QE4 Started & Nobody Noticed

[PRB]

Because that is when the recession was. We don't need QE when there isn't one.

why do you hate America?

 

[Madison320]

Which rates were zero (they were very low but not quite zero)? I would agree that QE after the first round was not necessary (there is diminishing returns- you need to exponentially increase it to continue the same effect). I also thought they could have started raising rates sooner. Do you think they should have stayed low and QE continued?

They should never have done QE at all and they should've let rates find their free market level. Which would have been much higher than 0%. And they never should've borrowed trillions of dollars every year. As with most members here I don't think the government should print, borrow and ZIRP to boost the economy in the short run (at the expense of a much bigger crash in the future).

Since your only argument that Obama didn't influence the Fed is that rates were not 0% but a tiny hair above 0%, I rest my case.

 

[r3volution 3.0]

I would argue that price inflation is the end of the game. If you think about it, you could print your way out of ANY economic problem if you could always print faster than the printing shows up in prices.

I think we're saying the same thing in different ways.

The fundamental economic problem is that the state's policies are diverting increasingly large quantities of resources toward relatively unproductive (if not actually consumptive) enterprises (e.g. "zombie companies"). Since the state finances these redistributions through inflation (because of political limits to conventional taxation), the end result will be inflationary. Barring a radical political change that would curb the growth of the state's economic interventions, we're going to experience declining economic growth and rising inflation. We should expect a repeat of the 1970s, except this time there will be no Volcker on a white horse. The misallocations are much worse now than they were c. 1980, and the liquidation required to correct them would be so painful that a Volcker-esque policy is politically impossible. I don't see any plausible argument for any outcome other than massive devaluation. That doesn't mean that there can't be a traditional, deflationary recession at some point (or several points) over the course of this future, because the Fed isn't always able to predict exactly when and how much it needs to print to prevent one, but they aren't going to allow the kind of cleansing liquidation that's necessary to fix the system. If they launched nearly half a trillion not-QE QE during relatively good times, imagine what they're going to do if/when GDP actually goes negative one quarter. Draghi's "whatever it takes" wasn't hyperbole.

P.S. If you look at a chart of the federal funds rate, note how there have been lower highs and lower lows each cycle since c. 1980. In a way, that tells the whole story. There's lot of talk by central bankers and mainstream economists about the zero bound and unconventional monetary policy, even leaking into the popular press, but the silence as to why we're at this point, or what it really means, is deafening. They treat it like some kind of technical difficulty solvable by tweaking the XYZ lending facility, when actually it represents the terminal crisis of this monetary system.

 

[Zippyjuan]

I think we're saying the same thing in different ways.

The fundamental economic problem is that the state's policies are diverting increasingly large quantities of resources toward relatively unproductive (if not actually consumptive) enterprises (e.g. "zombie companies"). Since the state finances these redistributions through inflation (because of political limits to conventional taxation), the end result will be inflationary. Barring a radical political change that would curb the growth of the state's economic interventions, we're going to experience declining economic growth and rising inflation. We should expect a repeat of the 1970s, except this time there will be no Volcker on a white horse. The misallocations are much worse now than they were c. 1980, and the liquidation required to correct them would be so painful that a Volcker-esque policy is politically impossible. I don't see any plausible argument for any outcome other than massive devaluation. That doesn't mean that there can't be a traditional, deflationary recession at some point (or several points) over the course of this future, because the Fed isn't always able to predict exactly when and how much it needs to print to prevent one, but they aren't going to allow the kind of cleansing liquidation that's necessary to fix the system. If they launched nearly half a trillion not-QE QE during relatively good times, imagine what they're going to do if/when GDP actually goes negative one quarter. Draghi's "whatever it takes" wasn't hyperbole.

P.S. If you look at a chart of the federal funds rate, note how there have been lower highs and lower lows each cycle since c. 1980. In a way, that tells the whole story. There's lot of talk by central bankers and mainstream economists about the zero bound and unconventional monetary policy, even leaking into the popular press, but the silence as to why we're at this point, or what it really means, is deafening. They treat it like some kind of technical difficulty solvable by tweaking the XYZ lending facility, when actually it represents the terminal crisis of this monetary system.

Also important to note that the rate of inflation has also significantly declined since the 1980s. Lower inflation means lower interest rates.

 

[Working Poor]

All I can say is that prices are going up. To me that means the currency is being devalued. I am not sure if it because of inflation or deflation but, both seem like they are the same to me.

 

[tebowlives]

Also important to note that the rate of inflation has also significantly declined since the 1980s. Lower inflation means lower interest rates.

Really? You're going to post the made up inflation rate which doesn't take into account quality? Or correctly measure the cost of health care coverage?
Something gets priced too high, take it out of the measure. And don't account for technology. That's like saying the Redskins are the same quality product as the Patriots. You're weak on that topic too.

