Bob Poole has an analysis. This is his area of expertise.
16 thoughts on “The “Infrastructure” Bill”
I’ve said this before, but I think lots of infrastructure spending hit diminishing returns half a century ago. When you have little or no infrastructure, a bit of spending to put in city water, sewer, gas, electricity, railways, and roads pays huge dividends. That’s probably why our politicians started thinking it was a magic bullet.
But once you’ve got a lot of infrastructure, more of the same doesn’t really do much at all except waste money, which is why none of us have been planning to run a second or third water line to our house, hoping to get the same gains in living standards the first water line provided.
Generally, the first piece of infrastructure you put in is sized for the anticipated load, with some padding for future growth. Eventually you might put in a second something in parallel with the first if the load increases due to population, and to provide redundancy so you can maintain the first something (road, bridge, etc). You can only do this a few times before you just increasing parallelism and gaining little in return.
Geez, here I thought plumbing was like the Internet. I put in 3x the piping to flush cycle my toilet in .3s with 3 gallons of water!
Nobody gets infrastructure. I once opened joke at work with the line, “I just found a leak in my 4″ water line at home…” NOBODY got the idea of the ridiculousness of that…..
> I think lots of infrastructure spending hit diminishing returns half a century ago
For growth, yes. But this isn’t about growth, it’s about kicking the deleveraging can further. They’ve run out of interest rate runway, the closer they get to negative the faster velocity drops as money leaves the system to chase stores of value. Banks won’t make bad loans because they were scapegoated last time for it. So direct counterfeit cash drops it is. They have the hubris to think they can manage a gradual inflationary deleveraging, and the same cowardice that made most of the tools to do so useless.
Expect much more of this, and worse. The economy is essentially a margin trade at 100:1 leverage now, it’s extremely fragile to even moderate shocks. The answer to a politician is more control – locked negative rate savings, capital restrictions, UBI, taxes taxes taxes, and of course massive financial surveillance and social credit scores to restrict how an ever-expanding serf class can earn and spend. As with all complex systems it cannot be managed forever, but if they can consolidate enough power before it collapses then it doesn’t matter. Judging from the blue pilled idiots I see all around, they have a good chance. I always wondered why great democracies and republics eventually give way to monarchy, it’s getting more understandable now.
It is what China did. Their quality sucks but they built things. Our money will disappear into pockets of pockets and we wont have much of anything to show for it.
This seems to be the Triffin dilemma endgame, or at least a high-fidelity test run. If we don’t get out of reserve currency position intentionally, it will happen unintentionally. Gradually, then suddenly as they say. May already have started with Russia and China. A preference cascade of nations purging dollars from their reserves is out of the Fed’s control – or at least, forces their hand in a way domestic actors cannot. The stock response (invade or foment revolution in any country that tries it) is delivering diminishing returns lately, both geopolitically and economically. In the long run, free money may well be the worst thing that can happen to both individuals and societies.
I wonder how many US states are in the same situation that has Oklahoma with small flood control dams. The state constructed a lot of them from the 1930’s (WPA construction) on to the 1960’s (major dams) to control flood water — all of that water has also had a (subjective impression, maybe?) noticeable effect on the local climate.
But after 50 years or so there is a growing list of small dams and small bridges that need repair and/or replacement. But those aren’t Sexy-Cool things and the Greens hate that sort of construction. So now what?
[Cuss Words deleted] River “restoration”, my rosy red posterior! Flash floods because some idiot thinks flood control is despoiling Mother Nature makes me furious.
I assume this does not mean they are going to remove the Hetch Hetchy Dam, or let Mono Lake refill.
Never lived in California? Getting rid of Hetch Hetchy is close to the top of their wish list.
That’s great. These jerks want to get rid of all the dams in the PNW while mandating everyone buy electric cars while not building nuclear power plants. Some of them still try and recycle glass even though they wont accept it curbside because no one wants it and they just make mountains out of it. But lets get rid of the dams and the awesome reservoirs.
C’mon man! We’ll just import our electricity from China using their downward facing Solar Power Sats… They even volunteered to pay for it!
My motto: If it ain’t crumbling, it ain’t infrastructure.
Actually, that’s just one of my many mottos…
So by your definition I presume cheesecake doesn’t have a crust, it has an infrastructure…
Related: Jack Dorsey has been reading Murray Rothbard and is not ashamed to say so.
I’ve said this before, but I think lots of infrastructure spending hit diminishing returns half a century ago. When you have little or no infrastructure, a bit of spending to put in city water, sewer, gas, electricity, railways, and roads pays huge dividends. That’s probably why our politicians started thinking it was a magic bullet.
