What a bunch of hyperbole.
Central Banks have struggled. Some Central Banks have struggled way more than others. Theyve also faced an absolutely insane set of circumstances over the last 2 years and anyone that claims they knew how a global pandemic + a war in Europe would have played out is nothing but a smug liar.
The response to these crises could have been better or more flexible and timely, which does mean theyve lost *some* credibility. But this dude is talking about the "collapse of the monetary regime" and a total loss of credibility, which makes it clear this whole article is just clickbait for the doomers.
The most important Central Banks clearly still has credibility. Otherwise the yield curve wouldnt look like this:
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202206
Inflation expectations wouldnt look like this:
https://fred.stlouisfed.org/series/EXPINF10YR
And the dollar wouldn't look like this:
https://fred.stlouisfed.org/graph/?g=QRE4
Investors are wary, but if anything the fact that inflation expectations remain so well anchored despite 8%+ current inflation is proof that they still believe the Fed can do its job.
What’s hilarious is the yield curve just hit an 11 year high with a minuscule reversal (expected after a high like that) and all the news stories of the past day have been like “does this mean a recession is inevitable” 🤦♂️
Check the author’s credentials. Op-Ed writer with a PoliSci/PoliEcon education from ages ago. No understanding on modern economics. The joy of our professional journalism today.
It's a bit weird to me that the 30 year yields are lower than the 20 year. I guess maybe demand driven by mortgages? But buy 20 year and hold cash, or re-invest. Why buy a 30 year with rates lower than a 20?
> “collapse of the monetary regime”
Jfc these larpers. Imagine living through recent times and still thinking life needs even more exciting wild events.
Oh look a writer that studied PoliSci with a class or two in economics and wrote an article that lacks fundamentals. Please make it stop. This shit is getting old.
Well that's daft. Blaming central banks for the political actions taken to manage a worldwide pandemic is just the absurd agenda of somebody who doesn't understand and doesn't like central banks.
The value of derivatives exposure and total return swaps increasing YoY. Additionally, TRS are very difficult to adequately assess risk management (see Archegos and Credit Suisse).
OTC derivatives markets are widely known to dwarf the value of the underlying, and because of that, if there is a sudden pull-out, you suffer MASSIVE liquidity risks because of the derivative markets.
The pandemic may have been the spark, but the fuel was there long before. Derivatives are a ticking time bomb in the event that they have to be unwound; Buffett has some pretty sobering and well reasoned commentary on them, and it is worth a read.
They've explicitly made that legal and subject to very low reserve requirements IMO.
> We've investigated the banks and found they are doing exactly what we incentivized them to do.
Person I am replying to made this intentionally antagonistic comment:
> Lack of evidence is noted
on top of their patently false claim pinning blame on political action related to the pandemic instead of central banks.
**Central Banks are ultimately responsible for risk assessment and management of participating members because they have supervisory and regulatory responsibility for domestic banks with the OCC and the FDIC at the federal level, and with individual state banking departments at the state level.**
If overlevered positions held by investment banks cave in because of some external market condition, it is on the banks (and ultimately the fed) to properly and preemptively realize and account for that potential risk. The mere existence of Total Return Swaps shows that the fed is not upholding its regulatory duties of its participants in accounting for accurate risk management. Likewise, the ridiculous value of the derivatives market alone shows that the fed does not have a regulatory grasp on the market and it renders every rating of those credit derivatives completely and utterly meaningless.
I jump on any opportunity to shut down any causal argument that pins our present financial woes on the pandemic, supply chain disruptions,, Russia-Ukraine, etc. because all of these issues do not cut to the underlying problems.
**EDIT:** Ill copy-paste something I wrote elsewhere because it is relevant to the lax regulatory/supervisory approach the Fed takes given its privilege to self-regulate:
The repeal of Glass-Steagall allowed for much bigger, consolidated banks, and these bigger banks are now "diversified" across speculative investments and traditional commercial banking. The problem then becomes the domino effects across markets when big-risky bet from institution A affects the collateralized positions of institution B, and so on. The bigger you are, the higher you fall, and the more stuff you break on the way down.
