Here we go again (Low low down payment)

[CA renter]

[quote=FlyerInHi][quote=livinincali]
You’re arguing that the math doesn’t matter. You might be able to postpone the realization that the other side of the balance sheet holds nothing for awhile but eventually it’s going to matter. Of course there’s another crash baked into the current bubble and people are falling for it again. That’s what;s surprising to me. This unwavering faith in the fed having your back. It’s worthless to argue about it now, most won’t see it until it becomes hindsight.[/quote]

What other side of the Federal Reserve balance sheet? Please elaborate. Are you saying the assets are worthless or that there are unknown liabilities?

Let’s look at the math.

Scenario 1:
– Say prior to recession peak GDP was 1.0.
– 2008 Great Recession occurred and GDP hit a low of .90.
– After government intervention, GDP is now 1.1. Success!!

Scenario 2:
– Had the government not intervened, GDP may have dropped to a depression low of .70. Terrible suffering and drop in standard of living.
– Digging ourselves out the depression, we may have experienced faster growth and are now at .95.

Scenario 2 is clearly less appealing to the country and represents self-inflicted pain. I doubt anyone is glutton for punishment.

So what if an other recession is baked into government intervention? Does it matter? So long as GPD remains above .95 + some annual growth (all else being equal, of course), then government intervention was clearly preferable.

The government’s job is to protect and improve our aggregate standard of living.[/quote]

No, I’m sorry brian, but the *type* of growth does matter. And if it’s the government’s job to protect and improve our standard of living why are so many people worse off today than they were ~30+ years ago, before TRILLIONS of dollars have been pushed into the system in order to manipulate things one way or another.

The wealthy are better off today, but most workers are not. This fully planned economic event (the Great Recession, and even the stock market bubble, IMO) has been extremely damaging to our economy, and it was all *caused* by Fed/govt manipulations. If the Fed were to stop working for the speculators and asset traders, we would all be better off (except, perhaps for those traders/speculators), IMHO. What the Fed is creating is not sustainable growth; they have instituted a zero-sum economic system where everyone is forced to play, and most of us will end up the losers.

This is not success:

“(Reuters) – The gap between the richest Americans and the rest of the nation widened after the Great Recession, a survey by the Federal Reserve showed on Thursday, suggesting deepening U.S. income inequality.

Though incomes of the highest-earners rose, none of the groups analyzed by the Fed had regained their 2007 income levels by 2013, underscoring deep scars from the financial crisis and its aftermath.”

http://www.reuters.com/article/2014/09/04/us-usa-fed-consumers-idUSKBN0GZ2DU20140904

…

“To explore the question further, our study estimated a relationship for GDP per capita in which a change in income inequality was added to standard growth drivers such as physical and human capital. The idea was to test whether the change in income inequality over time has had a significant impact on GDP per capita on average across OECD countries, and if this influence differs according to whether inequality is measured in the lower or upper part of the distribution. The results show that the impact is invariably negative and statistically significant: a 1% increase in inequality lowers GDP by 0.6% to 1.1%. So, in OECD countries at least, higher levels of inequality can reduce GDP per capita. Moreover, the magnitude of the effect is similar, regardless of whether the rise in inequality takes place mainly in the upper or lower half of the distribution.”

http://www.oecd.org/forum/oecdyearbook/growth-and-inequality-close-relationship.htm

[CA renter]

[quote=The-Shoveler]”when the SHTF moment does occur”

They will have learned a lot from the last time and be much better able to mask the issues the next time IMO.

Although IMO they pretty much knew exactly how it was going to play out in 2008 and it was planned for as well.[/quote]

Except that they have been using up all of their ammunition and there will be precious little left when the SHTF moment happens. They have masked the problem by *growing* the problem. The 2008 crisis was more difficult for them to manage than the 2000/2001 crisis, and the next one will be even worse because the numbers are growing larger and the problems are becoming more systemic with every new manufactured crisis.

[(former)FormerSanDiegan]

[quote=CA renter]

This fully planned economic event (the Great Recession, and even the stock market bubble, IMO) …

[/quote]

This is the sentence where I stopped reading. Anyone else read beyond this ?

[phaster]

[quote=CA renter]
Except that they have been using up all of their ammunition and there will be precious little left when the SHTF moment happens. They have masked the problem by *growing* the problem. The 2008 crisis was more difficult for them to manage than the 2000/2001 crisis, and the next one will be even worse because the numbers are growing larger and the problems are becoming more systemic with every new manufactured crisis.[/quote]

to give ya an idea how bad I think it is consider that Fannie Mae and Freddie “The two GSEs have outstanding more than US$ 5 trillion in mortgage-backed securities (MBS)”

http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac

BUT that MBS figure is dwarfed because the unfunded public pensions alone I read is in the 4.1 trillion dollar range, and the real “unfunded” public pension figure basically doubles if one considers health care costs

[quote=CA renter]
There is no smoke, nor any fire, from what I can see. If you have any evidence or reason to believe that there was fraud, please make your case.
[/quote]

been checking back every once in a while to see if anyone had something to add/say

http://piggington.com/how_will_unfunded_pensions_affect_economy?page=4

so wondering have I made my case….

http://www.washingtonpost.com/business/economy/congressional-leaders-hammer-out-deal-to-allow-pension-plans-to-cut-retiree-benefits/2014/12/09/4650d420-7ef6-11e4-9f38-95a187e4c1f7_story.html?tid=pm_business_pop

[Coronita]

As long as I don’t go down with it, I don’t care anymore if Rome burns down…I’ve stopped carrying when everyone else stopped carrying only talked about carrying right up to the point that they have to open up their own wallets and asked everyone else to pay except themselves.

