View Full Version : Interest rates in the coming months
eagle2
07-20-2021, 02:48 PM
I am literally on a tightrope with this one but historically Congress LOVES inflation. A lot of money has to be borrowed to cover the shortfall between revenue and spending but it is paid back in dollars that are worth a lot less thanks to inflation.
That's the case with regular treasury bonds, but not with inflation-adjusted ones. Also, when inflation increases, the interest rates on treasury bonds being issued also increases.
Eric Stoner
07-21-2021, 10:00 AM
^^^ Yes, but the dollars used to pay the interest on those bonds are worth less than the dollars that were used to purchase those bonds.
There is also "bracket creep " as taxpayers are pushed into higher tax brackets without any real increase in their actual spending power.
Stand by for the return of "The Misery Index ".
Some good news : Lumber prices are going down as supply increases. Ditto for oil as OPEC has decided to increase production. Let's see if it lasts.
rickdugan
07-22-2021, 09:28 AM
Stand by for the return of "The Misery Index ".
Most people here were not alive during the inflation spikes of the 70s and early 80s. I was only a young lad myself, but I remember. My parents were working class folks and we very much felt the impacts.
This is why, since the mid 80s, the number one mission of the Fed was to control inflation by getting ahead of it, but this Fed has completely abandoned that approach. Today they no longer want to hear that MV=PQ is as valid now as it ever was and in fact is playing out almost exactly as expected. Instead they continue to help pump endless M (money) into the economy with the belief that they will be bailed out by increasing Q (quantities) once supply chain constraints erode so that P (prices) will stabilize. IMHO they are dramatically under-estimating the long-term impact not only all of the money already sloshing around in the system, but the trillions in future additional spending that is being contemplated.
We are already seeing big increases in the prices of groceries and basic goods. Just wait until basic proteins like beef are completely out of reach for many and even certain cuts of chicken become a luxury. Or when working class folks go to renew their leases once eviction moratoriums are done and find their rents jacked up by 10-20%. Or when people can't afford to replace their sneakers or other clothes. We have forgotten how much high price inflation hurts the working class because it has been so long since we've had it, but IMHO those lessons may soon be back.
eagle2
07-24-2021, 01:18 PM
The main reason for current inflation, as well as the inflation of the 1970s was that supply could not keep up with demand. When that happens, prices increase. There is currently a microchip shortage, which has had a major impact on the supply of automobiles. There has been a pent up demand for travel, which has been pushing up the price of airline tickets and hotel and lodge stays.
From:
https://www.cnbc.com/2021/07/13/surging-prices-for-used-cars-gasoline-food-and-airfares-are-driving-the-jump-in-inflation.html
Excluding price increases in used cars, new cars, lodging and transportation services, the core CPI would have risen only by 0.18% month over month, which in normal times would be a relatively healthy increase in prices, according to Bank of America.
The inflation of the 1970s was also caused by supply shortages. The Arab oil embargo of 1973 resulted in the price of gas close to quadrupling from 1973 to 1974. That would be like the price of gas increasing to $11 or $12 a gallon today. There was also a major grain shortage, which resulted in significant increases in the price of food. In 1972 there was a massive drought in the Soviet Union, which greatly reduced their food output, which led to the Soviet Union buying massive amounts of grain from the US, and resulted in major increases in the price of food. Besides that, there was a major population increase in Europe and the US, as a result of the baby boom following World War 2. This greatly increased the demand for products, which led to prices going up. In addition to all of this, Nixon implement wage and price controls, which led to pent up demand and major price increases, once the controls were lifted. All of these factors causing the inflation of the 1970s, are not occurring today.
rickdugan
07-25-2021, 06:07 AM
The main reason for current inflation, as well as the inflation of the 1970s was that supply could not keep up with demand. When that happens, prices increase. There is currently a microchip shortage, which has had a major impact on the supply of automobiles. There has been a pent up demand for travel, which has been pushing up the price of airline tickets and hotel and lodge stays.
From:
https://www.cnbc.com/2021/07/13/surging-prices-for-used-cars-gasoline-food-and-airfares-are-driving-the-jump-in-inflation.html
The inflation of the 1970s was also caused by supply shortages. The Arab oil embargo of 1973 resulted in the price of gas close to quadrupling from 1973 to 1974. That would be like the price of gas increasing to $11 or $12 a gallon today. There was also a major grain shortage, which resulted in significant increases in the price of food. In 1972 there was a massive drought in the Soviet Union, which greatly reduced their food output, which led to the Soviet Union buying massive amounts of grain from the US, and resulted in major increases in the price of food. Besides that, there was a major population increase in Europe and the US, as a result of the baby boom following World War 2. This greatly increased the demand for products, which led to prices going up. In addition to all of this, Nixon implement wage and price controls, which led to pent up demand and major price increases, once the controls were lifted. All of these factors causing the inflation of the 1970s, are not occurring today.
There's more than one way to create inflation. If you run the printing presses long enough, you get inflation. Just about every country in the world that ever had runaway inflation knows that lesson all too well. The jump in housing prices, very much ignored in your article, is one of the biggest current concerns.
MV=PQ
Slosh around enough money in the system (M) and people keep spending it at the same clip (V) then prices (P) and or quantities (Q) have to rise. Since quantities rarely keep up in response to demand spikes, prices inevitably rise.
The housing market is a textbook exhibit. The Fed is keeping mortgage rates artificially low by depressing the interest rates and gobbling up 40 billion per month in mortgage bonds. The painfully predictable result is higher mortgage activity and, since housing supplies cannot rise easily in response, higher housing prices.
We also have hundreds of billions stimulus money already sloshing around in the system and potentially trillions more coming down the pike. What happens when all that M hits the hands of consumers is pretty predictable, especially when done in tandem with the Fed gobbling up $80 billion per month in general treasuries AND continuing to make borrowed money artificially cheap. This will impact a variety of sectors.
Eric Stoner
07-26-2021, 08:49 AM
The main reason for current inflation, as well as the inflation of the 1970s was that supply could not keep up with demand. When that happens, prices increase. There is currently a microchip shortage, which has had a major impact on the supply of automobiles. There has been a pent up demand for travel, which has been pushing up the price of airline tickets and hotel and lodge stays.
From:
https://www.cnbc.com/2021/07/13/surging-prices-for-used-cars-gasoline-food-and-airfares-are-driving-the-jump-in-inflation.html
The inflation of the 1970s was also caused by supply shortages. The Arab oil embargo of 1973 resulted in the price of gas close to quadrupling from 1973 to 1974. That would be like the price of gas increasing to $11 or $12 a gallon today. There was also a major grain shortage, which resulted in significant increases in the price of food. In 1972 there was a massive drought in the Soviet Union, which greatly reduced their food output, which led to the Soviet Union buying massive amounts of grain from the US, and resulted in major increases in the price of food. Besides that, there was a major population increase in Europe and the US, as a result of the baby boom following World War 2. This greatly increased the demand for products, which led to prices going up. In addition to all of this, Nixon implement wage and price controls, which led to pent up demand and major price increases, once the controls were lifted. All of these factors causing the inflation of the 1970s, are not occurring today.
Oh boy ! This is a toughie to respond to while avoiding politics. What you say is true but breathtakingly incomplete. It totally ignores Nixon taking us off the gold standard ( in isolation, not a bad thing but at the time destined to increase inflationary pressure , which it did ). It also takes no heed of the idiotic policies of Arthur Burns at the Fed. Rather than get lost in the weeds, suffice to say that he permitted M1 and M2 ( they didn't really track M3 back then ) to go up in fits and starts with a fixation on interest rates and not the overall money supply. It eventually resulted in double digit inflation and double digit interest rates by the end of the decade. Remember the "Prime Interest " rate ? Something you almost never hear about these days. One reason Nixon gets an "F" in economics from me was his imposition of wage and price controls. How the hell he did it without Congressional approval or any court challenges is best left for another day I suppose. Anyway , he compounded the pain by lifting price controls first and then wage controls. As usual with artificial manipulation of economic forces the government got it wrong and we all had to pay the price. It took years for basic equilibrium to be restored.
Volcker came in as Fed Chairman in 1979 and crudely but effectively brought inflation under control mostly by raising interest rates which gave us a two year recession that was deep and painful.
You are also correct that there was a lot of pent up demand but that was actually seen much more in the early and mid 1980's when for instance the average age of the American car was almost 10 years old. Why ? Because car loans cost as much as 20% in interest charges. When rates came down there was an explosion of new car buying among other consumer spending.
With the Soviet grain purchases we had a dimwit named Earl Butz as Agriculture Secretary ( remember him ? ) who specialized in bad jokes and other groaners. Among other things he didn't give farmers enough flexibility to increase grain and other production until it was too late. At the time, Federal agricultural policy was fixated on price and supply to guarantee high farm incomes for um , er , oh dear !, ( whispering ) political reasons to secure votes in the Midwest and Farm Belt. We had a meat shortage ; a paper shortage and a milk and butter shortage. How many people got heart disease by switching to partially hydrogenated fats i.e. margarine ? As grain prices went up the Soviets actually offered to sell us back our own grain ! Carter actually tried to bring some sanity to farm policy with at least some consideration for consumers with mixed results.
A reason the Arab Oil Embargo and follow up price increases had such an impact were Federal policies that limited domestic supply. I can still remember Carter sitting in the White House wearing a sweater telling everyone to lower their thermostats during a record setting cold winter ! Remember the Spot Oil Market and folks having conniptions when prices hit 30 and then $40 a barrel ? Increased supply and liberalized drilling under Reagan and Bush The Brighter led to lower prices. Reagan deregulated oil and gas and there suddenly was plenty of both. In real terms we had our best oil and gas prices under Clinton when domestic drilling coupled with OPEC and Russia producing at full capacity led to a worldwide glut. In 1998 gas averaged less than $1 a gallon.
