.”
Assume the money supply consisted of one dollar. How on earth would “debt servicing cost” possibly be some universal “cause of inflation?”
“Debt servicing costs” only “cause” inflation, because those who are economically illiterate, mindlessly believe default and bankruptcy is somehow magically “worse” than not-default and not-bankruptcy. So, they print money to pay for debt service. Hence increasing the money supply.
Similarly, if you have an economy consisting of one valuable good: How on earth could increasing the money supply from one dollar to a quadrillion dollars, not affect the going price of said good? Exactly why would that price NOT be bid up, given it’s literally the only good out there one can get for ones quadrillions, and it is indeed valuable?
Congrats on your house….here are a few tips.
1. If you have gas lines into your home, get a carbon monoxide detector ASAP – too many deaths lately with CO2 leaks. Side note: My sister-in-law bought a new home and they left the gas line loose, filled the house with gas which could have blown up but issue was fixed after a few days.
2. Thoroughly inspect the home for issues, communicate in writing to builder and get dates on when fixed. A friend bought a 600k newly built home but had so much shoddy work on pipes, drains, ventilation and the flooring warped a month after build. There is a trend by builders to just cut corners and slap stuff together as quickly as possible.
3. Good luck with insurance.
move in date sometime July or Aug
Original estimate, a year ago September, was September
Same thing happened with my friend which is why I caution you to double check the workmanship. His house delivery was delayed for a year and when he got the keys, he found a great deal of problems. He has had to take legal action to get them to fix the issues because the builder has been dragging their feet claiming they don’t have people right now to fix the issues and also cite supply chain problems.
Hope you got out of Illinois!
I escaped Illinois three years ago in about 2-3 weeks.
owned lots of properties out west and on coasts. an old pal of mine, a physicist, moved from CO mountain top, after he discovered the natural, radiation levels. he moved to the sandy beach in low country. good luck. r/e has a wonderful benefit that stocks, bonds and currencies……..don’t have. the benefit with no monetary value in reality of the asset. like art work. i’ve been making all sorts of art from marble to wood furniture…. to painting, and ceramics, for decades and there is not a billion dollars that could compensate in the place of the reward from my creating art. enjoy the house.
Even if you don’t have gas, your smoke detector should have CO monitoring. That’s a standard feature these days on smoke detectors or at least ones that’s aren’t bargain basement.
On the main floor I bought a better smoke detector that monitors for CO and I don’t even have gas in my house. Then upstairs where the bedrooms are I just went with plain smoke detectors.
5 min edit
Thank you for the thumbs up/down on comments. Any idea when it will be rolled out?
Thank you for the thumbs up/down for the comments. Any idea when it will be available?
Maybe people should have to have submitted a threshold number of posts before they earn the privilege of putting links and images onto the server space that you pay for?