The problem with reading any NBER working paper is they are not peer-reviewed as NBER acknowledges. Way too often when these papers get peer-reviewed by the professional crowd after publication, we find out they are garbage. However, very few people ever see the rebuttals, but the flawed papers get cited again and again.
A word about the 'Key' Bridge collapse in Baltimore. Every other news outlet I saw and heard from (local, state, national and on-line bloggers) got it correct, except you. To Wit: the collapse happened over 4 mins around 1:30am. No more than 8 people were missing, 2 saved, 6 presumed dead. Traffic to the bridge was closed due to May Day warning of the ship crew before bridge contact, thus there was no additional traffic on the bridge as you stated. Your entire paragraph, which I'll place below, was erroneous. Geeeeeez. Here is your paragraph:
Terrifying video out of Baltimore this morning, where a container ship struck a support pillar of the Francis Scott Key Bridge at around 1 a.m., causing huge portions of the 1.6-mile bridge to collapse. Heavily used during the day, there was comparatively little traffic on the bridge at the time of impact, but at least a few vehicles were present at the moment of collapse, as was a construction crew. Two people have been rescued; officials believe at least five and as many as twenty others are still in the water.
I can see that interest rates seem high to the folks coddled by the past few years of miniscule ones. But when we bought a house in 1983, two professionals, good credit and almost 50% down payment--the interest rate on the mortgage was over 13 %. We were DELIGHTED when we could finally re-fi at 8%.
Not completely relative. When interest rates are higher, houses prices stay more firmly anchored to their historical ratio to income. Lower interest did not mean that people could buy more house as real estate agents were wont to proclaim. No, instead people paid more for the same house. Furthermore, people on fixed income got a reasonable interest rate on their savings. No one seems to remember when 5.25% was the typical "passbook savings rate" for decades.
I'm talking about the relativity of and dramatic life changing move over 10 years for "ME" when my mortgage went from 18% to 10%. Yes, that was an $82K house in 1980 that is probably worth 1 million now. Maybe more and low interest rates don't change that.
“the rather technical adjustment of the Consumer Price Index in 1983—and there were some good reasons for those adjustments” — and what were those? I’d just like to note that Reagan was President from 1981 - 1989 so his administration started it. Is there a connection and if so, what is it and what were those good reasons?
About those interest rates: I know pretty much nothing about how money works, but it seems to me that it can work the other way, too. In 2023, my credit union helped me roll over three very small IRA accounts at minuscule rates into one account with a substantially higher rate. Right now, I can watch the value of the IRA hold as I take the annual RMD, and my retirement (I’m 74) is a whole lot less worrisome. I can sympathize with younger folks who are working to build wealth--I gave up on that years ago. But these studies don’t seem to take into account the vast number of people who live paycheck to paycheck and who are finally benefitting from higher wages.
So President Biden should not tell people how much better things are economically because that comes across as lecturing and condescension. But he should also get out there and tell people what all his administration has accomplished because otherwise people aren’t going to know. And while he’s at it, he should become a powerful orator because otherwise nobody is willing to listen to him. IMHO, he should just keep doing what he’s doing because, whatever he does, somebody is going to explain why it’s the wrong thing to do.
How have the corporate profits and Wall Street faired during this period? How are the profit margins? Any CEOs feeling the pinch? I seem to recall learning the vast Pepsi empire continued to raise prices, despite some negative impact on sales, because profits just continued to climb. Anything to that?
Great column by Bill explaining why consumers still are experiencing (and complaining about) inflation - because interest rates on borrowed money (looking at you credit cards and mortgages) finally started going up again to noticeable levels - and staying up. (I'm old - my first mortgage rate was wayyyyyyy higher than mortgage rates have been for the last, what, 30 years?)
