Debt is no longer a worry for the red team.
At least criticize the blue team for never thinking it was a problem.
Cant wait for the precipitous decline in debt when all the 2019 taxes have come in and we see we have grown our way out.
But, But... the jobs and the stock market. You mean the 4 jobs per poor household and paper gains.
Btw is anyone cashing in on the stock market, I’m waiting for it to fall to buy as things are too good? Isn’t that the strategy... You fools that sell too early...
The World Economy Is Stumbling Toward Disaster
If a new recession strikes, the Trump administration will get — and deserve — much of the blame.
https://www.bloomberg.com/opinion/ar...oward-disaster
No such thing as selling too early. It's only fools who think they have to hit it big to get ahead. 1%-5% gains are pretty easy to get once or twice per month, sometimes weekly.
'What Is the Fed Not Telling Us?':
Fears of Economic Instability After Central Bank Intervention es
"A financial system that requires over $100B of liquidity injections every day, temporary, permanent or otherwise, has major issues."
https://www.commondreams.org/news/2019/10/27/what-fed-not-telling-us-fears-economic-instability-after-central-bank-intervention?cd-origin=rss
The Fed now has to lend to hedge funds directly, why?
The Fed Protects Gamblers at the Expense of the Economy
the Fed is now pouring billions of dollars into the repo (repurchase agreements) market, in effect making risk-free loans to speculators at less than 2%.
the Fed is trapped into this speculative monetary expansion
to avoid a cascade of defaults of the sort it was facing with
the Long-Term Capital Management crisis in 1998 and
the Lehman crisis in 2008.
The repo market is a fragile house of cards
waiting for a strong wind to blow it down,
propped up by
misguided monetary policies that have forced central banks to underwrite its highly risky ventures.
https://www.counterpunch.org/2020/01/14/the-fed-protects-gamblers-at-the-expense-of-the-economy/
Last edited by boutons_deux; 01-15-2020 at 12:29 AM.
Zero Hedge is out there, but so is are the cir stances. Ten years of interest rate repression and QE are bound to have caused a few distortions, like the 944 trillion in global exposure to financial derivatives.
Why is the Fed openly discussing bailing out hedge funds?
https://www.zerohedge.com/markets/94...ut-hedge-funds
“NO LONGER TETHERED TO THE FUNDAMENTALS”:
A NASSIM TALEB PROTÉGÉ ON HOW TO PREPARE FOR THE COMING MARKET CRASH
what’s been happening and how for the last decade central banks around the world have been
warping our financial markets by keeping interest rates artificially low.
“These monetary distortions lead to this reckless reach for yields that we are all seeing,”
“Big caps, small caps, credit markets, volatility; it’s crazy. Reach for yield is everywhere.”
“When the stock market is no longer tethered to fundamentals—
that’s the distorted environment we live in, that’s just where we are—
when that happens, any price can print,” he says.
“Any price can print.
We shouldn’t be surprised by anything on the upside at this point because what’s tethering the markets?
People need yield and when they pursue yield because of the momentum that we have in the markets today, anything is possible.”
https://www.vanityfair.com/news/2020...tm_ca%E2%80%A6
the stock market scam is on its last legs
instead of shooting the cancerous dog they are still pumping in worthless medicines that will only let the dog breath a few more weeks/months
then it's game over
Yves Smith tries to talk us off the ledge by pointing out the Fed maybe doesn't know what it's doing:
https://www.nakedcapitalism.com/2020...erability.htmlJohn Dizard in the Financial Times pointed out that the reason big banks like JP Morgan who made clear they had ample liquidity but couldn’t be bothered to provide it to the repo market was that they were making more in foreign exchange swaps.
Note finally that the Bank of International Settlements has been worried about hidden foreign exchange swaps debt since at least 2017. The fact that they have not gotten to the bottom of it is a cause for concern. Opacity and hidden leverage are prescriptions for disruption or worse.
The bottom line is foreigners’ “hidden” dollar borrowings via foreign exchange swaps look to be bigger than their visible on-balance sheet borrowings. This is not a pretty picture, and among other things, means that credit rating agencies and other financial analysts have a big blind spot.
William White, former BIS guy, on ultra-low interest rates, QE and stimulus
https://www.ineteconomics.org/perspe...interest-ratesDoubts about the effectiveness of monetary easing go back at least as far as 1936 when John Maynard Keynes wrote “If, however, we are tempted to assert that money is the drink that stimulates the system to activity, we must remind ourselves that there may be several slips between the cup and the lip.” More recently, similar concerns have been raised that unprecedented policy responses might increase uncertainty and suppress the “animal spirits” necessary to motivate sustained spending. Turning to the components of demand, consumption might also suffer if low rates of ac ulation mean people must save more to meet retirement goals. Investment might also fail to respond for a whole variety of reasons.
