0% interest rate for several years is not healthy.
QE is not healthy.
100+ % debt:GDP ration is not healthy.
Inflating assets is not healthy.
A vanishing middle-class is not healthy.
QE is over (though, I wouldn't be shocked to see more).
>0% interest rate for several years is not healthy.
Why not?
>100+ % debt:GDP ration is not healthy.
Why not?
I mean, I wouldn't call the US economy "flourishing" or anything. But it's not sick, and relative to the rest of the world it's looking pretty good (as the strong dollar and low rates imply).
Artificially low interest rates is the main cause of most malinvestment and inflating assets. Usually ends with a pretty rough recession.
For debt, I could just say 'Greece/Argentina/Brazil/Japan/...', but(yes) these aren't the world's reserve currency. U.S could just pay its debt to China by 'printing money'
Still, it also severely hurt Americans and is probably the main problem for the middle class. Wages don't keep up with inflation and assets are inflated, so their purchasing power is smaller and citizens usually get indebted themselves.
Rates aren't "artificial" (there is huge demand for treasuries) and malinvestment occurs at any time. Sure, it makes it "cheaper" to spend money stupidly, but it's also cheaper to spend money "smartly" -- to take risks and chances to do big things. You know, what places like SV are all about. I'm agnostic as to what the rates are, because our economy requires lenders and borrowers. Right now it favors borrowers.
>"Wages don't keep up with inflation and assets are inflated"
Who owns all these inflated assets, the houses, the stocks?
Of course they're "artificial." There may be huge demand for treasuries, but not enough to maintain a constant ~0% interest rate - that's the Fed's doing. The Fed certainly is not allowing treasuries to drop to their true market value, as Volcker did.
Interest rates are set artificially by the Fed. Because they are set almost at zero, this causes run on government debt as the only "safe" source of interest income, lowering yields thus making it inexpensive for the government to acquire even more debt.
The result (in the US) is skyrocketing government debt (from 64% of GDP in 2008 to 103% in 2015)
We. Are. So. Fucked.
... were all just barely over 100% debt / GDP when things went bad? I don't recall that being the case.
It is surely true that there can be unsustainable levels of debt. You have not made the case that those are anywhere near 100% GDP. I would be surprised if there were any fixed number of GDP where it goes from good to bad - it's going to at least depend on the cost of borrowing that money, and that also looks much different between the US and many other countries (very much including the countries you listed).
Indeed. It's amazing to me that people don't blink an eye at borrowing 8-10x their annual income to buy a home in California, but think the US economy, which can print its own currency, is going to fold with debt levels at 1x income and rates at historic lows.
Bear in mind that printing currency is not without consequences either. It's not like each printed (and used) dollar is worth exactly as much as the previous one - otherwise hyperinflations could not happen.
China isn't the entity which holds the US debt, the US citizens do. Besides, printing money doesn't make you able to pay debt, it just devaluates the money you already have. The early 20th century has shown us all that printing money won't help you.
That's not healthy or unhealthy. It's just a thing.
> QE is not healthy
Ask Europe that didn't do quantitative easing (or did too little too late) which economy they'd rather have right now. And it's no longer a thing - because it ran its course and largely worked.
>Inflating assets is not healthy
Some classes of assets are inflating. Some are deflating. Again it's a little vague.
> 100+ % debt:GDP ration is not healthy.
It was never higher than right before the boom of the 50's and 60's so...
Agree with you on the impact on the middle class.
But I think you can assert on the balance of things that the economy is healthy vs not. You've obviously ignored a lot of positive stats around employment growth and economic growth.
I agree with you generally, but this response is a little silly. What does "it's just a thing" even mean? Given that there's no ironclad economic consensus on this question yet, it's more comfortable to not spend too much time sitting on the ZLB. Now that doesn't suggest anything specific about what costs should be incurred to get away from the ZLB[1], but all else held equal, it's not unreasonable to suggest that staying near zero for so long is a bit more uncomfortable than having a bit of a buffer to lower rates.
