4 ms·

By unhealthy credit expansion you mean unhealthy Fed balance sheet expansion? Very little of the credit created on the balance sheet has actually entered the m

by tertius 11y ago

By unhealthy credit expansion you mean unhealthy Fed balance sheet expansion? Very little of the credit created on the balance sheet has actually entered the market.

6stringmerc 11y ago
Well I think there's some pretty clear correlation that numerous large companies have been using cheap credit in the bond market to buy back shares at a rapid pace (billions) and further inflate the status of the equities market. That's the cheap credit that isn't doing anything other than fleecing the non-investor class. It's simply financial engineering dependent on access to cheap credit, from what I understand.
- tertius 11y ago
  Yes, buy backs has been a large contributor to indices heading upwards. A lot of these companies issue their own bonds at rates lower than even their dividends. In the public bond market, how is lending fleecing the "non-investor class"?
  - 6stringmerc 11y ago
    How? Because the Federal Reserve enables the cheap credit pegged to a near-zero interest rate to institutions on Wall Street, who turn around and loan to large organizations through channels by which the Wall Street firms will receive compensation by way of financial transactions. If you add up all the pocketing that goes along before a single retail investor has a shot at a position, then you'll understand what I meant by the 'fleecing' comment. Well, that and go back to the first point that the Federal Reserve's ridiculously low interest rate for the past half-dozen years punishes Savers, who are not investors in the market directly (that's why they're called savers), and that's a very large population being taken advantage of by a sophisticated system.
    - tertius 11y ago
      No, savers are investors. And I agree that a low to zero interest rate is bad for savers. Again, much of the money printed is just sitting on the balance sheets and haven't made it's way into the market. You're saying that lenders who borrow from the Fed then lend to large organizations who do buybacks. Why does this hurt non-investors?

by tertius 11y ago

By unhealthy credit expansion you mean unhealthy Fed balance sheet expansion? Very little of the credit created on the balance sheet has actually entered the market.

6stringmerc 11y ago

Well I think there's some pretty clear correlation that numerous large companies have been using cheap credit in the bond market to buy back shares at a rapid pace (billions) and further inflate the status of the equities market. That's the cheap credit that isn't doing anything other than fleecing the non-investor class. It's simply financial engineering dependent on access to cheap credit, from what I understand.

tertius 11y ago
Yes, buy backs has been a large contributor to indices heading upwards. A lot of these companies issue their own bonds at rates lower than even their dividends. In the public bond market, how is lending fleecing the "non-investor class"?
- 6stringmerc 11y ago
  How? Because the Federal Reserve enables the cheap credit pegged to a near-zero interest rate to institutions on Wall Street, who turn around and loan to large organizations through channels by which the Wall Street firms will receive compensation by way of financial transactions. If you add up all the pocketing that goes along before a single retail investor has a shot at a position, then you'll understand what I meant by the 'fleecing' comment. Well, that and go back to the first point that the Federal Reserve's ridiculously low interest rate for the past half-dozen years punishes Savers, who are not investors in the market directly (that's why they're called savers), and that's a very large population being taken advantage of by a sophisticated system.
  - tertius 11y ago
    No, savers are investors. And I agree that a low to zero interest rate is bad for savers. Again, much of the money printed is just sitting on the balance sheets and haven't made it's way into the market. You're saying that lenders who borrow from the Fed then lend to large organizations who do buybacks. Why does this hurt non-investors?