The Markets

Hey,  I was simply clarifiying the math for the numerically challenged.  Yet PJ calls me a 'partisan hack'.  Of course I could call PJ a partisan hack for spinning the 2022 stock market collapse as the fault of covid rather than Biden's failed fiscal and monetary policies in response to the pandemic which was in fact a 'unilateral choice'.  "The entire planet" did not experience stock market declines, but many countries did and many had the same kind of failed policies as Biden and were also influenced by the US market.

The market collapse in 2022 was a response to high interest rates.  Why did we have high interest rates?  The Fed both raised interest rates and went through a historic quantitative tightening during this period in order to mop up the excess liquidity caused by the reckless democrats pumping trillions of extra dollars into the economy.  That's what really caused the historic inflation and the Fed response.  If it was simply a 'supply chain' issue as PJ suggests, how would the Fed raising interest rates and contracting the money supply fix that problem?  Truth is that it wouldn't.

We had one year of inflation that was conquered without a recession.  Never been done before.  And thats because it was primarily a supply chain issue and not a monetary policy issue. 

And  Most of the money Biden spent is still waiting to be spent.    So you blaming it for market action from three years ago is ....  beyond ridiculous.  But Goood News, Charles -  You're right about one thing.  Not every country propped up unemployed people during the pandemic.  Like China.    They're just now starting to recover economically 3 years later and still have massive unemployment.    So feel free to play  Monday Morning QB and promote that as being the path the US should have taken.

There is no extraneous circumstance in the current environment.    Trump came into office with record low unemployment, no inflation, a growing GDP, and a roaring stock market.    He unilaterally fucked all that so he can start a trade war with Canada and Viet Nam.      Oh and dont forget the vitriol with which he talks to our foreign allies which is making their citizens plan their vacations elsewhere.      He gets direct credit for their alternate vacation plans.

If the inflation wasn't due to fiscal and monetary policy, why did the Fed raise interest rates 11 times?  If things were so great, why did they embark on never before tried Quantitive Tightening?  Why were the bulk of jobs created (not the one simply recovered) Government Jobs?  Why were credit card and car loan late payments at record highs when Trump took over.  Why were historic numbers of Americans working two jobs?  Why did real wages make historic drops?  

In any event, I was just showing Jerry how math works.  I'm pointing out to you that maybe you shouldn't get your panties in a wad over a 12% market correction when we had two such declines under your guy Biden even if the partisan hack in you wants to absolve his administration of any culpability (for anything).  It still happened. 

I'll tell you what.  You're obviously a partisan hack who believes Trumps policies of fair trade will ruin us.  I'll bet you that at some point in Trump's presidency, the Dow hits a new record high.  Loser leaves the Kitchen Sink forever.  Should be an easy bet for you since you've convinced yourself we're headed to Hell in a handbasket.  Or are you worried Trump will succeed or just a coward?

pj must get his economic data from msnbc

We had one year of inflation that was conquered without a recession

We did have a recession but the biden gang said it didn't count & the high inflation was more than 1 year.

low unemployment,  unemployment hasn't changed

no inflation 

cpi & ppi declined in March

 a growing GDP 

Still increasing

Most of the money Biden spent is still waiting to be spent

Deficit under biden increased from $27B to $36B

Prior to covid in 2020 there were 157.5m jobs.  Now there are 162.2m an increase of less than 5m.  Biden didn't create the 10m or so jobs he brags about, but the jobs merely returned to the economy.

Because thats the only tool the FED has.   SUpply was mostly the problem - also pent up demand.   Higher interest rates address the latter.       And it sorta worked...    But mostly things just right sized.

Trump sent out checks during COVID too.   But for some strange reason those didnt increase money suppply according to your non-partisan, objective analysis.  Only Biden's checks did.      That just speaks to your hypocrisy 

And the stock market hit record highs during Biden's term - and all you did was complain about how awful his economy was.   You seem to struggle finding one set of rules you are able to apply equally across administrations.   Like I said - partisan hack.

Here.  Educate yourself.

Federal spending was responsible for the 2022 spike in inflation, research shows | MIT Sloan

“Our research shows mathematically that the overwhelming driver of that burst of inflation in 2022 was federal spending, not the supply chain,” said Mark Kritzman, a senior lecturer at MIT Sloan.  In writing “The Determinants of Inflation,” Kritzman and colleagues from State Street developed a new methodology that revealed how certain drivers of inflation changed in importance over time from 1960 to 2022. 

In doing so, they found that federal spending was two to three times more important than any other factor causing inflation during 2022. 

Should I do a Mic drop?

PJ asks why Trump's deficit spending didn't create inflation, but Joe Biden's did.    Obviously it was because there were two very different economic situations.  Trump had to deal with an almost complete economic shutdown.  Unemployment spiked to over 14% in April of 2020.  We were facing a collapse of demand and potential liquidity trap.  When you're that far away from full employment, spending is the right thing to do according to Keynes.  

By the time Joe took over, Unemployment was 6.2% and falling.  The economy was already quickly recovering...So what happens when you pump trillions of new dollars into a quickly recovering economy?  You end up with too many dollars chasing too few goods.  A classic cause of inflation.  Some would say the only cause.  Of course Biden's energy policies didn't help matters, but that's another story.

PJ's question is like asking "Why did a defibrillator work for the heart attack patient but killed the guy with a brain aneurysm?"  Two very different situations that required different solutions.  

My bet is still open on the Dow.  I think this is a market correction that was going to happen at some point anyway.  The market was (and may still be) way over valued compared to history.  The uncertainty around tariffs probably just accelerated the hit.  It will come back...especially if Trump can strike a bunch of favorable trade deals.  Realize there are also a lot of economicly positive actions being taken beyond these trade issues.  Like encouraging American energy development and large scale roll back of Biden era regulations. 

Anyway call me whatever names you wish.  Put put your money where your mouth is.  I say the Dow will hit a new record before Trump's term ends.  You can't believe that since you continually blame only Trump for the current decline.  But maybe you're right.  Only time will tell.

No - Im not betting on the stock market.   I have no idea how it will turn out....and I have no idea if Trump will 180 on everything he's done to date or double down.     I gave up trying to predict Trump 8 years ago.

And I'll be honest, Charles, you can go on posting here as long as you like.  It doesnt bother me one bit.   So I dont see any incentive.

I can predict this much....Trump is causing permanent damage diplomatically and economically to relationships with western allies like Canada...and countries in South Asia.    He is an isolationist.   We no longer are a part of a group of Democracies that is ganging up on bad actors like China.   He's pushing away those partners and handing them over to China.     He's destroying the economic partnerships of the last 50 years and inviting them to move forward without us.    Good luck unilaterally forcing the hand of CHina to do anything.     You need something DOnald Trump has never had - friends.

American exceptionalism is actively imploding under Trump.   And thats damage that will require years to repair long after he's gone.        

  What illegal drugs are you on?

Japan, S Korea, Taiwan, Cambodia, Indonesia and Vietnam are here negotiating new trade deals

With China too.

So is EU and Canada.

And EU is now considering getting natural gas from RUSSIA instead of the US.    

Turns out they had some cards to play too.   Id prefer were playing with them instead of against them