Topic: The largest stock market bubble ever seen is finally Ko'd by Covid-19

[Tobelius]

So we are not the only ones... That can't be popular. But don't your government still have a majority stake in the main energy company?

I had a discussion recently and I asked what have our leaders made over the past 30 years that have been good for my country. The conclusion was that they had done good when they backed away. Everywhere they had control they have made things worse. It's quite ironic that during this pandemic my government haven't done much at all. They have followed the advice of a few doctors and we have at least not had a complete disaster. Effect? The popularity of the leaders have gone way up. Had they not decided to burn face masks and hospital equipment we would have been even better off. Imagine how bad a leader you have to be when your by far best decision is to do nothing.

Fortum,our biggest electricity company is indeed owned 51% by the state and it sold it's transfer grid to Caruna a few years ago,at the time the then government who made the decision through the controlling board said it was a good deal because you can't move the grid anywhere and they'll still pay the taxes,since then transfer charges have more than doubled and i think they still haven't paid a penny of tax in our country because they have multiple companies in Europe and can always show a loss through financial shenanigans.

I fear they'll sell our ground water next to service our swelling debt.

  Yeah i kind of agree on the doing nothing would perhaps be the lesser evil every time these politicians think of doing something,only thing they seem to be good at is bloating everything to the hilt and in creating well paid green branch jobs for their party buddies(regardless of the party) and loaning the money to do all of this until we can't loan any more,we'll be the Nordic Greece soon (without the islands,culture and nice weather) if this continues.

[Gnurglan]

Who exactly does this debt get paid to. It's all figures on a screen anyway. My guess is it'll never be paid things will continue on the way they are. The UK only finished paying off debt from the first world war very recently. I think people get a bit too caught up in this stuff really to be honest.

There is no intention to pay it back. But it will matter. It's complex, but I'll give you the bigger picture:

Countries need money to invest, say in new roads. They need money, but don't have it. The debt comes in the form of a government bond. Countries, pension funds etc can buy them and normally get a few percentages in return every year. The country gets money to invest.

What you'll hear from investors is pension funds have to invest X% of their money in government bonds. These bonds are considered risk free assets. Pension funds need a return of 7-8% per year so they can pay what they have promised. With bonds at 0% or even negative, pension funds will have to make up for the difference in the stock market. To make it simple, if you invest 100 and 50 goes to the bond market and 50 to the stock market, you need 108 in total at the end of the year. The first 50 will remain 50 (bonds). That means the other 50 (stocks) will need to become 58, which means you need your stocks to go up 16%/year. With a recent crash in the stock market and a slowing economy, what happens?

What would you do when there's 0% return in the bond market and the government issued more and more of those bonds? You'd probably put your money somewhere else. What we could be about to see is everyone moving away from the ’risk free’ government bonds and into the stock market. If we take it one step further, that means it would be very difficult for governments to issue bonds = borrow money. Right now every government in the world is borrowing like crazy. At 0% or thereabouts. Normally investors would demand higher interest rates when governments plan to give money away left, right and center to save corporations from going broke. Now it's 0%...

So increase the rates? How do we then finance the existing debt? It's easy to be 100 in debt when the bond that used to be 10% ends. Then you re-finance the loan at 0% over the next 1, 10 or 30 years. But what if you go the other way and everything you borrowed gets more expensive to re-finance? There's no way you can service the debt. The ’risk free’ bond investment becomes high risk, comparable to corporations going broke.

Remember all governments borrow like crazy today. They blame the virus, but they were heavily in debt long before the virus. Remember central banks currently buy everything to keep interest rates as low as possible. It used to be they bought long term government bonds, now they buy everything. Long term or short term, government bonds or corporate bonds, it doesn't matter.

Governments are not investing in those roads this time around. I believe they are simply trying to survive.

[Red-Soldier]

This is the model we should be adopting:

WRAP and the circular economy
 
What is a circular economy?

A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.




Why a circular economy is important

As well as creating new opportunities for growth, a more circular economy will:

    reduce waste
    drive greater resource productivity
    deliver a more competitive UK economy.
    position the UK to better address emerging resource security/scarcity issues in the future.
    help reduce the environmental impacts of our production and consumption in both the UK and abroad.

https://www.wrap.org.uk/about-us/about/wrap-and-circular-economy

The concept of a circular economy

In a circular economy, economic activity builds and rebuilds overall system health. The concept recognises the importance of the economy needing to work effectively at all scales – for large and small businesses, for organisations and individuals, globally and locally.

