Macro thread - Why is the market up/down?

[james22]

On 4/13/2025 at 12:43 PM, Blake Hampton said:

If you can't read it, subscribe to The Economist; it's certainly one of the best financial publications there is. You're doing yourself a huge disservice if you're not reading it.

 

Is the Economist smoking crack?

 

https://archive.ph/EquoC

[Spooky]

21 hours ago, james22 said:

 

Is the Economist smoking crack?

 

https://archive.ph/EquoC

 

To flip this on its head - the US has been the envy of the world and the most successful economy leaving the rest of the world in the dust. Why fix what isn't broken?

[Gregmal]

Just now, Spooky said:

 

To flip this on its head - the US has been the envy of the world and the most successful economy leaving the rest of the world in the dust. Why fix what isn't broken?

Well it works for us. But a lot of the country ain’t cash and asset hoarding snobs trading vol lol

[73 Reds]

2 minutes ago, Spooky said:

 

To flip this on its head - the US has been the envy of the world and the most successful economy leaving the rest of the world in the dust. Why fix what isn't broken?

"Why fix what isn't broken?"

 

So it stays that way.  What may look not broken to the rest of the world may in fact be fixed only for the rest of the World.

[Spooky]

Just now, 73 Reds said:

"Why fix what isn't broken?"

 

So it stays that way.  What may look not broken to the rest of the world may in fact be fixed only for the rest of the World.

 

I'm sorry but these tariffs / policies won't accomplish that. The source of American greatness is its innovation. Bringing back low margin manufacturing isn't the answer.

[73 Reds]

5 minutes ago, Spooky said:

 

I'm sorry but these tariffs / policies won't accomplish that. The source of American greatness is its innovation. Bringing back low margin manufacturing isn't the answer.

Agreed, but that's but a small piece.  I'm not here to argue that the methodologies are entirely correct but perpetually rising debt has consequences for both the US and the rest of the World.  Kicking the can down the road is not the answer.

[Dinar]

28 minutes ago, Spooky said:

 

To flip this on its head - the US has been the envy of the world and the most successful economy leaving the rest of the world in the dust. Why fix what isn't broken?

We have a 7% budget deficit to GDP, that is not sustainable, 30-40% of NYS is on Medicaid, that is not sustainable.  The list of things that must be fixed is a mile long.  

[Gregmal]

Meanwhile you see how absolutely enraged so many of the privileged are, because it’s worked for them…that is indeed quite gloomy to consider 

[Blake Hampton]

2 minutes ago, Dinar said:

30-40% of NYS is on Medicaid, that is not sustainable.

 

That is insane.

[Spooky]

56 minutes ago, Dinar said:

We have a 7% budget deficit to GDP, that is not sustainable, 30-40% of NYS is on Medicaid, that is not sustainable.  The list of things that must be fixed is a mile long.  

 

These are indeed problems. But nothing on offer from the Republicans aims to fix this other than potentially just eliminating Medicaid. Meanwhile the Senate is trying to pass a $5 trillion tax cut.

 

But this is not the main point of my argument.

Edited April 24, 2025 by Spooky

[Spooky]

1 hour ago, 73 Reds said:

Agreed, but that's but a small piece.  I'm not here to argue that the methodologies are entirely correct but perpetually rising debt has consequences for both the US and the rest of the World.  Kicking the can down the road is not the answer.

 

Yes the debt level is a problem but neither party seems capable of addressing it. The biggest three areas of spending are social security, healthcare and national defense.

 

I'm not really sure how tariffs and a reversal of globalization help address the debt problem. Would be good for the US to cut back on defence spending but that seems unlikely. Also healthcare reform also seems unlikely.

[Dinar]

15 minutes ago, Spooky said:

 

These are indeed problems. But nothing on offer from the Republicans aims to fix this other than potentially just eliminating Medicaid. Meanwhile the Senate is trying to pass a $5 trillion tax cut.

 

But this is not the main point of my argument.

Student loan subsidies cost tens if not hundreds of billions of dollars per annum.  DOGE is an attempt to cut government waste.  Eliminating Medicaid for those who are able to work is a good idea for society and taxpayers.  

[73 Reds]

Just now, Spooky said:

 

Yes the debt level is a problem but neither party seems capable of addressing it. The biggest three areas of spending are social security, healthcare and national defense.

 

I'm not really sure how tariffs and a reversal of globalization help address the debt problem. Would be good for the US to cut back on defence spending but that seems unlikely. Also healthcare reform also seems unlikely.

It all seems unlikely but something has to change.  Even low paying manufacturing jobs combined with a sensible legal immigration policy would be very helpful.   Neither party has been able to address these issues because each party's priority is to fight the other for control.   Your guess is as good as mine where this goes but the status quo was simply not acceptable.

