Posted on 10/12/2022 6:38:31 PM PDT by Beave Meister
The global debt market is orders of magnitude larger than the stock market, and debt instruments across the globe have nearly reached the breaking point due to the Fed’s steady increase in interest rates this year (combined with seemingly endless money printing and other disastrous fiscal policies).
Because bond values have an inverse relationship with interest rates, as interest rates go up, the value of bonds and other debt instruments already issued goes down. With each Fed rate increase, bond values are cratering, leaving debt investors holding substantial losses and leading to a collapse in the number of potential buyers even willing to take possession of these bonds.
As investor Larry McDonald says in this Marketwatch article, “things are breaking.” From the article:
(Excerpt) Read more at freedomfirstnetwork.com ...
If you invested in a bond mutual fund rather than the bonds themselves then you are correct. (Pretty much every 401K)
Generally better to invest in actual bonds. Assuming your bond issuer is solvent, hold them to maturity and you will get the face value at that time and the stated interest rate. You would be out any premium you paid, but presumably got a higher interest rate for as long as you held the bond. If you purchased at a discount, you will get full face so appreciation.
Very slowly at first, then quickly.
I’m not worried. My Sears (S) stock will never lose value!
—
Sears was Amazon before Amazon was Amazon.
I should like to point out something, y’all.
Printed money from QE is a substance created from nothingness. It represents nothing, particularly, beyond value imagination in counter parties.
But to believe this is the source of inflation gives it too much attention. May I point out the QE magnitude that took place from 2009 to 2020. Trillions upon trillions.
Inflation was sometimes below 0%. The printed money was there, but inflation was 0% or lower.
Only beginning last year did inflation appear. Globally. This did not happen from QE. QE had been going on globally for a decade.
What caused it now? The best answer is “I don’t know”. I just know what didn’t.
Vaccines are the cure to underfunded liabilities
What caused it now? The best answer is “I don’t know”. I just know what didn’t...
I think it was separating money from work which is the way we handled the Covid nonsense. We just gave away money while people sat on their rear ends.
Always before, even though QE existed, we gave lip service to the pretense that work was required for income.
Interesting theory.
I’m gonna say no because it’s global. Not everywhere did stimmi but they all have inflation.
I funded my own retirement thru the Dave Ramsey method....slow, continuous dollar cost averaging in good growth mutual funds....
and now, I loose....decades of hard work down the drain......
there should have been layoffs but the branch covidians wouldn't allow that....they just wanted money to be printed and no work done....
even today, cities and communities are debating on what lame brain scheme to spend their covid dollars on...
Inflation is contagious among nations. As soon as one gets a serious case it spreads like wildfire.
The reason is that if a nation sees its currency become stronger than its neighbors, its exports go down and its imports go up. This kills domestic emoployment. It is advantageous from an employment standpoint for every nation to have a weak currency.
This is why the dollar strengthened against the British Pound even though we have seen 8-9% inflation (18% if you look at shadowstats) They had even worse inflation than we did.
Kevin Hughes @realkrh80
For all the Trump haters out there, what did you hate most:
No wars?
Middle East peace?
Strong American economy?
No inflation?
Growing 401 Ks?
Market profits?
Low gas prices?
A secure oil reserve?
Lower taxes?
A strong dollar?
One day we are going to wake up and there will be no more money in your bank.
Everything is going to freeze up.
Have some cash on-hand! And pay down as much debt as possible right now.
I heard them saying it is about 2 days left.
which sets up a black Friday event...
I don’t know either, but I never believed inflation was any where near 0% during the QE years 2009-2020. I don’t know how they cooked the figures but my daily needs (food, utilities, travel etc) went up by 5-10% pa consistently through that period - even while returns on savings, pensions etc were practically zero.
It happened and is happening due to supply chain issues. This is why we will not overcome this inflation cycle with interest rate hikes. Instead those actions will crash they system and cause everything to freeze-up.
If the fiat currency cannot be converted into tangible assets, inflation will continue. We do not hear much about the supply chain at this point as it has become “common,” to see empty shelves of this or that, no chips for cars, no feed for farm animals, worldwide droughts, China’s no-covid lockdown policy. Tangible assets in this case are your everyday common items, not the gold or silver. Sucking the fiat currency out of the system doesn’t resolve the supply chain problems, it makes things worse because there is no capital to produce.
It really is simply about supply and demand. When there is little supply to meet demand, the price inflates.
The Fed and government are tackling the wrong thing with interest rates hikes. In the post-covid year(s), we should be moving to shore up our economy with production and bringing it back home. Oddly enough if you think about it, this is what President Trump was doing. He understood the fragile global supply-chain. Covid revealed many production weaknesses in our own national safety. Everything from the electronics we use to the medicines we need and the food we eat.
Produce the oil
Produce the energy
Produce the rice
Produce the wheat
Produce the chickens and process them in the United States
Produce the corn
Produce the computer chips
Stop complaining about the inflation and start asking why it exists. Why are the price of eggs so high? Why is milk so high? Why is gasoline so high? Why is diesel so high? The answer to all of these questions is the broken supply chain.
If there’s going to be no more money in your bank account, why would you pay down debt? The way you write your comment suggests no one will have no more money in their account. So paying down debt would seem to be useless at that point - many, many people will be in the same boat.
Re: 34 - bookmarking for potential claim chowder.
Because the money goes away to a bail-in. Your debt still exists and is expected to be paid.
If people have no money in their bank accounts because it disappeared overnight, there will be no reasonable expectations that debts will be repaid for a long time.
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