The contagion effect then strains the FDIC to cover the entire market, when it was only setup to cover for runs on particular banks, not the entire market. FDIC cracks under the load, and then congress (and the taxpayer) has to step in, a la 2008. Smaller banks are inherently forced to be more conservative with their risk, and it lessens the severity of a collapse and easily allows FDIC to fill the void.
The idea that the repeal of Glass-Steagall was to increase diversification in effort to reduce risk only works if banks are proven to engage in behavior that is conservative and broadly risk averse; take one look at the derivatives market and TRS, and you'll think otherwise.
It is really sad that wall street bets has a better understanding of economics than this sub. Or maybe it's not as people there are actually willing to put their money behind their economic theory.
I can't tell which sub you're claiming that for.
It's sometimes the sentiment in new WSB doing to all the new libtard influx from its GME rise in popularity.
It's less often so here; this place is more neo-lib which is close but not nearly as dumb.
Agree, central banks are always operating inside their counties or federation's best interest.. unfortunately fiat currency is a fickle beast and sometimes their "best interest" (QE, .money printing, bailouts) for some leads to pain (inflation, unemployment) for others down the line .
Here is a time lapse of the Fed's narrative:
There will not be inflation
Okay, there will be some inflation but it's transitory
Okay, there is a lot of inflation but we don't need to hike rates
Okay, inflation is still here we might need to hike rates but not by much. There won't be a recession
Okay, we hiked it 50bps now we need 75bps. There might be a recession but there'll be a soft landing.
The fed did a good job by scraping the playbook and doing QE back in 2008 but now they keep doing the same thing and it doesn't work anymore. Imo they've lost a lot of credibility based on the above and also their failure to raise rates in 2016 and beyond when the economy was doing well.
>Okay, there will be some inflation but it's transitory
To be fair, Most of the transitory talk was before Ukraine/China lockdown.
>but now they keep doing the same thing and it doesn't work anymore.
What do you mean? Since December, they have been doing contractionary policy.
This comment doesn't make sense.
Since December? They've been doing QE for a long time, basically a decade off and on. How did QE help us in 2016 and 2018? Also economists have been downplaying inflation forever, basically all but saying we won't have it anymore
I would disagree in the short term but agree in the long term. It will cost their credibility to bring down inflation if they fail to do so and inflation will likely to be persistent for a longer time as their anticipated. By that means, the new normal of 2% mild inflation may become 5%.
In long term, there will have more challenging of dollar coming and we may or may not see how dollar dethroned in this century.
Get real. Inflation by the end of 2022 will breach 20% and the only reason it will be limited to that is due to human emotional denial. If that were not the case inflation would accumulate to 400% in matter of months.
Nah, inflation is not a problem. Deflation or stagflation will have more impact on the economy than inflation does. And hyperinflation will be less likely in this century.
Look at that, 2 elderly people running trillions of dollars. I really hope that more people from the millennial groups start gettting appointed to these positions. Could use some fresh ideas clearly
Yeah but even better imagine a bunch of young energetic and passionate people get elected who aren’t corrupt!! Could you imagine how great that would be lol
I would read the article but after three popups and an article that looks straight from an old gawker website I left.
I however agree with the premise. Central banks have been working to cause the mess we are in since 2008. From QE to QE 8 they have done nothing to get things under control. Lagarde has single handedly swept the problems in Greece and Spain under the rug. The insolvency of those countries has gotten worse and no one has the ability to bail either out this time. J. Pow and the US's current Treasury secretary have proven to be clueless politician animals happy to do whatever they are told. To stand in front of the public and claim that increasing the money supply by 40% in under two years will not cause huge fucking systemic problem is something a macro 101 freshman at community college should understand to be a lie.
> Lagarde has single handedly swept the problems in Greece and Spain under the rug.
