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Old 08-29-2016, 03:35 PM
 
64,696 posts, read 66,183,819 times
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yellin does not control bond rates .investors do .

with the exception of 1994 , since 1980 whenever the fed has raised short term rates by 1% or higher in a yea , r bonds actually went up in value that year and did well.

the left side is how much the fed raised the fed funds rate . the right side is the total return on intermediate term bonds

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Old 08-29-2016, 04:25 PM
 
522 posts, read 332,101 times
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Quote:
Originally Posted by C2BP View Post
If they raise rates full blown deflation and depression will follow, the tsunami comes more quickly. It may bring down the entire system with it. So what? We created this mess and this zombie economy, we lied and cheated, we deluded ourselves that we can avoid pain, that all those monetary tricks and artificial low interest rates can work. We are 16 years late raising interest rates.

Our only medicine is higher interest rates and massive defaults and bankruptcies. That is the only way out of this mess that we have created for ourselves. Only way that can bring normal and organic economic growth one day, nothing else will work and can't work.

I know, most of you live in denial and can't accept this fact. What is next, should we try QE4 after QE1, QE2, Q3 didn't work. Should we try NIRP after ZIRP didn't work? How long our insanity will last.......until we self destroy ourselves and our country?

No easy and painless way out of our mess. The Fed has been staling since 2001, staling and lying for 16 years, stealing our public money, taxpayer money and plundering our country leaving us with massive debts. How long are we going to live in denial??????????

A lot of pain may mean revolution and civil war in America. It does not just mean a high unemployment rate. We are going to pay a huge price, all of us will, for this debt orgy and insanity since 2001.
What's all this "we stuff!"

I didn't create nothing!

I'm not in charge of lenders, banks, multi-nationals, nor market efficientcies that have illuminated 70% of the jobs out there. WE got corporations who get policies passed because they hire "million dollar" lobbyist who push bills through congress that only benefit them and penalizes the proletariat.

I'm starting to see how this "BS FAUX Capitalist system" is not really Capitalism at all...its more like "Corporatocracy!"

LINK

Read it an weap...!
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Old 08-29-2016, 06:26 PM
 
739 posts, read 403,346 times
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Quote:
Originally Posted by lchoro View Post
Why Yellen doesn't raise



The above assumes the holder is an all-cash buyer of bonds. It gets much worse if the holder is using margin which can range from 3 to 7 percent.
The central banks are buying the bonds as people flee. The buyer of last resort. Buying bonds from the 1% with tax money from the 99%. The biggest public wealth transfer in history.

Enclosing, privatising and plundering the commons has been a theme throughout history. Now it is being done in grand style on a truly global scale.

I have bonds, and they have all surged in value.

Last edited by C2BP; 08-29-2016 at 06:53 PM..
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Old 08-29-2016, 06:49 PM
 
739 posts, read 403,346 times
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Back to our economy. Today Total Debt to GDP is about 365%. QE and ZIRP is a stalling tactic. The idea is as long as you make it easy to service debt, then there is no crisis. But the crisis is the high debt level -- and when hyperinflation (it is coming) arrives, interest rates WILL go up, and then we will have the cascading default crisis we have been delaying (delaying is NOT avoiding).

The Fed has managed delaying the default crisis stage by spending our future money. But we have to go through the Default Crisis Stage -- because that is where the (global) economy is cleansed of excess, dross, waste -- the economy can't grow without this stage of the process. It is a kind of Winter Kill Stage. Yes, we like to listen to those who say we can avoid the Winter Kill Stage -- to those who say we don't have to suffer through the Default Stage -- but these voices are charlatan voices (even with their PHDs and their Nobel Prizes). Con-Men who fear losing power, and who will bankrupt the future in order to not have to face the remorse of having fallen for the "Debt does not matter" lie.

One doesn't have to understand this in the theological sense, however, in the philosophical sense, there is no Day without the subsequent Night -- and economists who claim there is only light and joy need to lose their credentials.

We should have begun raising rates in 2001, when the Business Cycle ended. One does not raise rates merely to fight inflation -- DEBT IS INFLATION, even though the official inflation gauge, CPI, or PPI, ignores it -- one raises rates to limit indebtedness and to protect the local currency, and to begin the process of supporting SAVING as a safe investment treasury for later use when the Inflation or Growth Season return later.

So, we have avoided pain for the last 16 years, but we have not done our job of preparing for the next expansion by unloading the dead-weight of debt taken on after the Growth Season. This perversion of understanding is a mortal sin in the philosophical sense, because it celebrates blinding oneself to the truth, and celebrates the half-truth (the need to ignore the side of reality one does not want to recognize).
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Old 08-29-2016, 06:50 PM
 
11,897 posts, read 14,372,203 times
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It seems to me that if people can't get a return, they don't save anything. They don't save up for future purchases, and the banks don't have any money to lend out. It especially hurts the elderly who have money in fixed income securities.
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Old 08-29-2016, 06:53 PM
 
4,229 posts, read 1,908,443 times
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Quote:
Originally Posted by redguard57 View Post
Seems to me the solutions are fairly simple. I think our economy is fundamentally strong. At the very least, it's better than pretty much any other major country's economy.
Well, the US stills produces about 25% of nominal world GDP, we have famously fair and stable legal and monetary institutions, a highly educated workforce, lots of natural resources, accessible transportation systems, and we participate heavily in global trade. These things help make us a very powerful economy indeed. Nevertheless, simple solutions are often not so simple..

