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The Fed, Debt, and the Economy


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Curious to find out what the forum thinks of the disparity in treatment between the civilian workforce, and the sacred cows that are the military and the retirees.

I'm a civilian workforce member, and as you can imagine I'm not happy about this.  The economy is fine and there is no reason to not provide a general raise that approximately matches the cost-of-living increase.  I was not happy about Obama freezing us for 3 years either, but at least back then there was some justification.

 

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1 hour ago, proteus126 said:

No federal employee pay raise for 2019.  The 2019 freeze will save 3 to 4 billion dollars per year, in perpetuity.

Military and Federal Retirees still get their bump, as usual.  Military and Retirees are up well over 20% over the last 11 years.  Civilian feds up 10% or so in the same time span.

Sad.

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1 hour ago, proteus126 said:

Curious to find out what the forum thinks of the disparity in treatment between the civilian workforce, and the sacred cows that are the military and the retirees.

I'm a civilian workforce member, and as you can imagine I'm not happy about this.  The economy is fine and there is no reason to not provide a general raise that approximately matches the cost-of-living increase.  I was not happy about Obama freezing us for 3 years either, but at least back then there was some justification.

 

It's disgraceful the treatment of the civil government employees in this country. They are vilified and get abused like this regularly.

Can they unionize?

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50 minutes ago, proteus126 said:

So am I correct in assuming that you are cool with freezing civilian federal employee pay?

Should we have frozen military pay and federal retiree pension increases as well?

Idk man, maybe I’ve been reading zero hedge and others too much here the past couple of months but if what I’m afraid what might happen comes to fruition people will be ecstatic to just have a job. Raise or not. Government employees might be relatively safe though. 

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10 minutes ago, The Z Machine said:

It's disgraceful the treatment of the civil government employees in this country. They are vilified and get abused like this regularly.

Can they unionize?

There is a union, but since at my workplace nobody ever mentions it I assume it doesn't apply to professionals.  My organization does research for the US Navy, so we are all engineers and physicists, except for the administrative tail.

It is considered illegal for Feds to go on strike or work stoppage, because essential services would be impacted.  Generally we just have to take the abuse.

We can either move on, or stick around.  Compensation is definitely set up to encourage sticking around.  However, it is inevitable that the salary control measures, when coupled with the anti-Fed rhetoric, incentivize the superior/motivated (young) employees to leave and the weaker employess (of all ages) who can't land a job elsewhere to stay a few extra years to make up the income shortfall.  Probably not the effect that the sharp-eyed budget hawks intend, but there we have it.  The best and brightest dozen of the gaggle of 20-somethings that I have had working for/with me over the last decade have indeed mostly left federal employment after a few years.  (one works for SpaceEx now 👍).  What a shame - the departed were all budding rock stars.

 

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6 minutes ago, NREC34 said:

Idk man, maybe I’ve been reading zero hedge and others too much here the past couple of months but if what I’m afraid what might happen comes to fruition people will be ecstatic to just have a job. Raise or not. Government employees might be relatively safe though. 

Very true - in bad economic times it is absolutely terrific to be a Fed.

And yes, based on reading your takes in the Stock Thread you are VERY bearish!  I'm not sure how shorting the civilian workforce to save a few $B helps or hurts.  It is chicken feed compared to the macro numbers you are working with.  You might want those folks in tip-top morale shape when the big one hits!

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19 hours ago, proteus126 said:

It is considered illegal for Feds to go on strike or work stoppage, because essential services would be impacted.  Generally we just have to take the abuse.

See, that's bull#### right there. If they can furlough you at any time because the political class can't get their #### together, you should be able to call a strike.

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22 hours ago, NREC34 said:

Idk man, maybe I’ve been reading zero hedge and others too much here the past couple of months but if what I’m afraid what might happen comes to fruition people will be ecstatic to just have a job. Raise or not. Government employees might be relatively safe though. 

Yup. I just took the last steps of opening my own business as part of a business plan two years in the making and I am terrified that I’m right about what’s about to happen to the economy. 

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22 hours ago, NREC34 said:

Idk man, maybe I’ve been reading zero hedge and others too much here the past couple of months but if what I’m afraid what might happen comes to fruition people will be ecstatic to just have a job. Raise or not. Government employees might be relatively safe though. 

You really don't want to do this.  Zero hedge is a crap news source that peddles conspiracy theories and constant impending doom.

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2 hours ago, Slapdash said:

You really don't want to do this.  Zero hedge is a crap news source that peddles conspiracy theories and constant impending doom.

That is true. There are some good things there, but they are surrounded by so much absolute garbage that it is not a good place to spend time. Like, even if Breitbart published the occasional piece of Putlitzer-worthy journalism, it would still be a terrible idea to spend time on that site.

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  • 1 year later...
  • 3 months later...

https://www.wsj.com/articles/fed-treasury-disagreements-slowed-start-of-main-street-lending-program-11594558800?mod=hp_lead_pos1

Holy smokes. Maybe I'm living under a rock but fascinating that it's Treasury that is reining in the Fed from going out and incurring losses. I suppose it's telling that the Treasury doesn't care about smaller businesses. But man, I gave Powell way too much credit. PE Powell is an appropriate nickname. 

