patrick.net

bgamall4 says

chart even way into 2008,

That was the Housing Bubble, the mother of all over investment thesis on the most toxic debt build up and packaging economic cycle we have ever seen. :-)

It takes a village to raise a child, it takes a entire country to work together to mess things up that bad

Logan Mohtashami says

it takes a entire country to work together to mess things up that bad

You underestimate the Fed.

indigenous says

You underestimate the Fed

and you over estimate their power :-)

Logan Mohtashami says

and you over estimate their power :-)

How so?

indigenous says

How so?

Way to much velocity power....It's like when people think Presidents can really change economic cycles,

If the Fed moved against inflation up or down, that would be a valid thesis but that hasn't been the case.

The recessions pre 1900 were longer and harder on the American people only 2 Recession post 1900 were dramatic in terms of length ...

A lot my Gold Bug Anti Fed friends always say

The Fed allows speculation to happen

However, if underwriting standards today were placed back in 1996, a lot of the excess speculation would have been taken out of line

Logan Mohtashami says

Way to much velocity power

? velocity is beyond the reach of the Fed as we see today.Logan Mohtashami says

If the Fed moved against inflation up or down, that would be a valid thesis but that hasn't been the case.

That is not the case with Volcker.

Logan Mohtashami says

The recessions pre 1900 were longer and harder on the American people only 2 Recession post 1900 were dramatic in terms of length ...

But there were "stimulated" with inflated/printed out of thin air money.

Logan Mohtashami says

However, if underwriting standards today were placed back in 1996, a lot of the excess speculation would have been taken out of line

So you are saying that banks knowingly wrote bad loans?

indigenous says

So you are saying that banks knowingly wrote bad loans?

The loan that were created I termed them back then as Band Aid Loans

These loans had no capacity to work long term, they were only needed to bridge until the next refinance happened.

Those lenders are all gone, none exist because they created Non Capacity Owning debt .... Which allowed home ownership to be a speculation and then from 2004-2006 the cash out craze happened which made things even worse

A lot debt on debt leverage

indigenous says

That is not the case with Volcker.

The economy that Paul V. had to deal with is much different now. That time frame was the birth of globalization and the start of the export/import side of the U.S. where we began to import deflationary factors, hence our trade surplus now.

Technology , Globalization, Demographics killed inflation ... while creating pocket inflation

These banks knowingly committed suicide?

Logan Mohtashami says

Technology , Globalization, Demographics killed inflation ... while creating pocket inflation

Seems like a stretch, as Volcker's actions correlated with the lower inflation.

indigenous says

These banks knowingly committed suicide?

Greed is a sickness that all men can't see when $$$$$$$$$ are around...

I call it Gold's disease

We export inflation $
We import Deflationary $

For a consumption based economy, it's not a bad deal

That can't go on forever

Logan Mohtashami says

Greed is a sickness that all men can't see when $$$$$$$$$ are around...

Behind all bubbles are policies that create them.

Let me ask you guys this

Is the Fed 100% responsible for the oil production of all oil nations?

;-)

what is your definition of inflation?

indigenous says

inflation?

The same as always.... too many $ cashing too few goods...

Logan Mohtashami says

The same as always.... too many $ cashing too few goods...

And who controls M2?

indigenous says

Behind all bubbles are policies that create them.

Yep--repealing Glass Steagall is a big part of the last one.

tatupu70 says

Yep--repealing Glass Steagall is a big part of the last one.

Cept Glass Steagall had nothing to do with derivatives.

indigenous says

Cept Glass Steagall had nothing to do with derivatives.

So what?

tatupu70 says

So what?

The banks you think were involved in derivatives would not have been affected by Glass Steagall.

http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisislow

With Glass-Steagall, there would not, could not, have been a Citi/Travelers merger, and competitors would not, could not have bulked up the way they did. Major money center banks most likely would have been smaller, more manageable, more easily wound down

https://www.washingtonpost.com/repeal-of-glass-steagall-not-a-cause-but-a-multiplier/2012/08/02/gJQAuvvRXX_story.html

The S.E.C. 2004 Leverage Act .... allowing 40-1 from 10-1

EWOMD

Economic
Weapon
Of
Mass
Destruction

So what is the deal on commercial lending? I read where the lending is tight to small business.

indigenous says

So what is the deal on commercial lending? I read where the lending is tight to small business.

The one big commercial lending conference I went to back in 2014... a lot projects that are in play from 2011-2017 time frame

The buildings are amazing ... state of the art ...

IIRC Dodd Frank has lowered the level of lending to small business. The big companies are unaffected, which has contributed to the slow recovery

Yea that is the story i.e. collecting interest on excess reserve fund and all, not sure how true that is or was?

Which is another question, what is the reserve ratio. I have read where it was infinity to one.

then where did the idea of infinity to one come from?

"These banks knowingly committed suicide?"

the banks were being run by people who got really really rich making bets with "other peoples' money" on housing loans.

annual growth of household indebtedness in mortgage, 2009 dollars

Banks are legal fictions and do not have human capabilities.

The people running "the banks" -- aka Wall Street knew what they were doing, mostly. "Heads I win, tails you lose" essentially

"

New comment by Bellingham Bill in Fed Rate Hikes Need More Inflation:
"These banks knowingly committed suicide?"

the banks were being run by people who got really really rich making bets with "other peoples' money" on housing.

Banks are legal fictions and do not have human capabilities.

The people running "the banks" -- aka Wall Street knew what they were doing, mostly. "Heads I win, tails you lose" essentially

"

And the people running "the government"-- aka the federal government knew what they were doing, mostly. "Heads I win, tails you lose" essentially

bgamall4 says

MERS.

?

turtledove says

Inflation is supposed to be good for debt holders. Unless you take on additional debt, the principal stays the same... but the ability to pay it off goes up as incomes rise. How is debt designed to grow with inflation?

It's inflation indexed, COLA, TIPS, etc...

besides if inflation happens, I'd be worried about us having anarchy revolt.

most debt does not grow with inflation.

Lost another MMT friend today! :-) Had to finally leave the group, these people have gone insane with Bernie running... a reality that no politician believes them even though their leader is the head economist of the senate...

EKKKKKKSSSSS!! :-)

what does MMT have to do with Sanders?

indigenous says

what does MMT have to do with Sanders?

Their main person or top 3 in America is Bernie economic adviser on economics

Once Bernie said he was going to pay for his stuff with tax increases, it drove the MMT people mad... They went ballistic,

I admit brought a smile to my face..... Their other head person Warren Mosler and I don't agree on this economic cycle, shocking right...

Side winder MMT people who are just old and cranky on facebook and then you have the Marxist lovers who hate America, well guess how that conversation went.

I really like the MMT jobs program for the poor and uneducated ... but man they can't get over themselves and try to make everything bigger than what it is

that is a paradox, a communist and free market guys.

Friedman has caused a lot of damage to the US with the floating exchange rate and a few other things. Stockman has some choice things to say about him.

OTOH I enjoy reading one of his students Thomas Sowell who is the 1st economics book I read, it was very enlightening. No matter what Lips says he makes a lot of sense.

indigenous says

Thomas Sowell

You would like Lee Adlers work and DiMartino Booth

Yea I follow Adler, I will have to check the other