Correct me if I am mistaken Eagle but from your posts it seems that you think supply and demand are the only economic forces at play. That is not always the case. The Soviets in the 70's had money and consumer demand with very limited supply but zero inflation. Yes, yes there was a "black market".
Today we have "New Monetary Theory " vs. classic Monetarism and "you know who " in the White House trying to tell us that multi-trillion dollar deficits will not be inflationary ? That they will be "anti-inflation" ! While trying to avoid any political argument does anyone know or understand just how that is supposed to work ? Rather than argue the "whys and wherefores" can anyone point to a single historical example where massive borrowing and massive government spending resulted in genuine economic growth without runaway inflation ?
More to the point, why are these temporary blockages and shortages in the supply chain having such a disparate impact on prices compared to past bottlenecks and shortages ? What is different now compared to then ? Rick and I are arguing that it is, in large part, too much easy cash . Too much money chasing too few goods and services.
Why are labor costs going up ( where employers can find someone to take the job ) ? Why are so many jobs going begging ? Depending on who you talk to there are anywhere from 4 to 5 million jobs with no takers.
eagle2
07-27-2021, 12:13 AM
The housing market is a textbook exhibit. The Fed is keeping mortgage rates artificially low by depressing the interest rates and gobbling up 40 billion per month in mortgage bonds. The painfully predictable result is higher mortgage activity and, since housing supplies cannot rise easily in response, higher housing prices.
The main reason for the increase in housing cost, is supply is down. There was a dramatic decline in new construction 2nd qtr 2020.
https://assets.bwbx.io/images/users/iqjWHBFdfxIU/i4VCs8_7_eWU/v2/pidjEfPlU1QWZop3vfGKsrX.ke8XuWirGYh1PKgEw44kE/977x-1.png
As you said, housing supplies cannot rise easily, so it's going to take time to make up for the drop in new construction during the pandemic. There's no easy or quick fix. Raising interest rates could potentially bring the price of houses down, but it would increase the amount of interest home buyers would have to pay on their mortgage, so either way, it's going to be more costly to buy a house if you're going to finance it.
eagle2
07-27-2021, 12:26 AM
Correct me if I am mistaken Eagle but from your posts it seems that you think supply and demand are the only economic forces at play. That is not always the case. The Soviets in the 70's had money and consumer demand with very limited supply but zero inflation. Yes, yes there was a "black market".
In the Soviet Union, prices were set by the government, not the market. If demand for a product exceeded the supply, instead of raising the price, the government would just ration the product, and people would wait in long lines to get it.
More to the point, why are these temporary blockages and shortages in the supply chain having such a disparate impact on prices compared to past bottlenecks and shortages ? What is different now compared to then ? Rick and I are arguing that it is, in large part, too much easy cash . Too much money chasing too few goods and services.
Because the shortages and supply chain issues we're having now, are far worse than anything we've had in the past, except perhaps in the 1970s during the oil embargo.
Why are labor costs going up ( where employers can find someone to take the job ) ? Why are so many jobs going begging ? Depending on who you talk to there are anywhere from 4 to 5 million jobs with no takers.
There were approximately 800,000 jobs created in June. If this trend continues, a lot of the open positions will eventually be filled.
Eric Stoner
07-27-2021, 07:32 AM
In the Soviet Union, prices were set by the government, not the market. If demand for a product exceeded the supply, instead of raising the price, the government would just ration the product, and people would wait in long lines to get it.
Because the shortages and supply chain issues we're having now, are far worse than anything we've had in the past, except perhaps in the 1970s during the oil embargo.
There were approximately 800,000 jobs created in June. If this trend continues, a lot of the open positions will eventually be filled.
Give yourself an A+ on the Soviet economy lol.
Are they ? We had shortages of everything during W.W. II . But we also had rationing and price controls. We had shortages of a lot of things after W.W. II as the economy switched gears from wartime to peacetime. We had some inflation and a LOT of unemployment which didn't finish finding any real stability until after LBJ got JFK's Tax Cuts passed.
Will they ? Won't be easy when folks can still make the same money or close to it by staying home and collecting benefits. Including the new Child Care Tax Credit. Which btw, will put additional pressure on housing prices. Unemployment actually crept up from May to June from 5.8% to 5.9.
Care to take a stab at my other questions ?
Eric Stoner
07-27-2021, 07:47 AM
The main reason for the increase in housing cost, is supply is down. There was a dramatic decline in new construction 2nd qtr 2020.
https://assets.bwbx.io/images/users/iqjWHBFdfxIU/i4VCs8_7_eWU/v2/pidjEfPlU1QWZop3vfGKsrX.ke8XuWirGYh1PKgEw44kE/977x-1.png
As you said, housing supplies cannot rise easily, so it's going to take time to make up for the drop in new construction during the pandemic. There's no easy or quick fix. Raising interest rates could potentially bring the price of houses down, but it would increase the amount of interest home buyers would have to pay on their mortgage, so either way, it's going to be more costly to buy a house if you're going to finance it.
And what about the effect of all the extra money on housing prices ? Every analyst I have seen has said that home prices are inflated , in part , because of loose Fed policy AND Federal handouts. Demand exceeding supply is certainly a big part of it but it is not the whole story.
eagle2
07-27-2021, 03:53 PM
I think your problem is that you're focusing too much on the money supply and interest rates, rather than the supply problem. If there are 1/2 million Americans who want to buy a house and/or a car, but aren't able to, what difference does it make if the reason why, is because the price is too high or the interest rate is too high? The only practical solution to the high price of houses and vehicles, is too build more houses and vehicles. If we were at full employment, then it would make sense to raise interest rates and/or decrease the money supply, but we currently have a lot of excess capacity in the economy. The unemployment rate is close to 6%. Building more houses and cars would both help solve the supply problem we're having, and the unemployment problem.
Eric Stoner
07-28-2021, 07:54 AM
I think your problem is that you're focusing too much on the money supply and interest rates, rather than the supply problem. If there are 1/2 million Americans who want to buy a house and/or a car, but aren't able to, what difference does it make if the reason why, is because the price is too high or the interest rate is too high? The only practical solution to the high price of houses and vehicles, is too build more houses and vehicles. If we were at full employment, then it would make sense to raise interest rates and/or decrease the money supply, but we currently have a lot of excess capacity in the economy. The unemployment rate is close to 6%. Building more houses and cars would both help solve the supply problem we're having, and the unemployment problem.
My "problem " ? And in another thread you accused me of being condescending ?
Why have home prices gone up so much, so fast ? In Florida it is clearly from increased demand generated by an influx of people leaving high tax Blue states. And excess money printed by the Fed available at artificially low interest rates is definitely having an effect on demand. Btw, as I noted previously , lumber prices have been going down. Hopefully housing starts will start going up. It would also help if employers could fill all their openings. It's not just the skilled trades but truck drivers to get materials and equipment to job sites ; warehouse workers ; sawmill workers etc. etc.
We could be and should at or near full employment. I join in arguing that we are not because the incentives have been skewed by government policy. If people can make the same money by staying home than they could by working, why would they get a job ? Or collect the benefits and work somewhere off the books ? Depending on who is doing the measuring and counting we have anywhere from 4 to 6 million jobs that are currently unfilled. We are 25% short on truck drivers alone. Many restaurants remain half open because they just don't have the staff. Something I have personally experienced several times in New Jersey and New York. I had to wait for a table while the restaurant was HALF full ! Both states have extended unemployment benefits. Florida opted out and the restaurants are packed and running at full capacity.
eagle2
07-28-2021, 12:05 PM
Okay. Perhaps I could have worded it better, but raising interest rates and tightening the money supply isn't going to solve the problem for people who want to buy a house, but are currently unable to do so. Who said Florida restaurants are operating at full capacity?
https://abc-7.com/news/2021/07/09/several-industries-struggle-to-get-employees-back-to-work/
Eric Stoner
07-28-2021, 12:37 PM
Okay. Perhaps I could have worded it better, but raising interest rates and tightening the money supply isn't going to solve the problem for people who want to buy a house, but are currently unable to do so. Who said Florida restaurants are operating at full capacity?
https://abc-7.com/news/2021/07/09/several-industries-struggle-to-get-employees-back-to-work/
I was focused on inflation caused in part by the ballooning of the money supply. Which btw can be brought back to sanity without raising rates. In fact I have long argued that the Fed should let the markets set rates.
The Florida restaurants I was in (from SoBe up to Delray ) were all packed and fully staffed.
The N.J. and N.Y. restaurants I referenced are all known for great , not good, GREAT tips so why don't you take a whack at why they are still short -staffed ?
eagle2
07-28-2021, 12:55 PM
According to the article, a lot of restaurants in Florida are short of staff.
Eric Stoner
07-29-2021, 09:00 AM
YOUR article looked at two towns both on the Gulf Coast. I was talking about Dade and Broward Counties on the Atlantic Coast. And several well known and popular restaurants in Manhattan and on the Jersey Shore.
In Florida, DeSantis cut off the enhanced Unemployment benefit two months early. With a resultant drop in unemployment.
eagle2
07-29-2021, 12:38 PM
Why are there 25 states with lower unemployment than Florida? Why are Florida restaurants on the Gulf Coast having trouble finding staff?
Eric Stoner
08-02-2021, 09:41 AM
The unemployment rate is a lagging indicator. Let's see where Florida ranks a few months from now.
According to the BLS Florida had the largest job gains of any state for June ,2021 - 81,300.
The following states all have extended unemployment incentives NOT to work and all have unemployment rates higher than Florida : California, Illinois , Connecticut , N.Y. , N.J., Arizona, Nevada and Pennsylvania.
Florida's economy is heavily dependent on tourism which is still getting up off the floor after the Covid lockdowns.