People live with economic anxiety or insecurity. It's wired into the current social landscape just as conquest, war, famine and plague were wired into life over much of history. The wealthy on paper (illiquid assets) dread inflationary pressures not because it erodes their current purchasing power but because it causes discomfort from having to reshape hopes and dreams of someday. The very poor couldn't get credit during the deflationary years and still won't be able to get credit. The scraping by are already paying 29.99% on their revolving debt. The middling sort grumble about having to substitute hamburger for Salisbury steak and making other tradeoffs. The starter families who can't afford a 30-year fixed mortgage at 6% for a their dream home today weren't able to afford the same house with an ARM with a teaser rate of 2% pre-2008—not because of a generalized notion of inflation but because of consequences of a century of housing and land use policy and decisions that promoted the idea of the single-family residence as a no-lose investment.
So, yes, arguments like "you think it's bad now? Try 1983 with 14% ARMs, you fool! 18% Treasuries!" based on abstact measures don't signify. It's hard to combat dreams and nightmares with facts and figures. You have to compete on the basis of hopes and fears. MAGA-land is selling Chicken Little fear. President Obama went with a straight up "Got Hope?", Senator Sander's sold a dream of Land of the Fair in 2016, President Biden borrowed Senator Warren's 2000 Plan for That. This year his message has to be forward looking, anticipatory, dopamine inducing. He needs to paint the pain of the recent past as Zero Dark Thirty, its easing as the dawn of a really nice weekend day in the coming years. Fight nightmares with dreams.
I had to buy a new car in 2021 when I finally got a job after losing mine during the previous year due to Covid...no way I could get a new one, so, I got a used Nissan Rogue, 2015...at first the interest rare was 15% which was pretty bad, then they did drop it to 11% , which is still not so good.
I constantly get credit card offers for 30% !!! interest, even if my credit report took a hit due to being out of work for over a year that is just usurious...now I got one the other day that 35%...yikes , this is just ridiculous, I get getting some penalty though it wasn't my fault due to not having a job for so long, but, even so these numbers are just outrageous....
Yeah, but, I have been where that isn't possible, through no fault of my own, ( so since that happens high interest rates are not a good thing.
So kind of you to make a judgment about someone you know nothing about .
Obviously you have a had a perfect life where nothing bad happened, and you made tons of money at all times ( in my case we can start with a divorce and cancer, and then there is losing my job and out of work for a year etc etc, there is actually more)
Oh and good for you that you never had to struggle
You are the one jumping to judgment . I do not share my personal life online, not even on The Bulwark, but suffice it to say you have no idea. Depending on age, the AVERAGE credit card debt ranges from $3000 to $9000. While some people might encounter emergencies that lead to debt, these averages show that high credit card debt is the norm, and that suggests an awful lot of people do not pay off the balance every month even if they can.
They are outrageous. And the "average voter" can't do a thing about it, which is why so many think the economy is awful. These are the kinds of things that really impact people. There's no sense in quoting some article in The Economist showing a steady decline in some key economic metric or even talking about the unemployment rate when you're looking at 35% credit card interest and an 11% car loan.
It'll get better. Those rates will drop, but it just strikes me that a lot of non-QAnon, non-Proud Boy Trump voters see things this way. They're not wrong about their own lived experiences.
Very informative YouTube channel about the bridge collapse. The video shows the ship lost power. News reports state the ship alerted bridge authorities that the ship had lost control and traffic was stopped. The video doesn’t show vehicles on the bridge before it’s collapse.
Along the lines of a theme I’ve been writing about recently, (and one I’m probably wrong about), I still have this crazy idea that if someone just made a SIMPLE enough summary of all the criminally psychopathically insane things Trump has done or inspired, he would lose 75% of his supporters.
I now see something I can do. I read the full article on the so called “heroes” of January 6. I have to say, I follow this stuff daily, I read Heather Cox Richardson, Joyce Vance (both liberals) and the conservative (real conservative) writers at the Bulwark and thought I was beyond shock (I also lived in NYC from the 70s through the 90s and knew as much as any New Yorker about DJT)
And I thought after following the congressional hearings on J6 I was beyond shock.
But no. I really did not quite get how truly horrible and frighteningly horrible these people are.
I’m going to take this article and do a summary, highlighting the absolute worst of it, and see if it has ANY effect on social media beyond getting the anti MAGA folk more worked up.
