Hey Matt. Just wanted to say thanks a ton for the look and the opportunity. It's funny, watching your coverage of the '08 crisis got me on my way, though we've never really chatted up until now. Been following you since we were both Democrats (yuk yuk). You're the first 'mainstream' outlet to give me a little shot in the arm after a decade of writing. It means everything, esp. coming from you. -C
It's not surprising that the mainstream economic media has fallen -- like other parts of the media -- into being propaganda pushers. Just the other day I watched Gavin Newsom tell Jen Psaki that this was one of the greatest economies of all time, and those dirty right-wingers kept telling lies about how bad things were.
Of course, Gavin doesn't do his own shopping so WTF does he know?
"...the crony capitalism that gives free market capitalism a bad name, which then seduces idiots into thinking that socialism is the answer, when that would be an even worse catastrophe."
I've been happily married for 15 years but I just fell in love again!
Fiat money is the biggest fraud ever perpetuated on the lumpenproletariat plebs by the ruling classes. It makes the invisible man in the sky story look possible. Like the invisible man in the sky story it works because of the genetic flaw that the nasty little henchman Yuval Noah Harari explained so well in "Sapiens". Homo Sapiens can and do believe "stories" and the more fantastical the better. If you tell >99% of the people that the Bank that created the credit to allow you to buy the house and indebted you for hundreds of thousands of dollars didn't have the money and just typed it into a computer and poof, you were on the wrong side of the balance sheet you wouldn't believe it, it's just too fantastical but that's the way it works. Now there are rules about the bank having "reserves", likely ~10% for a mortgage but that's also Fiat money conjured up in a different way. The system works not too bad as an adjunct to the real economy but when the the financial system IS the economy and is used to get a Free lunch by Rentier extraction from the bulk of the world you know it can't last forever. There aren't enough courtiers and Compradors to keep it going when a competitive system arises, enter China with a real economy building real stuff at home and abroad. Now you try and maintain your extraction hegemony through the same old Compradors, sanctions and even wars but the Compradors can turn on you like in Niger or become so strong they can beat you at War, see Russia that you wind up eating your own people. See Amerika, the real underbelly of poverty and misery. The Chinese system is so much better. The government controls the financial system unlike the West where the financial system controls the government. The economy produces REAL WEALTH. The people are happier because their lives are getting better and the philosophy is one of harmony and good business rather than Rentier extraction. After 5 or 6 hundred years of extraction it's overdue for change and I just hope the neoliberal neoconservatives don't blow up the world instead of accepting changes.
It's amusing to me. My late husband said basically he felt from 2000 our whole economy was BS. He felt it could not be sustained. Then 2008 happened. He was right, but he was not happy with what they did to "fix" it. He passed in 2013.
I believe he'd be even more vindicated now and unhappy.
I have a degree in finance and spent a lifetime in business, and this guy puts the fat part of the bat squarely on the ball. Always remember that government wants inflation, always.
Interesting to see these two spheres that I follow intersect. Been a reader/listener of QTR for a while. Matt, I strongly recommend you look into Doomberg next. His posts are first-thing reading for me, with yours coming in a close 2nd if we're being honest. Give him a look.
Irons is speaking fire and truth. It’s too bad that most public intellectuals don’t have the brains or the balls to draw a sharp line of understanding between free market capitalism and crony capitalism.
I do remember the textbook answer as to why a little bit of inflation is good. If there is deflation, then money is worth the same or more tomorrow than it is today. This incentivizes a lack of investment and spending over stuffing cash in your mattress. It gives an advantage to incumbents with less risk. Leaving a little bit of inflationary buffer is practically necessary because monetary policy cannot hope to perfectly target a 0% inflation rate. I buy the argument.
But how much is "a little bit"? The Fed used to target a 1% inflation rate, but then increased it to 2%. I have heard - and this is second or third hand knowledge I'm relating here - that the 2% target was chosen, rather than 1%, because it gives employers more flexibility to lower wages over time. Not getting a nominal raise is hard on morale, and the 2% target gives employers more room to give "raises" up to 2% a year without actually having to pay more in real money.
The claim is that a 1% buffer is for the Fed to have some play when avoiding deflation, and the additional 1% on top of that is play for the private sector to keep wages under control.
Again I'm not sure of the accuracy of the claim about the rationale behind the 2% target. I do know that the target was raised to 2% in the 90s from a previously lower target. I dug up this article which says none other than Janet Yellen pushed it as a policy, and it originated somewhat arbitrarily in New Zealand. Historically, inflation was higher when we targeted a 1% rate rather than a 2% rate, which makes me think Yellen's stated reason for the 2% target in the article is at least a bit suspect, and lends credence to the claim that upping the target was done to help control wages. https://sites.lsa.umich.edu/mje/2023/09/04/why-the-2-inflation-target/
I'm not totally convinced of either story although it's probably clear I favor the wage control argument. Happy to discuss if someone can shed more light on this.
“which then seduces idiots into thinking that socialism is the answer, when that would be an even worse catastrophe.” I have to ask you to define “socialism”. One element of socialism is workers using their collective power to demand a more just share of the profits. Are they idiots?
