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Very Hot Topic (More than 25 Replies) - Fed inverts yield curve - Fed funds rate at higher rate than long term bonds (Read 186 times)
TowardLiberty
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Re: - Fed inverts yield curve - Fed funds rate at higher rate than long term bonds
Reply #30 - Aug 14th, 2019 at 4:05pm
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admin wrote on Aug 14th, 2019 at 1:02pm:
- any good libertarian knows raw material prices dont go up causing inflation due to growth - because the market finds new supplies and alternatives - like oil supply increased and alternatives and efficiency



Nonsense. Prices reflect demand. An expanding economy means greater demand for inputs and that leads to higher prices.

Yes, substitution does occur but those are marginal adjustments, you still get rising prices with rising demand.

Any libertarian who has an interest in economics knows this.

Quote:
- only reason production or investment isnt high is because the supply of everything is available like on the net and competition and alternatives and china driving down prices killing businesses - all deflationary - people dont have unlimited buying power to buy more of everything- plus lower prices mean incomes are less for workers and investors

Actually, that is backward. If prices are lower that means incomes are HIGHER for consumers. Our dollars go further. That's a real wage increase.

Production and investment are weak right now because firms are forecasting that such investments would not be profitable. As you say, there is not unlimited buying power. I agree that trade, competition and alternatives are ultimately deflationary but that's supposed to be a good thing.

That's what economic growth means: getting more for less.

Maybe we should get use to production at this level and stop comparing our situation to those artificial periods of heightened activity we knew in the dot com and housing bubbles.

After all, we brought a lot of production & consumption forward, "through time," enjoying yesterday what we are to produce tomorrow. If you eat your seed corn your next harvest will be diminished.

That's our situation, in a nutshell.
« Last Edit: Aug 14th, 2019 at 4:17pm by TowardLiberty »  

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"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.” F A Hayek
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TowardLiberty
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Re: - Fed inverts yield curve - Fed funds rate at higher rate than long term bonds
Reply #31 - Aug 14th, 2019 at 4:14pm
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admin wrote on Aug 14th, 2019 at 1:12pm:
- long ago he said that - he wasnt President then


Yes, he was not a politician then. He was free to be truthful and had more incentive to do so.

Now he has an interest in low rates, they benefit him and help his reelection chances. And they paper over our trade missteps.

Quote:
- hes been saying the Fed should cut rates and shouldnt have raised them - he was right

Was he? Who is to say?

I argue it was right but perhaps we tightened too fast. Perhaps one or two rate cuts could have been postponed. I'll go there.

But the whole exercise was not a mistake.

We don't know how things would have played out without the trade war shock. But I have no doubt that ultimately a downturn is inevitable regardless of what we do.

The only question is how much ammo will the Fed have (how much room to ease) when the crisis comes?
  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.” F A Hayek
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