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I don't know, I'm just an idiot on the internet, but it seems like a better solution to monetary stimulus would have been fiscal stimulus. The government could

I don't know, I'm just an idiot on the internet, but it seems like a better solution to monetary stimulus would have been fiscal stimulus. The government could have passed an infrastructure bill 18 months ago and the fed could have backed off. I'll admit I'm pretty furious at the fed right now though. As someone with a lot of assets in cash who was hoping to buy a house last year, I have been double penetrated by inflation and spiraling home prices. The housing market accelerated just out of my reach before I could make a move and my cash pile is on fire. I'd have moved back into the stock market to protect it, but it seemed risky given historical valuations and such. Now I'm poorer and I can't help but think Powell effectively just stole from me and I've been punished for being defensive and not participating in the fueling of an asset bubble.

arcticbull 5y ago
> I'll admit I'm pretty furious at the fed right now though. I suspect you would have been a lot more furious at the Fed in the event they had sat back during COVID and presided over a deflationary spiral triggered by the lockdowns. Can't get a mortgage if you're out of work, ya know? > As someone with a lot of assets in cash who was hoping to buy a house last year... Let me stop you right there. Generally speaking, you shouldn't hold cash. Nobody should hold cash. Nobody should have ever held cash because even at the baseline expectation 2% inflation that's still a loss. > I have been double penetrated by inflation... Inflation is somewhere between 2 and 5%. That's not what I would call "penetration." Mild discomfort maybe. > ...and spiraling home prices. Housing affordability hasn't really changed on a monthly basis, because on a 30-year fixed rate mortgage the drop in interest rates from 4.xx% to 2.xx% means that a monthly payment two years ago on a $1M property is the same as it would be today on a $1.2M property. That's napkin math, I believe the spread is even larger IRL. In fact, if you can lock in a 2.xx% mortgage in a 2-5% inflationary environment then it is in real dollar terms a zero-interest loan. Before factoring in tax deductions. What's become more painful is making the down-payment. > Now I'm poorer and I can't help but think Powell effectively just stole from me and I've been punished for being defensive and not participating in the fueling of an asset bubble. You're not poorer, you're not as rich as you thought you'd be.
- landemva 5y ago
  OP said he or she is upset with price inflation and now has a pile of cash losing purchasing power. arcticbull said '... you would have been a lot more furious at the Fed in the event they had sat back during COVID and presided over a deflationary spiral ...' Deflation makes cash have more purchasing power, so arcticbull your speculation is wrong. Completely backwards.
  - arcticbull 5y ago
    I'm aware, however a mortgage also requires a job to obtain, which was what I was pointing to in the statement. Unless we saw truly spectacular deflation, I'm talking 500% year over year, it wouldn't have mattered. I suspect OP would have lost their job well before their admittedly less than 20% down-payment amount deflated enough to buy a house outright. I suspect anything in between would have led to a huge spike in interest rates making borrowing yet less affordable no? > Deflation makes cash have more purchasing power, so arcticbull your speculation is wrong. Completely backwards. >> Can't get a mortgage if you're out of work, ya know? So no, not really... unless you stopped reading before you got to that sentence ;)
    - dnautics 5y ago
      why do you assume a deflation will cause job loss, in particular for the poster? Maybe they have a deflation-proof job (most jobs that aren't a result of malivestment). Deflation is not a magic wand where "boom, it happens, and people lose their job". Just as, much as the central bank might wish it to be, inflation is not a magic wand where "boom it happens, and jobs are created" (hence the word "stagflation").
      - deelowe 5y ago
        There is a gigantic difference between inflation and deflation from a policy perspective. Deflection has a positive feedback loop which does tend to cause situations where liquidity dries up literally overnight and then "boom, it happens, and people lose their jobs." Inflation tends to happen more gradually. It's manageable as long as people don't lose confidence in the currency. The fed generally wants to avoid deflation if at all possible. As people leave the job market due to automation and median age trends higher, this because more and more difficult. Japan has had serious struggles fighting off deflation for decades now. "stagflation" is simply what happens when inflation keeps up with deflationary trends. It doesn't mean monetary policy is doing nothing. It likely means it's working as intended.
_dain_ 5y ago
But this article is clearly about the Netherlands, not the USA ...
