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Old 12-23-2019, 02:14 PM
 
7,657 posts, read 3,367,239 times
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Quote:
Originally Posted by travis t View Post
What I always find striking is that many think of the 1950s-early 1960s as a time of US economic nirvana. But from a book by Larry Kudlow:
Did millions of people have 5 and 6 figure debt while making less than $20/hr and housing was over 300k for something thats not rat infest crap hole?

Its not about recession its about the details of what the recession looked like.

Did a new car cost 70 grand while people are making $20/hr?
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Old 12-23-2019, 03:35 PM
 
2,762 posts, read 1,601,971 times
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Interesting times economically.

We are seeing massive central bank intervention and at least in the United States epic amounts of deficit spending as well. The fed is desperate to avoid stagnation and is willing to let the economy run hot, risking inflation in order to avoid something far more dangerous, deflation.

I'm not convinced the Fed can manage the economy like this without creating massive imbalances. However in the short term these liquidity injections and significant other stimuli will allow the reach for yield and risk assets to continue.

The biggest question is do we see inflation come back temporarily or do we just continue the downward trend slowly over time despite the stimulus? This is a big question for people looking to the safety of bonds because it is entirely possible you get a double squeeze if inflation shows up. Equities get spooked and long term yields rise due to future inflation expectations.

I think the markets melt up until just after Jan and then Q1 earnings will need to WOW everyone. If they don't and we see negative, flat or even low single digit earnings growth the market sells off. Every single point of gain in the S&P 500 since 3000 has been due to multiple expansion. Eventually earnings will need to back up the rally or it will correct, again.
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Old 12-23-2019, 04:35 PM
 
1,998 posts, read 491,139 times
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First time in history there has been this magnitude of central bank involvement. It won't end well......
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Old 12-23-2019, 04:40 PM
 
1,998 posts, read 491,139 times
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Quote:
Originally Posted by Lowexpectations View Post
We have also seen an in precedented about of central bank influence around the world. I believe without the influence we would have seen one in this current decade
Central banks around the world are becoming the lenders and buyers of last resort. And they want that. Through more debt equals more power. They think they can control everything but they can't. Lots of academics with no real-world experience. But the gig is up once the masses lose complete confidence in these central banking institutions. That time is very near as the collapse of 2020 is going to be 2008 on steroids.
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Old 12-23-2019, 05:41 PM
 
9,608 posts, read 4,215,898 times
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Quote:
Originally Posted by pittsflyer View Post
Its stealing from the future because asset classes have soared in price and wages are stagnant. The soaring real estate prices are due to easy access to low interest money so everyone is bidding up things they cant really afford to be bidding on in the first place.

So now instead of living at home for a few years to save up for a house working a mcjob they are going to be living at home for a decade trying to save for an ever inflating asset class on top of student loans due to the lending of money without pricing fixing the commodity they were lending for.

Now everyone is in massive debt making peanuts living at home or homeless or barely paying rent and are a hand full of pay checks away from insolvency and homelessness.

IT is completely out of hand.

Also the lay off cycle of GOOD jobs is getting shorter and shorter creating anxiety about lay offs which drives behavior like job hoping (becuase your going to get laid off anyways) might as well job hope, go back home, rinse and repeat.
I think more than anything this is the serendipity of life's timing within an economic cycle.

We certainly have booms and busts, economic expansions and recessions. So when and where you were born is so important. The Fed and the Gov't can certainly make things better or worse for you based on this serendipity. Maybe the Boomers were luckier coming off the economic successes of WW2. And now city based working millennial stiffs feel stiffed. And with good reasons.

IMO we are now in a longer term low interest, low inflation growth pattern. And that is what we all will have to live in and deal with. Things certainly could be worse.

But to think that the Fed and our Gov't would not have so reacted to the 2008 crash is just silly.
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Old 12-23-2019, 07:04 PM
 
Location: Silicon Valley
4,075 posts, read 1,858,657 times
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On August 29th, the FOMC held $3.769 Trillion in assets. At December 16th, they are at 4.137 Trillion in Assets. This seems a lot bigger than just a couple of overnight injections. Looking at their balance sheet, the biggest change as of late is that they're acquiring repurchase agreements. This wasn't even really a line item but now is $236B...so suddenly they are a whale of a buyer in a new market. It's all due within 90 days though. This is coming back to Fed faster than the other stuff.
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Old 12-23-2019, 10:56 PM
 
858 posts, read 518,795 times
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Quote:
Originally Posted by Hoonose View Post
The Fed stealing from the future?

The Fed created about $4T of new money out of thin air after the 2008 crash, and then swapped for a like amount of debt paper. All of which remains in the process of unwinding at this time.

This swap helped to lower interest rates, and tried to ignite some inflation. Which it did not do.