But once you’ve got a lot of infrastructure, more of the same doesn’t really do much at all except waste money, which is why none of us have been planning to run a second or third water line to our house, hoping to get the same gains in living standards the first water line provided.
Generally, the first piece of infrastructure you put in is sized for the anticipated load, with some padding for future growth. Eventually you might put in a second something in parallel with the first if the load increases due to population, and to provide redundancy so you can maintain the first something (road, bridge, etc). You can only do this a few times before you just increasing parallelism and gaining little in return.
Geez, here I thought plumbing was like the Internet. I put in 3x the piping to flush cycle my toilet in .3s with 3 gallons of water!
Nobody gets infrastructure. I once opened joke at work with the line, “I just found a leak in my 4″ water line at home…” NOBODY got the idea of the ridiculousness of that…..
> I think lots of infrastructure spending hit diminishing returns half a century ago
For growth, yes. But this isn’t about growth, it’s about kicking the deleveraging can further. They’ve run out of interest rate runway, the closer they get to negative the faster velocity drops as money leaves the system to chase stores of value. Banks won’t make bad loans because they were scapegoated last time for it. So direct counterfeit cash drops it is. They have the hubris to think they can manage a gradual inflationary deleveraging, and the same cowardice that made most of the tools to do so useless.
Expect much more of this, and worse. The economy is essentially a margin trade at 100:1 leverage now, it’s extremely fragile to even moderate shocks. The answer to a politician is more control – locked negative rate savings, capital restrictions, UBI, taxes taxes taxes, and of course massive financial surveillance and social credit scores to restrict how an ever-expanding serf class can earn and spend. As with all complex systems it cannot be managed forever, but if they can consolidate enough power before it collapses then it doesn’t matter. Judging from the blue pilled idiots I see all around, they have a good chance. I always wondered why great democracies and republics eventually give way to monarchy, it’s getting more understandable now.
It is what China did. Their quality sucks but they built things. Our money will disappear into pockets of pockets and we wont have much of anything to show for it.
This seems to be the Triffin dilemma endgame, or at least a high-fidelity test run. If we don’t get out of reserve currency position intentionally, it will happen unintentionally. Gradually, then suddenly as they say. May already have started with Russia and China. A preference cascade of nations purging dollars from their reserves is out of the Fed’s control – or at least, forces their hand in a way domestic actors cannot. The stock response (invade or foment revolution in any country that tries it) is delivering diminishing returns lately, both geopolitically and economically. In the long run, free money may well be the worst thing that can happen to both individuals and societies.
I wonder how many US states are in the same situation that has Oklahoma with small flood control dams. The state constructed a lot of them from the 1930’s (WPA construction) on to the 1960’s (major dams) to control flood water — all of that water has also had a (subjective impression, maybe?) noticeable effect on the local climate.
But after 50 years or so there is a growing list of small dams and small bridges that need repair and/or replacement. But those aren’t Sexy-Cool things and the Greens hate that sort of construction. So now what?
How good a swimmer are you?
While there may not be any new dams funded in the “infrastructure” bill, you will be happy to know that the Hydropower Reform Coalition and American Rivers enviro groups got what they wanted. The 2k pages includes the Kuster bill language.
https://www.americanrivers.org/2021/07/supercharging-river-restoration-a-landmark-bill-to-boost-dam-removal-nationwide/
[Cuss Words deleted] River “restoration”, my rosy red posterior! Flash floods because some idiot thinks flood control is despoiling Mother Nature makes me furious.
I assume this does not mean they are going to remove the Hetch Hetchy Dam, or let Mono Lake refill.
Never lived in California? Getting rid of Hetch Hetchy is close to the top of their wish list.
That’s great. These jerks want to get rid of all the dams in the PNW while mandating everyone buy electric cars while not building nuclear power plants. Some of them still try and recycle glass even though they wont accept it curbside because no one wants it and they just make mountains out of it. But lets get rid of the dams and the awesome reservoirs.
C’mon man! We’ll just import our electricity from China using their downward facing Solar Power Sats… They even volunteered to pay for it!
My motto: If it ain’t crumbling, it ain’t infrastructure.
Actually, that’s just one of my many mottos…
So by your definition I presume cheesecake doesn’t have a crust, it has an infrastructure…
Related: Jack Dorsey has been reading Murray Rothbard and is not ashamed to say so.
https://mobile.twitter.com/jack/status/1426349690879102980