Prices, Inflation/Deflation, Interest Rates & The Fed

Why has the S&P gone up more than 400% since 2010, the year that Quantitative Easing began?

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If you check each QE you'll find it was always before any asset purchases began. What this means is that the Fed's QE wasn't the driver. I get no one here cares about why or how things happen but seriously these things aren't hard to check.

Edit: the lesson you should be taking away with this and probably this thread...anyone associated with trading or the stock market is probably retarded. They are on average short-term thinkers who don't ask too many questions about the system. This is why Michael Burry thinks 2007 was something about mortgages even though that's not really true. It's also why Cathie Wood has glasses with lens which are too thick despite the technology to make them thinner existing for decades.
 
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cosine

Robin
If you check each QE you'll find it was always before any asset purchases began. What this means is that the Fed's QE wasn't the driver. I get no one here cares about why or how things happen but seriously these things aren't hard to check.

Edit: the lesson you should be taking away with this and probably this thread...anyone associated with trading or the stock market is probably retarded. They are on average short-term thinkers who don't ask too many questions about the system. This is why Michael Burry thinks 2007 was something about mortgages even though that's not really true. It's also why Cathie Wood has glasses with lens which are too thick despite the technology to make them thinner existing for decades.
Do you prefer inflation of higher education costs? Real Estate? Shares of the S&P 500?

We had the fastest, most aggressive crash in all recorded history, and the S&P is up more than 30% since then, with little real economic growth, probably still honestly economic contraction in the US. We have asset inflation that is wrecking the middle class, with "medium-sized" consumer goods inflation. Jumped just according to last month's numbers.

The world is flush with fiat currency, and it's going into assets. We have asset inflation.

Since 1980, college tuition and fees are up 1,200%, while the Consumer Price Index (CPI) for all items has risen by only 236%.

The Average Cost of College Over Time​

Back in 1980, it cost $1,856 to attend a degree-granting public school in the U.S., and $10,227 to attend a private school after adjusting for inflation.
Source:

Even the super-expensive Bay Area didn't budge, despite so many high-paying Silicon Valley jobs going remote.

San-Francisco-Bay-Area-Housing-Market-Forecast.jpeg
 

Blade Runner

Ostrich
Orthodox
Back to the denial? It sounds more and more like the Fed, changing the goalposts as they go. We've explained all of this before, it's curious why a few posters (maybe just 1) refuse to understand the positions, or the data that clearly supports it.
 
Do you prefer inflation of higher education costs? Real Estate? Shares of the S&P 500?

We had the fastest, most aggressive crash in all recorded history, and the S&P is up more than 30% since then, with little real economic growth, probably still honestly economic contraction in the US. We have asset inflation that is wrecking the middle class, with "medium-sized" consumer goods inflation. Jumped just according to last month's numbers.

The world is flush with fiat currency, and it's going into assets. We have asset inflation.


Source:

Even the super-expensive Bay Area didn't budge, despite so many high-paying Silicon Valley jobs going remote.

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We dealt with your stock market example.

Real estate? You should be embarrassed to post a 9 year chart on the subject and like much of what's said here, it says much about the mindset of these discussions. Were you even alive in 2008?

Judging by the charts in this thread, all of you are teenagers who's financial literacy begins a few years ago and ends with whatever the Fed tells you is true.
 

Arado

Pelican
Gold Member
Crazy how all the predictions from mid 2020 are coming true. Other than gold and silver, most assets that benefit from inflation did well - crypto and other commodities are booming. Growth stocks still doing well even though high inflation would normally lead to a higher discount rate, making future cash flows less valuable and blowing out 10 and 30 year bonds, making it harder for them to borrow in the long term. The bond market hasn't crashed yet though. Let's see what happens over the next year. It's amazing how the mainstream narrative has shifted from denying the possibility of inflation to saying it's good.


Lyn Alden sees more similarities to the 1940's in which interest rates will lag inflation significantly due to the need to inflate away the debt. Politically though I'd say the 70's are more similar, in which there's lower trust in institutions and the U.S. faces increasing geopolitical challenges.


Some guys with big followers are picking up on this.