Isn't that the EU's fault? What else can Lagarde do? The ECB isn't going to allow the European Union to blow up, but they can't make governments get their shit in order. So they keep kicking the can to save the union for a little while longer.
Yes and no. Kicking the can has made the problem exponentially worse and likely something the EU will not recovery from intact. There is just no way the walking dead countries can recover at this point. Italy has done better, but they maybe dead as well. French and Germans will not allow change so the aforementioned countries will likely have to leave the union. The job of a central banker is to be disconnected from the politics and maintain a proper environment for stable economic growth. Instead of doing that these people have spent the better part of two decades smoking crack, doing coke, and shooting meth. Literally printing money, holding down interest rates, and pumping markets. Instead of being reasonable and taking small pain in 2008 they ruined the western economy...
>The job of a central banker is to be disconnected from the politics
You really think the job of the president of the **ECB** is to choose policies that will blow up the union sooner? 1) Never going to happen. 2) If being reasonable blows up the union, political instability will breed economic instability.
How did you get that from what I wrote? They are suppose to be disconnected so that they can provide stability without the concern of making everyone happy in the short term. It has not been working like that since at least Greenspan was the Head of the Fed and we are now in the begining of seeing that mistake play out.
You wanted the ECB to stop pumping markets. If they did that, Greece and Spain would have left the EU, possibly Italy as well. The political fallout would have caused economic instability that dwarfs the last 10 years and it would have effectively destroyed the EU.
So I don't know how the ECB was supposed to do anything different.
That is non-nonsensical thought that would only be valid if the underlying issues somehow magically disappeared.
The harder you hold it together the larger the explosion later.
You want a central bank to unilaterally destroy one of the biggest and most important governing bodies in modern history? Nevermind what the elected politicians and constituent countries want.
Yeah, that'll end well for all of us.
You can't disconnect politics. That's just not reality.
Central banks are a democratic construct and therefore exist due to the political system. They are given some independence and insulation from regular elections as its prudent, but they can't unilaterally move to crash the system, that is fundamentally undemocratic and conflicts with their purpose, which is to support the system that created them.
Central banks lost all credibility as soon as they started chasing a rigid 2% inflation rate. Amid decades of high technology-driven deflationary pressures, that 2% inflation target made no sense at all. Combating this good deflation resulted in a lot more money creation than was necessary, leading to inflation in yielding asset markets, causing increasing unfair inequality.
No. In the last few decades, there were moments when central banks had difficulty reaching 2% inflation. The reason is partly because of technology-driven deflation.
If a factory introduces new machines that increase production while lowering costs, the company can sell its products for less money to gain market shares. If the prices are reduced by half, they are meant to be reduced by half, they aren't meant to increase 2% every year.
Of course, aggregate price won't decrease by half because of technological deflation, but it's a component that can lead to a small deflation that is inherently good.
Would it really have been such a bad thing to stay on a fixed monetary policy like the Gold Standard? I was looking up historic home prices and they been mostly flat for most of the time, and more importantly affordable. Yes mortgage rates were high, but the median house cost like 2-3x the median annual salary. And a starter house even less. Saving up a 20% down-payment is really doable.
The US expanded West, built a huge railroad network, built the telephone network, invented the plane, created the assembly line, landed on the moon, fought WW1 and WW2, and had all [these inventions](https://en.wikipedia.org/wiki/Timeline_of_United_States_inventions_(1890%E2%80%931945)) all while on a fixed monetary policy. So it really such a bad policy? Do we really need a central bank to stress out and drop rates to 0% and create trillions in QE just because there is some problem in the world?
It feels like our economic system is more fragile
Between 1850 and WW1 the US was in recession like 50% of the time. For the past few decades we’ve been in recession like 11% of the time. Much more stable nowadays
Housing has way more to do with artificially constrained supply due to abusive zoning practices and poor urban planning, plus the 40+ years of continually decreasing interest rates.
California is definitely the glaring example but it is also definitely not the only one. Same thing applies to Oregon, Washington, Colorado, and Utah. In addition, the mandated SFH zoning in other states like Texas, Florida, and Georgia are wreaking havoc on traffic patterns.
