"Economy is doing well"

GMONEY1GMONEY1 Posts: 426 Silver ✭✭✭✭
I had an interesting conversation with a Wharton grad private-equity/investment-advisor guy this weekend about cryptos, monetary policy, inflation/deflation, and the economy.

We agreed on cryptos being a new, small market cap, volatile, unregulated, wild-west space, in which a bigger player could come in (if they aren't there already) and move the nominal price around however they want. (Esp now with options, dark pools, secondary markets, margin/leveraged trading etc).

We disagreed on the following statement that he made:
"It is hard to dispute the economy is doing well".

My argument was basically the marginal slow growth has been financed with more and more debt (including central bank money printing and diluting consumers' purchasing power). But then we got into inflation; based on recent data there hasn't been much inflation (partially due to advancements in tech being naturally deflationary....ok true) but we see it in healthcare, education, rent, and asset bubbles like the stock market.
And also the "economy" is not equal to "financial markets" or assets that are being propped up by reckless monetary policy and credit expansion.

So needless to say, it was an intense discussion. Am I missing something though?!

Is the economy truly "doing well"? Why are systemic risks being overlooked (again)?


  • HClausenHClausen Posts: 36 Copper ✭✭
    Inflation figures (CPI) are strongly manipulated to the downside - the Boskin Commission was one of many steps in that direction. Shadowstats have a continuation of the original CPI calculations, but that is getting long in the tooth and also not perfect. Velocity of money is very low, that's deflationary.

    Systemic risks are a bit higher than in 2007, but worse is the fact that central banks are out of means to reinflate the bubble. That's spelled T R O U B L E!
  • HClausenHClausen Posts: 36 Copper ✭✭
    edited July 2017
    Also, we desperately need better metrics for how well the economy is doing! Dow Jones is lousy, that was proven already in 1929. Gross Domestic Product is also bad, as it includes government spending (by definition based on non-voluntary transactions), and financial transactions (vulnerable to monetary manipulation).

    I am suspecting that manufacturing of consumer goods could be a meaningful metric of a sound economy. Thoughts on tbis?
  • TexTex Posts: 197 Bronze ✭✭✭
    I guess it would all depend on what part of the economy you are engaged in. There is one thing for sure, the Central Banks are willing to print and print and print to no end.
  • HClausenHClausen Posts: 36 Copper ✭✭
    Even the concept "The economy" is flawed - what exactly does that mean..?
  • GMONEY1GMONEY1 Posts: 426 Silver ✭✭✭✭

    Generally speaking, we were speaking about "the economy" as the production and consumption of goods and services; and the net wealth, resources, and management of resources that make up that machine. Our scope was the global economy with an emphasis on the U.S.

    My argument was coming from "real" terms. And it appeared that the other side of the argument was heavily skewed to "nominal" terms.

    So, I guess I could/should clarify the question(s):
    - in real terms, is the production and consumption of goods and services net of debt truly doing well?
    - in real terms, is the management of resources doing well?
    - in real terms, is productivity yielding increased wealth net of debt? (wealth being plentiful resources and valuable assets either tangible or intangible.... and fiat currency being sovereign debt)
  • tomartotomarto Posts: 112 Copper ✭✭
    You could add """ fraud­u­lent behav­iour on an unprece­dented scale"""" and

    Michael Hudson’s sim­ple phrase that “Debts that can’t be repaid, won’t be repaid!!!!!!!!!!!!!!!! and

    Banks profit by cre­at­ing debt, and they are always going to want to cre­ate more debt and more.... and

    Any economy can produce short-term growth by incurring debt.,,big debt big growth,banks love this ....and

    The financial sector today is decoupled from industrialization. Its main focus to provide credit to corporate raiders,,,and

    Bigger and bigger interest ,the bigger it is the less ,much less, we sprend on products = markets shrink ,AND falls into

    a downward spiral.

    @GMONEY1 i am with you.....
  • paddy10tellyspaddy10tellys Posts: 249 Bronze ✭✭✭
    edited July 2017
    Regulators are a front (intermediate hosts) for obligate parasites (Bankers) that induce changes in the behaviour or appearance of their intermediate hosts. This usually makes the intermediate host vulnerable to predation by the definitive host. Wharton grad private-equity/investment-advisor guy seeks to emulate such behaviour. Of course, he thinks the, "Economy" is doing well.

    Thankfully, unregulated Crypto is less exposed to feeders benefiting from proximity to large capital flows that do not add value but just feed...
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