But how do you project this as stealing from the future? Or is this program not your point at all?
The FED spent all this money ($3.5 TRILLION) buying treasury bonds and mortgage bonds to keep interest rates from climbing. Repression of interest rates in this way seemed to keep the DEFLATION CYCLE at bay. Except it did not keep the DEBT BUBBLE at bay. Stealing and spending future earnings, our kids and grandkids money is a scam. Theft from the future.
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Old 12-23-2019, 11:10 PM
 
858 posts, read 518,795 times
Reputation: 1351
Quote:
Originally Posted by heart84 View Post
First time in history there has been this magnitude of central bank involvement. It won't end well......
It will end very bad. The Fed will NOT win this war against deflation and depression. If you remove all the deficit spending, stimulus and abnormal interest rates since 2001 , our economy wasn't and is still unable to generate any organic growth. As I mentioned earlier our economy has been dead since 2001 and the Fed is FAKING or SIMULATING economic growth all those years now.

IN 2001 the FED SHOULD have begun raising interest rates. Why? Aren't low interest rates good to encourage borrowing and economic expansion and higher interest rates bad, because they encourage SAVING instead of spending, which leads to economic contraction?

That is the common economic understanding. It is correct only in so far as it goes. The mistake arises from the understanding that thinks causality and human will alone move the material world. If PERPETUAL GROWTH were possible then one might say that borrowing and spending is ALWAYS good. Perpetual Growth is NOT possible.

Lowering interest rate during a NON-GROWTH REST CYCLE - 2001-2019 does not spur growth (GROWTH is periodical) but, instead, spurs increased debt (which eventually destroys growth) and, as we learned since 2001 grows asset bubbles (which is like taxpayers being forced by the government to give free money to the rich, to those only with unlimited collateral.

Repression of interest rates clearly delays DEFLATION but it does not destroy debt, which is a necessary step to restart real and organic economic growth.; it increases debt; further delay of DEFLATION requires further repression of interest rates, which results in NEGATIVE INTEREST RATES, which, if pursued long enough will destroy the banking system.

For every economic expansion there is an equal and opposite contraction.

That is a law of nature.

Good Luck
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Old 12-24-2019, 02:31 AM
 
7,657 posts, read 3,367,239 times
Reputation: 4889
Quote:
Originally Posted by Hoonose View Post
I think more than anything this is the serendipity of life's timing within an economic cycle.

We certainly have booms and busts, economic expansions and recessions. So when and where you were born is so important. The Fed and the Gov't can certainly make things better or worse for you based on this serendipity. Maybe the Boomers were luckier coming off the economic successes of WW2. And now city based working millennial stiffs feel stiffed. And with good reasons.

IMO we are now in a longer term low interest, low inflation growth pattern. And that is what we all will have to live in and deal with. Things certainly could be worse.

But to think that the Fed and our Gov't would not have so reacted to the 2008 crash is just silly.
But its so extreme that its leading to socialism, even if a socialist does not end up in office this time around the next time there certianly will be and congress may start filling up with socialists as time goes on.

Can you really blame people, trying to better their situations through political means is a last resort.

I would have thought there would have been massive policy overhaul with the fact that socialism is getting as much attention as it is and they are slowly trickling into office, but the stuanch gop and hard liners are going to push us right into it with their heavy handed tactics.

The govt can most certianly make life easier for young people through policy change but they wont until we are socialist. Maybe they think this is a fad and that somehow all these people will just start liking working at starbucks with a BS degree?

I just dont understand the disfunction ...

You would think that as soon as socialists started being taken seriously someone didnt say ... hey maybe we should fix some of this draconian economic factors ...
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Old 12-24-2019, 02:36 AM
 
7,657 posts, read 3,367,239 times
Reputation: 4889
Quote:
Originally Posted by C2BP View Post
It will end very bad. The Fed will NOT win this war against deflation and depression. If you remove all the deficit spending, stimulus and abnormal interest rates since 2001 , our economy wasn't and is still unable to generate any organic growth. As I mentioned earlier our economy has been dead since 2001 and the Fed is FAKING or SIMULATING economic growth all those years now.

IN 2001 the FED SHOULD have begun raising interest rates. Why? Aren't low interest rates good to encourage borrowing and economic expansion and higher interest rates bad, because they encourage SAVING instead of spending, which leads to economic contraction?

That is the common economic understanding. It is correct only in so far as it goes. The mistake arises from the understanding that thinks causality and human will alone move the material world. If PERPETUAL GROWTH were possible then one might say that borrowing and spending is ALWAYS good. Perpetual Growth is NOT possible.

Lowering interest rate during a NON-GROWTH REST CYCLE - 2001-2019 does not spur growth (GROWTH is periodical) but, instead, spurs increased debt (which eventually destroys growth) and, as we learned since 2001 grows asset bubbles (which is like taxpayers being forced by the government to give free money to the rich, to those only with unlimited collateral.

Repression of interest rates clearly delays DEFLATION but it does not destroy debt, which is a necessary step to restart real and organic economic growth.; it increases debt; further delay of DEFLATION requires further repression of interest rates, which results in NEGATIVE INTEREST RATES, which, if pursued long enough will destroy the banking system.

For every economic expansion there is an equal and opposite contraction.

That is a law of nature.

Good Luck
Yes and the people that have outstanding debt in a time of deflation are royally screwed. Our way of doing buisness with massive debt and spending is disfucntional and people call it normal and if you dont participate in this way when starting a buisness then your "extremely risk averse", no im just not stupid lol.

Could you imagine having tens or hundreds of thousands in debt for a floundering buisness when the deflation happens. I couldent, we will see alot of bank ruptcy and suicides.
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