# News & Current Events > Economy & Markets >  The Fed went all in and it is not getting the effect that was expected

## oyarde

Whats next ?

----------


## Bern

Why did the Fed drop bank reserve requirements to zero?  Liquidity issues?  Fears of a run on the banks?

What can we expect in the near term with banks having free reign after decoupling the credit markets from deposits?

----------


## Brian4Liberty

It created panic last time, and it created panic again this time. Meets the definition of insanity.

----------


## Brian4Liberty

So when do mortgages and small business loans go down to 1%?

When do credit card rates go down to 2-6%?

Don’t hold your breath.

----------


## Warlord

> It created panic last time, and it created panic again this time. Meets the definition of insanity.


And now they;re out of bullets. All they can do is continue to buy bonds and 'provide liquidity' to the Zombie banks who use it to play the markets like a giant casino. The whole edifice will come crashing down sooner or later.

----------


## oyarde

Dow down 15 percent , Gold down 2 percent Dow down about 33 percent in the past few days. Gov.'s are shutting economies , so are we at the bottom ?

----------


## sam1952

Oh i think there plenty of room to drop further... trying to stave off panic but am honestly concerned with how much further this can drop. Next comes the real estate market along for the ride.

----------


## oyarde

> Oh i think there plenty of room to drop further... trying to stave off panic but am honestly concerned with how much further this can drop. Next comes the real estate market along for the ride.


Ya , it really is showing no indication of bottoming yet that I see .

----------


## oyarde

I went to the butcher today . Place was wiped out . I got a roast , some bacon and tenderloin and other than a few chicken legs and some sausage that was all there was . No chops , no steaks , no shoulder , breast or wings . I have never seen that place depleted before , so record sales I am sure . I am guessing it is because Gov's have been closing restaurants in every state around me . I went to the bank today to deposit a check . Lobby was closed , had to use the drive through . I hate the drive through but I won't need to go back for at least a week .

----------


## r3volution 3.0

> I went to the butcher today . Place was wiped out . I got a roast , some bacon and tenderloin and other than a few chicken legs and some sausage that was all there was . No chops , no steaks , no shoulder , breast or wings . I have never seen that place depleted before , so record sales I am sure . I am guessing it is because Gov's have been closing restaurants in every state around me . I went to the bank today to deposit a check . Lobby was closed , had to use the drive through . I hate the drive through but I won't need to go back for at least a week .


Meat counters are literally empty in some places around here.

Saw one the other day with not a single item except chicken liver, which people would apparently rather die than eat.

I love the stuff, so that works.

----------


## oyarde

> Meat counters are literally empty in some places around here.
> 
> Saw one the other day with not a single item except chicken liver, which people would apparently rather die than eat.
> 
> I love the stuff, so that works.


Wife will be gone over the weekend so I'll see what I can find in the woods.

----------


## sam1952

> I went to the butcher today . Place was wiped out . I got a roast , some bacon and tenderloin and other than a few chicken legs and some sausage that was all there was . No chops , no steaks , no shoulder , breast or wings . I have never seen that place depleted before , so record sales I am sure . I am guessing it is because Gov's have been closing restaurants in every state around me . I went to the bank today to deposit a check . Lobby was closed , had to use the drive through . I hate the drive through but I won't need to go back for at least a week .


Bank drive thru’s... next the doors close. May I suggest to fellow RPF members it may not be a bad idea to have some CASH, FRN’s. Also it would be wise to have 1’s, 5’s and twenties. Not just all 100’s

----------


## oyarde

> Bank drive thru’s... next the doors close. May I suggest to fellow RPF members it may not be a bad idea to have some CASH, FRN’s. Also it would be wise to have 1’s, 5’s and twenties. Not just all 100’s


Ya , I need to think about 1's  , 5's  and 10's . All I can get out of a money mover around here is 20's . I usually have a bunch of small bills because I sell eggs 3.00 a dozen but I used them all this week filling all my gas cans .