Transitioning to a circular economy does not only amount to adjustments aimed at reducing the negative impacts of the linear economy. Rather, it represents a systemic shift that builds long-term resilience, generates business and economic opportunities, and provides environmental and societal benefits.

Technical and biological cycles

The model distinguishes between technical and biological cycles. Consumption happens only in biological cycles, where food and biologically-based materials (such as cotton or wood) are designed to feed back into the system through processes like composting and anaerobic digestion. These cycles regenerate living systems, such as soil, which provide renewable resources for the economy. Technical cycles recover and restore products, components, and materials through strategies like reuse, repair, remanufacture or (in the last resort) recycling.

https://www.ellenmacarthurfoundation.org/circular-economy/concept

[Red-Soldier]

Who exactly does this debt get paid to. It's all figures on a screen anyway. My guess is it'll never be paid things will continue on the way they are. The UK only finished paying off debt from the first world war very recently. I think people Gnurglan gets a bit too caught up in this stuff really to be honest.

Exactly, it's mostly bollocks.

Corrected the second bit for you there.

[Ma Vie en Rouge]

This is the model we should be adopting:

WRAP and the circular economy
 
What is a circular economy?

A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.




Why a circular economy is important

As well as creating new opportunities for growth, a more circular economy will:

    reduce waste
    drive greater resource productivity
    deliver a more competitive UK economy.
    position the UK to better address emerging resource security/scarcity issues in the future.
    help reduce the environmental impacts of our production and consumption in both the UK and abroad.

https://www.wrap.org.uk/about-us/about/wrap-and-circular-economy

The concept of a circular economy

In a circular economy, economic activity builds and rebuilds overall system health. The concept recognises the importance of the economy needing to work effectively at all scales – for large and small businesses, for organisations and individuals, globally and locally.

Transitioning to a circular economy does not only amount to adjustments aimed at reducing the negative impacts of the linear economy. Rather, it represents a systemic shift that builds long-term resilience, generates business and economic opportunities, and provides environmental and societal benefits.

Technical and biological cycles

The model distinguishes between technical and biological cycles. Consumption happens only in biological cycles, where food and biologically-based materials (such as cotton or wood) are designed to feed back into the system through processes like composting and anaerobic digestion. These cycles regenerate living systems, such as soil, which provide renewable resources for the economy. Technical cycles recover and restore products, components, and materials through strategies like reuse, repair, remanufacture or (in the last resort) recycling.

https://www.ellenmacarthurfoundation.org/circular-economy/concept

Yes, I like that. It fits right into a permaculture-type model of economics. It benefits individuals, communities, and the earth itself. It doesn't lend itself to mega-corporations or centralised control (and, in fact, would logically create stronger local economies).

[Gnurglan]

If you think debt doesn't matter, consider what happened in 2008. The crash in the housing market and the decisions following it gave way to what is probably the biggest wealth transfer in history. From you and me, to the top 1%.

[conman]

That's my main scenario. It's such a gigantic mess. It may not be as dramatic as I predict, but right now I think the EU is in danger of breaking up. Maybe not on Monday, but over the next 5-10 years. I think the bond markets are in danger of a collapse and while that doesn't appear to mean anything, it's how governments have borrowed money. Which means, if the bond market collapses, governments will have to raise taxes and they can no longer promise to provide as much as in the past. We're talking a direct threat to how things have been run for a century.

It's easy to think one bad thing will lead to something even worse in a downward spiral. But it's also hard to see how we can come out of this without taking a very hard hit.

Yea, it's a gigantic mess. It's ilkely the 4th turning, where this economic cycle is coming to an end and a new one will begin.

[Gnurglan]

Yea, it's a gigantic mess. It's ilkely the 4th turning, where this economic cycle is coming to an end and a new one will begin.

Sounds like you have been watching Neil Howe.

[The Last Known Survivor]

Sounds like you have been watching Neil Howe.

What is this, sounds interesting. Might waste an hour or two.

[Red-Soldier]

Covid-19 crisis will wipe out demand for fossil fuels, says IEA

Renewable electricity may be only source to withstand biggest shock in 70 years

Renewable electricity will be the only source resilient to the biggest global energy shock in 70 years triggered by the coronavirus pandemic, according to the world’s energy watchdog.

