The Fed doesn't create more. Deficit spending creates more. And while MAGA pretends to be about reducing the deficit they are doing exactly what we said they would: tax cuts for the rich, increasing the deficit.
-
Features
We are on the Verge of Economic Catastrophe
- Thread starter SLD
- Start date
It did a piss poor job of "working". Others have already shown the reality.
They always have value but the relative value changes over time and place. And that value can be artificially manipulated. DeBeers and diamonds being a prime example. Or, more recently, The Felon playing insider games with crypto.
History says you're very wrong.
You've been promised pie in the sky and don't want to listen to us telling you there's no pie.
Elixir
Made in America
True. That is a 100% sure indicator that installing the Trump regime was a big mess up.
A currency losing 10% of its value in 8 months vs other currencies, is a vanishingly rare phenomenon outside of the third world. Never in the US in the last 50 years.
Over the span I specified the market has always been ahead.
As your need for money becomes closer to reality you move some of it more stable but less productive things. It works, it's just not baby simple.
Swammerdami
Squadron Leader
Most employers offer pay raises to keep pace with inflation. Employers who don't will have trouble attracting talent.
I've worked where there was extreme deadwood that needed to be laid off, but obstacles made layoffs difficult. Give everyone else a 3% minimum raise to keep pace with inflation, while zero raise for deadwood (effectively a cut by the inflation rate) encourages them to leave.
Why do you need to impute unfounded views to me? What have I EVER said (outside your wet-dreams) to make you think I take the side of billionaires over workers?
Rudeness I can tolerate. Rudeness derived from ignorance and crazed delusions just tell us something sad about you.
This is the 2nd or 3rd time you've written "central banks" in a context where you seem to mean "private banks." PLEASE teach yourself a basic 6th grade-level understanding before you continue to embarrass yourself.
I tend to agree that "too big to fail" banks should be subject to "moral hazard." A bank can be forced to recapitalize (perhaps at a big loss to stockholders) without being rendered bankrupt.
But what about YOU? In your preferred model would banks, whether central or private, even exist?
You continue to miss the most basic point. Real people do NOT keep their savings in banknotes placed under their mattress. After current expenses, they spend what's left for an automobile or a house or other goods. Once they've bought the house, that money doesn't suffer inflation -- Just the opposite; they can expect the house's rise in value to exceed inflation. If the house price rises 8% in real terms, then with 2% inflation it will rise 10% in nominal terms.
Similarly for savings invested in businesses. All else equal, costs, revenues and share prices will rise to keep pace with inflation. A stock that gains 8% in real terms will rise 10% when inflation is 2%.
- - - - - - -
You mentioned petroleum as an alternative commodity to use as a monetary base! Are you aware petroleum prices fluctuate hugely? Do you think HUGE unpredictable fluctuations are better than a well-managed predictable inflation of 2%? Would you be happy to see countries like Russia, Iran and Saudi Arabia have control of the monetary base?
The FRB already ties the Dollar to commodities, to wit the basket of consumer items defined by the Consumer Price Index. Would that be acceptable to you if they targeted 0% inflation instead of 2%? Do you think the ding-bat loons who feed you lies on YouTube have a better understanding of economics than a majority of PhD-trained economists?
Swammerdami
Squadron Leader
Trump's stupidities increase the chance of stagflation and hasten the downfall of the Dollar's prestige -- there WILL be a global debt crisis, probably sooner rather than later.
But we might be heading toward economic catastrophe even if an incompetent criminal weren't sitting in the Oval Office. The stock market is more over-valued than ever. The boom in gold and cryptos signals a loss of faith in fiat money. Banks continue to place big bets -- some say that the derivatives market exceeds $1 quadrillion dollars in nominal value. U.S. banks' statements show assets (loans) valued in total at trillions of dollars more than their market values. Many big players think long-term debt is non-viable, but speak only in whispers for fear the house of cards will tumble down.
The problems are worldwide. India's derivatives market alone has $130 trillion (12 quadrillion rupees) in nominal value, with 41% of the activity from retail investors. I'd never heard of Jane Street until recently, but it is one of the biggest Wall Street traders and has systematically profited by billions of dollars from India's derivatives, partly with the aid of legal pump-dump schemes. (Derivatives are a zero-sum game.)
