Entries Tagged 'Word of The Day' ↓

WORD OF THE DAY—QT (Quantitative Tightening)

If you are worried about what the Fed is doing in the future, it will probably follow Britain’s central bank and start using QT (Quantitative Tightening). QT is where the Feds will seek to sell off assets, (mainly bonds) from their balance sheet. This practice will affect corporations, stockholders and the bond market.

QT is what ultimately ended the 2007-2008 BIG RECESSION. By its end, the Fed had bought 9 trillion dollars on their balance sheet.

The BIG RECESSION occurred because the big financial markets didn’t have liquidity (the ability to buy and sell assets easily). So our Fed bought assets in order to save big corporations and banks.

If I recall right over 500 banks had closed their doors in 2007-2008. That was because giant banks, corporations, etc. had built humongous houses of cards. When the bubble burst on their so-called ‘insurance’ derivative IOU’s, they didn’t have enough money to cover their debts. Everyone was hurting. Continue reading →

WORD of the DAY – Runaway Inflation

Economics Has “Long Been Called “The Dismal Science”.

However, In My Opinion It Should Be Called “The “Magical Thinking Science”

So many calculus formulas and jargon words are mis-used to promote economic policies that seem nuts.

This week I’m using an example of “Wolf Street’s Stories behind Business, Finance & Money” post  about Runaway Inflation for their chock-full-of-data about how Economics really works.

Wolf defines this phrase. Runaway Inflation is when “‘Temporary’ inflation” (or a “spike in inflation” is suddenly called “Runaway Inflation”).

Wolf shows in an easy-to-see Eurostat chart that “Runaway Inflation” in the Eurozone jumped to 9.1% in August 2022, a percentage that in Europe hadn’t been seen since 1997.

Ignoring reality, back in mid-2021 our Fed announced that inflation was just temporary, and the ECB followed suit.

For decades while printing money, both our Central Banks and the Eurozone Countries Central Banks had been getting away with using a policy called “Negative-Interest-Rates”

The Central Banks in Europe and U.S. told their big money-market customers that even though their clients’ accounts were losing money, their customers were safer with them than with other kinds of assets.

Those Central Banks were accually claiming that going and staying below zero was gaining their customers some kind value – the value of peace of mind. Continue reading →

WORD OF THE DAY — INFLATION — THE FED PART-TWO

STAVING OFF INFLATION

Inflation has been defined by economists as “too much money chasing too few goods”. If we use John Maynard Keynes variable Wages to offset Inflation we can see that broken supply chains are a really bad problem.

And another variable causing inflation (that was not created in Keynes’ lifetime) could be the the ‘helicopter money’ of the 2020 – 2021’s that is still trickling down in 2022 to some people via government fiat.

But even with Government payments to every American, too many working people have Wages too low to live on.

On the other hand, raising the Minimum Wage is hard on Main Street small business owners.

So I want to suggest another way to fight inflation. Clearly the broken supply chain problem is on the side of too much money and not enough goods. And the Executive Branch needs to tackle these things as much as possible.

But what I’d suggest for workers who have run out of Wages and government checks is that the Executive branch could expand the U.S. government’s Student Loan Forgiveness Program and offer it to blue collar workers as well.

The U.S. Government’s Student Loan Forgiveness Program

Continue reading →