US Economy 30% Down (Annualised)

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US Economy 30% Down (Annualised)

Postby ROB » Tue Aug 11, 2020 11:24 pm

What are the bets for the next quarter?

I bet the slide will ease significantly, but still shitville for a while yet.

Wouldn't want to be poor in the coming few years though. Teachers and nurses will be the new working class royalty (ie they actually have a stable job). And teachers maybe not.

The rich will be picking up some serious bargains when the stock market catches up (down) with the real economy. Hope you guys have been saving up.
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Re: US Economy 30% Down (Annualised)

Postby snaark » Wed Aug 12, 2020 5:28 pm

My prediction is ... we're all fucked.

But seriously, it depends on two things:
- whether the US congress & senate can agree on a follow-up stimulus that actually helps normal people; and
- how bad corporate bankruptcies are going to get

In any case, anyone expecting a V-shaped recovery is going to be disappointed.
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Re: US Economy 30% Down (Annualised)

Postby ROB » Wed Aug 12, 2020 11:40 pm

That is the weird thing. Every Keynesian and most Austrian economists seem to want stimulus. Yet a lot of government seem to want austerity.

This is gonna be a long one.
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Re: US Economy 30% Down (Annualised)

Postby snaark » Fri Aug 14, 2020 7:10 am

I find it amazing how quickly most governments have taken to it (stimulus I mean). In Germany they've thrown everything at it - even money transfers to Southern Europe. This was anathema just a few years ago. It took me a while to get my head around it, not being a trained economist and all. I mean why debt-gdp per se is not what's important. The bigger question, I think, is what other long-term effects it will all have. We're definitely entering a new era in economics. Its a pity that Keynes isn't here to figure it all out. I mean, there are plenty of clever economists in the world, but no towering figure that everyone will listen to.
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Re: US Economy 30% Down (Annualised)

Postby ROB » Fri Aug 14, 2020 8:36 am

There are a few but there have always been 2 main streams of economics so plenty of room to ignore according to political preference.

Sowell for conservatives/ libertarians / Austrians
Krugman for Keynesian
Kelton for MMT

The real debate at the moment is how much “debt” a country can carry. Sowell = low. Krugman = middle. Kelton = high (but constrained by inflation).

Japan has fucked up Sowell’s team. Literally could only barely spend their way out of stagflation.
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Re: US Economy 30% Down (Annualised)

Postby snaark » Fri Aug 14, 2020 9:12 am

I like Krugman's NYT column but I don't think he's really that active as an academic economist anymore. I "read" (i.e. as audiobook) Sowell's book on Basic Economics, but it seemed a little outdated to me.

Keynes was a giant at the time, who would be invited by presidents and prime ministers to advise them. Milton Friedman had the same influence decades later. These days there are too many voices, but as you said pretty much everyone agrees on stimulus.

As Robert Shiller says, MMT isn't all that modern, it's just a new spin on Keynesianism. With QE the Fed holds most of the debt and the treasury issues it, so it's just one branch of govt borrowing from another. As long as interest rates stay low you can keep doing that almost forever (like Japan). At least that's how I understand it.

Wish I'd studied macroeconomics but I'm too old to do another degree.
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