- MomoXenosaga 5y ago
  Indeed the Dutch economy is fine. Everyone expected COVID to be some kind of economic disaster but despite heroic efforts by the finance minister to spend money like water the Netherlands still only has a 70% GDP debt ratio and unemployment is at 4%. There's a lot wrong with the Netherlands and Dutch people but economically everything is still chugging along nicely. Our sole saving grace.
majormajor 5y ago
The people who outbid you for those houses could have outbid you without any monetary stimulus too, yes?
- foepys 5y ago
  Not necessarily. If the monetary stimulus was like $10,000 per person, it would be totally different than lowering interest rates that mainly benefit the rich that can get even more cheap money now to buy properties off the market.
- raducu 5y ago
  A lot of those people bid because interest rates are so low or even negative
  - majormajor 5y ago
    So? If they could afford an X/month mortgage, so bidded a higher total cash price because X/month suddenly was a higher total purchase price due to lower interest rates, and the original poster could only afford a X-$300/month mortage, the original poster isn't beating them anyway. There has been an extreme shortage of supply due to some combination of people not wanting to move due to Covid because of exposure to lots of people being required, people valuing homes with more space over apartments more than they did in the past, and people not wanting to try to "trade up" because the houses they'd upgrade to were also being hit by the price increase. That shortage is what fucked the original poster here, not stimulus checks.
    - fileeditview 5y ago
      I think one important point is that said people need to invest into properties instead of say government bonds because interest rates are so low or even negative.
- dnautics 5y ago
  Sure, some of them. But others (institutional investors) are basically able to make outrageous bids due to access to easy money.
systemvoltage 5y ago
Don't forget, our salaries are largely unchanged although the market is finding it out the hard way (employee shortage). So honest hardworking people got triple-fucked. I can't imagine how well UBI would ever go. This should be the nail in the coffin for UBI for me, I will never vote for it.
- lifty 5y ago
  You wouldn't vote for the party that promised to implement it you mean. I would love it if more democracies would enable citizens to vote on important issues like this, similarly to what Switzerland does.
  - systemvoltage 5y ago
    I've always been a Democrat but lately, I am reconsidering my position. I am not a single issue voter but UBI might be the reason to not support the Democratic party for me (if it ever gets on the ballot). Thankfully, most Democrats I know oppose UBI. The reason I am reconsidering is to do with how the entire west-coast is run - living in Seattle, Bay Area, LA and Portland feels like a third world nation. I'll probably continue to vote for Democrats in the presidential election, but local and county elections it will be the Republicans or Libertarians.
    - vineyardmike 5y ago
      > living in Seattle, Bay Area, LA and Portland feels like a third world nation UBI would help a lot with homelessness and blight. Also seattle is not nearly as bad as the rest of those places in 90+% of the area.
      - nostrademons 5y ago
        If it's coupled with actually building houses. Add UBI to existing zoning & construction regulations and you'll just see rent increase.
    - bananabreakfast 5y ago
dec0dedab0de 5y ago
I've been punished for being defensive and not participating in the fueling of an asset bubble. Yes, that is exactly it. The economy falls apart if everyone saves too much. Money is an imaginary number designed to facilitate separation of labor, if too many people save and retire early then there won't be enough people working. FWIW I am the same way, and used to be angry about it, but I have accepted it for what it is. I bought my house 15 years ago at the height of the last housing bubble. I was under water for a while, but I didn't qualify for any of the assistance because I bought a house I could afford. If I had bought a more expensive house, or if I made slightly less money I would have been able to get some money from the government. It was all based on the ratio of income to mortgage payment, which is still kind of annoying. Only way I could cut my losses in my mind was to pay off the house as quickly as possible, to save money on interest. So now it's paid off, and for the first time since a year after I moved in Zillow has it at a higher price than I paid for it, though just barely. But back to the point, don't keep your assets in cash, or any one thing for that matter. Index funds, mutual funds, commodities, collectables, anything that is easy to sell and will generally go up in price with inflation. These policies are meant to encourage people with cash to do things with that cash, instead of hoarding it.
- arcticbull 5y ago
