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Thread: No CoronaVirus BOOM Coming

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    Default No CoronaVirus BOOM Coming

    The debt Americans hold like auto student loan mortgage debts, will have to be addressed. The other countries will likely be up to outproducing us. One year or two of pent up demand will go to businesses in China, not here. They are a major provider of our goods and services. And the hiring boom will happen overseas.


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    Default Re: No CoronaVirus BOOM Coming

    If we got rid of loans...prices would go down for everything. Won’t happen...but it’s a nice thought. Loans keep college, cars, and home prices inflated and people in debt.
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    Default Re: No CoronaVirus BOOM Coming

    He's incorrect about debt. Because of the coronavirus crisis, consumers are paying down debt and saving more than they have in decades. Americans paid off a record $83 billion in credit card debt in 2020.
    https://www.cnbc.com/2021/03/08/amer...t-in-2020.html

    The US purchases a significant amount of goods from China, but not services. We actually have a trade surplus with China in services.

    From:
    https://ustr.gov/countries-regions/c...republic-china

    The United States had a services trade surplus of an estimated $36 billion with China in 2019, down 4.1% from 2018.
    There are many services that Americans spend money on, that can only be provided by people living here. The restaurant, hotel, movie, stripclub, and domestic travel industries all employ people who are living here in the US. These are all services that many Americans have been avoiding during the pandemic, and should rebound once it's over.

    Based on the significant amount of savings and paying down of debt, the stimulus, and the pent up demand for the industries mentioned above, I do expect to see a strong recovery later this year.

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    Default Re: No CoronaVirus BOOM Coming

    Well, he makes some good points, but I don't completely agree with him.

    I do agree that there is not as much pent up demand as some people think. Sure the dining, entertainment and travel industries will likely see a large jump once everything opens up, but the vast number of other sectors are likely to be far less affected as people never stopped spending on them to begin with.

    I don't agree that debt servicing will affect any short-term boost, but I am concerned about what happens next year and the year after. The Fed is printing money right now like Santa Claus in a never ending Christmas. This with keeping interest rates artificially jammed low is going to have consequences. We already have absurd bubbles forming in the stock and housing markets and as the economy normalizes this could easily expand to consumer staples. I am becoming very concerned about price inflation.

    I am also concerned about what the powers that be will do to hobble the long-term economic recovery. For the first time since the Great Recession, during the last few pre-COVID years, the downward trend on the labor force participation rate (LFPR) had actually reversed. Higher labor force participation = more economic activity and a healthier long-term economy. The more that we find ways to bleed money from productive companies and people, the more that the LPFR will remain depressed, which will have a long-term hobbling effect.

    But as far as that money going to China, the same argument could have been made in 2017-2019, when both wages and the LFPR were actually growing. When the tide comes in, it comes in for everybody. Yes Chinese factory workers will get paid, but so too will the large numbers of U.S. citizens involved in the sale and delivery of those goods.

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    Default Re: No CoronaVirus BOOM Coming

    It's not just demand that has been affected by the pandemic, but supply has been too. I have a friend who was looking to buy a new home this summer. She talked to builders and she said the earliest she would be able to get one is fall, and prices have gone up, due to the shortage of lumber and building supplies. Car sales were down 15% in 2020, due to manufacturers shutting down for part of the year. The economy will benefit from builders and manufacturers being able to operate at full capacity.

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    Default Re: No CoronaVirus BOOM Coming

    Quote Originally Posted by eagle2 View Post
    It's not just demand that has been affected by the pandemic, but supply has been too. I have a friend who was looking to buy a new home this summer. She talked to builders and she said the earliest she would be able to get one is fall, and prices have gone up, due to the shortage of lumber and building supplies. Car sales were down 15% in 2020, due to manufacturers shutting down for part of the year. The economy will benefit from builders and manufacturers being able to operate at full capacity.
    Fair enough Eagle. Sure building supplies have become more expensive, but the housing market has been heating up for years now due to an extended period of artificially depressed low interest rates and that accelerated yet more almost immediately after the Fed jammed interest rates back down to near zero a year ago, as did the stock market.

    It is unnatural and causes a myriad of unintended long-term consequences, a tab which will eventually come due. This includes a weaker dollar, which makes imported products more expensive and ultimately leads to consumer price inflation, savings disincentives, big problems for pension funds and insurance companies that need income yield, zombie companies that stay a live using cheap money and slow down alternative economic growth...the list goes on.

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    Default Re: No CoronaVirus BOOM Coming

    From:
    https://fortune.com/2020/10/04/housi...e-forbearance/

    The single most extraordinary feature of the COVID-19 economy isn’t the stock market’s record-setting spree. It’s the phenomenal, unforeseen boom in the most fundamental, economically sensitive area of all, the sector you’d think would rank among the hardest hit from the worst recession in decades: housing. According to a top industry expert, the current rampage in prices will keep running for months to come, even as the extraordinary sales sprint over the past few months slows to a more normal pace.

    “These increases are unsustainable, but prices will keep rising in double digits for another six months to a year,” says Ed Pinto, director of the American Enterprise Institute (AEI) Housing Center and the former chief credit officer for Fannie Mae. “America is running out of inventory. Buyers can’t buy houses that aren’t for sale, so they’re bidding up the prices of the relatively few on the market. That means price increases will keep racing until more inventory comes on. And new supply will come on slowly.”