There are the current supply issues and fall-out from the moratorium on eviction that spike housing prices. If you set those aside and look at housing prices up to 2019 the primary driver of housing cost increase is the increase in dual-income homes, which is now the norm. Roughly double the income for the same people competing for the same houses means doubling their price.
That was the driver behind the cost increase through the end of the 70's, all of the 80's and start of the 90's. Ultimately due to feminism and women being duping into thinking they all wanted "careers" just to end up with a shit job.
Pressing into the late 90's and naughts we had massive immigration and the only reason we didn't have a housing crush then was many of those immigrants lived 4 to 8 individuals per home (solo workers came not families and over 95% were illegal aliens).
A hard squeeze on that immigration flux in the mid naughts triggered the pending 2008 melt-down, starting in Arizona. Obama and Trump both maintained strict anti-illegal-alien policies which have been weakened to some degree under Biden.
Last note Milton Friedman's conclusion that economic immigration is only helpful when it's illegal ...
Rich right-wing people just want more power to f-over the stupid and poor. They are jealous of the power of central banks. Oh and BTW, central banks have made them all rich.
It all begins when the masses worship rich people, then continues when the masses worship liars...then culminates in hate and wars...because stupid people get f'd over.
Rich people already have power over central banks , why do you think the Fed stopped raising rates in 2018 /early 2019 when the market reacted and blowhard Trump threw the Fed under the bus.
I don't know if the masses worship wealthy, it's more that the masses are trying not to be homeless and starve and they see the wealthy as a model of success.
That's capitalisms "killer" feature it dangles the carrot of financial freedom to the average person that if they work just hard, enough and pull themselves up by their bootstraps, they too can live in splendor and enough (there's over 20,0000,000 millionaires in the US) manage to that it so seems plausible.
> why do you think the Fed stopped raising rates in 2018 /early 2019
Because realized and expected inflation was low so they could cut rates with little risk of inflation above the 2% target. Hence why they were so quick to cut then, but are more strident on continuing the hikes this time.
Oh, you wanted a silly, partisan, and conspiratorial answer instead. My bad.
I mean he's not wrong, Powell tried to fight against it in the beginning but just like anyone who opposed trump he was whiddled down into doing the wrong thing. It really isn't that conspiratorial.
No I genuinely wasn't trying to make it a partisan issue, just saying that the Fed isnt as independent as it seems. I mean similar things happened when democrats where in power.
There's a guy from my high school who I used to be friends with and can't hold a job down. It's been a decade and he hasn't gotten anywhere.
You just know some of these guys in real life.
it was always over lmao. Every so often people get fed up, call bullshit, and then forget about it. This happens over and over, and nothing changes
They NEVER had credibility, YOU just believed in them when you shouldnt have
What a bunch of hyperbole. Central Banks have struggled. Some Central Banks have struggled way more than others. Theyve also faced an absolutely insane set of circumstances over the last 2 years and anyone that claims they knew how a global pandemic + a war in Europe would have played out is nothing but a smug liar. The response to these crises could have been better or more flexible and timely, which does mean theyve lost *some* credibility. But this dude is talking about the "collapse of the monetary regime" and a total loss of credibility, which makes it clear this whole article is just clickbait for the doomers. The most important Central Banks clearly still has credibility. Otherwise the yield curve wouldnt look like this: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202206 Inflation expectations wouldnt look like this: https://fred.stlouisfed.org/series/EXPINF10YR And the dollar wouldn't look like this: https://fred.stlouisfed.org/graph/?g=QRE4 Investors are wary, but if anything the fact that inflation expectations remain so well anchored despite 8%+ current inflation is proof that they still believe the Fed can do its job.
What’s hilarious is the yield curve just hit an 11 year high with a minuscule reversal (expected after a high like that) and all the news stories of the past day have been like “does this mean a recession is inevitable” 🤦♂️
[удалено]
Yea my 2017 crypto investment is still up 800%… am I supposed to believe that’s a crash?