[Blake Hampton]

 

Financial Report of the United States Government (2024)

[Blake Hampton]

(in billions of dollars)
 

Total U.S. government spending (2024): 7,403

 

- Department of Health and Human Services: 1,738 - 23.5%

- Social Security Administration: 1,530 - 20.7%

- Department of Defense: 1,232 - 16.6%

- Interest on Treasury Securities held by the public: 909 - 12.3%

- Department of Veterans Affairs: 472 - 6.4%

 

Above five as a percentage of total spending: 79.5%

 

---------------------------------------------------------------------------------------------------------------------

 

Now tell me, is Congress or our president really interested in touching any one of these? They love to say, "We'll cut taxes now and address spending later," but will they really? The old people own the vote, and almost all of this money is going directly to them. To even mention cutting any one of the above is effectively political suicide.

 

Yet they continue to cut taxes. And they continue to push an inflationary agenda while our country has to roll over its old debt at ever higher rates.

 

As a younger person, this is an outrage. These people are selling my future, as well as my friends future, so that they can appease the stupid masses. It is a colossal joke.

 

Edited April 24, 2025 by Blake Hampton

[Blake Hampton]

But the joke quickly comes to an end when the bond market finally decides to revolt. This country has been acting fiscally retarded for many years now, and it certainly feels like we’re closer to the end of it than the beginning. I don’t think most people, both here and in real life, truly grasp just how big of a deal this is. You may have lived your entire life in a system that just worked. That may not hold true in the future.

[thepupil]

I'm a bit of a pollyanna regarding the US fiscal situation. 

 

for starters, ~20% is intragovernmental

then 2/3 of the remaining 80% is domestically held. 

 

So about 73% is held by  the government or by domestic institutions. we're not entirely "self funded", but moreso than headlines might suggest. 

 

Social Security is a relatively easy fix when the math dictates that we have to do so, which will be soon. Just increase taxes and reduce benefits. i don't really think it's reasonable my wealthy parents get $100K/yr adjusted for inflation..regardless of what they paid in...it should be a poverty insurance program...reduce bennies for the top 20-30%, increase payroll tax ceiling..

 

https://www.crfb.org/socialsecurityreformer/ you can try it here. taxing all wages and means testing for highest earners closes 80% of 75 year funding fap. it's already incredibly progressive. high earner get a very bad "return" on it. making it even worse is the answer IMO. 

 

I'm long term optimistic, we'll find some way to make healthcare incrementally cheaper. 

 

everything else is just details. 

Edited April 24, 2025 by thepupil

[Dinar]

1 hour ago, thepupil said:

I'm a bit of a pollyanna regarding the US fiscal situation. 

 

for starters, ~20% is intragovernmental

then 2/3 of the remaining 80% is domestically held. 

 

So about 73% is held by  the government or by domestic institutions. we're not entirely "self funded", but moreso than headlines might suggest. 

 

Social Security is a relatively easy fix when the math dictates that we have to do so, which will be soon. Just increase taxes and reduce benefits. i don't really think it's reasonable my wealthy parents get $100K/yr adjusted for inflation..regardless of what they paid in...it should be a poverty insurance program...reduce bennies for the top 20-30%, increase payroll tax ceiling..

 

https://www.crfb.org/socialsecurityreformer/ you can try it here. taxing all wages and means testing for highest earners closes 80% of 75 year funding fap. it's already incredibly progressive. high earner get a very bad "return" on it. making it even worse is the answer IMO. 

 

I'm long term optimistic, we'll find some way to make healthcare incrementally cheaper. 

 

everything else is just details. 

You cannot tax all wages for Social security.  You will push marginal taxes on entrepreneurs to 80% in places like NYC.  Start by cracking down on disability fraud - up 6x as a % of population in the last seventy years, put in workfare requirements for Medicaid and see millions join the labor force and pay tax.   

[thepupil]

an NYC couple that makes $1mm with no deductions pays 3% of income (the employer also pays another 3%) in social security and medicare taxes and an effective overall tax rate of 42%. It can be higher. 

 

I would certainly not like it if it was, partcularly if I'm going to get $2K / month in toda's dolalrs instead of $5K/month from social security when that day comes. 

 

But it's simply what it will take. it's pretty straightforward in my view. 

 

cut bennies, increase taxes. 

