Date: December 28th, 2021 11:51 AM Author: DrakeMallard (🦆) https://www.politico.com/news/magazine/2021/12/28/inflation-interest-rates-thomas-hoenig-federal-reserve-526177
Between 2008 and 2014, the Federal Reserve printed more than $3.5 trillion in new bills. To put that in perspective, it’s roughly triple the amount of money that the Fed created in its first 95 years of existence. Three centuries’ worth of growth in the money supply was crammed into a few short years. The money poured through the veins of the financial system and stoked demand for assets like stocks, corporate debt and commercial real estate bonds, driving up prices across markets. Hoenig was the one Fed leader who voted consistently against this course of action, starting in 2010. In doing so, he pitted himself against the Fed’s powerful chair at the time, Ben Bernanke, who was widely regarded as a hero for the ambitious rescue plans he designed and oversaw.
Hoenig lost his fight. Throughout 2010, the FOMC votes were routinely 11 against one, with Hoenig being the one. He retired from the Fed in late 2011, and after that, a reputation hardened around Hoenig as the man who got it wrong. He is remembered as something like a cranky Old Testament prophet who warned incessantly, and incorrectly, about one thing: the threat of coming inflation.
But this version of history isn’t true. While Hoenig was concerned about inflation, that isn’t what solely what drove him to lodge his string of dissents. The historical record shows that Hoenig was worried primarily that the Fed was taking a risky path that would deepen income inequality, stoke dangerous asset bubbles and enrich the biggest banks over everyone else. He also warned that it would suck the Fed into a money-printing quagmire that the central bank would not be able to escape without destabilizing the entire financial system.
On all of these points, Hoenig was correct. And on all of these points, he was ignored. We are now living in a world that Hoenig warned about.
The Fed is now in a vise. Inflation is rising faster than the Fed believed it would even a few months ago, with higher prices for gas, goods and automobiles being fueled by the Fed’s unprecedented money printing programs. This comes after years of the Fed steadily pumping up the price of assets like stocks and bonds through its zero-percent interest rates and quantitative easing during and after Hoenig’s time on the FOMC. To respond to rising inflation, the Fed has signaled that it will start hiking interest rates next year. But if that happens, there is every reason to expect that it will cause stock and bond markets to fall, perhaps precipitously, or even cause a recession.
“There is no painless solution,” Hoenig said in a recent
interview. “It’s going to be difficult. And the longer you wait the more
painful it will end up being.” |
Date: December 28th, 2021 11:52 AM Author: The Penised Individual Who Raped You Check You Emails (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688791) |
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Date: December 28th, 2021 11:54 AM Author: chilmata (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688800) |
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Date: December 28th, 2021 11:59 AM Author: .,,,,.,.,.,.,.,.,,.,.,.,. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688821) |
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Date: December 28th, 2021 12:00 PM Author: bowlcut autist There’s no way they can raise rates enough to get inflation under control. In the 70s they went as high as 20% and ljl at that happening now with so much debt. Only choice is to keep the money printing ponzi going. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688826) |
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Date: December 28th, 2021 12:00 PM Author: .,.,...,..,,,.,:.,:,,..,:::,.,...,:,.,.:.:.,:.::,. worth trying 20% interest rates just to see what happens 🔥🧨 (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688831) |
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Date: December 28th, 2021 12:02 PM Author: bowlcut autist They’ll just inflate the currency to oblivion and replace the dollar with a CBDC (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688843) |
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Date: December 28th, 2021 12:09 PM Author: GPT-3 (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688887) |
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Date: December 28th, 2021 12:25 PM Author: 10-4 Good Buddy (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688998) |
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Date: December 28th, 2021 12:01 PM Author: TEEN W0LF it's brrrr all the way down (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688834) |
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Date: December 28th, 2021 12:01 PM Author: .,.,.,.,.,...,.,,.,,.....,.,..,.,,...,.,.,,...,. They'd have to raise rates by like 10% to curb inflation, but it would completely destroy the economy lol (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688835) |
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Date: December 28th, 2021 12:04 PM Author: DrakeMallard (🦆) *stock market
which, tbf would be the economy given the banks would blow up |
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Date: December 28th, 2021 12:33 PM Author: (?) LOL! a 3 or 4% interest rate would send US into depression (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689030) |
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Date: December 28th, 2021 12:33 PM Author: 10-4 Good Buddy The only counter argument I can think is that they would raise rates and crash everything so the rich can buy on the cheap. But I think that that has already happened more or less. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689033) |
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Date: December 28th, 2021 12:03 PM Author: .,.,.,.,.,...,.,,.,,.....,.,..,.,,...,.,.,,...,. basically if they raise rates above the % GDP then the government becomes insolvent (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688851) |
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Date: December 28th, 2021 12:29 PM Author: 10-4 Good Buddy Reminder that the Fed averaged over $100 billion per month in MBS purchases for 2020. No wonder Big Finance is buying houses. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689023) |
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Date: December 28th, 2021 12:37 PM Author: ;..;.;;;.;;.;.;.;;;.;;;.;.;;;....;. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689046) |
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Date: December 28th, 2021 12:40 PM Author: Cow goes Moo They can't actually solve inflation anymore with rate increases.
the cat is out of the bag with the money printing. They need to actually crush the balance sheet of the fed (rates would rise as a result, but more as a byproduct).