[1]i.e., I'm not taking the oft-heard position that we need to do what it takes to raise rates NOW before it's too late
This isn't an excluded-middle sort of question. QE is indeed very unhealthy, precisely because it's a solely monetary stimulus, pumping up finance while households and public services starve. Fiscal stimulus works far better when you actually want a stimulus (but requires that Congress be willing to act).
By itself, there's no reason it's unhealthy if it's spent on solid investments in the country. After WWII when it was last way above 100%, the composition of that spending had a much better effect on the country. Now? What's the nature of the current debt? I'd agree that it's not so wisely spent.
Everyone's been picking at all your claims except this one, so let me jump in on this part.
You've been drinking too much of the kool-aid. It's certainly fashionable for talking heads to spout platitudes about the middle class, but it doesn't match the real world. The picture that's being painted is that the vast majority of us will be living lives as serfs, while a group of oligarchs (the arbitrarily mythical 1%) determine our fates while eating grapes and being fanned. That's not what's happening.
In fact, the VAST majority of Americans are better off than they ever have been. Check out this [1], for example, based on US census data.
Yes, the middle class has been disappearing, but they haven’t fallen into the lower class, they’ve risen into the upper class
Further, in the demographics where we have seen increases in inequality, the lion's share of the change has been the result of lifestyle choices made by the individual. Imagine a social order - call it "A" - in which most people are paired off and raising a family. In that world, a large portion of the families have two incomes, which are going to pay for a single rent or mortgage bill, a single set of utility expenses, etc. Imagine another society, "B", in which many of the folks corresponding to those paired adults have instead decided to go it alone, either by way of divorce, or even deciding to have a family with no mate.
Isn't it obvious that in society "B", the un-paired "families" are going to have far less aggregate income ('cause there's not a second breadwinner earning that income), and are going to have much greater expenses at the same time ('cause there's not a mate to share housing and utilities, and in fact other things like dining may need to be outsourced, that being the result of not having a mate to cooperate with)? And compared to those families that are following the "A" model, it'll appear that the "B"s have a disadvantage?
It doesn't apply for every case, but for most "B"s, a decline in purchasing power for the family is directly explainable by their own choices. We might wish that our choices had fewer side effects, but we can't blame it on others who made different choices.
[1] http://www.aei.org/publication/yes-the-middle-class-has-been...
You need to pick your sources a little more carefully. The organization whose article you cited is an ExxonMobil-funded conservative thinktank that was involved in some notable controversies, such as trying to bribe scientists with $10,000 to critique the International Panel on Climate Change.
http://www.theguardian.com/environment/2007/feb/02/frontpage...
I'll be more specific with my criticism: the alleged increase in upper-middle class membership tracks extremely closely to women entering the workforce. Note that the data they use is family income, although the author has conveniently omitted that keyword from the graph title.
I'm always annoyed at the invocation of the logical fallacy that the source of an argument renders it inadmissible. Not only is it a fallacy, but it's typically (but not in your case, especially since you're offering a specific criticism!) invoked by someone simply assuming that their own source is sacrosanct. That said...
You may have a point, but it's not fatal to my argument. It maybe renders mine less strong.
Why would you think that women entering the workforce must be treated exogenously? I think it's proper to consider this part of the overall improvement.
For the years shown in my chart, the shift of women into the workforce was well underway. Even in 1950, women accounted for about 30% of the workforce [1]. So by my thumbnail estimation, the increase from ~1965 (when my original chart began) on is nowhere near large enough to account for the effect I showed.
Further, women entering the workforce is central to my second point about it finding oneself in the lower income tiers is significantly a personal choice. If the rest of the world has passed you by, it's still your own choices that are holding your back.
Without making any moral claims at all, purely based on mathematics, the two-income family has advantages beyond simply having double the income. As I alluded to, by sharing tasks and specializing within the family (e.g., I cook while my wife does the laundry), we're able to lower total expenses because we save enough time between us that more can be done without outsourcing work. It also offers better risk management. One partner can pursue a riskier but potentially more lucrative job, without fearing losing the family's only income. I have several friends doing this kind of thing, with one spouse running a small business while the other has a corporate job (including the medical care it implies). And if one spouse does lose their income, the consequences are much less dire, as there's some semblance of a buffer protecting them.
Thus, even aside from the simple doubling of family income as women entered the workplace, they shifted the picture so that more wealth could be created in total by protecting against greater risks.
