Global Depression 2022 - Time to do the Breadline Boogaloo!

[The Ugly One]

This is another very interesting article by 'ourfiniteworld' -

*snip*

The situation we are facing today is much more severe than in 2008. The debt bubble is much larger. The shortage of energy products has spread beyond oil to coal and natural gas, as well. The idea of raising interest rates today is very much like going into the Great Depression and deciding to raise interest rates because bankers don’t feel like they are getting an adequate share of the goods and services produced by the economy. If there really aren’t enough goods and services for everyone, giving lenders a larger share of the total supply cannot work out well.

This guy is clueless. When the Fed raises rates, it doesn't give bankers a greater share of the economy. It does the exact opposite. This is because the interest rates that the Fed controls are the interest rates that it lends money to investment banks at. Low rates enable these banks to borrow at next to nothing and buy up assets. If I am investing my own money, I need to find an asset that yields at higher than inflation + taxes to make money. But if I'm borrowing money to invest, I only need to find a yield higher than the interest rate. So low interest rates make a much wider class of assets attractive to investment banks, who use the Fed's money to basically crowd out everyone else and further shift more and more of the wealth in the world to a tinier and tinier number of people.

IOW, this is a long essay by somebody who does not even understand the basics of what a central bank does.

 

[Beavis]

Costco hotdogs are still $1.50 I wouldn't panic until those are effected.

 

[mindlessobserver]

This guy is clueless. When the Fed raises rates, it doesn't give bankers a greater share of the economy. It does the exact opposite. This is because the interest rates that the Fed controls are the interest rates that it lends money to investment banks at. Low rates enable these banks to borrow at next to nothing and buy up assets. If I am investing my own money, I need to find an asset that yields at higher than inflation + taxes to make money. But if I'm borrowing money to invest, I only need to find a yield higher than the interest rate. So low interest rates make a much wider class of assets attractive to investment banks, who use the Fed's money to basically crowd out everyone else and further shift more and more of the wealth in the world to a tinier and tinier number of people.

IOW, this is a long essay by somebody who does not even understand the basics of what a central bank does.

People like to hate on the banks, but the banks provide an invaluable service. They turn debt into money. This is such a powerful economic tool. It's the cornerstone of why we are all so stupendously wealthy. Even section 8 project negroes in the hood have cars and flat screen TVs.

This is all thanks to consumer credit, and the proliferation of a debt as money model. The flip side to this is debt as money is a double edged sword. I will now refer to my spergout thread from nearly 2 years ago now.

The banks and the Fed did something evil. They disrespected their tool. They papered over the 2008 financial crisis with fake money and even more debt. They did this in order to prevent nature taking its course and rendering the American financial system Bankrupt. Because in 2008 it was.

But instead of solving the problem they made it worse. In order to save the economy in 2008 the Fed suppressed interest rates, allowed banks to cross savings accounts with checking accounts, and reduced the fractal reserve to 0. The money printer went into overdrive.

Then CoVID hit, and the US government leveraged the stupid low interests rates to take on even more debt and hand that out like Christmas candy to people who went on to dump the money in the stockmarket and property.

Triggering an inflationary spiral. This reactor is going to blow. They cannot stop what is about to happen. They think raising interests rates NOW will cool this reactor. But it wont. Not in the circumstances they have created. There is too much debt. Raising interests rates will crash asset values. At the same time it will increase the cost of servicing debt obligations. In an economy so over leveraged it has more debt then money.

 

[Socrates]

Triggering an inflationary spiral

Inflation doesn't exist. is transitory. is peaking. is your fault for spending too much, you spoiled bigot.

 

[The Ugly One]

People like to hate on the banks, but the banks provide an invaluable service. They turn debt into money. This is such a powerful economic tool. It's the cornerstone of why we are all so stupendously wealthy. Even section 8 project negroes in the hood have cars and flat screen TVs.

People also don't realize that your bank account isn't cash in a vault. It's nothing more than a debt note where you are the lender and the bank is the debtor. So when you rub your hands with glee about "lenders getting rekt and borrowers winning," the largest borrower on earth is the US federal government, and the largest lender class by head count is retirees.

