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Never The Same

Scorpio

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#1
Never The Same
Jun 23, 2020 by Morgan Housel

“Liquidate labor, liquidate stocks, liquidate real estate. Purge the rottenness out of the system.” – Treasury Secretary Andrew Mellon, 1930


“We have a lot of money. We need to get that money in Americans’ hands.” – Treasury Secretary Steve Mnuchin, 2020


Things are different now.


They started to change in 2008, when Congress and the Federal Reserve threw unprecedented money at the economy to keep it from collapsing.


They’ve done it again this year with even more money. Trillions and trillions of dollars. It was a huge debate in 2008. It’s much less controversial today.


My theory is that once a new kind of stimulus is tasted it becomes a permanent feature of how downturns are handled.


This isn’t about the technical details of stimulus.


It’s not even about whether you think it works.


It’s about the perceptions of struggling people who demand something be done, and their knowledge of what can be done.


People might give policymakers a pass if there’s a problem with no known solution. But if there’s a known solution and policymakers choose not to use it, they look like the problem. And they know it.


Let me tell a short story about Harry Truman to show you what I mean.



Hours after dropping a nuclear bomb on Hiroshima, Harry Truman told the world: “Having found the bomb we have used it.”


What he seems to have meant was: there was no debate about whether we should have used this bomb. Once we had it, not using it was inconceivable.


George Elsey, a Truman advisor, later said, “Truman made no decision because there was no decision to be made.” There was no serious discussion about not using it.


The inevitability of using the bomb had as much to do with politics as military strategy. Americans were exhausted from war in 1945 – from the death abroad to the rationing at home – and would have been furious if they learned a weapon that could have ended it wasn’t used. Historian David McCullough wrote:


Truman would have been impeached if it were found out later that he had sent any American soldiers to their deaths knowing he had a weapon that could have ended the war sooner.​

That was it.


If people desperately want you to do something and you choose to not do something that could have helped … well, good luck to you.


The stakes are lower, but that same idea might apply to how Congress and the Fed think about stimulus during future economic downturns.



More than 20 million Americans lost their jobs in April. But incomes rose a record amount, and poverty fell.


The halt in business has been stronger than anything ever seen, including the Great Depression. But the Nasdaq is at an all-time high.


The story isn’t over. And it’s political, so it’s messy. But in terms of quickly stemming an economic wound, the policy response over the last 90 days has been a success.


There’s been the $600 weekly boost to unemployment benefits.


The Fed expanding its balance sheet by trillions of dollars and backstopping corporate debt markets.


The $1,200 stimulus payments.


The Paycheck Protection Plan.


The airline bailouts.


The foreclosure moratoriums … on and on.


I don’t care whether you think those things are right, wrong, moral, or will have ugly consequences. That’s a different topic.


All that matters here is that people’s perception of what policymakers are capable of doing when the economy declines has been shifted higher in a huge way. And it’s crazy to think those new expectations won’t impact policymakers’ future decisions.


It’s one thing if people think policymakers don’t have the tools to fight a recession. But now that everyone knows how powerful the tools can be, no politician can say, “There’s nothing we could do.” They can only say, “We chose not to do it.” Which few politicians – on either side – wants to say when people are losing jobs.


I think the $600 a week unemployment benefit boost will stick. If it expires it’ll likely return, maybe in a different form. Anything less – going back to what was “normal” 90 days ago – will feel inadequate to unemployment workers who now know what the federal government is capable of doing.


I think the Federal Reserve will keep flooding the market with liquidity when it declines. When former chairman Ben Bernanke did it in 2008 it looked reckless. When it worked, it became the baseline assumption of what current chairman Jay Powell could do this year. Now that we know it’s possible, any future Fed leader who doesn’t do it will look reckless.


I don’t know exactly what that means for the future of the economy.


It probably doesn’t mean we’ll avoid future downturns. It might make them deeper, as bankers and investors who (rightly) know there’s a safety net take more risk. Calm plants the seeds of crazy.