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Date: December 28th, 2021 12:43 PM Author: ,.,,.,.,,,,,,,,,..,.,,.,,,,,,,, Globalization is very deflationary, and it's not going anywhere. For example, now that China isn't such a good cheap labor place, Indonesia is taking over. Most of the gold farmers in WoW are Indonesian now.
This phenomenon of moving production to the cheapest location didn't exist in the late 70s, nor are unions remotely as powerful now as they were then. So US wages can only go so high since we're competing with Indonesians, and if Americans only have so much to spend, then consumer prices can only rise so high.
Efficiencies cased by things like Amazon.com and Walmart also didn't exist in the late 70s. People had to pay what their local grocery store charged.
So I think we could get inflation under control with much, much lower rates than Volcker had to resort to in the early 80s.
More importantly than what I think, the 10 year bond yields show that the bond market thinks that.
https://www.cnbc.com/quotes/US10Y
No one would be buying 10 year bonds yielding less than 1.5% if
the smart money doubted the Fed can and will get inflation under
control. |
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Date: December 28th, 2021 12:47 PM Author: TEEN W0LF yeah, i just bought an android tablet for 69 dollars and used it to make a video with edited graphics and text and music and voiceover that same day using free apps and uploaded it to youtube where millions could (potentially) view it... and I just went on the walmart site and ordered prescription vision swimming googles for $11...they will be here today, a week later...
both harnessing cheap asian labor via the internet and super efficient shipping...massively deflationary |
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Date: December 28th, 2021 12:53 PM Author: ,.,,.,.,,,,,,,,,..,.,,.,,,,,,,, Yep- also, look at the increase in crop yields since the 1970s:
https://ourworldindata.org/grapher/average-corn-yields-in-the-united-states-1866-2014
Transportation and shipping has also gotten more efficient- everything has. That Mexican roofing your house has a nail gun, not a hammer.
With all these increases in efficiency, it's real small-brain thinking to contend we can go back to the late 70s, much less the Weimar Republic. An acre of crop land yields 5x what it did during the Great Depression.
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Date: December 28th, 2021 1:00 PM Author: Cow goes Moo All those efficiencies have been realized. You would need to argue that many continue to improve at the same pace unabated for your stance to be valid. I highly doubt that housing construction will get much cheaper (holding to the same quality standard). Likewise, there is an upper limit on harvest yields given increasing restrictions on fertilizer and pesticide usasge etc.
Speaking of fertilizer, did you know a big input is nat gas
prices. Do you want to know whats going to happen to fertilizer prices
next year? Don't you think that will flow into crop prices? |
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Date: December 28th, 2021 1:02 PM Author: DrakeMallard (🦆) Fertilizer prices gave already skyrocketed (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689159) |
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Date: December 28th, 2021 1:17 PM Author: Cow goes Moo Didnt mean to imply they hadn't just got tenses wrong. I just think its going to get worse. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689224) |
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Date: December 28th, 2021 12:57 PM Author: Cow goes Moo 1. Do not look at bond yields as an indicator of market expectations re: inflation. Someone going long the 10Y today at a massively negative real rate is not doing so because they expect to generate a real return in the future. They are doing it because the expect further Fed intervention to push yields lower, driving their bond investment higher. The bond market is now completely driven by market players betting for/against central bank intervention. Thats why half the bonds in Europe had negative yields for a while.
2. If you look at inflation and the damage it can cause, its mostly driven by higher housing costs, higher food costs, higher raw material inputs and logistics issues. Only that last one can be improved upon by globalization.
Housing is local.
Food is mostly regional, and to the extent that it is global, production is already occuring in the lowest cost parts of the world.
Raw materials prices are driven by scarcity of easily accessible
materials and a lack of capital invest driven by climate policy.
Neither of these can be changed by technology or globalization. The oil
and copper markets are already globalized. Short of new inventions for
extraction you have no more tailwinds on that front. |
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Date: December 28th, 2021 1:02 PM Author: ,.,,.,.,,,,,,,,,..,.,,.,,,,,,,, Lacy Hunt is a highly respected bond expert. He still thinks deflation is more likely than inflation.
