News Article: The Inflation Reduction Act

Diogenes

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Billions in tax credits to make electric vehicles cheaper. Hefty fees for high-polluting gas and oil companies. Funding to speed the production of solar panels and wind turbines. Cash to create the country’s first “green bank.”

 
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4Q Basket Case

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I've been advocating for a consistent energy policy. Essentially either:
1. The sort of policies in the mis-named Inflation Reduction Act, acknowledging that it will come at the cost of higher gasoline prices, or

2. Loosening restrictions on fossil fuels (extraction, refinement and distribution) in order to reduce prices, acknowledging that it will come at an environmental cost.

While I would have gone about it slightly differently, I do think it's a step in the direction of logical consistency. Just don't scream when gasoline, heating oil, natural gas, and electricity prices all increase over time.....which is why I think the bill is mis-named. This might (maybe) help with clean energy development, but it won't reduce inflation.

So you know my dislike for criticism without offering an alternative solution. What would I suggest?

First some background: I think energy independence is a matter of national security. Put another way, we wouldn't give a plugged nickel for the whole of the Middle East if the world didn't depend on their oil.

Thing is, we have enough in the US to tell them to pound sand (no pun intended)....if we'd just quit making it harder to extract, refine and distribute. If we no longer depend on Middle-Eastern oil, we're no longer beholden, and our bargaining position becomes infinitely stronger.

I also understand the long-term environmental impact of doing that. So I'd actually pursue a two-pronged strategy: For the short term, make it easier for the USA to achieve energy independence by removing a lot of the restrictions at all points in the chain. For the long term, subsidize renewable energy R&D.

Side Note: I also think there's one other aspect to national security that's gotten short shrift for 30 years -- the semi-conductor industry.

A huge portion of everything we use today is based on a computer of some sort. Household appliances, including HVAC, ovens, cooktops, refrigerators, dishwashers, etc., etc. Home entertainment. Cars.

You name it, and it's at least partially a computer. And a huge proportion of us can no longer do our jobs effectively without a computer, smartphone or pad.

And all of that is at the consumer level. It doesn't touch all the computers involved in manufacturing, transportation and distribution equipment.

Point of all that being: If we have to depend on someone else (Taiwan, anyone?) for semi-conductors, we have a MAJOR economic problem if, for whatever reason, we can't get them. Essentially, the whole economy stops. You think we've got inflation now? Wait until the price of computer components quadruples.

So I would advocate subsidy of the domestic semi-conductor industry until such time as the US is entirely self-sufficient.

Yes, I know that still leaves us vulnerable to gaining the materials necessary to make the semi-conductors, but that's another problem with a different solution. As it stands today, even if we had all the materials domestically, we don't have the manufacturing capacity to turn them into semi-conductors at anywhere near the volume we need.
 
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92tide

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May 9, 2000
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I've been advocating for a consistent energy policy. Essentially either:
1. The sort of policies in the mis-named Inflation Reduction Act, acknowledging that it will come at the cost of higher gasoline prices, or

2. Loosening restrictions on fossil fuels (extraction, refinement and distribution) in order to reduce prices, acknowledging that it will come at an environmental cost.

While I would have gone about it slightly differently, I do think it's a step in the direction of logical consistency. Just don't scream when gasoline, heating oil, natural gas, and electricity prices all increase over time.....which is why I think the bill is mis-named. This might (maybe) help with clean energy development, but it won't reduce inflation.

So you know my dislike for criticism without offering an alternative solution. What would I suggest?

First some background: I think energy independence is a matter of national security. Put another way, we wouldn't give a plugged nickel for the whole of the Middle East if the world didn't depend on their oil.

Thing is, we have enough in the US to tell them to pound sand (no pun intended)....if we'd just quit making it harder to extract, refine and distribute. If we no longer depend on Middle-Eastern oil, we're no longer beholden, and our bargaining position becomes infinitely stronger.

I also understand the long-term environmental impact of doing that. So I'd actually pursue a two-pronged strategy: For the short term, make it easier for the USA to achieve energy independence by removing a lot of the restrictions at all points in the chain. For the long term, subsidize renewable energy R&D.

Side Note: I also think there's one other aspect to national security that's gotten short shrift for 30 years -- the semi-conductor industry.