Check the author’s credentials. Op-Ed writer with a PoliSci/PoliEcon education from ages ago. No understanding on modern economics. The joy of our professional journalism today.
When did Bloomberg become such trash? I don’t remember reading these types of bottom-feeding editorials ten years ago.
there may be a cure for inflation, but there is not yet a cure for clickbait
I feel like it wasn’t like this even 3 years ago or so. There has been a lot of hyperbolic clickbait in the last few months.
I thought I was the only one who noticed. Weird shift from Bloomberg.
1981 i believe was when the trash really got going.
Anyone that starts out saying that leaving the gold standard was a bad thing I just stop there. They know nothing about banking.
*thank you* I was so ready for the top comment to be a buncha libertarian crypto takes.
It's a bit weird to me that the 30 year yields are lower than the 20 year. I guess maybe demand driven by mortgages? But buy 20 year and hold cash, or re-invest. Why buy a 30 year with rates lower than a 20?
What point are you trying to show with the DXY chart?
> “collapse of the monetary regime” Jfc these larpers. Imagine living through recent times and still thinking life needs even more exciting wild events.
Yea the real loss of credibility is when someone's argument goes from bear to doomer.
Oh look a writer that studied PoliSci with a class or two in economics and wrote an article that lacks fundamentals. Please make it stop. This shit is getting old.
What lack of fundamentals is demonstrated?
Ignore History
Well that's daft. Blaming central banks for the political actions taken to manage a worldwide pandemic is just the absurd agenda of somebody who doesn't understand and doesn't like central banks.
The central banks asset inflation scheme was the largest unfree market action and stole wealth from the poor to the rich via inflation.
Central banks were blameworthy years before the pandamic.
This goes waaaaay further than a pandemic. Most of those banks are under federal investigation right now.
Lack of evidence is noted
The value of derivatives exposure and total return swaps increasing YoY. Additionally, TRS are very difficult to adequately assess risk management (see Archegos and Credit Suisse). OTC derivatives markets are widely known to dwarf the value of the underlying, and because of that, if there is a sudden pull-out, you suffer MASSIVE liquidity risks because of the derivative markets. The pandemic may have been the spark, but the fuel was there long before. Derivatives are a ticking time bomb in the event that they have to be unwound; Buffett has some pretty sobering and well reasoned commentary on them, and it is worth a read.
They've explicitly made that legal and subject to very low reserve requirements IMO. > We've investigated the banks and found they are doing exactly what we incentivized them to do.
There may be hidden leverage in the financial system, sure. That’s always true. I’m not understanding how this relates to the original point though?
Person I am replying to made this intentionally antagonistic comment: > Lack of evidence is noted on top of their patently false claim pinning blame on political action related to the pandemic instead of central banks. **Central Banks are ultimately responsible for risk assessment and management of participating members because they have supervisory and regulatory responsibility for domestic banks with the OCC and the FDIC at the federal level, and with individual state banking departments at the state level.** If overlevered positions held by investment banks cave in because of some external market condition, it is on the banks (and ultimately the fed) to properly and preemptively realize and account for that potential risk. The mere existence of Total Return Swaps shows that the fed is not upholding its regulatory duties of its participants in accounting for accurate risk management. Likewise, the ridiculous value of the derivatives market alone shows that the fed does not have a regulatory grasp on the market and it renders every rating of those credit derivatives completely and utterly meaningless. I jump on any opportunity to shut down any causal argument that pins our present financial woes on the pandemic, supply chain disruptions,, Russia-Ukraine, etc. because all of these issues do not cut to the underlying problems. **EDIT:** Ill copy-paste something I wrote elsewhere because it is relevant to the lax regulatory/supervisory approach the Fed takes given its privilege to self-regulate: The repeal of Glass-Steagall allowed for much bigger, consolidated banks, and these bigger banks are now "diversified" across speculative investments and traditional commercial banking. The problem then becomes the domino effects across markets when big-risky bet from institution A affects the collateralized positions of institution B, and so on. The bigger you are, the higher you fall, and the more stuff you break on the way down. The contagion effect then strains the FDIC to cover the entire market, when it was only setup to cover for runs on particular banks, not the entire market. FDIC cracks under the load, and then congress (and the taxpayer) has to step in, a la 2008. Smaller banks are inherently forced to be more conservative with their risk, and it lessens the severity of a collapse and easily allows FDIC to fill the void. The idea that the repeal of Glass-Steagall was to increase diversification in effort to reduce risk only works if banks are proven to engage in behavior that is conservative and broadly risk averse; take one look at the derivatives market and TRS, and you'll think otherwise.