[FlyerInHi]

I haven’t seen any wallet opening. The biggest unnecessary expenditures of the last decade? Wars. Did the people who propose them pay?

[FlyerInHi]

[quote=CA renter]

Except that they have been using up all of their ammunition and there will be precious little left when the SHTF moment happens. They have masked the problem by *growing* the problem. The 2008 crisis was more difficult for them to manage than the 2000/2001 crisis, and the next one will be even worse because the numbers are growing larger and the problems are becoming more systemic with every new manufactured crisis.[/quote]

By worse, do you mean that the next crisis will undo all the gains since 2009?

As long as we move forward in GDP growth, it really doesn’t matter if we have a next crisis or many more.

[FlyerInHi]

[quote=CA renter]
No, I’m sorry brian, but the *type* of growth does matter. And if it’s the government’s job to protect and improve our standard of living why are so many people worse off today than they were ~30+ years ago, before TRILLIONS of dollars have been pushed into the system in order to manipulate things one way or another. [/quote]

You have to distinguish between the Federal Reserve and the Federal government.

The Fed acts through banks to adjust the money supply to economic conditions.

The Federal government has the power to affect GDP distribution.

When the Fed acts alone and provides liquidity, a lot of that is invested abroad for higher returns(good for pension plans). That improves standards of living worldwide. In fact world standard of living keeps on improving.

US GDP and world GDP are standard measures of well-being as imperfect as they may be. First priority, we need to maintain GDP growth. Then there are other ways to improve standard of living that require government coordination.

[Coronita]

[quote=FlyerInHi]I haven’t seen any wallet opening. The biggest unnecessary expenditures of the last decade? Wars. Did the people who propose them pay?[/quote]

But hey we need wars. If we don’t exert our #1 military force, people might actually expect us Americans to actually pay all our debt back…

[The-Shoveler]

I think Bush actually came closest to helicopter money when he mailed out refund checks to everyone, I think that was 2007 ?

[FlyerInHi]

And the 2009 stimulus that Obama signed on February 17, upon entering the White House was pretty much worked out by the Bush Administration.
http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

Obama took office on January 20, 2009

[FlyerInHi]

[quote=phaster]

to give ya an idea how bad I think it is consider that Fannie Mae and Freddie “The two GSEs have outstanding more than US$ 5 trillion in mortgage-backed securities (MBS)”

http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac
[/quote]

That’s not bad. MBS means the assets of Fannie and Freddie are backed by the equity in the homes of Americans. I believe the homes in America are worth that much and more.

[CA renter]

[quote=FormerSanDiegan][quote=CA renter]

This fully planned economic event (the Great Recession, and even the stock market bubble, IMO) …

[/quote]

This is the sentence where I stopped reading. Anyone else read beyond this ?[/quote]

If you believe that “nobody saw it coming” or that people in high levels of the finance industry and government didn’t know *exactly* how things would end up, you are incredibly naive. There is plenty of evidence showing how people who were trying to warn regulators and executive-level decision makers about the dangers of what was happening (both WRT the stock market bubble and the housing bubble) were silenced and tossed from their positions.

The wealthy/powerful decide how laws and our economy work; they pick the winners and losers and they design the system to make things happen in particular ways. The economic crisis made them even wealthier and more powerful. Coincidence? Not a chance.

Learn to connect the dots. It’s all right there before your eyes.

[CA renter]

[quote=FlyerInHi][quote=CA renter]
No, I’m sorry brian, but the *type* of growth does matter. And if it’s the government’s job to protect and improve our standard of living why are so many people worse off today than they were ~30+ years ago, before TRILLIONS of dollars have been pushed into the system in order to manipulate things one way or another. [/quote]

You have to distinguish between the Federal Reserve and the Federal government.

The Fed acts through banks to adjust the money supply to economic conditions.

The Federal government has the power to affect GDP distribution.

When the Fed acts alone and provides liquidity, a lot of that is invested abroad for higher returns(good for pension plans). That improves standards of living worldwide. In fact world standard of living keeps on improving.

US GDP and world GDP are standard measures of well-being as imperfect as they may be. First priority, we need to maintain GDP growth. Then there are other ways to improve standard of living that require government coordination.[/quote]

They work in concert. There is no central bank independence.

The surplus money is being used for speculation, it’s not being invested as much in productive ventures that will benefit society, either here or abroad.

Selling existing assets (or their derivatives) back and forth at ever-higher prices is NOT productive. Hoarding commodities and keeping them off the market in order to extract the highest possible gains is NOT productive. Betting on currency moves is NOT productive.

Yes, the govt could be doing things that would help to allocate some of this money to more productive uses, but they are owned by the speculators. The government does not work for the vast majority of US citizens/workers.

[CA renter]

[quote=FlyerInHi][quote=CA renter]

Except that they have been using up all of their ammunition and there will be precious little left when the SHTF moment happens. They have masked the problem by *growing* the problem. The 2008 crisis was more difficult for them to manage than the 2000/2001 crisis, and the next one will be even worse because the numbers are growing larger and the problems are becoming more systemic with every new manufactured crisis.[/quote]

By worse, do you mean that the next crisis will undo all the gains since 2009?

As long as we move forward in GDP growth, it really doesn’t matter if we have a next crisis or many more.[/quote]

Yes, undo all of the “gains” since 2009, and possibly more, as the economy was not allowed to realign and purge itself of the bubble-induced misallocation of resources.

[Author]

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