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Wednesday, September 26, 2018

Not Must to Say Except for Some MastoTwittervism

The title above just about says it all. Enjoy the MastoTwittervism!
























































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Posted by The_Lex at 8:01 PM 0 comments

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Wednesday, September 19, 2018

A Case for Increasing Interest Rates and Speeding Up Quantifiable Tightening Just a Little Faster

An episode of The Daily podcast, "The Economic Cost of Authoritarian Rule", though not mentioning stock buybacks, leads me to think that the US needs to increase interest rates just a little faster to encourage the increase in worker's wages.

Based on the next couple podcasts I cite below & random errata I've read and heard over the years,

My reasoning:

Low interest rates make saving in

  • Savings Accounts
  • Money Market Accounts
  • CDs
  • Bonds
unattractive compared to stocks (though the liquidity, stability, and security of some of these options can make them attractive if your goal isn't just maximizing the profit on your investment for emergency funds, expense accounts, etc.).

Low interest rates make it easy to borrow money. Per the cited Slate Money podcast, companies actually finance stock buy backs through borrowing.

Stock buy backs increase per share value because buy backs take shares out of the open market, creating more scarcity and/or altering the balance between supply and demand. Executives and other employees paid in stocks and options get tax advantaged cash since stock buy backs are taxed on a capital gains basis rather than an income or dividend basis.

While profiting insiders & employees with liquidity, people who continue owning stock profit since their shares increase in value. The total value of the company doesn't increase, but the value of shares held onto by investors go up, so insiders selling back stock likely "break even" in stock value while "outsiders" profit a good amount on the increase of their shares of stock in their portfolio.

Per the cited Daily Podcast ep, there are three ways to stimulate the economy: low taxes, borrow money, and low interest rates (and a way to cheat: print money). The problem with stimulating the economy fully through all three means or not moderating them: growth can happen too fast. It leads to hyperinflation, leaving a good amount of people in the dust. In attempts to control an out of control inflation bubble requires austerity measures and that screws everyone, then the economy crashes and bubble bursts.

The 2018 tax cuts were stupid. It's rarely a good idea to increase deficits in a good economy when money doesn't need to be borrowed. The United States government won't do anything about it, though, because attempts at populist politics and the rich wanting to preserve their wealth have the run of the country presently.

Governmental borrowing money is obviously stupid, too, but the tax cuts pretty much require borrowing. Not much can be done to reduce borrowing when tax deductions require the borrowing to pay for what taxes aren't paying for.

Increasing interest rates seems like the best bet. It's in the control of the Fed. Federal Reserve Jerome Powell has already stated that he's beholden to facts and the state of the economy, not to politics. Arguably, his slow interest rate increases, as much as they could be about not trying to cause a sudden bubble burst by reaching an austere level, could also seek to work with the politics of Trump. Even though Trump wants to keep interest rates low longer to slow down the increasing value of he dollar, imagine how much more crap Powell would have to deal with from the President if he increased interest rates a little faster to direct the speed of the economy toward employees, not investors and CEOs and other highly paid executives.

How increasing interest rates will help cool down the high-asset, high-income class economy and speed up the economy for mid-income to low-income employees:

Investing in stocks will become less attractive. Since stocks are so attractive, the market has become heavily invested in them, pushing their value sky high. Many would argue that their values have increased this high with good reason and base that argument on pretty complicated finance and economic terms. That's all very well, but it has the potential of creating a stock market bubble that could burst.

Investing in just stocks also stunts the rest of the economy since it halts value from circulating except through complicated machinations like stock buy backs. Increasing wages and hiring new employees has become unattractive because it doesn't seem like "a worthwhile investment" and can make a single company "uncompetitive" since that money for wages has to come from somewhere, generally by increasing the price of a product, making it less attractive to consumers.

I guess stock buy backs makes some sense here since they're a one time outlay versus new employees and higher wages are ongoing outlays, thus making stock buy backs more predictable and less risky down the road if the economy halts or something like that. This type of decision might make sense in the short view and microcosm of of an industry.

My problem here comes down to slowing down the economy eventually because if all the companies engage in stock buy backs rather than hiring and increasing wages, all the money will rise to the top and the bottom will get sucked dry through inflation. Prices will increase while wages and salaries will become smaller (nominal value of the pay check remains the same while the price of goods and services increases).

The consumer base will shrink as the base can't afford products that they want or need. This creates an obvious moral and ethical issue that tugs at my heart, but this economic discussion doesn't need it. An economic trope addresses the matter well enough: Distributing wealth to the poor leads to better economic growth, mainly because those with less wealth will tend to spend that money while those who already have enough will tend to save that money (or invest it in a company that will later buy back the stock). That's one reason why Trump was right about one thing: 'The economy does better under the Democrats'.