Perhaps more importantly, there is reason to believe that the effectiveness of monetary stimulus diminishes with extended or repeated use. Lower rates induce people to borrow and to spend today what they would otherwise have spent tomorrow. The ratio of global debt (governments plus households and corporates) to GDP had in fact risen by over 50 percentage points prior to the pandemic. However, if the spending is used for unproductive purposes, as is often the case, then the buildup of debt eventually becomes burdensome and slows future spending. In short, there is a negative feedback loop, once referred to by Chairman Greenspan as “headwinds”. At first, these can be offset by ever more aggressive easing but, as the headwinds grow commensurately, monetary policy eventually ceases to work at all.
moral hazard, malinvestment and indebtedness pose deflationary risks
Growing ineffectiveness is a problem in itself. The ammunition to fight future battles is no longer available. But a bigger problem is that, if monetary stimulus is sustained for a long period, then undesirable side effects ac ulate. The first of these is the higher debt level, which increases systemic risk in almost all states of nature. In the midst of the Great Depression, Irving Fisher sketched out how a debt/deflation process can play out with devastating consequences. As noted above, Paul Volcker shared these concerns quite recently.
However, debt ac ulation is not the only unintended consequence of relying on monetary stimulus. Such policies also threaten financial stability in various ways. They pose a danger to the survival of financial ins utions and to pension funds by squeezing net returns on traditional assets. Moreover, ins utions subject to such threats then “reach for yield” in an attempt to compensate, often leaving themselves open to risks that they had not anticipated and have no experience of managing. A related concern is that of growing “moral hazard.” Every time a problem materializes, the central banks or regulators create another safety net to protect the exposed, which then encourages them to behave even more badly.
Similarly, unusually easy monetary conditions over long periods can threaten the effective functioning of financial markets. In recent years, we have do ented: recurrent “flash crashes”; waves of Risk-On and Risk-Off behavior; persistent “anomalies” from normal price relationships; growing evidence that normal “price discovery” has been suppressed; and finally, the near-collapse of the US Treasuries market in September 2019 and March 2020. Moreover, easy monetary conditions lead to continuing increases (bubbles?) in the prices of virtually all financial assets and often to real assets (like houses and other property) as well. For a long while, these price increases can mask the other undesired consequences of easy monetary conditions but, as “fundamentals” eventually reassert themselves, a price collapse can easily follow.
Another side effect of easy monetary conditions could be a reduction in potential growth rates. The possibility of “malinvestments” and wasted resources was raised by Friedrich Hayek in the 1930s and has also been treated increasingly seriously by the BIS, OECD, and IMF in recent years. A well-functioning economy, with expanding growth potential, has ample room for companies to both exit and enter. However, there is growing evidence that easy monetary conditions discourage both processes from working effectively. In many counties, the birth and death rates of companies have in fact been falling sharply as indeed have measures of productivity growth.
Nor is this the end of the list of unintended consequences. Easy money in advanced countries spills over into emerging market countries threatening them with the same kind of distortions and exposures. Rising inequality, especially in the distribution of wealth, can have important social and political implications. Ironically, the extended reach of central bank actions could even threaten their cherished “independence”. Finally, since monetary easing in any individual (big) country generally affects the exchange rate, it invites retaliation (currency wars) and also protectionism (trade wars). None of this is desirable.
A fundamental complication is that once well embarked on this path, it is not obvious how a central bank gets off it. There is a kind of “debt trap.” Tightening policy, given high debt levels and the other unintended consequences of past easing, could trigger the very crisis the initial easing was designed to avoid. Conversely, failing to tighten invites still more unintended consequences.
The paper considers some possible scenarios leading to higher future inflation, but concludes that an excessively disinflationary outcome seems more likely. In this event, fiscal policy will have to be used more aggressively (as has been the case since the pandemic) and orderly debt restructurings should be encouraged. This might require some prior structural reforms. The OECD, the IMF, and the Group of Thirty have all recently contended that existing restructuring procedures in most countries are inadequate to deal with the many insolvencies likely to emerge in the near future.
at current rates of interest, savers are fools
Fed Chairman Powell tries to stifle inflation worries, signals start of Fed tapering "sometime this year"
https://www.federalreserve.gov/newse...l20210827a.htmThe Committee remains steadfast in our oft-expressed commitment to support the economy for as long as is needed to achieve a full recovery. The changes we made last year to our Statement on Longer-Run Goals and Monetary Policy Strategy are well suited to address today's challenges.
