Sorry, what is the mechanism of this "liquidity injection"? Government spending is a given, regardless of the size of the TGA surplus. You didn't explain how Yellen is going to supply more liquidity above and beyond that.
"there are no clear signs of broad economic weakness."
According to a recent survey published in Forbes Magazine, 78% of Americans are living from paycheck to paycheck.
"Fewer than half of Americans, 44%, say they can afford to pay a $1,000 emergency expense from their savings, according to Bankrate’s survey of more than 1,000 respondents conducted in December."
U.S. Home sales have hit a 30 year low. (WSJ)
The U.S. is the greatest debtor nation in the world.
Small businesses across the country are filing for bankruptcy at an alarming rate..
"The Department of Housing and Urban Development (HUD) counted 653,104 homeless Americans in its annual point-in-time report, which measures homelessness across the US on a single night each winter. That's a 12.1% increase from the same report in 2022." (USAfacts.org)
I could go on and on, but it's hard by any measure to believe that "there are no clear signs of broad economic weakness."
As for the stock market, if it weren't for stock buybacks, The market would probably be down thirty to forty percent.
Tom Robbins quote: “One has not only an ability to perceive the world but an ability to alter one’s perception of it; more simply, one can change things by the manner in which one looks at them.”
My point is; the financial markets do not align with our real-world experience, or our well informed opinions, all of the time.
Thanks Alf! Wishing Italy all the best in the upcoming Euro Cup.
Side note: I still remember what you mentioned in an early interview about there being a time to go long, a time to go short, and a time to go fishing 🎣 Well, since the ASX was closed today, I went fishing 😊
Raising taxes to fight inflation would not be unprecedented. After the end of the WW2 price controls, inflation was raging (over 17% in 1947). By 1951, CPI inflation had skyrocketed to 21%. Another root cause of this was because the Treasury had forced the Federal Reserve to peg short-term Treasury bills at 3/8% and long term Treasury bonds (5 year) at 2.5%. Most of these notes and bonds were monetised by the Fed. (There were no 10-year bonds created until the middle of the 1960s or 30-year T-bonds until the middle of the 1970s.) But in 1951, the FOMC trumped the Treasury and Truman and ended the cap on T-notes and T-bonds, and also ended the monetization. Sound familiar?
Unfortunately, this alone was not enough to break the inflation cycle, so the Government raised the highest income tax bracket to 90%. After JFK was elected in 1960, the highest income tax bracket was lowered to 60%, and it has been dropping ever since. Although Biden wants to raise the tax rates now, Trump, if he gets elected, will most likely drop tthose rates again.
Sorry, what is the mechanism of this "liquidity injection"? Government spending is a given, regardless of the size of the TGA surplus. You didn't explain how Yellen is going to supply more liquidity above and beyond that.
When the Treasury “drains the TGA”, what do they spend the money on?
"there are no clear signs of broad economic weakness."
According to a recent survey published in Forbes Magazine, 78% of Americans are living from paycheck to paycheck.
"Fewer than half of Americans, 44%, say they can afford to pay a $1,000 emergency expense from their savings, according to Bankrate’s survey of more than 1,000 respondents conducted in December."
U.S. Home sales have hit a 30 year low. (WSJ)
The U.S. is the greatest debtor nation in the world.
Small businesses across the country are filing for bankruptcy at an alarming rate..
"The Department of Housing and Urban Development (HUD) counted 653,104 homeless Americans in its annual point-in-time report, which measures homelessness across the US on a single night each winter. That's a 12.1% increase from the same report in 2022." (USAfacts.org)
I could go on and on, but it's hard by any measure to believe that "there are no clear signs of broad economic weakness."
As for the stock market, if it weren't for stock buybacks, The market would probably be down thirty to forty percent.
Tom Robbins quote: “One has not only an ability to perceive the world but an ability to alter one’s perception of it; more simply, one can change things by the manner in which one looks at them.”
My point is; the financial markets do not align with our real-world experience, or our well informed opinions, all of the time.
Thanks Alf! Wishing Italy all the best in the upcoming Euro Cup.
Side note: I still remember what you mentioned in an early interview about there being a time to go long, a time to go short, and a time to go fishing 🎣 Well, since the ASX was closed today, I went fishing 😊
I was wondering what are your thoughts on the Biden proposal for new taxes?
They make no sense...
Raising taxes to fight inflation would not be unprecedented. After the end of the WW2 price controls, inflation was raging (over 17% in 1947). By 1951, CPI inflation had skyrocketed to 21%. Another root cause of this was because the Treasury had forced the Federal Reserve to peg short-term Treasury bills at 3/8% and long term Treasury bonds (5 year) at 2.5%. Most of these notes and bonds were monetised by the Fed. (There were no 10-year bonds created until the middle of the 1960s or 30-year T-bonds until the middle of the 1970s.) But in 1951, the FOMC trumped the Treasury and Truman and ended the cap on T-notes and T-bonds, and also ended the monetization. Sound familiar?
Unfortunately, this alone was not enough to break the inflation cycle, so the Government raised the highest income tax bracket to 90%. After JFK was elected in 1960, the highest income tax bracket was lowered to 60%, and it has been dropping ever since. Although Biden wants to raise the tax rates now, Trump, if he gets elected, will most likely drop tthose rates again.