What Experts Say about This Past Week--Investment & Finance Thread Jan. 25

Weekly investment & finance thread ^ | Jan. 25, 2015 | Freeper Investors

[Zeneta]

...only tool they have is the printing press/QE*, which is designed to create "inflation" in order to stop the deflationary cycle.

--and they did it, it seemed to work for a while, but now they're quitting and we're all watching the world's economy deflate, beginning now with negative interest rates. The problem (imho) is that w/ all the printing the money supply hasn't made any serious moves. Money's supposed to be created by econ activity and it's not there. We especially see it in the fact that money-velocity has gone AWOL

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And after all their efforts we are back to where we started except....

Money's supposed to be created by econ activity and it's not there

This is Keynes and it is a complete failure.

There have been only a handful of truly revolutionary, technological breakthroughs over the past 115 years. When those breakthroughs have occurred the money flooded into them at breakneck speed. It will happen again, but the fact that it hasn't happened since the last "Breakthrough", the Internet, is somewhat surprising to me. Even the internet or the "World wide Web" was just an extension of the real breakthrough, that being the "integrated circuit".

The money "Created" by the FED is in the hands of the big banks and institutions and we are going to see an increased effort on the part of Governments around the world to confiscate this money since they believe they can spend it better than the private sector.

Keynes part II.

Fascism.

[Zeneta]

There are some who seem to think they’d benefit from deflation. Perhaps so, assuming no debt, ample savings and cash reserves, and your financial institutions don’t fail. That’s the biggie, failing financial institutions.

I think "Ample" is the key word.

As far as our financial institutions are concerned, I don't think they will get into trouble again, at least not for quite some time. They have sufficiently "de-leveraged" and are sitting on boat loads of cash.

[BipolarBob]

We still have coal plants that burn coal. The coal companies have been hurt, no doubt. Some may fail. If you buy, stick with the larger ones that will survive. I’ve bought some Console (CNX I think) to have some exposure.

[expat_panama]

Money's supposed to be created by econ activity and it's not there

This is Keynes and it is a complete failure...   ...money "Created" by the FED is in the hands of the big banks...

A nice thing about the U.S. economy is that the important amounts and receipts are public record; we can look at the money supply, see where the money came from and see where it went, but the impression I'm getting now is that it wouldn't make any difference to our conversation.  In the mean time I need to thank you for inspiring me to look again at the numbers:

Total money supply is the blue line on the left scale, and the Fed money printing is the green on the right.  What we got is that back in Jan '13 the economy was stalling so the Fed made money to buy T-bills on the open market.  It was just in time, for over a year the private sector had dried up and almost all money supply growth was from the Fed.  Half a year ago the Fed wound down and low'n'behold we're now creating money w/o the Fed's help.  That's good!  I mean, for the economy, not our conversation.

[NonLinear]

Nice wrap up of last week and start for the new one.

Thanks!

[Lurkina.n.Learnin]

The Weekend Is Over And Crude Oil Is Getting Smoked Again ($44.45)
http://www.freerepublic.com/focus/f-news/3250637/posts

[mad_as_he$$]

Size able layoffs in energy. The terrorist tom tom is on fire. Some body dropped a ton on shorts and lost their shorts. Metals and hard investments showing strength. Dollar very strong. EU QE is a big change. Anything can happen this week. I am watching CVX and COP to break 180 day lines down.

[cqnc]

Next correction - six times larger than 2008. you have been warned.

[expat_panama]

Happy New Week!   A beautiful day for short selling as futures traders (2½ hrs before opening) are already into a sell-off:  stock indexes -0.34%, metals -1.16% with the entire commodities market priced to sell at -0.45%.   Makes for plenty of news headlines:--

Oil falls more than 1 percent as euro tumbles after Greek election
Greek radical left wins election, threatening market turmoil
These taxes are going up, sooner or later
4 ways to play the currency wars Small-Firm Market Effect Is Real, And It's Spectacular - Cliff Asness, AQR
High-Frequency Traders Need a Speed Limit - Mark Buchanan, Bloomberg
Politicians Must Learn to Love Deflation - Jeff Dorfman, RealClearMarkets
Financial Press Promotes Economic Illiteracy - Acting Man

--and new FR econ threads:

• Texas, the ‘great American job machine,’ is responsible for the +1.2M net US job increase since 2007
• ‘Poor people don’t plan long-term. We’ll just get our hearts broken’
• Peer-reviewed pocket-calculator climate model exposes serious errors in complex computer models
• Denis McDonough on Adm's domestic, foreign policy priorities ["trust funds,"tax rate,prisoners]

[expat_panama]

—you’re quite welcome. This stuff’s so much easier in a group.

[expat_panama]

"...Crude Oil Is Getting Smoked Again..."

[abb]

Just remember, you’ve been warned...

[Lurkina.n.Learnin]

LOL, and now snowmageddon is on deck.

[Wyatt's Torch]

"...Crude Oil Is Getting Smoked Again..."

Boing!

[Wyatt's Torch]

Freepers have been warning of a market crash since the S&P was <700...

[expat_panama]

...been warning of a market crash since the S&P was <700...

There are Marxists who are so loyal that when asked about the fact that none of Marx's predictions have come about they say that it only proves how very very far into the future he was able to see...

[Zeneta]

I need to make a correction.

Money's supposed to be created by econ activity and it's not there

I replied

This is Keynes and it is a complete failure... ...money "Created" by the FED is in the hands of the big banks...

After re-reading our posts and replies I realized an error.

Keynes actually says the opposite, Money flow creates economic activity. I missed the word "by" from your comment.

That said it doesn't change the fact that the FED is/was employing Keynesian economics to fuel economic growth.

This nor your chart changes my assertion that the money created is in the hands of the big banks.

The good thing is that at least the "money pump" is moving away from one source, the FED, to a few dozen, the big banks. The next phase would be for these banks to seek opportunities since what was once a guaranteed profit has been removed. There are still a lot of regulatory challenges the FED is placing on the banking industry via Dodd-Frank and the new consumer lending agency that need to be overcome.

Now some readers may think that this is still a Keynesian model, "Money Creating economic growth", but it is not.

Well, actually it is still Keynesian if the banks are controlled by the FED.

As the decision making becomes diffused from the FED to a dozen or so banks to a hundred or so other banks and institutions to thousands of businesses to hundreds of thousands of "ideas" among smaller businesses, real economic growth will follow. We are not there yet.

[1010RD]

The dice roll 24/7 whether we choose to or not.

[1010RD]

There is a very close association with poverty, crime and impulsivity.

[1010RD]

There is no such thing as a nongovernmental deflationary spiral. Historical US deflations end naturally, unless government gets involved.