/1 One caveat to this @Jesse_Livermore and @patrick_oshag...
Friedman's maxim "inflation is always and everywhere a monetary phenomenon" is somewhat apt here -- albeit somewhat inaccurate in its original context (i.e. money supply causation)...
Friedman's maxim "inflation is always and everywhere a monetary phenomenon" is somewhat apt here -- albeit somewhat inaccurate in its original context (i.e. money supply causation)...
https://twitter.com/InvestLikeBest/status/1314632265616551936?s=19
/2 @Jesse_Livermore correctly draws a line between fiscal and monetary stimulus vis a vis inflation...
However, we did not see much spending or inflation spike after the 2008 or 2020 fiscal stimuli because of *expectations*...
However, we did not see much spending or inflation spike after the 2008 or 2020 fiscal stimuli because of *expectations*...
/3 @ReformedBroker made observations similar to yours in his recent post (thereformedbroker.com/2020/10/07/les…)...
and it *sounds* correct because of what we know about marginal propensity to consume vs save (MPC vs MPS) from classical econ...
but it's *not* accurate in COVID-19 economy...
and it *sounds* correct because of what we know about marginal propensity to consume vs save (MPC vs MPS) from classical econ...
but it's *not* accurate in COVID-19 economy...
/4 again, people's expectations (and the nature of this pandemic-driven recession's SIP/WFH) caused a lot of that stimulus to cold-stored in savings, rather than consumption...
https://twitter.com/AnthPB/status/1266474206545485824?s=19
/5 That's partially due to necessarily tepid qualitative forward guidance from fiscal authorities (as opposed to Fed)...
e.g. Despite higher income fm unemployment benefits, the perception that 'these programs are temporary' incentivized job applications:
e.g. Despite higher income fm unemployment benefits, the perception that 'these programs are temporary' incentivized job applications:
https://twitter.com/AnthPB/status/1290482552449318913?s=19
/6 The spike in saving (as opposed to spending and inflation) was likely also due to psychological/behavioral factors...
e.g. "Depression Babies 2.0":
e.g. "Depression Babies 2.0":
https://twitter.com/AnthPB/status/1177638796445265920?s=19
/7 Def agree (and have written) that there's a far out point of hyperinflation and nobody knows where that point lay – $100T is a good enough guess for me...
https://twitter.com/InvestLikeBest/status/1314632266535055360?s=19
/8 but, again, even during this pandemic, $3T in fiscal stimulus would have produced some measurable inflation had it come with the equivalent of a "Greenspan Put" for fiscal policy...
https://twitter.com/AnthPB/status/1259296085538934784?s=19
/9 Counterfactual: '2020 inflation has been a lot higher than it would have been sans stimulus'...
🤔, the nature of COVID-19 (e.g. fears of supply shortages/supply chain shutdowns) means *higher* inflation is actually a better control group to comp vs this empirical stimulus...
🤔, the nature of COVID-19 (e.g. fears of supply shortages/supply chain shutdowns) means *higher* inflation is actually a better control group to comp vs this empirical stimulus...
/10 and I'm also aware that this borders on Friedman's "permanent income hypothesis (PIH)" vis a vis expectations...
... according to my notes and highlights, @Jesse_Livermore did mention the pandemic as a caveat to in his original white paper (osam.com/Commentary/ups…)
... it's been real yo 🤦♂️🤷♂️
... it's been real yo 🤦♂️🤷♂️
https://twitter.com/AnthPB/status/1314753414526644225?s=19
... interesting to think that TIPS could be the killer trade for a Blue Wave in November's elections, given implications for inflation in a streamlined Democratic federal government $TIP
https://twitter.com/borrowed_ideas/status/1315476500288884738?s=19
... Biden victory plus Democrats sweeping Congress likely results in hella more fiscal stimulus and hotter growth:
https://twitter.com/AnthPB/status/1313599596237656065?s=19
... plus the volatility curve and investor sentiment/surveys have heavily discounted a contentious election night, etc (protracted decision and/or transition of power) $VIX
Jamie Dimon $JPM:
"we had massive global QE in the last go round, and we didn't have inflation... Fiscal stimulus, which has been extraordinary around the world is, by its nature, inflationary... we don't really know the outcome of that..." $TIP #TIPS
"we had massive global QE in the last go round, and we didn't have inflation... Fiscal stimulus, which has been extraordinary around the world is, by its nature, inflationary... we don't really know the outcome of that..." $TIP #TIPS
https://twitter.com/soonervaluecap/status/1316076557077798912?s=19
...revisiting this contingency among Blue Wave > fiscal stimulus > inflation > TIPS (
The odds of a meaningful fiscal stimulus arriving before 2020YE have dropped precipitously to ~10% probability (goodjudgment.io/superforecasts…)
$TIP #Election2020
https://twitter.com/AnthPB/status/1315493289106210824?s=20):
The odds of a meaningful fiscal stimulus arriving before 2020YE have dropped precipitously to ~10% probability (goodjudgment.io/superforecasts…)
$TIP #Election2020
... "An institutional case study of the period [Canada 1935-75], complemented by a general-to-specific econometric analysis, finds no support for a relationship between monetary financing and inflation."
https://twitter.com/xvrmdf/status/1322590799633199105?s=19
... moar TIPS:
"inflation expectations...continue higher as the 10 yr breakeven is up another 1 bp to 1.91%, the highest since May 2019 and getting ever closer to that other magic number, made up by the Fed, of 2%"
thereformedbroker.com/2020/12/09/inf… $TNX $TIP #CPI
"inflation expectations...continue higher as the 10 yr breakeven is up another 1 bp to 1.91%, the highest since May 2019 and getting ever closer to that other magic number, made up by the Fed, of 2%"
thereformedbroker.com/2020/12/09/inf… $TNX $TIP #CPI
... aaand, scene:
https://twitter.com/charliebilello/status/1358033945829511168?s=19
/1
... outstanding debate between Larry Summers and Paul Krugman on Biden stimulus vs inflation:
• Both agree on economic (GDP growth) boom in 2022;
• Disagree on nature of stimulus (Krugman says disaster relief/Summers says gravy ergo high inflation)
... outstanding debate between Larry Summers and Paul Krugman on Biden stimulus vs inflation:
• Both agree on economic (GDP growth) boom in 2022;
• Disagree on nature of stimulus (Krugman says disaster relief/Summers says gravy ergo high inflation)
/2
N.B. Both assume $1.9T fiscal package ("Biden stimulus") plus $1T spending bill ("Build Back Better"/BBB) spread out across 2021-22...
• Both agree that $1T BBB fiscal investment bill (infrastructure/climate/education) is most important long term priority;
N.B. Both assume $1.9T fiscal package ("Biden stimulus") plus $1T spending bill ("Build Back Better"/BBB) spread out across 2021-22...
• Both agree that $1T BBB fiscal investment bill (infrastructure/climate/education) is most important long term priority;
/3
• Larry: Income support is ~$75B per month *more* than COVID-related losses ($100B monthly sppt vs -$25B COVID run-rate); such a large Biden stimulus lowers probability of BBB approval in 2022;
• Paul: This is like wartime spending, so output gap is wrong measuring stick
• Larry: Income support is ~$75B per month *more* than COVID-related losses ($100B monthly sppt vs -$25B COVID run-rate); such a large Biden stimulus lowers probability of BBB approval in 2022;
• Paul: This is like wartime spending, so output gap is wrong measuring stick
• • •
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