Quote:
Originally Posted by redguard57 View Post
1) Get a lot of housing built to increase supply bring prices down to an acceptable range. Not only single family homes but nice multi-family units. Do this without the out of control speculation that caused the 2007-08 crisis.
Carrying costs are a killer. Builders do not like to sink cash into a building without seeing some willing buyers waiting in line somewhere. A buyer of last resort may be necessary. The financial crisis by the way was not caused by speculation. Speculators are an important and healthy part of most markets. In simple terms, the crisis was caused by wanton greed among former Wall Street investment banks and the spectacular inaction of wool-over-their-eyes regulators who stood by and let it all happen.

Quote:
Originally Posted by redguard57 View Post
2) Fix the freaking college cost problem. Either figure out a way to increase supply & reduce the cost or decrease the demand by giving young people an alternate path to jobs.
An increasingly complex, technical, and multilingual world begs for more and more education. In this country, we have long provided a free K-12 education, but that is not nearly enough anymore. A free K-16 and even a free K-20 education are more and more what's called for. These extra years need not be quite so universal as the base years, but they would need to be universal for those who were qualified. In any sort of long-run, it will be more expensive NOT to pay for K-16/20 education than to pay for it.

Quote:
Originally Posted by redguard57 View Post
3) Fix the health care cost problem.
It would take even a single-payer system some time to accomplish that, and it will take some time yet for the US to be ready to accept a single-payer system. In the meantime, we must migrate toward better practices while assuring that patients whose lives and health depend on the existing system do not somehow slip through the cracks as we lurch our way around. Health care is a little more than one-sixth of the economy. It takes a long time to safely turn a ship that big. Per capita and aggregate health care costs will continue to grow, but they are already growing at rates lower than during the 20 years preceding the financial crisis. In essence, we have made a good start, but there is a long, long way yet to go. With the possible exception of Taiwan which did national health care in more or less one fell swoop, this measured process would be consistent with what other developed countries have gone through.

Quote:
Originally Posted by redguard57 View Post
Our economy has the ability to be quite good and we still have a lot of built-in advantages vs. our competitors, but we cannot figure those 3 problems out which all have a kind of leukemic affect on our economic health.
It's not a prefect world. There have always been problems, many of which would have seemed daunting in their time. It could easily be argued however that energy, immigration, water, and global warming are all bigger problems than the three you've pointed to above. As an economy, we have been relatively good at dealing with problems. There is every reason to believe that we will continue to be.
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Old 08-29-2016, 07:02 PM
 
Location: Myrtle Creek, Oregon
11,061 posts, read 11,469,953 times
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Quote:
Originally Posted by mathjak107 View Post
and through it all we are still here , financially assets are higher than ever and the world did not end as we know it .

as usual it all comes to pass and we go on . if you tried to hide from it all , you are a lot poorer for it .

capital always has become rational despite human behavior being irrational and trying to alter its path wrongly from time to time . . .capitals path has always been over time to bigger and better company's and greater gdp eventually .
The reason assets are higher than ever is asset hyperinflation. That is very nice if you own assets, not so great if you don't. There is an article in the current issue of Scientific American asking whether civil society can survive "The Threat Of Inequality." Many people are a lot poorer for it, through no fault of their own.

Our GDP would be a better index if it actually depended on product. It does not. GDP includes paper manipulation of finances by bank "profits." It also includes things like the sale of Schitzer Steel to the Russians or the Chinese purchase of Morgan-Stanley.

Chinese acquisitions of U.S. companies - CNNMoney
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Old 08-29-2016, 07:06 PM
 
4,229 posts, read 1,908,443 times
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Originally Posted by C2BP View Post
The central banks are buying the bonds as people flee. The buyer of last resort. Buying bonds from the 1% with tax money from the 99%.
In the case of the Fed and QE, no tax dollars were involved. The Fed does not receive appropriated funds. They support themselves and return surpluses to the Treasury at the end of the year. As for QE itself, these were asset swaps with member banks. Banks were invited to surrender targeted types of securities to the Fed in exchange for markups to the bank's reserve accounts. These markups expanded the monetary base, but did not on their own expand the money supply.
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Old 08-29-2016, 07:08 PM
 
8,297 posts, read 3,460,242 times
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Quote:
Originally Posted by C2BP View Post
The central banks are buying the bonds as people flee. The buyer of last resort. Buying bonds from the 1% with tax money from the 99%. The biggest public wealth transfer in history.

Enclosing, privatising and plundering the commons has been a theme throughout history. Now it is being done in grand style on a truly global scale.

I have bonds, and they have all surged in value.
Explain how our Fed is using taxpayer money to purchase bonds.

Last edited by Hoonose; 08-29-2016 at 07:44 PM..
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Old 08-29-2016, 07:16 PM
 
4,229 posts, read 1,908,443 times
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Quote:
Originally Posted by pvande55 View Post
It seems to me that if people can't get a return, they don't save anything. They don't save up for future purchases, and the banks don't have any money to lend out. It especially hurts the elderly who have money in fixed income securities
In "Lost Decade" Japan, interest rates went negative, and people still saved. Saving is not only about earning interest.
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