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cokebottleag
Texas A&M Fan
Myles Garrett Did Nothing Wrong
Member since Aug 2011
22379 posts

The "Everything Bubble" that the Fed (and other central banks) have created
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quote:

One has to regret Federal Reserve Chairman Jerome Powell’s seemingly partial diagnosis of our present daunting economic challenge, especially considering his key role in defusing the crisis. In Powell’s view, our economic predicament has nothing to do with the possibility that years of ultra-easy U.S. monetary policy might have contributed to the creation of worldwide asset and credit market bubbles. Rather, he seems to believe that our economic challenge is solely the result of the supply side shock delivered to the economy by the coronavirus pandemic.


quote:

Indeed, Powell believes that the U.S. economy could fully recover by the end of 2021, notwithstanding the very much deeper economic recession that we are now experiencing than in 2008-2009.



quote:

Despite Mr. Powell’s assertions to the contrary, over the past decade the Fed, along with the world’s other major central banks, created a global asset and credit market bubble. They did so by buying a staggering cumulative $10 trillion in low-risk government and private sector bonds with the aim of forcing investors to take on more risk and to stretch for yield. The net result of that policy was the creation of a global equity and housing market boom as well as the major distortion of world credit markets.

One indication of the world equity price bubble was the very high valuation to which the U.S. equity market reached before its large coronavirus-induced correction earlier this year. Measured by the cyclically adjusted price-earnings ratio, before the pandemic's onset U.S. equity valuations reached lofty levels experienced only three times in the past hundred years. Meanwhile, numerous housing markets around the world, including those in several large U.S. cities, had price-to-income ratios that exceeded those reached at the 2006 peak of the earlier housing market bubble.

More troubling yet, the world’s major central banks have distorted global credit markets in a major way, as investors were encouraged to take on excessive risk. One indication of such credit market excess was the more than doubling in the risky U.S. leveraged-loan market to its present level of around $1.3 trillion. Other indications were the approximate doubling over the past decade of lending to the emerging market economies and the very low interest rates at which highly indebted countries like Italy were able to finance themselves.




notiger1997
Metairie
Member since May 2009
45816 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
My farts smell like blue berries


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13
Purple Spoon
Duke Fan
Hoth
Member since Feb 2005
12628 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

One indication of the world equity price bubble was the very high valuation to which the U.S. equity market reached before its large coronavirus-induced correction earlier this year. Measured by the cyclically adjusted price-earnings ratio, before the pandemic's onset U.S. equity valuations reached lofty levels experienced only three times in the past hundred years



Uhhhh.......yeah, what he said



cokebottleag
Texas A&M Fan
Myles Garrett Did Nothing Wrong
Member since Aug 2011
22379 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
Everything important take too much cashy-washy to buy. Economy go boom boom because fed make money free.


Toomer Deplorable
Auburn Fan
Member since May 2020
153 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
The economic lockdown of the past few months is but a fleeting glimpse at what we will experience when that bubble pops.

Venezuela is our future.



TerryDawg03
Georgia Fan
The Deep South
Member since Dec 2012
8078 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
It’s ironic that the deficit spending and bond purchases by the Fed are doing more to create the wealth inequality that Dems complain about so much by inflating asset prices.

Dems want deficit spending and increased money supply but campaign against its effects.
This post was edited on 5/23 at 2:34 pm


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50
chalmetteowl
LSU Fan
Member since Jan 2008
30828 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

Venezuela is our future.
I thought we had to elect a socialist for that


Crimson Wraith
Alabama Fan
Member since Jan 2014
16556 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
All dims are socialists.


Loserman
LSU Fan
Member since Sep 2007
17051 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

Venezuela is our future.


I sure hope so.

I'll make a fortune from my horde of toilet paper.


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roadGator
Florida Fan
Member since Feb 2009
106548 posts
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re: The "Everything Bubble" that the Fed (and other central banks) have created
It certainly helps


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chalmetteowl
LSU Fan
Member since Jan 2008
30828 posts
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re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

All dims are socialists.

even the ones who take Wall Street money to not be?


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FearlessFreep
Auburn Fan
Baja Alabama
Member since Nov 2009
9631 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

Economy go boom boom because fed make money free.
brrrr brrrr


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10
wdhalgren
Georgia Fan
Member since May 2013
2963 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

Indeed, Powell believes that the U.S. economy could fully recover by the end of 2021, notwithstanding the very much deeper economic recession that we are now experiencing than in 2008-2009.


He may be correct about the quick "recovery". If the Fed prints enough money and the govt hands out enough checks, we may never have another recession. Recession is a decline in GDP (exact definition varies, normally two quarters of negative GDP), and GDP is measured in dollars. If you print and flush enough new dollars into the hands of people who'll spend them, then voila, no recession.

