Prices, Inflation/Deflation, Interest Rates & The Fed

Arado

Pelican
Gold Member
I think I am following his language (more his idea) in the final tweet but it is strangely (or incorrectly) ordered/worded.

Surprised, fact, warning, likely ... those are all opaque in their construction, technically. I believe he is saying, "I am surprised that people don't see that the US is headed right where Japan has already gone." Correct?
Not quite, his point is that Japan's stock market has failed to regain previous highs, correlated with the massive deflation Japan has had for decades. In contrast, the market is NOT pricing in a deflationary outcome in the U.S. similar to what Japan had. These valuations are only possible when investors flood into stocks because they expect inflation in the future. Gromen is a full-on dollar will die, buy gold/BTC inflationist.

Totally meant to reply to your last post and it slipped my mind. You're correct that the Fed is providing material support. However, as your chart shows, the market for UST is huge. They only represent a small portion. Synder is probably right if only because you can watch rates drop...then the Fed says they're lowering rates. Then they try to take credit for it. I have yet to see them materially affect anything they claim to impact.

Those tweets by Groman are straight fire. I hadn't considered the one about the Nikkei, instead having thought we'd one day sink lower the way they did. However, that's a good point.
UST market is huge and it's acted as a pristine asset for reserves and various types of collateral. The question is whether foreigners can absorb additional treasury offerings on top of the natural growth in treasury demand due to a growing world economy. My point is likely not, if we are looking at 3-4 trillion dollar stimulus packages every year for the foreseeable future. That will all have to be bought with printed money. We'll find out soon enough when the next package passes.

The inflationists can still be proven wrong if the Fed steps back, but the larger the debt bubble grows the more painful the necessary medicine of deflationary bust will be. It is more likely instead that they will print away the debt (via debt forgiveness, 'reset', etc) to avoid the short term pain.
 

Blade Runner

Ostrich
Orthodox
That's all contingent on a change to the Federal Reserve Act or outright ignoring it by just issuing direct payment plans. Is that what you and Gromen are predicting then? Because we have seen that QE just causes more deflationary pressures, though yes certain asset classes get propped up ... for a while.
 

Arado

Pelican
Gold Member
That's all contingent on a change to the Federal Reserve Act or outright ignoring it by just issuing direct payment plans. Is that what you and Gromen are predicting then? Because we have seen that QE just causes more deflationary pressures, though yes certain asset classes get propped up ... for a while.
Their special purpose vehicle by which they buy up corporate junk bonds via the Treasury is already a violation, in spirit, of the Federal Reserve Act. The Fed buying muni bonds from cities with insolvent pension systems and SJWs running amok defunding the police is, I'm pretty sure, not what those who originally agreed to the Fed had in mind.

The whole reason that Biden nominated Yellen for Treasury is to combine the Fed and Treasury so that they can find new ways to print money into the economy and bail out companies even with an intransigent Senate blocking major spending.

 

Blade Runner

Ostrich
Orthodox
I know it seems a long shot, but Yellen won't be there. Neither will Biden. That might cause more of a hit to BTC, but I'll take it because Trump rightly is the president of the USA and should remain so. Either way, Trump can't overcome this culture, society and joke monetary system - even with all of the great policies and ideas that he has to try to correct it. It's too far gone. Can he buy us time, though? Yes.
 

Arado

Pelican
Gold Member
None of the inflation/deflation arguments take into account massive chaos in the U.S., all bets are out the window at that point and gold, food, guns, second passports, and maybe BTC are your only bets.

Interesting thread here on trust in the US and USD status.

On a lighter note how does anyone ever take the Fed seriously?

 

DenizenJane

Woodpecker

Maybe somebody who's more savvy on economics than me can explain the reasoning behind these recent December articles. To me, a stellar economy by next year is an equation that just doesn't add up;

decimated restaurant industry
decimated air travel industry
decimated tourism industry
widespread border closures and quarantine requirements
utter reliance on spending packages and stimulus to save businesses. Not to bolster. Not to speed up 'recovery'. To save them.


I remember as far back as March they said that The Germ had already hit the airlines worse than 9/11 ever did. So what am I missing here? I don't see shuddering the world economy as just a shrugoff dot com bubble event that you can just saunter away from and be flush within another twelve months? I can't tell if its genuine Wall Street delusion or your typical shilling for shareholders.
 

ball dont lie

Kingfisher
Gold Member
This picture is terrifying. Money velocity that low means businesses are bankrupt. No money in, no money out. This is as doomer as a picture can get and I havent seen this anywhere before.