But this is all endogenous to the question. Through their own means (in many cases, that being the decision of a woman to enter the workforce), Americans have transformed their demographics such that incomes have shifted strongly toward the higher end of the scale.
[1] http://www.bls.gov/opub/mlr/2002/05/art2full.pdf page 2 (PDF warning)
EDIT: I'd stupidly left the parens in para 4 empty; went back to fill them in.
I didn't say it is inadmissible. I simply pointed out that it is significantly biased as a source, and proved it by pointing out the author's willful omission of important information and misrepresentation of facts.
Another issue with the AIE article is that defining the middle class purely by income is fallacious. Paul Krugman explained this wonderfully [1]. He makes the point that being middle class is really about two things: security and opportunity.
http://www.truth-out.org/opinion/item/21841-paul-krugman-red...
So a $60,000 family with good health insurance, high labor mobility and job security can be middle class, whereas a $90,000 family with no health insurance and terrible job security may not be.
Economist Miles Corak also elaborated on the opportunity aspect:
http://milescorak.com/2013/06/18/income-inequality-equality-...
Because "improvement" normally refers to something like growth in productivity, or growth in income-per-labor-hour. Doubling the family's income by just doubling the total hours worked isn't actually an improvement at all, especially when it just results in doubled competition for certain zero-sum assets[1].
[1] -- http://slatestarcodex.com/2014/06/28/book-review-the-two-inc...
There's something very ironically Soviet about certain sectors of the American right. I'm sure at the height of Communism there were official mouthpieces that talked bout how everything was getting better, and I'm sure reading them was just as bizarre and vertigo-inducing like "what parallel universe do these people inhabit?"
Ideologies die hard. You can cherry pick statistics to attempt to argue anything, but the scenario you describe does not match the real world.
The income levels that fell during the studied period:
15,000-24,999
25,000-34,999
35,000-49,999
50,000-74,999
75,000-99,999
Income levels that grew:
100,000-100,000+
100k + increased by 6%
75k-99k decreased by 1.1%
50k-74k decreased by 3.1%
But sure, you could make up your own categories for the data to make 75,000+ look like it went up, when in reality it was only 100,000+ that showed an increase.
The fact is that the middle class is shrinking, and wages are stagnant or falling.
I encourage you to actually check the sources linked in articles - when you find different categories of data in the article than the study, its likely something is being misrepresented.
The key is that the number of people in the higher tiers increased, while the membership of the lower tiers went down. That's exactly what you said. But what it shows is people were shifting into those higher tiers.
You're right that in all groups below $75K, the percentage of people in the group went down. While from $75K and up, the membership of each group increased (you've read that part of the data wrong, as the $75l-$99K group also increased.). That's precisely what my linked article says, and exactly what we'd like to see: people are shifting from lower groups into higher groups, across the board.
EDIT: here's the spreadsheet from the census bureau I was working from: http://www.census.gov/compendia/statab/2012/tables/12s0696.x... (Excel spreadsheet)
Sure you can (note, I wouldn't, but that's a different issue); standards for "health" of an economy are deeply ideological.
The real problem in this country, frankly, is the Federal Government has been badly mismanaging economic & tax policy for 30+ years. They've repeatedly used short term solutions and short-changed everything from highways to R&D in the name of military, taxes, & social spending. Many long term investments in physical goods [e.g. buildings] are really only rated for a 30ish year timeline for depreciation for a reason.
That combined with the demographic shifts, labor market arbitrage, massive private debt load are the actual problems. Did you bitch when the private debt to gdp was over 120%? Did you even think about it, honestly?
I'd list sources but I honestly think you wouldn't believe me.
----
> A vanishing middle-class is not healthy.
By that logic, the US economy has in the shitter since the 1980s.
> Inflating assets is not healthy.
Actually, inflating prices is the definition of healthy and has been for a long time in economic theory. No economist argues we should have deflation.
> QE is not healthy. & 0% interest rate for several years is not healthy.
Having deflation would be less healthy than 0% interest and QE.
QE is also over.
> 100+ % debt:GDP ration is not healthy.