 

Edited April 24, 2025 by thepupil

[dwy000]

You Theres no question at all that taxes have to go up.  You can't solve this this solely by cutting spending (without sending the economy into a tailspin).  That being said, longer term solutions also need to be implemented to cut costs.  Cutting Medicare, Medicaid and Soc Security can be done on a graduated basis with reduced impact on those getting current benefits or in the next 3,5,7,10 years.  Anyone who has interacted with DoD knows you can easily get 10-15% reduction there without impacting military capabilities (maybe even improve them).  But it needs to be scalpel not hatchet or chainsaw.  

 

We don't need to balance the budget in 2 years.  We need to be on a trajectory towards a balanced budget to make the bond market happy.  Bond holders want to know that the problem is being acknowledged and dealt with not that it's resolved immediately. 

 

[73 Reds]

1 minute ago, dwy000 said:

You Theres no question at all that taxes have to go up.  You can't solve this this solely by cutting spending (without sending the economy into a tailspin).  That being said, longer term solutions also need to be implemented to cut costs.  Cutting Medicare, Medicaid and Soc Security can be done on a graduated basis with reduced impact on those getting current benefits or in the next 3,5,7,10 years.  Anyone who has interacted with DoD knows you can easily get 10-15% reduction there without impacting military capabilities (maybe even improve them).  But it needs to be scalpel not hatchet or chainsaw.  

 

We don't need to balance the budget in 2 years.  We need to be on a trajectory towards a balanced budget to make the bond market happy.  Bond holders want to know that the problem is being acknowledged and dealt with not that it's resolved immediately. 

 

What about a means test for receiving social security?  Many people I know laugh at the idea that they receive a monthly check.  Or apply it as a credit toward your tax bill if you don't need it and won't miss it anyway.

[Gregmal]

5 minutes ago, 73 Reds said:

What about a means test for receiving social security?  Many people I know laugh at the idea that they receive a monthly check.  Or apply it as a credit toward your tax bill if you don't need it and won't miss it anyway.

Bro they refuse to even agree to a simple license/ID check for voting…no chance they do that

 

Basically anything that requires any thought or effort is scoffed at. 

Edited April 24, 2025 by Gregmal

[73 Reds]

1 minute ago, Gregmal said:

Bro they refuse to even agree to a simple license/ID check for voting…no chance they do that

 

Basically anything that requires any thought or effort is scoffed at. 

Maybe not, but at least it might give them reason to reconsider.

[Dinar]

18 minutes ago, thepupil said:

an NYC couple that makes $1mm with no deductions pays 3% of income (the employer also pays another 3%) in social security and medicare taxes and an effective overall tax rate of 42%. It can be higher. 

 

I would certainly not like it if it was, partcularly if I'm going to get $2K / month in toda's dolalrs instead of $5K/month from social security when that day comes. 

 

But it's simply what it will take. it's pretty straightforward in my view. 

 

cut bennies, increase taxes. 

 

Your figures are just incorrect. 

 

First of all, social security is $10,918.2 per per person, or $21,836.4, more than twice what you show.  Your figure was incorrect even if one person was working, but clearly wrong when two people are working.  

Second of all, Medicare tax is wrong.  It is 1.8%*100000+ 0.9%* 750K = $24750

 

So, in your example, assuming both husband and wife work, taxes are higher by $15K than what you calculated.  So tax rate is 43.5%.  This does NOT include sales tax, property tax, etc... which could easily be $30-100K per annum.

 

Now, if you are an entrepreneur, then your tax rates are higher by: 6.2 (social security) + 1.8 (medicare) + 4.5% (unincorporated business tax + MTA tax) = 12.5%, less benefit from deducting these on the tax return, or 7 points higher, pushing the tax rate to 50.5%, BEFORE you take into account sales tax & property tax, so you many be paying 53-60%+ of your income in tax.  

 

By the way, again, why is there never a discussion of rooting fraud, crackdown on disability fraud, on people who are able bodied and sit on Medicaid.  25% of the country's population is on Medicaid, it makes zero economic sense for people in NYC on Medicaid to take a job paying $25 per hour.  The problem is the bloated welfare state.  

[thepupil]

fair enough, was assuming a single earner and the numbers are a little off. But I see no reason why 44% can't go to 50% via increased payroll taxes for high income folks. or even for...dividends/interest/capital gains etc. all income. if we want a welfare state that guarantees old folks not be destitute, we have to pay for it. flip side is cut benefits at the top.  

 

social security is just a transfer from those that earn to those that don't / old people. it's not like the income isn't there to redistribute as the electorate s desire. we'll increase taxes and decrease bennies when the math tells us too.

 

the whole medicaid fraud thing seems to be particularly important to you. i don't have a strong view there and don't think there's some huge underemployed population choosing not to work. just never really seen that....i just don't really ever understand what you're talking about on this to be frank.