U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 04-06-2019, 02:05 PM
 
Location: Silicon Valley
3,432 posts, read 1,518,710 times
Reputation: 5845

Advertisements

$4T is a lot of quantitative easing. Interest rates at 0% for nearly a decade is very low and for a very long time. Economically speaking, I had doubted the Fed would be able to pull back all of their money from a few years ago, but I did expect them to get further than they did...though it's rather obvious that we've perhaps now become less ready for shocks than a few years ago.



I know none of us were privy to the grand plan, but why do you think this occurred?
Reply With Quote Quick reply to this message

 
Old 04-06-2019, 02:13 PM
 
18,466 posts, read 13,199,340 times
Reputation: 13816
Are they actively pulling funds out as in selling securities or letting them mature and and reinvesting?
Reply With Quote Quick reply to this message
 
Old 04-06-2019, 03:32 PM
 
Location: Silicon Valley
3,432 posts, read 1,518,710 times
Reputation: 5845
The Fed has a large balance sheet of securities they own. As they mature, some are being reinvested and some are not. The not portion becomes the drop in the Fed's balance sheet. This effectively eliminates some of the cash created when the government was pumping liquidity into the markets. Banks require this liquidity as they tend to make longer term loans than what they have on hand, and in turn, seek to borrow the money on a shorter term for cheaper rates, with the assumption that they will be able to return to the well when they have to pay back those monies....netting the difference.


The crisis began when the banks stopped loaning to one another, fearful that the banks would not be able to repay it. Hence the massive injection of funds. In theory, the Fed should be getting a lower return on their money than the banks, who in turn get a lower return on their money than the people borrowing the money.



Compounded for nearly a decade, one would expect there to be plenty of money sloshing around and the Fed would need to pull it in to stop inflation. Yet inflation hasn't occurred according to their own numbers. Rather, there is fear of deflationary events that set in very soon after they began to pull in funds.
Reply With Quote Quick reply to this message
 
Old 04-06-2019, 05:07 PM
 
69,467 posts, read 70,016,385 times
Reputation: 47053
The fed pumped unprecedented trillions in to the economy and the best we can get is about 2% gdp growth and less than 2% inflation.. now that is a reason to worry
Reply With Quote Quick reply to this message
 
Old 04-06-2019, 05:26 PM
 
2,401 posts, read 1,346,523 times
Reputation: 4917
Quote:
Originally Posted by mathjak107 View Post
The fed pumped unprecedented trillions in to the economy and the best we can get is about 2% gdp growth and less than 2% inflation.. now that is a reason to worry
This.

One other thing is our demographics are favorable to over selling if things get panicky and there isn't an immediate rebound. Will be a good opportunity to buy but I imagine many who have been riding the beta wave to gains will panic when they see their egg quickly break.

There is a lot of money concentrated in relatively few names. Stocks are quite expensive right now given growth. The coming declines are going to smack many boomers right in the face.

You do not want to be aggressive right now in stocks hoping gains will off set lack of balance accumulation. Use these bounces near the top to evaluate your positions and ensure preservation if you're close to or in retirement. Respect the time horizon and be ironer diversified.

Last edited by aridon; 04-06-2019 at 05:46 PM..
Reply With Quote Quick reply to this message
 
Old 04-06-2019, 06:25 PM
 
499 posts, read 87,339 times
Reputation: 864
Quote:
Originally Posted by mathjak107 View Post
The fed pumped unprecedented trillions in to the economy and the best we can get is about 2% gdp growth and less than 2% inflation.. now that is a reason to worry
The Fed can keep pumping all they want but it will continue to have diminishing results. The global debt crisis is too much for the central banking systems to handle. I have been bullish on the general markets for a long time now up until very recently. Wouldn't be surprised to see the blowoff top with a China trade deal. After that good luck. The run has been great but dire times are ahead in the financial markets. It will take a lot of people by surprise just how bad things will get.
Reply With Quote Quick reply to this message
 
Old 04-07-2019, 08:17 AM
 
1,125 posts, read 553,840 times
Reputation: 1137
Quote:
Originally Posted by artillery77 View Post
The crisis began when the banks stopped loaning to one another, fearful that the banks would not be able to repay it. Hence the massive injection of funds. In theory, the Fed should be getting a lower return on their money than the banks, who in turn get a lower return on their money than the people borrowing the money.

The crises began a century ago, when private banking was given the green light to legally rape, pillage, and plunder. For this reason, JFK printed currency backed by silver; allocating it to reduce the debt.
The Money Masters – Famous Quotations on Banking


“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.”
-Henry Ford
Reply With Quote Quick reply to this message
 
Old 04-07-2019, 08:36 AM
 
4,540 posts, read 2,479,148 times
Reputation: 8207
The real issue is the amount of debt, the pricing of the debt, the traunches of risk and whose holding it, and finally the to big to fail concept.

Student loans, auto loans, and home loans along with fed/state/municipal debts will be the cement shoes our economy in the next recession.
Reply With Quote Quick reply to this message
 
Old 04-07-2019, 11:06 AM
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
3,702 posts, read 1,699,637 times
Reputation: 2857
JMO,
Most of the QE money and the tax reduction monies quickly went to those who accumulated and invested the funds into low velocity investment instruments. [see FRED Mx Velocity Charts); Hence the raising equity market. The FED can not really sell off the assets because no one really wants to buy relative low yielding and high risk to inflation products.

Last edited by leastprime; 04-07-2019 at 11:15 AM..
Reply With Quote Quick reply to this message
 
Old 04-07-2019, 05:18 PM
Status: "Whiny hipster SoyBeto for POTUS" (set 17 days ago)
 
Location: Brawndo-Thirst-Mutilator-Nation
16,079 posts, read 16,155,590 times
Reputation: 12086
All that QE-money, it just was not adequate to create a neato enough economy......now there is rumblings of a rate-cut, LOL.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2019, Advameg, Inc. | Please obey Forum Rules | Terms of Use and Privacy Policy

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top