I had my own observations from three recent trips to So Fla. I did not visit the Gulf Coast and do not know why employers ( according to you ) are having trouble finding employees.
eagle2
08-02-2021, 10:03 AM
Adjusted for population, AZ and NV had larger job gains than Florida.
Eric Stoner
08-02-2021, 11:43 AM
Adjusted for population, AZ and NV had larger job gains than Florida.
Nevada's unemployment rate is 7.8 %. One of the highest in the country. Arizona's is 6.8 %. Florida's is 5%.
All 3 have comparable labor force participation rates ( 77.5 , 74.3 and 75.6 % ) but the BLS only counts people between the ages of 20 and 64. Florida has a LOT of people over age 64 working at least part time. To get max Social Security benefits you have to wait until at least age 68 and you get the most by retiring at age 70.
eagle2
08-02-2021, 10:24 PM
Which measurement are you going to go by? When you talked about Florida's unemployment rate, I mentioned it is higher than 25 other states, and you switched to talking about job creation in FL. When I pointed out that AZ and NV created more jobs than FL, when adjusted for population size, you then go back to unemployment.
By practically every measurement, the US economy is doing great. We've now had two consecutive quarters where GDP growth exceeded 6%. Over 800,000 jobs were created in June. Wages increased at a rate of more than 10% for three months in row. Do you really think the economy would be doing better if interest rates were higher and government wasn't giving out stimulus checks?
Eric Stoner
08-03-2021, 09:09 AM
Which measurement are you going to go by? When you talked about Florida's unemployment rate, I mentioned it is higher than 25 other states, and you switched to talking about job creation in FL. When I pointed out that AZ and NV created more jobs than FL, when adjusted for population size, you then go back to unemployment.
By practically every measurement, the US economy is doing great. We've now had two consecutive quarters where GDP growth exceeded 6%. Over 800,000 jobs were created in June. Wages increased at a rate of more than 10% for three months in row. Do you really think the economy would be doing better if interest rates were higher and government wasn't giving out stimulus checks?
Yes I do.
eagle2
08-03-2021, 10:33 AM
It's been decades since we've had 2 consecutive quarters of GDP growth exceeding 6%, so I think that's unlikely. Also, the last time the Fed increased the money supply, your prediction of inflation turned out to be wrong.
From 2009:
The Fed and the Treasury are two totally different things. The Treasury collects and doles out Federal Government funds. The Fed prints the money; holds accounts for major banks; lends those banks money; buys and sells U.S. Government bonds and other securities.
We are not experiencing hyperinflation ( 100 % ; 50 % or even 20% ) and inflation has not struck. Yet. But if you add up all the money that has been printed and borrowed in the last year, there is an inflation piper that MUST be paid somewhere down the line. Inflation is caused by too much money chasing too few goods. The Fed is creating the money and industry is not creating the goods.
The inflation that you predicted never materialized. I think you have money confused with demand. Inflation is caused by too much demand chasing too few goods. It doesn't matter how much the Fed increases the money supply. If consumers aren't buying, prices won't increase. This isn't hypothetical. It's exactly what happened in 2009 - 2010.
Eric Stoner
08-03-2021, 11:26 AM
It's been decades since we've had 2 consecutive quarters of GDP growth exceeding 6%, so I think that's unlikely. Also, the last time the Fed increased the money supply, your prediction of inflation turned out to be wrong.
From 2009:
The inflation that you predicted never materialized. I think you have money confused with demand. Inflation is caused by too much demand chasing too few goods. It doesn't matter how much the Fed increases the money supply. If consumers aren't buying, prices won't increase. This isn't hypothetical. It's exactly what happened in 2009 - 2010.
True BUT you ignore productivity increases despite the sluggish growth. And the deficits while large then are but a fraction of what they are now. More importantly the asset purchases by the Fed THEN are a small fraction of what they are doing now.
We will see. At present the Fed and the Government are acting like someone who took on a big mortgage , a luxury car loan, financed a cabin cruiser and is maxing out on all their credit cards. Yes, for a while there will be a lot of spending and consumption. There will be money put into the economy. Until the bills start coming due and a huge chunk of the monthly budget goes just to pay interest on the debt that was accumulated. I have looked at the out year numbers and they are not pretty. We do NOT ( as some silly folks say ) owe the money to ourselves but to China , other sovereign wealth funds and large institutions.
Of course there is a key difference between our hypothetical spendthrift and the Federal government. The consumer cannot print his own money.
You also ignore the effects of Anticipatory Inflation. That is wage and price increases based not on supply and demand but on expectations that inflation will continue and/or increase.
eagle2
08-04-2021, 01:28 AM
True BUT you ignore productivity increases despite the sluggish growth. And the deficits while large then are but a fraction of what they are now. More importantly the asset purchases by the Fed THEN are a small fraction of what they are doing now.
We will see. At present the Fed and the Government are acting like someone who took on a big mortgage , a luxury car loan, financed a cabin cruiser and is maxing out on all their credit cards. Yes, for a while there will be a lot of spending and consumption. There will be money put into the economy. Until the bills start coming due and a huge chunk of the monthly budget goes just to pay interest on the debt that was accumulated. I have looked at the out year numbers and they are not pretty. We do NOT ( as some silly folks say ) owe the money to ourselves but to China , other sovereign wealth funds and large institutions.
Of course there is a key difference between our hypothetical spendthrift and the Federal government. The consumer cannot print his own money.
You also ignore the effects of Anticipatory Inflation. That is wage and price increases based not on supply and demand but on expectations that inflation will continue and/or increase.
The deficits for 2020 and 2021 are exceptionally large because of the pandemic and the stimulus, which is temporary. The budget deficit is projected to fall to $800 billion by 2023.
Wages and prices are always based on supply and demand, except in cases where there are laws regulating them, such as minimum wage laws or contracts. In most cases, businesses are going to price their products at the highest possible price their customers are willing to pay for the quantity they hope to sell, regardless of whether or not they anticipate inflation. For example, if Ford is producing and selling one million pickup trucks a year, and they determine that they can increase the price of their pickup trucks by $5,000, and still sell one million of them, they will most likely increase the price. If they determine that increasing the price of their trucks by $5,000 will result in decreasing the number of trucks sold by 400,000, then they most likely won't increase the price by that much. If there are issues that result in Ford not being able to produce one million trucks, such as supply chain issues, or plants being temporarily shut down because of a pandemic, and they're only able to produce 600,000 trucks instead of one million, then they would be more likely to increase the price by $5,000, if they determine they could sell all of the trucks they produce at that price.
Eric Stoner
08-04-2021, 07:55 AM
The deficits for 2020 and 2021 are exceptionally large because of the pandemic and the stimulus, which is temporary. The budget deficit is projected to fall to $800 billion by 2023.
Wages and prices are always based on supply and demand, except in cases where there are laws regulating them, such as minimum wage laws or contracts. In most cases, businesses are going to price their products at the highest possible price their customers are willing to pay for the quantity they hope to sell, regardless of whether or not they anticipate inflation. For example, if Ford is producing and selling one million pickup trucks a year, and they determine that they can increase the price of their pickup trucks by $5,000, and still sell one million of them, they will most likely increase the price. If they determine that increasing the price of their trucks by $5,000 will result in decreasing the number of trucks sold by 400,000, then they most likely won't increase the price by that much. If there are issues that result in Ford not being able to produce one million trucks, such as supply chain issues, or plants being temporarily shut down because of a pandemic, and they're only able to produce 600,000 trucks instead of one million, then they would be more likely to increase the price by $5,000, if they determine they could sell all of the trucks they produce at that price.
This is getting us nowhere. You think that supply and demand are the only forces at play. I think that the macroeconomics are more nuanced. Time will tell.
I hope you are right about the out year deficits but I am convinced that it will not play out that way. I would love to be wrong but I have looked at past Congressional behavior. Even under Gramm-Rudman we did not see real budget cuts. Just reductions in the rate of increase in spending. At one point the increases in spending were overtaken by revenue increases so that we had surpluses in Clinton's second term. At the risk of seeming to personalize ( not intended Eagle ) -If you want to bet your money on the projected anything and/or the use of "dynamic scoring " be my guest. I expect the Congress to use current spending as a baseline and add on to it. Even if the Republicans take over in 2022. We do not have a strong President to rein in the excesses and we are stuck with a soft, dovish Fed. History has shown that the last thing Congress worries about is inflation. They love paying off past debts with devalued dollars. THAT was the point of the original post and topic of this thread. Where are interest rates likely to go and what if anything can investors and consumers do to protect themselves as much as possible ? If Treasury rates increase just a point or two then the share of the budget needed to pay interest on the National Debt will also increase. For FY 2021 we are paying about $378 billion in interest on the Debt. That is with ridiculously low interest rates. But the Infrastructure Bill AND the Democrat Wish List aka Stimulus Bill will add trillions, not billions but trillions to the existing National Debt.
Rather than risk a "political" squabble , suffice to say that we will have to agree to disagree on the depth of the pandemic caused economic slowdown and the efficacy of the various stimulus programs. I look at the history of such programs and have argued that they do not work. You are free to take an opposing view. Another thing we will have to agree to disagree about.
eagle2
08-04-2021, 11:40 AM
Government spending decreased dramatically from 2010 - 2014. That's why the recovery was so slow.
https://tradingeconomics.com/united-states/government-spending
https://i.imgur.com/fO8vYrM.jpg
Eric Stoner
08-05-2021, 07:46 AM
Federal spending for the years 2010 - 2014 was:
2010 - 3.55 trillion
2011- 3.83 trillion
2012- 3.53 trillion
2013- 3.5 trillion
2014-3.5 trillion
Those numbers represent what was actually spent. Not just what was budgeted.
