General Forums => The O' Club => Topic started by: CptTrips on November 22, 2021, 06:52:00 PM
Title: 2007 Redeux?
Post by: CptTrips on November 22, 2021, 06:52:00 PM
Or will 2007 look like child's play?
BTW. This has nothing to do with political parties. Everyone has dirty hands on this one.
*Note: log scale on the vertical axis. That's important to understand full scale of the risk. (https://www.hussmanfunds.com/wp-content/uploads/comment/mc211120g.png)
Society is on a knifes edge of devolving into general violence as it is.
This bubble has been inflated to insane Extinction Level Event levels. Fed could keep it levitated as long as they could keep rates at 0%. Inflation is showing signs of not being "transitory".
The Fed would prefer not to raise rates. Pumping unlimited free money is the cocaine that is keeping everything high. Inflation might force their hand. They'll have to raise rates if inflation doesn't flatten soon. If they raise rates and the market crashes, they reeled in almost no rates to be able to lower to slow the crash. They have no ammo left to fight a collapse except negative rates, which I'm pretty certain is illegal in the U.S.
China might be the canary in the coal mine or the first domino. Might be a good time to make a try for Taiwan. Focus everyone on an external enemy. Strike while the West in distracted with an economic collapse.
What would a hot-war with China look like in the midst of an 80% market drop and 20% unemployment and 15% inflation?
Next year might be a wild ride before it's over.
Title: Re: 2007 Redeux?
Post by: dieter on November 22, 2021, 08:02:54 PM
There are some really wild indicators going on in Europe also. Putin is putting the screws to the European union in no light manner with his escalation of the migrant crisis via Belarus; massing of troops on the Ukraine border, etc. We are in for a very interesting few years. Nothing like having aggressive nations in Europe and the Pacific huh? Especially with the economics as fun as you just pointed out. You are just pointing out some of the really fun stuff, there is a bit more to it then just that, as I am sure you are well aware of, kind of makes you pucker a little bit.
ULDieter
Title: Re: 2007 Redeux?
Post by: guncrasher on November 22, 2021, 08:18:03 PM
you mean it's the 80s again. when if you had a really good credit interest was 18% on buying a home. companies were laying off tens of thousands of workers. hell at&t laid off something like 250k operators and sent the jobs overseas.
also about the time when the faith of the world was on a single Russian guy who risked everything on a hunch.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on November 22, 2021, 08:20:01 PM
There are some really wild indicators going on in Europe also. Putin is putting the screws to the European union in no light manner with his escalation of the migrant crisis via Belarus; massing of troops on the Ukraine border, etc. We are in for a very interesting few years. Nothing like having aggressive nations in Europe and the Pacific huh? Especially with the economics as fun as you just pointed out. You are just pointing out some of the really fun stuff, there is a bit more to it then just that, as I am sure you are well aware of, kind of makes you pucker a little bit.
ULDieter
Yeah. Authoritarian regimes might use an external conflict to distract their population from their own economic collapse. You can always claim it is the enemy doing it to you. And people tends to check their brains in at the door once shooting starts. It's all about Nationalism and winning the war then. And if there were territorial gains you wish to grab, there will be no better time perhaps for generation to come than when your adversaries are totally consumed with their own domestic cataclysmic economic collapse and their population are doubly uninterested in getting involved anywhere overseas.
If I were Putin or that Panda guy, it's when I'd make my move.
I'm pretty sure they are both smart enough to not attack the U.S. directly (Japan taught that lesson). That would only wake the Giant. I can't say the same for an foreign allies who's names we can barely pronounce anyway. Our public at this point would probably very inclined to say, "Fekit; we got our own problems."
Stay safe over there. I doubt things would start to unravel until spring/early summer. But who knows.
Title: Re: 2007 Redeux?
Post by: CptTrips on November 22, 2021, 08:36:36 PM
you mean it's the 80s again. when if you had a really good credit interest was 18% on buying a home. companies were laying off tens of thousands of workers. hell at&t laid off something like 250k operators and sent the jobs overseas.
I remember the 80's. That's a important point, because the only way Volcker was able to tame that inflation was by bringing down the rate hammer hard and mercilessly. They knowingly had to accept a hard recession to get control of inflation. (I think this is going to be way more painful than the 80s, IMHO.)
That's the reason that I believe the Fed has to start acting next year if inflation keeps rising. They learned the Volcker lesson and the Fed fears inflation even more than they fear a stock collapse.
A smaller percentage of voting American's are invested in the stock market. Every working family in America, and a ton of Retirees are impoverished by run-away inflation. If the Fed had to lay a sacrifice on the economic alter it would probably be the stock market. (https://www.forbes.com/sites/teresaghilarducci/2020/08/31/most-americans-dont-have-a-real-stake-in-the-stock-market/?sh=7862ce2b1154 (https://www.forbes.com/sites/teresaghilarducci/2020/08/31/most-americans-dont-have-a-real-stake-in-the-stock-market/?sh=7862ce2b1154))
If for no other reason than it is in their actual written charter to keep a handle on inflation. It doesn't say anything about them being responsible for propping up overly greedy, over extended, irrationally exuberant Wall Street. They can write that loss off to Moral Hazard.
We'll see. This is one of those times I would love to be proven utterly and completely wrong. I'm just not in the mood to deal with a whole 'nother level of world drama. ;)
What's that old curse Chinese put on their enemies? "May you live in interesting times."
Title: Re: 2007 Redeux?
Post by: CptTrips on November 22, 2021, 09:32:03 PM
And, if I were Putin or the Panda, I'd get in cahoots with the other and arrange to both make their move at the same time on different sides of the globe, while their adversary is still busy cleaning up the bodies of stock brokers who have splatted on the pavement from the 30th floor window on Wall Street.
Halves the risk for both as opposed to acting singly.
And it makes sense to re-nominate Powell. Let that poor shmuck take the blame. I bet there was no smart money begging for the job at this particular time. No one who has a brain wants to be in his shoes the next year or two. ;)
Title: Re: 2007 Redeux?
Post by: Eagler on November 23, 2021, 07:49:16 AM
I think they are pushing for Marshall law so that when the financial time bomb blows, they will have forces in place to control the extreme civil unrest that will follow.
To get where we accept Marshall law as a viable alternative the sheet really has to hit the fan thus all of this turning on each other for every reason under the sun is the plan and manipulation of the masses is historic.
War with Russia and or China are also on the possible horizon for the same above reasons..a nice big war has gotten the world out of a great depression once already
When the bottom drops out financially as many say it will the true wild west begins making the gang lootings today look like child play
Throw in news like this nice and early now to justify the use of nukes later...and it gets real interesting https://www.bloomberg.com/news/articles/2021-11-22/china-launched-missile-from-hypersonic-weapon-in-july-ft-says
Eagler
Title: Re: 2007 Redeux?
Post by: guncrasher on November 23, 2021, 10:08:43 AM
marshall law? wasnt that named for general marshall when he got promoted to 5 stars with the rank of marshall, he changed it to general because he didn't want to be called marshall marshall?
semp
Title: Re: 2007 Redeux?
Post by: Chris79 on November 23, 2021, 10:39:02 AM
I think they are pushing for Marshall law so that when the financial time bomb blows, they will have forces in place to control the extreme civil unrest that will follow.
To get where we accept Marshall law as a viable alternative the sheet really has to hit the fan thus all of this turning on each other for every reason under the sun is the plan and manipulation of the masses is historic.
War with Russia and or China are also on the possible horizon for the same above reasons..a nice big war has gotten the world out of a great depression once already
When the bottom drops out financially as many say it will the true wild west begins making the gang lootings today look like child play
Throw in news like this nice and early now to justify the use of nukes later...and it gets real interesting https://www.bloomberg.com/news/articles/2021-11-22/china-launched-missile-from-hypersonic-weapon-in-july-ft-says
Eagler
I think that is the last thing the Feds want to do. They lack the resources to implement it on a nation wide level and relying on states via the National Guard is futile due to the current bi-polar politics exhibited between states. OP is correct however on his economic outlook and I do fear we are heading towards “interesting times”. Now whether it’s 2007 redux, 1918 Russia, Weimar Republic, or something never before seen is anyones guess. I can say this with a great degree of confidence, if a economic collapse were to occur while the country is as politically stratified as we currently are, the consequence would be a watermelon storm of epic proportions.
Title: Re: 2007 Redeux?
Post by: oboe on November 23, 2021, 10:51:10 AM
marshall law? wasnt that named for general marshall when he got promoted to 5 stars with the rank of marshall, he changed it to general because he didn't want to be called marshall marshall?
semp
I think he means "martial" law.
Title: Re: 2007 Redeux?
Post by: guncrasher on November 23, 2021, 11:14:18 AM
I know what he means, I just think it's funny when somebody brings it up. same thing when they call the boarder instead of border.
we went thru this in the 80s, 2008, and the 70s and 60s. martial law wasn't declared then, but somehow I hear more and more how is gonna happen this year or next year, but ignore the fact that last year, people in position or advisors went around the country calling for the insurrection act.
think the whole thing is nothing but conspiracy theories but what worries me is that more and more people are buying into it.
semp
Title: Re: 2007 Redeux?
Post by: decoy on November 23, 2021, 11:14:41 AM
What's that old curse Chinese put on their enemies? "May you live in interesting times."
That's actually Part I of the curse.
Part II is: May you find what you are looking for.
Part III is: May you come to the attention of the authorities.
But, interesting times, indeed.
Title: Re: 2007 Redeux?
Post by: CptTrips on November 23, 2021, 11:30:01 AM
Another data point....
For the last year or two, Buffett has been quietly liquidation stock exposure and is now sitting on his largest pile of cash ever. Sounds like Warren is expecting much cheaper deals to come.
As I pointed out that first chart is in log scale on the vertical axis. That is because the gyrations on the right side of the chart are so large that a linear scale chart would completely have hidden the fluctuations on the left side of the chart. At linear scale those would have looked almost smooth.
The downside is that I think it can give the impression that the risk is not as high as it really is. Based on that chart, for the market to simply return to it's long-term historical averages (something the market has NEVER failed to do eventually in it's history), S&P would have to drop from it's current 4000ish level to ~1000ish. It would require a collapse of 75% from current valuations just to get back in line with economic realties that have been durable for 150 years. And generally, that level of panic will over shoot and have to come back up, so might see as low as 80%+ drop at some point.
The Bulls will reply markets go down, then they come back up again eventually. Yes. But it took 6 years for the S&P to recover after 2001 and took the Nasdaq 15 years.
That means you have to hold those risk assets all that time (15 years?) jsut to get back to where you started. If you sell any before that, you take the loss. They are called risk assets for a reason, so at any point a particular stock can go to 0. Usually that is why you are paid a risk premium in the form of increased value to compensate you for the risk you incur. In a case like 2001 you had to hold that risk for Wall Street for 15 years just to break even.
In that period you couldn't get access to that money without taking a loss (which prevents you from reallocating that money to something more profitable), and you got paid nothing for the privilege of holding all that risk for 15 years. You held Wall Street's risk for them for free. And God forbid if you had planned to retire at any time in that 15 years. :rolleyes:
Title: Re: 2007 Redeux?
Post by: Eagler on November 23, 2021, 11:54:40 AM
If/ when the dollar loses its status and is replaced, it will not matter how many you have stashed away as they will be useless...
See how no one is buying our debt anymore but the fed itself
They are getting rid of dollars as they see what we a doing to it by printing trillions out of thin air...for no real purpose but to keep our corrupt politicians in power by establishing a nanny state cradle to grave..
New reserve currency coming soon IMO as the dollar is losing its value by the second..
We can never get out of the debt that grows every split second
https://www.usdebtclock.org/
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on November 23, 2021, 12:05:01 PM
And I would totally understand if anyone were to laugh out loud at the thought of an 80% collapse from current levels.
But...
Quote
As it happened, the tech-heavy Nasdaq 100 lost an implausibly precise 83% of its value from March 2000 to October 2002.
It's not impossible.
[edit] Note for reference. That is not all in one drop. There are always sucker-rallies that make people think the worst is over. Those might last a couple of months before the fall continues. It's almost like a perfectly designed psychology trap for the smart money to squeeze out every last possible dollar from the rubes who don't completely get it. Historically a popping bubble can take 16 to 24 months to fully unwind with several sucker-rallies in the interim. Keep that in mind.
