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Old 06-09-2020, 06:58 AM
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How about our first trip to MickyDs, circa 1955 in our little Nash Rambler. Mom ordered a burger, fries and a soda for her and the 4 of us and got change back from her dollar!
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Old 06-10-2020, 03:42 PM
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John Williams of Shadow Stats thinks the end is nigh. The US Fed lowered reserve levels for all US Banks to 0% 1st time in history. So it really is not even fractional reserve banking. It is just print and dump. https://usawatchdog.com/federal-rese...qvISmnxGDGhbWY
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That's insane...

This is a very dangerous development...

I want to expand on this....


Why would the FED do this?

With current monetary velocity indicating deflation (not inflation), then is this the FED signalling they are willing to step back from trying to stop the massive M2 growth from entering the economy?

Remember this is unprecedented.... the FED has NEVER done this.

Thoughts?
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Old 06-11-2020, 08:33 AM
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Well some are starting to concede we are seeing inflation. https://www.zerohedge.com/economics/...roducer-prices
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Old 06-11-2020, 11:20 AM
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Well some are starting to concede we are seeing inflation. https://www.zerohedge.com/economics/...roducer-prices
Manufacturers passing on the costs of overall lower production volumes, rising per-unit production costs, and rising raw materials (input) prices can result in an uptick in consumer prices. Because of this, it is important to remember that producer prices rising is not the same as consumer prices rising. We can have consumer price inflation in a deflationary economy.

The only real test, i.e. "is rising prices a result of demand?" can be answered by looking at how this demand is resolved... and that is with the exchange of currency... so:

Monetary velocity that is stagnant/falling = stagnant/falling demand.
Consumer demand falling will ultimately result in consumer prices falling as manufacturers adjust production.
So traditionally: Prices falling = deflation

If monetary velocity was screaming... we'd be seeing associated indicators (ISM Purch Mgrs Index, etc.) doing the same... but they aren't. So this has to mean demand is down, and price rise can only be attributed to the whole supply chain raising prices to offset revenue/margin loss.


Classic signs of deflation.

This is why what the FED did is so troubling (at least to me)... it tells me they're panicking...


I would LOVE to be wrong on this.... I would love nothing more than the economy to come roaring back, so POTUS can stick the libs heads on pikes... but when I look at this data all I get is a horrible sense of foreboding... like standing on a beach staring at a far off tsunami.
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Old 06-11-2020, 11:31 AM
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Default Chaos in Stocks Today

S&P down 129.
Gold up 18
Bitcoin down 405
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Old 06-14-2020, 07:16 AM
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I believe history doesn't exactly repeat itself but it often rhymes. Stagnation, financial despondency and occasional social discord but no implosion in Europe or any other developed country.
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Old 06-14-2020, 12:10 PM
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Here are the stats for M2 for May 2020. Look at Jan 2020 and compare. Scary. Especially since the Fed removed all requirement for Banks and Financial Institutions to hold any reserves. https://tradingeconomics.com/united-...oney-supply-m2
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Old 06-14-2020, 12:30 PM
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Here are the stats for M2 for May 2020. Look at Jan 2020 and compare. Scary. Especially since the Fed removed all requirement for Banks and Financial Institutions to hold any reserves. https://tradingeconomics.com/united-...oney-supply-m2
yea clearly the Fed is preparing to let the genie out of the bottle....

They are desperate to re-ignite consumer spending....

I'd expect we'll start hearing talk of more direct-to-consumer stimulus... and some sort of debt jubilee...
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Old 06-14-2020, 12:34 PM
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Very dangerous desperate gamble. US Banks allowed to hold 0% in reserves. https://usawatchdog.com/federal-rese...ETJ2QRVi04zzVI
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Old 06-14-2020, 12:49 PM
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The irony here is that the problem is the same problem we've been talking about all along: Debt.


As long as the USD is reserve currency there are options...

Morale hazard aside (with what the FEDs doing it's gone anyways) - The only way to increase monetary velocity is to stimulate consumer spending.. and to do that the Fed is gonna have to:
  1. unencumber consumers from their existing, overwhelming debt... AND
  2. figure out how to put FRN's in their pocket to... AND
  3. get them to spend it...

This explosion in stimulus would be thermonuclear to M2... and likely kill the USD's veracity... but because its reserve (for now).. the Fx markets would likely blink....

At least until US bond yields rise to make debt service untenable.... and cause the federal government to shrink as operating funds from bonds die...

Their only hope is to offset that with accelerating tax revenue from GDP (PCE) based activity.


Prolly a longshot.... but at this point, the Fed is shooting blanks... and likely throwing whatever ideas they have on the wall to see what sticks....
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Old 06-14-2020, 01:37 PM
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Originally Posted by Steverino View Post
The irony here is that the problem is the same problem we've been talking about all along: Debt.


As long as the USD is reserve currency there are options...

Morale hazard aside (with what the FEDs doing it's gone anyways) - The only way to increase monetary velocity is to stimulate consumer spending.. and to do that the Fed is gonna have to:
  1. unencumber consumers from their existing, overwhelming debt... AND
  2. figure out how to put FRN's in their pocket to... AND
  3. get them to spend it...

This explosion in stimulus would be thermonuclear to M2... and likely kill the USD's veracity... but because its reserve (for now).. the Fx markets would likely blink....

At least until US bond yields rise to make debt service untenable.... and cause the federal government to shrink as operating funds from bonds die...

Their only hope is to offset that with accelerating tax revenue from GDP (PCE) based activity.


Prolly a longshot.... but at this point, the Fed is shooting blanks... and likely throwing whatever ideas they have on the wall to see what sticks....
It is a Hail Mary last ditch attempt. Before Covid total US GDP was 16T Now it is less, with 40% unemployment and a tsunami of bankruptcies coming. Debt last number I saw was 26T plus with all the printing. They can not tax their way out of this, that ship sailed some time ago. Inflation if measured properly without tricks is running much higher than the official number. Gravity is gravity.
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Old 06-14-2020, 07:26 PM
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just noticed this:

..... the Fed has monetized 105% of all Treasury issuance this year.

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Old 06-14-2020, 07:34 PM
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It is a Hail Mary last ditch attempt. Before Covid total US GDP was 16T Now it is less, with 40% unemployment and a tsunami of bankruptcies coming. Debt last number I saw was 26T plus with all the printing. They can not tax their way out of this, that ship sailed some time ago. Inflation if measured properly without tricks is running much higher than the official number. Gravity is gravity.

Or there's no taxes coming... maybe if a Dem gets elected... but then I'd expect them to do that...

Taking more money out of already strapped consumer pockets... that would be a Coup de Grace to the economy...
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Old 06-15-2020, 06:36 PM
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Big Sugar is taking away the sugar bowl end of July. https://www.zerohedge.com/personal-f...onomic-despair
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Old 06-15-2020, 08:45 PM
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From "Krugman and the pied pipers of debt":

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Old 06-16-2020, 12:56 PM
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Big Sugar is taking away the sugar bowl end of July. https://www.zerohedge.com/personal-f...onomic-despair
Any dead stop or drastic tapering just before a Presidential election is very unlikely.
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Old 06-16-2020, 03:09 PM
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Any dead stop or drastic tapering just before a Presidential election is very unlikely.
Yes the free heroin will continue until the patient dies. But the article lays out points of interest.
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Old 06-19-2020, 11:17 PM
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How long can they print. https://www.zerohedge.com/geopolitic...ing-end-dollar
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Old 06-21-2020, 03:16 AM
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Quoth The Raven podcast US will lose reserve status
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