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Whatever the Fed does or decides to do, let us just hope they do the right thing for American citizens. I worry about this new selection though. I think Janet Yellen has done a tremendous job so far, given the circumstances. I may not agree with the policy, but she has shown tremendous ability to stay calm in the eye of a hurricane. Her former position is the most difficult job in the world. I suspect that we even have enemies that attack the financial markets with manipulative tactics. I can't even imagine the amount of pressure she had during her short tenure. Does anyone know about this new guy? Does he have any idea what he's getting into? What was the reason for Yellen's replacement? I really hope this is not a mistake.
You are being very literal. We know they don't "print" money, but they do CREATE it.
It would help if you knew the proper terms. Most uneducated people don't.
Quote:
Originally Posted by Good4Nothin
The central banks have been buying up stocks, with the money they create. This amounts to, eventually, nationalizing the companies whose stocks they buy.
So we are going in the direction of only having the illusion of a free market.
According to the article I linked anyway, and others I have read.
People don't seem to be aware of these theories. I think the theories sound very plausible.
You might want to familiarize yourself with Section 14 of the Federal Reserve Act, which debunks your theory.
Mircea, nice post with plenty of unequivocal explanations and references. Unfortunately Good4Nothing has a long history on this forum. She acts like a troll and never backs off of her ignorant statements. You are unlikely to change Good4Nothing but you might clear the facts for others reading this thread. Count on being called "silly", "naïve", or worse.
You have clearly shown that pretty much very statement from Good4Nothing is incorrect:
"Central banks can create as much money as they want, and they can use it to buy stocks,to keep the stock market inflated."
"With central banks having the capacity to create money by decree anytime they want to"
"The central banks have been buying up stocks, with the money they create."
"US central banks can buy stocks indirectly."
"If the Fed can create money in member banks, with QE, and the memberbanks can invest in the stock market."
mircea , would you stop letting facts get in the way of a good story line . you are ruining it , you spoiled it now for the fed haters and the doomers . lol
Hold on now. The thread starter didn't say the Fed was directly purchasing equities. However the BOJ and the SNB have been purchasing US equities and treasuries. In fact, the main reason Citi expects the market to decline by 50% is because of this.
Everybody talks about what a stock price should be on whatever evaluation model they have, but unless somebody is willing and able to pay for the stock at that price, none of that matters. People are about to find out how parasitic the financial world is when they realize that capital goes from one bubble to the next bubble.
It is a bubble economy. Don't believe me? Look at crypto. Fundamentals mean jack. It's just about can I get a better price. For example, the Chinese are notorious for betting on things that make absolutely no sense, but the price appreciates, so someone makes money and the machines follow price.
This is not over. These financial markets will prove to be a disaster. It honestly takes faith and discipline to hold stocks because they're going to expect you to hold your stocks as the market loses value, while the banks and institutional investors follow the next bubble.
This is such crap. Not sure why people like this system.
"If central banks can produce zero interest rates simultaneously with a massive increase in indebtedness, why can’t they keep equity prices far above the values supported by fundamentals? As central banks have learned that they can rig financial asset prices to the delight of everyone in the market, in what sense does capitalism, free markets, and price discovery exist? Have we entered a new kind of economic system?"
"This is not the first time the Fed has come under such suspicion. In 2013 Time Magazine’s Dan Kadlec wrote the following about the unprecedented number of central banks that were moving into stock purchases:"
“The U.S. Federal Reserve does not appear to have joined in the stock-buying trend. The Fed is not permitted to make direct stock purchases. But there is nothing to prevent it from funding a Special Purpose Vehicle that buys a broad basket of stocks through indexes or Exchange Traded Funds. In the past year, Wall Streeters have speculated the Fed would buy stocks as part of its quantitative-easing programs to stimulate the economy.”
'More suspicions were raised on May 23 of last year when long-tenured New York Post financial writer, John Crudele, suggested that the heavy purchases of stocks by the Swiss central bank could be “as an agent of US financial authorities who fear that a big decline in stock prices would be against America’s national interest?”'
"There are many fundamental reasons to distrust central banks meddling in what are supposed to be free markets. For one thing, U.S. securities laws and regulators are not set up to police central banks. But more importantly, with the power to create money out of thin air, what is to stop central banks from effectively becoming the stock market, killing off its very reason for existing: as a reliable pricing mechanism."
"If central banks can produce zero interest rates simultaneously with a massive increase in indebtedness, why can’t they keep equity prices far above the values supported by fundamentals? As central banks have learned that they can rig financial asset prices to the delight of everyone in the market, in what sense does capitalism, free markets, and price discovery exist? Have we entered a new kind of economic system?"
Roberts is referring to foreign central banks, like Japan, not the Federal Reserve.
"This is not the first time the Fed has come under such suspicion. In 2013 Time Magazine’s Dan Kadlec wrote the following about the unprecedented number of central banks that were moving into stock purchases:"
“The U.S. Federal Reserve does not appear to have joined in the stock-buying trend. The Fed is not permitted to make direct stock purchases. But there is nothing to prevent it from funding a Special Purpose Vehicle that buys a broad basket of stocks through indexes or Exchange Traded Funds. In the past year, Wall Streeters have speculated the Fed would buy stocks as part of its quantitative-easing programs to stimulate the economy.”
That's mere speculation. Where's the proof? Kadlec has had five years to get it together.
Quote:
Originally Posted by Good4Nothin
'More suspicions were raised on May 23 of last year when long-tenured New York Post financial writer, John Crudele, suggested that the heavy purchases of stocks by the Swiss central bank could be “as an agent of US financial authorities who fear that a big decline in stock prices would be against America’s national interest?”'
Stock markets are not a requirement for any economic system. Stocks are merely one of many ways a business can raise capital. The stock market is not an indicator of economic health, as history proves.
Quote:
Originally Posted by Good4Nothin
"There are many fundamental reasons to distrust central banks meddling in what are supposed to be free markets. For one thing, U.S. securities laws and regulators are not set up to police central banks. But more importantly, with the power to create money out of thin air, what is to stop central banks from effectively becoming the stock market, killing off its very reason for existing: as a reliable pricing mechanism."
US security laws do police central banks. Central banks are qualified institutional buyers, also known as QIBs.
You'll have to do better than that.
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