A huge portion of everything we use today is based on a computer of some sort. Household appliances, including HVAC, ovens, cooktops, refrigerators, dishwashers, etc., etc. Home entertainment. Cars.

You name it, and it's at least partially a computer. And a huge proportion of us can no longer do our jobs effectively without a computer, smartphone or pad.

And all of that is at the consumer level. It doesn't touch all the computers involved in manufacturing, transportation and distribution equipment.

Point of all that being: If we have to depend on someone else (Taiwan, anyone?) for semi-conductors, we have a MAJOR economic problem if, for whatever reason, we can't get them. Essentially, the whole economy stops. You think we've got inflation now? Wait until the price of computer components quadruples.

So I would advocate subsidy of the domestic semi-conductor industry until such time as the US is entirely self-sufficient.

Yes, I know that still leaves us vulnerable to gaining the materials necessary to make the semi-conductors, but that's another problem with a different solution. As it stands today, even if we had all the materials domestically, we don't have the manufacturing capacity to turn them into semi-conductors at anywhere near the volume we need.
hopefully the chips act will start moving us in the right direction

 

NationalTitles18

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The really smart guys - those hated by certain people - think the act is a great idea and will have a positive effect. This includes past treasury secretaries under both major parties as well as several Nobel Laureates.




"


Economic Policy Institute

@EconomicPolicy



We applaud passage of the Inflation Reduction Act. It will reduce energy, health care, & prescription drug costs for American families and make the biggest investment to fight climate change in our nation’s history: and be paid for by raising revenue from wealthy & corporations

"
 
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TIDE-HSV

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I've been advocating for a consistent energy policy. Essentially either:
1. The sort of policies in the mis-named Inflation Reduction Act, acknowledging that it will come at the cost of higher gasoline prices, or

2. Loosening restrictions on fossil fuels (extraction, refinement and distribution) in order to reduce prices, acknowledging that it will come at an environmental cost.

While I would have gone about it slightly differently, I do think it's a step in the direction of logical consistency. Just don't scream when gasoline, heating oil, natural gas, and electricity prices all increase over time.....which is why I think the bill is mis-named. This might (maybe) help with clean energy development, but it won't reduce inflation.

So you know my dislike for criticism without offering an alternative solution. What would I suggest?

First some background: I think energy independence is a matter of national security. Put another way, we wouldn't give a plugged nickel for the whole of the Middle East if the world didn't depend on their oil.

Thing is, we have enough in the US to tell them to pound sand (no pun intended)....if we'd just quit making it harder to extract, refine and distribute. If we no longer depend on Middle-Eastern oil, we're no longer beholden, and our bargaining position becomes infinitely stronger.

I also understand the long-term environmental impact of doing that. So I'd actually pursue a two-pronged strategy: For the short term, make it easier for the USA to achieve energy independence by removing a lot of the restrictions at all points in the chain. For the long term, subsidize renewable energy R&D.

Side Note: I also think there's one other aspect to national security that's gotten short shrift for 30 years -- the semi-conductor industry.

A huge portion of everything we use today is based on a computer of some sort. Household appliances, including HVAC, ovens, cooktops, refrigerators, dishwashers, etc., etc. Home entertainment. Cars.

You name it, and it's at least partially a computer. And a huge proportion of us can no longer do our jobs effectively without a computer, smartphone or pad.

And all of that is at the consumer level. It doesn't touch all the computers involved in manufacturing, transportation and distribution equipment.

Point of all that being: If we have to depend on someone else (Taiwan, anyone?) for semi-conductors, we have a MAJOR economic problem if, for whatever reason, we can't get them. Essentially, the whole economy stops. You think we've got inflation now? Wait until the price of computer components quadruples.

So I would advocate subsidy of the domestic semi-conductor industry until such time as the US is entirely self-sufficient.

Yes, I know that still leaves us vulnerable to gaining the materials necessary to make the semi-conductors, but that's another problem with a different solution. As it stands today, even if we had all the materials domestically, we don't have the manufacturing capacity to turn them into semi-conductors at anywhere near the volume we need.
Along those same lines, I'll never have another Lenovo. In fact, I go out of my way to avoid anything electronic out of China if possible. They have a long history of "oopsies" with their computers, making it possible to install malware (maybe even their installing it). The link below is from 2015. If you Google it, you'll see that similar incidents continue up to earlier this year...

