The fed pushed a lot of what might have gone to savings into risk assets including the stock market.
we've already established that stock speculation was way down on the list of what people actually spent money on. Savings was for that matter too.
when we last discussed this it was established that number one was rent then food then essentials like toothpaste and toilet paper.
True, for folks with extra money to invest or save, but savings went up too.
Blaming it all on the CARES Act would be short-sighted. Obama's financial sector bailout and subsequent rounds of QE, plus Fed repression of interest rates, established a decade-long trend of malinvestment in zombie capitalism and risk assets.
The genie can't be stuffed back into the bottle.
https://www.project-syndicate.org/co...ufakis-2020-12We used to think, with good reason, that globalization had defanged national governments. Presidents cowered before the bond markets. Prime ministers ignored their country’s poor but never Standard & Poor’s. Finance ministers behaved like Goldman Sachs’s knaves and the International Monetary Fund’s satraps. Media moguls, oil men, and financiers, no less than left-wing critics of globalized capitalism, agreed that governments were no longer in control.
Then the pandemic struck. Overnight, governments grew claws and bared sharpened teeth. They closed borders and grounded planes, imposed draconian curfews on our cities, shut down our theatres and museums, and forbade us from comforting our dying parents. They even did what no one thought possible before the Apocalypse: they canceled sporting events.
The first secret was thus exposed: Governments retain inexorable power. What we discovered in 2020 is that governments had been choosing not to exercise their enormous powers so that those whom globalization had enriched could exercise their own.
The second truth is one that many people suspected but were too timid to call out: the money-tree is real. Governments that proclaimed their impecunity whenever called upon to pay for a hospital here or a school there suddenly discovered oodles of cash to pay for furlough wages, nationalize railways, take over airlines, support carmakers, and even prop up gyms and hairdressers.
Those who normally protest that money does not grow on trees, that governments must let the chips fall where they may, held their tongue. Financial markets celebrated, instead of throwing a fit at the state’s spending spree.
Repugs botched the pandemic prep and management, CARES helped (esp for BigCorp, BigFinance, wealthy), but Repugs wasted it, and now they say no more (our donors are safe and wealthier than ever, we are electorally safe, nobody can punish us).
Last edited by boutons_deux; 01-01-2021 at 06:30 PM.
According to your own link, 30% went to savings or paying down debt. That actually seems like a lot to me given the hundreds of billions spent. I've already stated why I don't think COVID stimulus checks are the best use of taxpayer dollars and why I think people are underreporting to the Census that number and the amount pushed into the stock market.
https://www.census.gov/library/stori...payments.html?According to the latest survey results released today, 15.7% used their stimulus check to pay off debt and 14.1% planned to mostly save it.
Last edited by DMX7; 01-01-2021 at 06:42 PM.
I don't see the problem. I imagine people accrued a ton of debt paying for food rent and essentials leading up to the stimulus check. Given that saving for the months to come to pay for food and rent and essentials makes sense too.
What I don't see is a whole lot of money being spent on stocks which would be an issue.
People don't put money into CDs and money market accounts as an investment much nowadays.
What was the peak unemployment rate this year? I remember having to repeat that most people didn't lost their job due to COVID and that stimulus should be targeted to the people who actually did IMO.
But most people didn't lose their job and they likely had fewer expenses; therefore I would expect higher savings/debt repayment and if you've got extra money in your pockets it seems logical that the stock market is going to benefit when savings rates are abysmal.
Except people making above $75K were more likely to actually save or repay debt with their COVID stimulus checks.
https://www.census.gov/library/stori...payments.html?Adults in households with incomes between $75,000 and $99,999 were more likely to use their stimulus payments to pay off debt or to add to savings, compared to households overall.
Over a third of adults in those households reported that they would use the money to pay off debt or add to savings.
What does lose your job from covid actually mean?
Does that mean that there has to be covid in the workplace or could what? What about a company that shut down because the economies crap?
Personally I don't give a I believe in universal basic income. I'm not a fan of means testing.
I see no problem with that. Do you?
Despite all that money not being spent on goods and services the Q3-Q4 GDP recovery was robust. Personal income increased and poverty decreased in Q3. These are all unmitigated successes, no?
Doesn't reducing the level of indebtedness free up more income for spending? I'm having a hard time seeing your point/objection.
I'm reading the book the power elite and in it the author describes a phenomenon in American society that results in an economic stratification.
Essentially at the bottom you have the impoverished who do not have enough money to pay for basic needs like food shelter and the like. Then you have the people that have the money to acquire basic needs but generally speaking they do not have a tremendous amount of disposable income because they buy bigger houses and better cars and go on vacation and the like. At the top you have the ultra rich where money is no object they can spend money and it really makes no difference when we are another they just keep on making more and more.
The point I'm making here is that somebody that makes $75,000 is not going to be in a position where they just have tons of disposable income and savings. That just isn't the reality in the United States. What it does mean is that they're expenses are higher.
It seems to me that this was largely financed with government debt which means this is not really a sustainable thing. And we will have another unforeseen disaster at some point down the the line and we'll probably just try to have the government spend our way out of it until at some point people realize the government can't borrow infinitely without major consequences.
Deficit Hawks have been making that claim since the night 1900s. At no point as it ever come to pass.
When market demand for US debt diminishes severely then we can start talking up until that point it's little more than fear-mongering.
In reality taking on American debt in a market is one of the better investments in the depressed economy because interest rates are low and investments outside are few and far between.
I would argue the debt has never been this out of control... However, I totally agree that we should take on debt to avoid a depression but how much and how we spend it matter. And there has to be a limit to how many times we do it. I suspect a major crisis like this could happen again soon given how many things could trigger it that we can't foresee. And what will the response be? More debt and more debt?
Look at the defense budget that was just passed. The natural state of things in our government is deficit spending and a lot of it...It'll stop in a couple months thats for damn sure. You think this infinitely?
I don't look at it in terms of debt good or debt bad. I look at in terms of demand for US debt in markets is high and available and going into debt will help us from spiraling into a very bad recession or depression.
The only impediment to us paying our debt or the interest associated with it has been various government shutdowns in the like which is political not economic. It is not anything approximating out of control. There is nothing indicating that we're even close to that. This is fiscal accounting not personal or business accounting.
There's certainly is no historical justification for your worries. To the contrary there's a lot of evidence that your worries are unfounded.
Yeah, that's the point I'm making. The defense budget is an annual thing that adds to the deficit and thus the debt. Are you that slow?Stimulus is not the defense budget re .
I was talking about the debt and deficit. The stimulus checks impact both.We're talking about the need for a stimulus check you ing re .
an wants his check!
My point is that the deficit spending isn't going to end with the stimulus checks. The defense budget contributes to that and that is annual. Stimulus checks for COVID may end soon but they'll be back for the next crisis and so will more debt.But we weren't talking about the defense budget that is forever. We were talking about a stimulus which is finite.
Give the man stimulus checks just for his effort on this board!
Go shine my shoes.You've been getting wrecked all night.
You deficit spend during recessions to keep the recession from wrecking your economy, this is canon.
A certain amount of deficit spending is stimulative and shouldn't be eliminated, but it makes sense to shrink it in good times so you have dry powder when the hits the fan again.
A government isn't like a household. It can issue currency, and that's a good thing. Pretending it is supposed to balance its books is an irrational fetish and a fundaental misunderstanding ofhow the monetary system works.
Last edited by Winehole23; 01-01-2021 at 07:43 PM.
CC gnaws ankles!
damn all those greedy poors!
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