Good luck out there. ;)
Title: Re: 2007 Redeux?
Post by: CptTrips on November 24, 2021, 01:45:09 PM
It will be too hard to get a real read on inflation until after the holiday retail binge.
If Inflation begins to drop off meaningfully by spring then the Fed will decide it can keep on inflating the bubble.
That doesn't change the outcome, just delays the inevitable and creates a bigger mess when it crashes. Hopefully on someone else's watch (says Fed Chairs and Pols of ALL parties!) :cool:
But if inflation doesn't come to heel, Fed has no choice. They'll prefer to reduce the largely hidden QE first to see if they can get lucky. If that doesn't quickly work they'll have to raise the very visible rates. They can't afford to lose credibility on inflation. Most of their actual power is all based on belief and confidence they have a handle on things.
Title: Re: 2007 Redeux?
Post by: Eagler on November 24, 2021, 02:13:32 PM
Fed is stopping their free money to the market ...supposed to be complete by next spring..we will see.
To curb inflation the fed has to raise interest rates slowly to a decent level.
They say that will kill the market as it was built on near zero interest money for years now
The covid crash in spring of 2020 was a perfect time to correct the market IMO but being election year no one was going to let that pain play out..
So they printed money out of thin air which really didn't do anything but make the situation worse..just kicking the can some more
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on November 26, 2021, 09:35:10 AM
Quote
Causes versus Triggers
We should distinguish between causes and triggers here. If you roll a wheelbarrow of dynamite into a crowd of fire jugglers, there’s not much chance things will end well. The cause of the inevitable wreckage is the dynamite, but the trigger is the guy who drops his torch. Likewise, once extreme valuations are established as a result of yield-seeking speculation that is enabled (1997-2000), encouraged (2004-2007), or actively promoted (2010-2014) by the Federal Reserve, an eventual collapse is inevitable. By starving investors of safe return, activist Fed policy has promoted repeated valuation bubbles, and inevitable collapses, in risky assets. On the basis of valuation measures having the strongest correlation with actual subsequent market returns, we fully expect the S&P 500 to decline by 40-55% over the completion of the current market cycle. The only uncertainty has been the triggers.
That was from 2015 so yeah, it's impossible to estimate when the shoe finally drops. But the barrels of dynamite have been getting stacked since 2009 so things at this scale don't happen in weeks/months. Massive economics can take years to play out long-term business cycles (not merely seasonal cycles). But historically, it does eventually happen. And historically it will catch 99% of the investors by surprise and they'll all say later that there was no way *such-n-such* could have been predicted. Which is true. That is the nature of Black Swans. But if you notice you are standing around barrels of dynamite watching fire jugglers perform their market antics, you might want to start stepping back a little to a safe distance. It's sure to end in tears eventually. :cool:
Is the new variant the trigger that will knock over the house of cards? (Not convinced yet...) No way to tell if this is the torch that finally drops in barrel. It could be next years inflation. It could be political violence/assassination. It could be Russia rolling into Ukraine or Panda-Boy making a dash for Taiwan. Or maybe some large firms bankruptcy like Enron.
Or they maybe get away with inflating the bubble a year or two more. But the longer it goes on, the more likely you are to the end rather than the beginning. The particular random trigger is just the excuse for the bubble to pop. The end result was already baked into the cake by the years of inflating the bubble.
Title: Re: 2007 Redeux?
Post by: Eagler on November 26, 2021, 09:47:13 AM
Variant smariant...lets hope we all don't get the clot shot..how would they continue to use this excuse...oh yeah booster shaming then?
What if the news is created to cover the markets?
It is not the market reacting to so called news but news setup to cover the coming movement in the markets by the ones making the real money from it..
PS black Friday is a bust today as they started it months ago....
Did anyone see a shortage of turkeys we were all warned about?
Publix here is overflowing with them..
Eagler
Title: Re: 2007 Redeux?
Post by: Chris79 on November 26, 2021, 12:12:44 PM
No shortages of turkey here, in fact there is a ton of them leftover after thursday
still plenty around here. just went shopping, funny thing, they only had a few boxes left of Jimmy Dean pree made breakfast. now that's a crime.
semp
Title: Re: 2007 Redeux?
Post by: Eagler on November 30, 2021, 09:00:46 AM
Omicron = moronic
As in moronic response to what looks like the lightest variant yet...please read the info posted by the south African doctor who discovered it...not what the panicked faces on cnn are screeching..
Or maybe it is just the latest excuse they will use to keep interest rates near zero and print even more money..to futher inflate the bubble and kick the can down the road some more..they are even reporting that now ..less than a week after it was 1st discovered..not too suspicious.
Of course after the drop happening now...heck maybe even a lockdown but be sure to get "boosted" ... or be dammed by society..
Man they have the perfect boogie man with this thing...terrorism was way harder to keep the fear up ... and it didn't divide us so nicely and pit us against each other as they need us to be.
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on November 30, 2021, 10:32:38 AM
Well, the party may not be officially over yet, but I get the feeling people are being handed their hat and coat.
As in moronic response to what looks like the lightest variant yet...please read the info posted by the south African doctor who discovered it...not what the panicked faces on cnn are screeching..
Or maybe it is just the latest excuse they will use to keep interest rates near zero and print even more money..to futher inflate the bubble and kick the can down the road some more..they are even reporting that now ..less than a week after it was 1st discovered..not too suspicious.
Of course after the drop happening now...heck maybe even a lockdown but be sure to get "boosted" ... or be dammed by society..
Man they have the perfect boogie man with this thing...terrorism was way harder to keep the fear up ... and it didn't divide us so nicely and pit us against each other as they need us to be.
Eagler
he said the symptoms are very mild. nobody has been sent to the hospital. just a sore body, headache and scratchy throat.
it was just discovered a few days ago, possibly been around for a while. who knows what it may do.
all my brothers and sisters got one of the variants. my nieces and nephews too. most of my friends did too. a couple died.
in our family the most affected was my wife, 1 nephew and 1 niece have about 60% lung capacity. I am the only one that had very mild symptoms, mostly a light headache and got tired easily.
one of my brothers is a big antivaxx, anti mask, whatever. he went on a big rant about how it isn't so bad, my nephew was really upset. my wife just yelled eff uu. she doesn't talk like that.
almost 800,000 dead, that's about 1 in 500 just in this country. hundreds of thousands or maybe millions are in some degree disabled or affected for life.
and yet there's other people who think it's not a big deal. we should act as if nothing is happening.
can't close the country forever, but somewhere in the middle would go a long way.
semp
Title: Re: 2007 Redeux?
Post by: Guppy35 on December 01, 2021, 12:59:49 AM
Maybe you should look at this from the Evangelical Right. You know those folks who suggested Hurricane Katrina was sent to New Orleans to punish certain groups they don't like, or those who suggested the California fires were there punishment from on high? Maybe this is the man upstairs message that greed, money, quests for more power etc is wrong and he's going to keep it going until the world figures out, wait for it, that the "love they neighbor as thyself" bit, greatest commandment, is what we should be doing instead of hating everyone else and trying to have power and control them?
Maybe this is the message that we better figure it out that the better we take care of each other, the better benefit to the world overall? This old hate thy neighbor, blame everyone else for it bit, is getting really old.
I get real tired of the never ending conspiracy theories.
Title: Re: 2007 Redeux?
Post by: TequilaChaser on December 01, 2021, 01:36:48 AM
Interesting thread....
The first stock bursting bubble, hit me hard back around 1999/2000, I was able to recover pretty quickly by 2003....
Stayed in the stocks until 2009, and causes and sold out, never to return....
Since before my parents 1st year married they started collecting coins, silver and gold...the tradition of doing this is still going with me and my kids and my Sister and some of hers.....
Simple reason why we are stock piling as much as we can get our hands on.... there's going to come a time where some people will accept help from 1 of the 4 dynasties (government, financial, education, religion).... if you bow a knee and accept the help....you will think all is going to be alright....but that is actually falsehood
The 90% silver coins, or silver bullion and gold bullion is going to be needed to barter with...
As for Marshall Law, if you have kept up with the US Government/ Congress....you should already know that the use of Marshall Law and FEMA mandate was updated and authorized in an Excutive Order as well as a bill that passed back in the mid to late 1980s....
Nothing new under the sun and history always repeats itself!
Heads up- The Big Brother is starting to watch those people stacking silver and gold....if you are one of those people who do that, you need to be 7 moves ahead and find ways to keep stacking without getting your name on a watch list....
Follow your own beliefs
TC
Title: Re: 2007 Redeux?
Post by: TequilaChaser on December 01, 2021, 01:38:30 AM
Maybe you should look at this from the Evangelical Right. You know those folks who suggested Hurricane Katrina was sent to New Orleans to punish certain groups they don't like, or those who suggested the California fires were there punishment from on high? Maybe this is the man upstairs message that greed, money, quests for more power etc is wrong and he's going to keep it going until the world figures out, wait for it, that the "love they neighbor as thyself" bit, greatest commandment, is what we should be doing instead of hating everyone else and trying to have power and control them?
Maybe this is the message that we better figure it out that the better we take care of each other, the better benefit to the world overall? This old hate thy neighbor, blame everyone else for it bit, is getting really old.
I get real tired of the never ending conspiracy theories.
Love your reply, Dan!
Title: Re: 2007 Redeux?
Post by: Eagler on December 01, 2021, 07:47:36 AM
Semp
Sorry about your covid experiences but please remember it was not everyones
Do what you need to feel safe
I was just pointing out how it is the perfect tool to manipulate many things as it has been used including the market
Word is this new variant might be the beginning of the end of it as a world stopper as it seems to be highly contagious but very weak which should help with the herd immunity - that thing we were told we needed in the beginning but now no one talks about anymore as they all seem set to get everyone on a cycle of neverending boosters...
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 01, 2021, 05:09:46 PM
Sorry about your covid experiences but please remember it was not everyones
Do what you need to feel safe
I was just pointing out how it is the perfect tool to manipulate many things as it has been used including the market
Word is this new variant might be the beginning of the end of it as a world stopper as it seems to be highly contagious but very weak which should help with the herd immunity - that thing we were told we needed in the beginning but now no one talks about anymore as they all seem set to get everyone on a cycle of neverending boosters...
Eagler
eagler, I dont talk about my family to get sympathy or for people to feel sorry for us. and by that I dont mean that you are putting us down or anything like this. this is just a discussion. I feel I am the average nobody and there's many other families just like ours. and there's other families that havent been affected.
you ever watched the film the wolf of wallstreet? brokers will do anything use anything to make people buy or sell stocks, that's how they make money. that movie is a perfect example of it. I remember back in the 80s when alan greenspan was chair of the federal reserve. I dont remember exactly how he said but he was talking about the market and mention "jubilus exuberance". (forgive if I dont spelled it correctly, couldnt find the right quote) and the market went into a frenzy. the stockbrokers will use anything to make people buy or sell as that's how they make money.
everybody is using covid to push one way or another for two reasons, power and money.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 01, 2021, 05:54:31 PM
I remember back in the 80s when alan greenspan was chair of the federal reserve. I dont remember exactly how he said but he was talking about the market and mention "jubilus exuberance".
"Irrational Exuberance".
Bernanke: "Hold my beer..."
Title: Re: 2007 Redeux?
Post by: guncrasher on December 01, 2021, 05:56:33 PM
ok that makes more sense :cheers: :cheers: :cheers:
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 01, 2021, 05:58:40 PM
Of course note, if inflation were to drop off after xmas and the Fed could go back to 0% because....Omicron...yeah, that's it; they could keep it propped up and keep inflating for year more. Regardless, the end result is the same...except bigger and probably bloodier.
Title: Re: 2007 Redeux?
Post by: guncrasher on December 01, 2021, 11:45:07 PM
this is how it is
semp
Title: Re: 2007 Redeux?
Post by: guncrasher on December 01, 2021, 11:50:50 PM
here's another example
semp
Title: Re: 2007 Redeux?
Post by: guncrasher on December 02, 2021, 12:05:58 AM
one more, you guys think for yourself, just like this this,
we all get played, but who's gonna close
semp
Title: Re: 2007 Redeux?