----------


## sam1952

Ha, I just bought two more gas cans tonight.

----------


## Madison320

> Whats next ?


One analyst tweeted something that actually made some sense. He said the markets won't stop falling until we see the actual corona emergency starting to improve. I think he's right. Until we get a handle on things and cases start going down and we start resuming normal activities the markets will keep falling.

----------


## BortSimpson

> Why did the Fed drop bank reserve requirements to zero?  Liquidity issues?  Fears of a run on the banks?
> 
> What can we expect in the near term with banks having free reign after decoupling the credit markets from deposits?


If there are 0 reserve requirements, doesnt that mean banks dont need to hold any cash (which would increase the likelihood of a customer not being able to get cash, which would quickly lead to a bank run)?

----------


## acptulsa

> One analyst tweeted something that actually made some sense. He said the markets won't stop falling until we see the actual corona emergency starting to improve. I think he's right. Until we get a handle on things and cases start going down and we start resuming normal activities the markets will keep falling.


I agree.  This flu bug will run its course and the market will spring back up like a dandelion.

But they do a flu bug scare yearly.  The H1N1 was far worse, but it didn't affect the market like this.  This market is existing volatility looking for an excuse.  Confidence is back to zero.  Everything's overvalued and everyone knows it.

Just like in 2008.  These shocks are a sign.  The actual crash is coming.  Yeah, the mainstream media says three biggest crashes ever like the dollar amount means something.  Comparing this to 1929 by the numbers is comparing pennies to dollars.  These are just volatility--a symptom.  The real crash is coming.

Most happen in late September or October, some in late April or May.  Will they be able to blow the bubble back up after that one?

----------


## Bern

> If there are 0 reserve requirementsdoesn’t that mean banks don’t need to hold any cash (which would increase the likelihood of a customer not being able to get cash, which would quickly lead to a bank run)?


1. Yes
2. Possibly.

I think it's likely that the Fed's concern was the corrallary issue of economic deflation (covid19 fears, etc) causing people to pull cash and banks facing liquidity issues trying to meet reserve requirements.  In effect, it might be a chicken and egg scenario.  They might have dropped the reserve requirement because there already exists enough of a bank run to cause banks stress.

----------


## Krugminator2

> Y*eah, the mainstream media says three biggest crashes ever like the dollar amount means something.  Comparing this to 1929 by the numbers is comparing pennies to dollars.*  These are just volatility--a symptom.  The real crash is coming.


I have gone through every market chart I can find of big declines in history. There is no historical precedent in the speed and depth of this decline. And it is actually masked because smaller companies which make up most the market are really getting crushed. The Russell 2000 is down 40% the past three weeks

As far as comparing this to 1929, here are the biggest down days in percentage terms of the Dow (which was around in 1929) Today was the second biggest down day ever (biggest for the Nasdaq and Russell). Thursday the fifth biggest and the Wednesday before the 13th.

1
1987-10-19
1,738.74
−508.00
−22.61

2
2020-03-16
20,188.52
−2,997.10
−12.93

3
1929-10-28
260.64
−38.33
−12.82

4
1929-10-29
230.07
−30.57
−11.73

5
2020-03-12
21,200.62
−2,352.60
−9.99

6
1929-11-06
232.13
−25.55
−9.92

7
1899-12-18
58.27
−5.57
−8.72

8
1932-08-12
63.11
−5.79
−8.40

9
1907-03-14
76.23
−6.89
−8.29

10
1987-10-26
1,793.93
−156.83
−8.04

11
2008-10-15
8,577.91
−733.08
−7.87

12
1933-07-21
88.71
−7.55
−7.84

13
2020-03-09
23,851.02
−2,013.76
−7.79

----------


## Brian4Liberty

> I have gone through every market chart I can find of big declines in history. There is no historical precedent in the speed and depth of this decline. And it is actually masked because smaller companies which make up most the market are really getting crushed. The Russell 2000 is down 40% the past three weeks
> 
> As far as comparing this to 1929, here are the biggest down days in percentage terms of the Dow (which was around in 1929) Today was the second biggest down day ever (biggest for the Nasdaq and Russell). Thursday the fifth biggest and the Wednesday before the 13th.
> 
> 1
> 1987-10-19
> 1,738.74
> −508.00
> −22.61
> ...