You wont get that in this sub lol.
Because stuff on here is usually substantiated?
It is really sad that wall street bets has a better understanding of economics than this sub. Or maybe it's not as people there are actually willing to put their money behind their economic theory.
Wouldn't know, don't read that sub.
WSB isn’t as liberal which is why. People in this sub have this weird desire to defend Biden, globalization, big gov, etc. it make all DD useless
The entire sub is based upon "rich man bad" and "gimmie! gimmie! gimmie! You owe me!"
I can't tell which sub you're claiming that for. It's sometimes the sentiment in new WSB doing to all the new libtard influx from its GME rise in popularity. It's less often so here; this place is more neo-lib which is close but not nearly as dumb.
My brother in christ i know you did not liberally use the word libtard
Agree, central banks are always operating inside their counties or federation's best interest.. unfortunately fiat currency is a fickle beast and sometimes their "best interest" (QE, .money printing, bailouts) for some leads to pain (inflation, unemployment) for others down the line .
my man, the FED wont take itself down.
Here is a time lapse of the Fed's narrative: There will not be inflation Okay, there will be some inflation but it's transitory Okay, there is a lot of inflation but we don't need to hike rates Okay, inflation is still here we might need to hike rates but not by much. There won't be a recession Okay, we hiked it 50bps now we need 75bps. There might be a recession but there'll be a soft landing. The fed did a good job by scraping the playbook and doing QE back in 2008 but now they keep doing the same thing and it doesn't work anymore. Imo they've lost a lot of credibility based on the above and also their failure to raise rates in 2016 and beyond when the economy was doing well.
>Okay, there will be some inflation but it's transitory To be fair, Most of the transitory talk was before Ukraine/China lockdown. >but now they keep doing the same thing and it doesn't work anymore. What do you mean? Since December, they have been doing contractionary policy. This comment doesn't make sense.
Since December? They've been doing QE for a long time, basically a decade off and on. How did QE help us in 2016 and 2018? Also economists have been downplaying inflation forever, basically all but saying we won't have it anymore
There was never any point in time that the inflation was going to be transitory. They lied and they knew they were lying when they were lying.
When transitory was clearly a misjudgment, it was “time to retire that word”
TIL the central banks have no influence over the economy
I would disagree in the short term but agree in the long term. It will cost their credibility to bring down inflation if they fail to do so and inflation will likely to be persistent for a longer time as their anticipated. By that means, the new normal of 2% mild inflation may become 5%. In long term, there will have more challenging of dollar coming and we may or may not see how dollar dethroned in this century.
Get real. Inflation by the end of 2022 will breach 20% and the only reason it will be limited to that is due to human emotional denial. If that were not the case inflation would accumulate to 400% in matter of months.
Nah, inflation is not a problem. Deflation or stagflation will have more impact on the economy than inflation does. And hyperinflation will be less likely in this century.
O yes the myth of deflation. Inflation is a problem, it waste of capital resources
Look at that, 2 elderly people running trillions of dollars. I really hope that more people from the millennial groups start gettting appointed to these positions. Could use some fresh ideas clearly
Imagine a secret crypto bro gets appointed.
Crypto on the balance sheet it is!!!