Post by: Eagler on December 02, 2021, 07:16:57 AM
The market has not ever been this manipulated and over valued than now in my lifetime.
They screwed the pooch in 09 by propping it up instead taking the pain then...
Since then it has just gone criminal IMO .. regardless of what administration was screaming for the next rate drop...all are to blame for where we are now financially.
The only thing holding us up is the fact the entire globe are greedy corrupt sobs
As the dollar loses its hold on its reserve currency and petrol dollar status our standard of living can do nothing but go down..thanks tricky Richard for getting rid of that pesky gold standard. :rolleyes:
But at least we have a military we can spin up another 20 year unwinnable war with in an attempt to pull us out of the next recession
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 10, 2021, 11:10:50 AM
The normal year end Santa-Rally was pretty expected. Might go up a bit from here. The market can run a bit farther, but it's just going to die more tired. :cool:
Dec 15-16 the Fed will probably announce a doubling of their initial plans to taper QE. It will be interesting to see how the market takes that. The real test will be early Q2 2022 when Fed start raising the actual rates again. If inflation doesn't prove "transitory" by then, they will have no choice; their hands will be forced.
That's if the China flag isn't flying over Taipei City by then. In that case, all bets are off. The new then might be consumed about the two US carriers at the bottom of the South China Sea and not the market crash.
I will be flabbergasted if stuff doesn't hit the fan bay end of 2024. I will be mildly amazed if it hasn't by end of 2023. I wouldn't be at all surprised to see it hit the fan in 2022 sometime. I expect the end result to be bad. Really bad. Maybe worse than either 2001 or 2007. I got whacked pretty good both those times but had decades more work life to recover the investments. I'm too close to retirement to take the full ride on the Crazy-Train into downtown Crazy-Town again. I'm getting off at the next stop. ;) If things haven't degraded by end of next year then maybe I'm the one full of it and might ease a little back in. Maybe just TIPS/Total Bond Index. If we get through two actual rate hikes without problems then maybe a little total market index fund.
But, as the physicist Niels Bohr once said, "“Prediction is very difficult, especially if it's about the future!” :D
Title: Re: 2007 Redeux?
Post by: Eagler on December 15, 2021, 03:11:53 PM
The Fed just missed another opportunity to reign this in but did nothing...
Check out I bonds now paying over 7% to fight this criminal inflation
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 15, 2021, 04:36:40 PM
The Fed just missed another opportunity to reign this in but did nothing...
Check out I bonds now paying over 7% to fight this criminal inflation
Well, they did about what I was expecting. In fact, they sound slightly more hawkish than I was hoping.
They first have $60 billion (biiiiiillllion) per month bond buying QE they have to wind down before raising rates. You can't just yank the rug out from under the market all at once. (Though they should have started in 2010. ) I hate to be a Fed defender, but putting past mistakes aside, they did what I thought they needed to do. But you have to give the market some time to digest and come to terms with the new reality. The punch bowl is being removed (in earnest I believe) for the first time in 20ish years. That's not going to happen in a single day, but this was a clear shot across the bow of a lot of traders who simply didn't believe this day would ever come. It's going to take a little while for the implications to fully sink into the minds of a lot of the young guns on Wall Street.
My fear was that they were going to be locked in to feel-good self-delusion and not realize they need to drastically change course. What I have seen is encouraging. It's all about telegraphing your future moves well ahead of time to hope to prevent surprise/panic. They've announced "Last Call" and they have signaled that the punch bowl will be removed. No one expected they would raise rates today. That would have been a disaster without setting expectation ahead of time. Though it would have been fun to watch. ;)
But, the party is over. I still expect a year end run up and the obligatory Santa-Rally. It'll take a couple of months for the QE taper to start being felt. The first real rate change in June will convince the remaining hold-outs that yes, this is not a drill this time.
Thing is, the majority of traders on Wall Street were in grade-school the last time we had rates that were not 0% or so close to 0% to not make a difference. They have no experience trading in that environment and are still having a hard time swallowing what the math is telling them the effects on the current extreme bubble valuations. They have the charts and the math, but they still can't bear the conclusion. Bonus' are only made in a rising market. Show me the financial incentive and I'll tell you what people want desperately to convince themselves. ;)
To paraphrase the comment of one older trader I saw recently:
Quote
There is still a lot of unwillingness of young traders to accept what's coming. They understand; They just still can't believe.
These are the youngsters with their hands on the controls of the market. If that doesn't make your sphincter pucker a bit, then you should go see a doctor. :cool:
But, alas, I think the Fed is trapped. Too much to unwind with too little time to do it without a lot of pain no matter what. Inflation is already getting annoying. I just got back from the store. A 4-pack of some not particularly impressive looking Kroger steaks $60. By mid next year, it will be worse I think. I think average American's will be screaming bloody murder about prices.
Title: Re: 2007 Redeux?
Post by: Eagler on December 15, 2021, 06:26:13 PM
They need to do both, stop the punch bowl and raise rates as painless as possible but there will be pain IMO
They need the higher rates to attract buyers of our debt as that has been mainly the fed lately
I don't think either will happen as it should but another boogeyman will be enacted to enable more of the same
Not to mention not printing trillions more to buy votes while calling it human infrastructure
Eagler
Title: Re: 2007 Redeux?
Post by: Brooke on December 15, 2021, 07:02:37 PM
A book recommendation to folks. I think Eagler and CptTrips would *love* this book.
The Mandibles, by Shriver
I think it is an awesome book. As important as 1984 and Brave New World.
If Fed keeps pumping, I think that we're in for enormous, currency-ruining inflation. So, precious metals, commodities, real estate, some stocks maybe but not others -- and not cash or bonds.
If the Fed stops pumping, I think that we're in for a gigantic crash (so cash -- but not stocks or bonds). Followed by an immediate about face with the Fed printing $100 trillion and triggering a monetary supernova.
Title: Re: 2007 Redeux?
Post by: CptTrips on December 22, 2021, 10:40:05 PM
Title: Re: 2007 Redeux?
Post by: Eagler on December 23, 2021, 08:22:27 AM
Have to wonder what they are preparing for... It sure isn't covid...omicron is a bad flu at worst and zero symptoms at best...
But listen to the talking heads and it's the end of the world...with potato head surprised at the level of infections though both south Africa and the UK have shown record spread but nothing more..but sleepy is surprised...
They have 10 months to spin it into the same 2020 scenario..and you best believe many are shooting for just that.
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 23, 2021, 10:13:36 AM
Quote
There are numerous signals that Russia has sent recently that make me believe invasion is almost certain, as well as a substantial number of reasons for why this is the preferred route for Putin
Have to wonder what they are preparing for... It sure isn't covid...omicron is a bad flu at worst and zero symptoms at best...
But listen to the talking heads and it's the end of the world...with potato head surprised at the level of infections though both south Africa and the UK have shown record spread but nothing more..but sleepy is surprised...
They have 10 months to spin it into the same 2020 scenario..and you best believe many are shooting for just that.
Eagler
tell the people that have died that it isn't so bad. dead only know one thing, it's better to be alive.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 23, 2021, 11:52:07 AM
Ground is freezing hard now allowing them to accelerate pushing forces into the front lines and pre-positioned forward locations. They have probably agreed not jump off until after the Beijing Olympics to not embarrass the Chinese who have probably promised them what ever economic aid and trade needed to offset Western sanctions.
That gives Putin two final months to try and scare the West into Neville Chamberlain-like concessions. That will of course fail. Their demands are ludicrous and even Putin doesn't think there is any chance getting that lucky. But it's worth a roll of the dice while he is waiting for the closing Olympic ceremonies.
So I'd expect tanks to roll the very end of Feb, maybe first week of Mar. My guess is that they would think they could make a blitzkrieg dash to take the eastern half of the Ukraine before muddy season sets in. Then hunker down and reinforce. By the time ground dries and hardens again, it's a done deal. Impossible to push them back out short of nuclear war. We won't go that far for poor Ukraine. Sorry. We'll slam them with sanctions and China will pour in support to offset. I don't get the feeling Putin is bluffing or that NATO will give him personal veto power over NATO membership.
China probably wouldn't move on Taiwan until winter 2022. After the Communist Congress. As soon as Panda-boy secures his next 5-year mandate, he has a free hand to act. And Russia will publicly support them, at least with propaganda and UN veto.
Sadly, I think Taiwan is another Wake Island. It is undefendable. It's too far into China's backyard, and too easily covered by Chinese land-based assets. We shouldn't put any U.S. forces within reach of those land-based weapons. I hope we are realistically communicating the the Taiwanese how far we will and won't go in helping them. You can't sink a continent, but you can sink aircraft carriers.
Our forces should be kept at more defensible position. Japan, Korea, Philippines, Australia. If China wants to expand further, they'll have to stick their necks out and then we'll have the positional advantage to make it hurt. Those southern most man-made islands look like juicy targets.
2022 is going to be another interesting year I'm afraid. Hope I'm completely wrong though.
Title: Re: 2007 Redeux?
Post by: Eagler on December 23, 2021, 12:26:45 PM
Yep my guess is that by the end of 2022 both will be controlled by different regimes
They see this as a perfect time as no one has the will to fight over them.. Russia and China will win both..
I am more curious about Australia..will anyone come to their defense if China really tries to flex?
I am not sure there is....
If there is any resistance, another round of delta++ will shut everything down and reduce any effort to stop them...they have the perfect bioweapon established currently providing any paranoia needed..
They also have to act prior to any economic collapse as that would inspire and motivate some to go to war as a possible way out of their increasing depression and civil unrest..
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 23, 2021, 12:34:19 PM
Seems that raising the rates high enough to check inflation would make the US debt untenable.
It already is but yes any rate increase is just financial suicide but the alternative is out of control inflation which is where we are headed quickly..
https://www.usdebtclock.org/
They have kicked the can for decades
There is no way out of this without feeling pain in numerous ways which is exactly what scares the bejesus out of the politicians...as they will be blamed and hopefully fired at the minimum
Eagler
Title: Re: 2007 Redeux?
Post by: guncrasher on December 23, 2021, 03:06:12 PM
you guys forget the 80s when if you had great credit a house loan was only 18%. banks paid 5% interest and credit cards were charging you 20+.
it isn't the end of the world.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 23, 2021, 09:26:42 PM
you guys forget the 80s when if you had great credit a house loan was only 18%. banks paid 5% interest and credit cards were charging you 20+.
it isn't the end of the world.
semp
It might feel that way to regular working folk.
When you are just barely scraping by with a family and you rent is going from $800 to $1200/mo at the same time gas to get to your chitty job is going from $3/gal to $5/gal to $8/gal. When you had just retired and watch your 401k nest egg you spent a lifetime building drop %80 in value. Yeah, it will eventually come back. In 6-12 years. Meanwhile you might have to sell some of it at pennies on the dollar to eat on waiting for it to recover.
Yeah, life will continue, but a lot of people who did absolutely nothing wrong might end up have lives and retirements and dreams crushed. Look at the shocking drop in birth rates. Young people are not seeing a future they want to start a family in. You would have thought with all that time stuck at home during the pandemic there would be a baby boom. Nope.
Title: Re: 2007 Redeux?
Post by: Eagler on December 24, 2021, 08:41:38 AM
Add Idiocracy to the mix where only the dumbest breed the most and it looks even rosier
When you have to tell your new ENT what pronoun to call you by (online registration asked this and other bizarre gender questions), the world is jacked up...
Sorry semp I remember the 80's and this ain't it.
Eagler
Title: Re: 2007 Redeux?
Post by: guncrasher on December 24, 2021, 11:52:23 AM
When you are just barely scraping by with a family and you rent is going from $800 to $1200/mo at the same time gas to get to your chitty job is going from $3/gal to $5/gal to $8/gal. When you had just retired and watch your 401k nest egg you spent a lifetime building drop %80 in value. Yeah, it will eventually come back. In 6-12 years. Meanwhile you might have to sell some of it at pennies on the dollar to eat on waiting for it to recover.
