Yes and no. Let me give you an example: if 70% of Americans get $40K bonus per annum from the fed, it will lead to inflation. However, if the same amount of money (70% of 300M times $40K =8.4T) is given to ten billionaires, it won't lead to inflation.
There are second order effects: if billionaires start buying stocks, thereby increasing the value of RSUs that tech employees hold, this can cause inflation in housing prices.
Yes, but the pressure to pay off those bonds would be deflationary, so in order to sustain the inflation next the Fed would have to do something even more extraordinary! AFAIK this policy pathway leads ultimately to bond forgivenesses (or funky bankruptcies) that eliminate deflationary pressure but may well have the unpleasant side effect of radically adjusting the fiat currency system.
How do you mean? If the Fed creates new money and buys bonds with it, the Fed can continue to hold them forever (really just until they mature) if it wants to. Then the Fed is more or less part of the government, so when the bond matures the Fed takes the bond to the treasury which gives it cash, then it gives the cash back to the treasury. It's like the bond evaporates into nothing when it matures while the Fed is holding it.
If the Fed theoretically bought all the bonds then it could obviously no longer increase the money supply by buying bonds, but we're a long way from that, and even then the Fed could still create new money and give it directly to the treasury to spend in lieu of collecting taxes. Or in the utopia where buying all outstanding government debt and funding the entire federal budget out of new money still hasn't caused the desired amount of inflation, to use to enact a negative income tax.
I won’t disagree with you there. Even this recent election of the neofascist Bolsonaro was essentially a self destructive act, very much grounded in identify politics (particularly anti-homosexual).
If you’re Brazilian then you’ve made your own bed. I won’t criticise, because why would I.
E sim meus pais e minha família são brasileiros. Portanto, boa sorte meu compadre. Se o Bolsonaro resolver algum problema no Brasil, que Deus abençoe o Fdp. Agora não acredito que o fará, particularmente na corrupção.
E não estou dizendo que Haddad devia ter ganho. O Brasil é o que é e pouco me serve explicar o nosso país para gringo. Mas eu tento. Eu tento.
Bolsonaro has already done good things for Brazil. Violent crime is down more than 20% in 6 months. Particularly, murders are down 25%. Foreign criminals who were protected by the previous administrations are now being extradited.
The economy is back on the growth track. A trade agreement with the EU was announced. The US have recognized Brazil as a major non-NATO ally. We’re about to join the OECD. Our interest rate is the lowest in history. The stock market is at historical highs. The government will sell many of its 400+ state-owned companies, reducing opportunity for corruption and saving billions of taxpayer money. Bureaucracy is being reduced by the Economic Freedom act. Unemployment is down. Minimum wage was raised on his first day in government. A decree that forbids confidential status in credit given by state banks, allowing them to be overseen by regulators, was signed in his first days.
Bolsonaro was the first President in our history elected without money from big corporations or a slush fund. He’s also the first president to avoid nominating his cabinet in exchange for support in Congress. Even without buying Congress support, vital reforms are being passed. Government propaganda costs have been slashed by billions.
Cuban doctors who were brought here under slave-like conditions have been replaced by Brazilian doctors. Eleven billion BRL that were supporting the Cuban dictatorship are now spent here.
I could go on, but you get the point. A lot is being done, and it’s still his first year. You may call him an SOB but there’s no way to deny things are getting better by the day.
> 15 seconds of Google and you can see how your first statement has little support
It’s great that you researched 15 seconds about Brazil. I live here, so what do I know... Your link is basically saying things are getting better, but who knows, they can get worse in the future, because god forbid the press admitting this president has done anything good.
> Privatizations to covert deficit?
First, what I said was that the economy was on the way to start growing again.
And yes, absolutely. Did you know Brazil has more than 400 state-owned companies? We absolutely must cut the deficit caused by the reckless spending that broke the country in the past.
> I could go on
Apparently you can’t, because you just dismissed all the other points with some scare quotes and no substance.
By the way, I think this administration is far from perfect. But it's strong in at least three areas, the Economy, Infrastructure and Justice cabinets, which are three areas where Brazil is severely lacking, and which have been abandoned by previous administrations, to say the least.
