6 ms·

What would be the endgame here?

by rbinv 7y ago

scarmig 7y ago
A long-lived Nikkei-style "bull run."
aazaa 7y ago
I suspect it will nurture a massive structural problem few today would understand or care much about. It will be allowed to grow unabated because, frankly, there will be bigger fish to fry. Maybe a little like subprime leading up to 2008. The problem was written off by just about everyone who bothered to look, until something snapped and it was the only thing that mattered. We may be seeing the start of this in the repo market, which once again had a convulsion today. I doubt many care about it or really understand it, and that goes double for policy makers.
mullingitover 7y ago
What's the term for when the government owns all the industries?
- lotsofpulp 7y ago
  Also, what is it when everyone owns them (in varying ownership percentages of course) via index ETFs?
  - indigo945 7y ago
    Marx was wrong not about if, but about how the workers would take control of the means of production!
    - lotsofpulp 7y ago
      That's the beauty of it, since the workers still don't control the means of production. But they do depend on the valuation of their "portfolios", so they're invested in the continued existence of the system, and they're pitted against each other as they are both labor and owners. But not enough owners to matter.
- tclover 7y ago
  FED is not the government
znt 7y ago
Stock bubble -> Stock crash -> More QE -> QE fails -> Bond crash & Govt crisis -> Currency crash -> Commodities skyrocket -> Civil chaos
Erlich_Bachman 7y ago
Just default on the debt far far down the line. Seing as how USD is still the reserve currency and they can still print, very far down the line. Keep borrowing from the future like there is no tomorrow until then, hopelly making sure the music doesn't stop playing during your political mandate period so you can get blamed for it.
resters 7y ago
I think there are multiple useful lenses for thinking about this: - Signaling that the Fed is willing to get involved to stabilize market prices (by making capital cheaper) is meant to calm markets and give participants comfort about making decisions today that they could optionally wait to decide. If everyone goes into a holding pattern, liquidity is impacted, which can cause all sorts of unpredictable price movement. - it is a wealth transfer from one group to another. The beneficiaries are existing debtors (mostly firms) and firms who benefit most from cheaper capital. - it gives the Fed slightly more influence over the outcome of the 2020 election, since reversal of the Covid-19 rate decrease can be timed to create desirable optics as the election approaches. Much research has been done about the most critical time period prior to the election when "it's the economy, stupid" is most true.

What would be the endgame here?

by rbinv 7y ago

What would be the endgame here?

scarmig 7y ago

A long-lived Nikkei-style "bull run."

aazaa 7y ago

I suspect it will nurture a massive structural problem few today would understand or care much about. It will be allowed to grow unabated because, frankly, there will be bigger fish to fry. Maybe a little like subprime leading up to 2008. The problem was written off by just about everyone who bothered to look, until something snapped and it was the only thing that mattered. We may be seeing the start of this in the repo market, which once again had a convulsion today. I doubt many care about it or really understand it, and that goes double for policy makers.

mullingitover 7y ago

What's the term for when the government owns all the industries?

lotsofpulp 7y ago
Also, what is it when everyone owns them (in varying ownership percentages of course) via index ETFs?
- indigo945 7y ago
  Marx was wrong not about if, but about how the workers would take control of the means of production!
  - lotsofpulp 7y ago
    That's the beauty of it, since the workers still don't control the means of production. But they do depend on the valuation of their "portfolios", so they're invested in the continued existence of the system, and they're pitted against each other as they are both labor and owners. But not enough owners to matter.
tclover 7y ago
FED is not the government

znt 7y ago

Stock bubble -> Stock crash -> More QE -> QE fails -> Bond crash & Govt crisis -> Currency crash -> Commodities skyrocket -> Civil chaos

Erlich_Bachman 7y ago

Just default on the debt far far down the line. Seing as how USD is still the reserve currency and they can still print, very far down the line. Keep borrowing from the future like there is no tomorrow until then, hopelly making sure the music doesn't stop playing during your political mandate period so you can get blamed for it.

resters 7y ago

I think there are multiple useful lenses for thinking about this: - Signaling that the Fed is willing to get involved to stabilize market prices (by making capital cheaper) is meant to calm markets and give participants comfort about making decisions today that they could optionally wait to decide. If everyone goes into a holding pattern, liquidity is impacted, which can cause all sorts of unpredictable price movement. - it is a wealth transfer from one group to another. The beneficiaries are existing debtors (mostly firms) and firms who benefit most from cheaper capital. - it gives the Fed slightly more influence over the outcome of the 2020 election, since reversal of the Covid-19 rate decrease can be timed to create desirable optics as the election approaches. Much research has been done about the most critical time period prior to the election when "it's the economy, stupid" is most true.