Yeah, life will continue, but a lot of people who did absolutely nothing wrong might end up have lives and retirements and dreams crushed. Look at the shocking drop in birth rates. Young people are not seeing a future they want to start a family in. You would have thought with all that time stuck at home during the pandemic there would be a baby boom. Nope.
except gas is not going to be 5 or 8 bucks rent around here is about 1100 if you can find an empty apartment. jobs are plenty and pay a minimum of 15, most pay 17 or 18 if they want workers. right now workers are demanding to be paid what they contribute not what the companies can get away with. have a friend that complains that nobody wants to work anymore he needs a guy to check trucks and pays 850 a week for 6 12 hour days. he can't find anybody because he wants to pay below minimum wage. lots of other business doing the same thing. that's really what sucks.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 24, 2021, 12:06:05 PM
Gas here was over $4 in 2007 and that wasn't even hyper-inflation, just some normal vanilla inflation. You're only thinking in terms of next week. I'm talking about over the next 5 years.
Ask anyone in Venezuela or Argentina what hyper-inflation is like. I hope you're right and I'm wrong. But, I'd much rather see a stock crash than hyper-inflation if I had to choose one or the other.
Title: Re: 2007 Redeux?
Post by: guncrasher on December 24, 2021, 01:29:05 PM
Gas here was over $4 in 2007 and that wasn't even hyper-inflation, just some normal vanilla inflation. You're only thinking in terms of next week. I'm talking about over the next 5 years.
Ask anyone in Venezuela or Argentina what hyper-inflation is like. I hope you're right and I'm wrong. But, I'd much rather see a stock crash than hyper-inflation if I had to choose one or the other.
just in case you didn't know i moved from a country were hyper inflation was normal. that's not gonna happen here. not the right signs. you are overstating your assumptions.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 24, 2021, 02:33:03 PM
Let's hope you're right, but that sounds more like faith than analysis.
A lot of people seem to think the U.S. has some magical properties that protect us from the negative economic outcomes other countries have suffered. I don't think we do. If we do the same kinds of things, I expect the same kinds of results. We are bigger, so things might progress at a different pace, but that also means it harder to turn around from a bad trend.
We've gotten ourselves in a real pickle. We have quite a bit of national debt that we can service with current revenue/spending because the interest load is so low. We have massive corporate debt levels and margin trading at a historic high, because money is essentially being handed out for free. We have been stacking up inflationary pressures since at least 2009 just waiting to get traction. We have a stock market that is probably 70% over any sane valuation kept aloft almost purely by Fed money printing.
The Fed has traditionally pegged neutral interest rate at ~4-4.5%. Below that you are applying inflationary pressure, above that you are cooling inflation. We are currently at 0.25%. It's going to be extremely hard for the Fed to get a handle on inflation if all that built up pressure is finally getting traction. Even getting to back to neutral rates would be a Herculean effort that I don't see how it could be accomplished without extremely painful consequences elsewhere. When the pain starts they will wince and try and stop and hope for the best and inflation will then continue spiraling upward. I don't think our Fed or Gov have the pain tolerance that Volker had. It's going to be a Hobbesian choice. How long do you think it would take them to be able to get rates even back to neutral? How much do you think inflation could have climbed by then?
I don't think there are any obvious good solutions. We are in the torturers chair and he is asking if we'd like to have our nuggets cut off or would we prefer to have our fingers and toes smashed with ball-peen hammers. "Uhhhh. Can I have some time to think that over?"
Pain has already been baked into the cake at this point. If we are lucky, we might be able to choose how the pain is allocated. It's possible we could go on pumping and avoid the pain a little longer, but that then has to trade-off of the eventual pain just being worse (but that doesn't mean that won't be what they choose). That doesn't make it go away, it just hangs over your head getting bigger.
I'd prefer a market crash. That's easier for me personally to dodge. I can move to cash and take the 10% inflation hit over the next two years rather than a 60-80% hit in the market. Endemic high inflation is much harder to hide from for everyone including average blue collar folks. It infects every goods or service in your life.
But one way or the other, the piper will eventually be paid. IMHO.
Title: Re: 2007 Redeux?
Post by: guncrasher on December 24, 2021, 03:46:32 PM
I'd prefer a market crash. That's easier for me personally to dodge. I can move to cash and take the 10% inflation hit over the next two years rather than a 60-80% hit in the market.
I think you contradict yourself.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 24, 2021, 03:57:15 PM
you prefer a market crash then something about a 60 hit on the market.
OK. So first we have to separate my personal interests from my fears for my fellow Americans in general. Let's start with me, because my interests are most important. :cool:
ME:
If the Fed REALLY tries to head-off inflation starting next year, and is either braver than I thought or simply mis-calculates the repercussions, I believe it can not help but cause a massive stock market collapse on the eventual level anywhere between 50-80%. Historical metrics would suggest something ~70% I think.
I want to early retire in about 2 years. I can't tolerate that level of hit to my investments, even if it recovers again in 6-12 years.
I think inflation is just getting started and is already ~6.7% (it's really more than that but that's another discussion). I expect it to continue accelerating. It won't happen all in one day. It might get up to 10% through next year. Maybe 15% the next. It may not be linear. I'm in the process of moving to all cash position for some amount of time until I get more clarity into how this historic unwinding of free Fed money effects the stock market. I think I know what will happen, but I could be wrong.
I realize that sitting in cash next year, I am accepting a loss due to inflation. Maybe 10%. If the Fed tries to raise a 1% and the market starts to craters 60%, my 10% inflation loss might look cheap in comparison and I'll soon start seeing much cheaper stocks to buy on the way down with the majority of my capital I preserved. Yes, I’m a ghoul. If the market collapses and I’ve preserved the majority of my capital, I will start picking through the rubble and dead bodies and find some really great deals to buy much more profitably.
If the Fed gives up and decides to print forever, I'll have to consider dipping back in by the end of the year, but maybe with a much more conservative hedged position than I have been in over recent years. It’s nuts, but if the Fed it determined to work the air pump forever, I might as well see if I can siphon some more of that off, but from a careful position wearing my parachute at all times. If they do that, I don’t think inflation will stop on it’s own so I see risks of hyper-inflation. But I hate to be involved in the stock circus in this state because it would also be vary risky even with a parachute.
It’s easier for me to survive a stock market crash. I’ll soon be completely liquid. It’s hard to avoid, the hyper-inflation without getting into stocks or some other asset (bonds, real estate, art, commodities, etc). Problem there is, the deranged Fed policy has created a dangerous asset bubble in every class not cash. We have an EVERYTHING BUBBLE! There is no where safe to go. It’s down to risk management and picking whether you prefer your nuggets cut off or your fingers and toes smashed into pulp.
So from my point of view, I’d prefer the Fed to make a heroic effort to tame inflation and crash the market (just as soon as I’m all cash ;)), at which point I could avoid hyper-inflation by moving back into the market at valuations that I consider a much more reasonable investment and use market gains to shield myself from inflation that might still not be tamed even after they’ve crashed the market. (The market might have crashed before they’ve even gotten rates to 2% and they need ~4% to really pull stop inflation. )
Bottom line, I think there is far, far, far, far too much complacency in the market right now and many retail investors are not putting any thought into just how unprecedented a historic inflection point is that we are hurtling towards. But now we have a timeline for important steps in that inflection. Tapering begins in Jan. Sometime Mar-May they will begin to attempt to reverse a long, deranged, unprecedented loose money policy and no one can be sure of how that unknown risk plays out. But it scares the bejebus out of me.
My best case is the Fed craters the market as soon as I’m all cash, and I then start moving back in to profit off the carnage and earn a positive return above any inflation.
If by the end of next year, inflation has not continued to increase and the Fed has successfully managed 3 rate hikes up to 1% and the market doesn’t blink, then I’ve mis-calculated somehow and I’ll have to stop and form a new plan. I can’t sit in all cash for ever at any level of inflation.
For Average Americans:
Most average Americans are not heavily invested in the stock market. The economy is not the stock market. Wall Street can crater without necessary bringing Main Street down with it. Main Street collapsing will usually crater Wall Street though. Most average salaries have not increased in real terms (minus inflation) since the 80’s. Average American’s have been getting proportionally poorer over the decades.
In your grand-daddy’s day a hard working Joe (non-college) working a steady job could raise a family in a modest home with the wife staying home full time to raise the kids. That’s really hard to do nowadays. Some do, but it’s a lot harder.
If I’m Elon Musk, 20% inflation might mean I can only afford two new yachts that year instead of three. For an average Joe, it might mean I can’t afford to send my kid to college or maybe I lose my house in foreclosure. Inflation is an insidious hidden tax on every single goods or service he buys. It impoverishes him daily.
He might not even notice a stock crash.
So for average American’s, I’d also prefer the taming inflation even if the cost is a smoldering stock market filled with wreckage.
Screw Elon. If his stocks crash, he can sell one of his yachts.
So yeah, I’d prefer the Fed to do WHATEVER it takes to tame inflation. That will almost certainly crash the stock market. I'll prefer that over hyper-inflation, because I’ll be sitting in cash, licking my chops at the buying opportunities as soon as the smoke clears. ;)
Title: Re: 2007 Redeux?
Post by: Eagler on December 25, 2021, 07:32:44 AM
That is if the dollar is still worth anything after the finacial explosion...
It's reserve currency status is struggling only held up by the globes mismanagement of the other currencies but if we continue to print trillions out of thin air while some other countries continue to buy gold to back their currency..won't matter how many dollars you have as they will be worthless...you will need a wheelbarrow to carry what you need ...see 1930's Germany
Eagler
Title: Re: 2007 Redeux?
Post by: guncrasher on December 25, 2021, 01:45:08 PM
trips, you cannot separate yourself from average americans. you are them and they are you. like i said before, i come from a country where people didnt want to get paid in money, they to get paid in food stuff. something that had value. they saw their hourly rate become worthless from monday to friday. so they figured out to be paid in something that had value, like if they worked for a butcher they wanted 10 or 15 kilos of meat on friday instead of money. that's something they could trade for other food. but that was in a country where the president had more power than we have in this country.
we now have a situation where workers demand to be paid based on the service they provide. wages are up and if employers dont pay enough to live on they go somewhere else. that's why everything went up, workers have more money to spend and we have less stuff to buy due to the pandemic. that is a major thing.
me and my wife normally go to her families house for xmas. they asked us not to come, her aunts daughter had a stroke and they're afraid we could have exposed ourselves to covid since we spent last night at my cousin's house. we are vaccinated and so is my cousin and her family. we do the best to not expose ourselfs, i already told everybody about what covid did to my wife. so they are being careful. I think it is stupid of them on the other hand i understand. there's always a chance we could be infected no matter how small the risk. and that is what is affecting he economy.
it's not always just money, it's the people. inflation will go up, people have more money for less stuff to buy. but that isnt the president's fault, not all of it. we aren't printing money that what we have in gold. and yes with the current interest it doesnt make buying bonds a good investment but we have things that need to be taken care of right now that will cost more money later on.
money is always wasted that is the truth in infrastructure there's a bridge near my house that I avoid at all costs, i know people that worked on it and knew of companies that got fired for subpar jobs. so I avoid it, it may fall it may not, just dont want to be on it. but that's how everything is now a days which is the same that it was before. moved here in 79, us citizen by birth born in another country, seen lots of money wasted. just look at the bridge to nowhere in alaska.
semp
Title: Re: 2007 Redeux?
Post by: Eagler on December 26, 2021, 08:14:30 AM
Semp
Not sure where you came from in 79 but I think you have it wrong in the US
Your barter system does not work in America..we are not setup for it to
We are all not the same and separate on our lifestyles and live choices
Some of us have worked our arses off and some look for the next easier way to get by with the most by doing the least..I know both types
Some workers don't want to work period here ..or not start at the bottom and work their way up..occupy wallstreet was that waste of time
When you raise minimum wage you raise prices on everything
Minimum wage was never designed to be a living wage...it was for kids to flip burgers doing summer break..
When you print trillions out of thin are, prices go up on everything
When you scare half the population into hating the other half for not doing whatever to avoid what is now the flu, prices will go up on everything
Those of us who have worked honesty for all of our lives can see through the bs, lies, exaggerations and corruption behind all of this
Eagler
Title: Re: 2007 Redeux?
Post by: Brooke on December 26, 2021, 02:13:10 PM
Today, the financial situation is not like the 1970's.
We had big inflation in the 1970's, but the amount of debt was drastically less than today. So Volcker could quit printing money, jack up interest rates to the teens, and kill the inflation; and government could still pay its bills.
