But...but...but...I thought the only thing propelling the stock market was QE. (governor, Senate)

[Finn_Jarber]

Originally Posted by pknopp

The argument is that QE is what is propping up the markets.

I am referring to the arguments about the market crashing as soon as QE ending is even hinted. The hint came about this time last year, and now the QE is completely ended, and yet the markets have gained 1300 points.

[LordBalfor]

Originally Posted by pknopp

It's very short sighted to defend QE based upon the idea that one wants to prove the "buy gold" preachers wrong. I own absolutely no gold. QE was designed to help one aspect of the economy and one only. The big investment banks.

It did a great job at that but as noted, it's done nothing for the economy overall except to further drive a wedge between the classes.

I never "defended QE based upon the idea of proving the buy gold preachers wrong". QE is what QE is. The fact that those gold mongers were wrong about QE is simply yet another symptom of the illness that all those "the U.S. dollar is going collapse and we'll have hyperinflation" types who were pretty pretty much wrong about EVERYTHING have.

How many times back in 2009-2011 did we hear that kind of ignorant nonsense posted here and elsewhere - along with "they'll be food riots in the streets" and "Obama is going to take away your guns"?
It was all wingnut utter nonsense from the get-go - as was the silly idea that the U.S. would go back to the gold standard. That's all standard (if really stooooooopid) sales pitch nonsense from folks like Schiff. Those folks sell gold by hawking fear. They prey upon the gullible and the fearful.

The fact that I'd seen it ALL play out before in the late 70's is simply a fact that I brought to peoples' attention. Unfortunately there's always suckers out there and a LOT of people were taken in by the goldmongers "end of the world" & "hyperinflation" nonsense. The ones who got in early and got out at the peak made a lot of money - while all those people who were "true believers" and bought into the nonsense lock, stock and barrel have largely ridden gold back down.

As I said, I'm old and I'd seen it all play out before.

So no, I never "defended QE to prove the gold hawkers wrong". I "defended" QE because I had a better understanding of what QE is/was and was pretty confident it was NOT going to do the types of things the wingnuts claimed it would. I was confident enough that when the bond buying stopped the stock market would do just fine (and that any stock market plunge - if there even was one - would be short-lived and followed by a rally) that I stated that flat-out many many times on this board over the last few years.
And it looks like my confidence was well-founded.
The "confidence" the wingnuts had... well not so much.

The fact is, there is NOTHING wrong with buying gold IF you are buying it for the RIGHT reasons and understand the risks. The problem is, a LOT of gold buyers buy gold for the WRONG REASON. ANYONE who buys gold (or makes any investment - but especially commodities like gold (because they are sooooo volitile) because of political dogma is just asking for beating - and it seemed pretty apparent that MANY of the gold boosters on this board were doing just that.

If you buy gold you should be doing it because of what the DATA says - things like the LEI and the P/E - rather than what your POLITICAL CONVICTIONS tell you are going to happen, and by 2010 the DATA did NOT tell a good story for the future of gold. That's why 4 years or so ago I began harping on this subject - and why I put my posts here on this board. Gold is - more than any other investment - a highly politicize commodity and wayyyyyyyy too many people buy it because of their political dogma rather than because of any careful analysis of the economic conditions. That happened in the late 70s and it happened again in the past decade (and especially in the Obama-era).
Neither time did things go well for folks who bought into that nonsense.

"Those who ignore history are doomed to repeat it" - so don't blame me for simply pointing out that all this gold nonsense has happened before. I lived through it, I watched it unfold (and hurt a LOT of people) and recognized it's ugly face when I saw it.

Ken

[LordBalfor]

Originally Posted by Finn_Jarber

I am referring to the arguments about the market crashing as soon as QE ending is even hinted. The hint came about this time last year, and now the QE is completely ended, and yet the markets have gained 1300 points.

Yup. As I've said MANY TIMES, stock market investors was always LOOKING AHEAD. Unless it's a surprise, they don't generally react to what happened TODAY. They are instead trying to react to what they expect to happen TOMORROW so they tend to react to the ANNOUNCEMENT of upcoming events rather than to the ACTUAL OCCURANCE of those events. This is why the market took a dive when the FED first announced they would end QE bond-buying rather than when the QE bond-buying actually ended. When the end of QE bond-buying was announced the market took a hit - and all those wingnuts out there posted all over this board things like "Wow! if the market took this much of a hit when the FED just ANNOUCED they would end QE, imagine how the stock market will tank when QE does actually end".

