Posted on 12/27/2018 11:52:59 AM PST by COUNTrecount
The low rates on the 30-year bond tells me that the Federal debt is not seen as a problem by investors right now.
“Like I said the whole fed circus act is the control inflation by selling bonds at a high interest rate to shrink the money supply and to reduce inflation.”
Where is it that you think you are seeing a “high interest rate”?
The money supply is shrinking because the Fed is allowing their past QE purchases to mature. They don’t have to sell anything for this to happen.
“The shrinking money supply slows the economy IT HAS TOO. That is how it works”
The basic Equation of Exchange illustrates the error of that claim, along with the real world example of the Jimmy Carter years.
The equation of exchange is MxV=PxY; Money Supply x Velocity = Price Level x Real GDP.
If a direct link between money supply growth and GDP growth existed then Jimmy Carter would have had a booming economy instead of a stagflationary disaster.
An increase in the money supply can go to GDP growth or it can go to inflation. Conversely GDP growth can result from an increase in velocity of money or a drop in the price level, it’s not dependent upon an increase in the quantity of money.
The money supply grew during the Carter years. But it went straight to inflation. The GDP was stagnant.
“Print a competing currency at zero percent interest.”
How do you figure that you are paying interest on currency? Is someone sending you a bill?
Yes. We pay Currency Interest in the form of dissidents.
A MANDATED currency IS the bill whenever a free voluntary currency is cheaper.
All free men want to exchange their fake Fed Reserve Notes, tax free, for those “dollar” coins that were available.
Oops, but due to a fraudulant copyright on the word dollar, we are banned.
Oops, due to the owner of the alternate currency being sent to prison, we cannot.
We are left with only trash called Fed Reserve money,
until some brave soul prints optional money,
... and when the money dissidents are released from prison,
... and the Feds are jailed for fraud.
“Wow....I never knew the Fed controlled my life .....”
Unfortunately for the rest of us there are always clueless people like you. I’m sure it’s for the best that your wife runs things.
Being wrong in this case is a matter of opinion.
Why is the yield curve so flat? There’s only a small difference between a 3 month security and a 30 year security.
https://stockcharts.com/freecharts/yieldcurve.php
Get rid of them all. The Fed must go.
ZH has all kinds of pix at this article. I’m not a finance guru, but they are interesting.
://www.zerohedge.com/news/2018-12-27/another-massive-buy-program-sends-dow-soaring-over-900-points
Real link that I messed up in prior post: https://www.zerohedge.com/news/2018-12-27/another-massive-buy-program-sends-dow-soaring-over-900-points
Being wrong is a great reason to resign.
Being wrong in this case is a matter of opinion.
...
No it’s not. This is a matter of the elites protecting other elites and their authority versus those of us putting America first and using market indicators like President Trump.
True - for now.
However, I’m sure you can see how the debt is going exponential, even if borrowing costs were not rising.
Fortunately, the USD is still King and enjoys reserve status and is relatively strong.
You probably know that China now successfully trades crude oil that settles in Yuan and (supposedly) backed by gold bullion. Russia and China and Iran and a host of other countries are already settling their trades of real goods in their own currencies, totally bypassing the USD. China’s BRI (belt and road initiative) is moving right along.
All this is a very small percentage and no current threat to eroding the dollar’s hegemony. But if and when that does change, our gargantuan public debt will very much be a problem.
If the Congress and States would care enough to do their job I would be more sanguine about the situation. Neither the politicians nor the electorate is interested in doing what it takes.
Heck - the Congress won’t even take meaningful steps to stop an obvious illegal invasion on the southern border!
Since when do borrowers get to dictate all the terms of their transactions?
Ask anyone who builds houses if they want to buy lumber for $0.
Ask anyone buying a house if they want to pay $0 for the house.
Ask anyone starting a small business in need of a loan if the want interest rates to be 0%.
Ask any investing in new infrastructure/machinery if they want to pay $0 for their infrastructure/machinery.
You realize you're going to get a "YES" to every question here, don't you?
How much are YOU lending to homeowners, home builders, and business owners at a rate of 3%?
But it is all political. Don't you get it? It is all designed to slow the economy down and to hurt Trump. You old school fools think economics and politics are not interconnected, THEY ARE ONE AND THE SAME.....
Why do corporations get to set wages by flooding the USA with H-1B's. See it's ALL political. GET IT?
Great point.
If your concern is a slowing economy, there are plenty of things far more destructive to the economy than a measly quarter point rise in the Funds rate.
Are you not aware?
During the Carter years workers still had a lot of union political power to increase wages along with inflation. That threat is gone forever due to offshoring, out sourcing and unbridled immigration. Workers have zero power in the USA. IT IS NOT THE 1970's ANYMORE.
Is this some kind of joke or are you playing dumb? So is the opposite true then? Shrinking the money supple will grow the economy? LOL! IT WON'T AND YOU KNOW IT.
Look at the graph in Post #24, dude. Keeping interest rates low for years has not been good for us.
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