In 1970, national debt was $370 billion, which was 27% of GDP. Today, the US national debt (what is owed on T notes, T bills, etc.) is 78 times bigger, $29 trillion, which is 127% of GDP.
Today, the US spends $400 billion/year to service this debt with an average interest rate of 1.5%. That's with interest rates at historical lows. If interest rates go up even a little, you can't tax enough to pay it. So, you have to keep interest rates at historical lows, which leads to inflation; or you have to print money to pay the debt, which leads to inflation. Or you outright default on it, or restructure it (i.e., "I'll pay you less and/or later.")
Or, you grow your GDP enough so that the debt/GDP does down. But as shown in "This Time Is Different: Eight Centuries of Financial Folly," by economists Reinhart and Rogoff, once you are above about 90% debt/GDP, nations haven't historically been able to grow their way out of debt -- leaving default, inflation, and restructuring as path forward.
None of this stuff is new. I don't know if there has ever been a nation that didn't eventually wreck its currency through debasement/inflation.
Title: Re: 2007 Redeux?
Post by: Brooke on December 26, 2021, 02:18:23 PM
For anyone wanting a great book on economics -- and I wish everyone in the world would read it, would lead to a great improvement in world governance:
Title: Re: 2007 Redeux?
Post by: Brooke on December 26, 2021, 02:33:29 PM
One problem in all of this, to me, is that I don't know if we will have a gigantic financial crash, then huge inflation, or just straight into huge inflation. I don't think things will be something smooth indefinitely into the future.
Inflation means own gold, silver, a house, commodities -- but not cash.
Gigantic financial crash means own cash.
The hardest to get right, and the most potential to ruin the most people, is large inflation, then gigantic crash, then huge inflation. So I guess that is my base assumption of what will happen.
Title: Re: 2007 Redeux?
Post by: guncrasher on December 26, 2021, 02:36:06 PM
minimum wage was designed so a father could provide for his family.
kids flipping burgers was not a summer job, I worked at a pizza place thru high-school, it allowed me to pay 75% of rent for our family. i made from 100 to 200 every 2 weeks. and I lived like a king in hischool, went to inn out almost every day for lunch. now I can't stand it.
as for the barter system that's what we had. I only wrote about it because I saw the signs when I was young. the signs aren't here.
the city where I live has a shortage of housing. looks like several cities around were competing in building warehouses. that caused the housing problem. nobody wants to work at minimum wage because there's jobs that pay more, if they want workers.
I consider that a good sign. if course there's people that would rather not work, always have always will. but that's not what I see in h the apartment complex where I live. everybody has at least 1 job, some have 2. a bit different from last year when people were home.
economy looks healthy and some companies still think they can do as they wish. pork is one example. they had years to change according to the law, they didn't, more they won't be able to sell here. the chicken and veal companies changed according to the law years ago. but pork industry decided not to.
semp
Title: Re: 2007 Redeux?
Post by: Brooke on December 26, 2021, 03:08:40 PM
minimum wage was designed so a father could provide for his family.
Minimum wage, rent control, and policies like that sound like they would help. But when you consider all economic consequences, they end up being harmful to the group of folks intended to help. Reasons why and some case studies are described in books like Economics in One Lesson, by Hazlitt; Basic Economics, by Sowell; and Losing Ground: American Social Policy, 1950 - 1980, by Murray. Minimum wage, for example results in higher wages for folks who are still employed (which is good for them), but puts some people out of work whose wages then are zero (so much worse for them). Over the whole group, it is harmful. Rent control leads to shortage of housing. Great for the folks who are already in it; sucks for folks who aren't. These are well-studied consequences that show detriment in aggregate.
Quote
as for the barter system that's what we had. I only wrote about it because I saw the signs when I was young. the signs aren't here.
I recently had to do large amounts of work to get my house ready to sell. Some is showing up.
Quote
I consider that a good sign.
If wages for everyone keep up with inflation, that is good, and the economy is functioning well. But usually under inflation, they don't. A Big Mac goes from $5 to $10, but while average person's wages go up, they don't double. So, comparatively, average person is less well off.
Today, we have massive printing of money from the government. It goes to a subset of people, who are way better off for it. But the folks down the chain of that economic flow are not. They get higher prices without the full measure of free money.
Title: Re: 2007 Redeux?
Post by: DmonSlyr on December 26, 2021, 04:48:08 PM
There is one simple solution to all of this, though it will never happen. In my dreams perhaps. It's why countries fail.
All they they have to do is lower the Income and property taxes by 30-40% and fire/remove many government programs/institutions, and people would automatically have an extra $150+ to spend a month while giving the government more cash to pay off debt/deficits. This would increase the people's spending capacity which the government would get back in some way. What I always see with failing countries is a very high tax rate that crushes consumer spending while the government grows its britches too big that it cannot compensate for a decline in consumer spending. Or the government takes over certain industries but cannot maintain them as well as a private Co, which leads to failure and collapse. I still believe that high taxes leads to high cost because all business must compensate for that tax lost, which forces your business to raise prizes to compensate for all of your suppliers raising prices.
Reduce the size of government and its spending and lower tax #s rates for all Americans. That is how you best this situation and bring GDP back to 5%.
Title: Re: 2007 Redeux?
Post by: CptTrips on December 26, 2021, 05:26:44 PM
Inflation means own gold, silver, a house, commodities -- but not cash.
Long term, yes.
But housing and commodities are also entrapped in the current EVERYTHING BUBBLE. When things pop, those are getting their heads lopped off too, IMHO.
Precocious metals and gems have some usefulness to store value through the storm, but only if you are taking physical possession of the asset. If you are paying for storage, you are losing purchasing power from the overhead.
If you are nearing retirement, you want to store a $mil of Kugerrands in your attic? Bury it in your back yard?
The only other option is buying gold options, but then you are just back to a different kind of paper. If I'm going to do that, then I prefer gold mining stock. I don't have to risk storage or pay for secure storage. The mining companies revenue would hopefully be very resilient as the thing they are generating revenue mining retains value. In addition, they have significant physical assets like land, equipment, etc. YMMV.
Some people say crypto is the new gold. I'm not buying it. crypto seems more reliant on a constant stream of "Greater Fools" than most other investments. Didn't we just have a bout of massive valuation swings? 20+ % over a weekend? Does that sound like stable store of value? Smells like Tulips to me. https://en.wikipedia.org/wiki/Tulip_mania (https://en.wikipedia.org/wiki/Tulip_mania)
IMHO, if I can't pay my Federal taxes with it, then it isn't a currency. <Shrug>
A friend is walking me through options. Not something I want to dabble in, but might be worth a smallish side bet. Might could make some inverse return from the market crashing, enough to offset the inflation cost of the rest sitting safely in cash during the upheaval. I haven't decided. But I'd do that before buying any crypto. ;)
Title: Re: 2007 Redeux?
Post by: Brooke on December 27, 2021, 01:02:34 AM
But housing and commodities are also entrapped in the current EVERYTHING BUBBLE. When things pop, those are getting their heads lopped off too, IMHO.
Absolutely. That's the dilemma I see: will we have crash then inflation, or no crash and then inflation? Each one of those has a very different optimal investments.
Quote
Precocious metals and gems have some usefulness to store value through the storm, but only if you are taking physical possession of the asset. If you are paying for storage, you are losing purchasing power from the overhead.
Every way of owning precious metals has its set of advantages and disadvantages. Vaulting isn't that expensive these days (like 0.5% per year) and still has some counterparty risk. Storing in your house might need various security expenses or overhead. Depends on a person's situation.
Quote
The only other option is buying gold options, but then you are just back to a different kind of paper.
I think futures could definitely decouple from the physical asset, with the futures becoming worthless.
Quote
If I'm going to do that, then I prefer gold mining stock.
Can be good, but depends on what you are planning for. If there is giant inflation, but the financial system still works, is probably good. If it gets so bad that brokerages and markets start to fail, then physical assets are perhaps best. Or can do a mix of those for diversity.
Quote
Some people say crypto is the new gold. I'm not buying it. . . . . Smells like Tulips to me.
Same to me. People think of Bitcoin as being unable to be diluted. But you can easily make Bitcoin II, III, etc. -- just like Dogecoin. It is dilutable by making additional currencies.
Quote
A friend is walking me through options.
I've done a lot of options trading. My feeling is that they are, for most people, like gambling on a roulette wheel, but with worse odds than the roulette wheel. But if you are the 1 in a million guy who can time things (like a crash), you could make a lot of money.
Title: Re: 2007 Redeux?
Post by: Eagler on December 27, 2021, 08:01:08 AM
I series savings bonds are paying over 7% until May 2022 where my guess is they go higher due to increased inflation
$10,000 limit per person per year has me investing $40k between now and next week 2022 for 2 for me and 2 for the wife
Not much but its its something and about as safe as it can be
Anyone still have a pension?
I recently discovered that one of mine that I thought was inclusive of another - buyout- was not and is actually a separate one
What are you thoughts on those? Take a lump sum if offered or take monthly payments?
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 27, 2021, 08:25:08 AM
[Nevermind. Was trying to fix a typo.]
Title: Re: 2007 Redeux?
Post by: CptTrips on December 27, 2021, 09:16:00 AM
I series savings bonds are paying over 7% until May 2022 where my guess is they go higher due to increased inflation
$10,000 limit per person per year has me investing $40k between now and next week 2022 for 2 for me and 2 for the wife
Not much but its its something and about as safe as it can be
I was looking at those.
Things to consider. That money is locked up for at least a year. If you don't keep it 5 years, you lose the last 3 months interest. So if you cash it in in a year, your yield is more like 4%. Current inflation is going to end up around 5.9% for 2021. Is inflation going up or down in 2022? My guess is up.
Not terrible for low risk. I personally don't know if I'm comfortable in having anything locked up for 12 months right now. I prefer liquidity, but you have to weight based on your own risk tolerance. I don't think there are any perfect investments right now. Pick your poison. ;)
Personally, I'm developing my own crypto currency (everybody is doing it), Tulipcoin. I just need some celebrity to promote it on TV for me and get me some buzz. Maybe Paris Hilton.
Title: Re: 2007 Redeux?
Post by: CptTrips on December 27, 2021, 12:55:10 PM
I series savings bonds are paying over 7% until May 2022 where my guess is they go higher due to increased inflation
$10,000 limit per person per year has me investing $40k between now and next week 2022 for 2 for me and 2 for the wife
Not much but its its something and about as safe as it can be
Have you also evaluated TIPS?
Title: Re: 2007 Redeux?
Post by: Brooke on December 27, 2021, 01:44:58 PM
Jeez. 7% on I Bonds. I know that there's inflation, but I didn't realize the official CPI was posted so high. CPI was 1.68% as of February, 2021. It is currently 6.8%.
My worry is that if there is a big enough crash, institutions that handle annuities or maybe pensions go belly up. I don't know, though. All money has to be put somewhere. Government bonds seem pretty safe because I don't think the government would outright default on them -- just print more money to pay them. But if there is huge inflation, they get eroded, even inflation-linked ones, as the government calculation of inflation is lower than real inflation.
I like this site for info on inflation: http://www.shadowstats.com/alternate_data/inflation-charts
Title: Re: 2007 Redeux?
Post by: CptTrips on December 27, 2021, 02:08:45 PM
My worry is that if there is a big enough crash, institutions that handle annuities or maybe pensions go belly up.
Well, that is one of the more criminal side-effects of the Fed deranged Zero-Interest rate policy.
Older Retirees, institutions and pension funds that have fixed outlays they HAVE to cover, have been forced bit by bit into heavier weight of risk assets because they can't earn sufficient revenue in the old traditional safer fixed-income instruments.
If they get caught when the music stops holding a bunch of worthless stocks, they are toast. Those kind of investors should NOT be holding lots of stocks, but many are because they had to to cover payouts. The Fed had basically closed off other revenue sources. TINA at work.
:uhoh
Title: Re: 2007 Redeux?
Post by: hazmatt on December 27, 2021, 03:57:24 PM
Let's hope you're right, but that sounds more like faith than analysis.
A lot of people seem to think the U.S. has some magical properties that protect us from the negative economic outcomes other countries have suffered. I don't think we do. If we do the same kinds of things, I expect the same kinds of results. We are bigger, so things might progress at a different pace, but that also means it harder to turn around from a bad trend.
