Comments by "DrScopeify" (@drscopeify) on "Summers: Fed Unlikely to be Able to Cut as Much as They Want" video.

  1. I think becasue of the massive trade deficit, every day huge quantity of money and inflation is being removed from the US economy because such a large percent of all goods bought are imported. A good deal of the cost of the items are sent abroad and that removes inflation from the US economy like no other country. Just Mexico and Canada alone make a big impact let alone Asia and Europe, this should help bring the neutral rate down, maybe not what the FED is thinking at around 3% but maybe 3.5%? I have a hard time seeing the USA sustain 4%+ but we will find out soon, if inflation rises as the FED cuts rates then they will slow down rate cuts and we will find the neutral rate.
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  2. Hyper inflation is not natural it is a policy done on purpose by the Government. In Germany after WW1 the government wanted to rebuild the country and military faster to prepare for a future war and also was forced to buy large quantity of gold to pay back the allies for war damages, so Germany on purpose created hyperinflation. No one really know 100% why, it may have been to cheat paying back the Allies, it may have been to get cheaper manpower, to make German people poor so they are all forced to get out and work as old money becomes worthless they have saved. And it could also be the classic reason of being forced to pay for more and more Government workers, this policy of ever increasing size of Government workforce is the policy that lead to hyperinflation in Argentina, Venezuela, Zimbabwe so it is the real modern take on hyperinflation. The USA is raising it's government manpower numbers in recent years since COVID so maybe you do see some risk here, BUT the US Government spending is only 36% of the US GDP which is really low, In France it is 60% in Germany 50% and China 33%, So in this respect the USA is OK, almost the level of China which is pretty amazing. This means the USA on a scale of age of a country is on the same level as China. SOme people see the USA as country that is getting older and China still young and has a long way to go, but in terms of Government spending as % of GDP, China and the USA are about the same. Amazing really.
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