I hope it does. If I’m wrong, maybe someone here can suggest something else very concrete, simple and down to earth we all can do.
I agree that this ought to be blasted out to the world using whatever method is most effective for reaching Trump voters. He will release these people back onto the streets to do create more mayhem in his name.
Thank you for surfacing the Econ report about the cost of money. This provides an insight into why people have a negative sentiment. Now there’s a way forward to show some empathy to folks who struggle and hopefully turn that sentiment around.
Actually there is a significant flaw in the Harvard analysis. Specifically, the base interest rate that the analysis is probably using was artificially low, a residual effect of the dramatic post-2008 reduction in mortgage rates. People familiar with mortgage interest rates over the long-term regard 6-7% interest rates as normative. When we become used to 2% to 3% rates and use that as a base, a return to normal seems highly inflationary rather than simply a return to more normal rates that should have taken place more gradually.
2008 was 16 years ago, so everyone who turned 21 in 2008 (plus everyone younger than that) have grown up over the last 16 years with 2%-3% interest rates - so it's understandable why they would be feeling like their cost of living (which includes credit card borrowing - who pays cash anymore?) was "still higher than it should be" given how healthy the economy is otherwise. I don't see that as a flaw in the analysis, unless there's some basic, underlying economic theoretic reason why 6-7% interests should be viewed as "normal" and "necessary."
Well done, Bill Lueders! Excellent article naming names, holding people to account, and reminding readers that TFG caused J6ers' violence and attempts to elevate them to this day.
The problem with reading any NBER working paper is they are not peer-reviewed as NBER acknowledges. Way too often when these papers get peer-reviewed by the professional crowd after publication, we find out they are garbage. However, very few people ever see the rebuttals, but the flawed papers get cited again and again.
A word about the 'Key' Bridge collapse in Baltimore. Every other news outlet I saw and heard from (local, state, national and on-line bloggers) got it correct, except you. To Wit: the collapse happened over 4 mins around 1:30am. No more than 8 people were missing, 2 saved, 6 presumed dead. Traffic to the bridge was closed due to May Day warning of the ship crew before bridge contact, thus there was no additional traffic on the bridge as you stated. Your entire paragraph, which I'll place below, was erroneous. Geeeeeez. Here is your paragraph:
Terrifying video out of Baltimore this morning, where a container ship struck a support pillar of the Francis Scott Key Bridge at around 1 a.m., causing huge portions of the 1.6-mile bridge to collapse. Heavily used during the day, there was comparatively little traffic on the bridge at the time of impact, but at least a few vehicles were present at the moment of collapse, as was a construction crew. Two people have been rescued; officials believe at least five and as many as twenty others are still in the water.
I can see that interest rates seem high to the folks coddled by the past few years of miniscule ones. But when we bought a house in 1983, two professionals, good credit and almost 50% down payment--the interest rate on the mortgage was over 13 %. We were DELIGHTED when we could finally re-fi at 8%.
Try first home in 1980 at 18% and the joy of refi at 15% then a life changing 10% by 1990 or so. As Einstein said "it's all relative."
Not completely relative. When interest rates are higher, houses prices stay more firmly anchored to their historical ratio to income. Lower interest did not mean that people could buy more house as real estate agents were wont to proclaim. No, instead people paid more for the same house. Furthermore, people on fixed income got a reasonable interest rate on their savings. No one seems to remember when 5.25% was the typical "passbook savings rate" for decades.
I'm talking about the relativity of and dramatic life changing move over 10 years for "ME" when my mortgage went from 18% to 10%. Yes, that was an $82K house in 1980 that is probably worth 1 million now. Maybe more and low interest rates don't change that.
“the rather technical adjustment of the Consumer Price Index in 1983—and there were some good reasons for those adjustments” — and what were those? I’d just like to note that Reagan was President from 1981 - 1989 so his administration started it. Is there a connection and if so, what is it and what were those good reasons?