 

[devil21]

USMCA Trump quote from ZH article:

He added that the deal is “good for China, and our long term relationship,” before adding that “250 Billion Dollars” will be returning to the US thanks to Beijing’s promise to scale up imports.
-----------

In other words, China sending dollars back. They don't need them anymore. Trade in Treasuries, receive dollars, send dollars back for real goods. The future is Americans working for the East, instead of the recent history of the other way around. I for one welcome our new Chinese overlords and hope to be of great service. Xiexie.

 

[Swordsmyth]

USMCA Trump quote from ZH article:

He added that the deal is “good for China, and our long term relationship,” before adding that “250 Billion Dollars” will be returning to the US thanks to Beijing’s promise to scale up imports.
-----------

In other words, China sending dollars back. They don't need them anymore. Trade in Treasuries, receive dollars, send dollars back for real goods. The future is Americans working for the East, instead of the recent history of the other way around. I for one welcome our new Chinese overlords and hope to be of great service. Xiexie.

LOL

China will collapse if it loses many more dollars and it will collapse due to further increased tariffs if it doesn't.

 

[devil21]

LOL

China will collapse if it loses many more dollars and it will collapse due to further increased tariffs if it doesn't.

You're still maintaining the narrative that Chinese pays the tariffs? LOL indeed. Tariffs are a cover story for dollar devaluation, imported goods costing more, that's all.

 

[Zippyjuan]

USMCA Trump quote from ZH article:

He added that the deal is “good for China, and our long term relationship,” before adding that “250 Billion Dollars” will be returning to the US thanks to Beijing’s promise to scale up imports.
-----------

In other words, China sending dollars back. They don't need them anymore. Trade in Treasuries, receive dollars, send dollars back for real goods. The future is Americans working for the East, instead of the recent history of the other way around. I for one welcome our new Chinese overlords and hope to be of great service. Xiexie.

China may buy "up to" $250 billion in goods over the next two years. There will still be a trade deficit and dollars will still in net flow to China. The agreement basically takes us back to November in the Trade war. They aren't going to trade in Treasuries and hand the US cash dollars.

https://www.ft.com/content/a01564ba-37d5-11ea-a6d3-9a26f8c3cba4

The agreement specified that purchases “will be made at market prices based on commercial considerations” and that “market conditions” would affect the timing

Chinese companies would have to want to buy $200 billion worth of more goods from the US for it to actually happen.

 

[Swordsmyth]

You're still maintaining the narrative that Chinese pays the tariffs? LOL indeed. Tariffs are a cover story for dollar devaluation, imported goods costing more, that's all.

China either pays the tariffs or loses the sales.
Either way they lose dollars they desperately need to pay their gigantic dollar denominated debt.

 

[PRB]

Also important to note that the rate of inflation has also significantly declined since the 1980s. Lower inflation means lower interest rates.

hey troll. how about you stop destroying our conspiracy theory that hyperinflation is coming any day now? we need to sell gold or else my kids will be homeless.

 

[Madison320]

I think we're saying the same thing in different ways.

The fundamental economic problem is that the state's policies are diverting increasingly large quantities of resources toward relatively unproductive (if not actually consumptive) enterprises (e.g. "zombie companies"). Since the state finances these redistributions through inflation (because of political limits to conventional taxation), the end result will be inflationary. Barring a radical political change that would curb the growth of the state's economic interventions, we're going to experience declining economic growth and rising inflation. We should expect a repeat of the 1970s, except this time there will be no Volcker on a white horse. The misallocations are much worse now than they were c. 1980, and the liquidation required to correct them would be so painful that a Volcker-esque policy is politically impossible. I don't see any plausible argument for any outcome other than massive devaluation. That doesn't mean that there can't be a traditional, deflationary recession at some point (or several points) over the course of this future, because the Fed isn't always able to predict exactly when and how much it needs to print to prevent one, but they aren't going to allow the kind of cleansing liquidation that's necessary to fix the system. If they launched nearly half a trillion not-QE QE during relatively good times, imagine what they're going to do if/when GDP actually goes negative one quarter. Draghi's "whatever it takes" wasn't hyperbole.

P.S. If you look at a chart of the federal funds rate, note how there have been lower highs and lower lows each cycle since c. 1980. In a way, that tells the whole story. There's lot of talk by central bankers and mainstream economists about the zero bound and unconventional monetary policy, even leaking into the popular press, but the silence as to why we're at this point, or what it really means, is deafening. They treat it like some kind of technical difficulty solvable by tweaking the XYZ lending facility, when actually it represents the terminal crisis of this monetary system.

I think it was at the last Fed meeting at Jackson Hole I saw this interview with a guy from India. The interviewer asked him something like: "Why can't you just lower rates (in India) to promote growth?" He replied: "We're not like you, we have to worry about inflation."