  > Yes, that is exactly it. The economy falls apart if everyone saves too much. Money is an imaginary number designed to facilitate separation of labor, if too many people save and retire early then there won't be enough people working. Yes, this I recently learned is called the paradox of thrift. [1] [1] https://www.investopedia.com/terms/p/paradox-of-thrift.asp https://www.investopedia.com/terms/p/paradox-of-thrift.asp
  - imtringued 5y ago
    It's not just the paradox of thrift. The general concept is the paradox of competition. There are macroeconomic statements that always apply but as individuals optimize their local statements they actually end up "deoptimizing" the global statement. Basically a race to the bottom or a continuous form of the prisoners dilemma. In other words, the idea that local decision making will always reach a global optimum, the very foundation of free market economics, isn't even true in theory given our current money system. See this in the case of Greece vs Germany. Germany is trying to boost exports by cutting back on imports. If Greece would retaliate by following the exact strategy there would be less trade between them overall. Meanwhile if both countries tried to boost imports, then both of them would be better off. How exactly does Germany do it? The government is simply enacting policies to destroy the bargaining power of labor. Yes, Germany is trying to compete with Greece based on labor costs. It's trying to pass off a questionable economic policy that destabilizes the eurozone as strength because of moral attachments to export industries and saving money while blaming the other side for importing its products and borrowing to pay for them. This is why the eurozone is a failure and every country should have its own currency. https://en.wikipedia.org/wiki/Paradox_of_competition https://en.wikipedia.org/wiki/Paradox_of_competition
WalterBright 5y ago
Inflation is a tax on cash. It's how the government can spend money without increasing explicit taxes. I don't hold any cash because of this. However, asset inflation is not quite the solution it seems, as the government taxes the illusory capital "gains" due to inflation. I suspect the stock market surge over the last year is mostly fake inflation gains.
- arcticbull 5y ago
  > I suspect the stock market surge over the last year is mostly fake inflation gains. It's not really possible to make 100% gains out of 5% inflation. Not every price increase is inflation! The increase in the price of stocks isn't really inflation (except with respect to CPI) because 1 share of AAPL buys you far more CPI goods than 1 share of AAPL bought you 2 years ago. For it to be "inflation" and "entirely illusory" 1 AAPL share, while priced at $150 would have to only buy you as much a 1 AAPL share 2 years ago at $50. That makes the increase in asset prices "ROI" not inflation. What you're seeing is a massive increase in personal savings among Americans, recently at near all-time highs. [1] Combined with FINRA margin debt at near all-time highs due to the low-cost and broader availability of loans. [2] That's my theory anyways. [1] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT [2] https://www.advisorperspectives.com/dshort/updates/2021/08/12/margin-debt-and-the-market-down-4-3-in-july-first-decline-in-15-months https://www.advisorperspectives.com/dshort/updates/2021/08/1...
  - WalterBright 5y ago
    Do you really believe that inflation is only 5%? I don't. I see big price increases across the board. BTW, what the shares of one company does means nothing in this discussion. What the S&P 500 does means something.
    - arcticbull 5y ago
      (1) well I don’t know what to tell you haha, inflation calculations are public. You can’t just say without citation that ehhh I feel like it’s not though shrug - this is actually something you can calculate! Please, do it, or cite some sources - ideally credible ones! You can’t just make giant claims like that without evidence. Of course certain contributors will be higher than the average weighting - like housing - but that’s how averages work. (2) ok the same exact thing applies to SPY shares and doubly so when you include dividends. I mean AAPL is 7% of the S&P500 and 12% of the NASDAQ and so is fairly representative but your point is well taken.
divbzero 5y ago
Not only has the Fed’s endless easing been unfair to many, I fear what will happen next. We will suffer when the bubble pops or inflation worsens or both.
- imtringued 5y ago
  We'll see about that. I was predicting deflation months ago. Now that the government is cutting back on stimulus the labor market will have to support itself.
- eru 5y ago
  Do you want to bet on the 'bubble popping' or 'inflation worsening'? Financial markets don't seem to expect either. Inflation expectations (via TIPS spreads) are where the Fed wants them.
exporectomy 5y ago
I can understand your frustration, but you seem to have contradictory feelings. You didn't want to fuel an asset bubble and are unhappy that you didn't?
- 01100011 5y ago
  Are you fueling an asset bubble every time you make a purchase?
eru 5y ago
Why? Fiscal stimulus is very expensive. Monetary stimulus is basically free.
- 01100011 5y ago
  But it's not free. Idiots like me are paying for it.