His bond purchases, and those of many others like him, are
informed by this view that deflation is more likely, not by a belief
that the Fed will distort the bond market indefinitely. |
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Date: December 28th, 2021 1:05 PM Author: DrakeMallard (🦆) Appeal to authority? On XO? Really? (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689168) |
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Date: December 28th, 2021 1:08 PM Author: ,.,,.,.,,,,,,,,,..,.,,.,,,,,,,, Hunt is a massive bond purchaser, not just some pundit. So yes, his opinion matters in rebutting what the guy above me posted about why bond yields are so low.
Doesn't mean that Hunt is necessarily correct, of course, but
it's wrong to say bond yields are so low because the smart money thinks
the Fed will fix the market. |
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Date: December 28th, 2021 1:13 PM Author: Cow goes Moo Yes he is just betting V continues to drop. I guess having been between 1 and 1.5 for the entirety of recorded monetary history is outweighed by his opinion that it will stay at 0.5 for the foreseeable future.
You also missed the key data point: why are European bond yields
NEGATIVE. That can't be driven by purely a call on deflation, by
definition the only way to make money on a bond investment with a
purchased YTM thats negative, is if it goes more negative. What is the
only process by which that happens? If the ECB p buys those negative
rate bonds. |
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Date: December 28th, 2021 1:14 PM Author: DrakeMallard (🦆) Hunt manages $4B. That’s literally nothing in FI
Mohammed El Erian manages $3 TRILLION |
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Date: December 28th, 2021 1:16 PM Author: Cow goes Moo He also can't explain negative rates with a deflation hypothesis UNLESS you dovetail that with central bank rate/QE actions (at which point the tail is wagging the dog). (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689220) |
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Date: December 28th, 2021 1:10 PM Author: 10-4 Good Buddy Read the new Market Wizards. The traders with biggest gains traded bonds on expectations of central bank interventions. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689188) |
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Date: December 28th, 2021 1:15 PM Author: Cow goes Moo Its been crystal clear that since 2008 the bond market has been exclusively just a betting market on central bank actions.
Maybe once you leave IG it becomes more about economic outlook
at whatnot. But lol if he thinks the 10Y is driven by a genuine view on
anything but what the Fed does over the next few years. |
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Date: December 28th, 2021 1:20 PM Author: ,.,,.,.,,,,,,,,,..,.,,.,,,,,,,, But the Fed's tapers on QE have already been announced and scheduled. By the middle of next year the Fed won't be buying any treasury bonds (correct me if I'm wrong). Are you saying the Fed is going to backtrack on that? Why on earth would they do that if inflation is going to increase as you contend? (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689241) |
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Date: December 28th, 2021 1:29 PM Author: Cow goes Moo Your asking me in bewilderment if the Fed could possibly backtrack on its schedule to taper/end QE? Have you been alive for the past 13 years? Do you want to count how many false starts and backtracking has gone on each time the Fed tries to normalize rates and shrink its balance sheet?
Hell we all forget that before COVID, in the Fall of 2019, the Fed literally had to reopen and support the repo market with massive liquidity. This was at the same time it was trying to tighten.
The Fed will most certainly backtrack because they will not have the wherewithal to push through with taper and higher rates. It will destroy the economy and they will make the decision to let inflation run in order to avoid tanking the economy.
They will make the stupid decision to avoid taking the gross
medicine and let the disease worsen. I think the bond market is right to
have such negative real yields. |
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Date: December 28th, 2021 2:13 PM Author: TEEN W0LF so you are saying that the fed will not tighten AND that inflation will increase and 'run'? Where are interest rates going to be? (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689581) |
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Date: December 28th, 2021 2:56 PM Author: ,.,,.,.,,,,,,,,,..,.,,.,,,,,,,, If Powell hadn't already been re-nominated I might agree, but he has been, and he seems to take his inflation-fighting duty at least somewhat seriously. I don't see him backtracking on QE- the question is how high he will raise rates imo. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689806) |
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Date: December 28th, 2021 1:14 PM Author: The silence of our lib friends Bernanke, Powell, Yellen, all need to be strung up. (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689207) |
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Date: December 28th, 2021 2:58 PM Author: Refunkulus (I Always Post Always TP) harsh but fair (http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689820) |
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Date: December 25th, 2021 1:41 PM Author: Your President Idris R. Biden PD if you want the best plea on the DAY OF TRIAL, because they won't have time to investigate your case or file dispopsitive motions until then.
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https://xo2day.blogspot.com/2021/12/do-i-need-attorney-for-misdemeanor-dui.html
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