But maybe it means those sharp, hard, downturns will be shorter-lived than before. That’s been the case this year, as the speed of the rebound has taken nearly everyone off guard.


Maybe just knowing the safety net is there fundamentally changes the way the economy works. No one’s used a nuclear bomb on an enemy since 1945, but knowing they exist changed geopolitics ever since.


Whatever the changes are, it seems crazy to deny that things changed.


People can’t unlearn what they’ve learned is possible, and everyone’s knowledge of what’s possible grew this year.



https://www.collaborativefund.com/blog/never-the-same/
 

Buck

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#2
i woke up this morning to 'nothing new'...it's mostly still broken
 

Strawboss

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#3
The masses have discovered that they can pressure the politicians to give them free stuff...

The masses dont forget stuff like this...
 

Bottom Feeder

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#4
going back to what was “normal” 90 days ago – will feel inadequate
That - right there, that's the problem.
Once you get something for 'free' you cannot go back to earning it.
without a revolution, that is.

BF
 

Area51

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#7
“I think the $600 a week unemployment benefit boost will stick.”

You can’t be serious with that comment.

Who in the everloving fuck is going to go back to work a 40hr week, spending money on gas to get there plus time in traffic?

Not when they can stay home and get unemployment PLUS an extra $600 and still run a side hustle for cash.
 

hammerhead

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#8
Throwing money at a problem doesn't fix it. Prices can still rise and as mentioned, people will be careless knowing there is nothing to lose.

At the point of when the the bombs were dropped, WWII was almost over anyway.
 

Rollie Free

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#9
This is why I hate the idea of racial reparations. It would destroy the black community just that much more.
Did wonders for the Native Americans didn't it?

I remember seeing a documentary about a young man in the Wounded Knee area. He was not like his peers, listless, veering into a lifetime of alcoholism and meth. He could see what was happening. His plan was to go to Rapid City and go to college and that is exactly what he did.
Like everyone, he met with some difficulties. Instead of forging through he ended up going back to the reservation and becoming what he despised. It was all just too easy.
No doubt had he not had that option he would have been a successful person. When everyone around you is doing it and you were raised in it, its nearly impossible to not be affected.
 
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#10
Did wonders for the Native Americans didn't it?

I remember seeing a documentary about a young man in the Wounded Knee area. He was not like his peers, listless, veering into a lifetime of alcoholism and meth. He could see what was happening. His plan was to go to Rapid City and go to college and that is exactly what he did.
Like everyone, he met with some difficulties. Instead of forging through he ended up going back to the reservation and becoming what he despised. It was all just too easy.
No doubt had he not had that option he would have been a successful person. When everyone around you is doing it and you were raised in it, its nearly impossible to not be affected.
Maybe the Democrats are trying to destroy blacks. Maybe they still just secretly hate them.
 

wallew

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#11
Throwing money at a problem doesn't fix it. Prices can still rise and as mentioned, people will be careless knowing there is nothing to lose.

At the point of when the the bombs were dropped, WWII was almost over anyway.

Apparently you know very little of the history of WWII.

Harry Truman dropped the bomb on Japan.

WHY?

Because if he had not done that twice (the Japanese, after being hit by the first atomic bomb thought it could not happen again so we dropped the second one to prove we could and did). So we dropped the second one and told them we had more where that came from. The emperor Hirohito finally capitulated to the American Command and surrendered.

The REASON we dropped the bombs on Japan was it was estimated that to invade Japan, which was the last battle that we would have had in WWII, would have killed 1 million US Soldiers and it was also estimated that the majority of the Japanese on the island would have died, thereby eliminating the Japanese people as a race.

And tell me what would have happened IF we had invaded Japan and LOST 1 million US soldiers? Do you think ANY JAPANESE would be LEFT ALIVE after Bobby Jo and Billie Mac went to 'avenge the death of their relatives' that died invading JAPAN? They would have gone to the Japanese internment centers here in the US and killed all of them. All of those internment camps here in the US would have turned into death camps and ALL the American Japanese would have been killed as well.