That isn't a serious issue as long as the US is considered the reserve currency. National debt doesn't have a direct correlation with economic growth.
http://www.theatlantic.com/business/archive/2014/09/governme...
> Government Debt Isn't the Problem—Private Debt Is
> What was the big problem? Look at the line representing private debt. It clearly is not parallel to the GDP line and, indeed, reflects a rapid growth of private debt relative to GDP.
> Look familiar? Time and again, that’s the story we found: A major financial crisis is preceded by a runup in private debt relative to GDP. In fact, there seems to be only one other ingredient required for a crisis: that the absolute level of private debt is high to begin with. We found that almost all instances of rapid debt growth coupled with high overall levels of private debt have led to crises.
Most of the time, an unqualified "deflation" means "a trend of declining retail prices, as measured by non-adjusted currency." And I know why economists in the employ of monetary authorities hate it. It means that there was a missed opportunity for that authority to steal more from the economy by inflating the money supply at a faster rate.
Ordinary price deflation is beneficial [for the working class]. It allows you to buy more stuff with less of your own labor. You can buy a computer today that is vastly more capable than one from 1995, at maybe 20% the cost, as measured by your own labor. You might have spent two weeks of gross wages back then. Now, you might spend 2 days of your work.
Working people usually spend at least 2000 hours of their own labor per year, for a span of about 50 years. They have to budget that 100000 hours out for everything they will ever want or need. They can't get more stuff for free just by printing off a few more bills or raising taxes. So everybody loves it when they can all get more stuff with the same amount of work, and everybody hates it when they have to work twice as hard to only get the same amount of stuff their parents had.
The economy hasn't just been in the toilet since the 80s. Real wages for working class families have been in decline since 1970. And the cause (in my opinion) was economists who pretended that macroeconomics was something other than a simple summation of many thousands of individual microeconomic models. They pretended that "government" was some magical economic actor that could defy the laws of microeconomics, by gradually moving numbers from the "truth" column of the ledger into "lies", from "lies" to "damned lies", and finally putting them into "statistics", where they could safely be explained away, hidden in margins for error, or redefined into nothing.
This is what monetary authorities and their pet macroeconomists have given us since 1970. The ordinary march of human progress--which has steadily given us an approximate annualized return of 1.5% per year, failing only temporarily due to wars, plagues, or other catastrophes--now goes directly into an annual inflation of the money supply of at least 1.5%. This has transformed global commerce from an ever-rising tide that floats all boats, into one where only the yachts float higher as the canoes, coracles, skiffs, and dinghies get swamped.
You can and should apply the principles of personal finance to national economies. You may learn something about macroeconomics that you didn't suspect before.
> This is what monetary authorities and their pet macroeconomists have given us since 1970. The ordinary march of human progress--which has steadily given us an approximate annualized return of 1.5% per year, failing only temporarily due to wars, plagues, or other catastrophes--now goes directly into an annual inflation of the money supply of at least 1.5%.
Someone hasn't heard of the various inflation-caused panics of the 1800s or deflationary economic problems pre-1900. applauds Read some history books.
Please, just stop. You have no clue what you are talking about.
I am claiming that the problems caused by central banking are worse than the those supposedly solved by central banking. Some people that are far more knowledgeable about economics than I have claimed that the greatest single cause of the Great Depression was the monetary policy of the Federal Reserve.
The first panic of the 19th century was created or worsened by the Second Bank of the United States, a Hamiltonian central bank. I loathe that guy. They should have run him out of Philadelphia in a wheelbarrow in 1783. If ever there was a man who loved money more than freedom, it was him. Unfortunately, there are plenty of others like him, and someone would have tried multiple times to institute a central bank in the U.S. After all, we got saddled with the Fed long after he was dead.
The second panic was caused mostly by massive fraud by a single financial company, but also the fear of legal slavery in the western territories.
The third was a combination of a bubble in railroads and the government ending the bimetallic standard, due to the 16:1 fix getting very unbalanced by silver mining. And oh, look, another "too big to fail" bank overinvested in the railroads bubble and failed. Again, it was Hamilton that fixed the silver:gold ratio at 15:1 in the first place instead of letting the market work. That jerk.
