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the simple reason why we are facing another collapse

Discussion in 'Economics, Business, and Taxes' started by Days, Nov 8, 2015.

  1. Days

    Days Governor

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    Fed rate hike 'makes sense', says U.S. central banker(LINK)

    Read the article and ask yourself; how in the world does that make sense? Nothing but bullshit in that article and the journalist is doing this on purpose, he's exposing what these guys are saying.

    First off, the rate hike makes absolutely no sense. The target for national economic growth is 3%, when growth is higher, they raise rates, when growth is lower they lower rates; NOTICE: that's not even mentioned in the article. The scary part is the nature of our 1-2% "growth" that has been a hallmark of this "recovery"... it is smoke and mirrors, purely the result of printing money, it is a synthetic growth, and the baseline is post collapse! So what is really going on in this nation? About a third of the nation is on food stamps. We are in a Depression, people. And the FED says it makes sense to raise rates.

    So why are they raising rates?

    C'mon, this is terribly obvious. When the only way out of the horrific collapse of 2008 was to set target rates at zero and the only avenue left to the banks for doing something with that free money was the stock exchanges... yep, they repeated the stock bubble. Immediately we all said it would just collapse again, because it is a house of cards, it is printed money, there was no uptick in business, the banks just bid more for the existing stocks. They coined the phrase "double dip" ... and we waited. What were we waiting for? We waited for what the FED always does to bubbles it creates, they raise rates - aka - they pop their bubbles. This isn't rocket science. Thomas Jefferson pointed it out 200 years ago, what do you think he meant by "expansion and contraction of credit"? That's exactly what is going on.

    So the FED is about to raise rates in the middle of a Depression... and that makes sense, y'know, after all, look at all those jobs they added from the free money. But then, what do you think will happen to those jobs when the free money disappears?
     
    Last edited: Nov 8, 2015
  2. Lukey

    Lukey Senator

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    They will not raise rates. Oh, they may do a symbolic .25 increase in December, but the next move after that in early 2016 will be back to zero on the way to NIRP.
     
  3. Days

    Days Governor

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    wtf do we need a symbolic raise for? Are the money priests so far removed from main street that they need to kill the last semblance of economic movement just so they can say they are charging interest? What is that? "The gods demand it"?

    With inflation running too low, the FED board member actually pointed at employment figures... can you believe that? As if, employment is somehow undesirable... can't have people on main street working jobs, we need to raise rates.
     
  4. Lukey

    Lukey Senator

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    I understand your bewilderment. Keynesian economics is, quite frankly, bewildering, in that it never works (although sometimes it does appear to). But I'm not convinced they will raise rates, other than as a way to produce some semblance of credibility for their ongoing policy approach. At some point (after what, six, seven years) it begins to beg the question WTF are they doing? Why can't we get rates to "normalize?"

    So there is a powerful incentive to "declare victory and move on" but you are correct - there is an ongoing depression and the only thing keeping everyone from noticing is the ZIRP and QE that has artificially boosted asset prices and created a fake wealth effect. But the main street economy is dying. Small businesses, good, full time employment, social mobility, is all being crushed by the big governmentism (and corporatism) that Keynesian policy begets.

    So if they do raise rates in an attempt to regain some sort of monetary policy credibility, it will quickly expose the weakness of the underlying private economy and they will be forced to reverse course and lower rates (probably going negative) and implement even more QE (probably "helicopter money" to individuals).

    What could we have done or do differently to get out from under this policy that is killing off the American Dream? We could learn a thing or two from Ireland, which used the "Andrew Mellon" policy approach (that Keynesians universally deride) and are now doing quite well economically:

    http://www.marketwatch.com/story/ireland-is-making-paul-krugman-eat-crow-2015-11-11/print

    And appears poised to keep drawing in more capital and more jobs from the moribund Keynesian economies. As I like to say, this isn't rocket science...
     
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  5. Days

    Days Governor

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    Ireland copied Bill Clinton. Tighten the belt and wait for results. But there's more to the picture than the outward behavior. Austerity in and of itself doesn't work. Starving your people in hopes that some member of the super rich comes to rescue your nation... is not a model for sane policy. The only thing worse is spending yourself into bankruptcy and getting a depression from it.

    The entire key to running a money policy that works is to regain control over the money creation in your nation. The last 100 years, we have seen central banks take over the currency of every nation on earth except a couple... and the same thing happens to every nation, they go bust.
     
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  6. Lukey

    Lukey Senator

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    True enough! Like I keep saying - this isn't rocket science...
     
