U.S. Economy Is Better Than People May Feel: Cohn

Exchanges at Goldman Sachs is a very good podcast where GS executives share their views of the current news in the capital markets and the over all macro economy. Gary Cohn is a regular member there. He sounded very bullish in the latest podcast too.

I think he has several excellent points but I don't think any of these guys EVER take into account debt levels. We have a consumer spending driven economy. If you immediately tripled the average household debt and tripled the national debt, he would sing the same song.

I never hear these guys say, "this is a BAD time" financially. They are like realtors. It's never a bad time to buy a house or sell a house.

Our economy is doing well. Anyone that disagrees is not looking at the facts. We sold the most new cars in history last year. That does not happen if we have 42% unemployment like a certain orange wanna be politican is telling his uninformed crowds.

Our economy is always doing well if our personal financial situation is doing well. I agree with the physician on corporate earnings. We could use some inflation though.

Yeah, I don't see any reason to suspect an economic crash, and I can't stand when people like Peter Schiff use the term "hyperinflation" to refer to anything less than 1,000%-per-year inflation. I do admit to being one of the people who thought that monetary policy in 2008 would lead to significant inflation by 2010, but it never happened.

It's interesting to think about what will happen with currencies for the remainder of the 21st century. I tend to think that the deflationary malaise of our current period is resulting more in pushes for nationalist currencies, rather than in pushes for globalist currencies. Historically speaking, economic globalization and financial integration seems to occur more during good times than during bad times.

Here's the weird thing about that though--the last time there were movements based on changing monetary policy during deflationary episodes (like the bimetallism movement of the 1840s, the populist "Free Silver" movement of William Jennings Bryan, or the Keynesian movement toward nationalist fiat currencies), these were movements away from currencies that were backed by hard metal. Now we are dealing with the specter of deflation yet again, except this time there is no hard metal baseline to delink the currency from. So whereas previous movements in the past away from hard gold standards were essentially movements away from global currencies and toward nationalist currencies; today we see a situation where currencies are already nationalist, and thus there is no way to push further in that direction.

Monetary theorists in the Cold War era always seemed to assume that consumer price inflation was something that was extremely easy and tempting for governments to do. Now we are seeing that such assumptions were unwarranted. I suspect that in coming decades, many countries will find novel ways to produce consumer price inflation with their national currencies, but so far no major economies have pioneered such a route.