So, kindly tell me how WWII was almost over. NO, it was over BECAUSE we dropped TWO ATOM BOMBS ON JAPAN. Most countries would have given up when we dropped the first one. NOT JAPAN. THEY had to be convinced that the first one was real. After losing Hiroshima. THEN after suffering the same fate for Nagasaki they decided they had to surrender.

Good choice. Because it would have been the end of the Japanese as a race if we had not had the Atom Bomb to drop on Japan. We would have invaded Japan. It would have been bloody and most of the Japanese were so brainwashed that they would have killed themselves in large numbers by jumping off cliffs into the sea.

GET IT?

Probably not.
 
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hammerhead

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#12
Apparently you know very little of the history of WWII.

Harry Truman dropped the bomb on Japan.

WHY?

Because if he had not done that twice (the Japanese, after being hit by the first atomic bomb thought it could not happen again so we dropped the second one to prove we could and did). So we dropped the second one and told them we had more where that came from. The emperor Hirohito finally capitulated to the American Command and surrendered.

The REASON we dropped the bombs on Japan was it was estimated that to invade Japan, which was the last battle that we would have had in WWII, would have killed 1 million US Soldiers and it was also estimated that the majority of the Japanese on the island would have died, thereby eliminating the Japanese people as a race.

And tell me what would have happened IF we had invaded Japan and LOST 1 million US soldiers? Do you think ANY JAPANESE would be LEFT ALIVE after Bobby Jo and Billie Mac went to 'avenge the death of their relatives' that died invading JAPAN? They would have gone to the Japanese internment centers here in the US and killed all of them. All of those internment camps here in the US would have turned into death camps and ALL the American Japanese would have been killed as well.

So, kindly tell me how WWII was almost over. NO, it was over BECAUSE we dropped TWO ATOM BOMBS ON JAPAN. Most countries would have given up when we dropped the first one. NOT JAPAN. THEY had to be convinced that the first one was real. After losing Hiroshima. THEN after suffering the same fate for Nagasaki they decided they had to surrender.

Good choice. Because it would have been the end of the Japanese as a race if we had not had the Atom Bomb to drop on Japan. We would have invaded Japan. It would have been bloody and most of the Japanese were so brainwashed that they would have killed themselves in large numbers by jumping off cliffs into the sea.

GET IT?

Probably not.
Where were we fighting the Japs when the bombs were dropped?
 

Scorpio

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#13
GET IT?

Probably not.
nice write up, but let me throw a curve for the heck of it,

if the evil nuc was so bad, and the stats regarding them are so accurate,

then why did both Hiroshima and Nagasaki bounce back in months, and not the 1/2 life of radioactive boo hoo bombs?

or why is Chernobyl a veritable wildlife paradise currently, just a few years beyond the supposed melt down,

or Japan and the recent melt down, either being very craftily buried, or it just isn't what it was all made out to be,

etc.

so I agree with the overall thrust of your commentary,
just not buying the propaganda associated with the evil boo hoo bomb
 

keef

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#14
World War II was a continuation of WW I giving both sides time to rearm.
World War III will start wherre WW II left off, having again given everyone enough time to rearm.

Its not over til the fat lady says its over. We just had a nice break inbetween battles. About 70 years.

Economic collapse, world war. Better stock up on some good hopium, no better make that real opium as pain killers will be at a premium.
 

FunnyMoney

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#15
The high tech military powers of today are light years beyond even those 2 super toys tested out over Japan.

Way beyond tactical and a 1000 times stronger which is just for starts. Plus that class of warfare is only one of the 3 main toy styles in play. There are chemicals which can wipe out entire populations in a 10 or 20 square mile region without harming any infrastructure. There's bugs developed which make this latest one seem like a blessing - and the nation producing them often has the cure to them as well. People go missing and end up as the test subjects so the nation knows they work.

Seems like many around these parts need a refresh on the saying, "Whatever bad things you think the gov;t is doing, what they're actually doing is 100 times worse." Because today you need to replace 100 with about 10,000.
 
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