I wrote them in Portuguese because I don’t feel like explaining my opinions too much in English. I don’t find it productive and it might just bring other people into the discussion, which I didn’t want. I hope that was clear.
I hope you’re right and things get better. There would be no greater joy in my life than seeing Brasil succeed.
And how do you know I don't? Are you going to tell me you didn't notice my username?
> Your link is basically saying things are getting better, but who knows, they can get worse in the future, [...]
It uses apropriate language regarding future events. Do you have a crystal ball?
A complex system is hard to predict, but you can have an idea of how turning some knobs is going to affect things in the long run.
Also: using caution when talking about the future is what resonable people do; the ones full of certainty about the future are usually polititians of some particular kind.
> Did you know Brazil has more than 400 state-owned companies?
And do you know Canada has 250+?
The USA also has tons of state-owned companies, it just happen that they are owned by states not by the federal government. Most of them are called "public-benefit corporations", which are very similar in the way they operate (often treated as a synonym), see:
Now getting a proper number is not an easy task though, as each state keeps them independently. I have some numbers for New York if you want to have a look:
If every state has at least half of these (~25), you get around a thousand (1000). Yes, three zeroes. And I'm not counting local authorities.
Considering half again (~250), that would push the number to twelve thousand (12000)!
Say what you want about the specifics, but that looks like a very big number for me.
> Like 15s of google?
If 15s of Google is already more factually correct than your sources, maybe you can start there.
Last, but not least, not really into responding all your comment. I've spent some time talking to people defending Bolsonaro. They end up the same way as the guys defending Lula: ridiculed.
Take this as a word of advice: polititians do not deserve your loyalty, specially the ones full of certainty and bringing the "I'll fix everything" motto. I've seen the same thing at least since voting in Brazil became a thing again (hint: Collor). You are not the first and not the last, but you can be one less gullible person to buy into the propaganda. Think about it.
A "corrupt" party that could, but didn't, interfere with the largest corruption probe in Brazilian history was removed in a coup, replaced by a vice president from the party most involved in corruption scandals, allowing a farcical, inquisitorial investigation to jail a former president on thin "evidence" so that a neonazi (with a long history of low-level corruption and close ties with organized crime) could win an election...
It also has to be mentioned that the defendant has been convicted by three independent instances of the Brazilian justice system (local, regional and superior courts), each time unanimously.
> Those were not separate trials, but rubber stamping the first one.
This is what you’d probably like to be true, due to political alignment or something; however, there isn’t any evidence whatsoever that that was the case. Do you really think multiple judges in the country’s higher courts would all, unanimously, simply rubber stamp the decision of a local judge?
> Don't you think the judge privately advising the accusation without communicating the defense undermines the right to a fair trial?
No, because the messages do not reveal anything remotely illegal. The Brazilian justice model admits communication between the judge and the accusation and defense, and none of the leaks have shown anything that can be described as harmful to the defense.
And that is all assuming the messages have been faithfully reproduced; there’s strong indication they’ve been modified, for example when The Intercept published edited timelines and cited people who were not even part of the taskforce at the time.
Organized labor was extremely problematic for capital since WW2.
The new dealers ( FDR, Truman ) gave organized labor tremendous power because without it the USA would probably have had a big communist party.
They also knew the deflationary period of the 1930s lead to the rise of fascism and nationalism in Europe. So the petty greed of capital was scarified at the altar to maintain peace. They were also willing to sacrifice growth to maintain peace.
We are going through a similar period of deflationary shock, so it's going to be interesting to see how it plays out and ends.
Most likely the source of unrest may not be US but China.
Uhm, modern Germany? Many companies have labor representatives on board (for example Volkswagen). The country is just fine.
> They were also willing to sacrifice growth to maintain peace.
Who would do such a thing! We should get back to my grandfather times, he was happy because he was a child, and children did not only get a few potatoes to eat per day, but also a little bit of oil with it. Also I suppose it's kind of romantic to have sex with a stranger on the barricades before being shot to death and having your body join the decomposing pile of bodies in the streets.
European style unions are not the same as American ones, despite the same name.
One huge difference is there can only be a single union at an American company, while with the European style an employee can pick which to chose from.
I don't think that is correct. My understanding of American union activity was that it was much less associated with communist movements than Europe, in large part because of its history with machine politics and various ethnic affinities.
