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> Teetering between hyperinflation and deflationary collapse sounds like a long winded, alarmist way to say “in pretty good shape.” No it's actually a less ala

> Teetering between hyperinflation and deflationary collapse sounds like a long winded, alarmist way to say “in pretty good shape.” No it's actually a less alarming way to say "we're at a point where the economy could collapse overnight (not exaggerating here, I quite literally mean it would take one night where very feasible events occur) and almost has on multiple occasions in the past 3 years" >But it’s pretty hard to say what’s wrong exactly? No it's not hard actually. Real inflation is still extremely high despite very high interest rates and despite job losses, consumer debt is insanely high, several banks have collapsed, the economies of several countries have collapsed, there is a growing anti-US economic block and monetary velocity is running off a cliff in an uncontrolled manner.

ethanbond 3y ago
Which reality do you live in? At least in the US, inflation is not “extremely” high and it’s been coming down for several months now. Interest rates are not “very high” by any historical measure and likewise are stalling and even coming down already. The labor market is ridiculously strong. The “several banks” that collapsed should have collapsed due to their own poor risk management [0] and the systemic risk was mitigated effectively and quickly. Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.” [0] SVB’s risk model flashed red. So executives changed it. https://www.washingtonpost.com/business/2023/04/02/svb-collapse-risk-model/ https://www.washingtonpost.com/business/2023/04/02/svb-colla...
- BasedAnon 3y ago
  >and it’s been coming down for several months now The inflation _rate_ has been coming down, inflation is still high. >Interest rates are not “very high” by any historical measure They're at 2008 levels and the situation is still not under control. >The labor market is ridiculously strong The labor market is not strong, the numbers don't include people who've dropped out of the market, and the people who are working are being pushed to breaking point and cannot afford their lifestyles (hence why we look at consumer debt, and the polling that shows people are putting groceries on credit cards). >The “several banks” that collapsed should have collapsed due to their own poor risk management I'm not discussing whether they should or shouldn't have. I'm discussing the fact that they did. >and the systemic risk was mitigated effectively and quickly. This was recent enough that the systemic risk is still in play. The FDIC isn't infinite. >Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.” Interest rates hike to control inflation -> nobody wants to lend to consumers because of interest rates -> [money stops moving -> consumer mass default (this is the 'oh shit' overnight moment) -> mass business bankrupcy -> nobody to hire said consumers] (loop) -> risk of uncontrollable deflation -> fed needs to starts money printing again to meet obligations to paper over the fact real productivity is annihilated -> erratic hyperinflation
  - ethanbond 3y ago
    Are you hoping for deflation? Inflation (rate) back to ~2% seems like the optimal outcome but I suppose you'd still be worried that it's high relative to some other arbitrary point in history? Which point in history would that be? It's not like there's some absolute barometer of overall inflation. Employment rates: You can find this data and it doesn't really seem all that alarming to me. In 2013 there were ~2.5MM marginally attached and 800k discouraged workers. Today there are 1.5MM marginally attached and 400k discouraged workers. https://www.bls.gov/webapps/legacy/cpsatab16.htm https://www.bls.gov/webapps/legacy/cpsatab16.htm (I picked 2013 only since it was the earliest data shown on the chart.) That scenario is plausible at any point in time, no? We have to do what we have to do and yes, it could definitely turn out poorly, but so far there's been a whole lot more talk of doom and gloom (for years) than actual doom and gloom. It's not clear there's another path of action anyway. If you know of a "slow inflation but don't risk spooking lenders" button, I'd love to hear about it.
    - BasedAnon 3y ago
      >Are you hoping for deflation Long term yes. >but I suppose you'd still be worried that it's high relative to some other arbitrary point in history Ideally the inflation rate should be around 0.1% and stay consistent with real economic output, instead of going towards feeding a parasitic financial sector. >Employment rates I think you might be right on this point. >That scenario is plausible at any point in time, no? No, recent stresses have made it much more likely. >If you know of a "slow inflation but don't risk spooking lenders" button, I'd love to hear about it. In an ideal world I would spook the lenders more aggressively, and cause the immediate systemic failure of the banking system, and just accept the fallout, but unfortunately such things are relegated to the realm of fiction for now.

ethanbond 3y ago

Which reality do you live in? At least in the US, inflation is not “extremely” high and it’s been coming down for several months now. Interest rates are not “very high” by any historical measure and likewise are stalling and even coming down already. The labor market is ridiculously strong. The “several banks” that collapsed should have collapsed due to their own poor risk management [0] and the systemic risk was mitigated effectively and quickly. Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.” [0] SVB’s risk model flashed red. So executives changed it. https://www.washingtonpost.com/business/2023/04/02/svb-collapse-risk-model/ https://www.washingtonpost.com/business/2023/04/02/svb-colla...

BasedAnon 3y ago
>and it’s been coming down for several months now The inflation _rate_ has been coming down, inflation is still high. >Interest rates are not “very high” by any historical measure They're at 2008 levels and the situation is still not under control. >The labor market is ridiculously strong The labor market is not strong, the numbers don't include people who've dropped out of the market, and the people who are working are being pushed to breaking point and cannot afford their lifestyles (hence why we look at consumer debt, and the polling that shows people are putting groceries on credit cards). >The “several banks” that collapsed should have collapsed due to their own poor risk management I'm not discussing whether they should or shouldn't have. I'm discussing the fact that they did. >and the systemic risk was mitigated effectively and quickly. This was recent enough that the systemic risk is still in play. The FDIC isn't infinite. >Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.” Interest rates hike to control inflation -> nobody wants to lend to consumers because of interest rates -> [money stops moving -> consumer mass default (this is the 'oh shit' overnight moment) -> mass business bankrupcy -> nobody to hire said consumers] (loop) -> risk of uncontrollable deflation -> fed needs to starts money printing again to meet obligations to paper over the fact real productivity is annihilated -> erratic hyperinflation
- ethanbond 3y ago
  Are you hoping for deflation? Inflation (rate) back to ~2% seems like the optimal outcome but I suppose you'd still be worried that it's high relative to some other arbitrary point in history? Which point in history would that be? It's not like there's some absolute barometer of overall inflation. Employment rates: You can find this data and it doesn't really seem all that alarming to me. In 2013 there were ~2.5MM marginally attached and 800k discouraged workers. Today there are 1.5MM marginally attached and 400k discouraged workers. https://www.bls.gov/webapps/legacy/cpsatab16.htm https://www.bls.gov/webapps/legacy/cpsatab16.htm (I picked 2013 only since it was the earliest data shown on the chart.) That scenario is plausible at any point in time, no? We have to do what we have to do and yes, it could definitely turn out poorly, but so far there's been a whole lot more talk of doom and gloom (for years) than actual doom and gloom. It's not clear there's another path of action anyway. If you know of a "slow inflation but don't risk spooking lenders" button, I'd love to hear about it.
  - BasedAnon 3y ago
    >Are you hoping for deflation Long term yes. >but I suppose you'd still be worried that it's high relative to some other arbitrary point in history Ideally the inflation rate should be around 0.1% and stay consistent with real economic output, instead of going towards feeding a parasitic financial sector. >Employment rates I think you might be right on this point. >That scenario is plausible at any point in time, no? No, recent stresses have made it much more likely. >If you know of a "slow inflation but don't risk spooking lenders" button, I'd love to hear about it. In an ideal world I would spook the lenders more aggressively, and cause the immediate systemic failure of the banking system, and just accept the fallout, but unfortunately such things are relegated to the realm of fiction for now.