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Can the fed continue to print money to prop up the economy?
In a word: NO.
there is a reason why people like Warren Buffet are selling and holding cash instead of buying...even when it dropped from 27,--- to 19---.
Picking up stocks at 19--- MIGHT have been good ...OF you turned around and sold again at the new 25,---_26--- or whatever it's back up to now.
I read an article, Actually a couple...we are in fir a BIG day of reconning...one said we are staring right at a decade long depression....the other said we are going to bed in a depression, not a recession. I also read an article from an economist who said the dollar is about to crash, and crash VERY hard.
Right now every about the nation's finances and economy, is, in my opinion, all smoke and mirrors. When the smoke clears and the mirrors are taken away, the will be a huge shock!
I do kinda wish we had extra cash lying around to invest at 19,---, to sell when it got back to 27,---, but was not about to finance that move. Slow and steady wins the race.
If you are old enough, do you remember"Reganomics"? Interest rates on bank accounts were something lije8-10%, Money Market Account s were like 12-13% and if you shopped carefully you could get CDs for 15%+++!
That also meant mortgage rates were high, so "interest only loans" or ARMs were the norm..an enticing low rate offered, but adjusted up every year.
Then, recession of 1990, kaput! Rates dropped like hot potatoes, it's like rates now... nothing.that was GREAT for mortgages but not do great to go from 12-13% to 4-5%, which was still better than today, but it was a "day of reconning" for those inflated interest rates!
I'm getting rid of the renovations debt, and socking cash away. I just gave this "feeling", and according to what I'm reading, appaymy gut is *RIGHT*.
Best to all as we navigate this time in history....
Who cares man. You’re not gonna change anything regardless how many chicken little posts you put up. Truthfully the world is gonna go on regardless what governments do. I have gone through a few of these “the world is ending we’re all gonna die broke” scenarios. I’m not dead and I’m not broke.
Is this COVID thing bad....yeah it is. So was the Spanish flu. So was the great depression so was the RE bubble in 2000s. And many other financial calamities.
Literally nothing you say or do here will have any impact in the world. You’re literally pissing in a ocean hoping it overflows.
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This sort of foolish complacency is exactly why the next crisis will be so horrible. No, this is not the end of the world or even the end of civilization. But it is the end of our current mode of living.
The last crisis was essentially a banking and corporate crisis. The next crisis will be a currency crisis and sovereign debt crisis. We're not looking at banks and companies failing. We're looking at nations failing. We're looking at a catastrophic collapse in the American standard of living and consumption. We will be punished harshly for the unbelievably foolish hubris and complacency we've shown over the decades.
This sort of foolish complacency is exactly why the next crisis will be so horrible. No, this is not the end of the world or even the end of civilization. But it is the end of our current mode of living.
The last crisis was essentially a banking and corporate crisis. The next crisis will be a currency crisis and sovereign debt crisis. We're not looking at banks and companies failing. We're looking at nations failing. We're looking at a catastrophic collapse in the American standard of living and consumption. We will be punished harshly for the unbelievably foolish hubris and complacency we've shown over the decades.
Nah! Worst case some onerous inflation. The USA remains very strong and productive, with ample resources, rule of law, safety and security. You worry too much about a fiat debt number. A number that could be retired with fiat if we had any reason to pursue such nonsense. There is simply too much need and demand for anything USD in the world for it to crump. I can't think of any Black Swan, save loss of a world war or asteroid hit that would undo us and the USD.
The Fed could cover it, as the total amount of USD's/money they can create has no set limit. Bank deposits today are about $15.5T. After the 2008 crash the Fed created a total of $29T. Much of that new money was repetitive overnight loans, but even then $7-9T, all temporary money paid back or cancelled. And very few people on Earth even knew about it.
The Fed did not create $29T post 2008 crash. They may have a funded overnight loans cumulatively summing to $29T, but I rather doubt it, and that number really wouldn't be very meaningful.
Also FDIC insurance program is NOT the Fed. They may be under the same roof at some level, but FDIC simply didn't have enough money to bail out the big guys if they collapsed. Panics were starting. Lines were at Wamu and BAC. It was cheaper to keep them propped then to let them fail.
By law, a unit dollar is a silver coin (0.77 ounce pure silver). A one ounce gold coin (double eagle) is equivalent to 20 unit dollars.
A dollar bill (paper) is an IOU denominated in dollars. Until redeemed, it has a minus value. Congress repudiated redeeming their notes in 1933. FDR also confiscated all the gold money and criminalized the ownership of gold by "free" Americans.
Since 1933, no dollars have circulated, which is one of the reasons a State of Emergency was declared, and later codified as Title 12 USC Sec. 95a,b.
The Fed did not create $29T post 2008 crash. They may have a funded overnight loans cumulatively summing to $29T, but I rather doubt it, and that number really wouldn't be very meaningful.
Also FDIC insurance program is NOT the Fed. They may be under the same roof at some level, but FDIC simply didn't have enough money to bail out the big guys if they collapsed. Panics were starting. Lines were at Wamu and BAC. It was cheaper to keep them propped then to let them fail.
The Fed created a total of $29T of temporary money. Loans are money creation.
As you say a lot of that was repetitive and huge over night loans and guarantees as the Fed cannot do long term loans that I am aware of. Even then there was still $7-9T.
By law, a unit dollar is a silver coin (0.77 ounce pure silver). A one ounce gold coin (double eagle) is equivalent to 20 unit dollars.
A dollar bill (paper) is an IOU denominated in dollars. Until redeemed, it has a minus value. Congress repudiated redeeming their notes in 1933. FDR also confiscated all the gold money and criminalized the ownership of gold by "free" Americans.
Since 1933, no dollars have circulated, which is one of the reasons a State of Emergency was declared, and later codified as Title 12 USC Sec. 95a,b.
The financial factors that brought down the Roman Empire will bring down this one too- excessive spending, and debasing the money.
Last edited by Taggerung; 06-30-2020 at 09:17 AM..
The economic factors that brought down the Roman Empire will bring down this one too- excessive spending, and debasing the money.
We will have a serious problem if we have no resources or labor or can't get resources or labor, that is lose our national productivity.
We would create a problem, if our seniors become so enriched by SS, that our younger people cannot access or buy necessary goods and services. We would create a problem if our broad middle class was so enriched that the cost of life's necessities zoomed out of reach.
New central spending should not be a problem as long as it increases our productivity or raises our lower classes std of living.
Of course the Fed needs no ink nor printer.
Low grade ongoing inflation is almost inevitable all over the world.
Hyperinflation of the USD very unlikely unless we lose our national productivity.
Debt bubbles collapse to the monetary base. If you want to avoid deflation expand the monetary base to include all non government debt. If you want true inflation expand wages faster than inflation. Increasing the minimum wage at several % points faster than inflation long term will have a lot of positive effects. Short term a substantial increase will create un-leveraged income that can be loaned against.
The Fed created a total of $29T of temporary money. Loans are money creation.
As you say a lot of that was repetitive and huge over night loans and guarantees as the Fed cannot do long term loans that I am aware of. Even then there was still $7-9T.
Many companies will utilize a sweep account. The money of various function operating accounts at the end of the day is swept into a main account and that main account earns a little interest in the overnight lending markets. Measuring something by adding up the daily sweeps in and not netting with the daily sweeps out leads to a number that is meaningless.
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