Posted on 02/28/2019 2:10:02 PM PST by Enlightened1
There is no doubt that the Federal Reserve has had a role in creating inflation, via it’s non-market (Fed committee) manipulation of the cost of providing credit to and within the banking community. Prior to the 1st decade after the Fed, the U.S. economy did fairly well, with ups and downs, but had very little inflation. We already had Fractional Reserve Banking then, but credit markets determined the availablity of, and base rates for bank credit - not a non-market operating committee of bureaucrats.
That is a different topic than whether or not market downturns, by themselves, when they happen, represent “destruction of value”. As, I said, that “market value” is only on paper, unless and until you are selling a stock.
Every stock I held last September is still TODAY worth more than, and represents an increase over - a gain - the value when purchased. So, tell me what “value” was “destroyed”, other than some POSSIBLE, POTENTIAL paper value on some day in 2018, when I was not going to sell it in the first place. I never “had” that value in October 2018 in reality, because if I was not selling then it was not mine. I have no right or irrational notion that the on-paper value a stock I hold is never supposed to ever go lower than some “market value” it has hit had any particular time. Much of that value you say was “destroyed” is already being recovered here in the first part of this year.
Yes, the Fed, instead of ending the “business cycle” instead became the chief instigator of its ups and downs.
But that is separate from the value of stocks, and what value we are talking about, at any given time. Stocks I have ever had have had to me only two values of any matter to me - what I paid, and what I sold them for. Nothing got “destroyed” in between, because I have never bought any stock for some short-term ride thinking it could never possibly on any day of any year have a market value less than some highest value it ever reached. Guess what, the value of most long term retirement accounts - like a 401K - is the same. As long as the end value at retiremant time, not before, shows a good gain, then no value has been “destroyed”. Coulda, woulda, should does not count in stock values.
I put ten thousand into a B of A money market account and lost money. Unbeknownst to me, there was a twelve dollar a month service charge which, with the practically nonexistent interest rates, sucked out more fee than interest going in.
If you have money in the 401K and are not close to retirement they you will be getting a bargain on low prices, if you are retired and have your money in Bonds and Stable Funds you will be fine also.I believe the stock market is close to regaining most of the losses anyhow.
It’s a little scary the stuff I see that FReepers post about economic news. The market sets medium and long term interest rates, not the Fed. The global debt market is saying it absolutely loves US debt, which has flattened our yield curve. The Fed doesn’t want to freak people out with an inverted yield curve (though that in and of itself is no big deal) so no more increases for a while.
Its funny how conservatives promote the free market for everything - but when it comes to money and interest rates, they prefer to have a soviet-style central planner.
I like it too. I have it because I don't want all my eggs in one basket. If I lose in one area, another area balances it out with a win. If I lose other assets, I'll have my metals to fall back on. Right now, my metals aren't doing well while my stocks are doing great. Metals are my insurance policy. Plus I can hold it in my hands, which I like. I know too many people who have nothing physical in their hands and rely on promises in digital form (bank accounts, stocks, and yes cash which is losing buying power). You're doing it right.
No no, 'Hoibet Hoover."
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.