A day is pretty short term. We’ve been mixed, down and up. Probably the rest of those had some days surrounding them that were mixed.

Moving averages might be more informative.

----------


## Brian4Liberty

> Bank drive thru’s... next the doors close. May I suggest to fellow RPF members it may not be a bad idea to have some CASH, FRN’s. Also it would be wise to have 1’s, 5’s and twenties. Not just all 100’s


Grocery store runs are preferable to bank runs, in an economic sense.

----------


## Krugminator2

> A day is pretty short term. We’ve been mixed, down and up. Probably the rest of those had some days surrounding them that were mixed.
> 
> Moving averages might be more informative.


Not sure what you exactly you are looking for. But you use speed of the decline.

----------


## sam1952

I’ve made a few posts in this thread and i’d Like to clarify my thoughts. I don’t think TEOTWAWKI is happening. I have always preached keeping cash in small denominations for a variety of reasons, ie hurricanes, ect. I did actually but two gas cans today and filled them. Why? Because i am in a position to be able to do it. I also bought some 9mm, added 100 rounds, nothing crazy, today too.
I am not a prepper in the sense of... That said I think everyone should consider putting themselves in a position to be as safe as possible without neglecting their day to day lives.
Do the best you can for yourself and family within means and without being crazy.
I do follow the mantra...

Ob,la,di ob,la,da... life goes on...

----------


## Brian4Liberty

> Not sure what you exactly you are looking for. But you use speed of the decline.


50 day moving average of the Dow shows a drop comparable to December 2019. And it came right back.

100 day moving average is potentially a little more troubling, but still similar to Dec 2019.

----------


## Brian4Liberty

> I’ve made a few posts in this thread and i’d Like to clarify my thoughts. I don’t think TEOTWAWKI is happening. I have always preached keeping cash in small denominations for a variety of reasons, ie hurricanes, ect. I did actually but two gas cans today and filled them. Why? Because i am in a position to be able to do it. I also bought some 9mm, added 100 rounds, nothing crazy, today too.
> I am not a prepper in the sense of... That said I think everyone should consider putting themselves in a position to be as safe as possible without neglecting their day to day lives.
> Do the best you can for yourself and family within means and without being crazy.
> I do follow the mantra...
> 
> Ob,la,di ob,la,da... life goes on...


Dare we actually say it? Modern electronic transactions have probably saved us from bank runs. Millennials and younger have no reason for cash. As long as their cards still work, no problems.

As a matter of fact, this is probably the most important difference between the current panic and the Great Depression.

----------


## ATruepatriot

> Dare we actually say it? Modern electronic transactions have probably saved us from bank runs. Millennials and younger have no reason for cash. As long as their cards still work, no problems.
> 
> As a matter of fact, this is probably the most important difference between the current panic and the Great Depression.


What happens when the card doesn't work anymore?

----------


## Brian4Liberty

> What happens when the card doesn't work anymore?


Apocalypse Now: The Snowflakes Melt.

----------


## ATruepatriot

> Apocalypse Now: The Snowflakes Melt.


Lol, yep...

----------


## Warlord

> Whats next ?



Schiff (former Ron Paul economic adviser) says its worse than WW2 and the bottom could be another 60% or so:



https://youtu.be/ixelsjTCW-g

----------


## oyarde

> 1. Yes
> 2. Possibly.
> 
> I think it's likely that the Fed's concern was the corrallary issue of economic deflation (covid19 fears, etc) causing people to pull cash and banks facing liquidity issues trying to meet reserve requirements.  In effect, it might be a chicken and egg scenario.  They might have dropped the reserve requirement because there already exists enough of a bank run to cause banks stress.


