Higher

Higher

If the US wants to return to full employment, it's going to take "a society-wide commitment, with contributions from across government and the private sector," Jerome Powell said Wednesday, in a set of generally innocuous remarks delivered during a speech to the Economic Club of New York. Powell's not the best communicator. The market learned that in 2018. Early cheers tied to his "plain English" approach turned to jeers and then, shortly thereafter, to tears, when an egregious communications m
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4 thoughts on “Higher

  1. The Fed’s policies actually tend to suppress inflation by keeping alive excess capacity. Funneling money into the hands of those likely to spend (but not enough to eventually keep them from better paying jobs) should be a focus. Giving $1500-2500 a month to the lowest 50-75% of the population would definitely move the needle. I am not a big believer in universal income but if you want prices to move up isn’t a demand shock a good way to go and one that could be sustained? And if demand is sustained investment could follow and the markets would provide capital (whether debt or equity as we have an excess savings pool). Also, why don’t we actually pay people to achieve education. Pass a grade get a check, get a degree get a bigger check, get a certification get another big check. Focus on science, engineering, math, etc. The more productive the workforce is the less universal basic income we will need to provide. Productivity is the key to a better quality of life and investment and education lead to productivity.

    After a decade of doing the same thing and expecting different results is it not time to consider a different path?

  2. some of the ex-communist countries used to give high achieving students a stipend comparable to an average salary. some still do. sounds like a good idea to me. reward performance early on and performance may follow.

  3. The great thing about the stock market is that if you don’t like or are too late to a given “opportunity” – there will always be more.
    You just have to be interested in sourcing opportunities.

    Passed on over-shorted stocks, cryptos and pot- but I am seriously interested in banks who might have “over-reserved” in 2020 and will be releasing reserves in 2021.
    Maybe the banks will actually start making loans, as well.

    1. I really like the next item on your prospect list. When the CEO of my first bank (actually a mutual S&L) consulting client took over the job he went over the loan portfolio and through write-offs and reserves was able to essentially reserve the bank into negative net worth, creating a potentially huge tax-loss carry forward. He converted the bank to a stock company, negotiated a forbearance agreement with regulators, and sold enough equity to eight angel investors to bring the bank’s capital to Federal minimums and the rest was history. Through the next couple of years he set up a trust company and a very profitable student loan subsidiary, and started making recoveries on the bad loans and unwinding the reserves. For four years profits were tax-free, equity piled up, deposits and loans doubled and we sold the place to another bank for a huge gain that allowed the angels to get out with five times their investment in four years. Those reserves are such a handy tool for earnings management.

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