You think the sluggish growth of those years was because of "dramatic decreases " in Federal spending. I have taken a different view. Please, let's not rehash it. You have pulled out the numbers that you like and I have presented different numbers. You want the government to micromanage the economy and spend money it does not have. I prefer that it get out of the way of free market capitalism and that it stay within its means. We have argued the whys and wherefores too many times to count. Again, we will have to agree to disagree.
eagle2
08-05-2021, 10:52 AM
You're dishonestly misrepresenting my position. I don't want the government to micromanage the economy.
Your figures support what I said, and so do the facts. From 2011 to 2014, govt spending decreased by more than $300 billion. Considering discretionary spending is approximately 1/3 of govt spending, that's very significant. From 2009 - 2014 GDP growth averaged less than 3%, with some years below 2%. In 2019, govt spending was $4.4 trillion. In 2020 govt spending increased to $6.5 trillion and projected spending for 2021 is $6.8 trillion. GDP growth was 6.4% 1st qtr 2021 and 6.5% 2nd quarter. We had much stronger GDP growth when govt increased spending by $2 trillion than we did when govt spending decreased by over $300 billion. Government stimulus spending works. The facts prove it.
eagle2
08-06-2021, 02:00 PM
Eric,
943 thousand jobs added in July. Are you going to admit you're wrong?
Eric Stoner
08-09-2021, 07:42 AM
No. Not on one month's figures.
We will see.
Unless I am mistaken , you seem to like the classic Keynesian focus on demand. Government spending is good because it stimulates and increases demand for good and services. I admittedly take a more Free Market view with an eye on supply. Thus we'll have to agree to disagree. Your approach has been tried. Under Obama we had "Cash for Clunkers " , "Dollars for Dishwashers" , SOLYNDRA ! , INFRASTRUCTURE spending among a host of smaller government spending programs and incentives. We did not have a single year of economic growth greater than 2%. We had a few good quarters of solid growth but it always petered out into stagnation. I haven't even touched Biden's energy policies which are most certainly micromanaging and which I assume you approve of.
Likewise, the free and easy money policies of the Fed focus far more on demand than supply. Inter alia it is feeding spending that some consumers could not otherwise afford .
Biden has admittedly taken action which he has acknowledged is Unconstitutional by extending the moratorium on evictions. We have millions of tenants who haven't paid a dime of rent in well over a year. Meanwhile the landlords still have to provide heat, hot water, electricity , pay the supers and pay property and other taxes and charges. Who, WHO ? in their right mind would want to be a landlord today ? Who can see any incentive to provide affordable housing ? I live in NYC and we saw this movie before. In the late 60's and into the 70's we had energy costs and local taxes go up and up while rents were stabilized and controlled. What happened ? Repairs didn't get done. Energy costs kept going up and some landlords couldn't afford the heating bills. Rents didn't get paid. Evictions took many months and even years. Tax arrears built up, so much so that at one point the City of New York was the largest holder of private apartment buildings in the city. Developers stopped building rental apartments and switched to condos. They bought SRO's and turned them into condos and converted as many rental buildings as possible. The end result was a lot of housing the middle and working classes could not afford and an explosion in the number of homeless.
eagle2
08-09-2021, 05:52 PM
No. Not on one month's figures.
We will see.
It's not just one month. Over 800,000 jobs were created in June and over 1/2 million were created in May. From 2017 - 2019, the economy was averaging less than 200,000 jobs created a month.
Unless I am mistaken , you seem to like the classic Keynesian focus on demand. Government spending is good because it stimulates and increases demand for good and services. I admittedly take a more Free Market view with an eye on supply. Thus we'll have to agree to disagree. Your approach has been tried. Under Obama we had "Cash for Clunkers " , "Dollars for Dishwashers" , SOLYNDRA ! , INFRASTRUCTURE spending among a host of smaller government spending and incentives. We did not have a single year of economic growth greater than 2%. We had a few good quarters of solid growth but it always petered out into stagnation. I haven't even touched Biden's energy policies which are most certainly micromanaging and which I assume you approve of.
We did. GDP growth was 2.56% in 2010. The first quarter of 2009, GDP contracted by 4.6%. The $800 billion stimulus went into effect 2nd quarter. By 4th qtr, GDP growth reached 4.3%. That's an increase of close to 9%. The stimulus clearly worked. From 2011 - 2014, govt spending declined by $300 billion, according to your figures. GDP growth fluctuated between 1.5% and 2.5% during those years. From 2019 to 2021, government spending increased by more than $2 trillion and GDP growth went to over 6% for first two quarters of 2021. The evidence is very clear that government spending stimulates the economy and increases economic and job growth. If you look at the economy over the past 90 years, there has consistently been increased economic growth when govt spending increased. FDR increased govt spending on public works programs from 1933 - 1936, and there was strong economic and job growth. In 1937, FDR cut spending, and the economic growth slowed and the economy went into recession. In 1940, govt increased spending again to build up the military, and economic and job growth increased dramatically. In the 1960s, LBJ greatly increased govt spending on social programs and the military, for the Vietnam War, and we saw strong economic growth again.
No, Biden is not micromanaging energy. Oil and natural gas companies are free to drill on any govt land they have permits for, or any private land they own or lease. Only 5 percent of domestic crude oil comes from land owned by the federal govt. Micromanaging the economy is what they do or did in communist countries, where the govt tells factories what goods to produce, how many to produce, and what price to sell them for. That is not something I am even remotely close to being in favor of.
Likewise, the free and easy money policies of the Fed focus far more on demand than supply. Inter alia it is feeding spending that some consumers could not otherwise afford .
No, lower interest rates makes goods and services more affordable for consumers who buy products on credit.
Biden has admittedly taken action which he has acknowledged is Unconstitutional by extending the moratorium on evictions. We have millions of tenants who haven't paid a dime of rent in well over a year. Meanwhile the landlords still have to provide heat, hot water, electricity , pay the supers and pay property and other taxes and charges. Who, WHO ? in their right mind would want to be landlord today ? Who can see any incentive to provide affordable housing ? I live in NYC and we saw this movie before. In the late 60's and into the 70's we had energy costs and local taxes go up and up while rents were stabilized and controlled. What happened ? Repairs didn't get done. Energy costs kept going up and some landlords couldn't afford the heating bills. Rents didn't get paid. Evictions took many months and even years. Tax arrears built up, so much so that at one point the City of New York was the largest holder of private apartment buildings in the city. Developers stopped building rental apartments and witched to condos. They bought SRO's and turned them into condos and converted as many rental buildings as possible. The end result was a lot of housing the middle and working classes could not afford and an explosion in the number of homeless.
The moratorium on evictions isn't fiscal policy. Its intent was to prevent more people from becoming homeless in the midst of a pandemic.
Eric Stoner
08-10-2021, 08:12 AM
It's not just one month. Over 800,000 jobs were created in June and over 1/2 million were created in May. From 2017 - 2019, the economy was averaging less than 200,000 jobs created a month.
We did. GDP growth was 2.56% in 2010. The first quarter of 2009, GDP contracted by 4.6%. The $800 billion stimulus went into effect 2nd quarter. By 4th qtr, GDP growth reached 4.3%. That's an increase of close to 9%. The stimulus clearly worked. From 2011 - 2014, govt spending declined by $300 billion, according to your figures. GDP growth fluctuated between 1.5% and 2.5% during those years. From 2019 to 2021, government spending increased by more than $2 trillion and GDP growth went to over 6% for first two quarters of 2021. The evidence is very clear that government spending stimulates the economy and increases economic and job growth. If you look at the economy over the past 90 years, there has consistently been increased economic growth when govt spending increased. FDR increased govt spending on public works programs from 1933 - 1936, and there was strong economic and job growth. In 1937, FDR cut spending, and the economic growth slowed and the economy went into recession. In 1940, govt increased spending again to build up the military, and economic and job growth increased dramatically. In the 1960s, LBJ greatly increased govt spending on social programs and the military, for the Vietnam War, and we saw strong economic growth again.
No, Biden is not micromanaging energy. Oil and natural gas companies are free to drill on any govt land they have permits for, or any private land they own or lease. Only 5 percent of domestic crude oil comes from land owned by the federal govt. Micromanaging the economy is what they do or did in communist countries, where the govt tells factories what goods to produce, how many to produce, and what price to sell them for. That is not something I am even remotely close to being in favor of.
No, lower interest rates makes goods and services more affordable for consumers who buy products on credit.
The moratorium on evictions isn't fiscal policy. Its intent was to prevent more people from becoming homeless in the midst of a pandemic.
I don't want to get into a political argument. Obama's 8 years were marked by sluggish growth and relatively high unemployment. Until Covid hit the economy was humming along despite Trump's trade wars with modest growth and low unemployment.
You are partially correct about FDR. As I have noted on this board many times, he did cut spending in 1937. And his tax INCREASES from 1936 also took effect. And we got a deep recession in 1937 and 1938.
Johnson increased spending but he also cut taxes and we got an economic boom until he raised taxes and then Nixon and the Fed completed the process of giving us stagflation.
The moratorium on evictions is probably well intentioned although Cori Bush seems to think everyone, including her, should live rent free. The problem is that it has lasted too long and is already having a disastrous impact on rental housing. I call it micromanaging. Along with Biden's energy mandates , mileage requirements , electric car subsidies and a host of other things.
The low interest rates from the Fed are affecting demand. You just agreed that it is so. If some of those borrowers are doing adjustable rate mortgages or otherwise do not have sterling credit ratings there is a good chance of defaults and foreclosures further on down the line.
eagle2
08-10-2021, 08:56 AM
I don't want to get into a political argument. Obama's 8 years were marked by sluggish growth and relatively high unemployment. Until Covid hiot the economy was humming along despite Trump's trade wars with modest growth and low unemployment.