Govt statistics (GDP, for example) are like magic, they show the people sitting in the audience whatever the magicians want them to see, but are not to be confused with reality. Printing money is a tax on savers and a boon to the people who get something for nothing. It's a cocaine stimulus for an economy moribund with cancerous debt. The more you print, the more you need to forestall the inevitable collapse.
This post was edited on 5/23 at 2:08 pm


Toomer Deplorable
Auburn Fan
Member since May 2020
153 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

If the Fed prints enough money and the govt hands out enough checks, we may never have another recession.


Our print-on-demand monetary system is the wellspring of the current crisis.


wdhalgren
Georgia Fan
Member since May 2013
2963 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

Our print-on-demand monetary system is the wellspring of the current crisis.


I'm not disagreeing, but this all started much earlier than Bernanke/Yellen/Powell's wholesale debt monetization (or Quantitative easing if you prefer euphemisms). We started down this rabbit hole not long after the Federal Reserve was formed in 1913. They established a debt/money system that requires exponential growth to pay the true rate of interest (not some arbitrary rate set by a grand council of financial wizards). Cheap, plentiful oil, technology and population growth propped it up for a long time, but there's no such thing as endless exponential growth in a closed system. We've reached the end game where the only recourse is to force money supply growth to race away from the underlying production.
This post was edited on 5/23 at 2:26 pm


Bass Tiger
Missouri Fan
Member since Oct 2014
17240 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

Printing money is a tax on savers and a boon to the people who get something for nothing. It's a cocaine stimulus for an economy moribund with cancerous debt. The more you print, the more you need to forestall the inevitable collapse.


The common sense of the average American knows that the fiat monetary system is nonsensical in the manner it's currently being exercised. I can tell you, if prudent savers were guaranteed 4-5% interest on their savings the markets would lose 30-40% of their value and there are some smart SOBs who pull the levers of power that know this. Is the Fed monetary policy making sense yet?


Toomer Deplorable
Auburn Fan
Member since May 2020
153 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

We started down this rabbit hole not long after the Federal Reserve was formed in 1913.


1913 was an annus horribilis in American history. The Fed was established, a progressive income tax was initiated and the 17th Amendment led to the direct election of Senators instead of their appointment by state legislators, effectively killing the doctrine of States’ rights. All these elements contributed to a massive shift of centralized power to Washington D.C. It has been a downhill slide ever since.



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Toomer Deplorable
Auburn Fan
Member since May 2020
153 posts
 Online 

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

Printing money is a tax on savers and a boon to the people who get something for nothing. It's a cocaine stimulus for an economy moribund with cancerous debt. The more you print, the more you need to forestall the inevitable collapse.



quote:

The common sense of the average American knows that the fiat monetary system is nonsensical in the manner it's currently being exercised. I can tell you, if prudent savers were guaranteed 4-5% interest on their savings the markets would lose 30-40% of their value and there are some smart SOBs who pull the levers of power that know this. Is the Fed monetary policy making sense yet?


Another sinister aspect of this print-on-demand monetary system is the emergence of the PetroDollar pact with Saudi Arabia. The high standard of living we enjoy in this nation is wholly dependent upon the USD’s dominance as the world’s reserve currency.

The PetroDollar pact with Saudi Arabia is the primary reason the U.S. dollar is accepted as the world's reserve currency. Yet how long will this arrangement last? Our entire economic system is in a very precarious situation for 2 main reasons:

First off, we need to constantly remind ourselves that the vast majority of the 9/11 hijackers were Saudis. Saudi Arabia is a brutal theocratic fiefdom that fears violent revolution at home. Saudi Arabia thus seeks to channel these violent impulses into world-wide jihad abroad. It is Saudi Arabia, not Iran, that is the primary source of radical Islam vis-à-vis it’s funding of Madrasas that preach Wahhabism, a violent, fundamental strain of Islam.

Second, the Petrodollar is being challenged by many countries that oppose U.S. hegemony — most notably from Russia & China. The US government, and virtually all western governments are bankrupt — walking financial zombies — due to their dependency upon Fiat currency. We thus need Saudi Arabia more than they need us.

The U.S is never going to be able to cover their financial obligations without either a crippling increase in taxation or a massive cutback in expenditures. Yet Washington keeps fiddling like the party will never end. We indeed just witnessed the largest spending bill in human history because of this insane economic lockdown. It is not going to be a soft landing when gravity inevitably takes over.










This post was edited on 5/23 at 4:53 pm


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DallasTiger11
UCLA Fan
Los Angeles
Member since Mar 2004
8311 posts

re: The "Everything Bubble" that the Fed (and other central banks) have created
quote:

If the Fed prints enough money and the govt hands out enough checks, we may never have another recession.

Uhh it doesn’t quite work like that. We are in a recession right now anyway.

Nailed the rest of your post though.


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