arcticbull 5y ago

> I'll admit I'm pretty furious at the fed right now though. I suspect you would have been a lot more furious at the Fed in the event they had sat back during COVID and presided over a deflationary spiral triggered by the lockdowns. Can't get a mortgage if you're out of work, ya know? > As someone with a lot of assets in cash who was hoping to buy a house last year... Let me stop you right there. Generally speaking, you shouldn't hold cash. Nobody should hold cash. Nobody should have ever held cash because even at the baseline expectation 2% inflation that's still a loss. > I have been double penetrated by inflation... Inflation is somewhere between 2 and 5%. That's not what I would call "penetration." Mild discomfort maybe. > ...and spiraling home prices. Housing affordability hasn't really changed on a monthly basis, because on a 30-year fixed rate mortgage the drop in interest rates from 4.xx% to 2.xx% means that a monthly payment two years ago on a $1M property is the same as it would be today on a $1.2M property. That's napkin math, I believe the spread is even larger IRL. In fact, if you can lock in a 2.xx% mortgage in a 2-5% inflationary environment then it is in real dollar terms a zero-interest loan. Before factoring in tax deductions. What's become more painful is making the down-payment. > Now I'm poorer and I can't help but think Powell effectively just stole from me and I've been punished for being defensive and not participating in the fueling of an asset bubble. You're not poorer, you're not as rich as you thought you'd be.

landemva 5y ago
OP said he or she is upset with price inflation and now has a pile of cash losing purchasing power. arcticbull said '... you would have been a lot more furious at the Fed in the event they had sat back during COVID and presided over a deflationary spiral ...' Deflation makes cash have more purchasing power, so arcticbull your speculation is wrong. Completely backwards.
- arcticbull 5y ago
  I'm aware, however a mortgage also requires a job to obtain, which was what I was pointing to in the statement. Unless we saw truly spectacular deflation, I'm talking 500% year over year, it wouldn't have mattered. I suspect OP would have lost their job well before their admittedly less than 20% down-payment amount deflated enough to buy a house outright. I suspect anything in between would have led to a huge spike in interest rates making borrowing yet less affordable no? > Deflation makes cash have more purchasing power, so arcticbull your speculation is wrong. Completely backwards. >> Can't get a mortgage if you're out of work, ya know? So no, not really... unless you stopped reading before you got to that sentence ;)
  - dnautics 5y ago
    why do you assume a deflation will cause job loss, in particular for the poster? Maybe they have a deflation-proof job (most jobs that aren't a result of malivestment). Deflation is not a magic wand where "boom, it happens, and people lose their job". Just as, much as the central bank might wish it to be, inflation is not a magic wand where "boom it happens, and jobs are created" (hence the word "stagflation").
    - deelowe 5y ago
      There is a gigantic difference between inflation and deflation from a policy perspective. Deflection has a positive feedback loop which does tend to cause situations where liquidity dries up literally overnight and then "boom, it happens, and people lose their jobs." Inflation tends to happen more gradually. It's manageable as long as people don't lose confidence in the currency. The fed generally wants to avoid deflation if at all possible. As people leave the job market due to automation and median age trends higher, this because more and more difficult. Japan has had serious struggles fighting off deflation for decades now. "stagflation" is simply what happens when inflation keeps up with deflationary trends. It doesn't mean monetary policy is doing nothing. It likely means it's working as intended.

_dain_ 5y ago

But this article is clearly about the Netherlands, not the USA ...

