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Sure. Keep in mind I'm not an expert. I also have to write some assumptions first, I apologize for the length. There are ups and downs. The bigger the up, the
by quickben 9y ago
Sure. Keep in mind I'm not an expert. I also have to write some assumptions first, I apologize for the length.
There are ups and downs. The bigger the up, the uglier the down (1999 vs 2007).Money gets flooded and scooped (interest rates are as much proactive as reactive).
Inflation is aimed at 2-3% because that's what people ignore but it keeps this fable called money going for all (rich get richer, the poor get regular inflation based raises, all is happy).
Credit cycles are a thing, but can be extended by injecting money in the system (as long as nobody objects, inflation is near 3%, and interest rates are reasonable).
Bailouts work up to an extent, at some point (because I can't draw charts) the math catches up, and heavily QE will become worthless, this risking inflation or deflation. No matter the outcome, one or the other must happen, or like the Bank of Japan, the government starts buying bonds and stocks with it just to keep the pretense money are still worth something.
Based on the above (and I'm aware the story is longer and somewhat with more details) USA has a way to go for a complete endgame.
However, the money flooded so far in the system, are bigger than ever, and the next down will be probably more ugly than ever.
So, when it's ugly it's somewhat benefitial if people can get some sort of jobs.
With all the assumptions from above, and it really doesn't look like from here that Trump came with the idea (he would be boasting). He's doing what any sane central bank will do. So he's told what to do, and believes it's overall the right thing.
- Make sure outsourced jobs vanish. It will cost businesses now, but maybe if they get awesome tax cut, they won't complain.
- NAFTA will probably go away, Americans will get to do stuff that free trade did. If employment on domestic grounds is good (and not in the service industry, but factories and stuff), when it gets bad, people (or a bigger fraction of them) will have jobs, compared to if the service sector is doing great now.
- Based on the continuous QE volume, the next credit cycle will be the worst.
- If I had to guess, tech stocks will crater the worst. So all related tech visas will also go.
- He repealed Obama care, because in a recessions, most people won't have health care, but won't pay penalties. Not having it, is horible, but the population seems somewhat adjusted to the idea of not having health care ( and a revolution hasn't started over that so far, so they can do that).
Related reading: USA losing the Petro dollar. Bitcoin being worse than the tech stocks and cratering more. China bonds being risky right now. That report from IBS (October?) where they wrote that china/India are fully integrated in the world labour and main growth stopped, wages will restart going up after two decades. Upcoming Australia's housing crash (because resource export stalled, and other factors). Interest rates raising again, so other overextended housing markets will get corrected (starting with Canada, UK, Sweden).
The world economy is complex and it's all fluid all the time, but at this point, this how it looks to me.
Apologies for the length.
- winslow 9y agoI'm very grateful you took the time to respond especially in such great length. Don't apologize for the length this is the exactly what I was hoping for! Sometimes it's good to get a completely different view on things as the rhetoric within the US has been quite negative towards Trump (potentially well deserved) without much discussion around the quantitative easing etc but rather just tax cuts for corporations etc.