The fourth? Oh, shit. Another railroads bubble, and more bank failures from overinvestment in it. And more stupid government intervention in the silver market.
Did I miss any? Investment bubbles and the silver standard, all the way. Do I need to include the greenback crisis during the Civil War, where Lincoln paid for the Union war effort with inflationary fiat paper that went all the way up to one gold dollar costing 2.5 greenback dollars just a few scant years after the first print run?
And are you referring to the deflationary period from 1870 to 1890, which correlates with one of the strongest periods of sustained growth, industrialization, and prosperity in the history of the U.S.? That deflation in consumer prices of about 2% per year? The only economic problem there was that businesses had a harder time achieving economic profits--that is, a greater return than other possible investments--because more things were becoming commoditized. If you wanted to make real money, you had to innovate and invest in useful capital. ~Sounds like a real problem to me.~
Do you dispute that central banks pursue an explicit economic policy of routine monetary inflation to offset price deflation? Do you dispute that this practice transfers wealth away from the producers of value in the economy to the printers of money, and those who get to spend that new paper first? Do you dispute that any institution that is too big to fail is also too dangerous to continue to exist?
I have several clues about what I am talking about, and I haven't needed to impugn your knowledge of this subject to do it. Please do me the courtesy of arguing with facts, rather than dismissing my claims with the rhetoric of ad hominems and appeals to authority.
Sure. That is because you don't.
> Most of the time, an unqualified "deflation" means "a trend of declining retail prices, as measured by non-adjusted currency." And I know why economists in the employ of monetary authorities hate it. It means that there was a missed opportunity for that authority to steal more from the economy by inflating the money supply at a faster rate.
> This is what monetary authorities and their pet macroeconomists have given us since 1970. The ordinary march of human progress--which has steadily given us an approximate annualized return of 1.5% per year, failing only temporarily due to wars, plagues, or other catastrophes--now goes directly into an annual inflation of the money supply of at least 1.5%. This has transformed global commerce from an ever-rising tide that floats all boats, into one where only the yachts float higher as the canoes, coracles, skiffs, and dinghies get swamped.
https://www.cibcwg.com/c/document_library/get_file?uuid=1308...
7.7% according to this one is "real returns" from 1913-2012.
http://efinance.org.cn/cn/fm/The%20Equity%20Premium%20Stock%...
> Over the period from 1802 through 1990, equity has provided returns superior to those on fixed income investments, gold or commodities. Most strikingly, the real rate of return on equity held remarkably constant over this period, while the real return on fixed income assets declined dramatically. Over the subperiods 1802-70, 1871-1925 and 1926-90, the real compound annual returns on equity were 5.7, 6.6 and 6.4 per cent, but the real returns on shortterm government bonds dropped from 5.1 to 3.1 and, finally, 0.5 per cent.
Real returns are basically the same before and after the Federal Reserve and sure as hell hasn't had a 1.5% change to the negative in real returns.
Real returns were higher after the Federal Reserve was created over an extended period of time. You can't really go earlier than 1802 because there just isn't enough records available. So where is this magical 1.5% real return loss coming from?
So please, provide a 50+ year period that doesn't include the Federal Reserve, in which your statement beats the market under the Federal Reserve. I'm willing to even eat the Great Depression since you think its caused by the Federal Reserve. I'm even willing to let you pick a period about half the size! So all you need is to show a 9.2% return in the US for 51+ years. Can you do it? [Hint: You can't.]
> I am claiming that the problems caused by central banking are worse than the those supposedly solved by central banking. Some people that are far more knowledgeable about economics than I have claimed that the greatest single cause of the Great Depression was the monetary policy of the Federal Reserve.
Okay, well I'm willing to eat the Great Depression in either of the time periods I offered you. Hell, I'm willing to start in 1926, during the run up to the Great Depression, and let you cherry pick a period that is over a decade smaller than mine.
http://www.merrilledge.com/Publish/Content/application/pdf/G...
> 1879: US stocks record their best year ever, returning 57%*
Hell, take Jan 1 1871 to Dec 31st 1912
http://www.moneychimp.com/features/market_cagr.htm
7.64% / 8.59%; real returns
Jan 1926 to Dec 31st 2009 [hell, lets take near a market top to near a market bottom over 80 years!]