The future of AI is one big mystery. "The cost of compute: A $7 trillion race to scale data centers" by 2030. Call it $1 trillion per year: That's about 3% of U.S. GDP to be spent on AI, spending which has yet to produce much revenue. And a report shows that large businesses are turning away from AI, finding that it doesn't live up to its hype. AI is good at writing essays for homework, but not so much for real business tasks. Who's right? I dunno. Ed Zitron thinks AI is hugely over-hyped -- is he a crackpot? Nvidia is selling AI hardware for cash and raking in money, but its P/E is 51. Will it come tumbling down?
Gold set another all-time high today -- $118 per gram.
But we might be heading toward economic catastrophe even if an incompetent criminal weren't sitting in the Oval Office. The stock market is more over-valued than ever. The boom in gold and cryptos signals a loss of faith in fiat money. Banks continue to place big bets -- some say that the derivatives market exceeds $1 quadrillion dollars in nominal value. U.S. banks' statements show assets (loans) valued in total at trillions of dollars more than their market values. Many big players think long-term debt is non-viable, but speak only in whispers for fear the house of cards will tumble down.
The problems are worldwide. India's derivatives market alone has $130 trillion (12 quadrillion rupees) in nominal value, with 41% of the activity from retail investors. I'd never heard of Jane Street until recently, but it is one of the biggest Wall Street traders and has systematically profited by billions of dollars from India's derivatives, partly with the aid of legal pump-dump schemes. (Derivatives are a zero-sum game.)
The future of AI is one big mystery. "The cost of compute: A $7 trillion race to scale data centers" by 2030. Call it $1 trillion per year: That's about 3% of U.S. GDP to be spent on AI, spending which has yet to produce much revenue. And a report shows that large businesses are turning away from AI, finding that it doesn't live up to its hype. AI is good at writing essays for homework, but not so much for real business tasks. Who's right? I dunno. Ed Zitron thinks AI is hugely over-hyped -- is he a crackpot? Nvidia is selling AI hardware for cash and raking in money, but its P/E is 51. Will it come tumbling down?
Gold set another all-time high today -- $118 per gram.
bilby
Fair dinkum thinkum
- Joined
- Mar 6, 2007
- Messages
- 39,828
- Gender
- He/Him
- Basic Beliefs
- Strong Atheist
No it's not.
But then, nor are most schoolchildren, so it doesn't matter.
There's no billion (or trillion) dollar revenue stream to be found in that market anyway, so it doubly doesn't matter.
As you were...
TV and credit cards
Contributor
It nearly is "baby simple". I know the government's TSP has Lifecycle funds which make it just that. I'm sure similar is available elsewhere. If you're in your sixties/seventies and are still investing in individual stocks with money you depend on, you've no one to blame but yourself. Similarly, if you're younger and are looking at a home purchase and have all your eggs in Wall Street's basket, this might not be a good way to head into escrow.
Swammerdami
Squadron Leader
This quote surprised me -- @RVonse posts as though he IS in the camp that DOES keep all their savings in banknotes under their mattresses!
If that is NOT his approach to savings, wtf are all his posts on inflation about?
But I clicked and clicked again and see that this was YAMQ ("Yet Another Misattributed Quote"). Have I mentioned that I'm not overly pleased with the Xenforo editor or wtf it is?
Elixir
Made in America
In the interest of not becoming a victim of what I feel is a pending economic crash, I have become more comfortable with allowing the largest portion of our “wealth” to be ‘tied up’ in real estate. I’m not pushing so hard to get the four potential parcels/home sites that I now own, to market in the very near future. Barring a crash of 1929 proportions I think we have enough cash and liquid assets to live on long enough to weather the storm. Selling it all at this time would give us more cash than we need or can foresee needing, and cash (along with equities) is going to be heavily depreciated if what is happening now persist or gets worse. But real estate always seems to maintain its value.
The dollar goes down, real estate prices go up accordingly. Equities crash, the value of real estate remains, it’s just harder to sell for a while. Or so it seems to me.
I’m not financially savvy so this is my simplistic view. Is it reasonable? If not, why not?
The dollar goes down, real estate prices go up accordingly. Equities crash, the value of real estate remains, it’s just harder to sell for a while. Or so it seems to me.
I’m not financially savvy so this is my simplistic view. Is it reasonable? If not, why not?