CNN
 
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Bamaro

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The major stock market indexes tumbled on Tuesday after a key measure of inflation came in worse than expected.

The Dow Jones Industrial Average plunged 900 points, for a 2.8 percent decline. The S&P 500 dropped 3.2 percent, while the Nasdaq Composite fell 4.1 percent.

The drop, which undid a week worth of gains, came after the Bureau of Labor Statistics revealed that the Consumer Price Index (CPI) increased by 8.3 percent in August compared to the same time last year and increased 0.1 percent from the previous month.

The rise was worse than the 8.1 percent increase that economists had expected, according to Dow Jones estimates.
 

UAH

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Watching stocks for years and being and investor through 2000 and 2008 I have felt that the Dow has been seriously overvalued since the Fed began printing money in 2008. It seemed absurd to me to be investing at Dow 13,000. Its recent high was 37,000. Over the last year I have been watching stocks like Intel that have skidded past their 2020 lows as a possible entry point. Now I believe just about everything will overshoot to the downside. The Fed principally has printed so much money through quantitative easing and over the past 20 plus years has taught the market that a Fed put is in place. They have put themselves in a corner and have no choice but to administer bitter pills to the economy. No easy way out of this one.
 

JDCrimson

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The only way to navigate through this downsizing of the Fed Balance sheet is to maintain 3.5-4% unemployment. I think they can thread the needle with industry on shoring, retooling to the available labor supply, and on the backdrop of boomer retirements. With all things being stable, our economy is losing significant manpower and brain drain to retirement. This shift alone will support employment and wages for the next 5-10 years. We need to get our house in order during this timeframe. After that we will require significant more inflation to collect sufficient revenue to fund social security benefits for this demographic.

This is why I have been advocating for the return of 50y and maybe even 100y bonds to price fix our pension obligations. This would allow us to grow our economy while these obligations remained fixed. There would still be a COLA adjustment for Social Security but it would effectively already be paid for to some degree with ultra-long bonds.
 
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UAH

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Nov 27, 2017
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The only way to navigate through this downsizing of the Fed Balance sheet is to maintain 3.5-4% unemployment. I think they can thread the needle with industry on shoring, retooling to the available labor supply, and on the backdrop of boomer retirements. With all things being stable, our economy is losing significant manpower and brain drain to retirement. This shift alone will support employment and wages for the next 5-10 years. We need to get our house in order during this timeframe. After that we will require significant more inflation to collect sufficient revenue to fund social security benefits for this demographic.

This is why I have been advocating for the return of 50y and maybe even 100y bonds to price fix our pension obligations. This would allow us to grow our economy while these obligations remained fixed. There would still be a COLA adjustment for Social Security but it would effectively already be paid for to some degree with ultra-long bonds.
Excellent comments. It has been a puzzle to many as to why the Treasury has not issued 30 year bonds at a minimum to finance our debt when rates were at historical lows.
 

JDCrimson

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The biggest single buyer of Treasuries is the Social Security and Medicare funds being somewhat regulated into buying Treasuries. It's a symbiotic relationship. SS needs wage inflation to collect more payroll taxes to pay benefits. US Treasury needs the SS to increase its taxable payroll threshold so that it has the cash flow to buy the Treasuries issued from higher deficit spending. Sure, deficit spending is not paid for by income taxes. Inflation generates higher incomes which increases income taxes collected which service the debt issued by the Treasury.

What they don't tell you is its financed by payroll taxes that were increased by regulation. Payroll taxes in this way are your flat tax with no deductions that everyone clamors for. You just don't get any income tax relief. It's sort of taxation without representation. But it's also an inequitable progressive tax - meaning higher earned incomes/wages are taxed. The income tax is where the inequity really resides.

All the Republicans who advocate for the elimination of Social Security and Medicare are just pandering to the base who hate paying taxes worse than receiving Social Security which is pretty much the folks who don't need it to live on. Republicans need campaign funds from those folks but there arent enough of them to win a fair election. Without Social Security playing its role, and it must continue playing this role, our economic system would collapse. If the value of labor is not increasing then our economy cannot really grow.

We don't really realize how much power we as the collective American wage-worker has given that we underpin the origination of payroll taxes. If we all went on a collective strike, think the early Covid lockdown as a self-imposed strike, imagine the benefits and legislation the American wage-worker could demand? A current real life example amplified is the current railroad union negotiations.
 
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