We've gotten ourselves in a real pickle. We have quite a bit of national debt that we can service with current revenue/spending because the interest load is so low. We have massive corporate debt levels and margin trading at a historic high, because money is essentially being handed out for free. We have been stacking up inflationary pressures since at least 2009 just waiting to get traction. We have a stock market that is probably 70% over any sane valuation kept aloft almost purely by Fed money printing.
The Fed has traditionally pegged neutral interest rate at ~4-4.5%. Below that you are applying inflationary pressure, above that you are cooling inflation. We are currently at 0.25%. It's going to be extremely hard for the Fed to get a handle on inflation if all that built up pressure is finally getting traction. Even getting to back to neutral rates would be a Herculean effort that I don't see how it could be accomplished without extremely painful consequences elsewhere. When the pain starts they will wince and try and stop and hope for the best and inflation will then continue spiraling upward. I don't think our Fed or Gov have the pain tolerance that Volker had. It's going to be a Hobbesian choice. How long do you think it would take them to be able to get rates even back to neutral? How much do you think inflation could have climbed by then?
I don't think there are any obvious good solutions. We are in the torturers chair and he is asking if we'd like to have our nuggets cut off or would we prefer to have our fingers and toes smashed with ball-peen hammers. "Uhhhh. Can I have some time to think that over?"
Pain has already been baked into the cake at this point. If we are lucky, we might be able to choose how the pain is allocated. It's possible we could go on pumping and avoid the pain a little longer, but that then has to trade-off of the eventual pain just being worse (but that doesn't mean that won't be what they choose). That doesn't make it go away, it just hangs over your head getting bigger.
I'd prefer a market crash. That's easier for me personally to dodge. I can move to cash and take the 10% inflation hit over the next two years rather than a 60-80% hit in the market. Endemic high inflation is much harder to hide from for everyone including average blue collar folks. It infects every goods or service in your life.
But one way or the other, the piper will eventually be paid. IMHO.
It doesn't make me happy to say that I agree with you.
Title: Re: 2007 Redeux?
Post by: hazmatt on December 27, 2021, 04:12:36 PM
Today, the financial situation is not like the 1970's.
We had big inflation in the 1970's, but the amount of debt was drastically less than today. So Volcker could quit printing money, jack up interest rates to the teens, and kill the inflation; and government could still pay its bills.
In 1970, national debt was $370 billion, which was 27% of GDP. Today, the US national debt (what is owed on T notes, T bills, etc.) is 78 times bigger, $29 trillion, which is 127% of GDP.
Today, the US spends $400 billion/year to service this debt with an average interest rate of 1.5%. That's with interest rates at historical lows. If interest rates go up even a little, you can't tax enough to pay it. So, you have to keep interest rates at historical lows, which leads to inflation; or you have to print money to pay the debt, which leads to inflation. Or you outright default on it, or restructure it (i.e., "I'll pay you less and/or later.")
Or, you grow your GDP enough so that the debt/GDP does down. But as shown in "This Time Is Different: Eight Centuries of Financial Folly," by economists Reinhart and Rogoff, once you are above about 90% debt/GDP, nations haven't historically been able to grow their way out of debt -- leaving default, inflation, and restructuring as path forward.
None of this stuff is new. I don't know if there has ever been a nation that didn't eventually wreck its currency through debasement/inflation.
Agree. Well said.
Title: Re: 2007 Redeux?
Post by: CptTrips on December 27, 2021, 05:24:20 PM
It doesn't HAVE to happen. We do know how to stop inflation. In fact, I'd say that most of the Fed's real toolkit is oriented toward controlling inflation. That doesn't mean it won't be painful.
The pain should have been slowly absorbed, bit by bit, since 2010, probably. There would have been less pain debt built up, and longer to siphon it out of the system. It would have been a not so fun period, but manageable. Now, it could be cataclysmic.
Or protect the stock market and allow inflation to run rampant.
Or try and split the difference? Not do enough tightening to really get control of inflation, but still enough to crash the market? End up with 20% YoY inflation AND a 70% market drop. I don't think the insanely distorted stock market will tolerate any real amount of tightening without unwinding.
Beware of Recency Bias. At the beginning of the Pandemic, I had been digging into stuff and I remember telling friends, "This could get bad. It's possible the death rate could climb as high as... maybe even 1,000 deaths a day in the U.S. 200,000 Americans could die from this before we get control of it." They rolled their eyes and laughed in my face. I didn't blame them. I felt like an idiot saying that out-loud, but it is what the numbers were telling me could be possible. It's hard for humans to accept anything cataclysmic could happen to them out of the blue. Surely someone in charge will stop that from happening. It could never get that bad. "That's not going to happen here." And yes, it sounded insane to say it at the time.
It's the same mentality that kept people from getting into the lifeboats on the Titanic until it was too late. Many "smart" people thought it was all overblown hysteria. "The engineers are working on it and will have the leak fixed soon. No point in getting in crowded boats and freezing for hours for no reason. Stay here in the bar and enjoy another cigar and glass of port and let others panic. If things get worse, we can always go and get into one of the boats later."
Title: Re: 2007 Redeux?
Post by: hazmatt on December 28, 2021, 11:52:42 AM
I'm a prepare for the worst and hope for the best kinda guy but it's tough to prepare for unknowns.
Title: Re: 2007 Redeux?
Post by: Eagler on December 28, 2021, 12:17:02 PM
To compare covid to the sinking of the titanic is silly at best
They would certainly die if they stayed on the ship..while millions live just fine not taking the shot
Too bad the globe doesn't hold China financially responsible for their leaked latest bioweapon experiment
But seeing the majority of the globe are Chinas customers/consumers of slave created products, how can they?
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 28, 2021, 12:29:23 PM
To compare covid to the sinking of the titanic is silly at best
You need to read that post a little more closely.
That analogy was referring to the complacency of investors not taking the scale of the current stock market risks seriously.
The COVID comment was another separate, but more recent example of the dangers of Recency Bias.
But bother were referring to investors underestimating the current market risks.
Title: Re: 2007 Redeux?
Post by: CptTrips on December 28, 2021, 02:56:23 PM
A good sampling on different views. Some I agree with, some I don't, but it's good to hear the counter argument if well argued. I do agree there are a lot of unknowns.
Title: Re: 2007 Redeux?
Post by: CptTrips on December 28, 2021, 05:00:00 PM
We've seen this movie before.
Except this time it's going to be In IMAX.
In 3D!
Quote
“The real danger comes from [the Fed] encouraging or inadvertently tolerating rising inflation and its close cousin of extreme speculation and risk taking, in effect standing by while bubbles and excesses threaten financial markets,” Volcker later wrote in his memoir.
But housing and commodities are also entrapped in the current EVERYTHING BUBBLE. When things pop, those are getting their heads lopped off too, IMHO.
Precocious metals and gems have some usefulness to store value through the storm, but only if you are taking physical possession of the asset. If you are paying for storage, you are losing purchasing power from the overhead.
If you are nearing retirement, you want to store a $mil of Kugerrands in your attic? Bury it in your back yard? The only other option is buying gold options, but then you are just back to a different kind of paper. If I'm going to do that, then I prefer gold mining stock. I don't have to risk storage or pay for secure storage. The mining companies revenue would hopefully be very resilient as the thing they are generating revenue mining retains value. In addition, they have significant physical assets like land, equipment, etc. YMMV.
Some people say crypto is the new gold. I'm not buying it. crypto seems more reliant on a constant stream of "Greater Fools" than most other investments. Didn't we just have a bout of massive valuation swings? 20+ % over a weekend? Does that sound like stable store of value? Smells like Tulips to me. https://en.wikipedia.org/wiki/Tulip_mania (https://en.wikipedia.org/wiki/Tulip_mania)
IMHO, if I can't pay my Federal taxes with it, then it isn't a currency. <Shrug>
A friend is walking me through options. Not something I want to dabble in, but might be worth a smallish side bet. Might could make some inverse return from the market crashing, enough to offset the inflation cost of the rest sitting safely in cash during the upheaval. I haven't decided. But I'd do that before buying any crypto. ;)
anything is worthless if people arent willing to buy it. for example diamonds, they arent rare and they are plentiful. it's just a gimmick. sure spent 6 months of your salary to buy an engagement ring. diamonds last forever. gold mining stock is just as worthless if people dont want to buy gold. just like anything else.
in your way of thinking that we are gonna crash. only thing worthy buying is what you can sell, food stuff. If you really believe that the economy is going the way you think, buy rice or beans and store them in buckets. that would be worth more than your precious gold papers. even if you dont sell it, you can live on it. sure gold stock or bonds have plenty of fiber but you cant live on it. or at least if paper toilet disappears like last year, you can still use it as toilet paper or maybe to cook the rice or beans.
semp
Title: Re: 2007 Redeux?
Post by: CptTrips on December 29, 2021, 08:25:55 AM
in your way of thinking that we are gonna crash. only thing worthy buying is what you can sell, food stuff.
You are correct if you are predicting all out nuclear-winter, Mad-Max societal collapse. That's not what I'm predicting.
I have about 6 months MRE and such out at my cabin at land outside of the city. Any total collapse that would be decades long, I have a 9mm for that. I'll just eat a bullet. Some games just aren't worth the candle.
I'm thinking of a economic scenario more along the lines of something halfway between 2007 and 1929 crashes. Worse than 2007, not worse than 1929. Devastating. Retirement savings wiped-out. Various bank, and pension fund collapses. Significant business failures and home foreclosures. Social/political unrest; perhaps some sporadic violence. Someone might start a war somewhere; or two.
But I'm assuming it will be a scenario where there is still a banking system, a government, electricity, flushing toilets, internet and a stock market.
Title: Re: 2007 Redeux?
Post by: Eagler on December 29, 2021, 08:58:30 AM
Have to wonder how bad it would get and how fast...
I can see the evening news bugged eyed screaming at its audience stating it's the end of civility...
Imagine how that would inspire some...more peaceful protests..
Flash mob the sams, targets, Walmarts, grocery and liquor stores and we are all hurting quickly
I see a controlled crash quickly becoming an uncontrolled shift in society for the worse...
Eagler
Title: Re: 2007 Redeux?
Post by: Eagler on December 29, 2021, 09:31:26 AM
It is a possible scenario that excuses are found to stop the tightening before a stock collapse (I don't think it will be Omicron driving that). If they could hold inflation down to no more than 10% and not collapse the stock market for now, they might try for that. Sucks hard for average families, but that doesn't mean they won't do it to protect big banks and Wall Street.
That doesn't mean a collapse won't happen eventually, but they might decide to start printing again postpone the inevitable for a while longer. The threat doesn't go away, just grows bigger then, and will be even worse when it eventually comes.
Still, I'm not sure that any real tightening won't collapse this teetering circus by accident, and once it gets a head of steam going, the Fed might not be able to stop it until it's run it's course by any amount of printing.
Title: Re: 2007 Redeux?
Post by: guncrasher on December 29, 2021, 12:10:51 PM
I'm thinking of a economic scenario more along the lines of something halfway between 2007 and 1929 crashes. Worse than 2007, not worse than 1929. Devastating. Retirement savings wiped-out. Various bank, and pension fund collapses. Significant business failures and home foreclosures. Social/political unrest; perhaps some sporadic violence. Someone might start a war somewhere; or two.
But I'm assuming it will be a scenario where there is still a banking system, a government, electricity, flushing toilets, internet and a stock market.
stil in your possible scenario, with tens of millions out of work, gold or whatever precious gems even in paper will lose value faster than anything else.
somethings in this thread are way far out. like we just keep printing money, we don't, it needs to be backed up by gold or bonds. also the money is not spent in one year, it's over a number of years. most of the money will be well spent. infrastructure and health. and that's money well spent. unless you listen to Facebook.
semp
Title: Re: 2007 Redeux?
Post by: Eagler on December 29, 2021, 12:18:55 PM
They have been printing trillions of dollars that are not backed by anything for decades now...
Do you think bad orange man and potato head thought hmm lets print a trillion for all that gold sitting in some vault somewhere?
The dollar has been based off oil since the 70's
That agreement is dead and so is the dollar unless we go to war to prevent it from being replaced as the reserve currency by another country's currency that is actually backed by gold
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on December 29, 2021, 01:21:41 PM
gold or whatever precious gems even in paper will lose value faster than anything else.