Swammerdami
Squadron Leader
I'm not savvy either, but real estate investment seems wise to me. I've read that the super-rich have bought up huge amounts of land (mostly in U.S.?), especially farmland. I encourage my daughter and her boyfriend (a Chiang Mai businessman) to invest her meager savings in land near here but (perhaps for good reasons) they show little enthusiasm. (And despite my advice, boyfriend prefers to dabble in U.S. stocks.) I do give my daughter credit for buying a house where she did -- away from flood zones and away from worst traffic jams.
- - - - - - - - - -
On another topic, I just came across more warnings about stable-coin. Specifically about the stable-coin controlled by the Trump family (and an anonymous investor!). Let me confess that I do NOT understand the "advantage" of stable-coin over cash, but there must be some advantage: Stable-coins backed by the U.S. dollar have total "market-cap" already $250+ billion and this is sky-rocketing upwards.
Stable-coins bypass central banks and the rest of the banking system. I suppose this is wonderful news for hyper-libertarians, but central banks serve the public interest while stable-coins operate for the profit of their managers. The money spent buying a stable-coin can be invested in long-term high-yield Treasury debt or even (secretly?) in whatever suits the managers, i.e. the Trump family in the case of the World Liberty Financial stablecoin. Is it plausible that the Trump family does NOT plan on grifting billions as fast as they can? Congress is busy deregulating stablecoins at Trump's urging.
TV and credit cards
Contributor
It can be tough to unload which puts you at a disadvantage when an interested party does finally come along. In the meantime you're paying property taxes on it year in and year out which needs to be factored in and possibly maintenance (brush hogging). I found most landscape companies do not do this type of maintenance. You have to find a farmer looking to make some extra cash and hope he wants to keep on doing it every year. And if you let it get overgrown, your chances of finding someone to come in for that first cut is a real struggle as few want to run their tractor into what they can't see in front of them.
As a small fry, you have to look at highway access and state routes to buy smart. There are people who do this for a living. They probably work for the super rich.
Swammerdami
Squadron Leader
Soon after posting the above, as if on cue, Robert Recih's newsletter shows up in my in-box. It's free to view, so I'll just post a few excerpts.
Robert Reich said:
Swammerdami
Squadron Leader
In other news, as if to prove that we are in a financial Bubble almost as outlandish as the Dutch Tulip Bubble in 1636, Oracle, which hopes to be a big player in the AI bubble, soared to a P/E of 76! (Seventy-six. It has since fallen back to a more sedate 71.) Larry Ellison passed Elon Musk, briefly, for the title of World's Richest Man. Musk and Ellison have both joined the 1.5%-of-GDP club. Contrast this with 1901 when Andrew Carnegie's 2% share of a MUCH smaller GDP caused jaws to drop all around the world.
It isn't just U.S. stocks that are soaring. German stocks and Japanese stocks are near all-time highs, etc. (EUAD of which I bought a few shares just to make a statement to myself, has doubled since February.)
Gold is up, cryptos are up, 30-year Treasuries are WAY over-priced. (Pity poor RVonse who apparently keeps his savings under his mattress and loses 2% annually.)
But all is not rosy. Billions (if not trillions) are being siphoned off by criminals (and by "legal" pump-dump schemes, etc.) so the huge wins by the super-rich are not trickling down. As employment drops in the U.S., commercial office space drops in value, and commercial mortgages are increasingly in default. (If "mark-to-market" were in vogue banks' reports wouldn't look too good.)
As the thread title states, we ARE on the verge of economic catastrophe. Let the party continue, I guess, but don't be surprised when the melody changes to a dirge.
It isn't just U.S. stocks that are soaring. German stocks and Japanese stocks are near all-time highs, etc. (EUAD of which I bought a few shares just to make a statement to myself, has doubled since February.)
Gold is up, cryptos are up, 30-year Treasuries are WAY over-priced. (Pity poor RVonse who apparently keeps his savings under his mattress and loses 2% annually.)
But all is not rosy. Billions (if not trillions) are being siphoned off by criminals (and by "legal" pump-dump schemes, etc.) so the huge wins by the super-rich are not trickling down. As employment drops in the U.S., commercial office space drops in value, and commercial mortgages are increasingly in default. (If "mark-to-market" were in vogue banks' reports wouldn't look too good.)