Those kinds of statements - which were all over this board - simply showed of uninformed and ignorant such posters were. The fact is, the plunge the market took when the upcoming end of QE was announced WAS the impact to the market. Because stock market investors are always looking forward rather than simply looking at the present meant that the market had its' correction BEFORE QE actually ended. That correction was sharp but very temporary - for the simple reason that it was a pychologically-induced correction rather than a correction based on any economic fundimentals. Once investors had "digested" the fact that the bond-buying was ending, the stock market bounced back (as I said would be the case).

So, once the end of QE actually arrived, the impact to the stock had ALREADY been factored in and was old news. This is likely the reason the stock market did NOT crash when QE ended.

Ken

[Hoonose]

Originally Posted by pknopp

It's very short sighted to defend QE based upon the idea that one wants to prove the "buy gold" preachers wrong. I own absolutely no gold. QE was designed to help one aspect of the economy and one only. The big investment banks.

It did a great job at that but as noted, it's done nothing for the economy overall except to further drive a wedge between the classes.

The BIG takeaway is that by and large the gold bugs did not understand QE beyond 'printing money'.

QE helped/helps the middle class too with housing costs. And with their stocks/401k.

[LordBalfor]

Originally Posted by Hoonose

The BIG takeaway is that by and large the gold bugs did not understand QE beyond 'printing money'.

QE helped/helps the middle class too with housing costs. And with their stocks/401k.

Yup.
Goldbug are pretty simplistic thinkers.
The biggest single thing QE did was help the housing market - that was a DIRECT affect. There WERE secondary affects that came about as "fallout" from the lower interest rates - one of which was an indirect boost to the overall economy (including the stock market). Those affects are much smaller though and very very difficult to quantify or measure - and the fact that QE purchases are done will NOT undermine them.

All in all, QE was a good thing. It helped stablize the housing market and indirectly provided some support for the economy as a whole. Now that the purchases are done it will provide revenue to the FED.
There's nothing wrong with any of that.

Ken

[TheCityTheBridge]

Originally Posted by LordBalfor

Yup.
Goldbug are pretty simplistic thinkers.
The biggest single thing QE did was help the housing market - that was a DIRECT affect. There WERE secondary affects that came about as "fallout" from the lower interest rates - one of which was an indirect boost to the overall economy (including the stock market). Those affects are much smaller though and very very difficult to quantify or measure - and the fact that QE purchases are done will NOT undermine them.

All in all, QE was a good thing. It helped stablize the housing market and indirectly provided some support for the economy as a whole. Now that the purchases are done it will provide revenue to the FED.
There's nothing wrong with any of that.

Ken

I think it's fair to say that QE had an outsized effect on the housing market. The Fed's purchase of securitized mortgages certainly had a direct impact on the mortgage lending market when lenders were in dire straits. But I would say that the impact of QE was quite far-reaching. The net effect of the Fed's increased balance sheet was increased inflation and lower interest rates. That is a recipe for encouraging cash to get off the sidelines and find its way into the capital markets. That, to me, is the biggest thing QE did--the influence was more marked on housing than elsewhere, partly because of the purchase of mortgage-backed securities and partly because housing had been particularly hard hit by the financial crisis (so it had the most ground to regain).

[pknopp]

Originally Posted by LordBalfor

"Those who ignore history are doomed to repeat it" - so don't blame me for simply pointing out that all this gold nonsense has happened before. I lived through it, I watched it unfold (and hurt a LOT of people) and recognized it's ugly face when I saw it.

Ken

The markets hurt a lot of people and the Fed's reaction to that is still hurting a lot of people.

[LordBalfor]

Originally Posted by pknopp

The markets hurt a lot of people and the Fed's reaction to that is still hurting a lot of people.

Prove it.
Prove the Fed's actions are hurting more people than they are helping.
MILLIONS of Americans have equity back in their homes because of QE, millions more were able to be become homeowners because of the low mortgage rates that QE helped create - and if one would accept the wingnut view that the Fed has boosted the stock market then roughly 50 MILLION American workers with 401Ks - and millions more with pensions - have benefitted as well.

Ken

[pknopp]

Originally Posted by LordBalfor

Prove it.

Economist Thomas Piketty Explains Why Income Inequality Is Just Getting Started

This is not good for the long term health of a country.

[Hoonose]

Originally Posted by pknopp

Economist Thomas Piketty Explains Why Income Inequality Is Just Getting Started

This is not good for the long term health of a country.

Piketty mainly talks of capitalism itself creating this inequality. But right or wrong the Fed does augment those possibilities.

But take the other side of the Feds mandates.

Who benefits from more unemployment and higher interest rates?

The rich can still make out there, but the middle class do even worse. Their fixed income may fly better, but housing the center of middle class wealth languishes.