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Thread: The stock market--Democrats vs. Republicans

  1. #31
    Senior Member Franco's Avatar
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    A paper written by two staff members of the Federal Reserve Bank of Atlanta tried to quantify what all the Fed’s new money creation and related measures have accomplished. They conclude that unemployment today would be 0.13% higher without the radical measures and 1.0% higher if nothing at all had been done.
    For some time, the Fed has been trying to demonstrate what its quantitative easing ( new money creation in plain language) has accomplished. This has not been easy. In the first place, the results have been poor, far below what the Fed hoped for. In the second place, the Fed did not even have a theory to explain why it would work. Without a theory, it has been difficult to build a quantifiable model that would evaluate results.
    After many false starts, a few papers have emerged arguing that the Fed’s actions helped. But even these papers don’t argue that they helped much. And the story isn’t yet over.
    Economist John Hussman has likened the Fed’s current financial policies to a Roach Motel, easy to get into, impossible to get out of. It will be interesting to see how the Fed tries to get out.

    http://www.againstcronycapitalism.or...whopping-0-13/
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  2. #32
    Senior Member menmon's Avatar
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    First: saving and investing are the same. You buying a MM is no different that purchasing stock, just different risk tolerance.

    Second: lower interest rates mean economy is strong because lower default risk. What you are confused with is inflation risk and that is when investor or savers require more return to offset inflation risk. In a weak economy inflation risk is typically low, but if you will look government bond rates are up because there is some risk of inflation and that is were the talk of raising fed funds comes from. A higher overnight rate to banks take money out of the economy.

    Quantitative easing does more than put dollar back in the economy, because when the government pays back debt it replaces bonds with cash that is where the liquidity. But the smarter thing is that the government has been retiring more expensive debt with cheaper debt. Pretty smart don't you think. I told all of you there was no risk of inflation until Europe's economies started recovering and that is beginning. That is also positive for our economy and will create jobs. See we pulled out of our recession quickly unlike Europe because they approached it like the Tea Party would have and it was a major mistake.

  3. #33
    Senior Member Buzz's Avatar
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    Quote Originally Posted by menmon View Post
    I told all of you there was no risk of inflation until Europe's economies started recovering and that is beginning. That is also positive for our economy and will create jobs. See we pulled out of our recession quickly unlike Europe because they approached it like the Tea Party would have and it was a major mistake.
    Europe's response to the financial crisis is an unmitigated disaster.

    Mike, this grilling of Santelli on CNBC that Krugman posted on his blog today was taylor made for this discussion. I was smiling through the whole thing. Liesman was right on every point.



    Krugman:

    So, there was a fun moment on CNBC: Rick Santelli went on a rant about inflation and the Fed, and CNBC analyst Steve Liesman went medieval on him:

    You really need to watch this moment:


    But here’s the thing: before Liesman started, Santelli yelled that he had been right all along — and some of the traders started applauding.

    Think about that: Liesman is of course right about Santelli’s record, and as I’ve pointed out many times this goes for all the inflationistas. So any trader who believed him would have lost money hand over fist. So why the applause?

    Basically, I think, it’s because Santelli is their kind of guy; he hates the poors, he hates people who want to help the poors, he was trashing Janet Yellen for suggesting that she actually cares about the plight of the unemployed. And the traders feel the same way. So they like Santelli even though he’s been wrong about everything.
    Last edited by Buzz; 07-14-2014 at 08:29 PM.
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  4. #34
    Senior Member Mike W.'s Avatar
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    Santelli....what a bozo. He has been on the wrong side of every major trade over the last 6 years.

  5. #35
    Senior Member menmon's Avatar
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    That guys is just spinning right wing BS, since the crash. It is suppose to be financial news not politics. The bad news is someone that wants to agree with him takes him as creditable, thus making very bad investment decisions.

  6. #36
    Senior Member Henlee's Avatar
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    Just because the stock market up does not mean the economy is good. In fact if you look at the cause and effect of the gains we have made it is because of new foreign markets and investments in them. Even though the money is showing up on American exchanges that does not mean the money is here. The job market despite huge gains in the market is anemic. Wages have been stagnant for 14 years and counting. That is why the richest people are the only ones benefiting from these gains, because they are the only ones with disposable income to invest. That is why the middle class has continued to shrink and the poor has become more desperate.