We have said that we would continue our asset purchases at the current pace until we see substantial further progress toward our maximum employment and price stability goals, measured since last December, when we first articulated this guidance. My view is that the "substantial further progress" test has been met for inflation. There has also been clear progress toward maximum employment. At the FOMC's recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year. The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant. We will be carefully assessing incoming data and the evolving risks. Even after our asset purchases end, our elevated holdings of longer-term securities will continue to support accommodative financial conditions.
The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test. We have said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches conditions consistent with maximum employment, and inflation has reached 2 percent and is on track to moderately exceed 2 percent for some time. We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2 percent inflation on a sustainable basis.
Barron's Op-Ed says it's time to give the Greenspan put the heave-ho.
It makes several points I've been harping on for years: chronic instability, slow growth, malinvestment and financial suppression that punishes savers and enriches already superrich speculators
https://www.barrons.com/articles/fed...on-51631120497Fed policy has three key components, none of which have worked as planned. The post-2010 recovery was the weakest since the Second World War; inflation constantly surprises the central bank; and markets keep rising to troubling and sometimes disastrous heights even as U.S. economic inequality gets steadily more acute.
The Fed first relies on ultra-low rates set via its longstanding open-market operations. These low, low rates are making it harder for middle-class families to save while boosting the fortunes of the ultra-rich. And while the Fed won’t own up to its part in inequality, it has set rates so low that there’s no room for error above the “zero lower bound” at which short-term rates would become negative in nominal terms, just the inflation-adjusted ones to which we’ve become all too familiar. It thus added quan ative easing to its toolkit, striding even farther off the shore and from known, safe territory.
In QE, the Fed buys trillions of Treasury and agency assets. Now, these have grown to $8.3 trillion or about one-third of U.S. GDP. The Fed thought that all these trillions would make a major macroeconomic difference in part by giving banks cash with which to lend, thus boosting growth. However, bank lending as a percentage of GDP has gone steadily down even as markets go ever upward. An important study shows that the Fed’s portfolio has had ten times more impact on equity prices than output.
The reason? The more safe assets the Fed takes out of financial markets, the greater the demand for them, the lower the rates safe issuers such as Treasury need to pay, and the more investors desperate for real returns above zero head into high-risk equity and bond markets. The Fed thought that interest on the reserves banks hold at the Fed in the course of QE would bolster traditional rate-setting operations by placing a floor under short-term rates. But the floor keeps sinking even though the Fed continues to tinker with the rate it pays banks to park funds with the Fed.
Even these fixes haven’t worked as hoped. In 2013, markets trembled so the Fed stepped still deeper into the river. It created an overnight reverse-repo program to recycle cash from banks and money-market funds. These are not small programs. Banks now hold $3.9 trillion at the Fed and the ONRRP just took in record amounts of as much as $1.08 trillion. Because none of this worked as hoped, the Fed just created yet another window, a Standing Repo Facility.
As it set rates since 2008, bulked up QE since 2020, and established one after another market interventions, the Fed still could not achieve stable, sustained, shared prosperity. It has, though, effectively exercised the “Greenspan put,” setting a floor under financial markets in hopes that the trickle-down benefit of the “wealth effect” will eventually materialize. While waiting for this victory, the Fed strode so deep into uncharted waters that it has become not just the lender of last resort, once considered the sole remit of central banks in the market, but also the market-maker and even the broker-dealer of last resort. Does the Fed like getting this wet and dirty? Of course not. It wants banks to lend out its cash and knows that savings—not speculation—best ensures financial stability. It also knows that its huge portfolio distorts markets, making them far more dependent on utterances from central-bank officials than any profit-or-loss fundamental. And the Fed also knows that backing markets with billions and trillions encourages behavior that is at best unwise from yield-chasing investors.
What it doesn’t know is how to step back, turn around, and go back to the shallow waters in which its presence made a meaningful difference toward ensuring shared prosperity and financial stability.
The Fed pumps money into BigFinance which hoards it for the oligarchy, so 95% of growth of national wealth post-2010 went the wealthy, not to the general economy.
iow, the Fed, aka the oligarchy's ATM, is a key part of the rigging of the economy for the Capitalist oligarchy while impoverishing the non-oligarchy of Labor.
All working according to the rigging plan.
- "Jerry, I'm looking for FDIC for my money. I don't see any of that here."
- Jerry's FIL - "Fargo"
This message is hidden because boutons_deux is on your ignore list.
You broke ranks once, there when mother er Biden hit the quarter million dead Americans mark.
lmcontrollinao!!!
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