Increasing interest rates will also lead to a faster growing economy by making investment in stocks less attractive. Investing in savings accounts, money market accounts, CDs, and bonds will become attractive again (I could write a whole other essay about how these accounts do good work building REAL wealth rather hot potato wealth based on a lot of money in circulation is actually borrowed money, but such an essay has little place here). People will take money out of the stock market to put into these secure and more liquid accounts become attractive again, causing stock values to go down again. The stock market bubble will deflate, which would be safer than the bubble popping because the consumer base grew too small or disappeared.

At some point in time, I think after the housing bubble burst, banks found investing in bonds more attractive and safer than taking chances on lending money to commercial and personal borrowers. Job losses, customer base disappearing, demand deflating, people going underwater on their loans, etc etc made loaning out money to the public too risky. Making a small amount of money on interest income with bonds is better than the public defaulting on loans, causing the bank to flat out lose a ton of capital. The Federal government also putting capital requirements on banks and other financial institutions also encouraged bond investment and saving money in the Fed rather than loaning out money (though I think these capital requirements are important). If the banks get more capital into their accounts through deposits (and payments of credit cards), they will be more willing to loan out money to some people and business they might have been willing to do so before, which leads to more spending, which leads to the economy growing more by increasing demand and actual purchasing of goods and services.

At this time, I don't believe commercial businesses are feeling enough demand for actual products and services to increase wages. We're living in this weird hypnagogic state of the economy in which companies have more willingness to hire part time and low-wage workers to address something that needs to be done, but not enough to warrant higher pay (since borrowing money to do stock buy backs is a more attractive allocation of resources to increase stock value and provide tax-advantages liquidity is "more valuable' than growing a workforce, putting money into the investor class's pockets rather than providing money to the employee class to spend and meet needs). Maybe hiring the part timers is about setting up a reserve force to address an expected and hoped for demand in the future.

If stocks become less attractive and interest rates increase, however, the best way to increase the profits of a company will be to actually sell goods and services. Companies won't find it profitable to finance stock buy backs by borrowing money. Their collateral value of stock to borrow money will also decrease, leading interest rates to increase there, also.

Initially, I could see a deflationary and economic shrinking stage occurring because less of that circular financial activity would occur, leading to less money circulating. Costs for goods and services would likely decrease because companies would feel more of a need to actually make sales and currently, the low- to middle-income consumer price point is lower than what companies can see as a profitable sale. Once the commercial price point of goods and services synchronizes with the low- to middle-income consumer price point, purchases of goods and services will increase. Increased purchases, especially for consumables and durable yet obsolescent devices, will lead to inflation because of consumer activity, not high-income financial activity. As this type of inflation and demand increases, companies will need to hire more people to help produce goods and services to meet the needs of consumers.

Other options for the government to help grow the economy for the low- to middle-income employee income class:

  • Provide more assistance to the lower income set
  • Provide more innovative student loan forgiveness programs
  • Even some Guaranteed Basic Income
I don't see the current state of the United States Federal and State governments doing anything like that. Again, the high-asset and high-income financial, wealth, resource, and capital class control the government and want preserve all that. Voters can do something about that by going out to vote in November 2018 and other voting and campaign activities in 2020 and later to try electing officials willing to behave in the interests of The People and to put into place policy in the service of The People.

So until us voters and civic participants get out government into shape, my most rational hope at the moment is for Jerome Powell and the Fed to speed up interest rate increases and speed up on the quantitative tightening. Doing so will help cut down on the attraction and profiting off of abstract financial transactions when we need to take action to encourage the growth of profiting off of actual, concrete goods and services.

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Posted by The_Lex at 9:16 PM 3 comments

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Sunday, September 16, 2018

Almost Back into the Swing of MastoTwittervism

Sorry, but just MastoTwittervism for this edition:


























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Posted by The_Lex at 4:20 PM 0 comments

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Wednesday, September 12, 2018

Trepidation for Post-2018 General Election, Eerie Quote, MastoTwittervism

CONTENTS

1. Brief Introduction without Header: Trepidation for Post-2018 General Election
2. Eerie Quote Relevant to Present & Possible Future
3. MastoTwittervism

I think I've been procrastinating on thinking about politics or getting involved too much in poltical discussions and arguments since returning from the 1-1/2 week trip to California a couple weeks ago (though I plan on posting some ruminations about regionalism and some videos of the landscape at some point, but that requries some sound editing). I only just caught up on local Chicago and Illinois politics over at the Chicago Tribune Clout Street section (the Chicago mayoral race has gotten crazy since Rahm declined to participate in the election). The podcasts have piled up a bit, but I'm making headway there.

This procrastination has a little more psychology to it, though. Part of me doesn't want to move past the Primaries and the 2018 General Election. Or a better alternative: fast forwarding my perception of time until the hands of government change drastically. Now sucks, I miss the old days when the United States government and the Western world felt sane, but I feel like things will get even more crazy and even more tense after the 2018 General Election.

