Market Watch

[two_bit_score]

I believe in fixing things that are broken and am disgusted with both political parties and people who are polarized either to the left or right.

If you believe that fixing the anchor baby, birther tourism and excessive welfare problems are what we need to do, you and I could probably solve it over a couple beers. You might have to compromise a little though.

 

[jyoutz]

If you believe that fixing the anchor baby, birther tourism and excessive welfare problems are what we need to do, you and I could probably solve it over a couple beers. You might have to compromise a little though.

Agree. Anything can be solved over a few beers; all the world’s problems. Now that you have me thinking about it, my grandmother was an anchor baby when her parents (illegally) immigrated here from Slovakia in 1914. But they didn’t have benefits such as EBT at that time. Maybe it’s not the anchor baby issue that needs to be resolved; it’s the benefits programs and criteria.

 

[Torvy]

Do you remember Gerald Ford’s WIN (whip inflation now) buttons? Also I remember the huge defense buildup spending during the Reagan years, so you can’t attribute this to just domestic spending. The defense buildup did result in collapse of the Soviet Union, so maybe the inflation was worth it.

Yes WIN was Ford's way of trying to deal with the inflation. Nixon had continued the reckless spending of the Johnson administration. He didn't have Reagan's abilty to get a hostile Congress to slow spending. Carter did nothing to address inflation until August of '79 when he appointed Volcker to be Fed Chair. There were high interest rates in the beginning of the Reagan administration, but he got inflation down pretty quickly. Inflation was 14.8% in April of 1980. A year later it was down to 6.5%

Reagan's presidency had high interest rates early on because that how you slow inflation. Defense spending can be inflationary, but not to the same degree as most social spending. Defense spending largely goes to contracts with private industry who hire real people with real jobs and, eventually, increase productivity. The big thing with Reagan was the tax cuts and the deregulation. He freed up the economy to fix itself. Confiscatory tax rates as high as 70% essentially stopped investment and industrial growth.

 

[jyoutz]

Yes WIN was Ford's way of trying to deal with the inflation. Nixon had continued the reckless spending of the Johnson administration. He didn't have Reagan's abilty to get a hostile Congress to slow spending. Carter did nothing to address inflation until August of '79 when he appointed Volcker to be Fed Chair. There were high interest rates in the beginning of the Reagan administration, but he got inflation down pretty quickly. Inflation was 14.8% in April of 1980. A year later it was down to 6.5%

Reagan's presidency had high interest rates early on because that how you slow inflation. Defense spending can be inflationary, but not to the same degree as most social spending. Defense spending largely goes to contracts with private industry who hire real people with real jobs and, eventually, increase productivity. The big thing with Reagan was the tax cuts and the deregulation. He freed up the economy to fix itself. Confiscatory tax rates as high as 70% essentially stopped investment and industrial growth.

I guess that I don’t understand your statement that high interest rates were early in the administration? 1987 was year 7 of the administration. For reference, current inflation is 3.9%. For PNVT calculations, economists have been teaching to use 4% as a baseline. For many years.

 

[Torvy]

I guess that I don’t understand your statement that high interest rates were early in the administration? 1987 was year 7 of the administration. For reference, current inflation is 3.9%. For PNVT calculations, economists have been teaching to use 4% as a baseline. For many years.

Big difference between full year average rates and one month.

 

[two_bit_score]

Now that you have me thinking about it, my grandmother was an anchor baby when her parents (illegally) immigrated here from Slovakia in 1914.

Were your ggrandparents going to be deported but were only allowed to stay because your grandmother was born on US soil?

Im retired but I still have more things to do today on Monday than chat with my favorite government employee bureaucrat.

 

[Torvy]

I guess that I don’t understand your statement that high interest rates were early in the administration? 1987 was year 7 of the administration. For reference, current inflation is 3.9%. For PNVT calculations, economists have been teaching to use 4% as a baseline. For many years.

The baseline of 0% versus 4% is about fed funds rate, not inflation. The lowest (baseline) rate prior to Reagan was about 4%. Have to go back before 1965 to have lower rates.

Prior to the current administration, the rate was zero (baseline) and had been effectively zero. Had to go back to 2008 to find rates consistently over 1%.

The baseline is one point of figuring the delta between current norms and current rate. If you just use the rate the year immediately prior, it was 13.35% in 1980. It went up to over 16% in 1981, but then fell to 7.6% by 1988. So, rates were lower under Reagan than they were before him by about 6 percentage points. 4% was just me being generous to Carter in the comparison. The point in all of this is that people felt a real positive change versus their 'normal' under Reagan as rates dropped. Rates have increased recently and the normal baseline from which regular people are judging is the zero percent. While the rates may be lower today 5.1% vs 7.6%, the real change for people is an increase of 5.1% versus a decrease of about 6%. That is huge in terms of consumer confidence. Inflation just adds to the problem because they know that prices are way up and the 3% spin is a joke. It has only been that low a few months, not a full year.

 

[jyoutz]

Were your ggrandparents going to be deported but were only allowed to stay because your grandmother was born on US soil?

Im retired but I still have more things to do today on Monday than chat with my favorite government employee bureaucrat.

I’m on vacation this week and plowed the road yesterday, so I’m a man of leisure today. In 1914 they just came here, no immigration permissions required, so yes today they would be considered as illegal immigrants. My grandmother was born in 1917 on US soil, so birthright citizenship.

 

[jyoutz]

The baseline of 0% versus 4% is about fed funds rate, not inflation. The lowest (baseline) rate prior to Reagan was about 4%. Have to go back before 1965 to have lower rates.

Prior to the current administration, the rate was zero (baseline) and had been effectively zero. Had to go back to 2008 to find rates consistently over 1%.

The baseline is one point of figuring the delta between current norms and current rate. If you just use the rate the year immediately prior, it was 13.35% in 1980. It went up to over 16% in 1981, but then fell to 7.6% by 1988. So, rates were lower under Reagan than they were before him by about 6 percentage points. 4% was just me being generous to Carter in the comparison. The point in all of this is that people felt a real positive change versus their 'normal' under Reagan as rates dropped. Rates have increased recently and the normal baseline from which regular people are judging is the zero percent. While the rates may be lower today 5.1% vs 7.6%, the real change for people is an increase of 5.1% versus a decrease of about 6%. That is huge in terms of consumer confidence. Inflation just adds to the problem because they know that prices are way up and the 3% spin is a joke. It has only been that low a few months, not a full year.

Regardless of the current rate, prices are at a new normal. This is the case in most of the first world countries. Covid and supply change disruptions and tariffs have changed prices everywhere. It’s not even valid to compare pre-pandemic prices to the changed world of today. Deflation isn’t going to occur for most things because current wage rates are baked into prices.

 

[Torvy]

I’m on vacation this week and plowed the road yesterday, so I’m a man of leisure today. In 1914 they just came here, no immigration permissions required, so yes today they would be considered as illegal immigrants. My grandmother was born in 1917 on US soil, so birthright citizenship.

Come on, man. By that definition, almost everyone would be illegal. The law didn't change until 1921 that would have any effect on immigration from Slovakia. Birthright citizenship applied because your ancestor was here legally. That is not the issue with anchor babies. Those are just a gross misinterpretation of the 14th Amendment. "And subject to the jurisdiction thereof" means that people who are still subjects of another nation (such as travelers, diplomats or illegal aliens) are excluded from birthright citizenship.