Inflation vs high interest rates & unemployment

[Fau Teixeira]

I moved from FL to CT (partially  for quality of life improvements) but also mostly for cost of living reasons.
My mortgage now is less than rent would have been in a much smaller house in florida.

In the overall scheme of things, i kinda agree with pondwater. This is how capitalism works. Companies will buy out all the properties if they see a profit to be had and that will drive the market up. And if it crashes, then they're set to take the hit.

The one thing that is unacceptable, is that when the market crashes, that the government bails out these companies or the banks that back them. Don't drive up the market for profits and then when you're in trouble expect taxpayers to bail you out.

[pondwater]

The one thing that is unacceptable, is that when the market crashes, that the government bails out these companies or the banks that back them. Don't drive up the market for profits and then when you're in trouble expect taxpayers to bail you out.

Yes, the free market should decide the fate of a company. Just like it should have back in '08 when banks, GM, and Dodge got bailouts.

[Dave Gray]

Yes, the free market should decide the fate of a company. Just like it should have back in '08 when banks, GM, and Dodge got bailouts.

They should, but we would all pay that price.

The banks -- bailing them out was the right call.  (It was GW Bush administration who did it).  But I think it was good.  It ultimately kept the economy from going into a downward spiral where we were all way worse off.  The issue that I had was that there weren't really consequences.  The bailout should've socialized some of that and it needed to be tied to regulations so they couldn't just do the same shit again.

The GM bailout was just a smart business move.  The government made that money back so it saved an industry and didn't even cost us anything.


Capitalism is heartless, which is good and bad.  The free market is great and all, but rich people can pump their profits, the entity fails and regular people lose jobs and investors lose out, but the super rich people have pulled their assets and filed bankruptcy.  It's the cycle.  You have to intervene to prevent that sometimes.

[pondwater]

They should, but we would all pay that price.

The banks -- bailing them out was the right call.  (It was GW Bush administration who did it).  But I think it was good.  It ultimately kept the economy from going into a downward spiral where we were all way worse off.  The issue that I had was that there weren't really consequences.  The bailout should've socialized some of that and it needed to be tied to regulations so they couldn't just do the same shit again.

The GM bailout was just a smart business move.  The government made that money back so it saved an industry and didn't even cost us anything.


Capitalism is heartless, which is good and bad.  The free market is great and all, but rich people can pump their profits, the entity fails and regular people lose jobs and investors lose out, but the super rich people have pulled their assets and filed bankruptcy.  It's the cycle.  You have to intervene to prevent that sometimes.

Printing money that adds to the debt AND further debases the currency is a losing move. There should be zero leniency on private companies that are too stupid and/or greedy to properly run their company. If the economy collapses, so be it. If a few thousand people lose their jobs, so be it.

Bailouts are like giving drugs to drug addicts, it doesn't really accomplish anything except not holding people accountable for their actions. Firing up the printing presses and kicking the can down the road isn't a plan. Most reporting puts the national debt at $30+ trillion. That's disingenuious at best. Total unfunded liabilities are closer to $125+ trillion. I can assure you that when our debt finally becomes unsustainable, it will be multiple times worse than a few banks and car companies collapsing.

Anyhow, we'll just have to disagree.

[Spider-Dan]

Printing money that adds to the debt AND further debases the currency is a losing move.

The only reason anyone should care about debasing the currency is because of the effect on the economy.  So there's no point in detonating the economy to avoid "debasing the currency."

This concept will become increasingly relevant as we approach the hard debt ceiling.  There will be people who will insist that increasing the debt ceiling (to pay for spending already legally authorized by Congress) will eventually devalue the dollar, while ignoring that defaulting on our debt will IMMEDIATELY destroy the value of the dollar.

[pondwater]

The only reason anyone should care about debasing the currency is because of the effect on the economy.  So there's no point in detonating the economy to avoid "debasing the currency."

This concept will become increasingly relevant as we approach the hard debt ceiling.  There will be people who will insist that increasing the debt ceiling (to pay for spending already legally authorized by Congress) will eventually devalue the dollar, while ignoring that defaulting on our debt will IMMEDIATELY destroy the value of the dollar.

Debasing the currency is a greater threat to the economy than a few companies going belly up. Go through the uncomfort of rehab and withdrawal now or die of an overdose down the road.

[Fau Teixeira]

I think the debt ceiling is inherently unconstitutional according to the 14th amendment. Just cause some partisan hacks don't want to pay bills doesn't invalidate the constitution of the united states.

[Spider-Dan]

Debasing the currency is a greater threat to the economy than a few companies going belly up.

That's not the outcome you suggested:

If the economy collapses, so be it.

The economy collapsing is a worse outcome than whatever devaluation of the currency you believe may accompany a bailout of "a few companies."

[pondwater]

That's not the outcome you suggested:

The economy collapsing is a worse outcome than whatever devaluation of the currency you believe may accompany a bailout of "a few companies."