MomoXenosaga 5y ago
Indeed the Dutch economy is fine. Everyone expected COVID to be some kind of economic disaster but despite heroic efforts by the finance minister to spend money like water the Netherlands still only has a 70% GDP debt ratio and unemployment is at 4%. There's a lot wrong with the Netherlands and Dutch people but economically everything is still chugging along nicely. Our sole saving grace.

majormajor 5y ago

The people who outbid you for those houses could have outbid you without any monetary stimulus too, yes?

foepys 5y ago
Not necessarily. If the monetary stimulus was like $10,000 per person, it would be totally different than lowering interest rates that mainly benefit the rich that can get even more cheap money now to buy properties off the market.
raducu 5y ago
A lot of those people bid because interest rates are so low or even negative
- majormajor 5y ago
  So? If they could afford an X/month mortgage, so bidded a higher total cash price because X/month suddenly was a higher total purchase price due to lower interest rates, and the original poster could only afford a X-$300/month mortage, the original poster isn't beating them anyway. There has been an extreme shortage of supply due to some combination of people not wanting to move due to Covid because of exposure to lots of people being required, people valuing homes with more space over apartments more than they did in the past, and people not wanting to try to "trade up" because the houses they'd upgrade to were also being hit by the price increase. That shortage is what fucked the original poster here, not stimulus checks.
  - fileeditview 5y ago
    I think one important point is that said people need to invest into properties instead of say government bonds because interest rates are so low or even negative.
dnautics 5y ago
Sure, some of them. But others (institutional investors) are basically able to make outrageous bids due to access to easy money.

systemvoltage 5y ago

Don't forget, our salaries are largely unchanged although the market is finding it out the hard way (employee shortage). So honest hardworking people got triple-fucked. I can't imagine how well UBI would ever go. This should be the nail in the coffin for UBI for me, I will never vote for it.

lifty 5y ago
You wouldn't vote for the party that promised to implement it you mean. I would love it if more democracies would enable citizens to vote on important issues like this, similarly to what Switzerland does.
- systemvoltage 5y ago
  I've always been a Democrat but lately, I am reconsidering my position. I am not a single issue voter but UBI might be the reason to not support the Democratic party for me (if it ever gets on the ballot). Thankfully, most Democrats I know oppose UBI. The reason I am reconsidering is to do with how the entire west-coast is run - living in Seattle, Bay Area, LA and Portland feels like a third world nation. I'll probably continue to vote for Democrats in the presidential election, but local and county elections it will be the Republicans or Libertarians.
  - vineyardmike 5y ago
    > living in Seattle, Bay Area, LA and Portland feels like a third world nation UBI would help a lot with homelessness and blight. Also seattle is not nearly as bad as the rest of those places in 90+% of the area.
    - nostrademons 5y ago
      If it's coupled with actually building houses. Add UBI to existing zoning & construction regulations and you'll just see rent increase.
  - bananabreakfast 5y ago

dec0dedab0de 5y ago

I've been punished for being defensive and not participating in the fueling of an asset bubble. Yes, that is exactly it. The economy falls apart if everyone saves too much. Money is an imaginary number designed to facilitate separation of labor, if too many people save and retire early then there won't be enough people working. FWIW I am the same way, and used to be angry about it, but I have accepted it for what it is. I bought my house 15 years ago at the height of the last housing bubble. I was under water for a while, but I didn't qualify for any of the assistance because I bought a house I could afford. If I had bought a more expensive house, or if I made slightly less money I would have been able to get some money from the government. It was all based on the ratio of income to mortgage payment, which is still kind of annoying. Only way I could cut my losses in my mind was to pay off the house as quickly as possible, to save money on interest. So now it's paid off, and for the first time since a year after I moved in Zillow has it at a higher price than I paid for it, though just barely. But back to the point, don't keep your assets in cash, or any one thing for that matter. Index funds, mutual funds, commodities, collectables, anything that is easy to sell and will generally go up in price with inflation. These policies are meant to encourage people with cash to do things with that cash, instead of hoarding it.