Ok, I answered my own question:
https://www.fullstackeconomics.com/p/why-the-government-took-home-prices-out-of-the-consumer-price-index?utm_campaign=post&utm_medium=web
About those interest rates: I know pretty much nothing about how money works, but it seems to me that it can work the other way, too. In 2023, my credit union helped me roll over three very small IRA accounts at minuscule rates into one account with a substantially higher rate. Right now, I can watch the value of the IRA hold as I take the annual RMD, and my retirement (I’m 74) is a whole lot less worrisome. I can sympathize with younger folks who are working to build wealth--I gave up on that years ago. But these studies don’t seem to take into account the vast number of people who live paycheck to paycheck and who are finally benefitting from higher wages.
So President Biden should not tell people how much better things are economically because that comes across as lecturing and condescension. But he should also get out there and tell people what all his administration has accomplished because otherwise people aren’t going to know. And while he’s at it, he should become a powerful orator because otherwise nobody is willing to listen to him. IMHO, he should just keep doing what he’s doing because, whatever he does, somebody is going to explain why it’s the wrong thing to do.
Don't tell JVL 🤫
Thx for Kim Whele's piece. She answered my question of how unusual it is for the court's ruling in Trump's favor. It's not business as usual .
So the Court is relying on the monitor, although the prosecutor said that isn't enough. We shall stay tuned.
How have the corporate profits and Wall Street faired during this period? How are the profit margins? Any CEOs feeling the pinch? I seem to recall learning the vast Pepsi empire continued to raise prices, despite some negative impact on sales, because profits just continued to climb. Anything to that?
Great column by Bill explaining why consumers still are experiencing (and complaining about) inflation - because interest rates on borrowed money (looking at you credit cards and mortgages) finally started going up again to noticeable levels - and staying up. (I'm old - my first mortgage rate was wayyyyyyy higher than mortgage rates have been for the last, what, 30 years?)
People live with economic anxiety or insecurity. It's wired into the current social landscape just as conquest, war, famine and plague were wired into life over much of history. The wealthy on paper (illiquid assets) dread inflationary pressures not because it erodes their current purchasing power but because it causes discomfort from having to reshape hopes and dreams of someday. The very poor couldn't get credit during the deflationary years and still won't be able to get credit. The scraping by are already paying 29.99% on their revolving debt. The middling sort grumble about having to substitute hamburger for Salisbury steak and making other tradeoffs. The starter families who can't afford a 30-year fixed mortgage at 6% for a their dream home today weren't able to afford the same house with an ARM with a teaser rate of 2% pre-2008—not because of a generalized notion of inflation but because of consequences of a century of housing and land use policy and decisions that promoted the idea of the single-family residence as a no-lose investment.
So, yes, arguments like "you think it's bad now? Try 1983 with 14% ARMs, you fool! 18% Treasuries!" based on abstact measures don't signify. It's hard to combat dreams and nightmares with facts and figures. You have to compete on the basis of hopes and fears. MAGA-land is selling Chicken Little fear. President Obama went with a straight up "Got Hope?", Senator Sander's sold a dream of Land of the Fair in 2016, President Biden borrowed Senator Warren's 2000 Plan for That. This year his message has to be forward looking, anticipatory, dopamine inducing. He needs to paint the pain of the recent past as Zero Dark Thirty, its easing as the dawn of a really nice weekend day in the coming years. Fight nightmares with dreams.
Whoa! It was a trick? Mom lied to us in the 50s? My god
I had to buy a new car in 2021 when I finally got a job after losing mine during the previous year due to Covid...no way I could get a new one, so, I got a used Nissan Rogue, 2015...at first the interest rare was 15% which was pretty bad, then they did drop it to 11% , which is still not so good.
I constantly get credit card offers for 30% !!! interest, even if my credit report took a hit due to being out of work for over a year that is just usurious...now I got one the other day that 35%...yikes , this is just ridiculous, I get getting some penalty though it wasn't my fault due to not having a job for so long, but, even so these numbers are just outrageous....
Any one who pays off their credit card balance each and every month doesn't need to care hat the interest rate is.
