Medicaid (see my answer below). I was shocked to find out I qualified given my income level in the past year, but since I made no money, it was free for my wife and kids and i had to pay a heavily subsidized rate for marketplace insurance, with no expected pay back now that my income is back to normal. I honestly think that the 'America has no social programs' trope that is often parroted by online personalities does a lot of harm in that it discourages people from applying. I applied originally as a joke to show my very fiscally-conservative mother that it is hard to get on to government welfare programs, but I was shocked at how easy it was.
Engine No. 1 (the activist group who "won" against Exxon) has an S&P 500 ETF that they use the funds for shareholder activism like this. You can read more about it here: https://etf.engine1.com/vote/
Do you mind sharing your nationality? This rings true of the opinions of many people I know in Europe but I would be very surprised if any Americans felt this way. Genuinely curious.
The US is officially in a recession when the National Bureau of Economic Research says we are. Two quarters of shrinking GDP is often used as a heuristic but other factors like duration and intensity are included as well. Sometimes labor and unemployment data gets corrected months later, so it is sometimes the case that a recession is not official until it has already passed.
Basically, in the US, we are in a recession when the Business Cycle Dating Committee says so.
We're not "officially" in a recession because the midterms are just around the corner. The numbers they use to judge inflation, GDP, recession are all fudged for political purposes. I don't need some greased politician or partisan body to tell me that.
This would be the same regardless of which party were in power, the government lies.
The White House's official position is that the NBER's definition is the official one. From their website [1]:
"What is a recession? While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle. Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data—including the labor market, consumer and business spending, industrial production, and incomes.
"[...] The National Bureau of Economic Research (NBER) Business Cycle Dating Committee—the official recession scorekeeper—defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”"
You can certainly make the argument that people shouldn't use this definition or that better measures exist, but it's objectively the official definition used by the US federal government.
Ah yes, the self-appointed, private, and secretive cabal of folks that decided they would be arbiters of truth, NBER.
Here's the thing -- there is no "official" or "legal" definition of recession in the United States. Yes, you'll hear regulators and politicians defer to NBER, but that's it.
The most common definition used by economists and the financial industry is the same one used world-wide: two quarters of negative growth. And by that measure we're in a recession.
When I need to get a ride someplace, I find myself calling a cab more than uber/lyft these days. The taxis are significantly cheaper than the alternative and are required to take credit cards. A side benefit is that the airport has a fixed price to the city, while rideshare services will often cost double or even triple with demand pricing.
Very cool. It is always nice to read foreign newspapers to get a slightly different take or opinion on topics. I am quite happy that it is only 2,49€/month for a digital subscription.
I considered subscribing to a German newspaper or two, but their digital prices are quite high, often coming in at 10+€/month. NYTimes is only $4/month, but I imagine their subscriber count is higher.
Rampant inflation is a problem. The inflation seen now in many places is not quite there. 7% is higher than we would like, but if the alternative is to have shrinking GDP and massive unemployment, I would rather have some inflation.
In the US at least, a lot of the raise in the US CPI is due to rising energy costs (predicted months ago due to cold winter in Asia), used and new cars (the infamous chip shortages), and food. Rising food costs is a problem, but it is not a catastrophic problem. The US federal government could subsidize farmers that grow real vegetables, not just corn and soybeans. This would bring down the cost of real food and probably allow people to eat healthier.
>The US federal government could subsidize farmers that grow real vegetables, not just corn and soybeans.
I mean they could also just stop subsidizing corn production quite so much; that would probably be preferable to providing a larger subsidy to grow other things.
It's really not shocking. Those people could then possibly buy entirely imported food if it was cheaper and wipe out domestic agricultural. Ensuring domestic food production is geopolitics 101, above domestic energy production. A nation doesn't want its bellies depending on a foreign adversary. You aren't a sovereign nation then.
You're right. That said there are other ways to get around cheeper imported food. Why not raise the tariffs?
I just generally find it surprising that the US subsidizes an industry. It feels against the countries ideals, and I think the subsidies decrease the industry's incentives for innovation.
That's going in the opposite direction with respect to where you would like food prices to be. It's the same final outcome you're concerned with about foreign production. Food is a bare necessity for a country's people and you want those prices as low as possible. Most places make a sales tax exception on groceries for this reason. People will allow dictators to seize power if it means they don't starve. But the same direction applies in less extreme situations. With US inflation already at 7.5%, good luck stopping food subsidies, adding food taxes (tariffs), and seeing food prices lurch another 30%. Current politicians would be voted out in a flash.
> but if the alternative is to have shrinking GDP and massive unemployment, I would rather have some inflation.