The 2020 Presidential Election cycle will start, along with the 2020 House elections (2-year terms now feels like a breakneck pace, now that I've learned about it and have come to actually pay attention to the House), and also some of the 2020 Senate races. The Chicago mayoral race with the initial run-off election in February will feel somewhat like a pleasant diversion (and a follow up race later if one candidate doesn't get at least 50% of the vote, which I doub will happen). The 2020 races will start on November 7, and with Trump at the head of the GOP, all this shit will explode get even worse. Hopefully some other Republican(s) will run, too, and help to dampen Trump's impact.

Either which way, I expect the rhetoric and attacks to get tense, rapid fire, ugly, and even more divisive. The effects could expand further out from just rhetoric to action, which could get worse than ugly. Dang, I didn't even think about attacks on the media, social media scrutiny, and tampering in the US Elections, both from the aftermath of Election 2018 and the attempts to further secure and desecuritize Election 2020. Let's not forget voter and turnout suppression, either!

Admittedly, I've all but determined where my votes go in November. I expect to vote the first weekend that early voting becomes available in my district/precinct. I'll just want to get it over with, like tearing off a Band-Aid (TM).

While waiting for that day to come, though, part of me wants to avoid politics and news. That part of me just wants to pamper myself in escapism and enjoyable things. My sensible side, however, tells me not to succumb to this thinking, laziness, and lack of participation. I might enjoy myself by relaxing during these days of relative calm before the storm of the 2020 Election that will start in a little less than 50 days. I might become complacent, especially not good because I have that luxury.

I need to get my ass more into gear. I need to get my politics and news bandwidth open again. Things need to change. The present state of things is not tolerable. Eligible voters need more urging to get out to their polling places, whether through their own initiative or, if within my power, with the assistance of others that can help voters get to their polling places. Even though Trump's approval has declined below 40% again and the generic polls have stayed relatively steady (but still scary close), we can't take those polls for granted. Those polls don't become reality unless we get out there to vote.

So I need to get my ass into gear more to become active and facilitate other people's activity. I need to shake this funk. Come me, let's do this! Let's get into action and raise motivation among the people. Let's "be the change I want to see in the world." Let's revive hope again. I can do this, and so can you!


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EERIE QUOTE RELEVANT TO PRESENT & POSSIBLE FUTURE (Crypto Pluralism Track)

From page 21 of The Altruistic Personality: Rescuers of Jews in Nazy Europe - What Led Ordinay Men and Women to Risk their Lives on Behalf of Others? by Samuel P and Pearl M Oliner (The Free Press, a Division of Macmillan, Inc., New York, NY 1988):
In Germany, the persecution of Jews was official government policy and had evolved gradually during the years when the Nazi regime attained the height of its popularity and power. Here, unlike conquered or satellite states, the assault on the Jews could not be discredited as a program imposed by a victorious foreign tyrant or enacted to ingratiate a dominant ally. Any German opposition to the persecution of the Jews was interpreted as a form of treason. This does not mean that most Germans shared Hitler's racism and sought the physical annhilation of European Jewry. Instead, the accepted anti-Semitic discrimination as just one plank in the Nazi platform for the restoration of German power. Their support for the Third Reih was predicated on Hitler's overall success in overcoming the civil strife and depression that plagued Germany in the early 1930s and in freeing Germany from the shackles of the Treaty of Versailles had clamped on the country's irredentist and military aspirations. When Hitler succeeded in achieving these goals between 1933 and 1941, the suffering of the Jews seemed to be either a necessary or small price to pay for this national revival.
Sound familiar?

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MASTOTWITTERVISM

I've changed from Twittervism to MastoTwittervism because I want to switch over most of my social media activity to Mastodon. I appreciate, though don't fully understand the implications, the Federalism of Mastodon and also like that some Instances (servers) feel comfortable to assert more moderation than Facebook or Twitter, willing to take action against harassers, hateful, and abusive people. Mods and admins have a bit of learning and figuring out to do, but I like the idea and spirit.

The main worry/drawback at the moment: I don't have too many friends, acquaintences and/or followers using Mastodon. I had a lot of hope for Google Plus and the social media system they tried launching before that, but neither of them worked. Mastodon feels the same, but I think a fair amount of people feel excited about it, too, especially regarding the assertiveness that we hope the mods and admins feel and will act upon. Their presence and willingness to act feels more reassuring than the behavior that Facebook and Twitter will tolerate and neglect these two platforms present. Like voting, however, Mastodon won't amount to much unless people adopt the system and migrate over to it.

With that in mind, please do some research and come on over to join the party. I hang out over at mastodon.social with user name @screwjaw. If you have an account at another Instance/server that hasn't muted/blocked my instance, you can still connect with me at @screwjaw@mastodon.social. From what I've, though, even if your Instance mutes my Instance/server, you might still have the ability to follow me and vice versa. Come on over to the Mastodon side and hang out!

Until then, check out my MastoTwittervism:







































































































































































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Posted by The_Lex at 9:51 PM 0 comments

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