GDP growth was about the same under Obama as it was during Trump's first 3 years. Annual job creation was higher during Obama's 2nd term than it was during Trump's first 3 years. Unemployment was at around 4.5% when Obama left office, which is not relatively high.
US GDP growth 2012 - present:
https://tradingeconomics.com/united-states/gdp-growth-annual
https://i.imgur.com/a7PHAh3.jpg
Eric Stoner
08-10-2021, 11:02 AM
Fine. We've batted the numbers back and forth too many times to count.
eagle2
08-10-2021, 11:46 PM
Because you're never willing to acknowledge facts you don't like. There is no way that you could look at that graph and come to the conclusion that there was stronger economic growth from 2017 - 2019, than there was from 2013 - 2016. You just don't want to acknowledge that economic growth before tax cuts and deregulation, was similar to economic growth after these policies went into effect.
Eric Stoner
08-11-2021, 07:59 AM
Because you're never willing to acknowledge facts you don't like. There is no way that you could look at that graph and come to the conclusion that there was stronger economic growth from 2017 - 2019, than there was from 2013 - 2016. You just don't want to acknowledge that economic growth before tax cuts and deregulation, was similar to economic growth after these policies went into effect.
Rotflmao. Look who's talking. You acknowledge FDR's spending cuts in 1937 but never mention his tax increases which gave us a recession in 1937 and 1938. You praise LBJ for his massive spending yet never acknowledge his getting JFK's tax cuts passed. Or Clinton's capital gains tax cuts. Or Reagan's which almost doubled federal revenue.
I have laid out the case several times that the Great Depression was CAUSED by government policies. Not the stock market bubble and crash. Not the Dust Bowl. But by The Federal Reserve, Smoot -Hawley and first Hoover's and then FDR's tax increases. The alphabet soup of federal programs did not work. W.W. II ended the depression. It's all there in the history books.
You're like the American Socialists who say they want us to be more like the Scandinavian countries but never acknowledge that all of them are pro business.
Why do you think high earners are leaving N.Y. , N.J. , Illinois and California in droves and relocating to Florida, Texas , Nevada and Idaho ? N.Y. has lost another congressional seat ( it used to have the most ) while Florida has gained one and Texas two. Just in my lifetime N.Y has gone from 41 seats to 27, soon to be 26. Michigan 19 seats to 14. Illinois 25 to 18. N.J. 14 to 12. In contrast Florida has gone from 8 to 28 , soon to be 29. California went from 30 to 53 but they are losing a seat for the first time in history. In my lifetime, California and N.J. have gone from low tax states to two of the highest in the country. I can't think of a single high tax state that has gained population. Certainly not in relative terms.
It's simple. You have your philosophy and I have mine. You think government is good , the more the better and tax the rich until they squeal and then tax them some more. I obviously have different views and focus on things that I think are more important.
We'll just have to agree to disagree.
Btw, I now have the Nobel Prize winning economist Paul Krugman on my side. I know. Larry Summers was one thing but Krugie ? He has said that Biden's spending is out of control and misguided. And that the Fed is buying too many bonds and other assets giving it a balance sheet way out of whack. I know. I can't believe it either.
eagle2
08-11-2021, 02:48 PM
Rotflmao. Look who's talking. You acknowledge FDR's spending cuts in 1937 but never mention his tax increases which gave us a recession in 1937 and 1938. You praise LBJ for his massive spending yet never acknowledge his getting JFK's tax cuts passed. Or Clinton's capital gains tax cuts. Or Reagan's which almost doubled federal revenue.
When government spending was increased in 1939, strong economic growth resumed without tax cuts. Taxes were increased multiple times from 1940 - 1945, and strong economic growth continued.
LBJ temporarily raised taxes in 1968 and 1969, and strong economic growth continued. There was already strong economy growth when Clinton's capital gains tax was passed. There was stronger economic growth in the 4 years before Clinton's tax cuts than in the 4 years after them. George W Bush also cut the capital gains tax, as well as income tax, and there was no significant increase in economic growth in the following years.
Reagan's tax cuts didn't almost double federal revenue, or anything close to that. His tax cuts decreased revenue so much, that they were scaled back after going into effect.
I have laid out the case several times that the Great Depression was CAUSED by government policies. Not the stock market bubble and crash. Not the Dust Bowl. But by The Federal Reserve, Smoot -Hawley and first Hoover's and then FDR's tax increases. The alphabet soup of federal programs did not work. W.W. II ended the depression. It's all there in the history books.
GDP growth was 10.8% in 1934, 8.9% in 1935, and 12.9% in 1936. Yes, government stimulus spending did work. It's all there in the history books.
You're like the American Socialists who say they want us to be more like the Scandinavian countries but never acknowledge that all of them are pro business.
Once again you are dishonestly misrepresenting my views. I never said anything remotely close to this. This is your problem. You argue against everything except what I actually post. The only thing I've stated, is the fact that increased government spending results in increased economic growth. That is a fact. You don't like this fact, so you're not willing to acknowledge it.
Why do you think high earners are leaving N.Y. , N.J. , Illinois and California in droves and relocating to Florida, Texas , Nevada and Idaho ? N.Y. has lost another congressional seat ( it used to have the most ) while Florida has gained one and Texas two. Just in my lifetime N.Y has gone from 41 seats to 27, soon to be 26. Michigan 19 seats to 14. Illinois 25 to 18. N.J. 14 to 12. In contrast Florida has gone from 8 to 28 , soon to be 29. California went from 30 to 53 but they are losing a seat for the first time in history. In my lifetime, California and N.J. have gone from low tax states to two of the highest in the country. I can't think of a single high tax state that has gained population. Certainly not in relative terms.
It's simple. You have your philosophy and I have mine. You think government is good , the more the better and tax the rich until they squeal and then tax them some more. I obviously have different views and focus on things that I think are more important.
Again you're dishonestly misrepresent my position. I never said, "the more the better and tax the rich until they squeal and then tax them some more," or anything remotely close to this. In some cases it makes sense to increase government spending, in other cases it doesn't. My position on taxes, is that taxes should cover government spending, except in economic downturns, where govt should increase spending to stimulate the economy. You're dishonestly trying to portray me as a socialist or communist, when my views aren't remotely close to either.
You're entitled to your own philosophy, but not your own facts. You don't seem willing to accept facts that contradict your philosophy. That is why we argue endlessly. You don't want to acknowledge that government spending stimulates growth, or that tax cuts don't always improve the economy.
So far you have refused to acknowledge these facts:
The 2009 stimulus did significantly improve economic growth. Again, we went from GDP declining 4.6% first qtr 2009, to GDP increasing to over 4% by 4th qtr.
Government decreased spending by $300 billion from 2011 - 2014, which is why GDP growth was slow during those years.
There was little difference in GDP growth during Obama's 2nd term and Trump's first three years.
Dramatic increases in spending in 2020 and 2021 resulted in dramatic increases in economic growth and job growth in 2021.
We'll just have to agree to disagree.
Yes, we can agree to disagree on the policies or philosophy we prefer, but not on the facts. There is only one set of facts for everyone.
Btw, I now have the Nobel Prize winning economist Paul Krugman on my side. I know. Larry Summers was one thing but Krugie ? He has said that Biden's spending is out of control and misguided. And that the Fed is buying too many bonds and other assets giving it a balance sheet way out of whack. I know. I can't believe it either.
It doesn't matter what anyone says. What matters are the facts. We've had two consecutive quarters of GDP growth rate over 6%, along with more than 2 million jobs created in the past three months. Those numbers are good by any standard. You're entitled to disagree with the policies, but you can't deny that GDP growth rate > 6% for 2 quarters and over 2 million jobs created in 3 months are great results.
Eric Stoner
08-12-2021, 07:36 AM
Eagle , we have been doing this for YEARS ! You trot out your facts and figures and I respond with numbers that you don't like. Sometimes you even question their validity and then I point you to the source like the BLS and tell you to argue with them.
I could respond and rebut the above point by point. Anyone genuinely interested can look up the GDP numbers plus government revenue and spending numbers for themselves.
Btw, I did NOT call you a Socialist. I said you reminded me of American Socialists.
You are in favor of government spending and think it is good for the economy. I take a contrary view. You cite numbers to support your position. I come up with numbers ( usually involving tax cuts ) that you left out.
You say that we should have tax rates that pay for government spending. Do you have any idea how much taxes would have to be raised to cover just a portion of the trillions in spending passed and proposed by the current Congress ?
Yes, FDR increased taxes during W.W. II. We were at war ! We had growth because we had full employment. Most of the war was financed not by taxes but by bonds. Billions and billions of borrowing. Look up the numbers for those years for deficit as a % of GDP and Federal debt as a % of GDP.
I have posted the numbers numerous times that show that as a result of Reagan's tax cuts Federal revenue almost doubled by 1989. Every time we cut tax rates revenues go up. Economic growth results in higher revenues .Even Obama acknowledged that Clinton's capital gains tax cuts resulted in increased revenue.
I think you and I can agree that we had a good economy in Clinton's second term. Do you know who his closet economic advisor was ? The guy who voted for him twice ? Arthur Laffer.
Eric Stoner
08-12-2021, 10:48 AM
Eric,
943 thousand jobs added in July. Are you going to admit you're wrong?
If the economy is doing so well than WHY do we need such enormous Federal spending to "stimulate" ?
eagle2
08-12-2021, 12:22 PM
If the economy is doing so well than WHY do we need such enormous Federal spending to "stimulate" ?
We needed federal stimulus spending because the economy wasn't doing well in 2020 and early 2021. The economy is doing well now because of the massive increase in federal spending.
