Quote:
Originally Posted by Tervuren
And what happens if we do nothing?
Owned by China?
There is a big push-back against our consumer society from young people, they may actually vote for measures that would cause U.S. citizens to value goods instead of one use throw away like we do today.
Young people want to see re-use, recycling. The higher prices on cheaply made consumer goods may be something that is considered good.
Look at some of the threads here about how young people aren't buying things these days. There may be less pushback to raised prices than you think.
Now those disposed to complain because of who is president will complain no matter what happens.
How do you think what you outline in your post affects the long term treasury bond yield vs the short term treasure bond yield?
I see the need for a long term recession so we can get our stuff together and be more responsible, responsible and boom times rarely go together.
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Not sure about the long bond yield. Higher prices tend to drive higher inflation which tends to drive long yields up, but recessions and low productivity tend to drive it down, and there are other factors affecting long yields as well.
On the need for a long term recession - we had one, lasted from 2008 to 2012-13-ish for most folks.
The consumer exhibited a lot of responsible behavior. Housing prices corrected, house size declined, consumers deleveraged, savings rate went up. Some of this was merely forced, but there has been a certain change in perspective among the generation that came of age during the recession, as you note.
Corporates initially did the same, cutting labor, deleveraging, focusing on core biz. But after a couple years, corporates took advantage of near-zero interest rates to lever up again, buying back stock and chasing M&A. Corporate debt load is now at record levels.
US govt initially went deep into the red, as it is supposed to do in a recession (govt spending = economic stabilizer). Deficit started declining as recovery progressed, again as it is supposed to do. Then we did the massive corporate tax cut and passed a deep deficit budget, and govt deficit is soaring again, this is
not supposed to happen in the late stages of a recovery.
When the next recession comes, either the US govt will not be able to do its job as ecoomic stabilizer, or deficits will balloon to market-destabilizing levels.