Triggering an inflationary spiral. This reactor is going to blow. They cannot stop what is about to happen. They think raising interests rates NOW will cool this reactor. But it wont. Not in the circumstances they have created. There is too much debt. Raising interests rates will crash asset values. At the same time it will increase the cost of servicing debt obligations. In an economy so over leveraged it has more debt then money.

IOW, the Federal Reserve created a financial Chernobyl to try and prevent a short-term crisis. Recently had a "well my head asplode" moment when I learned that nobody at the Federal Reserve accounts for shipping volume at all. It doesn't even factor into their models. So they go to their policy meetings without even having the capacity to consider the global supply chain crisis as a meaningful factor in economic conditions. These people are fucking idiots.

 

[mindlessobserver]

People also don't realize that your bank account isn't cash in a vault. It's nothing more than a debt note where you are the lender and the bank is the debtor. So when you rub your hands with glee about "lenders getting rekt and borrowers winning," the largest borrower on earth is the US federal government, and the largest lender class by head count is retirees.



IOW, the Federal Reserve created a financial Chernobyl to try and prevent a short-term crisis. Recently had a "well my head asplode" moment when I learned that nobody at the Federal Reserve accounts for shipping volume at all. It doesn't even factor into their models. So they go to their policy meetings without even having the capacity to consider the global supply chain crisis as a meaningful factor in economic conditions. These people are fucking idiots.

Chernobyl really is the correct analogy i think. None of the people in the control room of reactor 4 were idiots. Not even Dyatlov. They were all actually very educated and understood at a basic level what they were dealing with. The problem was they were myopic. They lacked the imagination/information to consider all the risks, and all the factors contributing to it.

The price of gasoline right now in my view is quite literally the xenon gas in the reactor. It's a predictable result, but it's poisoned the core. The Central Banks think they have a failsafe to stop the debt and inflation spike. But its.not. too much of the economy is now relying on assets and debt to keep things moving. If interest rates go up and that effort fails...

 

[Raoul_Duke]

People like to hate on the banks, but the banks provide an invaluable service. They turn debt into money. This is such a powerful economic tool. It's the cornerstone of why we are all so stupendously wealthy. Even section 8 project negroes in the hood have cars and flat screen TVs.

This is all thanks to consumer credit, and the proliferation of a debt as money model. The flip side to this is debt as money is a double edged sword. I will now refer to my spergout thread from nearly 2 years ago now.

The banks and the Fed did something evil. They disrespected their tool. They papered over the 2008 financial crisis with fake money and even more debt. They did this in order to prevent nature taking its course and rendering the American financial system Bankrupt. Because in 2008 it was.

But instead of solving the problem they made it worse. In order to save the economy in 2008 the Fed suppressed interest rates, allowed banks to cross savings accounts with checking accounts, and reduced the fractal reserve to 0. The money printer went into overdrive.

Then CoVID hit, and the US government leveraged the stupid low interests rates to take on even more debt and hand that out like Christmas candy to people who went on to dump the money in the stockmarket and property.

Triggering an inflationary spiral. This reactor is going to blow. They cannot stop what is about to happen. They think raising interests rates NOW will cool this reactor. But it wont. Not in the circumstances they have created. There is too much debt. Raising interests rates will crash asset values. At the same time it will increase the cost of servicing debt obligations. In an economy so over leveraged it has more debt then money.

"CRASHING THIS PLANE WITH NO SURVIVORS!"

 

[The Ugly One]

Chernobyl really is the correct analogy i think. None of the people in the control room of reactor 4 were idiots. Not even Dyatlov. They were all actually very educated and understood at a basic level what they were dealing with. The problem was they were myopic. They lacked the imagination/information to consider all the risks, and all the factors contributing to it.

The price of gasoline right now in my view is quite literally the xenon gas in the reactor. It's a predictable result, but it's poisoned the core. The Central Banks think they have a failsafe to stop the debt and inflation spike. But its.not. too much of the economy is now relying on assets and debt to keep things moving. If interest rates go up and that effort fails...

The problem is that the Federal Reserve can cause inflation, it's not the only cause. We're currently in an inflationary spiral caused by government spending. Obligations are growing faster than tax revenues, and since Congress spends money into existence, that means that even as the Fed raises rates, Congress is going to spend uncontrollably. Politically, they can't cut spending. There is no meaningful portion of the budget they can cut without whatever party does it being thrown out for a generation. IIRC only 5% interest rates on USTs put the dollar into an inflationary death spiral where interest on the debt will exceed tax revenues.

