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 75 bips
Tickerguy 188k posts, incept 2007-06-26
2022-09-21 08:19:55

@Hapie - Check your premise. The inflation one, in particular, is flat-out wrong.

But admitting the correct one, your Congressperson and two Senators, means you have to own it yourself, doesn't it?

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NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Quik49 13k posts, incept 2007-12-11
2022-09-21 08:44:17

And those home loans back then...seems you actually had to back them up with income and a real down payment.

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2 + 2 =5
Hapie 258 posts, incept 2020-07-25
2022-09-21 09:34:34

@Tickerguy Is it correct to say that the overspending by governments is enabled by the collusion between the governments and the central banks, resulting in inflation? And the end result is that the wealth is stolen from the people?
Tickerguy 188k posts, incept 2007-06-26
2022-09-21 09:37:44

In the United States @Hapie, since all revenue bills must originate in the House (per the Constitution) and, all bills must be passed into law without which not one penny can be either taxed or spent, it is always the Congress with concurrence (or override) of the Executive that results in inflation, when it occurs.

The last 20 years have led people to believe that said malfeasance will not result in inflation. They were wrong just as they've always been wrong; the reason it hasn't immediately occurred over the last 20 years was never investigated and understood by these people because they did not care to do so. If they HAD cared they would not have undertaken the measures they did which destroyed, all at once (rather than slowly backing away from it) the inflation-suppressing "feature" of international trade with a stable, known governmental form behind our currency.

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NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?

Hapie 258 posts, incept 2020-07-25
2022-09-21 10:01:55

@Tickerguy Thanks. The Executive has been tearing the up Constitution even by going to wars without a declaration from the Congress and not just in doing that alone.

I remember the answer by a past Republican head of the Congress when asked why the Congress is letting the Executive usurp the power. He laughed and said that the Congress wants to give it to the Executive. Dereliction of duty by the Congress?
Hapie 258 posts, incept 2020-07-25
2022-09-21 10:07:48

@Tickerguy I agree that the "feature" of international trade, that you have written about in your Tickers, of the US dollars not coming back to the US has allowed the US govt to continue with overspending without much inflation.

The foreigners will cash all their bonds, at least stop buying more, if the power behind the US dollar, i.e. the faith in the US govt., is no longer there. But that is likely to happen anyways, even after the Feds jack up the interest rates?
Tickerguy 188k posts, incept 2007-06-26
2022-09-21 10:11:38

Most of it @Hapie has nothing really to do with bonds, since they're locked up for the duration unless you'd prefer to take the capital gain/loss associated. In a rising rate environment that's always loss yet during declining rates its gains, which you'd expect to result in sales (but hasn't historically.)

So no, that's not the explanation. Its simply temporary sequestration in trade, and as the volume of trade goes up so does the amount. Economists have generally ignored this but that's facially stupid. Nonetheless they have, and here we are.

Do recall that Bernanke DID warn Congress that while The Fed (as a creation of Congress, thus under their control on an ultimate basis) could well buffer excess spending that power had limits and when reached very bad things would happen. He was ignored in that warning and now the bad things are happening.

The West made it much worse with the sanctions but that this was always going to end was obvious to anyone who was paying attention.

----------
NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Hapie 258 posts, incept 2020-07-25
2022-09-21 12:28:39

Thank you so much, @Tickerguy, for clearing up the fundamentals.

Now, it is clear how devastating the effects of "sanctions" on Russia can be as the currency implosions unfold! They have been pouring gas into an on-going fire.

It all appears to be well-designed plan, in line with all the other actions by the west, of self-destruction!

Now, the Globalists are trying to control the supply chains.

It appears that enslavement of the people has been their top priority!

Sonoran_monk 1k posts, incept 2021-08-16
2022-09-21 15:08:34

@Tickerguy - In terms of the temporary sequestration how much of a buffer are you referring to? Is most of the unwind already happening and any further spending immediately shows up or is there also a ton of overhang waiting to drop on our heads still?
Tickerguy 188k posts, incept 2007-06-26
2022-09-21 15:09:02

No way to know, but I would presume that ALL deficit spending at this point goes directly to the inflation line.

----------
NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Iou 1k posts, incept 2009-03-16
2022-09-21 16:22:05

TG wrote..
No way to know, but I would presume that ALL deficit spending at this point goes directly to the inflation line.

So over $1 trillion each year. That's going to hurt...

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"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies
Edward.fish 333 posts, incept 2021-12-17
2022-09-21 16:22:49

Hapie wrote..
@Tickerguy Thanks. The Executive has been tearing the up Constitution even by going to wars without a declaration from the Congress and not just in doing that alone.

I remember the answer by a past Republican head of the Congress when asked why the Congress is letting the Executive usurp the power. He laughed and said that the Congress wants to give it to the Executive. Dereliction of duty by the Congress?

@Hapie -- It's really quite simple: it allows the establishment of policies which the people would not countenance by having a different branch of government implement it while they wring their hands in front of the camera whining about the y can't do anything. Indeed, ALL THREE branches so this!
(Just look at how Congress never addressed Roe v. Wade, despite how they have the ability to remove [non-original] jurisdiction from the Supreme Court... or their refusal to dissolve executive-departments.)
Iou 1k posts, incept 2009-03-16
2022-09-21 16:26:30

@Edward.fish, you mean like this?
https://www.zerohedge.com/markets/powell....