It's like we're in this fantasy world where the laws of economics have been suspended. But it can't last forever.

 

[devil21]

Now China has caught a little cold that threatens the dollar trade recycling scheme...

hmm....

 

[devil21]

Tesla going parabolic, in conjunction with Fed repo cash injections directly into the Wall St. banking sector. ~100B today.

Total coincidence I'm sure. Equity markets are most certainly not tracking Fed repo operations.

https://www.zerohedge.com/markets/liquidity-panic-term-repo-most-oversubscribed-start-repo-crisis

 

[Zippyjuan]

Tesla going parabolic, in conjunction with Fed repo cash injections directly into the Wall St. banking sector. ~100B today.

Total coincidence I'm sure. Equity markets are most certainly not tracking Fed repo operations.

https://www.zerohedge.com/markets/liquidity-panic-term-repo-most-oversubscribed-start-repo-crisis

Fed started putting money into the repo markets in September. Did Tesla stocks soar then? Has the stock market in general soared? Or just specific stocks?

 

[Brian4Liberty]

Tesla going parabolic, in conjunction with Fed repo cash injections directly into the Wall St. banking sector. ~100B today.

Total coincidence I'm sure. Equity markets are most certainly not tracking Fed repo operations.

https://www.zerohedge.com/markets/liquidity-panic-term-repo-most-oversubscribed-start-repo-crisis

Ominously, the massive demand for term repo today means that the liquidity crisis that continues to percolate just below the surface of the market and has clogged up the critical plumbing within the US financial system, is getting worse, not better, and today's massive oversubscription indicates that one or more entities continues to face a dire shortage of reserves, i.e., cash. As for what they are doing with that cash, one look at Tesla this morning may provide an answer.

And Tesla had a drop at the end of the day. Sounds like some boys on Wall St. are day trading with no interest Fed loans. Nothing to see here, move along.

Moral hazard and malinvestment, as Ron Paul would say.

 

[devil21]

Fed started putting money into the repo markets in September. Did Tesla stocks soar then? Has the stock market in general soared? Or just specific stocks?

"Agenda 2030" stocks sure have and continue to. If it's a stock related to Agenda 2030 goals, it has as much Fed cash as it needs to continue operations. Obviously Musk has known that Tesla will not be allowed to fail as an Agenda 2030 company, hence his constant mocking of shorts and blatant disregard for securities law.

 

[Zippyjuan]

"Agenda 2030" stocks sure have and continue to. If it's a stock related to Agenda 2030 goals, it has as much Fed cash as it needs to continue operations. Obviously Musk has known that Tesla will not be allowed to fail as an Agenda 2030 company, hence his constant mocking of shorts and blatant disregard for securities law.

How have other "Agenda 2030" stocks performed? Have they also been soaring since September?

it has as much Fed cash as it needs to continue operations.

How much money has the Fed given to Tesla? Other Agenda 2030 companies?

(Rising stock prices don't give any new money to a company- they got their money when they sold shares. It is the share holders who benefit from the rising stock prices- not the company- unless they own their own shares and even then they would not realize any of those gains unless they sold their stock).

 

[devil21]

How have other "Agenda 2030" stocks performed? Have they also been soaring since September?

Pretty much all the spy tech stocks, autonomous car stocks, food delivery stocks, rent-a-thingie stocks, streaming propaganda social engineering tv stocks. They're all under the umbrella of Agenda 2030 stocks. They've all done well since the PPT was turned on in Jan 19 and have continued to do well. Record NASDAQ and SP500 today, no? They're all for conditioning people to a reduced standard of living in Gaza-like controlled movement cities. Living in jail cells without even realizing it...

How much money has the Fed given to Tesla? Other Agenda 2030 companies?

Who knows. The Fed open market operations aren't audited and what is audited is a rubber stamp. Remember how we needed an act of Congress to find out about the trillions doled out in secret?

(Rising stock prices don't give any new money to a company- they got their money when they sold shares. It is the share holders who benefit from the rising stock prices- not the company- unless they own their own shares and even then they would not realize any of those gains unless they sold their stock).

Gee, I'm glad to know that. There haven't been giant routine buyback programs going on for the last 10 years or anything like that, has there?
Then there's stock as collateral for debt raising so yes rising valuations do (or at least can) give new money to a company. The higher the stock value, the better the collateral it is, the more debt the company can secure to keep the lights on even when they're otherwise a money losing zombie corp. As long as the Fed keeps pumping new cash into Wall St, the stock market is artificially held up, valuations are artificially held up, debt interest rates are suppressed, which allows Agenda 2030 companies to finish their social and physical engineering projects. That is, until the curtain is pulled back and we find out they're mostly just institutionally supported Enrons. Book cooking, money laundering operations is what the markets have become.

Tell us again Zip how repo was only overnight and only for a few days, won't you please?