The International Energy Agency said the outbreak of Covid-19 would wipe out demand for fossil fuels by prompting a collapse in energy demand seven times greater than the slump caused by the global financial crisis.

In a report, the IEA said the most severe plunge in energy demand since the second world war would trigger multi-decade lows for the world’s consumption of oil, gas and coal while renewable energy continued to grow.

The steady rise of renewable energy combined with the collapse in demand for fossil fuels means clean electricity will play its largest ever role in the global energy system this year, and help erase a decade’s growth of global carbon emissions.

Fatih Birol, the IEA’s executive director, said: “The plunge in demand for nearly all major fuels is staggering, especially for coal, oil and gas. Only renewables are holding up during the previously unheard of slump in electricity use.”

Renewable energy is expected to grow by 5% this year, to make up almost 30% of the world’s shrinking demand for electricity. The growth of renewables despite a global crisis could spur fossil fuel companies towards their goals to generate more clean energy, according to Birol, but governments should also include clean energy at the heart of economic stimulus packages to ensure a green recovery.

“It is still too early to determine the longer-term impacts,” said Birol. “But the energy industry that emerges from this crisis will be significantly different from the one that came before.”

The impact of the coronavirus has triggered a crisis for fossil fuel commodities, including the collapse of oil market prices, which turned negative for the first time in the US earlier this month.

Global efforts to curb the spread of Covid-19 have led to severe restrictions on travel and the global economy that will cause the biggest drop in global oil demand in 25 years.

Demand for gas is expected to fall by 5%, after a decade of uninterrupted growth. It is the steepest drop since gas became widely used as an energy source in the second half of the previous century.

Coal demand is forecast to fall by 8% compared with 2019, its largest decline since the end of the second world war.

The Paris-based energy authority used data from every country and across each energy sector to analyse the impact of the pandemic on the global system.

It found that global energy demand was likely to plummet by 6% this year, the equivalent of losing the entire energy demand of India – the world’s third largest energy consumer – or the combined energy demand of France, Germany, Italy and the UK.

The impact of the pandemic on energy use will be more keenly felt in advanced economies where demand is expected to fall by 11% across the EU and 9% across the US.

The collapse of fossil fuel demand could lead global emissions to fall by 8% compared with 2019, a drop six times larger than the record fall after the financial crisis in 2009 to lows not seen in the past decade.

The 3bn tonne drop in carbon dioxide emissions surpasses data commissioned by the Guardian this month that predicted a fall or 2.5 bn tonnes this year, greater than the drop triggered by every financial crash since the second world war combined.

https://www.theguardian.com/business/2020/apr/30/covid-19-crisis-demand-fossil-fuels-iea-renewable-electricity

[Gnurglan]

What is this, sounds interesting. Might waste an hour or two.

It's worth it. He's been on Real Vision a couple of times. Here's one link:

https://www.realvision.com/shows/the-interview/videos/history-creates-generations-generations-create-history

[Gnurglan]

30M Americans have filed for unemployment in the last 6 weeks! It's about 1M per working day.
https://www.theguardian.com/business/2020/apr/30/us-unemployment-americans-jobless-coronavirus-pandemic

Soon we're talking Great Depression numbers. And apparently it's being discussed if the US should stop paying interest on the treasuries owned by China. We live in strange times.

[Iska]

Looks like that’s that absurd rally finished then.  Time to open this thread up to the doom mongers again

[Gnurglan]

Just looked at my post above. 30M Americans had filed for unemployment by the end of April. Now they've have added another 10M. Or is it 12M? Does it even matter anymore? The US debt has grown with a couple of trillion dollars this year, but who's counting? Put in perspective total tax revenue in a year is just above $3tr.

In Europe it's possibly even worse. One insolvent nation is expected to bail out another insolvent nation. We are led to believe it's all because of the virus, but things were a mess long before the virus hit. It has just accelerated things. Unless someone can find a magic wand to save the situation, this has disaster written all over it.

[Iska]

That’s some chart today, absolutely relentless selloff with no respite worth mentioning.  Opened down 700, dropped another 1100 in pretty much a straight line.  And that’s from within 10% of its all-time high while circumstances are desperate, so plenty of scope for much more of this over the summer.

[Gnurglan]

Just read that Nicola, a competitor to Tesla who have $0 in revenue, are valued higher than Ford.

https://business.financialpost.com/investing/nikola-corp-a-26-billion-truck-company-with-zero-revenue-just-surged-103

So yes, I think we can say there's some risk for lower valuations going forward.

