The End of the Beginning
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“Interest rates are financial gravity” just may be the best line I’ve heard in nearly 40 years in this business.
If push came to shove and Powell were to dig in his heels on his aversion to negative rates, what could the Fed do about it? Start to liquidate some of the balance sheet? That would seem pretty weird, during the End Times and all. I think it’s probably all talk, and this will just erode the credibility of the Fed a little bit more.
I’ve believed for a while that the widening gyre is almost entirely explained as a consequence of a shrinking pie. Shrinking for the rubes, anyway, as the elites scoop up more and more for themselves. Wealth inequality has the first order effect of depriving the rubes of resources they would need to be a real threat, but also the second order widening gyre/shrinking pie that keeps them at each others’ throats to hamper their ability to use what resources they do have to effect change. Nonlinear positive feedback (to WI) makes for some kind of singularity in the future, and probably not the cool VR kind.
I prefer the phrase written as “THEY are all MMTers now”
and they’re jerks for doing it
I have a pet theory that we need a Big Project to arrest the widening gyre. Ideally one that is not a revolution or a big war. I like to poke fun at Elon Musk as much as the next guy, but SpaceX in particular is inspiring and aspirational to me.
I am so gonna steal that.
First of all this was a fantastic read!
As far as inflation is concerned I’ll share a story. In 2008 our manager came in my office and asked “ how close are we the bottom?” My reply was this — “ I don’t know but I will tell you exactly when we will hit the bottom, when I longer have the energy or the will to try to talk panicked investors from selling all of their positions.”
I was right on both counts , that day came, and it was the bottom.
My feeling on inflation is the same , once we all become convinced that this time somethings different and inflation is not coming that is when it will come. I think we have inflation now in everything but the inflation number, but I am talking about inflation that cannot be ignored or ?♂️.
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