    The strong dollar was abandoned by bush in order to spur exports and gain jobs. It is policy that Obama has followed. It is a policy that simply did not work and needs to be abandoned, but will end up in the short term cost more jobs. Our unfettered access to our markets that we grant to foreign business is killing us and is not returned in kind. A real recovery in our country (not the market) will be dependent on adding to the middle class. The farther removed we get from where we were the harder it will be to bring it back. I think market reform or any sort of financial reform is an absolute pipe dream that will never happen.
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  7. #37
    Senior Member menmon's Avatar
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    Quote Originally Posted by Henlee View Post
    Just because the stock market up does not mean the economy is good. In fact if you look at the cause and effect of the gains we have made it is because of new foreign markets and investments in them. Even though the money is showing up on American exchanges that does not mean the money is here. The job market despite huge gains in the market is anemic. Wages have been stagnant for 14 years and counting. That is why the richest people are the only ones benefiting from these gains, because they are the only ones with disposable income to invest. That is why the middle class has continued to shrink and the poor has become more desperate.


    The strong dollar was abandoned by bush in order to spur exports and gain jobs. It is policy that Obama has followed. It is a policy that simply did not work and needs to be abandoned, but will end up in the short term cost more jobs. Our unfettered access to our markets that we grant to foreign business is killing us and is not returned in kind. A real recovery in our country (not the market) will be dependent on adding to the middle class. The farther removed we get from where we were the harder it will be to bring it back. I think market reform or any sort of financial reform is an absolute pipe dream that will never happen.
    You are right on one front...it is benefiting the rich more than the middle class.

    However, it is a reflection of the economy doing well as evidenced by the companies in the economy.

    You are right in saying these companies need to pay their workers more, but they don't have to because our legislature is in their hip pocket and as long as it stays that way the worker will get the short stick

  8. #38
    Senior Member Matt McKenzie's Avatar
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    Quote Originally Posted by Henlee View Post
    Just because the stock market up does not mean the economy is good. In fact if you look at the cause and effect of the gains we have made it is because of new foreign markets and investments in them. Even though the money is showing up on American exchanges that does not mean the money is here. The job market despite huge gains in the market is anemic. Wages have been stagnant for 14 years and counting. That is why the richest people are the only ones benefiting from these gains, because they are the only ones with disposable income to invest. That is why the middle class has continued to shrink and the poor has become more desperate.


    The strong dollar was abandoned by bush in order to spur exports and gain jobs. It is policy that Obama has followed. It is a policy that simply did not work and needs to be abandoned, but will end up in the short term cost more jobs. Our unfettered access to our markets that we grant to foreign business is killing us and is not returned in kind. A real recovery in our country (not the market) will be dependent on adding to the middle class. The farther removed we get from where we were the harder it will be to bring it back. I think market reform or any sort of financial reform is an absolute pipe dream that will never happen.
    The richest people are the only ones who invest? I beg to differ. Smart people are the ones who invest. Others mismanage their money in the belief that some government safety net is going to take care of them.
    The labor market is no different than any other market. Left to its own devices, it reaches equilibrium between supply and demand. Manipulation by government regulation creates problems. It amazes me that the same people that are advocating an increase in mimimum wage are the same knuckleheads in favor of increasing the cheap labor supply in the form of illegal immigration.
    Here's some basic, simple ecomomics. If you make it more expensive for companies to hire people (increasing minimum wage, forcing them to spend more on benefits, increasing taxes, etc.) companies in the aggregate will hire fewer people. If companies hire fewer people, there are more people looking for work. If there are more people looking for work than jobs available (supply exceeds demand), labor prices decrease. When labor prices decrease, companies hire more workers, but at lower wages. That's when wages stagnate.
    Now if you have a weak ecomomy with many people looking for work, causing labor prices to decrease, increasing the supply of cheap labor only makes the problem worse. Now unskilled laborers that were making 1$ above minimum wage can be replaced by immigrants who are happy to work for minimum wage. In fact, most would work for less than minimum wage because it's more money than they have ever made. So by increasing the labor pool in a weak job market, you just drove down wages.
    So the simplistic, emotional and irrational thought process that leads someone to believe in raising minimum wage and encouraging illegal immigration is terrible for the economy and terrible for our fellow citizens. But I guess it feels good to someone who has a limited capacity for analytical thought.
    Matt McKenzie

