The US is dead broke. Yet, today's politicians on both sides seem to think we can just keep issuing these multi-trillion dollar (largely boondoggle) "stimulus" bills that add HUGELY to our already unsustainable debt burden.
Multi-trillion dollar lump spending (over and over again) simply can't last.
Inflation? Heck, yeah. Perhaps runaway inflation.
And even then, there won't be enough $$ to pay for everything including the interest on all that new national debt.
Eventually, the whole thing has to go belly up. We simply can't keep spending at the levels that we are spending at and expect our financial system to survive long (or even near) term.
My entire life I've heard this and believed it. After the previous Covid spending bill I realized we've had deficit spending for all the years I've been alive except for five years. The national debt rolls onward and upward. And yet...no real elevated inflation rates outside of the mid 70's and early 1980's, almost all of it related to oil prices shooting upwards.
So there is the world we live in and the world that we are told we live in. Pick.
I heard that last year's COVID spending was > $4T. Now add $1.9T. That's almost $6 TRILLION "one-off" spending in addition to the normal deficit spending we usually have.
There's a point that printing money by the wheelbarrow full destroys the value of all existing dollars - and if we keep going like this, we're gonna hit that point quite rapidly, IMHO.
Now it’s Biden’s spending plan that’s going to trigger inflation. And why should I believe it this time?
I'm using 3.0% inflation average, and 1.0% stddev.Inflation typically refers to CPI over sustained periods of time, not snapshot views of specific commodity prices. So, for those who feel the rate of inflation is going to increase or already increasing:
What rate do you project for inflation and when does it reach that level?
Edit to add - the most recent BLS showed 0.3% in January and 1.4% for the previous 12 months. https://www.bls.gov/news.release/pdf/cpi.pdf
Because, as I said above, we've never in our entire history as a country had spending to the LEVEL we're talking about.
It took us nearly 244 years to get to $28T. Now, we're talking about spending nearly three quarters of that (71%) in less than 2 years JUST on "one-off" spending: COVID "stimulus" (although much of it is reportedly not COVID related), Infrastructure and even potentially reparations..
That has never, ever, ever happened - and it's 100-1000X anything that Reagan, Obama, Trump or anyone else ever did or considered. And spending nearly 75% of our ENTIRE debt incurred over 244 years in the span of 24 months is a recipe for disaster, IMHO.
Any of us who have saved anything for retirement should be extremely concerned. The value of those savings is potentially going to be vaporized by spending at these levels.
FWIW, I'd love to be wrong in the end and have everything turn out just fine and ducky. But I don't suspect I will be.
The only thing that will save us from inflation is allowing a bust in the FED driven bubble-bust cycle. Federal Reserve and government are scared politically to let that happen, and has already created inflation. We are already seeing some of the resulting price inflation in many sectors, and it will likely get worse unless the FED allows interest rates to rise and pulls in liquidity.There's probably 3 Trillion dollars in US denominated currency outside the US. We don't have much tourists right now to spend 'US dollars' in US tourism industries.
The stimulus won't cause inflation, because our economy contracted by nearly 1.9 Trillion dollars in 2020 - big drop in consumer spending. And there are millions of people unemployed - both officially reported and unofficially reported. To get back to growth, the stimulus is needed to pump prime the economy.
Can I still buy a $1.19 Cheeeseburger - Yes. Food and essentials -there's no inflation here. Housing prices are a bit higher, since there's a higher demand due to covid19 and there's less construction going on.
The only thing that will save us from inflation is allowing a bust in the FED driven bubble-bust cycle. Federal Reserve and government are scared politically to let that happen, and has already created inflation. We are already seeing some of the resulting price inflation in many sectors, and it will likely get worse unless the FED allows interest rates to rise and pulls in liquidity.
Yeah, my personal inflation on the same things I've been spending money on is getting out of control. Greenspan said inflation is his biggest concern.
Inflation typically refers to CPI over sustained periods of time, not snapshot views of specific commodity prices. So, for those who feel the rate of inflation is going to increase or already increasing:
What rate do you project for inflation and when does it reach that level?
Edit to add - the most recent BLS showed 0.3% in January and 1.4% for the previous 12 months. https://www.bls.gov/news.release/pdf/cpi.pdf
Wow 10 year treasuries yield was today momentarily up 10%. Something is starting to happen.
Since when family making $150K considered poverty? I could have understood to give help to unemployment people but printing money and giving them away to majority of US population? Classical inflation - more money than products.I guess there are several things happening. The monetary policy is potentially leading to asset bubbles, but some economists seem to believe that you can only recognize a bubble once it pops, so no alarms are going off.
There is a fiscal "stimulus," but it's not so much a stimulus as a get-out-of-poverty-free card for those impacted by the pandemic.
So I'm not seeing the inflation argument. I am buying the slow, painful recovery argument, though. And maybe asset *deflation* after we get back to some sense of normal.
Genuine fiscal stimulus is also on the table (e.g., infrastructure spending). That seems like a good idea to me.
Since when family making $150K considered poverty? I could have understood to give help to unemployment people but printing money and giving them away to majority of US population? Classical inflation - more money than products.
My short version, from Econ 101, is that inflation requires "too much money chasing too few goods". While there is a lot of money sloshing around, there is no shortage of goods. Or of labor thanks to Covid (we were approaching labor shortages a year ago and real wages were rising). And we haven't had real shortages of anything important for a long time. Hence little to no inflation.
The main reason of the drop of economy is that goods and services that would normally have been produced and rendered were not produced last year due to Covid. I don't know the exact number off the top of my head, but it is in the neighborhood of the 1.9 Trillion quoted by cyber888. That number appears as missing income, but much of that missing income is due to the fact that the goods and services that should have been produced and that would have led to this missing income are not there.<snip>
The stimulus won't cause inflation, because our economy contracted by nearly 1.9 Trillion dollars in 2020 - big drop in consumer spending. And there are millions of people unemployed - both officially reported and unofficially reported. To get back to growth, the stimulus is needed to pump prime the economy.
Fundamental economics and human action doesn't change just because technology and innovation does.Respectfully, these experts may have fine credentials and be mildly interesting to listen to, but they do not know the answer to the question.
The factors which drove inflation in the 70s will likely never recur so trying to compare that period with now I think is useless.
I think our recent experience shows that inflation is far less of a concern than it was in the past.
Perhaps that will change but there is no such indication at this writing.
That is a useful way of thinking. Can you expand a bit what you think the drivers for the 1970 problems were? What immediately comes to mind is of course the oil price shock, which took out an unexpected chunk from the US economy. Other than that, there were management mistakes that are more clearly visible in hindsight. What else contributed? Also now we have a big unexpected chunk taken out of the US economy.Respectfully, these experts may have fine credentials and be mildly interesting to listen to, but they do not know the answer to the question.
The factors which drove inflation in the 70s will likely never recur so trying to compare that period with now I think is useless.
I think our recent experience shows that inflation is far less of a concern than it was in the past.
Perhaps that will change but there is no such indication at this writing.