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"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies
Greenacr 619 posts, incept 2016-03-15
2022-09-21 21:43:45

Karl -

While driving back from vacation I listened to an interview of Jeffery Gundlach on CNBC (via Sirius XM).

Almost felt like he might be a contributor here as he spoke about how the Fed doesn't set rates but that the market does. He also thinks that the Fed will overtighten and seemed to think that the recession will likely be more severe than what most are thinking.

While still keeping abreast of your blog I haven't commented much as I have been enjoying a fantastic 3 weeks out west. Just found it interesting that there are others seeing things the way you do.
Late_to_the_party 473 posts, incept 2007-08-14
2022-09-22 09:42:47

The data incontrovertibly show that the Fed's *actions* lag the market but to what extent, if any, does their jawboning lead the market? In other words, do we ever have: Fed issues hawkish/dovish statement --> market drives rates up/down --> Fed adjusts target rate up/down?

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-The toughest part of being principled is when it means you must support NOT doing something that would personally benefit YOU. (KD)
-A pig and his money are soon parted.
Mannfm11 8k posts, incept 2009-02-28
2022-09-22 09:42:58

THe air sure went out of the balloon when the chair spoke.

As far as deficits? If 4% becomes the new normal, after a few years, that's $1.2 trillion and counting, a $750 billion pop. Each trillion will be another $40 billion.

I think if I was going to come up with a reason it took so long for inflation to come out of this mess the past 14 years is interest is a cost of doing business, thus many experienced lower costs and some was passed on. The benefits became stale and there are no longer any savings to pass on.

Maybe they try to go back to zero, when it all comes crashing down, but unless the Fed goes back to buying assets I don't think we see long rates in the sub 2% again. We are going to find ourselves massively short of capital. I was shopping commercial real estate and looking at cap rates. There was a Jack in the Box a couple of cities north and I think the net on the lease was 4.85%. That might be okay, if the dirt was absolutely prime going forward, but after 20 years or so, you have an aged building and likely a lower rent scale. I saw an amazing number of medical office buildings and condo's. I suspect we will see a lot of foreclosures going forward.

I ran into a real estate agent who by flat chance had a contact in REO's fall in her lap, back in 2008. She told me of some real deals you didn't see on the street. There is a hell of a lot of commercial property that has been built in the southern half of Collin and Denton county the past few years at low caps. If mortgage rates stay up, suburban growth isn't going to continue and these properties are going to suffer. Houses that were selling for $150K 8 years ago are now pushing $400K. These are 40 year old homes. In 2014 we bought a 3000 sq ft home about 10 years old in a top school district for $300K. These homes pushing $400K are remodelled lower end tract homes from around 1980.

Stuff is so far up in the air, that I'm not sure what to buy, when the time comes. If they continue to push green (Democrats win in Texas), a lot of outlying stuff goes in the trash. They can put more units in a square mile along mass transit than in 25 square miles of suburban single family. There is 100 units and acre allowed and I suspect that number will increase as they build up higher. That is about what you get in 25 acres of SFR. The perimeter here, being projected out 15 to 20 miles might not move at all or no more than 5 miles. AS I explained to a guy tonight, there is an entire 800 sq mile county between US 380 and US 82. There is a lot of hyping the Dallas Noth tollway going to US 82, but not if there isn't traffic. A lot of proprty fails to progress in value, if the march north is stopped or delayed.

Higher rates will increase costs of everything. How much price suppression has occurred with the 40 year downward march in rates? As Karl pointed out several times, Corporations have fattened their bottom line by borrowing in the trend of lower rates. That game is over.

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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith
Tickerguy 188k posts, incept 2007-06-26
2022-09-22 09:43:31

@Late_to_the_party -
Quote:
The data incontrovertibly show that the Fed's *actions* lag the market but to what extent, if any, does their jawboning lead the market

Always. So what?

Cramer jawbones every day. Talk is cheap and everyone uses it.

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NASA faked out a computer instead of running the test.
Then tried to launch and aborted instead of going "BOOOM!"
Did they abort the JABS after faking THOSE tests?
Tbuck 2 posts, incept 2022-03-23
2022-09-23 07:25:49

Nashville wrote..
I so enjoy these economic Tickers and cast my vote for more of same.
You should have been here in 2007/2008 as mortgage companies and markets imploded and Karl graced us with video commentary nearly every day. I think my stomach still hurts from laughing so hard. Spot on informations as always but the delivery was a snarkfest second to none.
Steelpiston71 7k posts, incept 2007-09-05
2022-09-23 11:55:11

@Tbuck, Mark Hanson was the Truth Bomb, he had actual video and papers of NINJAs. In... 2008.


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"We have resolution authority under Frank/Dodd... How about we USE IT?" Karl Denninger, 10/07/10 on the Dylan Ratigan Show, MSNBC.
Redwood 529 posts, incept 2009-05-17
2022-09-24 08:42:33

Yes, June 2009 Bernanke warned congress. Bernanke said large U.S. budget deficits threaten financial stability, government can't continue indefinitely to borrow at the current pace to finance the shortfall, and that "unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth." He did warn the FED won't finance government spending over the long term. This should lessen the very real threat of inflation, which would devalue every dollar.
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