Fractured Myths
Readers often ask if I really believe there's no threshold for so-called "money printing" in advanced economies.
As a quick aside, this is one case when you can take "readers often ask" literally. Sometimes when I say "often" as it relates to reader inquiries I just mean a handful of people over the course of, say, a few months. When it comes to the current policy conjuncture (i.e., the overt, barely-veiled enabling of fiscal outlays by monetary policy) and the read-through for inflation, I get
It often occurs to me that one of the reasons most of us don’t really appreciate the “real people” is because the mainstream media doesn’t. The Kardashians are not real people. Neither are the folks growing up hip-hop in Atlanta. One may get a slightly better picture from cops busting poor benighted folks who just fell for a bait car. The KC Star has become suddenly “woke,” more or less coincident with its parent company’s bankruptcy. Someone looked back at lots of old papers and discovered that the Star has virtually never covered the African American community in KC so they are trying to make up for lost time, although they can’t quite figure out how to do that yet. Still, they don’t cover “real” people in general very much either. Sports is half the paper but nowhere is there coverage of “The Chronicle of the Common Man,” for example. What’s the right way to get a title loan, for example? No one who can afford the paper (at a subscription cost of $500/year) really wants to know about the hard life of all the real people. Back in the depression movies were all Fred Astair and MGM musicals, with some Film Noir thrown in. The latter was the walk on the wild side for those who wanted to think, “there but for the grace of God …” Mostly the media then and now was and is aspirational. No one wants to know about real people very much so we tell them they’re just going to have to change, get a job, … We are so screwed up.
A large number of consumer relevant companies have come out with statements of pending price increases over the coming months/ early next year (nestle, proctor and gamble, etc)
It is not surprising that consumer expectations for inflation are elevated… we’re literally being told it’s coming.
It is hard to see clearly in a smoky forest but I think you have highlighted why you choose to go in the direction you do go.
I believe you have mentioned that most Americans don’t make six figure salaries.
Robert Kessler had some interesting observations; America’s net worth is 120 trillion. Outstanding debt is 30 trillion. If you had a mortgage of only 20% of your income, the percentage of debt to net worth in considerably low. He also pointed out at peak of housing bubble in 2009, net home valuation was 25 trillion. Today, 12 years later, its 35 trillion. Also equity p/e at plus thirty never lasts long before a major pullback.
H-Man, you actually did answer questions about what you believe and what you don’t.
I have often pondered this and hoped you would at last provide some clarity on your thoughts regarding the limits of printing money. In short, you are admitting there are limits but alas the guideposts remain quite wide on how far is too far. As I watch this grand experiment unfold I will remind myself that it will work until it doesn’t!