[kavah]

Anyone buy Zoom shares in February for $80. Now $220. I actually got that tip but didn’t 

[Felch Aid]

GDP fell 20.4% in April. Not a surprise but still huge with May and June still to report.

[PaulF]

Anyone buy Zoom shares in February for $80. Now $220. I actually got that tip but didn’t 

Did you see the spike in the other zoom that's listed? Absolutely nothing to do with the video conferencing company but Muppets piled in on it!

[fowlermagic]

And the farce that is the stock market is riding that BS wave again to new record heights after the worse crash in living memory only months ago. God knows how we rejoice in companies esp tech companies reaping the rewards as they siphon jobs to India and China for slave labour and still expect us to pay top dollar for items that have a warranty if you pay for the warranty. The reasons for these new heights? Well if you believe the snake oil salesmen its due to a rebounding employment and increase consumer spending etc etc etc (unemployment is still triple what it was prior Covid) . Who knows as back in 2019 some of the greatest risks to the market then were the continuing trade war btw the US & China (thats not going away), lack of global growth due to a recession (wtf are we in right now?), fears the GDP may stagnate (oh I guess a drop of 33% in 2020 wont affect the market). I am no economist but the idea the market can be booming as the world is slowly imploding tells me its full of shit.

[No666]

If governments are printing money and interest rates are low, there are few outlets except the stock market.

[Gnurglan]

If governments are printing money and interest rates are low, there are few outlets except the stock market.

Yes. And they can't allow interest rates to go up.

[Sheer Magnetism]

The boom is simply because a lot of tech companies' business models start looking a lot better once everything moves online. Zoom and Peloton are the most obvious beneficiaries but Amazon's profits and revenue are going through the roof, and anyone that's in cloud services or software will also be raking it in along with home entertainment providers. If you look at the share price for most traditional businesses, it's still down significantly from the start of the year.

[Gnurglan]

The boom is simply because a lot of tech companies' business models start looking a lot better once everything moves online. Zoom and Peloton are the most obvious beneficiaries but Amazon's profits and revenue are going through the roof, and anyone that's in cloud services or software will also be raking it in along with home entertainment providers. If you look at the share price for most traditional businesses, it's still down significantly from the start of the year.

Those are factors too, but what No666 said above is really important. It's been cheap to borrow for a decade thanks to governments/central banks. Corporations have borrowed money and bought back their own shares. This has propped up the stock market. It's been a key driver. Why buy a bond that gives you 0%? Any share that doesn't move at all but pays a dividend is better.

Of course you can always find some that are doing great. Like tech companies this year. But we can see that stock prices are really high. Amazon are doing great, but they are also expensive at a P/E>100. Compare with for example Coca Cola where the P/E is around 25.
https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-ratio

[mallin9]

Those are factors too, but what No666 said above is really important. It's been cheap to borrow for a decade thanks to governments/central banks. Corporations have borrowed money and bought back their own shares. This has propped up the stock market. It's been a key driver. Why buy a bond that gives you 0%? Any share that doesn't move at all but pays a dividend is better.

Of course you can always find some that are doing great. Like tech companies this year. But we can see that stock prices are really high. Amazon are doing great, but they are also expensive at a P/E>100. Compare with for example Coca Cola where the P/E is around 25.
https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-ratio

Really interesting couple posts, cheers. Is there a historical analog for the above scenario?

[fowlermagic]

True that its better to invest in your company pension fund that it is to put money in the bank, which does feck all but I will be curious to see how many investors will fall to the wayside during this recession. No matter what Wall Street wants us to believe the day to day economy is floating down the river without a paddle and after the last recession less people had spare money to invest. It is strange to see the market soar since 2010 pretty much as investors drop from 65% of households to 55% so perhaps it will continue to grow while our own finances suffer. I guess it just shows fewer and fewer people are propping up Wall Street and more companies are keeping their own value high via buybacks.

[Max_powers]

Its important to note that Stock Markets typically only represent some of the largest companies. It doesn't include most small and medium sized businesses. These larger companies have easy access to capital at rock bottom interest rates due to quantitative easing and governments handing out loans.

Many of them will ride through this recession just fine, a few will go bankrupt but these would mostly be companies with a lot previous debt or non-pandemic friendly business models.

Stock market is not the economy.