This is the general problem with central banking.
Politicians and governments will ALWAYS take action to "save the economy", whether that is a small downturn or a big one. There's too much pressure to not use the magic money printer. Short term election cycles incentivize everyone to just fix the problem as fast as we can, future consequences be damned.
You can get away with it in the short term, but over a long enough time horizon, you start to run out of bullets, as all the real value has already been plundered.
The US Federal debt is currently $30 trillion USD. This is never getting balanced, ever. There's only one possible eventual outcome with this system.
> The US Federal debt is currently $30 trillion USD. This is never getting balanced, ever. There's only one possible eventual outcome with this system.
The US debt to GDP ratio is currently slightly higher than it was at the end of WWII. It is significantly lower than that of Japan, who has a debt to GDP ration similar to those the UK ran during portions of the 19th century.
There are very good reasons for governments should be prudent in their spending and high levels of debt are to be avoided. But no, it will never be balanced, the national debt is permanent and exists by design.
> There's only one possible eventual outcome with this system.
I don't think that's true, and I'm really not even sure what you're ominously hining at.
If you read history books covering the time just before and after the American revolution, there was a lot of discussion of this topic at the time. A lot of the founder fathers, most notably Alexander Hamilton, believed a national debt was a good thing for the country.
The belief is/was that by carrying a substantial debt, you give the bank and financial institutions skin the game and make their success tied to the success of the country.
In the modern era it also gives individuals and other types of institutions a stake in the country's success. When people take about the U.S. national debt, much of the conversation goes to China and how much money we owe them. We owe them a lot, however, the biggest holders of U.S. debt are individual Americans with their 401ks and things like pension funds and university endowments.
Disregard new accounts that claim the sky will be falling. The debt will always be going up and there will always be inflation. That's how fiat currencies work. Research the federal reserve and it's stated objectives to understand why.
The only problem with that is that inflation is a like a fire. When it's very small it can serve you, but once it gets bigger and you lose control of it you're f*ked.
There will always be inflation (temporary and permanently via mining) and debt goes up with a gold standard too. That's actually a general property of permanent money.
Depends on your definition of inflation. If you're just talking about money supply, sure. If you're talking about prices, no. It is entirely conceivable that consumption increases faster than the speed at which we can mine, which would probably set off a deflationary spiral as wall st starts to hoard cash.
If the way fiat currencies work is constant devaluation in the name of increased short term spending, then it makes the currency utterly terrible to invest and save in in the long term.
If this is how its supposed to work, then your money is a toxic asset which should be handed off as quickly as possible to someone else.
And so if no one actually wants this asset, then it makes it valueless.
> then it makes the currency utterly terrible to invest and save in in the long term.
That's why it's called “current-sy” (only slightly joking) It's for current use as a medium of exchange. For investment/savings, you go to productive assets.
That's the whole point. Mixing those functions doesn't help anything.
No, money is supposed to be good at storing value as well. That's why gold evolved as the world currency over the last 8000 years, and that's why central banks still hoard it in bunkers. You can't easily devalue it by creating more of it.
You're failing to understand that treasury bond markets have an important function in the macro economy; ideally, a safe way to save and store value with low risk. And they are larger than stock markets.
> No, money is supposed to be good at storing value as well.
I think you’re confusing wealth/assets with mediums of exchange. Gold for example is a pretty decent store of value but a nightmare for exchange. Want to buy a pack of gum? Why don’t you shave a tenth of a gram off right here on the counter so I can measure it.. etc. You can see how crappy that is.
USD however have never been great stores of value but are great currency because they’re so liquid. Everybody accepts dollars. It’s easy to trade and convert to other assets. How much is that pack of gum? Oh it’s a dollar. Ok here you go. And that’s that.
The name of the game has always been converting dollars to productive assets.
Along comes Bitcoin and cryptocurrency and now crypto currencies in general have features. Bitcoin sucks as a currency for buying stuff but is great at storing deflationary value (or so it seems). Monero sucks as a currency compared to the dollar but has privacy features. Etc.
For #1, I want increase in value over time, but don't care much about volatitlity or ease of exchange.
For #2, I want low volatility (both in value and it's first derivative).
For #3, I want low volatitlity in value and logistical ease of exchange.
So, for #1, I want a different thing than for #2 & #3, for which I might want the same thing, since the needs are, though not identical, at least overlapping.
Productive investments serve #1 well, so I’d leave it to them, and leave the design of money to balance #2 & #3.
