I am proposing that the newly printed money from central banks causes deflation not inflation. Newly printed money flows to automation which lowers consumer prices. Traditional central banks say that newly created money goes to wage inflation but that is not fully true. Further we have globalization which again lowers consumer prices and newly created local money by central banks does not effect foreign wages.
"Under this policy approach the target is to keep inflation, under a particular definition such as the Consumer Price Index, within a desired range.
The inflation target is achieved through periodic adjustments to the central bank interest rate target. The interest rate used is generally the overnight rate at which banks lend to each other overnight for cash flow purposes. Depending on the country this particular interest rate might be called the cash rate or something similar."
source: https://en.wikipedia.org/wiki/Monetary_policy
- It is just wrong to think that you can control consumer price index on a globalized market.
Consumer prices aren't really going down, at least on things people care about (food, housing, or education).
At least in the U.S., it seems like the consumer classes are pretty tapped out in terms of consumption, and wages are stagnant so new consumption growth is elusive. With the income inequality that the U.S. is current experience, there just aren't enough consumers with resources that can keep spending indefinitely.
People are cutting out consumer spending because they have to spend an increasingly higher percentage of their income on housing and education. The fatal flaw isn't that inflation doesn't happen, it's the fallacy that inflation in one sector of the economy will automatically propagate to all other sectors.
Wages aren't stagnant right now, they're almost on target (for current growth, at least. They are still behind overall from being below target for a few years).[1] That's a relatively new thing though, and who knows how long it will last...
Real median personal income increased 14% between its low point after the recession in 2012 and 2018[1]. There are plenty of resources for consumer spending, at least in the U.S.
I would imagine that consumer prices going down for everything but local, supply constrained goods like housing, education and healthcare, is leaving people with more disposable income to spend on local, supply constrained goods, thereby making them more expensive.
From a micro perspective, the cost of consumer goods seems to be steady but the cost of housing, education, and healthcare is increasing faster than inflation.
The central banks are causing the inflation. Inflation devalues the currency in circulation and increases value in the debt held by those banks - a transfer of wealth. Why would they ever want to cause deflation?
Is growth adjusted for inflation here? I.E. is it real growth?
A 0.8% increase does not keep up with inflation, so that would already be a decline in real terms.
It seems like it does. The EU, US, and China are like 70% of global GDP. And if they're growing at 1.2%, 2.4%, and 6.1% respectively, I don't know how global growth could be only 0.8%. The rest of the world would need to be deep in the red.
I don't disagree with you, but I think Central Banks would.
It's basically their job to keep inflation steady.
On one hand, we can criticize them for not doing a good job. On the other hand, if you compare the volatility of inflation vs equities vs house prices vs just about anything -- they're doing pretty good.
From investopedia: "Most of the individual data sets will also be given in real terms, meaning that the data is adjusted for price changes, and is, therefore, net of inflation."
I read recently that QE has disrupted capitalism's process of creative destruction by keeping alive companies that would have died otherwise[1]. These low-growth zombie companies drag on the economy.
Surprised it took this long given the way the US economy is being yanked left and right on a moment's notice. Just think about how much money you could make if you could affect the DJIA with a tweet.
Pretty sure the answer is no. US insider trading law is very much concerned not just with whether you traded on material nonpublic information, but also on whether your trading based on this information was a breach of trust between you and the person giving you the information.
As far as I understand, overhearing a stranger discussing a deal at the local Starbucks and trading on that, is perfectly legal. But overhearing your wife discuss a deal and trading on that is illegal, as it is a breach of trust.
Edit: I managed to find the article I remember reading on this. Turns out it was Matt Levine in Dec. 2018. To quote him:
> Famously, in American insider trading law, it’s legal to trade on inside information that you randomly overhear in a train station.
Is a stranger talking on the phone in Starbucks really public information?
If so, I would start a SAAS that just puts a microphone in every Starbucks and high end restaurant in ritzy corporate areas like Bellevue, Palo Alto, Manhattan and sell that data to some quant fund. That signal could be worth billions per year
If you start that, let me know. I'll then head to my local Nobu with a friend, and pretend I'm from Adobe discussing an imminent deal to buy Docusign, while holding Docusign shares :)
That's correct, but i'm not sure this qualifies. I think the person who's trust you're breaching has to have some fiduciary relationship to the company in order to qualify. Trump is more of a macro event and doesn't have any sort of privileged status in relation to a company, so i'm not sure if he'd qualify.
> As far as I understand, overhearing a stranger discussing a deal at the local Starbucks and trading on that, is perfectly legal. But overhearing your wife discuss a deal and trading on that is illegal, as it is a breach of trust.
I believe this is technically incorrect. If the information you heard inadvertently was non-public and you trade on it, that is still illegal.
"Under this policy approach the target is to keep inflation, under a particular definition such as the Consumer Price Index, within a desired range.
The inflation target is achieved through periodic adjustments to the central bank interest rate target. The interest rate used is generally the overnight rate at which banks lend to each other overnight for cash flow purposes. Depending on the country this particular interest rate might be called the cash rate or something similar." source: https://en.wikipedia.org/wiki/Monetary_policy
- It is just wrong to think that you can control consumer price index on a globalized market.
At least in the U.S., it seems like the consumer classes are pretty tapped out in terms of consumption, and wages are stagnant so new consumption growth is elusive. With the income inequality that the U.S. is current experience, there just aren't enough consumers with resources that can keep spending indefinitely.
Wages aren't stagnant right now, they're almost on target (for current growth, at least. They are still behind overall from being below target for a few years).[1] That's a relatively new thing though, and who knows how long it will last...
1: https://www.epi.org/nominal-wage-tracker/
[1]https://fred.stlouisfed.org/series/MEPAINUSA672N
A 0.8% increase does not keep up with inflation, so that would already be a decline in real terms.
It seems like it does. The EU, US, and China are like 70% of global GDP. And if they're growing at 1.2%, 2.4%, and 6.1% respectively, I don't know how global growth could be only 0.8%. The rest of the world would need to be deep in the red.
The 0.8% would be extra growth on top of that if the US-China trade war stopped.
It's basically their job to keep inflation steady.
On one hand, we can criticize them for not doing a good job. On the other hand, if you compare the volatility of inflation vs equities vs house prices vs just about anything -- they're doing pretty good.
From investopedia: "Most of the individual data sets will also be given in real terms, meaning that the data is adjusted for price changes, and is, therefore, net of inflation."
https://www.investopedia.com/terms/g/gdp.asp
[1]. https://www.afr.com/policy/economy/qe-would-kill-finance-and...
As far as I understand, overhearing a stranger discussing a deal at the local Starbucks and trading on that, is perfectly legal. But overhearing your wife discuss a deal and trading on that is illegal, as it is a breach of trust.
Edit: I managed to find the article I remember reading on this. Turns out it was Matt Levine in Dec. 2018. To quote him:
> Famously, in American insider trading law, it’s legal to trade on inside information that you randomly overhear in a train station.
https://www.bloomberg.com/opinion/articles/2018-12-03/inside...
If so, I would start a SAAS that just puts a microphone in every Starbucks and high end restaurant in ritzy corporate areas like Bellevue, Palo Alto, Manhattan and sell that data to some quant fund. That signal could be worth billions per year
I believe this is technically incorrect. If the information you heard inadvertently was non-public and you trade on it, that is still illegal.
The title is misleading. I don't want incredible growth, I want sustainable growth.
How dare they try to model a thing which is not themselves!