Borrow at a fixed rat for as long a period as possible.. Rates are below historical rates
Do we need a runaway inflation before someone like Volcker steps in?
- Thread starter schizo
- Start date
Yes indeed zdreg haha.
No one looks at gold, look at BTC
When I read your OP, just today, I knew that is what you were saying earlier this week (that we are in a world of hurt if at some point we need another Volcker).
Not surprisingly some others didn't.
Did you mean "couldn't have"? I think it's important for us to understand that there is really only one "printing" step associated with deficit spending. That's when the Central bank covers net Treasury overdrafts (i.e., deficit spending, regardless of whether that's a perfectly accurate description of the actual plumbing.)
Although it's difficult to sort this out, when the Central bank buys bonds it is not actually an additional "printing." In substance, it amounts to the exchange of regular money for the interest paying kind of money (i.e., Treasuries). The money goes into bank reserve accounts and the Treasuries go to the Central Bank. There is really no net printing of money at this stage.
So it would be more correct to look at the Central Bank purchases as expanding Bank reserves and pushing down interest rates. And this, under the right circumstances could lead to inflation. Let's remind ourselves that it is not just the amount of money in the private sector that creates inflation, but the amount that is spent (i.e, the amount circulating) relative to the goods and services on offer. . .
Here is a pertinent well written but long article, that I've cut to the chase with snippet, for this topic:
This crazy shipping crisis, explained
.............
Item: One of Japan's "Sogo shosha," or giant holding companies, is looking to charter a ship for $130,000 a day for three years, which would have been $20,000 a year ago. The company will have to put up $35 million for the first nine months in cash, on day one.
Wow! Who’s going to pay for all that? We are of course, via higher priced goods. If that doesn’t scream inflation to you, you must be high. And I’m talking about non-transitory inflation here, as in real inflation that sticks around for years.
.............
https://www.yahoo.com/news/this-crazy-shipping-crisis-explained-094340766.html
This crazy shipping crisis, explained
.............
Item: One of Japan's "Sogo shosha," or giant holding companies, is looking to charter a ship for $130,000 a day for three years, which would have been $20,000 a year ago. The company will have to put up $35 million for the first nine months in cash, on day one.
Wow! Who’s going to pay for all that? We are of course, via higher priced goods. If that doesn’t scream inflation to you, you must be high. And I’m talking about non-transitory inflation here, as in real inflation that sticks around for years.
.............
https://www.yahoo.com/news/this-crazy-shipping-crisis-explained-094340766.html
So what ? It's still very tame inflation. Central banks have been trying to create core inflation for more then a decade and failing. They are finally succeeding that's a good thing no deflation like we had in 2009. I can't take all these fake crisis seriously I can remember when mortgage rates were much higher and if you didn't get a 10% annual raise you were disappointed.
Geez I thought you were smarter than that.
Absolute rates of inflation don't matter so much as (although they are running 5%+, when was the last time that happened) the rate m-o-m and y-o-y.
CB's around the world that are, almost in unison, raising rates - guess they are just overreacting huh?
And the stock indices tonight ......... loooower. Why is that?
WTI futures up above 80 now. Seems equity indices and WTI do not like each other.