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When does U.S. MMT policies end? And how can we make money or protect ourselves from it?

Posted on 2/24/21 at 10:50 am
Posted by GumboPot
Member since Mar 2009
140573 posts
Posted on 2/24/21 at 10:50 am
Obligatory, this is not investment advice.

First MMT policies: LINK

It certainly seems like congress will never stop spending more than tax revenues. Here is a screen cap of federal deficit over the years:




When congress is short on money they sell bonds. The main issue is not necessarily the debt through bonds it's the type of debt. You have federal debt (bonds) bought by institutions who can't print money and federal debt bought by the Federal Reserve who does print money. The Federal Reserve steps in and buys treasury bonds to keep interest rates low. Here is a picture of the current Federal Reserve balance sheet:



LINK

Yeah, needless to say the Federal Reserve has been printing.




But who is getting this money and how is inflation being held in check?

Obviously the federal government is getting this money and they are doling out the money to failed blue states and cities and chump change stimulus to people. The answer to inflation from people that support MMT is taxes. Taxes keep money out of consumers hands and prevents runaway inflation. Another answer is this:



Yes, keeping the public ignorant. Here is some evidence of an ignorant populous:



But how can we protect ourselves from MMT? Precious metals seem to be a place to store money to protect yourself from MMT:




Then there is crypto currency. Crypto has been on a nice little bull run offering a lot more than just protection to crypto investors.

The Federal Reserve has noticed.





Sure, a lot of money can probably be made in crypto but IMO the uncertainty of when and how governments take over crypto is dangerous especially for long term investors.

So what vehicles have been valuable in inflationary cycles? From Michael Burry of "The Big Short" fame:




What are "real assets"?

And I guess MMT policies will never end.

Michael Burry Twitter Archive






Posted by TerryDawg03
The Deep South
Member since Dec 2012
17963 posts
Posted on 2/24/21 at 11:09 am to
The price of lumber, construction costs and existing residential sales beg to differ.

There’s inflation. Anyone try to buy a house recently? Haven’t looked at equity or commodity valuations lately, but looks like it’s there as well.

CPI is BS.

The Fed’s policies are worsening the wealth inequality that Dems claim to challenge by inflating asset prices that owners consider good. The haves win; the have nots lose.

quote:


Posted by GumboPot
Member since Mar 2009
140573 posts
Posted on 2/24/21 at 11:15 am to
quote:

The Fed’s policies are worsening the wealth inequality that Dems claim to challenge by inflating asset prices that owners consider good. The haves win; the have nots lose.



Exactly.

But it seems we are not allowed to talk about the fact that deficit spending coupled with Fed policy actually keeps the poor, poor.
Posted by BiteMe2020
Texas
Member since Nov 2020
7284 posts
Posted on 2/24/21 at 11:17 am to
The CPI index keeps removing products that inflate too quickly.

Look at land prices. 10x what they were 20 years ago.
Posted by GhostOfFreedom
Member since Jan 2021
13269 posts
Posted on 2/24/21 at 11:18 am to
It is amazing that we fought WWI, WWII, Korea and Vietnam and had little deficit spending and then erased the debt. What happened in the mid 70s?
Posted by jimbeam
University of LSU
Member since Oct 2011
75703 posts
Posted on 2/24/21 at 11:26 am to
Digital currencies don’t mean shite except that the gov can watch everything you buy. The beauty of crypto is decentralization and no printing.
Posted by wutangfinancial
Treasure Valley
Member since Sep 2015
11958 posts
Posted on 2/24/21 at 11:44 am to
If you have to point to certain prices to prove there's inflation you are invalidating your own conclusion.
Posted by GumboPot
Member since Mar 2009
140573 posts
Posted on 2/24/21 at 11:49 am to
quote:

It is amazing that we fought WWI, WWII, Korea and Vietnam and had little deficit spending and then erased the debt. What happened in the mid 70s?




1971 we completely got rid of the gold standard. It’s been helicopter money since then. Started out slow now we are reaching critical velocity.
Posted by TerryDawg03
The Deep South
Member since Dec 2012
17963 posts
Posted on 2/24/21 at 2:17 pm to
quote:

If you have to point to certain prices to prove there's inflation you are invalidating your own conclusion.


Exactly. Thanks for proving my point.

If the Fed consistently swaps out items from its basket of goods to keep inflation figures low, it invalidates its conclusion that inflation is low.

Velocity of money needs to be considered when discussing inflation and it’s often ignored.
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