2022-09-01
Wrap
A few story stocks made dramatic moves. The notable one was $NVDA, which was down 12% because the company (Nvidia) was told by the government to restrict sales to Russia and China.
Update: $NVDA is now down 12%
— Nancy Pelosi Stock Tracker ♟ (@PelosiTracker_) September 1, 2022
Part of being a world class trader is knowing when to cut your losses
By cutting theirs with $NVDA, the Pelosi's saved themselves $800K
Honestly incredible https://t.co/twnkClrky0
Generally today was very risk off. New (jobless) claims was down modestly to 232K (vs. consensus 250K), which indicates the economy is doing better than expected, but the market interpreted this as being likely to lead to increased tightening (presumably).
Chengdu, another (very big) Chinese city was put in lockdown.
Commodities were down heavily, especially energy. It’s one working day from the next OPEC+ meeting. Time to get flat!
Stocks were generally down, although the USA held its end up.
The dollar was up against basically everything, putting more pressure on commodities.
Bonds were down, in response to the claims number, ignoring the news out of China.
I will never get tired of looking at this @climate graphic which shows just how much LAND renewables take up compared to fossil fuels. https://t.co/vs7azSmCyA pic.twitter.com/9cOj6JT8J2
— Shannon Osaka (@shannonosaka) August 31, 2022
Imagine having nearly 400 PhDs in economics & 18,000 people on the payroll for an annual salary expense of $2.6 billion with 2 mandates: Full employment & price stability and then getting inflation completely wrong & thinking you don't owe anyone an explanation.
— Sven Henrich (@NorthmanTrader) September 1, 2022
h/t @hkuppy pic.twitter.com/dsG18ntIgo
Idea
This is not fully worked up, but as I understand it, Keynes advocated public spending, particularly on productive investment, as a response to a collapse in demand (i.e. a depression, in the jargon of the time), to bring the demand for savings into balance with the supply of investment. This was based on the assumption that the propensity to consume, which is the obverse of the demand to save, is taken to be a fixed proportion of income. But we know that propensity to consume is very much determined by relative income. Those who are very rich relative to the rest of the population at the time wish to save more. By using the tax system to transfer income from the rich to the poor, it would be possible to increase demand without relying on the government to find worthwhile investments.
I’m not saying that the public sector should not invest, I’m saying that if we take money from the kleptocracy and give it to those in poverty, most of the transfer will get spent into the economy.
I know there all sorts of complications about demand leaking abroad, but seriously, with the challenges of energy bills going up fivefold, it’s worth a try.
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