My Dad was a small business guy and he constantly talked about the explosion of money velocity in the 90s, that huge jump there you see. He made out really well, but of course like many other people, that early 2000s drop killed so many people. Money stopped being spent. Period. No money moving means it doesnt get into your hands to pay your bills.

Cash flow is king. For governments to small businesses. Only the mega-corps with 12 billion in cash can handle this.

This is serious, gird your loins doomer info. If Biden comes in and forces a NATIONAL lockdown, then places like Florida where the economy is still hanging on, will go the way of CA and NY. Then your only choice is revolution basically, or starve.



Eo-WGE7UwAA8aXh.jpg
 

Dr. Howard

Peacock
Gold Member

Maybe somebody who's more savvy on economics than me can explain the reasoning behind these recent December articles. To me, a stellar economy by next year is an equation that just doesn't add up;

decimated restaurant industry
decimated air travel industry
decimated tourism industry
widespread border closures and quarantine requirements
utter reliance on spending packages and stimulus to save businesses. Not to bolster. Not to speed up 'recovery'. To save them.


I remember as far back as March they said that The Germ had already hit the airlines worse than 9/11 ever did. So what am I missing here? I don't see shuddering the world economy as just a shrugoff dot com bubble event that you can just saunter away from and be flush within another twelve months? I can't tell if its genuine Wall Street delusion or your typical shilling for shareholders.
This picture is terrifying. Money velocity that low means businesses are bankrupt. No money in, no money out. This is as doomer as a picture can get and I havent seen this anywhere before.

My Dad was a small business guy and he constantly talked about the explosion of money velocity in the 90s, that huge jump there you see. He made out really well, but of course like many other people, that early 2000s drop killed so many people. Money stopped being spent. Period. No money moving means it doesnt get into your hands to pay your bills.

Cash flow is king. For governments to small businesses. Only the mega-corps with 12 billion in cash can handle this.

This is serious, gird your loins doomer info. If Biden comes in and forces a NATIONAL lockdown, then places like Florida where the economy is still hanging on, will go the way of CA and NY. Then your only choice is revolution basically, or starve.



View attachment 27672

I like this feature where I can reply to both posts.

1. Stock market vs. actual economy. I heard this from an investment advisor re: the stock market. His theory is that because people can't earn interest from basic things like CID's, bonds and plain old savings account due to low interest rates, those "play it safe" income investors have now had to move into regular stocks, increasing stock prices due to demand, not even really a surging economy. His theory was its demand pushing the stocks up, not economy.

2. Money velocity - makes sense. I heard from a missionary that places like Jamaica are grinding to a halt as there are no tourists. Maybe some places like Orlando FL can survive one bad tourist season, but how about two? I will however cushion that by saying that it does seem like some areas where there are no real lockdowns, like the south, are operating as usual.
 

Tactician

Kingfisher
Gold Member
^ Yikes. Some good news & some bad news. The 'good news' is that the drop looks so steep in 2020 because the denominator for M2 money velocity is the M2 money supply. All the money printing is likely the reason for the sudden drop.

The bad news is that M2 is hardly a measure of granularity of transactions. A bunch of big financial sector transactions can paint a vastly inflated money velocity picture compared to what the average cat is experiencing. Like you mention with the lockdowns, the picture on the ground (small business) has got to be seriously worse than this chart indicates.
 

Lace em up

Woodpecker
This all interests me greatly, no pun intended. However, I am not well educated on these topics.

The terms used, and specifically how different markets interlock seems like a jumbled 1000 piece puzzle.

Would you gentlemen recommend any of the free online courses on Economics, or possibly a reading list as a primer to get me started?

Is there a more appropriate thread to ask these questions?
 
This all interests me greatly, no pun intended. However, I am not well educated on these topics.

The terms used, and specifically how different markets interlock seems like a jumbled 1000 piece puzzle.

Would you gentlemen recommend any of the free online courses on Economics, or possibly a reading list as a primer to get me started?

Is there a more appropriate thread to ask these questions?
Start with this:

The Federal Reserve is a private entity started by globalist bankers and run by American-Israeli dual citizens.

In other words: We F****D.

Always start with "The Creature from Jekyll Island" to understand the nature of the American Banking System Scam.
 

bucky

Ostrich
This all interests me greatly, no pun intended. However, I am not well educated on these topics.