We're screwed with either inflation or insolvency.


I would argue that the inability of the left to recognize that inflation is a problem caused by excessive spending and debt monetization is going to make things worse since they will resist reigning in government. However, OTOH I could see politicians like AOC stirring up popular anger again crypto investors and others who have benefitted from inflation.


 
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Crazy how all the predictions from mid 2020 are coming true. Other than gold and silver, most assets that benefit from inflation did well - crypto and other commodities are booming. Growth stocks still doing well even though high inflation would normally lead to a higher discount rate, making future cash flows less valuable and blowing out 10 and 30 year bonds, making it harder for them to borrow in the long term. The bond market hasn't crashed yet though. Let's see what happens over the next year. It's amazing how the mainstream narrative has shifted from denying the possibility of inflation to saying it's good.


Lyn Alden sees more similarities to the 1940's in which interest rates will lag inflation significantly due to the need to inflate away the debt. Politically though I'd say the 70's are more similar, in which there's lower trust in institutions and the U.S. faces increasing geopolitical challenges.


Some guys with big followers are picking up on this.


We're screwed with either inflation or insolvency.


I would argue that the inability of the left to recognize that inflation is a problem caused by excessive spending and debt monetization is going to make things worse since they will resist reigning in government. However, OTOH I could see politicians like AOC stirring up popular anger again crypto investors and others who have benefitted from inflation.



You're sharing Peterson tweets. PETERSON TWEETS. The superficial propaganda is bad enough but this takes the cake.

Rename this thread financially illiterate and turn on CNBC.
 

cosine

Robin
We dealt with your stock market example.
You didn't deal with anything. The gov't created trillions of stimulus beginning in March 2020 and assets have been soaring ever since.

Real estate? You should be embarrassed to post a 9 year chart on the subject
Fair point, but the result is the same. Housing in nice places has skyrocketed, with the 2007-2009 crash now appearing as the "buy the dip" we could have capitalized on.
 
Fair point, but the result is the same. Housing in nice places has skyrocketed, with the 2007-2009 crash now appearing as the "buy the dip" we could have capitalized on.

Speak for yourself. I made a killing leading up to and after the 2007-2008 crash. Best financial years I've ever had. That period secured my financial independence for the rest of my life.

The 2020 stock crash came close though and since I was more experienced, this market has been a lot more fun. During the 2007 crash it was hard to tune out everyone, even every investor I knew, screaming how I had it all wrong and was making devastating mistakes.

This time I'm able to be more slow and deliberate. I have a better understanding of the big picture and where to look this time around (what's that? Why would you want to remove used cars from the inflation metrics?????? Why are you looking at Japanese interest rates???). Even as some of my plans have been dashed (selling our primary home in 2021) I've had the patience to play the hand dealt and play it well.

Although I will say, even though I predicted real estate prices going up in April of 2020...the global market is so crazy, it's sort of cool to watch it all unfolding...with a glass of scotch in hand.
 

cosine

Robin
I made a killing leading up to and after the 2007-2008 crash. Best financial years I've ever had. That period secured my financial independence for the rest of my life.
This is my whole point -- especially coming out of the 2007-2008 crash, if you had brains, income, and investible assets during that period, you probably did really well(you specifically). If you picked FAANG stocks, you're probably rich. But, if you had one of those things missing, if you were of average/below average IQ, if you were young, or stretched thin supporting a family, then you missed out. Lots of people now stuck making mediocre hourly wages while the investor class sits back and watches their accounts grow.
 

Arado

Pelican
Gold Member
You're sharing Peterson tweets. PETERSON TWEETS. The superficial propaganda is bad enough but this takes the cake.

Rename this thread financially illiterate and turn on CNBC.
I'm not implying he's a financial expert, the point is that high profile people are talking about inflation, making it a mainstream topic and changing the psychology of the average person. That increases money velocity and people will start buying things they anticipate they'll use over the next year rather than waiting for when they actually need it.

He displays a pretty sophisticated understanding of Bitcoin philosophy here.