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    Default Re: No CoronaVirus BOOM Coming

    That's true. It will generate demand for more houses to be built. UNTIL interest rates start rising. Thanks to the latest Stimulus , we will be paying 20% of the Federal budget just to pay interest on Federal Debt. If the $3 Trillion Trojan Horse Stimulus Plan passes it could go as high as 25%. The Dems LOVED to chirp about Reagan's deficits , deficits and debt under both Bushes and under Trump. Clinton , to his credit gave us balanced budgets and even surpluses thanks mostly to spending restraint and increased Capital Gains taxes.

    The BEST way out from under our current mess is economic growth and increased revenues. Instead we are getting anti-growth policy and tax increases plus higher inflation. A true witch's brew of lousy fiscal and monetary policy.
    Last edited by Eric Stoner; 03-30-2021 at 07:45 AM.
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    Default Re: No CoronaVirus BOOM Coming

    Federal Reserve Chairman Jerome Powell has an optimistic outlook on the US economy.

    https://www.cbsnews.com/video/jerome...-2021-04-11/#x

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    Default Re: No CoronaVirus BOOM Coming

    Let's hope he's right.
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    Default Re: No CoronaVirus BOOM Coming

    Quote Originally Posted by eagle2 View Post
    Federal Reserve Chairman Jerome Powell has an optimistic outlook on the US economy.

    https://www.cbsnews.com/video/jerome...-2021-04-11/#x
    Compare that to Janet Yellen's recent attack of uncontrolled candor and the latest unemployment numbers.

    When , not if , we get serious inflation , interest rates will go up slamming the brakes on whatever gains were made.
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    Default Re: No CoronaVirus BOOM Coming

    Quote Originally Posted by Eric Stoner View Post
    Compare that to Janet Yellen's recent attack of uncontrolled candor and the latest unemployment numbers.

    When , not if , we get serious inflation , interest rates will go up slamming the brakes on whatever gains were made.
    Inflation has already started. Food prices and other consumer staples are jumping. The housing and stock markets are in bubbles. It's only going to get worse as the Fed continues to print money and keep interest rates artificially low. Meanwhile, the Fed points to ongoing unemployment as the rationale while ignoring the fact that the only reason the figure is still so high is because we are paying a large swath of people not to work - they are still receiving employment level payments and spending them in the economy.

    It's like watching a slow moving training coming. There's still time to stop the train before it hits the people laying on the tracks, but the conductor says fuck it and keeps plowing ahead anyway because he has other priorities.

    The Fed is supposed to be non-political, but it's clearly prioritizing short-term political interests over medium-term economic stability. Policies like this are how runaway inflation has taken root in a number of Banana Republics. I just never thought I'd see anyone reckless enough to pull those stunts here.
    Last edited by rickdugan; 05-09-2021 at 11:37 AM.

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    Default Re: No CoronaVirus BOOM Coming

    Rick , Rick , Rick. How soon we forget. How about the Village Idiot , Arthur Burns ? He almost invented Stagflation. He admitted after leaving the Fed that he adjusted Fed policy to try and help Nixon politically. Or Janet Yellen, as dumb and ineffective a Fed Chairperson as we've ever had ?
    A
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    Default Re: No CoronaVirus BOOM Coming

    Quote Originally Posted by Eric Stoner View Post
    Rick , Rick , Rick. How soon we forget. How about the Village Idiot , Arthur Burns ? He almost invented Stagflation. He admitted after leaving the Fed that he adjusted Fed policy to try and help Nixon politically. Or Janet Yellen, as dumb and ineffective a Fed Chairperson as we've ever had ?
    Didn't forget them, though I might disagree with you re: Yellen. I was not her biggest fan for sure, but there wasn't really much she could do to goose the economy early in her tenure as rates were already at 0 - the supposed 'recovery" was shackled by bad fiscal and regulatory policies. For the same reason, later in her tenure, with the recovery still on shaky legs even if slightly better, she was in a shit position to try to return the interest rate to something more normal.

    But none of this compares to now. We are heading into a perfect storm, with the current Administration trying to play Santa in a never-ending Christmas while the Fed continues to print money and keep rates buried. I challenge you to find a time like this in our history. The Fed has to be seeing alarming inflation indicators, yet refuses to act because of an artificial unemployment rates that doesn't account for the gobs of money being thrown at the "unemployed." This is a shit show that is going to have very bad consequences.

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    Default Re: No CoronaVirus BOOM Coming

    Yellen perpetuated the Fed's soft money policies. She kept buying up "assets" at inflated prices. She pushed the "New Monetary Policy" that ignores all the fundamentals of M1 ; M2 ; M3 ; monetary velocity etc. The U.S. may have not seen this "Perfect Storm " before but other countries have: Weimar Germany ; Argentina ; Israel in the 70's and 80's ; Zimbabwe etc. Whether our experience will be as extreme as those countries is doubtful. The dollar is still relatively strong for one thing. A lot of the money printed by the Fed has not yet been distributed and there is still demand for our debt. Nonetheless we will see major inflation. How much and for how long are open questions. So is whether we'll have to go through a major recession to get it under control.
    Last edited by Eric Stoner; 05-12-2021 at 11:07 AM.
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    Teddy Roosevelt

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    Default Re: No CoronaVirus BOOM Coming

    And the latest batch of Government stats confirms increased inflation. Before the Colonial pipeline shutdown.
    A
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    Teddy Roosevelt

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