By the way, the price of lumber is way down.
https://fortune.com/2021/07/07/lumber-prices-2021-chart-update-july-price-of-lumber-falling-wood-costs/
The laws of supply and demand are still working. What is your explanation for this, since you believe too many dollars chasing too few goods always results in inflation? Do you think it's possible that you're wrong again, just like you were ten years ago, when you insisted Bernanke's fiscal policies of increasing the money supply, lowering interest rates, and weakening the dollar would lead to high inflation?
eagle2
08-15-2021, 11:46 PM
Eagle , we have been doing this for YEARS ! You trot out your facts and figures and I respond with numbers that you don't like. Sometimes you even question their validity and then I point you to the source like the BLS and tell you to argue with them.
You don't respond with numbers or references most of the time.
You are in favor of government spending and think it is good for the economy. I take a contrary view. You cite numbers to support your position. I come up with numbers ( usually involving tax cuts ) that you left out.
It's not a matter of opinion that government spending increases economic growth. It's a fact. You don't have a basic understanding of supply and demand. Government spending increases demand. You want to attribute economic growth to tax cuts, but we had massive economic growth from 1933 - 1937 and from 1939 - 1945 without tax cuts. Taxes were significantly increased during that time period.
You say that we should have tax rates that pay for government spending. Do you have any idea how much taxes would have to be raised to cover just a portion of the trillions in spending passed and proposed by the current Congress ?
I said taxes should cover govt spending, except during an economic downturn, like the one we've just been through. In the 1950s and 60s, we managed to build our national highway system, build modern airports in all our major cities, send a man to the moon, pay off our debt from World War 2, fight a war in Asia, and cover medical care for our seniors and poor people; and we did all of this without running up massive amounts of debt. Now we're unable to maintain what we built in the 1950s and 60s, and we're running up massive amounts of debt. Taxes were cut in the 1960s because we had paid off the debt from World War 2, and govt could afford to lower tax rates. Reagan, W Bush, and Trump cut taxes without finding a way to pay for it, and we ended up with massive increases in deficits and debt.
Yes, FDR increased taxes during W.W. II. We were at war ! We had growth because we had full employment. Most of the war was financed not by taxes but by bonds. Billions and billions of borrowing. Look up the numbers for those years for deficit as a % of GDP and Federal debt as a % of GDP.
How do you think we got to full employment? It obviously came from massive govt spending. The war was financed by taxes and bonds. The top tax rate was raised to 94%. It's true that we did run up a significant amount of debt during World War 2, but the debt was paid off in the following decades, because taxes were kept at a reasonable rate. Now we just continue to increase our debt.
I have posted the numbers numerous times that show that as a result of Reagan's tax cuts Federal revenue almost doubled by 1989. Every time we cut tax rates revenues go up. Economic growth results in higher revenues .Even Obama acknowledged that Clinton's capital gains tax cuts resulted in increased revenue.
You did not post the numbers numerous times because tax revenue didn't almost double by 1989. Also, I'm sure that whoever your source was, dishonestly went by current dollars, instead of adjusting for inflation. Adjusted for inflation, tax revenue increased approximately 19% from 1981 - 1989. During the same time period before Reagan took office, (1972 - 1980), tax revenue increased approximately 37%. Source:
https://www.taxpolicycenter.org/statistics/federal-receipt-and-outlay-summary
(See tax receipts in constant fiscal yr 2012 dollars)
Do you still think Reagan's tax cuts increased revenue?
I think you and I can agree that we had a good economy in Clinton's second term. Do you know who his closet economic advisor was ? The guy who voted for him twice ? Arthur Laffer.
No, his closest advisor was Secretary of the Treasury, Robert Rubin, who advised Clinton to raise taxes to decrease the deficit and lower interest rates. The people who shared your views, insisted this would cause a recession. Instead we had strong economic growth and ended up with a budget surplus. We had a good economy before Clinton cut the capital gains tax. The economy was already growing at over 4% and the deficit had decreased to the point where we had a balanced budget.
Eric Stoner
08-16-2021, 08:34 AM
You don't respond with numbers or references most of the time.
It's not a matter of opinion that government spending increases economic growth. It's a fact. You don't have a basic understanding of supply and demand. Government spending increases demand. You want to attribute economic growth to tax cuts, but we had massive economic growth from 1933 - 1937 and from 1939 - 1945 without tax cuts. Taxes were significantly increased during that time period.
I said taxes should cover govt spending, except during an economic downturn, like the one we've just been through. In the 1950s and 60s, we managed to build our national highway system, build modern airports in all our major cities, send a man to the moon, pay off our debt from World War 2, fight a war in Asia, and cover medical care for our seniors and poor people; and we did all of this without running up massive amounts of debt. Now we're unable to maintain what we built in the 1950s and 60s, and we're running up massive amounts of debt. Taxes were cut in the 1960s because we had paid off the debt from World War 2, and govt could afford to lower tax rates. Reagan, W Bush, and Trump cut taxes without finding a way to pay for it, and we ended up with massive increases in deficits and debt.
How do you think we got to full employment? It obviously came from massive govt spending. The war was financed by taxes and bonds. The top tax rate was raised to 94%. It's true that we did run up a significant amount of debt during World War 2, but the debt was paid off in the following decades, because taxes were kept at a reasonable rate. Now we just continue to increase our debt.
You did not post the numbers numerous times because tax revenue didn't almost double by 1989. Also, I'm sure that whoever your source was, dishonestly went by current dollars, instead of adjusting for inflation. Adjusted for inflation, tax revenue increased approximately 19% from 1981 - 1989. During the same time period before Reagan took office, (1972 - 1980), tax revenue increased approximately 37%. Source:
https://www.taxpolicycenter.org/statistics/federal-receipt-and-outlay-summary
(See tax receipts in constant fiscal yr 2012 dollars)
Do you still think Reagan's tax cuts increased revenue?
No, his closest advisor was Secretary of the Treasury, Robert Rubin, who advised Clinton to raise taxes to decrease the deficit and lower interest rates. The people who shared your views, insisted this would cause a recession. Instead we had strong economic growth and ended up with a budget surplus. We had a good economy before Clinton cut the capital gains tax. The economy was already growing at over 4% and the deficit had decreased to the point where we had a balanced budget.
Read Eagle , READ. I said his CLOSET advisor, not his closest. Both Clinton and Laffer have confirmed that they spoke numerous times about the economy in general and Capital Gains tax cuts in particular.
We got balanced budgets under Bill " The Era of Big Government is Over " Clinton thanks mostly to spending restraint under Gramm Rudman coupled with increased revenues as a result of his tax cuts.
Government does not create anything. That is the underlying fallacy of many of your arguments. It does not invest. It spends. That spending is paid for, in the main by tax receipts and borrowing. I love it when folks want to return to the days of Eisenhower, when we STARTED to build the Interstate Highway System ; started the Space Program and had a top marginal tax rate of 91%. We also had three recessions during Eisenhower's two terms in office. After he finally stopped listening to Arthur Heller ( who if you read his stuff honestly thought that government was the driver of our economy) JFK proposed across the board tax cuts reducing the top marginal rate to 70%. After LBJ got them passed we had an economic boom. Some anti-tax cutters try to say that the boom was caused solely by the Baby Boomers entering the work force. O.K. then WHERE did their jobs come from ? Somebody started the businesses or expanded the businesses that hired them. For the most part it was not government.
I have posted the numbers that show that Reagan's tax cuts increased revenues both in real and current dollars. If you don't like the numbers please take it up with the Treasury Dept. What was the Dow when Reagan took office ? About 1,000. What was it when he left ? What is it now ? About 35,000. What was the Misery Index when Reagan started and when he left office ? What is it now ? What was the Prime Rate when he took office ? And when he left ?
When Reagan left office the top marginal tax rate ( after a number of tax increases or "revenue enhancements" ) was 29%. Reagan agreed to those revenue enhancements in exchange for spending cuts. We got the increases but never the cuts. Bush the Brighter made the same lousy deal to try and reduce the deficits. We got tax increases but not the promised spending cuts and he was tossed out of office.
Eric Stoner
08-16-2021, 08:47 AM
We needed federal stimulus spending because the economy wasn't doing well in 2020 and early 2021. The economy is doing well now because of the massive increase in federal spending.
By the way, the price of lumber is way down.
https://fortune.com/2021/07/07/lumber-prices-2021-chart-update-july-price-of-lumber-falling-wood-costs/
The laws of supply and demand are still working. What is your explanation for this, since you believe too many dollars chasing too few goods always results in inflation? Do you think it's possible that you're wrong again, just like you were ten years ago, when you insisted Bernanke's fiscal policies of increasing the money supply, lowering interest rates, and weakening the dollar would lead to high inflation?
If the economy is doing well ( and arguably it is except for inflation ) then WHY are we paying people to stay home and/or work off the books instead of getting a job ?
Eagle , Eagle , please take out your dictionary and look up "Fiscal". Bernanke had ZERO, Zip, Nada to do with fiscal policy. He and the Fed controlled monetary policy. Fiscal policy is government revenue and spending policy. During Bernanke's term that was controlled by Bush the Dimmer and Obama along with the Congress.
You are right that we did not get the high inflation that I was worried about. There were numerous reasons for that starting with the fact that the big banks glommed a lot of that money to shore up their balance sheets i.e. we had low monetary velocity. The banks didn't lend. Remember when Main Street was going begging for credit ? And we saw an explosion in legal loansharking because no state limits the interest charged to a corporation ; only individuals. We also had a weak recovery. For the first time in U.S. history, the magnitude of the recovery did not match the depth of the recession.
Yes, lumber is down in price. Just about everything else is up. Have you looked at the latest inflation numbers ?
In less than a year we have gone from a net exporter of oil and gas to an importer with Biden begging OPEC to increase production. After they stop laughing what do YOU think they will do ?
eagle2
08-16-2021, 02:47 PM
Read Eagle , READ. I said his CLOSET advisor, not his closest. Both Clinton and Laffer have confirmed that they spoke numerous times about the economy in general and Capital Gains tax cuts in particular.
