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Interest rates are now barely over 1% and it took the Fed over 2 years to accomplish this. Yes, 2 years to just move interest rates over 1%. When Yellen was asked if she is worried about stock market going up 100+ points every day, about high asset prices her answer was no, the Fed is not worried at all. She said, the Fed is not only seeing any flashing red lights, but the Fed is not even seeing the yellow flashing lights. She basically said "It's different this time".
Yellen also said that last time when we had elevated stock market and real estate market it was because we had too much debt and today that is not the case. There is nothing to worry about, Really???????
Actually, today we have more debt then ever before in the history of our country.This is a bigger bubble that has been fueled by even more cheap money. The Fed is force-feeding cheap money into the economy, interest rates are abnormally low and barely over 1%, corporations are indebted more then ever before and have been buying back their own stock with debt creating this illusion of growth, consumer debt is at the old time high, credit card debt, auto loan debt, student debt, government debt is exploding, national debt is twice as big since we had 2008 financial crisis and on top of all this we are cutting taxes which will make our debt problem even worse.
And Janet Yellen is saying there is nothing to worry about, "it's different this time".
And Janet Yellen is saying there is nothing to worry about, "it's different this time".
It *is* different. QE was never done before. Since the proliferation of fiat money, globalization, and creative finance in the 70s and 80s, 2008 was the first world wide depression. Only it wasn't.
Assets like stocks and RE keep soaring because because:
a) Interest returns on financial instruments are abysmally low
b) The rich keep getting richer and they have to stick their cash somewhere.
c) Consumers *aren't* getting richer, so investing in higher production would be silly.
Personal and business debt are high, but interest rates are so low that debt service costs are still historically low.
Federal debt is not remotely like personal and business debt.
Our economy is a POS IMO, but its problems aren't something the Fed can fix.
QE has been done before. There have been at least five cases of asset purchase programs by the Fed. There have also been several coordinated asset purchase programs with other foreign central banks in recent decades.
It *is* different. QE was never done before. Since the proliferation of fiat money, globalization, and creative finance in the 70s and 80s, 2008 was the first world wide depression. Only it wasn't.
Assets like stocks and RE keep soaring because because:
a) Interest returns on financial instruments are abysmally low
b) The rich keep getting richer and they have to stick their cash somewhere.
c) Consumers *aren't* getting richer, so investing in higher production would be silly.
Personal and business debt are high, but interest rates are so low that debt service costs are still historically low.
Federal debt is not remotely like personal and business debt.
Our economy is a POS IMO, but its problems aren't something the Fed can fix.
Rruff, only real medicine (higher interest rates + deflation + depression) can fix our economy, can make our economy grow organically again, nothing else. High debt KILLS the economy. Our economy has been dead since 2001 and the only thing we managed to grow since 2001 was debt. Wall Street chose lower salaries, higher debt, and higher prices. Corporations have to pay for higher salaries - workers have to pay for higher debt.
Low interest rates are the cause of debt. But low interest rates avoid revolution. So we avoided (delayed) a Great Depression, and a revolution -- but our TOTAL DEBT TO GDP today (370%) is still much higher than what it was in 1929 (301%), when it took a Great Depression and a World War to get us back to 150% Total Debt/GDP which is (roughly) ground zero for economic growth. We can't start growing our economy normally and organically again unless we go thru deflation and depression first. This is very important to understand. Housing costs and medical costs along with education costs are sucking up all the people's money leaving little room and smaller houses to buy and consume.
The job of economic deflation and depression is to get us back to Ground Zero in Debt so we can grow again. Obama (through the FED) chose to preserve debt and encourage more debt - and have a second term - so we still need a depression to get us where we need to be in terms of debt.
We preserved our standard of living by taking money from our grandchildren, who get to pay off our debt for us. Only cowards do this, leaving our children and grandchildren with unprecedented amount of debt, with dead and socialist managed zombie economy.
In fact, we have no plans ever to pay off the public debt, and neither do any of the other major economies that carry such debt, and you can't find one that doesn't. Households and the mere mortals who make them up play by one set of rules. National governments (e.g., "perpetual unions") with their taxing and currency-issuing authorities play by a very different set of rules.
Interest rates are now barely over 1% and it took the Fed over 2 years to accomplish this. Yes, 2 years to just move interest rates over 1%. When Yellen was asked if she is worried about stock market going up 100+ points every day, about high asset prices her answer was no, the Fed is not worried at all. She said, the Fed is not only seeing any flashing red lights, but the Fed is not even seeing the yellow flashing lights. She basically said "It's different this time".
Yellen also said that last time when we had elevated stock market and real estate market it was because we had too much debt and today that is not the case. There is nothing to worry about, Really???????
Actually, today we have more debt then ever before in the history of our country.This is a bigger bubble that has been fueled by even more cheap money. The Fed is force-feeding cheap money into the economy, interest rates are abnormally low and barely over 1%, corporations are indebted more then ever before and have been buying back their own stock with debt creating this illusion of growth, consumer debt is at the old time high, credit card debt, auto loan debt, student debt, government debt is exploding, national debt is twice as big since we had 2008 financial crisis and on top of all this we are cutting taxes which will make our debt problem even worse.
And Janet Yellen is saying there is nothing to worry about, "it's different this time".
God Bless America
You actually pay attention to these clowns? The personal income and corporate tax cuts are both slight of hand moves to prop this false ”eCONemy”.
Rruff, only real medicine (higher interest rates + deflation + depression) can fix our economy, can make our economy grow organically again, nothing else. High debt KILLS the economy. Our economy has been dead since 2001 and the only thing we managed to grow since 2001 was debt. Wall Street chose lower salaries, higher debt, and higher prices. Corporations have to pay for higher salaries - workers have to pay for higher debt.
Low interest rates are the cause of debt. But low interest rates avoid revolution. So we avoided (delayed) a Great Depression, and a revolution -- but our TOTAL DEBT TO GDP today (370%) is still much higher than what it was in 1929 (301%), when it took a Great Depression and a World War to get us back to 150% Total Debt/GDP which is (roughly) ground zero for economic growth. We can't start growing our economy normally and organically again unless we go thru deflation and depression first. This is very important to understand. Housing costs and medical costs along with education costs are sucking up all the people's money leaving little room and smaller houses to buy and consume.
The job of economic deflation and depression is to get us back to Ground Zero in Debt so we can grow again. Obama (through the FED) chose to preserve debt and encourage more debt - and have a second term - so we still need a depression to get us where we need to be in terms of debt.
We preserved our standard of living by taking money from our grandchildren, who get to pay off our debt for us. Only cowards do this, leaving our children and grandchildren with unprecedented amount of debt, with dead and socialist managed zombie economy.
Someone gets it. Thank you.
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