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The bailout appears to be winding to a close. Now we have to pay for it.
Everything reads better in your browser or in the app. The footnotes especially, and Random Walk is really leaning into the footnotes. Plus, if you have the app, you can set delivery to “app only” and then my daily barrage will feel less like a barrage. Unfortunately, substack does not yet have a “Weekly Digest” option, but I’m hectoring them aplenty.
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Daily Data
The bailout has ended. The bailout is just getting started.
I’ve become somewhat skeptical of the “excess savings” metric because there are so many ways to measure it, but here it goes.
According to JPM, now the excess savings are gone:
The up-and-then down of the savings rate (combined with the growth of credit card spending) is partly why I find this more convincing.
On an income cohort basis, the “excess liquidity” has been gone for the bottom 40%, and is shortly gone for the middle 40%, and will be gone for the top 20% maybe sometime later.
Savings may favor the wealthy, but the the wage gains have done the opposite.
Now that we’re on our own, we better be able to handle it, because we’ve already had our bailout and then some. Uncle Sam is tapped out (but can’t actually tap out).
Just look at how much borrowing Uncle Sam has done, and how much more it plans to do (from Ed Yardeni via
):That’s a lot of fresh IOUs, and the curve is just getting steeper.
To give you a sense of the scale, just compare the 3-month change to marketable securities in 2008 (i.e. the bailout to the Great Financial Crisis) to what we’ve got going on now, during Everything-is-Awesome pandemania.
The 2008 bailout’s got NOTHING on us.
And we’re just getting started. Boo-yah!
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