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Originally Posted by sebastian_dangerfield
Kills uncertainty. Right now, everyone's waiting for the other shoe to drop. Let the fucking thing fall already.
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I'm going to be brief because there isn't much new to say, except that your theory that people will be able to spend more if we just make everyone poorer was conclusively proved wrong by the Great Depression.
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No. I'm saying let it go for a while, and see if after it gets worse, it doesn't get better, which I think it should. If that doesn't happen, turn the printing presses on again.
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The problem is that there is exactly zero reason to expect it to get better.
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WWII got us out of the GD. If we hadn't had that, FDR's policies would have taken us through a see saw of downs and ups with tepid growth.
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There is a vast amount of scholarship on the Depression and in particular about how going off the gold standard and letting the dollar float and other expansionary monetary policies were working until the Fed improvidently reversed them by raising rates in 1937.
But yes, ultimately WWII is what it took to end the Depression, in the midst of the fiscal and monetary policies mistakes that have been well documents.
But you realize, right, that WWII was just a massive, debt-financed binge of government spending? If you say that it's what ended the Depression, you are telling an explicitly Keynesian (paleo and not even New Keynesian) story.
What's so frustrating about you is that you say so many things that make perfect sense, and then you mess them with nonsense spewed by the pop-culture financial press. Or you say things that make no sense and then render it irrelevant by reaching the right conclusion.
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That would have happened already.
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Huh? How, with the Fed policing inflation higher than 2%, would inflation have driven real interest rates sufficiently negative for the market in loanable funds to clear?
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The market in, say, housing can't clear because even if there were equilibrium between credit demand and availability, there is an absence of qualified creditors.
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This is finance. There is no such thing as "qualified creditors." There is "qualified creditors at market prices." Get rates to the right levels and there are enough qualified creditors. Given the choice between losing money on holding reserves via inflation and lending at positive interest rates, banks will find lenders they want to give money to.
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So it's "job creators" who'll spur a recovery?
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Work on your reading comprehension. Credit markets matter. That has nothing to do with "job creators" as a privileged class of individuals.
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I was considering offering all sorts of cherry-picked timelines in response, but I'll leave it at this: Don't be annoying. You know what I'm talking about.
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There was nothing cherry picked about the timeline. Pick whatever timeline you like, and we aren't in a rally of any significance. So, no, I don't know what you are talking about.
Btw, why didn't the beginning of 2009 inspire the "vulture rally" (a meaningless term), you're sure is just around the corner if only we let things get worse?
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