The real problem with American unions is its bloody fight against suppression in the late 19th century. American labor relations with management are war compared to Europe and Asia.
The Industrial Workers of the World (founded in Chicago, 1905) had very strong ties with socialism. Helen Keller was involved in both the Socialist Party and the IWW, but you won't find her political views on a motivational poster at your offices.
> The US is also, essentially, entirely energy self-sufficient, with Canada's help. Something China is nowhere near being. The US could shut off China's access to foreign oil and a lot of coal supply very easily and it would grind up their economy.
China can import as much energy as it wants from Central Asia and Russia, it chooses not to because Saudi oil is cheaper.
China also is not as dependent on fossil fuels, due to extensive rail links between their major cities. Its just convenient to use jet planes, also the CCP actively wants to create a Boeing alternative.
If we do end up in a situation that becomes an existential threat to CCP:
- China would aggressively dump US treasuries.
- China stops exporting rare earths that even the US military depends on.
- China starts importing Iranian crude ( providing navy escort ).
- Chinese nationals are forced to sell their holdings in the US.
All of these things would cause a major financial crisis in the US, the Baby Boomers do not have the stomach for it and would vote Trump right out.
Anyway, you are right, the US doesn't depend on trade.
But 44% of US corporate sales happens overseas. A shutdown of global trade would be quite bad for the Chinese, but it would be worse for the "richest nation on earth".
> This is the fundamental mistake China made by keeping its economy so restricted and locked down to foreign companies. Most of the US economy doesn't have a critical dependency on China.
Why should the Chinese open their economy to US companies without getting something big in return ? US firms are not entitled to free access to anything outside their borders.
We know what Facebook, Google can do to a country, it's better for humanity if US companies are not given completely access to every market.
> But 44% of US corporate sales happens overseas. A shutdown of global trade would be quite bad for the Chinese, but it would be worse for the "richest nation on earth".
You're wrong about that. You're talking about the S&P 500, not all US businesses (most US businesses have very little overseas exposure in fact). China is a modest fraction of that S&P 500 44% figure. Further, as noted previously, the US doesn't benefit from or require global trade nearly as much as China (which is also highly dependent on an inflow of dollars to fund its economy).
China currently has a serious dollar based debt problem with its corporations. The Chinese economy requires constant, large inflows of USD. The US is the exact opposite, it has almost no foreign currency debt dependency. And it has zero dependency on the Yuan.
The US is highly self contained in all regards, including its wealth. Its sole major weakness is the consumer junk that people buy at Walmart, mostly from China. Fortunately, the US can replace China with three dozen other countries that would love to start making those easy-to-replace goods, like $60 microwaves (which can easily be made in Mexico or Vietnam). This trade & manufacturing shift is happening right now and will continue.
> China would aggressively dump US treasuries.
Which would do almost nothing. China represents a now trivial part of the US debt picture. Each year that goes by that position becomes ever less important. The Fed could very easily replace China's holdings with a round of QE. The US isn't lacking for demand on its debt, especially while $13 trillion in global debt yields nothing.
> China stops exporting rare earths that even the US military depends on.
The US has begun the process of using the Defense Production Act, which enables the US military to spend money and allocate resources to fix this problem as it sees fit. China has maybe a year to utilize rare earths to any impact, after that it's likely to be permanently removed as a trade weapon. China already made a mistake by hinting at rare earths as a weapon, the US is going to preemptively correct the issue.
Rare earths are plentiful and the US has two domestic mines capable of production near-term (one of which is active right now). There are multiple domestic processing facilities set to be built in the next couple of years. The US military will begin expediting all of that. It wouldn't take more than a year if it were necessary. Further, it's only a small subset of rare earths that the US has a strong need for, narrowing the problem considerably.
Rare earths is among China's least potent threats against the US. If they make the mistake of trying to use it, the US will permanently break their hold over that market (something that Japan almost single-handedly accomplished previously, while having a far smaller economy and far less ability to force outcomes than the US; the US would smash China's global rare earth market share, it would only take a few billion dollars in annual spending for a few years by the US military to do that; an easy move on a national security basis).
> Chinese nationals are forced to sell their holdings in the US.