arcticbull 5y ago
> Yes, that is exactly it. The economy falls apart if everyone saves too much. Money is an imaginary number designed to facilitate separation of labor, if too many people save and retire early then there won't be enough people working. Yes, this I recently learned is called the paradox of thrift. [1] [1] https://www.investopedia.com/terms/p/paradox-of-thrift.asp https://www.investopedia.com/terms/p/paradox-of-thrift.asp
- imtringued 5y ago
  It's not just the paradox of thrift. The general concept is the paradox of competition. There are macroeconomic statements that always apply but as individuals optimize their local statements they actually end up "deoptimizing" the global statement. Basically a race to the bottom or a continuous form of the prisoners dilemma. In other words, the idea that local decision making will always reach a global optimum, the very foundation of free market economics, isn't even true in theory given our current money system. See this in the case of Greece vs Germany. Germany is trying to boost exports by cutting back on imports. If Greece would retaliate by following the exact strategy there would be less trade between them overall. Meanwhile if both countries tried to boost imports, then both of them would be better off. How exactly does Germany do it? The government is simply enacting policies to destroy the bargaining power of labor. Yes, Germany is trying to compete with Greece based on labor costs. It's trying to pass off a questionable economic policy that destabilizes the eurozone as strength because of moral attachments to export industries and saving money while blaming the other side for importing its products and borrowing to pay for them. This is why the eurozone is a failure and every country should have its own currency. https://en.wikipedia.org/wiki/Paradox_of_competition https://en.wikipedia.org/wiki/Paradox_of_competition

WalterBright 5y ago

Inflation is a tax on cash. It's how the government can spend money without increasing explicit taxes. I don't hold any cash because of this. However, asset inflation is not quite the solution it seems, as the government taxes the illusory capital "gains" due to inflation. I suspect the stock market surge over the last year is mostly fake inflation gains.

arcticbull 5y ago
> I suspect the stock market surge over the last year is mostly fake inflation gains. It's not really possible to make 100% gains out of 5% inflation. Not every price increase is inflation! The increase in the price of stocks isn't really inflation (except with respect to CPI) because 1 share of AAPL buys you far more CPI goods than 1 share of AAPL bought you 2 years ago. For it to be "inflation" and "entirely illusory" 1 AAPL share, while priced at $150 would have to only buy you as much a 1 AAPL share 2 years ago at $50. That makes the increase in asset prices "ROI" not inflation. What you're seeing is a massive increase in personal savings among Americans, recently at near all-time highs. [1] Combined with FINRA margin debt at near all-time highs due to the low-cost and broader availability of loans. [2] That's my theory anyways. [1] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT [2] https://www.advisorperspectives.com/dshort/updates/2021/08/12/margin-debt-and-the-market-down-4-3-in-july-first-decline-in-15-months https://www.advisorperspectives.com/dshort/updates/2021/08/1...
- WalterBright 5y ago
  Do you really believe that inflation is only 5%? I don't. I see big price increases across the board. BTW, what the shares of one company does means nothing in this discussion. What the S&P 500 does means something.
  - arcticbull 5y ago
    (1) well I don’t know what to tell you haha, inflation calculations are public. You can’t just say without citation that ehhh I feel like it’s not though shrug - this is actually something you can calculate! Please, do it, or cite some sources - ideally credible ones! You can’t just make giant claims like that without evidence. Of course certain contributors will be higher than the average weighting - like housing - but that’s how averages work. (2) ok the same exact thing applies to SPY shares and doubly so when you include dividends. I mean AAPL is 7% of the S&P500 and 12% of the NASDAQ and so is fairly representative but your point is well taken.

divbzero 5y ago

Not only has the Fed’s endless easing been unfair to many, I fear what will happen next. We will suffer when the bubble pops or inflation worsens or both.

imtringued 5y ago
We'll see about that. I was predicting deflation months ago. Now that the government is cutting back on stimulus the labor market will have to support itself.
eru 5y ago
Do you want to bet on the 'bubble popping' or 'inflation worsening'? Financial markets don't seem to expect either. Inflation expectations (via TIPS spreads) are where the Fed wants them.

exporectomy 5y ago

I can understand your frustration, but you seem to have contradictory feelings. You didn't want to fuel an asset bubble and are unhappy that you didn't?

01100011 5y ago
Are you fueling an asset bubble every time you make a purchase?

eru 5y ago

Why? Fiscal stimulus is very expensive. Monetary stimulus is basically free.

01100011 5y ago
But it's not free. Idiots like me are paying for it.