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  9. #39
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    Quote Originally Posted by Matt McKenzie View Post
    The richest people are the only ones who invest? I beg to differ. Smart people are the ones who invest. Others mismanage their money in the belief that some government safety net is going to take care of them.
    The labor market is no different than any other market. Left to its own devices, it reaches equilibrium between supply and demand. Manipulation by government regulation creates problems. It amazes me that the same people that are advocating an increase in mimimum wage are the same knuckleheads in favor of increasing the cheap labor supply in the form of illegal immigration.
    Here's some basic, simple ecomomics. If you make it more expensive for companies to hire people (increasing minimum wage, forcing them to spend more on benefits, increasing taxes, etc.) companies in the aggregate will hire fewer people. If companies hire fewer people, there are more people looking for work. If there are more people looking for work than jobs available (supply exceeds demand), labor prices decrease. When labor prices decrease, companies hire more workers, but at lower wages. That's when wages stagnate.
    Now if you have a weak ecomomy with many people looking for work, causing labor prices to decrease, increasing the supply of cheap labor only makes the problem worse. Now unskilled laborers that were making 1$ above minimum wage can be replaced by immigrants who are happy to work for minimum wage. In fact, most would work for less than minimum wage because it's more money than they have ever made. So by increasing the labor pool in a weak job market, you just drove down wages.
    So the simplistic, emotional and irrational thought process that leads someone to believe in raising minimum wage and encouraging illegal immigration is terrible for the economy and terrible for our fellow citizens. But I guess it feels good to someone who has a limited capacity for analytical thought.
    Have you ever given thought to running for office? The nation could stand many more like yourself
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  10. #40
    Senior Member Buzz's Avatar
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    Quote Originally Posted by Marvin S View Post
    Have you ever given thought to running for office? The nation could stand many more like yourself
    doing the thinking where it counts . At all levels!

    I know you dislike Krugman and everything he says is wrong in your book. But what I read above fits right in with what he calls the ignoramus strategy. All of the arguments I see come from the right side of the aisle completely disregard consumer demand. It's all about the job creators, with no consideration given to the fact that job creators are not going to create jobs in an economy lacking consumer demand, no mater how cheap the labor is.


    A while back Noah Smith described one common strategy for arguing against Keynesian economics, and yours truly in particular: “Relentlessly pretend to be an ignorant simpleton.” Of course, as always, this strategy is most effective if you aren’t pretending, and really are an ignorant simpleton.

    Which brings me to this rant by Ken Langone, in which he answers my arguments by saying,


    Let’s stop all this crap with all of these high fallutin’ thoughts and ideas. You know what happens to people their eyes glaze over, I don’t know what the hell he’s saying.

    This may, by the way, be the first time I’ve ever heard anyone say “high fallutin” outside of an old Western.


    Anyway, this wounds my vanity. I like to imagine that I’m pretty good at making economic arguments as simple as possible, and stating them in plain English. True, I never get to the simplicity of “People are having to tighten their belts, so the government should tighten its belt too.” But that’s because the world isn’t that simple, and some lines sound good but are just wrong.


    Now, I don’t know if Langone is really as dumb as he sounds; my guess is, probably not — the attempt to sound like a regular guy, while actually sounding like an actor in a 1950s B-movie, is a giveaway. Still, maybe this is an occasion to restate what is really going on in the economy, and why I advocate the things I do.


    So, in order:


    1. The economy isn’t like an individual family that earns a certain amount and spends some other amount, with no relationship between the two. My spending is your income and your spending is my income. If we both slash spending, both of our incomes fall.


    2. We are now in a situation in which many people have cut spending, either because they chose to or because their creditors forced them to, while relatively few people are willing to spend more. The result is depressed incomes and a depressed economy, with millions of willing workers unable to find jobs.


    3. Things aren’t always this way, but when they are, the government is not in competition with the private sector. Government purchases don’t use resources that would otherwise be producing private goods, they put unemployed resources to work. Government borrowing doesn’t crowd out private borrowing, it puts idle funds to work. As a result, now is a time when the government should be spending more, not less. If we ignore this insight and cut government spending instead, the economy will shrink and unemployment will rise. In fact, even private spending will shrink, because of falling incomes.


    4. This view of our problems has made correct predictions over the past four years, while alternative views have gotten it all wrong. Budget deficits haven’t led to soaring interest rates (and the Fed’s “money-printing” hasn’t led to inflation); austerity policies have greatly deepened economic slumps almost everywhere they have been tried.


    5. Yes, the government must pay its bills in the long run. But spending cuts and/or tax increases should wait until the economy is no longer depressed, and the private sector is willing to spend enough to produce full employment.


    Is this impossibly complicated? I don’t think so. Now, I suppose that someone like Langone will just respond that it’s all gibberish he can’t understand. But unless he really is stupid, which as I said I doubt, that’s only because he doesn’t want to understand.
    "For everyone to whom much is given, of him shall much be required." -- Luke 12:48

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    Peerless - Moneybird's Sole Survivor
    (Two River's Lucky Willie x Moneybird's Black Magic Marker)

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