Re:Nearly half of American workers don’t earn enough to affo...
by josephcsible on Thursday August 12, 2021 @09:58PM
(#28164419)
> Executives had looted companies by loading them up with debt that relied on optimistic cashflow, gave themselves bonuses for that "optimization", and then got bailed out when the cashflow slowed. These companies should have been restructured in bankruptcy, with the executives going to jail for violation of fiduciary duty.
By "optimistic cashflow", do you mean the assumption that the government wouldn't suddenly ban most companies from doing anything that would earn them any money for months on end? Because until they did, that seemed like a totally reasonable assumption.
Re:Nearly half of American workers don’t earn enough to affo...
by mindslight on Friday August 13, 2021 @09:26AM
(#28168548)
No, I mean they assumed that there would not be a significant slowdown of economic activity due to something like a pandemic, recession, depression, natural disaster, or even a market shift. Trying to pin the blame on the government is a bit disingenuous when there was an overarching condition that everybody was responding to.
Re:Nearly half of American workers don’t earn enough to affo...
by imtringued on Thursday August 12, 2021 @08:29PM
(#28163718)
This reminds me of the overseas cash reserves that corporations hold. They basically wait for a tax holiday. Now that inflation is there, that strategy has an obvious problem.
You're right about consumer stimulus. The worst thing about inflation is that it is unpredictable. Pumping the markets with trillions without meaningfully impacting inflation just causes more unpredictability. Just do "QE for the people", hit your inflation goal and then never talk about low inflation again.
The bailout that caused all the current asset inflation happened reflexively after a single day drop in the stock market at the start of Covid. Executives had looted companies by loading them up with debt that relied on optimistic cashflow, gave themselves bonuses for that "optimization", and then got bailed out when the cashflow slowed. These companies should have been restructured in bankruptcy, with the executives going to jail for violation of fiduciary duty. Instead, they were rewarded.
The direct price inflation we're seeing lately is actually a good thing in that it will force the Fed to use the brakes. When they only give money to the financial industry, it takes a while for price inflation to occur. But by giving the new money directly to consumers instead, price inflation occurs much quicker and thus precludes asset inflation.