[CraigDS]

Many of them will ride through this recession just fine, a few will go bankrupt but these would mostly be companies with a lot previous debt or non-pandemic friendly business models.

And likely the bigger companies will pick the best bits from the carcasses of those who do go under (or before they do), which will see a share price jump.

[conman]

• Fed Chairman Jerome Powell will speak Thursday during a virtual version of the Fed's annual Jackson Hole, Wyoming, conference.
• He is expected to outline what could be the central bank's most active efforts ever to spur inflation back to a healthy level.
• "Average inflation" targeting means the Fed will allow inflation to run higher than normal for a period of time.
• The effort will be the reverse of former Fed Chairman Paul Volcker's rate hikes instituted to quash inflation in the 1980s.

History will remember Paul Volcker and Jerome Powell as standing on the opposite ends of the inflation canyon, with the former taking desperate actions to try to tamp it down and the latter expected this week to announce an unprecedented effort to crank it back up.

Volcker, the Federal Reserve chairman from 1979-87, ushered through a series of inflation-busting interest rate hikes that dragged the country into recession but won the fight against pricing pressures and spurred a powerful economic recovery.

Powell, the central bank chief since 2018, is likely to detail a set of measures aimed at pushing inflation higher amid a coronavirus pandemic that has dragged the U.S. economy into one of its darkest hours.

While the average consumer might find it absurd to want to raise the cost of living, central bankers and economists see too little inflation also as a problem. It often reflects a slow-moving economy with a low standard of living. On top of that, the accompanying low interest rates give policymakers little wiggle room when crises happen and there's a need to loosen policy.

That's why Powell, who will speak Thursday during a virtual version of the Fed's annual Jackson Hole, Wyoming, conference, will outline what could be the central bank's most active efforts ever to spur inflation back to a healthy level. The speech is titled "Monetary Policy Framework Review" and wraps up a yearlong examination both among central bank officials and with the public, during a series of open events, on what policy should look like in the future.

more @ https://www.cnbc.com/2020/08/24/powell-set-to-deliver-profoundly-consequential-speech-changing-how-the-fed-views-inflation.html

[conman]

This is a fascinating listen - Lyn Alden, Luke Gromen, Preston Pysh & Jeff Booth discuss the macro enviornment, game theory and how they think this financial mess could play out.

https://podcasts.apple.com/us/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000488887755

[conman]

And likely the bigger companies will pick the best bits from the carcasses of those who do go under (or before they do), which will see a share price jump.

That's unfortunately true.

In Ireland, the government is not doing enough to support businesses that they (gov) have forced to reduce capacity or close doors for the forseable. Whether it's stupidity or malice, it's looking increasingly grim for SME's to survive these next few months, let alone years.

It's not just about the companies though. I see a lot of people complaining (rightly so), but not enough learning how to survive. More than ever, we as individuals must see what's happening in the world and learn about how we can protect our own income and wealth.

[Gnurglan]

While the average consumer might find it absurd to want to raise the cost of living, central bankers and economists see too little inflation also as a problem. It often reflects a slow-moving economy with a low standard of living. On top of that, the accompanying low interest rates give policymakers little wiggle room when crises happen and there's a need to loosen policy.

So we will see more of the same. What a surprise...

Eventually they will get the inflation. The problem then is they are unlikely to be able to control it. They can't raise interest rates like Volcker did. Nobody would be able to service their debt. Powell will wish he is replaced before this becomes an even bigger mess.

[fowlermagic]

That's unfortunately true.

In Ireland, the government is not doing enough to support businesses that they (gov) have forced to reduce capacity or close doors for the forseable. Whether it's stupidity or malice, it's looking increasingly grim for SME's to survive these next few months, let alone years.

It's not just about the companies though. I see a lot of people complaining (rightly so), but not enough learning how to survive. More than ever, we as individuals must see what's happening in the world and learn about how we can protect our own income and wealth.

Its the capitalist way where the bottom line dictates everything else. That is true for the average consumer trying to save a bit and the larger companies who have the ear of the government, who forget about the smaller businesses. Perhaps we should look at nature as THE example as without the smallest of creatures or plants everything else will crumble. The smaller businesses out there are the core to any small town or neighbourhood so governments should be ensuring their survival and if that means taxing the Apples, IKEA and IBMs of the world a tad more then so be it especially if it allows the soul of our communities to thrive. Right now there is so many social hubs, entertainment centers and artists on the brink as instead of thriving they are just trying to survive. 