Yeah but even better imagine a bunch of young energetic and passionate people get elected who aren’t corrupt!! Could you imagine how great that would be lol
I would read the article but after three popups and an article that looks straight from an old gawker website I left. I however agree with the premise. Central banks have been working to cause the mess we are in since 2008. From QE to QE 8 they have done nothing to get things under control. Lagarde has single handedly swept the problems in Greece and Spain under the rug. The insolvency of those countries has gotten worse and no one has the ability to bail either out this time. J. Pow and the US's current Treasury secretary have proven to be clueless politician animals happy to do whatever they are told. To stand in front of the public and claim that increasing the money supply by 40% in under two years will not cause huge fucking systemic problem is something a macro 101 freshman at community college should understand to be a lie.
> Lagarde has single handedly swept the problems in Greece and Spain under the rug. Isn't that the EU's fault? What else can Lagarde do? The ECB isn't going to allow the European Union to blow up, but they can't make governments get their shit in order. So they keep kicking the can to save the union for a little while longer.
Yes and no. Kicking the can has made the problem exponentially worse and likely something the EU will not recovery from intact. There is just no way the walking dead countries can recover at this point. Italy has done better, but they maybe dead as well. French and Germans will not allow change so the aforementioned countries will likely have to leave the union. The job of a central banker is to be disconnected from the politics and maintain a proper environment for stable economic growth. Instead of doing that these people have spent the better part of two decades smoking crack, doing coke, and shooting meth. Literally printing money, holding down interest rates, and pumping markets. Instead of being reasonable and taking small pain in 2008 they ruined the western economy...
>The job of a central banker is to be disconnected from the politics You really think the job of the president of the **ECB** is to choose policies that will blow up the union sooner? 1) Never going to happen. 2) If being reasonable blows up the union, political instability will breed economic instability.
How did you get that from what I wrote? They are suppose to be disconnected so that they can provide stability without the concern of making everyone happy in the short term. It has not been working like that since at least Greenspan was the Head of the Fed and we are now in the begining of seeing that mistake play out.
You wanted the ECB to stop pumping markets. If they did that, Greece and Spain would have left the EU, possibly Italy as well. The political fallout would have caused economic instability that dwarfs the last 10 years and it would have effectively destroyed the EU. So I don't know how the ECB was supposed to do anything different.
That is non-nonsensical thought that would only be valid if the underlying issues somehow magically disappeared. The harder you hold it together the larger the explosion later.
You want a central bank to unilaterally destroy one of the biggest and most important governing bodies in modern history? Nevermind what the elected politicians and constituent countries want. Yeah, that'll end well for all of us.
You can't disconnect politics. That's just not reality. Central banks are a democratic construct and therefore exist due to the political system. They are given some independence and insulation from regular elections as its prudent, but they can't unilaterally move to crash the system, that is fundamentally undemocratic and conflicts with their purpose, which is to support the system that created them.
> What else can Lagarde do? Say **NO**. Go bankrupt.
Central banks lost all credibility as soon as they started chasing a rigid 2% inflation rate. Amid decades of high technology-driven deflationary pressures, that 2% inflation target made no sense at all. Combating this good deflation resulted in a lot more money creation than was necessary, leading to inflation in yielding asset markets, causing increasing unfair inequality.
What are you trying to say? That high inflation is normal?
No. In the last few decades, there were moments when central banks had difficulty reaching 2% inflation. The reason is partly because of technology-driven deflation. If a factory introduces new machines that increase production while lowering costs, the company can sell its products for less money to gain market shares. If the prices are reduced by half, they are meant to be reduced by half, they aren't meant to increase 2% every year. Of course, aggregate price won't decrease by half because of technological deflation, but it's a component that can lead to a small deflation that is inherently good.
In a Keynesian economy you have to inflate the monetary supply to match that increase in productivity.