Have you actually researched how gold performed during the Great Depression, Great Recession and the DotCom Bust?
Gold tends to be inversely correlated with the stock market. It is seen as a safe-haven in times of market turmoil and/or rising inflation. Sometimes during the crash it will drop a little because people are selling their gold (which held value well) to pay off margin. But that is after a run-up before the turmoil. If the stock market crashed, it will usually be nice to be holding some position in gold assuming you bought some before it zoomed.
I would never go all in on gold, but it is a useful hedge in a diversified portfolio, especially at scary times. I consider it a hedge rather than an investment. I wouldn't hold a lot in boom times. Maybe just hold a little, again as a hedge.
If you disagree, that's ok with me. We all make our best guesses and place our bets and live with the results. If you have a better game plan for a crash, I wouldn't mind hearing it.
In any case, good luck.
Title: Re: 2007 Redeux?
Post by: Eagler on December 29, 2021, 01:42:36 PM
somethings in this thread are way far out. like we just keep printing money, we don't, it needs to be backed up by gold or bonds.
U.S. dollar is no longer backed by gold.
"Printing money" is a euphemism. Treasury prints the actual physical currency, but that is only a tiny fraction of the total money supply.
And yes, the Fed just creates it out of thin air.
My understanding:
1. When Fed wants to "create" money they call up one of their primary dealers (mega-banks, Goldman's, ect) and tells them the Fed would like to "buy" a trillion dollars of U.S. treasuries.
2. The bank says OK and transfers the assets they are authorized to sell.
3. The Fed says thanks and types in some numbers that just appear in the banks reserve account. They could have picked 2 trillion or 3 trillion. or 100 trillion. They just make up what ever they want. It's simply a matter of typing more digits.
4. The bank then has excess reserves they can lend out for profit or buy assets, thus injecting that magically created digital money into the economy.
5. The Fed can then hold that government debt on their balance sheet.
6. The government either pays it off from tax revenue or issues more debt to cover it.
The Fed "prints" money by telling the primary dealer how much government debt they want to buy. They just make that number up out of thin air depending on how much liquidity they think they want to inject into the economy. There is no limit other than the Fed's discretion.
New "money" is created in exchange for new government debt. How much money/debt is completely at the arbitrary discretion of the Fed.
[Edit] Sorry, I think the above is how QE works. And to add insult to injury, they are also buying mortgage backed securities. Private citizen's home loans. And other central banks (Japan?) are even buying private company stocks. Insane.
Here is a better description of the normal Fed mechanism: https://www.investopedia.com/articles/investing/081415/understanding-how-federal-reserve-creates-money.asp (https://www.investopedia.com/articles/investing/081415/understanding-how-federal-reserve-creates-money.asp)
Title: Re: 2007 Redeux?
Post by: Eagler on December 29, 2021, 02:41:25 PM
It's a giant shell game..nothing more
Well it should be criminal at this point...
Eagler
Title: Re: 2007 Redeux?
Post by: hazmatt on December 29, 2021, 03:55:50 PM
This is good description of fractional: https://www.investopedia.com/articles/investing/081415/understanding-how-federal-reserve-creates-money.asp (https://www.investopedia.com/articles/investing/081415/understanding-how-federal-reserve-creates-money.asp)
Title: Re: 2007 Redeux?
Post by: CptTrips on December 29, 2021, 05:54:59 PM
Wholesale inflation almost 10% already????? I wasn't expecting that until mid-2022.
Offff. Fed got complacent and fell asleep at the wheel. Good luck stopping a freight train once it's got a head of steam up.
Title: Re: 2007 Redeux?
Post by: Eagler on December 30, 2021, 07:07:46 AM
Inflation is another rigged benchmark where the goal posts are moved by just changing the what's in the basket of goods that are tracked for it
If they says its 10 it is probably closer to 15 or higher
More government bs for those that don't think past the evening news ..
And as they use this manipulated figure in their financial decisions..it is just another shell to look under
Eagler
Title: Re: 2007 Redeux?
Post by: hazmatt on December 30, 2021, 07:14:40 AM
I think shadow stats was showing 15% using the old way of calculating.
I'm thinking to buy everything I could possibly need for the next 5 years on credit so that my credit payment as say 9% will be a wash with 10% or more inflation.
Title: Re: 2007 Redeux?
Post by: CptTrips on December 30, 2021, 08:48:55 AM
I think shadow stats was showing 15% using the old way of calculating.
Yeah, they play ridiculous games with the inflation estimates. The whole substitution scam. If the basket used to have ribeye stakes but now they are too expensive to buy they say you can substitute less expensive ground rat meat with A1 sauce and so there is no change to standard of living so no change in inflation. If the CPI basket had ribeye in 1980, then it should have ribeye in 2021. Otherwise you are comparing apples and oranges and continually lowing the standard of living is not the same as no inflation. Inflation is not being able to maintain the same standard of living for the same amount of money.
I'm thinking to buy everything I could possibly need for the next 5 years on credit so that my credit payment as say 9% will be a wash with 10% or more inflation.
Heh. A perfectly reasonable reaction. But you realize it is exactly the inflationary psychology that the the Fed is afraid will spread, because it makes inflation self-reinforcing. That's one of the big reasons they try so hard to hide the real inflation numbers from the public. :D
Heh. A perfectly reasonable reaction. But you realize it is exactly the inflationary psychology that the the Fed is afraid will spread, because it makes inflation self-reinforcing. That's one of the big reasons they try so hard to hide the real inflation numbers from the public. :D
Title: Re: 2007 Redeux?
Post by: Eagler on January 06, 2022, 07:38:13 AM
They are talking about printing more $$$ out of thin air and giving it to restaurants now...
I don't think they understand the issue .... it's all about politics and keeping the power to them
If our representatives weren't treated as royalty maybe they would understand the problems average Joe is experiencing with their economy killing policies
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on January 08, 2022, 01:45:35 PM
The X-Axis NMC/GVA is just a more technical, slightly more accurate version of the Buffett Indicator ratio. But they are both telling the same story.
1.0-1.2 is reasonable historically. Higher that that and you are not likely to see real returns above average inflation over the subsequent 10-12 years.
This chart suggest that 12 years from now, the stock valuations will still be -6% lower than they are today. One scenario is the market doesn't crash but slowly declines 6% over the next 12 years. I think that scenario is highly unlikely. Todays investors are nuts, but they are greedy and nuts. In that scenario they would have gotten out way before that. If they can. An a slow gradual decline gives them that flexibility. They aren't going to sit and hold slowly declining risk assets for a decade without losing patience. They'll take a bit of a trim, but they can make that up by getting their principle out and into better earning assets.
What historically happens is a massive and quick crash occurs (when the smart-money decided the game is no longer worth the candle). Joe retail investor dollar-cost-averaging is paycheck into the market like he is told to, never selling, like he is told not to, ends up being the bag-holder. Goldman-Sachs can't get their money out without the retail bag-holders willing to buy at these levels. Stocks don't sell to themselves. There has to be a bag-holder for smart-money to get out at the top. bag-holders are NOT immoral or stupid. They are just average folks who DCA their checks while raising kids and living their life. They don't obsess over this stuff and don't see it coming and CNBC will never tell them. CNBC will only ever tell you to keep buying and never sell. Once the crash happens, bag-holders are stuck. They can't sell without locking in their 60% loss. But if they don't, their investment is locked for 12+ years , or until they can get to some level of loss they can stomach. After that crash the market will start to claw it's way back, but 12 years from now might not have year gotten back to where it started. The NASDAQ took 15 years to recover from 2001. But after the initial crash, there are good invests for new money in those remain 10 years. You just don't want to be a bag-holder for Goldman-Sachs. The market in aggregate won't be back up to these levels in 12 years, but they will be up quite a bit from the low point after the initial crash.
If they are young enough (20-30yo), they can still work and put new money in the market after the crash (2 years?) at the point that the market reaches reasonable levels and starts to rise again, hopefully at more reasonable and sustainable rate. They'll still have decades to make up the difference. Retirees or Near-Retirees are screwed.
Goldman-Sachs will still payout record bonuses those years. Even if they get caught flat-footed (and they won't), they have high speed trading systems that will get their sell orders in front-loaded ahead of any retail investors sell off.
There is a reason Buffett is sitting on his largest pile of un-invested cash in Berkshire's history. He may look like he is grinning like a baby, but that is really just a gator licking his chops.
Title: Re: 2007 Redeux?
Post by: Brooke on January 08, 2022, 04:17:56 PM
I love their elegance and how well thought out his data is. I hate what they tell me is coming. But I've reach the acceptance stage of grief. I can find no flaw in his arguments. His only failing was to be too early. He was the guy freezing in the lifeboat from the second after the Titanic hit the iceberg. He isn't wrong, but he could have stayed in the bar and enjoyed another port and cigar first. But he is still going to be better off than the others. When their nads hit that cold water they will realize it is better to be years early than a second late.
I spent a couple of years analyzing them and trying to figure how he had it wrong. At this moment in time, I think he is dead right and will be one you read about later like Michael Burry in 2008. Though it's amazing how much hate he gets. If he is wrong, then he is wrong. I think people hate him because he is right and they don't want to hear it, but can't find the math to prove he is wrong. People hate being told what they don't want to hear by someone that won't be shouted down into going along with the crowd-think. Being early (as he readily admits) did hurt his half-cycle performance. But don't count the chips until the dealin is done. Lets measure after the full cycle has completed.
(NOT INVESTING ADVICE) I couldn't take it anymore. I pulled out to cash last week. I am going to take a limited portion of fun-money and seek some Alpha. Gotta play da game, yo. I'm thinking gold mining (maaaaaybe some silver too) and some HSGFX. I think Hussman is currently deeply under-valued ;) and he has some short position to maybe earn off the collapse. I'm too scared to dabble in that stuff with my own hands. I don't have time to learn at this point. I'd only hurt myself. ;)
After the crash, I'll do some copper, agriculture etf. As a techie, I've been researching block-chain the last couple of months. No way you are convincing me that Bitcoin is a currency (not to say governments won't produce their own crypto, but that will have official backing), but that doesn't mean that block-chain tokens don't have some value. Just not at these levels. After they have lost 90% value I might buy some like a lotto ticket. I don't know what they might eventually get used for, but like raw unimproved land, it is a finite asset. There are uses it COULD be put to, but highly speculative. Not quite as bad as a lotto ticket, but I'll buy some at an appropriate price just for fun.
Eventually after enough stock brokers have jumped off enough buildings it will be time to buy some total market index. But only after everyone has lost all hope. :evil:
But I can see no other assets I like the smell of right now. Bonds? Nope. Real estate? Nope. Housing? Nope. Emerging markets? Nope. Guns and ammo? Hmmmm. Nah. Already over-weighted there. :rofl
Title: Re: 2007 Redeux?
Post by: Brooke on January 08, 2022, 11:09:17 PM
So far, this is from one guy looking at it, and he has no idea of infectiousness or deadliness. If he's right about seeing it (need more confirmation than one lab), it might be less infectious and less deadly than anything yet, or might die out as a variant without doing much.
I think we're going to be commonly and indefinitely hearing of new strains of covid. Because it is a mutating virus without a 100% effective vaccine, and is now endemic, like flu.
Thanks, WIV.
Title: Re: 2007 Redeux?
Post by: Eagler on January 09, 2022, 07:12:25 AM
The media is trying to get the public to crap its pants over the mild cold omicron variant...
If the deltacron is anyway more contagious and or deadly than omicron, they might get the lockdown needed for later this year and with it even more money printed out of thin air for "stimulus " checks to "save the economy "
The excuse they are looking for NOT to have to correct their financial problems instead more can kicking..
Eagler
Title: Re: 2007 Redeux?
Post by: guncrasher on January 09, 2022, 03:48:14 PM
brooks, you forgot to mention that the flu has around 220 strains. but once you catch one, you become immune to it.
the difference is covid you don't get the same natural immunity. you can become infected over and over. that's the scary part. what it does long term, nobody knows.
last week I took my wife to the doctor for her memory loss, he basically said, he didn't know what to do.
my wife has fallen several times, broken leg, arm and a rib when she becomes disoriented. had the police show up on a welfare check. showed them the videos that I saved and they left. have two ring cameras inside my house to keep an eye on her.
not a week goes by that a restaurant around my house closes for a week or two because they get infected. same for the legions. a friend of mine passed away yesterday from getting infected at the legion.
media doesn't make me concerned. it's what happens around me that does. I am not scared but concerned. I don't believe any media but I do believe my own eyes. think some of you don't believe what you see.
semp
Title: Re: 2007 Redeux?