As the thread title states, we ARE on the verge of economic catastrophe. Let the party continue, I guess, but don't be surprised when the melody changes to a dirge.
Swammerdami
Squadron Leader
As a reminder of how powerful the super-rich are, consider U.S. media:
- The Ellison family owns 77% of NAI which in turn controls Paramount Global, CBS, MTV, Nickelodeon, Comedy Central, Black Entertainment Television, some streaming services, some foreign networks, Showtime, TMC, half of Miramax, half of United International Pictures, etc.
- Bezos owns the Washington Post and (via Amazon) MGM and much more. (He also personally owns almost a thousand square miles of American land.)
- Zuckerberg controls Facebook, Instagram, WhatsApp, Reality Labs, etc.
- Musk owns X, Neuralink and much more.
- The four men just mentioned -- the four richest men in the world -- are among the biggest players in AI. The two other big players are the behemoths Alphabet/Google and Microsoft.
- The Murdoch family controls the New York Post, the Wall St. Journal, Fox News etc. etc.
- Comcast (market cap $120 B) and Disney ($210 B), while not controlled by centibillionaires own much of the rest of major media.
unapologetic
55+ years without a god
- Joined
- Dec 12, 2023
- Messages
- 1,555
- Location
- Penna., Fascist States of Amerika
- Basic Beliefs
- Hasa Diga Eebowai, antitheist,
But are they realy?
If so, what's the point of owning them?
Swammerdami
Squadron Leader
* Wednesday Gold briefly exceeded $119.20 per gram, the highest price since the crust cooled. Friday silver sold at $43 per ounce, also an all-time record.
* The Dow-Jones Industrial Average rose to an all-time record yesterday.
* The S&P-500 index set phenomenal record highs during Biden's term, but has been setting more record highs in the MAGA era and is now 10% higher than the Biden high. P/E = 28.
* The NASDAQ index has been setting records throughout much of September; Friday QQQ soared to the highest price ever recorded. P/E = 34½. Google, Oracle, Meta, Microsoft, Nvidia are all very near their all-time highs; and even Apple and Amazon are close.
* The Russell Index of 2000 stocks -- a very broad measure of the U.S. stock market -- has been lagging behind other indices but finally soared to an all-time high Thursday afternoon. P/E = 18.7.
* The German stock market (DAX) set its all-time high 2 months ago and is within spitting distance of besting that record.
* Japan's Nikkei-225 set its all-time record yesterday. I don't have time to show all foreign markets.
* The Swiss Franc obliterated its all-time high of $1.27 set back in July 2011, getting as high as $1.29 on Wednesday.
* The Singapore dollar set a 10-year high but needs more gains to break its July 2011 record.
* Bitcoin is about $116K, not far from the $123+k record set last month. Bitcoin is a preposterous scam, but the Dollar is hardly a paradigm of prudence.
Is it unusual that so many asset classes are all up? We usually imagine that wealth flows FROM one type of asset TO a different type. And a rising U.S. stock market is usually accompanied by a rising dollar. But now we see other currencies rising against the dollar with their stocks also rising. And investors already saturated with overpriced stocks often put their money in cryptocoins, gold or silver. Up, up, up. Bubbles of champagne rise up, up, up.
But not all asset classes are up.
* U.S. Real estate, as defined by the five "best" REITs has total return (including dividends) outperforming inflation by only about 1%.
* Yield on the Treasury's longest bonds, as measured by INDEXCBOE: TYX jumped from 4.64% to 4.74% on Thursday. (It was as low as 4.33% last December before Trump showed up with his plan to kill inflation.) Yields are up on other hard-currency long-term sovereign bonds. Mortgage rates are rising, one reason real estate prices aren't rising.
The market correctly understands that the fiat currency regime that began 55 years ago is losing its viability. Simply put, debt is growing with no end in sight. The mystery is NOT "why is the 30-year Treasury falling in value despite that Trump's lackeys want to lower interest rates?" but rather "Why isn't it falling even FASTER?" Get your dollars out from under your mattress and invest in something more tangible: land, precious metal, overpriced stocks, even cryptos -- anything but the U.S. Dollar, which is destined (along with other paper currencies) for a fall.