Ya I think they did it because they anticipated a run.

----------


## Krugminator2

> 50 day moving average of the Dow shows a drop comparable to December 2019. And it came right back.
> 
> 100 day moving average is potentially a little more troubling, but still similar to Dec 2019.



Those two times are not even close. 

I traded through that time and made a zillion posts on here during that time. That was a fierce decline. That was was  about 1/3 as severe as this. That was a little baby move. Yesterdays move alone was bigger as a percentage to the  entire death drop part of 2018 which lasted nine days.

----------


## Bern

> A corner of the financial system that provides corporate America with short-term IOUs to buy inventory or make payrolls is seizing up, triggering a scramble for cash elsewhere and fueling speculation that the Federal Reserve will intervene.
> 
> In the $1.13 trillion commercial paper market, yields over risk-free rates have surged to levels last seen during the 2008 financial crisis. The strains are causing companies to draw down on backup credit lines, according to people with knowledge of the situation.
> 
> The longer the commercial paper market remains stressed, the more companies will look to tap credit lines, increasing the risk that banks will need to raise funds themselves, Bank of America Corp. strategists Mark Cabana and Olivia Lima wrote in a March 13 note. Cabana said the Fed needs to start buying commercial paper to unclog the market.
> 
> “It’s prudent for everyone to try and raise liquidity, and the Fed needs to facilitate this,” he said. If not contained, the turmoil could increase risks for money-market funds that hold the debt, he said.
> ...


https://www.bloomberg.com/news/artic...it-market-rout

This explains the smashing of the bank reserve ratio I think.

----------


## Brian4Liberty

> Ya I think they did it because they anticipated a run.


When the general public is living paycheck to paycheck, and is net in debt, with credit cards, car loans, student loans, etc, is it possible to have a run on banks? They don’t have any savings to pull out of a bank.

----------


## Brian4Liberty

> Those two times are not even close. 
> 
> I traded through that time and made a zillion posts on here during that time. That was a fierce decline. That was was  about 1/3 as severe as this. That was a little baby move. Yesterdays move alone was bigger as a percentage to the  entire death drop part of 2018 which lasted nine days.


I realize that. Did you look at a 50 day moving average chart?

My point remains the same though, regardless of which crash we are talking about. One day does not tell the whole story. The market could set a record going down one day, and a record going up the next. The net move over time is more important.

Yes, in this crash, the net is moving down, severely. But at the moment the DOW is up 650. And the question is will there be a V shaped recovery within the year?

----------


## oyarde

> When the general public is living paycheck to paycheck, and is net in debt, with credit cards, car loans, student loans, etc, is it possible to have a run on banks? They don’t have any savings to pull out of a bank.


That is a legitimate point . Hard to say . Take me as an example . i am retired , don't draw social security or a pension but i still probably dump 37k a yr in a checking or savings account that i later convert to silver or gold after utilities and property taxes. Some people park money there , more now than a month ago because of the amount of stock that has been sold.There are probably more people in cash now than in a long time .

----------


## H_H

> except chicken liver
> 
> I love the stuff, so that works.


Chicken is pure estrogen, 3pO.  Good if you're going for a tranny transition; bad if you're looking to up your benchpress numbers.

----------


## H_H

> Wife will be gone over the weekend so I'll see what I can find in the woods.


Word on the street is very low estrogen in squirrel.

----------


## Madison320

> I agree.  This flu bug will run its course and the market will spring back up like a dandelion.
> 
> But they do a flu bug scare yearly.  The H1N1 was far worse, but it didn't affect the market like this.  This market is existing volatility looking for an excuse.  Confidence is back to zero.  Everything's overvalued and everyone knows it.
> 
> Just like in 2008.  These shocks are a sign.  The actual crash is coming.  Yeah, the mainstream media says three biggest crashes ever like the dollar amount means something.  Comparing this to 1929 by the numbers is comparing pennies to dollars.  These are just volatility--a symptom.  The real crash is coming.
> 
> Most happen in late September or October, some in late April or May.  Will they be able to blow the bubble back up after that one?


