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Thread: Warning : Is it game over ?

  1. #1

    Default Warning : Is it game over ?

    Looks like many places can never go back to normal interest rates or economies will crash even faster. Everyone seems to be pulling back after raising rates just a few times including the FED. Its a big red light flashing Danger.
    I believe the gold and silver markets are Deeply under estimating the dangers in the world economies (Under valued) . Central banks understand it as you can see by the many that have record gold holdings at this time and continue to add.

    China Scoops Up More Gold for Reserves as Global Risks Mount

    https://www.bloomberg.com/news/artic...-2-year-hiatus


    Fed Gov. Brainard: 'Downside risks have definitely increased' on the economy

    Federal Reserve Governor Lael Brainard said she's growing more concerned about economic growth.

    Speaking the same morning that retail sales numbers came up well short of market expectations, the central bank policymaker said she's watching the developments in an economy that has otherwise look strong.

    "Downside risks have definitely increased relative to that modal outlook for continued solid growth," she told CNBC's Steve Liesman during a "Squawk on the Street" interview.


    https://www.cnbc.com/2019/02/14/fed-...ml?forYou=true




    Janet Yellen: Possible next Fed move is a cut if global growth continues to slow



    Former Federal Reserve Chair Janet Yellen said the central bank may have to cut interest rates if a global growth slowdown starts to impact the U.S



    https://www.cnbc.com/2019/02/06/jane...eat-to-us.html

  2. #2

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    Why Did Fed Chairman Jerome Powell Back Off on Rate Hikes?


    They will send the economy into a faster crash mode

  3. #3

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    Retail sales were so bad, it's either suspect data or a recession warning

    Retails sales plunged 1.2 percent in December, shocking economists who expected a 0.2 percent gain.
    The report immediately raised new fears of recession, but economists said the report is also so negative against other more positive data, that it appears suspect.
    Even so, economists are slashing fourth quarter GDP growth estimates, and also keeping a wary eye on jobless claims, which showed a slight increase for a third week in a row.
    The drop in sales raised new concerns about the consumer, which accounts for more than two-thirds of the economy.


    https://www.cnbc.com/2019/02/14/reta...n-warning.html

  4. #4

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    We need to distance ourselves from the term "normal interest rates". There isn't such a thing. The neutral rate of interest changes over time as economies and demographics shift. Just because interest rates were around 10% a few decades ago doesn't mean that a lower interest rate is suddenly not "normal". The better question is where current rates stand in relation to R*...aka the current neutral rate. By all estimations we're at the lower end of neutral, thus rates are only considered to be slightly accomadative right now. While we can gripe about rates, the fact remains Fed policy helped pull us out of the worst recession of our life times and has sustained one of the longest recoveries in our history. You don't achieve that by bench-marking current rates to where rates were at some random time in the past and hiking in accordance.
    Last edited by Ryanferr; 02-14-2019 at 11:48 AM.
    The answers are in the data

  5. #5

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    Interest rates (how much you need to rent debt certificates) are set to keep the amount of debt certificates (aka FRNs) growing at consistent rate without allowing semi-stable prices to fluctuate dramatically.

    All that the raw interest rate demonstrates is the cost of creating and using those debt certificates with a penchant for constant and consistent inflation.

  6. #6

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    Quote Originally Posted by Ryanferr View Post
    We need to distance ourselves from the term "normal interest rates". There isn't such a thing. The neutral rate of interest changes over time as economies and demographics shift. Just because interest rates were around 10% a few decades ago doesn't mean that a lower interest rate is suddenly not "normal". The better question is where current rates stand in relation to R*...aka the current neutral rate. By all estimations we're at the lower end of neutral, thus rates are only considered to be slightly accomadative right now. While we can gripe about rates, the fact remains Fed policy helped pull us out of the worst recession of our life times and has sustained one of the longest recoveries in our history. You don't achieve that by bench-marking current rates to where rates were at some random time in the past and hiking in accordance.

    And when the next crisis hits where can you go with rates if you have no room ? How will the fed pull the economy out of a far worse recession? That's why they were in a hurry to get rates back up. But it doesn't look like they can do it without crashing the economy. They are screwed

  7. #7

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    Quote Originally Posted by Silver and Gold View Post
    And when the next crisis hits where can you go with rates if you have no room ? How will the fed pull the economy out of a far worse recession? That's why they were in a hurry to get rates back up. But it doesn't look like they can do it without crashing the economy. They are screwed
    We have plenty of room to cut rates, can go negative, can use the Fed balance sheet, and can use fiscal policy. We have plenty of tools in the tool box. There's no point in raising rates to provide you with "ammo" for the next recession if raising rates simply for the sake of raising them causes the very recession we're trying to become prepared for.