Ok, if you say so. I'm sure someone else will go around in circles with you.

[Spider-Dan]

"If the economy collapses, so be it" doesn't really sound like a statement that requires a whole lot of unpacking.

But sure, if you want chalk criticism of that very straightforward statement up as "going around in circles," be my guest.

[CF DolFan]

My only issue is the type of bank it was. Apparently most banks have something like 90 percent of customers who have less than $250,000 in them.  This is why the FDIC insures up to that amount. It's also why most of our neighborhood banks are in no danger of failing. This bank was the opposite and has almost 90 percent of their customers having over $250,000 with many big Democrat donors. In fact the bank itself donated 75 million to BLM among many other things. The fact it passed out bonuses in the week prior to failing is the tip of the iceberg.  This bank bail out really looks like a Democrat donor bailout and is why many of the Democrats are giving back their donations.  

[Dave Gray]

It was only a matter of time before this thread got crazy.

[pondwater]

Believe it or not, I do respect pondwater's position.  Even though I don't agree with it, it's ideologically consistent.

I just don't think that we truly have the cojones to do nothing.  ...what we do is "do nothing" until shit fails and then do something to fix the broken shit.  It's the worst of both worlds, but it's the reality.  As much as I'd just love banks to fail that do stupid shit and take dumb risks, I ultimately don't want the economy to fail and my kids not to eat out of principle, so we prop it up and let those who did it get rich.  It's really fucked up.  I'd prefer the regulation side where we stop it before it happens, but I certainly do understand the idea of a completely free-market.  It's just not realistic in our world.

That's the way our economy is supposed to work though. But if you artificially prop the system up you're increasing long term instability in the economy, inflation, interest rates, and most of all the national debt.

If you let it correct itself, it will usually balance itself out. That's not to say that there aren't going to be some unpleasant things that come along when that happens. No system is going to be perfect. But it's much better to have a few bumps in the road than it is to take a different path and eventually go off a cliff.

There are certain people with black and white thinking patterns, they assume or imply that all economies collapse at the same severity. Which is as absurd as saying that all gunshot wounds are the same. In reality, that's not how it works, it's on a spectrum. They are all different. And as noted, if the economy naturally resets itself there will certainly be some discomfort.

However, delaying a few low to moderate level economic collapses to avoid discomfort, while simultaneously almost insuring a catastrophic collapse down the road is a terrible plan. That type of thinking is short sighted, not to mention it's not congruent with the whole "evil big companies" agenda. The government manipulating the economy is much worse than the "big evil companies" manipulating the free market. The latter will correct itself over time, but the former is permanent damage that will never be corrected.

[Spider-Dan]

That's the way our economy is supposed to work though.

No, that's the way our economy used to work prior to the regulatory reforms put in place after the Great Depression.  We then went over 50 years with no major economic collapses until Reagan got into office and started unwinding regulation, which led to Black Monday in 1987.

There are certain people with black and white thinking patterns, they assume or imply that all economies collapse at the same severity. Which is as absurd as saying that all gunshot wounds are the same. In reality, that's not how it works, it's on a spectrum. They are all different. And as noted, if the economy naturally resets itself there will certainly be some discomfort.

However, delaying a few low to moderate level economic collapses to avoid discomfort, while simultaneously almost insuring a catastrophic collapse down the road is a terrible plan.

And what would be an example of a low to moderate level economic "collapse"?
The Great Recession as opposed to the Great Depression?

Despite what the bootstraps-type people might claim, allowing a "low to moderate level economic collapse" to take place instead of intervening to stop it does not make things better; it makes them worse by economically undermining organizations that would otherwise be healthy.  An economic collapse is not like eating vegetables or taking bitter medicine.  There is no upside.  We should not let people with a fetish for punishing the unworthy try to steer the economy.

[CF DolFan]

It was only a matter of time before this thread got crazy.

I stand corrected. Accordinng to CNN Business 94% of their customer were over the $250,000 insured.

https://www.cnn.com/2023/03/16/investing/first-republic-bank/index.html
 Silicon Valley Bank had one of the highest rates of uninsured deposits
SVB's percentage of both uninsured deposits and deposits that were loaned out is much higher than it is for other top banks. The latter made it more difficult for the bank to get access to cash when customers started pulling out their money.Split bar chart that shows the percentages of Silicon Valley Bank's uninsured deposits and deposits that were loaned out are much higher than they are for other top banks.

Bank of New York Mellon 97% Uninsured Deposits & 31% Deposits that are loans or held-to-maturity securities
Silicon Valley Bank - 94% Uninsured Deposits & 94%  Deposits that are loans or held-to-maturity securities
State Street Bank and Trust Co.- 91% Uninsured Deposits & 40% Deposits that are loans or held-to-maturity securities
Signature Bank - 90% Uninsured Deposits & 93% Deposits that are loans or held-to-maturity securities
Northern Trust Co. 83% Uninsured Deposits  & 55% Deposits that are loans or held-to-maturity securities