The problem is that our economy is the weakest it's ever been in history if you use debt as your weakness gauge.

----------


## Okie RP fan

The Fed blew their load less than a minute in. Now they have nothing left. 

And all this means for the rest of us is that we're screwed. 

Can be the quickest way to civil war, which may be the exact thing the powers that be want out of all of this. You know, population control and all that jazz.

----------


## Slave Mentality

> The Fed blew their load less than a minute in. Now they have nothing left. 
> 
> And all this means for the rest of us is that we're screwed. 
> 
> Can be the quickest way to civil war, which may be the exact thing the powers that be want out of all of this. You know, population control and all that jazz.


It looks like your prediction is accurate so far.  The fed blew their wad, the market rebounded little (dead cat style), and now the reality of people not working will set in.  A hungry man is a desperate man.

----------


## Okie RP fan

> It looks like your prediction is accurate so far.  The fed blew their wad, the market rebounded little (dead cat style), and now the reality of people not working will set in.  A hungry man is a desperate man.


Yep. It all happened so quickly that I've come to two conclusions: they've bene planning this and achieved the effects they wanted or they are so stupid and panicked and are now left with their thumbs up their butts wondering what comes next.

----------


## rosenfield

> Oh i think there plenty of room to drop further... trying to stave off panic but am honestly concerned with how much further this can drop. Next comes the real estate market along for the ride.


Do you think that the next dump of the market will be in real estate? Perhaps this will be a good reason to buy while cheap? 
A month ago, I almost bought an apartment in Europe at https://korter.ro, but the situation quickly changed, I heard that in some countries the showing of apartments was stopped altogether. I do not know what will happen next, and it is difficult to accept the decision now.

----------


## oyarde

> Do you think that the next dump of the market will be in real estate? Perhaps this will be a good reason to buy while cheap?


So far I do not expect to see that . It would take several months for real estate to show lower I think.

----------


## sam1952

> Do you think that the next dump of the market will be in real estate? Perhaps this will be a good reason to buy while cheap?


Yes, I expect real estate to follow. No homes are being shown. Peoples investments are losing value. The real estate market where I am is at a stand still. The only positive is people are remortgaging their homes with the lower interest rates.

----------


## rosenfield

> So far I do not expect to see that . It would take several months for real estate to show lower I think.





> Yes, I expect real estate to follow. No homes are being shown. Peoples investments are losing value. The real estate market where I am is at a stand still. The only positive is people are remortgaging their homes with the lower interest rates.


Thank you both for yours opinion!

----------


## BortSimpson

> Do you think that the next dump of the market will be in real estate? Perhaps this will be a good reason to buy while cheap?


I see others have responded and I'll throw another opinion out there.  *DISCLAIMER: I'm no expert, so make your own judgments about what I'm saying.*

I think real estate will dump but I wouldn't buy right now.  With all the moves the Fed is making these days, it's going to cause prices to rise (potentially massively).  That will cause interest rates to move way up and, thus, housing prices way down.  If you're in a good financial position at that point, then you can consider buying.  (Note that government may try to bail it out again but I can't imagine it will work again.  That card has already been played).  

In the meantime, I think you'd be better off investing some money in precious metals (which should go up as the Fed prints more and more money).

----------


## Bern

Fed balance sheet 3/26/2020:  $ 5.302 T.  Roughly $600 billion dollars more than last week.  I wonder if it hits $6T next week.

----------


## oyarde

> Fed balance sheet 3/26/2020:  $ 5.302 T.  Roughly $600 billion dollars more than last week.  I wonder if it hits $6T next week.


I wonder what it will be this time a yr from now .

----------