I’m pretty sure I didn't invent anything, you just picked a random currency that meets neither your implicit goals not my explicit ones, because it's convenient for a pre-canned argument you wanted to make.
good store of value just means its value is predictable. Fiat currency actually make money a much better store of value, because monetary policy can be used to control inflation. Using intrinsically valuable goods as currency is horrible for store of value because people will always be worried that a new use or way to produce the good will be found.
Fiat money is not a good store of value because it is the easiest to erode (central bank changes a digit in a database, and new money exists). Tell me which country's fiat currency you'd be willing to hold for 100 years, and how much buying power you expect it to retain.
Fiat money isn't supposed to be held for long periods of time. That's literally the point. The government is incentivizing you to invest/consume it, otherwise we're in a liquidity trap. It's just supposed to allow people to to make transactions and be confident that the thing they are selling won't be worth 20% more tomorrow.
You realize the yield on a 1 yr US treasury bond is currently 1%, and the yield of it one year ago was 0.1%? And that bonds pay coupons denominated in dollars?
The savings rate at Bank of America is 0.01% APY.
A person has no risk-free ability to save, and is forced to speculate in asset markets just to keep up with inflation.
> The savings rate at Bank of America is 0.01% APY.
The government doesn't want you holding large amounts of cash. It causes problems for everyone.
> A person has no risk-free ability to save
Nothing is risk free. Yes, the government wants to force people to invest their money in order for it to keep its value over long periods of time. Hoarding money is bad. If you don't think T-bonds pay enough you're free to buy other bonds, equities, real estate, even gold if you like it so much.
> The government doesn't want you holding large amounts of cash.
Government ownership of the interest rate is part of the problem. In a free market, an interest rate emerges naturally based on the supply of money from savers, and demand of money from consumers.
Any individual divides their wealth into either saving or consumption based on their individual time preferences. Some people like stuff now, some people are happy to wait and have more later. Presently, we are forced to consume, or take on riskier assets to save.
> Hoarding money is bad.
Bonds and savings accounts aren't hoarding money; you loan the money out for other people to use productively, and they pay you an interest rate.
> If you don't think T-bonds pay enough you're free to buy other bonds, equities, real estate, even gold if you like it so much.
Again, you're failing to see the consequences of t-bonds having a low interest rate and the US dollar being unable to store value. The consequence are volatile and speculative asset markets. If over time no one wants treasury bonds or USD, they become valueless.
The end result is that everybody is an "investor" (mostly by proxy via 401k and pension funds), and that is then used as the trump card to shoot down any regulations that would reign in the insanity that is the modern stock market, by pointing out that any reduction in market profits hurts those "investors".
A couple of thoughts (may be wrong, interested in the discussion)
When the government borrows money it borrows it at an interest rate. When rates are low, like close to 0% low like they are now, that's exactly when you want to borrow money. Want to fix bridges and invest in things? Now is the time to borrow money to do that. It also has the added benefit of making past debt cheaper. This scenario that we're in is made even more interesting by the fact that many governments also had to print tons and tons of money. While we're now over 100% debt-to-GDP, it's not unheard of and not so catastrophic that we can't recover from.
I'm also unsure about rising wages here. If they continue to rise won't prices continue to rise to reflect wages? I'm also of the opinion that slow sales from 2020/2021 + supply chain issues have caused companies to raise prices. I don't think cereal actually needs to be more expensive. Shareholders do though.
Have you ever wondered why the people that have the money that represents the government's debt isn't returning, ever?
When go the austerity route your economy collapses faster than you can pay your debts back, isn't there something odd with that? If money is supposedly cheap why does it refuse to show itself?
I think the bigger problem is that people stop being able to price anything in a reasonable way. Should companies be valued at 1x revenue? 2x? 10x? 437x? How do you decide if the value of the thing you're using as the denominator changes wildly.
The downside of this is, instead of people working to create productive things, effort instead shifts to gambling and gaming the system. Witness what's happened all over our economy. It's like a cancer devouring everything: Robin Hood, GameStop, Crypto. You name it and it's turned into a casino. How does any of that increase human wealth?
Economists were saying some time ago on NRP that inflation becomes a vicious circle when it encourages/forces employees to demand higher wages "because everything is more expensive", which in turns makes everything more expensive, because wages are higher now.
I think we are already there, everyone is jumping ship to get a higher wage right now, rampant inflation is here to stay
This seems like an alarmist take, the truth is wages haven't been going up much and yet inflation was occurring regardless. What caused inflation then?
Why do folks only ever worry about inflation when it comes to increasing the bottom wages?
Minimum wage is de-facto 15, with Amazon offering at least that everywhere. Now we see additional requests for increase. This will never stop. The problem is not with the minimum wage amount, it's with helping people getting off of that, minimum wage should be a temporary stopgap in a person's life.