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  7. Days

    Days Governor

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    So now, in order to justify an interest hike, the new target rate for inflation is 2%; can't have the country growing more than 2%, that's unhealthy. Look what a disaster China is, with that 8% growth year in and year out. But even this logic doesn't cut it, our average growth rate in the recovery is around 1.6%. And all of it, is from printing money and pouring it into the stock market.

    We are in a depression. The FED countered by making money free to the banks. All they could do was print up money and buy up stocks. So guess what, we have an even worse stock bubble than we had in 2008...

    [​IMG]
     
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  8. georgephillip

    georgephillip Governor

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    What's the alternative?
    Does public as opposed to private banking offer better results?
    I've seen numbers indicating public banks could offer mortgages at 2% and credit cards capped at 6%.
     
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  9. Max R.

    Max R. On the road Supporting Member

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    You are free to live in fear, but when you needlessly and senselessy fear-monger, I'm free to call you on it.

    Here, your fears are bullshit. Markets rise and fall. I don't live in fear of "The End". Unlike you, I really do have faith in God.

     
  10. georgephillip

    georgephillip Governor

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    [​IMG]
     
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  11. Max R.

    Max R. On the road Supporting Member

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    Another conspiracy theory? LOL
     
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  12. Days

    Days Governor

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    I love that version.

    Markets do rise and fall, we just happen to be witnessing the crest to what should be a very deep trough.
     
  13. Lukey

    Lukey Senator

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    It's even worse than that. The deflator they use to "adjust" nominal GDP to get real GDP is very flawed, meaning that there's a very real possibility that GDP is actually shrinking rather than growing at 1.6% since the Great Recession. And much of the "growth" (if there has been any) is inventory builds:

    http://www.zerohedge.com/news/2015-...ld-history-prevents-total-collapse-us-economy

    And even the "growth" in the stock market is (largely) illusory:

    Screen Shot 2015-12-23 at 6.30.45 AM.
    With a few issues accounting for all the "lift."

    And after all the Keynesian "demand side" attention and effort to use fiscal and monetary policy to goose "aggregate demand" what we see is a steady decline in the growth of YoY consumption:

    Screen Shot 2015-12-23 at 6.33.42 AM.
    And the reason for all this? One is "peak debt" - the consumer (and businesses) have maxed out the credit cards:

    Screen Shot 2015-12-23 at 6.35.21 AM.
    And the other is stagnant (declining, actually) real median incomes:
    Screen Shot 2015-12-23 at 6.37.23 AM.

    Like you said, this isn't rocket science. It's the result of big government crowding out the private sector, as Bushbama resurrected the "era of big government" that Bill Clinton ended:

    Screen Shot 2015-12-23 at 6.52.17 AM.

    Doh!
     
  14. Max R.

    Max R. On the road Supporting Member

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    We just went through a very deep trough. I see no storm on the horizon to think we'll have another one. Time will tell.
     
  15. Lukey

    Lukey Senator

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    We never addressed the underlying causes of the last one. We used unprecedented levels of monetary stimulus to counteract the negative economic forces that pushed us into the financial crisis in 2008.

    Debt: There's more debt now than there was in 2008.

    http://www.mckinsey.com/insights/economic_studies/debt_and_not_much_deleveraging

    Consumption: The debt level is inhibiting people's ability to consume.

    http://www.zerohedge.com/news/2015-...spending-data-early-worst-yoy-growth-may-2013

    Trade: The result is global trade is collapsing.

    http://www.marketoracle.co.uk/Article53164.html

    Currency: Countries are furiously trying to export deflation through competitive devaluation.

    http://www.afr.com/markets/currenci...ospect-of-global-currency-war-20151210-gll2wx

    International relations: Currency wars have a tendency to turn "hot."

    http://www.thenation.com/article/whos-ready-for-the-next-world-war/

    Other than that, everything looks great...
     
  16. Days

    Days Governor

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    Dude, open your eyes...

    [​IMG]

    this graph ends in Jan 2014, we have already seen the crest around 19,000+ (this chart was only drawn to 18,000) and it has already started down... in reaction to the FED increasing the interest rate, which was what I said would trigger it.
     
  17. Lukey

    Lukey Senator

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  18. Days

    Days Governor

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  19. Max R.

    Max R. On the road Supporting Member

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    I'm all stocked up on canned goods, ammo and toilet paper. No worries here, but you sound like you need to stock up on Depends and Imodium A-D to help prevent you from sh*tting your pants over this.
     
  20. Days

    Days Governor

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    market challenged? Or just thread jacking again?

    ... your constant abrasion and lack of content is the only pain in my ass, Max.
     

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