 

[Cpl. Long Dong Silver]

@Cpl. Long Dong Silver, Only thing I'd add to this is don't quit the day job. Make sure to get the matching 401k contributions. Even if the market is going down, your employer giving you 1.5x shares is worth buying into a shaky market with. The main way to fuck up in a crisis is to sell the farm over fear of the bottom. Hold steady and don't let fear drag you into terrible positions.

Yeah since I was 22 I've been putting 10% in to my 401k or military equivalent. My job of the last 3 years had a 5% match, and I'm taking a new position with a company offering 9% in lieu of a pension.

I won't ever stop saving/buying, I'm just wondering if it might be ok to try and save what growth I have had in the last decade.

I'll just ride it out based on what I'm hearing.

 

[Darkholme's Dungeon]

The problem is that the Federal Reserve can cause inflation, it's not the only cause. We're currently in an inflationary spiral caused by government spending. Obligations are growing faster than tax revenues, and since Congress spends money into existence, that means that even as the Fed raises rates, Congress is going to spend uncontrollably. Politically, they can't cut spending. There is no meaningful portion of the budget they can cut without whatever party does it being thrown out for a generation. IIRC only 5% interest rates on USTs put the dollar into an inflationary death spiral where interest on the debt will exceed tax revenues.

The only solution I can see is some sort of new coin/bill like the solidus. Even then that was after the government literally collapsed in on itself. I do not see even shred of possibility of this reform happening lest there be a strong authoritarian leader.
Oh by the way, the most useless fucking part of the government, the social security section, is raising payouts so even MORE money in the system.

https://www.ssa.gov/news/press/releases/2021/#10-2021-2

The 5.9 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2021.

Copied from the supply chain thread.

https://www.dailymail.co.uk/health/article-10830979/Massachusetts-officials-confirm-human-case-monkeypox.html

Health officials in Massachusetts have detected a monkeypox infection in a man who has recently returned from Canada. Its Department of Health said the individual was hospitalized, but in a 'good condition'. They are now tracing his close contacts. It is the first confirmed infection with the virus in the U.S. this year, and comes a day after CDC officials said they were monitoring six potential cases.

If you're wondering, Monkeypox comes from niggers eating bushmeat because Africa, once again, cannot feed itself.

 

[Tealeaf]

Blizzard did this with that crappy warcraft remaster. That game died because of soyboy (mis)-management but the outsourcing of art-assets afaik worked just fine from a technical perspective and was probably a lot cheaper than hiring a bunch of cal-arts 3D artists yourself. Malaysia is a lot cheaper than almost any place in the west.

https://en.wikipedia.org/wiki/Lemon_Sky_Studios

https://www.lemonskystudios.com/projects/warcraft-3-reforged/

Around the time of WC3R, Lemon Sky Studios was also contracted to help with the art for C&C Remastered Collection, which is technically and visually excellent.

Yes, Blizzard punches far below Electronic Arts, though to be fair, C&C stuff is mostly handled by Petroglyph on behalf of EA.

 

[Male Idiot]

The problem is that the Federal Reserve can cause inflation, it's not the only cause. We're currently in an inflationary spiral caused by government spending. Obligations are growing faster than tax revenues, and since Congress spends money into existence, that means that even as the Fed raises rates, Congress is going to spend uncontrollably. Politically, they can't cut spending. There is no meaningful portion of the budget they can cut without whatever party does it being thrown out for a generation. IIRC only 5% interest rates on USTs put the dollar into an inflationary death spiral where interest on the debt will exceed tax revenues.

Well they need to send more money to Zelenskyiyiyiyiyiy and Kiyiyiyiv. And Israel! Don't forget Greatest Ally, oy vey!

 

[Chinggis Khan]

The problem is that the Federal Reserve can cause inflation, it's not the only cause. We're currently in an inflationary spiral caused by government spending. Obligations are growing faster than tax revenues, and since Congress spends money into existence, that means that even as the Fed raises rates, Congress is going to spend uncontrollably. Politically, they can't cut spending. There is no meaningful portion of the budget they can cut without whatever party does it being thrown out for a generation. IIRC only 5% interest rates on USTs put the dollar into an inflationary death spiral where interest on the debt will exceed tax revenues.