 

[conman]

Jerome Powell: "Many find it counterintuitive that the Fed would want to push up inflation. However, inflation that is persistently too low can pose serious risks to the economy."

Translation: "Our shareholders want more value. Economies without enough theft face serious risks."

[Gnurglan]

Jerome Powell: "Many find it counterintuitive that the Fed would want to push up inflation. However, inflation that is persistently too low can pose serious risks to the economy."

Translation: "Our shareholders want more value. Economies without enough theft face serious risks."

Yes, that's one part of the translation. What he doesn't say is:

Forget what inflation will do to people who have lost their jobs. I bet they will cheer prices finally go up. They should also celebrate that the goal is for prices to go up faster than before. But it's only some tens of millions who will be affected, so no need to worry. Meanwhile, everyone who has bought a government bond should also be pleased that the value of it will decrease faster and faster. That's bad news for pension funds. Those who benefit are the already rich. Apparently this will have no impact on the wealth gap.

It's crazy.

[conman]

Yes, that's one part of the translation. What he doesn't say is:

Forget what inflation will do to people who have lost their jobs. I bet they will cheer prices finally go up. They should also celebrate that the goal is for prices to go up faster than before. But it's only some tens of millions who will be affected, so no need to worry. Meanwhile, everyone who has bought a government bond should also be pleased that the value of it will decrease faster and faster. That's bad news for pension funds. Those who benefit are the already rich. Apparently this will have no impact on the wealth gap.

It's crazy.

Yea, it's totally mental.


Tuur Demeester provided some good commentary on today's announcment.

1/ Widely anticipated Powell speech sure delivers! It's my understanding that the Fed is seriously reinterpreting its own mandate to allow for higher official CPI inflation.

https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm

2/ First, Powell sings the praises of the post 2008 bubble, dubbed The Long Expansion": "delivering life changing gains" ... "before the pandemic, there was every expectation that these gains would continue".



3/ Despite US cost of living indicators going up +10% annually now, Powell states that "persistent undershoot of inflation from our 2 percent longer-run objective is a cause for concern". Basically the old trope that deflation is scary and can lead to economic instability.



4/ Imo here he is saying that if people fear deflation, they won't dare living beyond their means as much (demand for debt goes down), and that means the Fed will have less capacity to stimulate when another "actual" recession comes around.



5/  So here it is. They're changing their mandate, from targeting 2% inflation at all times, to targeting a 𝘭𝘰𝘯𝘨 𝘵𝘦𝘳𝘮 𝘢𝘷𝘦𝘳𝘢𝘨𝘦 inflation of 2%..



6/ Of course, in line with the Fed's long standing tradition, they won't be holding themselves to any formula to calculate that average of 2% CPI inflation. It's all about "management" of market expectations, and if you're transparent you lose the ability to surprise.

https://pbs.twimg.com/media/EgcHs6MWkAE8VIP?format=jpg&name=small

https://twitter.com/TuurDemeester/status/1299016466784817156

[Gnurglan]

My question is how long they can keep the trust of people. Every time I hear some finance person talk about it, they seem to disagree with what the Fed is doing.

I guess Krugman, who believes the world is awash in savings, is an exception.

[conman]

My question is how long they can keep the trust of people. Every time I hear some finance person talk about it, they seem to disagree with what the Fed is doing.

I guess Krugman, who believes the world is awash in savings, is an exception.

I don't think they can put the genie back in the bottle, it just doesn't get better without getting a whole lot worse.

We are near the end of this system imo, we'll have a new global reserve currency and a new model relatively soon.

[conman]

This is effectively the path the Fed is choosing.. Slowly, but surely, then very suddenly.

[Gnurglan]

I don't think they can put the genie back in the bottle, it just doesn't get better without getting a whole lot worse.

We are near the end of this system imo, we'll have a new global reserve currency and a new model relatively soon.

It doesn't look sustainable and I think they're playing with fire. Once the inflation target has been reached, things could get really ugly. Then nobody will want to buy government bonds at 0%. I suspect the expectation will be 5-10% and if that's the bid no government will be able to service their debt anymore. And/Or governments can't borrow money, at least not the way it's supposed to happen. If we are to believe some of the people in the know, we have already crossed a few red lines in that regard. I'm sure you have heard/read about the Fed breaking their regulations.

And at this stage governments borrow even more and blame the virus. In reality the problems have existed for a long time.