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Post by sarasota on Mar 22, 2020 23:02:34 GMT -5
bingo. The Federal Reserve's balance sheet is not on the Government's balance sheet. Now you know the reason...... Sorry, no bingo. The Fed's balance sheet includes $2.5 trillion of Federal debt held by the Fed. Interest on this debt, paid by Treasury, is collected by the Fed. The interest paid to the Fed is then turned back to the Treasury, to be classified as revenue (receipts). Its a circular transaction that does not reduce the total amount of debt. As revenue, it would reduce the size of the annual deficit, the remaining deficit (expenses - revenue = deficit) would add to total debt. Way back in the final years of Clinton, the Federal government began running surpluses. The initial plan, premised on these surpluses continuing, was to pay down the Federal debt. The chairman of the Fed objected, arguing that no/little Federal debt would hamper his ability to fashion economic policy. I never did quite understand the basis for that claim, and thought it untested speculation. In any event, rather than argue with the chairman, the Executive branch set up an escrow account for the social insurance trust funds, and planned on putting the government's surplus revenue into that account. This would be drawn down in the future by Social Security and Medicare as the trust funds' reserves became depleted mid 21st Century. The Bush43 tax cuts ended the prospect of continuing surpluses, as politicians once again fell for the seductive lure of Arthur Laffer and his curve. IMO, Laffer has done more long-term economic damage to the United States than anyone I know. Even more damage than Keynes? |
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Post by nycrusader2010 on Mar 23, 2020 13:57:17 GMT -5
Sorry, no bingo. The Fed's balance sheet includes $2.5 trillion of Federal debt held by the Fed. Interest on this debt, paid by Treasury, is collected by the Fed. The interest paid to the Fed is then turned back to the Treasury, to be classified as revenue (receipts). Its a circular transaction that does not reduce the total amount of debt. As revenue, it would reduce the size of the annual deficit, the remaining deficit (expenses - revenue = deficit) would add to total debt. Way back in the final years of Clinton, the Federal government began running surpluses. The initial plan, premised on these surpluses continuing, was to pay down the Federal debt. The chairman of the Fed objected, arguing that no/little Federal debt would hamper his ability to fashion economic policy. I never did quite understand the basis for that claim, and thought it untested speculation. In any event, rather than argue with the chairman, the Executive branch set up an escrow account for the social insurance trust funds, and planned on putting the government's surplus revenue into that account. This would be drawn down in the future by Social Security and Medicare as the trust funds' reserves became depleted mid 21st Century. The Bush43 tax cuts ended the prospect of continuing surpluses, as politicians once again fell for the seductive lure of Arthur Laffer and his curve. IMO, Laffer has done more long-term economic damage to the United States than anyone I know. Even more damage than Keynes? NO. |
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Post by rickii on Mar 25, 2020 10:39:54 GMT -5
This is another thinly veiled political comment in defense of the policies in place from 2017-20. Some perspective might help. Debt in 2001-09 increased dramatically due to various policies including the war in Iraq. At the time it was held by those in power that debt is not important. Debt from 2009 - 17 increased by anywhere from $2.8 trill to $5 trill depending on the method of calculation. Much of the increase in debt was due to the National Recovery Act and other measures required to pull the nation out of the Great Recession and prevent another depression. Under the present administration prior to the Covid-19, the increase in debt from 2017 - 2020 has been estimated at $8 trillion all during a time of a healthy economy inherited from the previous administration. It was not deficit spending to pull a nation out of a recession. $28 trillion is the estimated debt over a full 8 year term with current policies not including Covid-19. Similar statistics can easily be found in various economics sources, not political in nature. Any sources from politically based sources are useless and should be ignored. One could point to lower unemployment due to the added juice to the economy provided by tax cuts primarily benefitting corporations and wealthy investors. Maybe, deficits do not matter and increased debt is of no importance. My point is that it is best to leave politics at the front door and restrict our comments to Covid-19. Stay safe and stay healthy. With respect. Talk about thinly veiled! You make a blatant political dessertation veiled in loose numerics and then advise as your ‘point’ that others leave politics out of the discussion. |
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Post by longsuffering on Mar 25, 2020 13:11:58 GMT -5
Regarding the endowment, is it too soon to speculate that coronavirus has popped the bubble in higher education? Or will this be a blip like the 2008-09 recession with tuition and fees resuming their climb faster than the inflation rate after the dust settles?
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Post by sarasota on Mar 25, 2020 16:19:55 GMT -5
Won't current actions lead to significantly higher inflation of the US Dollar?
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Post by Pakachoag Phreek on Mar 25, 2020 17:32:26 GMT -5
Won't current actions lead to significantly higher inflation of the US Dollar? What you mean by 'current actions'. The $2 trillion coronavirus relief package? The looming huge Federal budget deficit? The Fed's quantitative easing? The U.S. has now entered a recession,. Borrowing is ultra-cheap; material resources and labor should be in good supply, short-term Recessions usually dampen inflationary expectations, as there should be little upward pressure on prices. |
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Post by nycrusader2010 on Mar 25, 2020 20:15:32 GMT -5
Won't current actions lead to significantly higher inflation of the US Dollar? In theory yes. However the real "bailout" occurs when despite radical monetary policy, the rest of the world continues to buy the dollar. So as long as we maintain world reserve currency and foreign powers continue to buy our debt, we put off the ultimate day of reckoning. |
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Post by sarasota on Mar 26, 2020 1:53:34 GMT -5
Thanks, guys, for the explanations.