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3 minutes ago, sporthenry said:

https://www.wsj.com/articles/fed-treasury-disagreements-slowed-start-of-main-street-lending-program-11594558800?mod=hp_lead_pos1

Holy smokes. Maybe I'm living under a rock but fascinating that it's Treasury that is reining in the Fed from going out and incurring losses. I suppose it's telling that the Treasury doesn't care about smaller businesses. But man, I gave Powell way too much credit. PE Powell is an appropriate nickname. 

Yeah, this was discussed a bit when the programs were passed. The Fed doesn't have experience in credit underwriting. So, if you are counting on them to lend to firms AND telling them they cannot have losses....they are going to set terms such that hardly anybody will use it.  That is exactly what we have seen borne out in the data. The CARES act has a lot of problems.

You can listen to a good discussion of this here

 

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On 4/1/2020 at 9:07 PM, Slapdash said:

Seems a apt time to bump this now that the Fed is back at 0 and we are piling trillions onto the debt. Will add some more detailed thoughts about COVID impacts I have been bouncing around in my head soon.

Take your time....the "but QE!!!!!!!!!!!" usuals are doing their best cricket impressions....the trillions we will pile on during this QE phase will make us wish we could go back to that level.

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8 hours ago, Slapdash said:

Yeah, this was discussed a bit when the programs were passed. The Fed doesn't have experience in credit underwriting. So, if you are counting on them to lend to firms AND telling them they cannot have losses....they are going to set terms such that hardly anybody will use it.  That is exactly what we have seen borne out in the data. The CARES act has a lot of problems.

You can listen to a good discussion of this here

 

Will have to listen to it. I don't disagree about the initial take and the Fed not being able to underwrite. Hence, why they bought ETFs and portfolios. Obviously that wasn't a great solution either. But that article makes it seem like the Fed wants to blow through the backstop they were given whereas the Treasury was being more conservative and hoping to not lose money (probably hoping to make money on it). Just surprising the Fed would jump into that, knowing the scrutiny it would get. 

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2 hours ago, sporthenry said:

Will have to listen to it. I don't disagree about the initial take and the Fed not being able to underwrite. Hence, why they bought ETFs and portfolios. Obviously that wasn't a great solution either. But that article makes it seem like the Fed wants to blow through the backstop they were given whereas the Treasury was being more conservative and hoping to not lose money (probably hoping to make money on it). Just surprising the Fed would jump into that, knowing the scrutiny it would get. 

I felt the same way as the Fed when I read the CARES legislation; the $400B was a 10% capital investment so they could extend $4T in credit. Mnuchin's comments made it clear that wasn't the plan.

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The budget deficit grew to a record $864 billion in June as the government pumped money into the economy to prop up workers and businesses affected by the pandemic.

That's for one month.

The deficit for the entire last year prior to Trump was $587 billion.

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15 hours ago, The Gator said:

The budget deficit grew to a record $864 billion in June as the government pumped money into the economy to prop up workers and businesses affected by the pandemic.

That's for one month.

The deficit for the entire last year prior to Trump was $587 billion.

I thought I read that we were close to $2.5T in deficit spending this year :mellow:

The only thing left are the inevitable articles from Wall Street saying "Biden is going to cut profits of XYZ market by X% with his tax proposals" which means he'll roll back the Trump tax cuts and get things back to the status quo.  People won't be smart enough to understand that why that X% is likely going to be a huge number, it's what Trump's tax cuts gave to businesses and the super rich on the backs of the middle/lower classes.  It's what they cheered on, many to their personal detriment.  

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  • 3 weeks later...
1 hour ago, ren hoek said:

They're been trying for a decade.  Deflationary forces are overwhelming all their efforts.  I doubt they'll get much traction here.

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On 8/4/2020 at 9:04 PM, Sand said:

They're been trying for a decade.  Deflationary forces are overwhelming all their efforts.  I doubt they'll get much traction here.

What?  They've been printing like crazy.  It's QE infinity.  The dollar has lost something like 96% of its value since 1913.  If it was their goal to debase the dollar, I'd say it's been a wild success. 

I don't really buy that deflation is bad for the economy (although maybe that's not what you were saying).  

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26 minutes ago, ren hoek said:

 The dollar has lost something like 96% of its value since 1913.  If it was their goal to debase the dollar, I'd say it's been a wild success.   

I was talking a little more recent.  The last ten years or so the Fed has been unable to reach it's inflation target, and they certainly have tried to hit it.

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49 minutes ago, Sand said:

I was talking a little more recent.  The last ten years or so the Fed has been unable to reach it's inflation target, and they certainly have tried to hit it.

I find that hard to believe.  We’ve not really been brought to bear for central bank-financed debt- the wars, student loans, housing bubble, the everything bubble.  They’ve pumped trillions and trillions into the economy.  Other countries know we’re not good for it.  Not sure how that figures into their target inflation rate scheme but the money’s obviously out there.  

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38 minutes ago, ren hoek said:

I find that hard to believe.  We’ve not really been brought to bear for central bank-financed debt- the wars, student loans, housing bubble, the everything bubble.  They’ve pumped trillions and trillions into the economy.  Other countries know we’re not good for it.  Not sure how that figures into their target inflation rate scheme but the money’s obviously out there.  

https://www.usinflationcalculator.com/inflation/current-inflation-rates/

We've hit it a few years, but mostly not.  With the effort in printing they've been putting in it's hard to believe they haven't gotten there, but for the most part they've struggled.

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