Why then is Treasury still able to sell long bonds with a coupon under 5%? Several reasons. One is "Treasury buybacks" -- these are NOT a form of Quantitative Easing. Scott Bessent is buying long bonds at a discount, retiring them, and replenishing his cash by selling short-term bills and notes. He's bought about $140 billion of such long bonds this year, a rather large share of long bond transactions. In addition to that, foreign central banks and U.S. private banks which want to maintain good relationships with Trump maintain large holdings of U.S. debt whether they want to or not.
The question is NOT whether there will be a major dollar crisis within the next 5 or 10 years. The question is WHEN will that crisis come and what form will it take.
* The Dow-Jones Industrial Average rose to an all-time record yesterday.
* The S&P-500 index set phenomenal record highs during Biden's term, but has been setting more record highs in the MAGA era and is now 10% higher than the Biden high. P/E = 28.
* The NASDAQ index has been setting records throughout much of September; Friday QQQ soared to the highest price ever recorded. P/E = 34½. Google, Oracle, Meta, Microsoft, Nvidia are all very near their all-time highs; and even Apple and Amazon are close.
* The Russell Index of 2000 stocks -- a very broad measure of the U.S. stock market -- has been lagging behind other indices but finally soared to an all-time high Thursday afternoon. P/E = 18.7.
* The German stock market (DAX) set its all-time high 2 months ago and is within spitting distance of besting that record.
* Japan's Nikkei-225 set its all-time record yesterday. I don't have time to show all foreign markets.
* The Swiss Franc obliterated its all-time high of $1.27 set back in July 2011, getting as high as $1.29 on Wednesday.
* The Singapore dollar set a 10-year high but needs more gains to break its July 2011 record.
* Bitcoin is about $116K, not far from the $123+k record set last month. Bitcoin is a preposterous scam, but the Dollar is hardly a paradigm of prudence.
Is it unusual that so many asset classes are all up? We usually imagine that wealth flows FROM one type of asset TO a different type. And a rising U.S. stock market is usually accompanied by a rising dollar. But now we see other currencies rising against the dollar with their stocks also rising. And investors already saturated with overpriced stocks often put their money in cryptocoins, gold or silver. Up, up, up. Bubbles of champagne rise up, up, up.
But not all asset classes are up.
* U.S. Real estate, as defined by the five "best" REITs has total return (including dividends) outperforming inflation by only about 1%.
* Yield on the Treasury's longest bonds, as measured by INDEXCBOE: TYX jumped from 4.64% to 4.74% on Thursday. (It was as low as 4.33% last December before Trump showed up with his plan to kill inflation.) Yields are up on other hard-currency long-term sovereign bonds. Mortgage rates are rising, one reason real estate prices aren't rising.
The market correctly understands that the fiat currency regime that began 55 years ago is losing its viability. Simply put, debt is growing with no end in sight. The mystery is NOT "why is the 30-year Treasury falling in value despite that Trump's lackeys want to lower interest rates?" but rather "Why isn't it falling even FASTER?" Get your dollars out from under your mattress and invest in something more tangible: land, precious metal, overpriced stocks, even cryptos -- anything but the U.S. Dollar, which is destined (along with other paper currencies) for a fall.
Why then is Treasury still able to sell long bonds with a coupon under 5%? Several reasons. One is "Treasury buybacks" -- these are NOT a form of Quantitative Easing. Scott Bessent is buying long bonds at a discount, retiring them, and replenishing his cash by selling short-term bills and notes. He's bought about $140 billion of such long bonds this year, a rather large share of long bond transactions. In addition to that, foreign central banks and U.S. private banks which want to maintain good relationships with Trump maintain large holdings of U.S. debt whether they want to or not.
The question is NOT whether there will be a major dollar crisis within the next 5 or 10 years. The question is WHEN will that crisis come and what form will it take.
Elixir
Made in America
A symptom of unrealized inflation. The values (with some exceptions) are not up, only the dollar figures are up while the dollars themselves are trending toward worthless.
OTOH … it has been almost exactly a year since I bought OKLO for $12 and change. I only bought a hundred shares, shoulda bought ten thousand. It closed above $135 yesterday.
Also, GE’s spin-offs have outpaced inflation, but most of my “safe” holdings have only kept pace with inflation while accruing potential tax liability on the dollars, even though the value is basically static. Trump loves it. Tax collected on phantom “profits” only means more money for billionaires,