The terms used, and specifically how different markets interlock seems like a jumbled 1000 piece puzzle.

Would you gentlemen recommend any of the free online courses on Economics, or possibly a reading list as a primer to get me started?

Is there a more appropriate thread to ask these questions?
I'm not terribly well versed on banking and international finance either, but if you read even the wikipedia article about the Federal Reserve, you'll see that private banks get voting rights on its policy. So then you have to ask yourself who runs the private banks. I'd be interested in a Federal Reserve-for-Dummies-and-what-it-all-means type thread too.
 
This all interests me greatly, no pun intended. However, I am not well educated on these topics.

The terms used, and specifically how different markets interlock seems like a jumbled 1000 piece puzzle.

Would you gentlemen recommend any of the free online courses on Economics, or possibly a reading list as a primer to get me started?

Is there a more appropriate thread to ask these questions?
I'm also trying to put this puzzle together. There are three different people whom I would recommend paying attention to for a more macro view.

The first is Lyn Alden, I saw some tweets by her embedded earlier on this page. Her articles are all 20-30 minute reads, she combines macro with some investing advice.

Her most recent article is here and is about different monetary paradigms of the 20th-21st centuries and their effects on investing returns. She talks about gold standard, bretton woods, and current petrodollar system and discusses the costs and benefits from being the reserve currency.

The second is Ray Dalio, particularly his writing on long term debt cycle articles. He's written 5ish. These are also pretty long, he publishes them on his linkedin.

The third is Jeff Booth. He wrote a book about inflation/deflation called The Price of Tomorrow. Highlights of his thinking can also be found in this 1 hour podcast he did with the investors podcast. His thesis is basically that technology is inherently deflationary, the only way to fight against this is to inflate, and the rate of inflation to keep this going not only increases but increases exponentially.
 

Coja Petrus Uscan

Crow
Orthodox Inquirer
Gold Member
Query -

The more I look at things the more it seems the path forward may be long the lines of MMT (i.e. money printing).

I get the impression that the powers that be will print over any bumps in the economy indefinitely.

I am also surprised there has been no recession in The West as far as most people's lives are concerned.

It appears they have the power to jigg the books to some considerable extent.

I have a feeling that they will print us up to very large debt levels in the next decade; and then around 2030 when pain hits they will be ready and waiting with the cashless-control-grid society.

Thoughts?
 

bucky

Ostrich
Query -

The more I look at things the more it seems the path forward may be long the lines of MMT (i.e. money printing).

I get the impression that the powers that be will print over any bumps in the economy indefinitely.

I am also surprised there has been no recession in The West as far as most people's lives are concerned.

It appears they have the power to jigg the books to some considerable extent.

I have a feeling that they will print us up to very large debt levels in the next decade; and then around 2030 when pain hits they will be ready and waiting with the cashless-control-grid society.

Thoughts?
Sounds about right. I don't claim any deep understanding of economics but, at least in the US, the economy just somehow feels entirely disconnected from reality.
 
Query -

The more I look at things the more it seems the path forward may be long the lines of MMT (i.e. money printing).

I get the impression that the powers that be will print over any bumps in the economy indefinitely.

I am also surprised there has been no recession in The West as far as most people's lives are concerned.

It appears they have the power to jigg the books to some considerable extent.

I have a feeling that they will print us up to very large debt levels in the next decade; and then around 2030 when pain hits they will be ready and waiting with the cashless-control-grid society.

Thoughts?
I agree with you. My investments are positioned for inflation not deflation, with the exception of cash I'm saving for a down payment and some short-term bonds I use as a hedge for leveraged investments.

I really wish the future held deflation even it came with a market correction or depression. It would be better for middle/working classes who are barely scraping by so of course there's no chance the Fed allows the housing/equity bubbles to pop just yet.

Looking at how the Fed has acted over the last year and who Biden will appoint as his treasury secretary, a doveish/inflationary approach will continue and may be kicked into overdrive. If the Dems think they have the next election locked up via fraud/demographic shifts they might allow the bubble to pop prior to 2024 because a shitty economy is the only way they could lose. If not the Fed will continue to inflate the underlying issues away much like they've done since March for President Trump.

I will be surprised if the inflations leaks out of college/health care/stocks/real estate and into food/consumer goods. It should eventually but I've been waiting for that to happen for years now.
 
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