We got balanced budgets under Bill " The Era of Big Government is Over " Clinton thanks mostly to spending restraint under Gramm Rudman coupled with increased revenues as a result of his tax cuts.
Government does not create anything. That is the underlying fallacy of many of your arguments. It does not invest. It spends. That spending is paid for, in the main by tax receipts and borrowing. I love it when folks want to return to the days of Eisenhower, when we STARTED to build the Interstate Highway System ; started the Space Program and had a top marginal tax rate of 91%. We also had three recessions during Eisenhower's two terms in office. After he finally stopped listening to Arthur Heller ( who if you read his stuff honestly thought that government was the driver of our economy) JFK proposed across the board tax cuts reducing the top marginal rate to 70%. After LBJ got them passed we had an economic boom. Some anti-tax cutters try to say that the boom was caused solely by the Baby Boomers entering the work force. O.K. then WHERE did their jobs come from ? Somebody started the businesses or expanded the businesses that hired them. For the most part it was not government.
Now you're just making stuff up. Government does create and invest. When government builds a bridge, it creates a bridge, either directly by building it itself, or indirectly by paying contractors to do it. Without the government, the bridge wouldn't be there. Government spending on roads, bridges, airports, and scientific research is investing. Nobody said we should return to the days of Eisenhower. As I said before, taxes should cover govt spending, except during economic downturns. When Eisenhower was in office, our govt had massive debt to pay off from World War 2. It is because Eisenhower acted responsibly and paid down this debt, that we were able to cut taxes in 1964 without seeing massive increases in deficits and debt. The main reason for the boom in the 1960s was the massive increase in govt spending on the military, infrastructure, and social programs.
I have posted the numbers that show that Reagan's tax cuts increased revenues both in real and current dollars. If you don't like the numbers please take it up with the Treasury Dept. What was the Dow when Reagan took office ? About 1,000. What was it when he left ? What is it now ? About 35,000. What was the Misery Index when Reagan started and when he left office ? What is it now ? What was the Prime Rate when he took office ? And when he left ?
Will you please stop gaslighting? You do this all the time. You did not post any numbers. I did. Again, from 1972 - 1980, tax revenue increased approximately 37%. From 1981 - 1989, tax revenue increased approximately 19%. Which is greater? 19% or 37%? If you don't know which is greater, 19% or 37%, there's no point in continuing discussing this.
Reagan had nothing to do with the Prime Rate. The person responsible for bringing the Prime Rate down, after dramatically increasing it to bring down inflation, was Paul Volcker. What was the national debt when Reagan took office? What's the national debt now?
When Reagan left office the top marginal tax rate ( after a number of tax increases or "revenue enhancements" ) was 29%. Reagan agreed to those revenue enhancements in exchange for spending cuts. We got the increases but never the cuts. Bush the Brighter made the same lousy deal to try and reduce the deficits. We got tax increases but not the promised spending cuts and he was tossed out of office.
Reagan did make massive spending cuts to social programs, especially the Dept. of Housing, which led to a massive increase in homelessness.
The economy did better after Clinton raised the top rate to 39%, than it did when Reagan lowered it to 29%.
eagle2
08-16-2021, 03:02 PM
If the economy is doing well ( and arguably it is except for inflation ) then WHY are we paying people to stay home and/or work off the books instead of getting a job ?
We're not. As I said in a previous post, over 2 million jobs were added over the past 3 months. The stimulus spending was passed last year and early this year, when the economy wasn't doing as well as it is now. The stimulus is why we're seeing such strong economic growth and job growth, as well as pent up demand.
Eagle , Eagle , please take out your dictionary and look up "Fiscal". Bernanke had ZERO, Zip, Nada to do with fiscal policy. He and the Fed controlled monetary policy. Fiscal policy is government revenue and spending policy. During Bernanke's term that was controlled by Bush the Dimmer and Obama along with the Congress.
I'm sorry. I meant monetary policy.
You are right that we did not get the high inflation that I was worried about. There were numerous reasons for that starting with the fact that the big banks glommed a lot of that money to shore up their balance sheets i.e. we had low monetary velocity. The banks didn't lend. Remember when Main Street was going begging for credit ? And we saw an explosion in legal loansharking because no state limits the interest charged to a corporation ; only individuals. We also had a weak recovery. For the first time in U.S. history, the magnitude of the recovery did not match the depth of the recession.
There wasn't inflation because demand was down. Sellers can't raise the price of their products if people aren't buying. We had a weak recovery because of cuts to govt spending. As you posted earlier, from 2011 - 2014, annual govt spending decreased by $300 billion. We're seeing a strong recovery now because government spending increased by $2 trillion.
Yes, lumber is down in price. Just about everything else is up. Have you looked at the latest inflation numbers ?
In less than a year we have gone from a net exporter of oil and gas to an importer with Biden begging OPEC to increase production. After they stop laughing what do YOU think they will do ?
Inflation is up because supply is down and demand is up. The reason why gas is up is because demand has increased more than supply. We're producing more oil now than we were in December.
Eric Stoner
08-17-2021, 07:59 AM
Fine. Stick with the numbers you like. I have previously posted ( many moons ago ) the numbers that show that revenues went up after Reagan's tax increases. You didn't like them then. You don't like them now. For instance, Reagan's deficits as a % of GDP pale in comparison to Obama's and Trump's. And Biden's are off the charts.
You're a classic Keynesian and that's fine. You think that government spends better than individuals. I prefer a free market and that people keep as much of their hard earned pay and return on investment as possible. Another example is that you apparently think that Reagan's modest reductions in the increase to housing subsidies caused the homelessness of the 1980's. Instead I point to the deinstitutionalization of thousands of the mentally ill ; the crack epidemic and gentrification which included massive conversion of SRO's. We used to call them flops or flophouses .
Assuming that you are right, then where was Clinton ? or Obama ? Each had 8 years to deal with homelessness and the mentally ill. DeBlasio gave his wife almost a billion dollars to improve homelessness in NYC. Nobody knows what she did with all that money and we have more homeless now than we did in any year since Koch was Mayor. The fact is that most homeless people are mentally ill and/or have major drug and/or alcohol addiction. Yes, there are working homeless and we ought to do more to help them. Letting the private sector build more affordable housing would certainly help. But the very people who bleat the loudest about the homeless don't want affordable housing built near them. Or homeless shelters for that matter.
The economy under JFK was in the doldrums. He ran on the slogan of "Getting America moving again ". His tax cuts did that and we had a boom. Larry Kudlow's book about JFK and Reagan and their tax cut policies lays out the case far better than I can. I suggest you read it. You won't go blind or lose your hair, I promise. I've read Galbraith , Heller , Samuelson, Krugman and a bunch of other Keynsians and Socialists with no ill effects. I've also read Hayek, Milton Friedman, Laffer and Kudlow. If you haven't read them then your study of economics that you bragged on before pulling it was ahem, let's say incomplete.
As I have posted, we will see. I would rather be wrong and have you proved right because it means that the economy is doing well. I'm just not going to bet on it.
You can call it investing instead of spending. When governments build bridges they don't do it out of their own pockets. They get the money from taxes or more often by selling bonds. That money has to be paid back and before those bonds mature interest has to be paid. We have agreed in the past and can agree now that such spending has corollary benefits. Workers, suppliers and the public all benefit. Temporarily for the former two and hopefully for years for the latter except for the inevitable toll increases. You NEVER see tolls reduced. Not ever. Not by a penny. You do know that there was a time when most bridges in this country were privately owned ? That the Chrysler and Empire State Buildings were both built privately in less than a year. Good luck trying it today. Most airports were privately owned. In the U.K. all the major airports are in private hands and have never been run better. Why do you think that is ?
You are technically correct about oil production. Domestic production is up slightly from December 2020. However in 2019 we were producing an average of 12.3 million barrels per day. Since Biden took office it is down and stagnant at around 11 million barrels per day according to the U.S. DOE ; the API and U.S. News . If you don't like their numbers please take it up with them. Domestic production is down over a million barrels a day.
Btw, after going up under "you know who" Real Wages have been going DOWN. That's according to MSN among a number of sources.
eagle2
08-17-2021, 12:28 PM
Fine. Stick with the numbers you like. I have previously posted ( many moons ago ) the numbers that show that revenues went up after Reagan's tax increases. You didn't like them then. You don't like them now. For instance, Reagan's deficits as a % of GDP pale in comparison to Obama's and Trump's. And Biden's are off the charts.
Reagan started out with a $79 billion deficit, which is the equivalent of $191.6 billion in 2012. Obama started out with a $1 trillion deficit and Biden started out with a $3 trillion deficit. Reagan's, Bush's, and Trump's tax cuts led to massive increases in deficits that their successors inherited.
You're a classic Keynesian and that's fine. You think that government spends better than individuals. I prefer a free market and that people keep as much of their hard earned pay and return on investment as possible. Another example is that you apparently think that Reagan's modest reductions in the increase to housing subsidies caused the homelessness of the 1980's. Instead I point to the deinstitutionalization of thousands of the mentally ill ; the crack epidemic and gentrification which included massive conversion of SRO's. We used to call them flops or flophouses .
I don't think that. Please stop misrepresenting my views. There are certain things that government does better than the private sector, such as national defense and building highways and airports. There are other things that the private sector does better than government, such as providing consumer goods and services.
Assuming that you are right, then where was Clinton ? or Obama ? Each had 8 years to deal with homelessness and the mentally ill. DeBlasio gave his wife almost a billion dollars to improve homelessness in NYC. Nobody knows what she did with all that money and we have more homeless now than we did in any year since Koch was Mayor. The fact is that most homeless people are mentally ill and/or have major drug and/or alcohol addiction. Yes, there are working homeless and we ought to do more to help them. Letting the private sector build more affordable housing would certainly help. But the very people who bleat the loudest about the homeless don't want affordable housing built near them. Or homeless shelters for that matter.