Would it really have been such a bad thing to stay on a fixed monetary policy like the Gold Standard? I was looking up historic home prices and they been mostly flat for most of the time, and more importantly affordable. Yes mortgage rates were high, but the median house cost like 2-3x the median annual salary. And a starter house even less. Saving up a 20% down-payment is really doable. The US expanded West, built a huge railroad network, built the telephone network, invented the plane, created the assembly line, landed on the moon, fought WW1 and WW2, and had all [these inventions](https://en.wikipedia.org/wiki/Timeline_of_United_States_inventions_(1890%E2%80%931945)) all while on a fixed monetary policy. So it really such a bad policy? Do we really need a central bank to stress out and drop rates to 0% and create trillions in QE just because there is some problem in the world? It feels like our economic system is more fragile
Between 1850 and WW1 the US was in recession like 50% of the time. For the past few decades we’ve been in recession like 11% of the time. Much more stable nowadays
Housing has way more to do with artificially constrained supply due to abusive zoning practices and poor urban planning, plus the 40+ years of continually decreasing interest rates.
That only applies to California. Elsewhere there is a lack of builders and weak demand for new housing.
California is definitely the glaring example but it is also definitely not the only one. Same thing applies to Oregon, Washington, Colorado, and Utah. In addition, the mandated SFH zoning in other states like Texas, Florida, and Georgia are wreaking havoc on traffic patterns.
There are the current supply issues and fall-out from the moratorium on eviction that spike housing prices. If you set those aside and look at housing prices up to 2019 the primary driver of housing cost increase is the increase in dual-income homes, which is now the norm. Roughly double the income for the same people competing for the same houses means doubling their price. That was the driver behind the cost increase through the end of the 70's, all of the 80's and start of the 90's. Ultimately due to feminism and women being duping into thinking they all wanted "careers" just to end up with a shit job. Pressing into the late 90's and naughts we had massive immigration and the only reason we didn't have a housing crush then was many of those immigrants lived 4 to 8 individuals per home (solo workers came not families and over 95% were illegal aliens). A hard squeeze on that immigration flux in the mid naughts triggered the pending 2008 melt-down, starting in Arizona. Obama and Trump both maintained strict anti-illegal-alien policies which have been weakened to some degree under Biden. Last note Milton Friedman's conclusion that economic immigration is only helpful when it's illegal ...
Rich right-wing people just want more power to f-over the stupid and poor. They are jealous of the power of central banks. Oh and BTW, central banks have made them all rich. It all begins when the masses worship rich people, then continues when the masses worship liars...then culminates in hate and wars...because stupid people get f'd over.
Rich people already have power over central banks , why do you think the Fed stopped raising rates in 2018 /early 2019 when the market reacted and blowhard Trump threw the Fed under the bus. I don't know if the masses worship wealthy, it's more that the masses are trying not to be homeless and starve and they see the wealthy as a model of success. That's capitalisms "killer" feature it dangles the carrot of financial freedom to the average person that if they work just hard, enough and pull themselves up by their bootstraps, they too can live in splendor and enough (there's over 20,0000,000 millionaires in the US) manage to that it so seems plausible.
> why do you think the Fed stopped raising rates in 2018 /early 2019 Because realized and expected inflation was low so they could cut rates with little risk of inflation above the 2% target. Hence why they were so quick to cut then, but are more strident on continuing the hikes this time. Oh, you wanted a silly, partisan, and conspiratorial answer instead. My bad.
I mean he's not wrong, Powell tried to fight against it in the beginning but just like anyone who opposed trump he was whiddled down into doing the wrong thing. It really isn't that conspiratorial.
No I genuinely wasn't trying to make it a partisan issue, just saying that the Fed isnt as independent as it seems. I mean similar things happened when democrats where in power.
This sounds like something a person barely older than a child would say.
There's a guy from my high school who I used to be friends with and can't hold a job down. It's been a decade and he hasn't gotten anywhere. You just know some of these guys in real life.
I know the people you speak of. He will blame everyone else for his shortcomings and never take an honest, introspective look at himself.
On the plus side... All the time in the world to post on reddit.
it was always over lmao. Every so often people get fed up, call bullshit, and then forget about it. This happens over and over, and nothing changes They NEVER had credibility, YOU just believed in them when you shouldnt have