6.63% / 8.72%; real returns. That is a 1.01% gap, not a 1.5% gap. So I really have no clue what time periods you use to get a 1.5% gap and I'm super curious. Hell, I took the worst possible timeframe I could think of and gave you the best year on record.
So please enlighten me to this special time frame where you find this 1.5% gap.
http://fee.org/freeman/the-great-depression-according-to-mil...
> The Great Depression created a widespread misconception that market economies are inherently unstable and must be managed by the government to avoid large macreconomic fluctuations, that is, business cycles. This view persists to this day despite the more than 40 years since Milton Friedman and Anna Jacobson Schwartz showed convincingly that the Federal Reserve’s monetary policies were largely to blame for the severity of the Great Depression. In 2002 Ben Bernanke (then a Federal Reserve governor, today the chairman of the Board of Governors) made this startling admission in a speech given in honor of Friedman’s 90th birthday: “I would like to say to Milton and Anna: Regarding the Great Depression, you’re right. We did it. We’re very sorry.”
Yeah, that is what you mean?
> Friedman and Schwartz argued that all this was due to the Fed’s failure to carry out its assigned role as the lender of last resort. Rather than providing liquidity through loans, the Fed just watched as banks dropped like flies, seemingly oblivious to the effect this would have on the money supply. The Fed could have offset the decrease created by bank failures by engaging in bond purchases, but it did not. As Milton and Rose Friedman wrote in Free to Choose:
> The [Federal Reserve] System could have provided a far better solution by engaging in large-scale open market purchases of government bonds. That would have provided banks with additional cash to meet the demands of their depositors. That would have ended—or at least sharply reduced—the stream of bank failures and have prevented the public’s attempted conversion of deposits into currency from reducing the quantity of money. Unfortunately, the Fed’s actions were hesitant and small. In the main, it stood idly by and let the crisis take its course—a pattern of behavior that was to be repeated again and again during the next two years.
The problem with using that as part of argument is that. Yes, the single greatest cause of the Great Depression was the monetary policy of the Federal Reserve precisely because they do what you advise and let nature take its course.
The taking by inflation does not impact investment returns that are adjusted by inflation. That's the whole point of adjusting for monetary inflation. When you take out that inflation, you are comparing the equities against all the other uses of that money that are also adjusted for inflation. The loss from inflation becomes invisible, because everyone is affected by the same amount of it. The impact can still be seen in the change of ownership, from those who held real assets and old money to those who printed and spent the new money.
The 1.5% is the increase in total productivity. It comes from every laborer on the planet using, on average, slightly better tools every year than were available the previous year. That's an estimated average over a very long period of time--about 500 years. The average worker today can produce about more of whatever it is they make than the average worker in 1500, and there are a lot more workers to do it all. The rate of productivity increase has itself been increasing, thanks to universally useful inventions like steam engines, modern steel, and computers. So in the last century, the average annual increase in productivity has been closer to 4%.
The Bank of England was founded in 1694, as the first national central bank. Others followed. But it wasn't until around 1870 that it, and other national central banks, decided that they could lend in excess of commodity reserves in response to financial crises. This expanded the monetary power of central banks. It wasn't really until Bretton Woods that they started to really break free of the gold standard (coincidentally increasing in total global supply at about 1.5% per year). Had countries remained on the gold standard, the money supply could only increase by 1.5% while national productivity was increasing at 0% to 10%. Monetary crises where the amount of new money did not match the increase in available goods and services would have become increasingly common. So they started fudging the numbers, and the Fed was the lucky one that got to issue the reserve currency, so they could cheat more than any other central bank.
This all fell apart in 1971, when Nixon ended redemption in gold. The Fed had abused its dominant position from Bretton Woods too much, and other banks were calling them on it. So Nixon gave them the finger, and told them to sit on it. Nice guy. After the gold window closed for good, central banks were now free to inflate their money supplies at a greater rate, with the only check being how fast the other central banks were inflating, rather than how fast new gold could be mined and vaulted. And not coincidentally, this is when incomes started stagnating for the middle class.