Raising interest rates is a spiral itself, if the fed raises interest rates long term the US budget will have to allocate a higher percentage of the budget to paying down debt payments from past spending. I don’t know what it is now, maybe 15-20% of tax revenues are allocated towards interest rates. But doubling or tripling rates long term over time you would eventually see 50-60% of all government revenues allocated just towards interest payments on the debt. The government likes to hide this by adding Social Security and Medicare payments to the budget, but since that is allocated it really should be a separate budget. The only reason they don’t is to simply obfuscate budgetary spending, and further confusing the two by calling things discretionary and non-discretionary spending - a meaningless term that crosses the two budgets together. So it’s difficult to find out how much of actual government revenues are allocated to interest payments (go ahead and Google it)

Anyways, the last time the fed ran long term interest rates to combat inflation was the 1980s, but the US didn’t carry nearly the amount of debt that it has now. I wonder if they are simply thinking they can do it again not realizing what this will do to budgetary spending. If the US is basically allocating all or most of its revenues towards interest payments, its current spending can only be carried by more debt and more money printing. Basically just adding to the inflationary spiral it can’t get out of in either direction.

I think they are hoping this will all just blow over in a year or two. lol

 

[The Ugly One]

The only solution I can see is some sort of new coin/bill like the solidus. Even then that was after the government literally collapsed in on itself. I do not see even shred of possibility of this reform happening lest there be a strong authoritarian leader.
Oh by the way, the most useless fucking part of the government, the social security section, is raising payouts so even MORE money in the system.

A currency change won't fix anything because the government has a permanent, standing obligation to shift a precomputed share of economic resources to people over age 65 and people under a certain income level + interest on the debt. Those groups combined make up the majority of voters. This share is trending toward to exceed the amount of revenue the government is able to obtain via taxation. It turns out that when you tell women to sterilize themselves and head to the office so we can grow GDP, there aren't as many young people to tax so that the olds get paid. Nothing really works out economically when you don't have kids, which is why they're so obsessed with keeping immigration up now.

Legally, Social Security has to be reformed once the Ponzi math collapses. It's already in deficit, with revenues being less than payouts, and we're about 13 years away from insolvency, at which point there will be a legally mandated 22% benefit cut across the board. If you think olds, each cohort of which saves even less than the previous one (because our monetary policy is based on the premise that saving is bad) will allow that, lmao, just lmao.

 

[Meat Target]

We have reached the Baghdad Bob stage.

 

[888Flux]

We have reached the Baghdad Bob stage.

View attachment 3298355

The working definition of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP), (https://www.frbsf.org/education/pub...007/february/recession-depression-difference/ | https://archive.ph/j16uA)

There is an almost 99% guarantee that we will be entering the technical definition of a recession. These people are pathetic.

 

[Socrates]

Oh by the way, the most useless fucking part of the government, the social security section, is raising payouts so even MORE money in the system.

This is the feedback loop beginning to show up. A good portion of the governments obligations are pegged to inflation, so they have no choice but to spend more, making the problem even worse. Just wait until they have to start bailing the pension funds out.

There is an almost 99% guarantee that we will be entering the technical definition of a recession. These people are pathetic.

nah dude only 35% fed has got this one dude they said it's gonna be a soft landing why are you being such a debbie downer dude just stop noticing things and listen to what your betters like Jim Cramer and Paul Krugman say.

 

[The Ugly One]

We have reached the Baghdad Bob stage.

View attachment 3298355

Imagine if a Biden admin official straight up said, "lol yeah the economy is fucked" heading into the midterms. The entire admin would get Arkancided. At least the inflation was only transitory!

 

[Meat Target]

 

[Aqua Panda]

Yeah, 4.65 for gas means I'm not going to go anywhere for memorial day. I'll just cook burgers at home. (Though lord help you at how high ground beef prices have shot up.)

The amazing thing is that the minimum wage is still 7.25 an hour. We're quickly approaching the point where 1 gallon of gas will be more expensive than an hours work in certain areas. (Yes, some states already have $15 on the books, but a LOT of people are still going to be fucked.)

Add in food/electricity shortages and we're going to see some serious shit pop off. Bets are off when people start starving and know security cameras aren't working due to no power.