Yeah, but, I have been where that isn't possible, through no fault of my own, ( so since that happens high interest rates are not a good thing.
So kind of you to make a judgment about someone you know nothing about .
Obviously you have a had a perfect life where nothing bad happened, and you made tons of money at all times ( in my case we can start with a divorce and cancer, and then there is losing my job and out of work for a year etc etc, there is actually more)
Oh and good for you that you never had to struggle
You are the one jumping to judgment . I do not share my personal life online, not even on The Bulwark, but suffice it to say you have no idea. Depending on age, the AVERAGE credit card debt ranges from $3000 to $9000. While some people might encounter emergencies that lead to debt, these averages show that high credit card debt is the norm, and that suggests an awful lot of people do not pay off the balance every month even if they can.
They are outrageous. And the "average voter" can't do a thing about it, which is why so many think the economy is awful. These are the kinds of things that really impact people. There's no sense in quoting some article in The Economist showing a steady decline in some key economic metric or even talking about the unemployment rate when you're looking at 35% credit card interest and an 11% car loan.
It'll get better. Those rates will drop, but it just strikes me that a lot of non-QAnon, non-Proud Boy Trump voters see things this way. They're not wrong about their own lived experiences.
Very informative YouTube channel about the bridge collapse. The video shows the ship lost power. News reports state the ship alerted bridge authorities that the ship had lost control and traffic was stopped. The video doesn’t show vehicles on the bridge before it’s collapse.
https://youtu.be/N39w6aQFKSQ?si=r5uVzes1NSyKNPaw
ETA. OMG the YouTube comment section starting to fill with conspiracy theories. Bonkers.
Along the lines of a theme I’ve been writing about recently, (and one I’m probably wrong about), I still have this crazy idea that if someone just made a SIMPLE enough summary of all the criminally psychopathically insane things Trump has done or inspired, he would lose 75% of his supporters.
I now see something I can do. I read the full article on the so called “heroes” of January 6. I have to say, I follow this stuff daily, I read Heather Cox Richardson, Joyce Vance (both liberals) and the conservative (real conservative) writers at the Bulwark and thought I was beyond shock (I also lived in NYC from the 70s through the 90s and knew as much as any New Yorker about DJT)
And I thought after following the congressional hearings on J6 I was beyond shock.
But no. I really did not quite get how truly horrible and frighteningly horrible these people are.
I’m going to take this article and do a summary, highlighting the absolute worst of it, and see if it has ANY effect on social media beyond getting the anti MAGA folk more worked up.
I hope it does. If I’m wrong, maybe someone here can suggest something else very concrete, simple and down to earth we all can do.
Trump is "looking at" pardoning these people.
I agree that this ought to be blasted out to the world using whatever method is most effective for reaching Trump voters. He will release these people back onto the streets to do create more mayhem in his name.
Thank you for surfacing the Econ report about the cost of money. This provides an insight into why people have a negative sentiment. Now there’s a way forward to show some empathy to folks who struggle and hopefully turn that sentiment around.
NEVER take a NBER working paper seriously
Actually there is a significant flaw in the Harvard analysis. Specifically, the base interest rate that the analysis is probably using was artificially low, a residual effect of the dramatic post-2008 reduction in mortgage rates. People familiar with mortgage interest rates over the long-term regard 6-7% interest rates as normative. When we become used to 2% to 3% rates and use that as a base, a return to normal seems highly inflationary rather than simply a return to more normal rates that should have taken place more gradually.
2008 was 16 years ago, so everyone who turned 21 in 2008 (plus everyone younger than that) have grown up over the last 16 years with 2%-3% interest rates - so it's understandable why they would be feeling like their cost of living (which includes credit card borrowing - who pays cash anymore?) was "still higher than it should be" given how healthy the economy is otherwise. I don't see that as a flaw in the analysis, unless there's some basic, underlying economic theoretic reason why 6-7% interests should be viewed as "normal" and "necessary."
Well done, Bill Lueders! Excellent article naming names, holding people to account, and reminding readers that TFG caused J6ers' violence and attempts to elevate them to this day.