Anyway, can you lay out your exact prediction of what happens over the next year with the various asset classes and Fed moves? George Gammon often says that the inflationists and deflationists both understand how messed up things are, just that the inflationists think that the system will change by necessity due to political realities that make mass debt defaults unacceptable.
 
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I'm not implying he's a financial expert, the point is that high profile people are talking about inflation, making it a mainstream topic and changing the psychology of the average person. That increases money velocity and people will start buying things they anticipate they'll use over the next year rather than waiting for when they actually need it.

He displays a pretty sophisticated understanding of Bitcoin philosophy here.


Anyway, can you lay out your exact prediction of what happens over the next year with the various asset classes and Fed moves? George Gammon often says that the inflationists and deflationists both understand how messed up things are, just that the inflationists think that the system will change by necessity due to political realities that make mass debt defaults unacceptable.

Everyone should read this explanation. You'll find this stupidity at the heart of nearly everything the Fed and the financial media talk about. Instead of discussing THE SYSTEM, a complicated interwoven network that spans the globe, and its associated mechanisms and timings or supply and demand...

We're talking about Jordan Peterson's Twitter account as a source of inflation.

You don't get any more surface level and out of touch than this. It's never about reality; it's only ever about how things are worded and creating expectations. Never how or why, just vacuous impressions devoid of content or analysis. The failed predictions are just gravy on the cake.

Edit: I'll also note Gammon was 100% wrong about his real estate predictions over the past two years. Smoke that one.
 
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Blade Runner

Ostrich
Orthodox
Ok, @EndlessGravity , what do you see over the next 4-12 years? I know predictions are hard, so I appreciate your input and won't be crazy in my criticism should we return to it. I've done quite well and am in a good position, but I think the system is fragile, and I think you also deny many clear facts at hand, and conclusions as a result. It is true that one of this matters in the sense that if you don't have your money or your positions supporting a particular thesis, it's just random internet banter or doomsaying, yes.
 
Ok, @EndlessGravity , what do you see over the next 4-12 years? I know predictions are hard, so I appreciate your input and won't be crazy in my criticism should we return to it. I've done quite well and am in a good position, but I think the system is fragile, and I think you also deny many clear facts at hand, and conclusions as a result. It is true that one of this matters in the sense that if you don't have your money or your positions supporting a particular thesis, it's just random internet banter or doomsaying, yes.

You're asking a crazy broad question at what is one of the most uncertain points in the entirety of human history. If there's a certain area you're thinking of, let me know. I don't like to give broad advice...however, I should be mercilessly held to whatever I say. Life will hold me to it anyway and with much less care. Your criticism, when intelligent, is the most valuable thing you can give.

That said, the system is insolvent and hobbling along but in a broken away. It's amazing the eurodollar DIDN'T implode in 2020 and speaks to how ingrained this system is. However, China isn't buying our BS anymore, which is why they aren't just NOT saving Evergrande, they're actually DOING the collapsing of their own real estate market (this should clue you in to what they think about "inflation"). Without China's growth, the worldwide demand for commodities will significantly fall. Secondary to that, the US consumer, the one who buys the world's junk, is changing his outlook on his spending, debt, traveling, etc. Many Americans don't have the money to pay their mortgages anymore (let's call it 10% of total), let alone rent (35% of total, with mortgages 1/3 of Americans) or student loans (99%). Few businesses are profitable any longer (and they can't pay their office rent either). Furthermore the banks don't trust each other to lend overnight.

Given all this, when the next dollar shortages comes it will be ugly (and deflation in the open). There are only a few solutions.
  1. Shut the world in their houses
  2. War
  3. Subjugation
  4. A new system
  5. Or a combination of each of these.
You saw 1) in 2020. My money next time is on a bit of everything. Best bet? You should be selling everything you bought at the bottom of the last crash to the suckers buying things at high prices (I suspect @Arado is a seller himself, which is why he likes the inflation narrative). Otherwise, buy a house that butts up to a very big preserve, stop buying useless crap, gain as many hard skills as you can, and pray. The world of careers and make-work is probably drawing to a close. Either we see a historic supernova of defaults or we slide into third world status. However, there's always plenty of time still left for more shenanigans by the government.
 
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