Those historical returns on investments in equities are completely orthogonal to what I am talking about. The productivity dividend should, for the most part, be distributed to those who invest in research and development, and those who buy capital goods based on new technology. So, pretty much everyone, in a wide variety of businesses, across all industries. Everybody gets x% more stuff for the same amount of work. The central banks, by inflating the money supply by y%, takes some of those gains. They are not destroying the additional production. They are taking it. That percentage is not being subtracted. It is going to a different recipient. When y equals x, everyone who works labors just as hard for the same amount of stuff, and some people get a lot of stuff for no work at all. Free lunch.
But monetary inflation is a large and unwieldy hammer. You can't fine tune it for different industries. Businesses that can gain more productivity than x% can actually come out ahead. Those that cannot find it more difficult to stay in business. Tech companies often manage to pull off greater gains.
That's all this is. The power to control the money supply is the power to take a percentage of the entire economy circulating your currency. If you believe that central banks and their bank clients do not exercise that power for their own gains, at the expense of everyone else, you are a fool.
Persistent inflation of a fiat currency monetary base puts everyone on a technology treadmill, where if you do not increase your productivity faster than everyone else, you fall off. And the whole time, the spinning wheels are powering some banker's margarita mixer.
A) The Federal Reserve actually increases real returns on investment, thereby masking the extraction.
B) Your statement that they are extracting money from the system is false since real returns have improved, not declined.
Like, I get you want to believe there is some massive extraction going on here but it just isn't the case. Inflation existed before the Federal Reserve.
If I have $100,000 today and $106,000 in a year, I'm not having money "taken" from me via inflation if in an earlier time I'd have only ended up with a $105,000.
You can't prove something like what you claim exists without showing an impact on the real return on investment.
If I buy an equity at $100 a share, and I sold it at $110 a year later, and got $1 in dividends during that year, I earned 11% on it, without accounting for inflation. There are two effects that may occur due to inflation. First, the $111 I now hold can only buy an amount of stuff that could have been purchased for $106 the previous year (or the amount of stuff that cost $100 then now costs $105). The second effect is that someone close to the monetary authority, perhaps a government agency or one of their contractors, could outbid someone else for that $110 equity, because they have newly inflated money.
The return remains the same. The ownership of the equity is different. Without the monetary inflation, someone could have bid a lower amount for the equity in order for me to achieve the same real rate of return. The equity does not cease to exist. It does not perform more poorly. It does not change its own length if the measuring stick is now longer. Those who benefit most from the monetary expansion (i.e. those who can spend the new cash first) can more easily afford to take ownership of it from those who benefit least.
Do you understand now why real rate of return is irrelevant to the value extracted from the economy via monetary expansion? Some fraction of corporate dividends are now going to different people. They do not grow or shrink based on who gets them.
Granted, you definitely give a more in-depth account of how we got to the end points that OP cites, but still I don't see the need for such hostility.
Repeating the reasons people use to justify things like:
"If we just lowered taxes"
"If we just cut the deficit"
Isn't helping. Especially when they aren't the underlying cause.
>By that logic, the US economy has in the shitter since the 1980s.
Yes, and?
And what inflation? Outside VC money and the stock market ( and the peripheral real estate markets to those ) there isn't any.
Many of the problems are "easy" to fix with government action, but the consequences of the easy fixes are problematic.
> the rabid ... crowd won't have the thought of weak fundamentals
If you've been telling people using the same level of rhetoric and the same amount of facts as in this comment, I wouldn't be surprised if they don't listen to you, regardless of whether you're actually right or not.
The public is only slowly waking up to the fact that mass media ownership has been consolidated among 5-6 major corporate/industrial conglomerates.
Slowly, hence the frustration.
The media has been on the bullhorn about "the recovery" for years now, trying to make it happen by repeating that it's already happening. It's no surprise that this language rings hollow for many people; the GDP of a country and the stock valuations on an index do not necessarily mean that there is a genuinely healthy economy. These kinds of discussions never take into account labor force participation, only rarely QE, geopolitics, actual volume of consumer goods moved, actual market liquidity, etc.
You can state the facts as impartially as you like; people will not hear them because it contradicts the "recovery is here and the economy is strong" narrative.