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Hoping to clear up some FUD here: 1) This is the financial equivalent of taking a sledgehammer to squash a bug. Financial markets operate largely on confidenc

Hoping to clear up some FUD here: 1) This is the financial equivalent of taking a sledgehammer to squash a bug. Financial markets operate largely on confidence, and especially the rule that the Fed is the lender of last resort at their specified Fed Funds Rate (now 25 basis points lower as of Wednesday). 2) This isn’t $165b. It could be the same $75b used every day. 3) No, this isn’t a sign of a healthy market, but bond prices especially in Europe have gone bananas the past few months and we could be in the biggest bond bubble of our generation. This was evident in negative yields as also a very quick yield curve inversion in the U.S. for 2y10s. 4) I personally believe some banks were over levered as bond prices began to unwind this week and got caught with their pants down. 5) I think the Fed is using this sledgehammer approach to allow some banks to unwind and de-lever their bond positions safely and orderly over the next 2 weeks. 6) I said #5 about 11 years ago, but I believe “this time it’s different.”

helen___keller 7y ago
> 2) This isn’t $165b. It could be the same $75b used every day. I made the $165b comment, my understanding is that there's four overlapping liquidity injections (three 14-day operations and the recurring overnight operation). Would this not be 30 + 30 + 30 + 75?
colechristensen 7y ago
It might not be happening this time but there are thoughts out there that the era of constant inflation is over. Automation and a sinking or negative growth rate among the top economies will lead to a long phase of economic retraction which is not at all the same as the periodic growth/recession cycle, but a longer term net negative. Many populations of people have a birth rate under the replacement rate and automation is making workers less necessary. Zoom out and it could be the first phase of the transition from capitalism to a post-scarcity economy which would look very much different. Obviously that is a lot of speculation, but there are going to be all sorts of population peak points which are going to pass in the next 20-30 years and it's really hard to believe economic growth can continue or even ever happen again with a steadily shrinking global population. When you pack smart successful people into cities like rats and have them paying half their income to live in a few hundred square feet they just won't have babies. They have to work too hard for too little and don't have interest in places with more space because the job market doesn't want to leave the cost-efficiency of the city. The effect is that populations are going to shrink until cost of living becomes cheap enough for people to want to afford the luxury of working less and raising children. I am honestly in that position myself at the moment. I am of the age and life situation where it should be time to start having children but I don't want to because I can't afford it despite being in the top X percentile of income because I want to live in a decently sized space less than 30 minutes away from my work.

helen___keller 7y ago

> 2) This isn’t $165b. It could be the same $75b used every day. I made the $165b comment, my understanding is that there's four overlapping liquidity injections (three 14-day operations and the recurring overnight operation). Would this not be 30 + 30 + 30 + 75?

colechristensen 7y ago

It might not be happening this time but there are thoughts out there that the era of constant inflation is over. Automation and a sinking or negative growth rate among the top economies will lead to a long phase of economic retraction which is not at all the same as the periodic growth/recession cycle, but a longer term net negative. Many populations of people have a birth rate under the replacement rate and automation is making workers less necessary. Zoom out and it could be the first phase of the transition from capitalism to a post-scarcity economy which would look very much different. Obviously that is a lot of speculation, but there are going to be all sorts of population peak points which are going to pass in the next 20-30 years and it's really hard to believe economic growth can continue or even ever happen again with a steadily shrinking global population. When you pack smart successful people into cities like rats and have them paying half their income to live in a few hundred square feet they just won't have babies. They have to work too hard for too little and don't have interest in places with more space because the job market doesn't want to leave the cost-efficiency of the city. The effect is that populations are going to shrink until cost of living becomes cheap enough for people to want to afford the luxury of working less and raising children. I am honestly in that position myself at the moment. I am of the age and life situation where it should be time to start having children but I don't want to because I can't afford it despite being in the top X percentile of income because I want to live in a decently sized space less than 30 minutes away from my work.