Hey Matt. Just wanted to say thanks a ton for the look and the opportunity. It's funny, watching your coverage of the '08 crisis got me on my way, though we've never really chatted up until now. Been following you since we were both Democrats (yuk yuk). You're the first 'mainstream' outlet to give me a little shot in the arm after a decade of writing. It means everything, esp. coming from you. -C
It's not surprising that the mainstream economic media has fallen -- like other parts of the media -- into being propaganda pushers. Just the other day I watched Gavin Newsom tell Jen Psaki that this was one of the greatest economies of all time, and those dirty right-wingers kept telling lies about how bad things were.
Of course, Gavin doesn't do his own shopping so WTF does he know?
"...the crony capitalism that gives free market capitalism a bad name, which then seduces idiots into thinking that socialism is the answer, when that would be an even worse catastrophe."
I've been happily married for 15 years but I just fell in love again!
Loved QTR’s disclaimer, honesty at last!
One of the first financial (or any) substacks I subscribed to and sent me off in a lot of interesting and beneficial directions.
Thank you for sharing Quoth the Raven and exposing us to another source of independent thought!
Fiat money is the biggest fraud ever perpetuated on the lumpenproletariat plebs by the ruling classes. It makes the invisible man in the sky story look possible. Like the invisible man in the sky story it works because of the genetic flaw that the nasty little henchman Yuval Noah Harari explained so well in "Sapiens". Homo Sapiens can and do believe "stories" and the more fantastical the better. If you tell >99% of the people that the Bank that created the credit to allow you to buy the house and indebted you for hundreds of thousands of dollars didn't have the money and just typed it into a computer and poof, you were on the wrong side of the balance sheet you wouldn't believe it, it's just too fantastical but that's the way it works. Now there are rules about the bank having "reserves", likely ~10% for a mortgage but that's also Fiat money conjured up in a different way. The system works not too bad as an adjunct to the real economy but when the the financial system IS the economy and is used to get a Free lunch by Rentier extraction from the bulk of the world you know it can't last forever. There aren't enough courtiers and Compradors to keep it going when a competitive system arises, enter China with a real economy building real stuff at home and abroad. Now you try and maintain your extraction hegemony through the same old Compradors, sanctions and even wars but the Compradors can turn on you like in Niger or become so strong they can beat you at War, see Russia that you wind up eating your own people. See Amerika, the real underbelly of poverty and misery. The Chinese system is so much better. The government controls the financial system unlike the West where the financial system controls the government. The economy produces REAL WEALTH. The people are happier because their lives are getting better and the philosophy is one of harmony and good business rather than Rentier extraction. After 5 or 6 hundred years of extraction it's overdue for change and I just hope the neoliberal neoconservatives don't blow up the world instead of accepting changes.
It's amusing to me. My late husband said basically he felt from 2000 our whole economy was BS. He felt it could not be sustained. Then 2008 happened. He was right, but he was not happy with what they did to "fix" it. He passed in 2013.
I believe he'd be even more vindicated now and unhappy.
I have a degree in finance and spent a lifetime in business, and this guy puts the fat part of the bat squarely on the ball. Always remember that government wants inflation, always.
once the economy debt bubble pops, it’s either gonna be the Storming of the Bastille or the Stalinist gulags. yer guess is as good as mine...
Interesting to see these two spheres that I follow intersect. Been a reader/listener of QTR for a while. Matt, I strongly recommend you look into Doomberg next. His posts are first-thing reading for me, with yours coming in a close 2nd if we're being honest. Give him a look.
Irons is speaking fire and truth. It’s too bad that most public intellectuals don’t have the brains or the balls to draw a sharp line of understanding between free market capitalism and crony capitalism.
I do remember the textbook answer as to why a little bit of inflation is good. If there is deflation, then money is worth the same or more tomorrow than it is today. This incentivizes a lack of investment and spending over stuffing cash in your mattress. It gives an advantage to incumbents with less risk. Leaving a little bit of inflationary buffer is practically necessary because monetary policy cannot hope to perfectly target a 0% inflation rate. I buy the argument.
But how much is "a little bit"? The Fed used to target a 1% inflation rate, but then increased it to 2%. I have heard - and this is second or third hand knowledge I'm relating here - that the 2% target was chosen, rather than 1%, because it gives employers more flexibility to lower wages over time. Not getting a nominal raise is hard on morale, and the 2% target gives employers more room to give "raises" up to 2% a year without actually having to pay more in real money.
The claim is that a 1% buffer is for the Fed to have some play when avoiding deflation, and the additional 1% on top of that is play for the private sector to keep wages under control.
Again I'm not sure of the accuracy of the claim about the rationale behind the 2% target. I do know that the target was raised to 2% in the 90s from a previously lower target. I dug up this article which says none other than Janet Yellen pushed it as a policy, and it originated somewhat arbitrarily in New Zealand. Historically, inflation was higher when we targeted a 1% rate rather than a 2% rate, which makes me think Yellen's stated reason for the 2% target in the article is at least a bit suspect, and lends credence to the claim that upping the target was done to help control wages. https://sites.lsa.umich.edu/mje/2023/09/04/why-the-2-inflation-target/
I'm not totally convinced of either story although it's probably clear I favor the wage control argument. Happy to discuss if someone can shed more light on this.
“which then seduces idiots into thinking that socialism is the answer, when that would be an even worse catastrophe.” I have to ask you to define “socialism”. One element of socialism is workers using their collective power to demand a more just share of the profits. Are they idiots?
I was a QTR fan for years from seeing his posts on Zerohedge. I was happy to find him on Substack. Keep up the great work, everyone.
Thanks Matt, enjoy both of you!