That would hurt China and benefit the US. It would be ideal for asset prices in the US to decline slightly (they're extremely high right now). Regardless, Chinese nationals do not hold enough US assets to substantially impact US asset valuations.
> All of these things would cause a major financial crisis in the US
None of those would have any serious impact at all.
> China also is not as dependent on fossil fuels, due to extensive rail links between their major cities.
China's demand for oil is increasing, not declining. Their overall power production from coal is increasing, not declining. They've merely been simultaneously increasing their share of renewables. Over the last ten years their oil demand has increased by 50%. They're currently consuming roughly as much coal as all the rest of the world combined.
It makes them exceptionally vulnerable to an external energy shock from fossil fuels. They're incapable of meeting their own energy supply needs in the next 30 years.
It isnt a competition. The point I was trying to make is that India not only has highly fertile land, but also a lot of it to theoretically feed its people without relying on others.
As you said, US has only a 3rd of the population. This is probably the reason they are the largest exporters of food in the world.
Also, the fact that Coinbase is in the US legal jurisdiction gives its clients confidence they would be made whole if anything untoward were to happen.
If the untoward event is solely in USD, perhaps, but not if it's in crypto. Exit scams, hacks, rogue employees, etc, could still hit a US exchanges' crypto holdings and the government probably cannot or will not compell a roll back, supply expansion, etc, on a major blockchain.
If anything is actually protecting clients against crypto theft, it's the exchange's privately-purchased insurance rather than the government. Although I wouldn't rely on that for much either as insurers are rarely eager to pay out.
So all the money spent on mosquite coil, net , aerosol, skin cream ( while harming your own body ) was worth for nothing ? Nature had a better solution all along.
If we lived in forests mosquitoes won't be a problem, well at least all those activities increased GDP.
If you lived in the forests of, say, Thailand there's a good chance you'd die from Dengue Fever or Malaria. Good ol' nature, looking out for the humans.
The ignorance in comments like these is bugging (yes) me.
If you truly believe nature itself is perfect and human inventions are stupid, leave the comfort of your home / office and try to survive buttnaked in the jungle, all by yourself.
People who think nature is all beautiful and perfect and benevolent ironically are the same people who have never tried to survive in the harsh wilderness.
Oh, I do believe nature is all beautiful and perfect and I did survive some very harsh wilderness. I just never believed it is allways nice to be, if I am unprepared ..
If it makes you feel any better, California is perfectly capable of doing all that, but they still don't, and are stuck in a tragedy-of-the-commons type water shortage where farmers will gladly waste $1 of water to produce 5 cents of crops, because the alternative is to get nothing.
Yet companies build plants on the Great Lakes, hoover up all the water, filter it, bottle it, and sell it to the unsuspecting, who happily buy it.
I never ever saw bottled water as a kid in Europe. It wasn't until I moved to the US where it appeared to be commonplace. When I went back home to England last year, they've got it in every supermarket I visited. Sad, really. I still just drink out of the tap here in Texas.
What you wrote about bottled water not being a thing in Europe is definitely country specific. When I lived in Germany none of my German friends drank water from the tap. They would buy packs of bottled water for drinking at home.
Much of the US cities have great tap water. Some places (Flint) get lead going on.
However, much of the water in the US by area is well water. Well water tastes gross, and has some dubious health effects if not filtered right. Bottled water seems reasonable for those people.
Just because bottled water is not useful for you, does not mean it's not useful for anyone.
I never said it wasn't useful. Obviously there are people who need it. I just won't pay for it when I already do by paying for house water. Our tap water is clean here in Texas.
Yet companies build plants on the Great Lakes, hoover up all the water, filter it, bottle it, and sell it to the unsuspecting
I can't speak for every state, but here in Michigan (The Great Lakes state!), companies like Nestle have to apply for a license that subjects them to regular inspections to make sure they're not over-burdening the local groundwater supply. They pump from wells on their own private land using their own facilities. Their license fee is pretty cheap, something like $300USD.
This seems like a common-sense regulation that doesn't overly burden either the company or the regulator.
I buy Ice Mountain spring water with a clear conscience.
If the fed buys every USD bond in existence ( aka monetize the debt ) - it would lead to a good amount of inflation.