Post by: Brooke on January 09, 2022, 10:23:32 PM
brooks, you forgot to mention that the flu has around 220 strains. but once you catch one, you become immune to it.
the difference is covid you don't get the same natural immunity. you can become infected over and over. that's the scary part. what it does long term, nobody knows.
You aren't immune to flu after getting it once. It mutates continually, requiring new vaccines every year. You can get flu and get it again. You can get one strain, then get another. You can get co-infected with two strains at the same time. Like with covid, some strains aren't that bad, and some are quite deadly (1918 Spanish flu, bird flu, swine flu).
There seem to be potentially useful early treatments for covid, but many are vigorously suppressed by the government and the status quo. Most doctors seem to recommend nothing until you are sick enough that you go to the hospital. By then, some things are too late.
I think that people will look back at this time and marvel at the level of bungling, partisan groupthink, and corruption.
Title: Re: 2007 Redeux?
Post by: Eviscerate on January 09, 2022, 10:51:27 PM
flu has around 220 strains. but once you catch one, you become immune to it.
You are woefully incorrect.
Title: Re: 2007 Redeux?
Post by: RotBaron on January 10, 2022, 03:03:53 AM
Semp, as stated that is way off base and way too simplified.
First, the influenza viruses are not corona viruses. There epidemiological differences are significant.
My microbiology prerequisites for nursing school were my favorite; really intriguing and eye opening about urban myths vs what has been factually proven and what is hypothesized but has strong evidence.
Taking an intro to microbiology class would go a very long way for the average person relying on the “news” and TV doctors to explain these things.
Title: Re: 2007 Redeux?
Post by: Eagler on January 10, 2022, 07:19:45 AM
I think they need to change the name from vaccine to something else...
I only took one polio vaccine
It's turning out this shot is not a one time thing, heck it isn't a three shot thing...
It is the best excuse for government overreach that has ever come along IMO
Semp - very sorry for your personal experience with this virus but it is not the normal experience for over 95% of ppl who catch any variant has..and in my opinion doesn't justify the actions taken so far and what they will try to get away with in the near future
To keep the peace in the family I got my booster last week and almost lol in Walgreens as I waited and read the paperwork which explains that the vaccine may not do anything and to continue to social distance and wear masks...
Eagler
Title: Re: 2007 Redeux?
Post by: MiloMorai on January 10, 2022, 10:09:21 AM
Was it ever claimed the covid vaccine was 100% effective?
Title: Re: 2007 Redeux?
Post by: CptTrips on January 10, 2022, 10:22:51 AM
Having a running email argument with a Perma-Bull friend of mine. He is convinced that rate hikes will be bullish for the market as it will eliminate uncertainly. He expects the market to climb another 20%+ this year. He says this bull market can extend another decade. Buy the dips, sell the rips!
Four rate hikes this year? And QE Taper? And QE balance-sheet reduction? And possibly two regional wars with nuclear armed near-peers popping off?
If the market climbs 20% this year then I fundamentally don't understand how markets works. I'll just have to buy some annuities and take my hands off the controls. ;)
I told him I am going to have a t-shirt printed for him:
Quote
"stock prices have reached what looks like a permanent plateau." - Economist Irving Fisher, Fall 1929
:rofl
One of us has some interesting lessons to learn about markets soon.
Title: Re: 2007 Redeux?
Post by: CptTrips on January 10, 2022, 11:35:35 AM
Quote
Dudley thinks the Fed will start to raise its benchmark rate four or five times this year and ultimately have to raise it benchmark rate to 3%-4%.
That was the 1st fantasy they were spewing...not until the break through cases did they change the narrative
Eagler
No, it was not. Pfizer and Moderna were both 96% effective against the original virus according to trials. Please source where any company claimed to have 100% efficacy against contracting the virus.
Title: Re: 2007 Redeux?
Post by: Brooke on January 10, 2022, 12:44:16 PM
Vaccine effectiveness is looking bad for Omicron, perhaps even negative (i.e., worse than having no vaccine) for folks with 2 shots according to studies out of Denmark and Canada. The studies say that boosters improve the effectiveness initially over 2 shots (so that it is no longer negative), but don't know how that holds up over more time.
This news is being hyped by right news and misrepresented/downplayed by left news.
But you can read the papers yourself and not rely on agenda-driven re-interpretations.
Uhhh... we those talks only supposed to last a single day? Or is this a stomp off?
Definitely B.
Title: Re: 2007 Redeux?
Post by: Eagler on January 11, 2022, 08:51:45 AM
Pretty sure Russia is not concerned in the least with potato heads response
If there was ever a time for our enemies to push us it's now
China/ Taiwan is one I expect to happen quickly without any of this so called negotiations
Imagine the market response when they announce that attack?
There is your major correction excuse and all of this government pandemic overreach exercise has its true meaning as civil unrest will hit a new high at that time IMO
Eagler
Title: Re: 2007 Redeux?
Post by: CptTrips on January 11, 2022, 09:37:13 AM
Quote
‘If we’re lucky,’ the Fed can engineer a ‘soft landing’: Expect more than 4 rate increases in 2022 and a lot of market volatility, says JPMorgan’s Jamie Dimon
More than 4 rate hikes in 2022? LoL. Plus QE Taper, plus QE balance sheet drawdown? Pffffft. :rofl
The market is already getting sweaty and shaky like a junkie who can't find a fix. And the Fed hasn't even DONE anything yet other than ease up on the accelerator pedal a tad. They haven't even come close to tapping the brake yet.
1. Give how 2020 and 2021 have gone, how "lucky" are we feeling about 2022?
2. Given all the Fed has done, given that it has gone from, "What inflation? Oh, that's just a transitory blip." to "Oh sh|t, inflation is going to be painful for a while, we might need multiple rate hikes next year to try and slow down the inflation freight train!", given that that 180 deg flip took less than 6 months, how confident do you feel they can deftly engineer a "soft landing"?
That'd be like giving Jack Black a crayon and paper and asking him to design a nuclear reactor from scratch. Does anyone think that wouldn't end in disaster? (https://images.nintendolife.com/8120f63d6222e/1280x720.jpg)
Title: Re: 2007 Redeux?
Post by: redcatcherb412 on January 11, 2022, 09:46:57 AM
I think they need to change the name from vaccine to something else...
I only took one polio vaccine
It's turning out this shot is not a one time thing, heck it isn't a three shot thing...
It is the best excuse for government overreach that has ever come along IMO
Semp - very sorry for your personal experience with this virus but it is not the normal experience for over 95% of ppl who catch any variant has..and in my opinion doesn't justify the actions taken so far and what they will try to get away with in the near future
To keep the peace in the family I got my booster last week and almost lol in Walgreens as I waited and read the paperwork which explains that the vaccine may not do anything and to continue to social distance and wear masks...
Eagler
Strange the number of people told their 'vaccine' didn't work or worked worse than expected to run and line up to get another 'booster' of the exact same crap that didn't work before. (know what you mean and sometimes have to do about 'keeping the peace')
Title: Re: 2007 Redeux?
Post by: CptTrips on January 11, 2022, 12:36:48 PM
Beware the Ides of March.
Title: Re: 2007 Redeux?
Post by: Eagler on January 11, 2022, 02:41:13 PM
Did you hear the Pfizer ceo say now how the previous shots don't work as advertised but his new omicron variant booster out in March will?
Omicron will be gone before they have another billion dollar shot ready for it..but my guess is you won't be "fully vaccinated " unless you get that jab too
Its turning into an even bigger economy manipulator than their best wishes ever imagined
Eagler
Title: Re: 2007 Redeux?
Post by: RotBaron on January 11, 2022, 03:26:55 PM
I know more people in the past month who have caught Covid than the past couple years combined.
The positivity rate in AZ last week was almost 35%, that’s nearly 3x any other time I’m aware of.
Our ICU’s in Phoenix metro are ~40% Covid patients, once again much higher than any other time so far.
Most of the people I know with symptoms are vaccinated, and the majority had the booster/3rd dose.
The range of body systems I’m seeing is hardly just respiratory, i.e. this is not a flu or cold (hopefully I don’t really need to tell anyone that by now :rolleyes:)
Depending on the hospital corporation, their ICU bed capacity is either full or ~96% occupied.
Hope things are better where you live, stay well!
Title: Re: 2007 Redeux?
Post by: TheBug on January 11, 2022, 05:53:17 PM
Did you hear the Pfizer ceo say now how the previous shots don't work as advertised but his new omicron variant booster out in March will?
Omicron will be gone before they have another billion dollar shot ready for it..but my guess is you won't be "fully vaccinated " unless you get that jab too
Its turning into an even bigger economy manipulator than their best wishes ever imagined
Eagler
You sound like such a frightened, angry, little man and a perfect example for Occam's Razor.
Title: Re: 2007 Redeux?
Post by: TheBug on January 11, 2022, 05:54:04 PM
"SARS-CoV-2 is an American-created recombinant bat vaccine or its precursor virus. It was created by an EcoHealth Alliance program at the Wuhan Institute of Virology (WIV), as suggested by the reporting surrounding the lab leak hypothesis. The details of this program have been concealed since the pandemic began. These details can be found in [gives pointers to the other docs that have the details]."
and
"The reasons why nonpharmaceutical interventions like masks and medical countermeasures like the mRNA vaccines do not work well can be extrapolated from the details. The reasons why the early treatment protocols work as curatives are apparent."
and
"Ivermectin (identified as curative in April 2020) works throughout all phases of illness because it both inhibits viral replication and modulates the immune response."
It will be very interesting to see what happens with this report: whether or not it holds up; whether or not it is memory holed via a large, coordinated media campaign; etc.
Title: Re: 2007 Redeux?
Post by: guncrasher on January 11, 2022, 11:34:35 PM
actually no, a simple google search would prove you you wrong.
semp
Title: Re: 2007 Redeux?
Post by: guncrasher on January 11, 2022, 11:45:45 PM
i'll give you guys a break, the covid vaccine is not to get you infected, its to stop you from lowering the chances you will be in a hospital.
you think I am stupid, when it first came around, i let a few million people get it before I did. and even you know my wife, she had the choice she took it. I would rather have a percentage lower than not take it. whatever the percentage is, I would rather not take my chances. wearing a mask, not shaking hands, wash your hands, maybe it is stupid, but if it lowers my chances or my wife's chances to not get it again, I'll take that. you guys think it takes away your freedom, but I've seen you guys post crap about how taking away using straws takes away your freedom, that bs, and I call you on it. because it's just bs. most of you guys are full of it.
semp
Title: Re: 2007 Redeux?
Post by: Brooke on January 12, 2022, 01:14:55 AM
The goal of vaccines are all of those reasons: lower chance of death, keep from getting infected in the first place, keep from transmitting it. No one makes a vaccine hoping for only one of those things and not others.
I don't think anyone is stupid for having had the vaccine. Folks saw mostly good data and took their best guess.
That was all against alpha and delta. Now we have Omicron, and the vaccine isn't looking too great against that. Let alone other information coming to light. No big surprise. Covid mutates. A vaccine designed against alpha is eventually is not going to work well on some future variant.
A big thing to me, though --
During all of this, there have been treatments that are not dangerous. That have at least some evidence of usefulness (not super solid, but some). And yet the establishment worked to preclude people from trying it. That is wrong.
Folks know what these are, now. But like many things, whether folks think it's worth a try depends on their politics, not on science or risk management.
Title: Re: 2007 Redeux?
Post by: Eagler on January 12, 2022, 07:42:01 AM
With or from
Once that was so blurred - some think purposely - you couldn't tell the difference and since the difference didn't matter to the fear mongers the truth was lost forever
Now we have a cold called omicron - my 65 year old sister with lung issues has it and states its a mild flu - and its numbers are being counted as though it is as dangerous as delta
But it makes for the best excuse for so many things - see the last two years...especially poor financial policies
Perfect kick the can cover for those missing the stones to do what has been needed for at least the last 20 something years