    The Fed now has 225 basis points of room to fight recession before hitting the theoretical lower bound of 0 -- that is not trivial. The Fed responded to the Asian Financial Crisis with a 75bp cut. It also responded to the 1995 slowdown with a 75bp cut. The key is a willingness to act before a recession gets underway, and low inflation creates a willingness to act.

    I do agree however, that our fiscal tools are now more limited. The tax cut from last year is now manifesting in bigger and bigger deficits and higher federal debt. To that extent, our ability to run even greater deficits during a recession may be muted. It's exactly why when the tax cuts were being discussed on this board while they were still in the legislative stage I commented about how the timing made little sense to me.
    Last edited by Ryanferr; 02-14-2019 at 01:11 PM.
    The answers are in the data

  8. #8

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    They are just waiting for interest rates to go back down so they can borrow for free, pump it back up, enrich themselves, then dump again, it's the cycle of boom/bust that we have grown accustomed too. Remember when we used to bounce, errr, I mean float a check, now they just let everyone max the CC out, pretend everything is alright, and let cards fall where they may. Bankruptcy is rampantly normal, especially for corporations, and yeah people, even cities, next will be states, then countries. It's ok, they'll make more! IPO, it, then your 401k investment banker will buy some for you so you can board the train under their rules.

  9. #9

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    yes it is crazy. they just keep trying to get us all further into their debt scheme. i have been playing the c c game getting 18 month no fee transfer cards and paying my debt down then getting another card and transferring the balance to the new one again. all the while, edging up my fico to the high 700's and for about a year am getting payday loan requests for up to 10k to consolidat the leftover low amount of zero interest cc debt i carry offering an easy pay method to go out on an up to 29% 36 month loan for my benefit. lolz. today i got an offer to borrow $65k pre-approved personal loan to "help me" - yeah right!!! no chance that i will bite on that generous offer for my benefit. my c c debt using the zero interest balance transfer game will be paid off before the end of the no interest offer end date as i make huge monthly payments to this end. i wonder what offers i will get once i hit over 800 on my fico? they will probably start pre qualifying me for over a $100k loan to buy bank stocks HA! moral of the story, if you are going to play their monopoly money debt game you need to do it wisely and make sure you play by the rules to beat that debt trap they entice you with. i was able to use their fiat and front load some nice assets while the cost has been low, and the value increases with their zero interest loans that are almost paid off early. what a scam they use to entice and trap the masses. what a game of chess if played properly. thanks big banks! it feels good to basically beat you at your own game for once.

  10. #10

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    My take on the 2 tools of the Central Bank and the 1 by the Federal Government are this: Just my humble opinion

    Interest rate levels - supposed to be used to adjust the credit cycle. rates are lowered to facilitate credit expansion (cost of credit goes down - supply increases)
    and rates go up to head off speculation and malinvestment and over indebtedness ( stock buybacks, financial engineering with cheap money, real estate speculation,
    leveraged loan takeovers, over indebted consumers, lack of savings etc. My opinion it is being used mainly to accommodate more and more debt around the world
    Countries will eventually all end up like Japan - near 0 growth and 0 interest rates, but many will not have the benefit of surplus balance of payments and culturally high saving rates.

    Quantitative Easing: simply a tool to artificially keep interest rates suppressed and or creating demand for assets depending on what the Central banks purchase( potentially any asset) It is a distortion of the
    market forces and will lead to misallocation of capital, economic inefficiencies, and once started will be very hard to unwind, without the purchased assets experiencing a significant price decline
    In bonds case the yields will increase in an unwind.

    Fiscal Stimulus. It is my belief that this is the most under reported and most important of the drivers of this long expansion. It directly contributes to demand in the real economy by increasing the government
    component of GDP, and also that of individual and corporations ( cutting taxes without cutting spending) Just think how long the expansion would have lasted if the Federal Deficit was balanced
    after it righted itself, after the first couple years of the so called great recession. Borrow in the bad times and pay back in the good times. Someone forgot about the last part. The US and the world would have suffered through a recession, like they always have, and would have been far better for it. In my opinion the 2 monetary tools were, and will be applied so that the fiscal one will work in the current environment. If rates go too high the governments will not be able to service their ever growing debts ( corporate and individuals as well), so they must keep them accomodative (low),
    and QE must be ready to be used when normal market forces simply are not mad enough to buy debt, or other assets that are way overvalued ( primarily government debt, but could be corporate or any other asset). Central Banks can only control the short end of the fixed income curve without this tool.

    Governments are caught in a trap they made for themselves. They took the easy way, and keep kicking the can down the road. They will continue to do so in the hopes that it will all work out someday.
    My opinion is we need to let market forces take us to equilibrium, whatever that is. It will probably be painful, maybe we can try to do it slowly, but we need to reduce the ever increasing debt in the system
    That means less government and let the market determine the level of interest rates.
    DEBT does matter, but it never seems to matter until it does, just ask a lot of individuals, corporations and governments that experienced that day.

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