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Post by purplehaze on Jun 6, 2020 9:56:53 GMT -5
I'm very curious if the new management team has been conservative or somewhat aggressive as we've seen the market go from 18000 to 27000 in two months - is there a chance we have recovered much of the losses we sustained through march and april ?
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Post by longsuffering on Jun 6, 2020 10:34:42 GMT -5
Hopefully, and interestingly no significant cuts have been announced by HC, outside of the Arizona State hockey game, that I have noticed. Unless the Administration is whistling by the graveyard, the school seems to be in good shape, relatively speaking. Fordham announced a $100 million shortfall and Lehigh has announced a $40 million shortfall. Nothing from HC so far.
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Post by KY Crusader 75 on Jun 6, 2020 11:16:25 GMT -5
I'm very curious if the new management team has been conservative or somewhat aggressive as we've seen the market go from 18000 to 27000 in two months - is there a chance we have recovered much of the losses we sustained through march and april ?We surely would have made such a recovery if we had employed the KYCRUSADER 75 index fund approach I have championed many times |
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Post by bison137 on Jun 6, 2020 12:26:07 GMT -5
I'm very curious if the new management team has been conservative or somewhat aggressive as we've seen the market go from 18000 to 27000 in two months - is there a chance we have recovered much of the losses we sustained through march and april ? If the investing team has done their job, the HC endowment should be higher now than it was a year ago. The S&P index is a lot higher than on this date last year, and the NASDAQ is up almost 30% over the same time period. Since January 1st, the S&P is down slightly, but the NASDAQ is up significantly. Right now, operating revenue is the issue - not the endowment. |
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Post by redbandit236 on Jun 6, 2020 20:35:04 GMT -5
In an email to students on Friday May 15th, Fr. Boroughs said the endowment was down approximately 10% in the calendar year to date. Interestingly, at that time the S&P 500 was only down 12% calendar year to date. Maybe there was a delay in Fr. Boroughs reporting?
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Post by KY Crusader 75 on Jun 6, 2020 20:56:54 GMT -5
In an email to students on Friday May 15th, Fr. Boroughs said the endowment was down approximately 10% in the calendar year to date. Interestingly, at that time the S&P 500 was only down 12% calendar year to date. Maybe there was a delay in Fr. Boroughs reporting? The S & P 500 is +11.8% since May 15th. I do understand that the endowment uses many investment vehicles, but surely the college's US stock investments are up substantially since Father B wrote the email. |
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Post by bison137 on Jun 6, 2020 22:35:00 GMT -5
In an email to students on Friday May 15th, Fr. Boroughs said the endowment was down approximately 10% in the calendar year to date. Interestingly, at that time the S&P 500 was only down 12% calendar year to date. Maybe there was a delay in Fr. Boroughs reporting? As KY Crusader75 points out, the S&P is up significantly since then, so the HC endowment probably is now positive year-to-date. Also Fr. Burroughs may not have mentioned that the S&P was up a lot significantly in the second half of 2019, as was the NASDAQ, so the endowment for the fiscal year was likely down only a few percentage points as of May 15th. Now is is almost certainly up by a fair amount for the fiscal year. |
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Post by Pakachoag Phreek on Jun 8, 2020 11:07:56 GMT -5
The college's investment strategy.  Long-term investments* by class, as of June 30, 2019$20.8M in fixed income $119.5M in domestic equities $49.3M in emerging markets $179M in global equities $61.8M in absolute return, Global long/short $166.7M in absolute return, opportunistic $126.7M in private equity $55.4M in real assets $7.5M in split interest agreements $1.0M in other * Excludes short-term investments, and 'cash', e.g., Treasury bills. |
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Post by rickii on Jul 16, 2020 14:29:24 GMT -5
In an email to students on Friday May 15th, Fr. Boroughs said the endowment was down approximately 10% in the calendar year to date. Interestingly, at that time the S&P 500 was only down 12% calendar year to date. Maybe there was a delay in Fr. Boroughs reporting? As KY Crusader75 points out, the S&P is up significantly since then, so the HC endowment probably is now positive year-to-date. Also Fr. Burroughs may not have mentioned that the S&P was up a lot significantly in the second half of 2019, as was the NASDAQ, so the endowment for the fiscal year was likely down only a few percentage points as of May 15th. Now is is almost certainly up by a fair amount for the fiscal year. [ Fr B’s assessment is rather simplistic given the investment spread as of 6/2019. It can be viewed that between $120 mlllion and just under $300 million was invested in domestic and/or domestic based equities with global operations. These are largely liquid holdings and can be priced/valued daily. What we don’t know is the aggregate value of these two categories on day 3/1/20 or on 5/15/20. We do know what the S&P 500 was on 3/1/20 and on 5/15/20. This, an accurate performance comparison is difficult. Now, as discussed on page 1 of this thread, about 45 to 50% of the total assets are/were invested in more aggressive areas with illiquidity risks and - at best - guesstimates on asset values at any given time. Thus IMO, Fr B’s report of the Endowment being down only 10% or any % in May, is in fact a general ‘guesstimate ‘. And this is true of any Endowment with a portfolio similar to HC. BTW, we don’t know what defensive / restructuring transactions if any took place since roughly 3/1/20. |
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