From:
https://shelterforce.org/2004/05/01/reagans-legacy-homelessness-in-america/
The most dramatic cut in domestic spending during the Reagan years was for low-income housing subsidies. Reagan appointed a housing task force dominated by politically connected developers, landlords and bankers. In 1982 the task force released a report that called for “free and deregulated” markets as an alternative to government assistance – advice Reagan followed. In his first year in office Reagan halved the budget for public housing and Section 8 to about $17.5 billion. And for the next few years he sought to eliminate federal housing assistance to the poor altogether.
In the 1980s the proportion of the eligible poor who received federal housing subsidies declined. In 1970 there were 300,000 more low-cost rental units (6.5 million) than low-income renter households (6.2 million). By 1985 the number of low-cost units had fallen to 5.6 million, and the number of low-income renter households had grown to 8.9 million, a disparity of 3.3 million units.
Another of Reagan’s enduring legacies is the steep increase in the number of homeless people, which by the late 1980s had swollen to 600,000 on any given night – and 1.2 million over the course of a year. Many were Vietnam veterans, children and laid-off workers.
I couldn't find any figures for Clinton, but under Obama, there was significant reduction in homelessness.
https://www.mic.com/articles/128837/in-4-years-obama-cut-the-number-of-homeless-veterans-on-the-streets-by-50-here-s-how
But if you take a step back, a more promising picture emerges. Between 2007 and January of 2015, overall homelessness fell by 11%, and chronic homelessness declined by 31%.
The most striking long-term plunge, though, has occurred among one specific segment of the homeless population: veterans. Homelessness among veterans declined by 35%, and over a shorter span of time — between 2009 and 2015. The number of unsheltered homeless veterans across the nation has plummeted by 50% in the past four years.
The economy under JFK was in the doldrums. He ran on the slogan of "Getting America moving again ". His tax cuts did that and we had a boom. Larry Kudlow's book about JFK and Reagan and their tax cut policies lays out the case far better than I can. I suggest you read it. You won't go blind or lose your hair, I promise. I've read Galbraith , Heller , Samuelson, Krugman and a bunch of other Keynsians and Socialists with no ill effects. I've also read Hayek, Milton Friedman, Laffer and Kudlow. If you haven't read them then your study of economics that you bragged on before pulling it was ahem, let's say incomplete.
As I have posted, we will see. I would rather be wrong and have you proved right because it means that the economy is doing well. I'm just not going to bet on it.
We were already having strong economic growth at the time JFK's tax cuts were passed. In 1962 GDP growth was 6.1% and in 1963 GDP growth was 4.4%. Cutting taxes probably helped, but there was also massive increases in spending on infrastructure, defense and the Vietnam War, social programs, and the space program.
You can call it investing instead of spending. When governments build bridges they don't do it out of their own pockets. They get the money from taxes or more often by selling bonds. That money has to be paid back and before those bonds mature interest has to be paid. We have agreed in the past and can agree now that such spending has corollary benefits. Workers, suppliers and the public all benefit. Temporarily for the former two and hopefully for years for the latter except for the inevitable toll increases. You NEVER see tolls reduced. Not ever. Not by a penny. You do know that there was a time when most bridges in this country were privately owned ? That the Chrysler and Empire State Buildings were both built privately in less than a year. Good luck trying it today. Most airports were privately owned. In the U.K. all the major airports are in private hands and have never been run better. Why do you think that is ?
Heathrow Airport was built by the government, as were most large international airports. From what I've read, the US has the best air traffic control system in the world. The problem with depending on private industry to build infrastructure is that they're going to build roads, bridges, and airports where it is most profitable for them, rather than where they are needed, and not many firms have the resources to build major infrastructure projects. Also, with privately owned infrastructure, such as bridges, there isn't incentive for owners to spend money on maintenance and improvements, if the extra spending doesn't increase revenue. The privately owned Ambassador Bridge, which connects the Canada to the US in Detroit has been very poorly maintained, and the owner fought efforts in the US, to require him to connect the bridge to major highways. In Canada, the bridge still doesn't connect to major highways.
You are technically correct about oil production. Domestic production is up slightly from December 2020. However in 2019 we were producing an average of 12.3 million barrels per day. Since Biden took office it is down and stagnant at around 11 million barrels per day according to the U.S. DOE ; the API and U.S. News . If you don't like their numbers please take it up with them. Domestic production is down over a million barrels a day.
It takes a lot more time to increase oil production, than it does for demand to increase. Short-term, gas prices may continue to increase, but over the long-term I expect them to go down significantly, as a result of the increased mileage requirements for vehicles and increased sales of electric vehicles.
Btw, after going up under "you know who" Real Wages have been going DOWN. That's according to MSN among a number of sources.
Wages have increased significantly this year.
https://tradingeconomics.com/united-states/wage-growth
eagle2
08-18-2021, 12:00 AM
The child tax credits and other payments in the stimulus have dramatically decreased hunger in America.
https://www.politico.com/news/2021/08/12/child-tax-credit-hunger-rates-504258
The percentage of American families with kids who report not having enough to eat fell dramatically after the first child tax credit payments were distributed last month, according to new data from the U.S. Census Bureau.
Before the first tranche of tax credit payments hit bank accounts in mid-July, about 11 percent of households with children reported that they sometimes or often did not have enough to eat in the past week. After the money went out, the rate dropped to just over 8 percent — a decrease of nearly 24 percent — and the lowest rate recorded since the beginning of the pandemic.
The government has near real-time data on how households are faring during the pandemic through a tool known as the Household Pulse Survey, which launched in April 2020 to help policymakers understand what was happening in the economy throughout the crisis.
The survey has routinely shown that hunger and other forms of hardship decrease after Washington doles out stimulus checks, bumped-up unemployment payments, increased Supplemental Nutrition Assistance Program benefits or other forms of aid.
Hunger rates, for example, peaked in December, several months after Washington gridlock stalled any further pandemic aid. At that point, more than 18 percent of households with children reported that they sometimes or often did not have enough to eat in the past week. After Congress passed two aid packages, in December and March, which provided two additional rounds of stimulus checks and a 15 percent increase in SNAP benefits, overall hunger rates plummeted 40 percent.
Eric Stoner
08-18-2021, 08:17 AM
Reagan started out with a $79 billion deficit, which is the equivalent of $191.6 billion in 2012. Obama started out with a $1 trillion deficit and Biden started out with a $3 trillion deficit. Reagan's, Bush's, and Trump's tax cuts led to massive increases in deficits that their successors inherited.
I don't think that. Please stop misrepresenting my views. There are certain things that government does better than the private sector, such as national defense and building highways and airports. There are other things that the private sector does better than government, such as providing consumer goods and services.
From:
https://shelterforce.org/2004/05/01/reagans-legacy-homelessness-in-america/
I couldn't find any figures for Clinton, but under Obama, there was significant reduction in homelessness.
https://www.mic.com/articles/128837/in-4-years-obama-cut-the-number-of-homeless-veterans-on-the-streets-by-50-here-s-how
We were already having strong economic growth at the time JFK's tax cuts were passed. In 1962 GDP growth was 6.1% and in 1963 GDP growth was 4.4%. Cutting taxes probably helped, but there was also massive increases in spending on infrastructure, defense and the Vietnam War, social programs, and the space program.
Heathrow Airport was built by the government, as were most large international airports. From what I've read, the US has the best air traffic control system in the world. The problem with depending on private industry to build infrastructure is that they're going to build roads, bridges, and airports where it is most profitable for them, rather than where they are needed, and not many firms have the resources to build major infrastructure projects. Also, with privately owned infrastructure, such as bridges, there isn't incentive for owners to spend money on maintenance and improvements, if the extra spending doesn't increase revenue. The privately owned Ambassador Bridge, which connects the Canada to the US in Detroit has been very poorly maintained, and the owner fought efforts in the US, to require him to connect the bridge to major highways. In Canada, the bridge still doesn't connect to major highways.
It takes a lot more time to increase oil production, than it does for demand to increase. Short-term, gas prices may continue to increase, but over the long-term I expect them to go down significantly, as a result of the increased mileage requirements for vehicles and increased sales of electric vehicles.
Wages have increased significantly this year.
https://tradingeconomics.com/united-states/wage-growth
We get deficits from increased spending. The numbers are there for all to see. I know you don't like looking at them but they are easily found from OMB among other sources.
I don't know why but it seems from your posts that you are content to let Ivy League educated "sophisticated" so called experts who never ran so much as a hot dog stand decide how to spend and invest YOUR money. Regardless of whether or not that harmonizes with your views the fact is that BEFORE government can spend it somebody has to earn that money. Before it can be taxed or borrowed somebody had to create , build , design , repair , maintain or sell something to earn that money. Some conditions are more favorable for such wealth creation and in general the U.S. has been the best such environment over the last 200 years or so. At the other extreme are places like the old U.S.S.R., Venezuela, Cuba, Fascist Spain and Portugal etc. etc. The most important factor in successful economies is FREEDOM. Freedom to think , to create , to innovate and the incentives to do so. Excessive taxation and regulation suppress that freedom. As far as government doing some things well all I can say is that they used to. Today, we have a failed military that can't even manage a withdrawl from Afghanistan and loses to China in every war game. They haven't won a war in over 30 years. Roads and bridges take forever to build today and almost always are behind schedule and over budget.
Read Kudlow's book about the JFK and Reagan tax cuts ( complete with lots of facts and figures ). It won't hurt you . I promise. You might even learn something. You can still be a Keynesian afterwards lol.
I said REAL WAGES. I'm sure you've noticed that inflation has been going UP ! A LOT !
I will respond on the homeless issue separately.