Living on minimum wage sucks hard, no matter the amount. If you increase it, you will only have more people living on minimum wage, struggling to make ends meet. At 7.25, a person doing 20 was fine. Now at 15, a person doing 20 is struggling.
Minimum wage isn't what is driving inflation. It's insane to me that folks think inflation will happen if we increase wages, when it happens regardless of that. It has more to do with the crazy subsidies / handouts we give to the top 1%.
If you look up the stats (hearing is just anecdotes and alarmist takes by Fox to rile their base), there hasn't been a whole lot of movement. And inflation has been going on a lot longer than the last 2 years, so still it wouldn't be correlated as much as something else pushing it behind the scenes.
> 7% is higher than we would like, but if the alternative is to have shrinking GDP and massive unemployment, I would rather have some inflation.
The alternative is to have typical 2-3% of inflation and correspondingly the typical 2-3% of GDP growth with healthy labor market. The 7% inflation does get you that 7% GDP growth we're seeing and red hot labor market, yet it is just a temporary effect, like a shot of stimulant, which will soon produce a very heavy hangover.
I'm not sure this is true - the base case seems to be the Eurozone, the countries of which intervened in their economies enough to forestall a depression, but not to the extent that the US did. Eurozone inflation is just a notch above 5%, unemployment rate right about 7%. In the US it's 7% and 4% respectively. In effect, the US traded a ~2% rise in yearly inflation for a ~3% reduction in unemployment. Reasonable people can disagree on whether that was a good trade, but to say that we could have just "skipped" all the COVID disruptions and maintained low inflation, low unemployment and typical GDP growth strikes me as fantasy land. There wasn't any magical economic policy prescription that would make everything "normal".
Is there a reason you think US money printing, which increases the supply of the world's main currency, is not the cause of at least some non-US inflation?
The suppression of interest rates in the US means it is cheaper to borrow loans in USD right? Those loans are available to foreigners as well. The asset price bubble is international at this point, and with it, the wealth effect leading to sustained levels of demand which would be absent if adequate pricing signals were still allowed to be effective.
If such trade worked then the whole world would have already been practicing it for many decades. Yet what we know from the last 100 years of such attempts is that there is the sweet spot of 2-3% inflation, and deviation from it into either direction is punished.
> The US federal government could subsidize farmers that grow real vegetables, not just corn and soybeans.
You can’t subsist on “real vegetables”. Vegetables form important supplement to the diet, but they are not basis of it, nor they ever been (people used to eat much more grain and much less meat and vegetables than they do now). Governments are subsidizing staples, because it is by far most effective way to ensure food security.
Having been a recipient of those programs “staples” are not what is being subsidized. The largest “food” producers are, like General Mills and Coca Cola.
I could get soda but not fresh fruits or vegetables for my kids.
We somehow have to keep discussing what real nutrition for children looks like and the impact it has on their ability to become productive citizens. It’s really not that much of a mystery anymore, plenty of reproducible studies have been done, but our systems are still not designed to achieve it.
Yes, it makes a massive difference what the goals of food security are.
I guess I don't agree with the authors premise that "it’s not so much the greenness that matters as being seen to be green."
In fact, it is the greenness that matters, and the author is just self-conscious and wants to appear green. Who cares what other people are doing? If you can pick up a biodiesel fuel car for a "song" and use free/cheap vegetable oil, why not just do it? You are saving all the emissions related with producing a car and transporting it.
I know in many cities they have EU 3/4/5/6 requirements to drive inside the city, but I would hope that a car that runs on vegetable oil satisfies these requirements.
Huh, I thought the consensus was that inflation generally favoured workers and disadvantaged asset owners. I learned that the comparable value of assets is eroded by inflation, but (eventually) wages must rise to accommodate higher prices. Granted there is much ado about stagnant wages lately, but it has held in the past.
Most people, including workers, do not like inflation because they don't expect their own wages to rise in real terms. But they could, e.g. the shifting of relative prices is possible even if the general price level is going up. But rarely does inflation benefit workers. For example now we have average real wages falling by 3%, which is not good news for workers, and that fall is entirely due to inflation.
>But rarely does inflation benefit workers. For example now we have average real wages falling by 3%, which is not good news for workers, and that fall is entirely due to inflation.
Negotiating power depends on how close you are to full employment. If an increase in inflation results in more employment then you will get closer to full employment and over the long term you can use your newly gained negotiating power to get wages that outpace inflation.
One problem right now is that things like gas price increases don't meaningfully contribute employment, they are just a short term inflation spike that is going away. i.e. it's stagflation caused by a supply shock
