4 ms·

> Printing our way out of 2008-2010 is exactly what we did that worked It was always just a band-aid. The reason the Fed has had to take interest rates so low

> Printing our way out of 2008-2010 is exactly what we did that worked It was always just a band-aid. The reason the Fed has had to take interest rates so low now is that they were unable to raise them during the lastest 'boom'.

adventured 7y ago
It'll continue to be a band-aid, of course. Band-aids are useful. It's the Japanification of the US economy, including a similar Federal debt problem (which is the single biggest reason the Fed can never raise rates back to a normal level again). Japan still has a highly functioning country and functioning economy (one of the wealthiest and most productive on earth), even though their central bank policies and debt situation are an enormous mess. The US has a lot of household wealth (~$100-$110 trillion) that the Fed can debase on a perpetual basis, as a never-ending band-aid. Then there is all the other dollar based wealth around the world. They can run a never-ending $80 billion per month QE program and it'll barely scratch the massive US asset base (which over time, averaged, may well outgrow a trillion dollar per year debasement). Ideally you want to see the US Government bring its irresponsible fiscal situation under control, sooner than later, so that approach doesn't have to go on for 30 or 50 years (but nobody is going to hold their breath for that). The counter is to point out that foreign actors will pull their confidence in the USD during this process (increasing the real cost for the Fed to keep doing it), whether after 10, 20, 50 years - and that may well happen, but it's impossible to forecast when. This is especially true given the currency competitors are all a mess as well, with China overloaded with debt, Japan in far worse shape than the US, and the Eurozone with no growth and their own miscellaneous debt & economic problems.
fourstar 7y ago
Came here to reply with the same thing. Not sure who is downvoting me but my guess is people who weren't around back in '08 or are significantly out of touch with US economic policy (or general econ policy, that is). If you've downvoted me then you probably need to watch this: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0. This is a wet band-aid.
- kmonsen 7y ago
  We really need band-aids now, like in 2008. The problem is not the band-aid now, the problem is that we did not rip it off in the good times but instead spent all the money in irresponsible tax cuts for people that didn't need them.
  - fourstar 7y ago
    No. We don't. We need more emphasis on value vs. growth. In what world is WeWork's valuation sustainable. Also who the hell is downvoting me? LOL. If you downvote, please comment here so we can debate. I'm dying to see you defend the bull market case (even sideways to slightly up which would be best case scenario).
    - cinquemb 7y ago
      Alot of people think that CB's should always be on call to cover their bad bets… like a gunman threatening taking a hostage if they dont get the cash grab they expect… To bad for them, there's collateral damage sometimes… only the strong will survive.
    - fourstar 7y ago
      > Alot of people think that CB's should always be on call to cover their bad bets… I think more people would probably hope that central banks don't make bad bets anyway. You know when you hear about Japan being this futuristic society? You go and visit and you feel like they are "ahead" and have things figured out? Their economy is what our economy is going to look like. A short-medium term down and then long drawn out sideways market. Who knows when a recovery will be. Good time to refinance.
      - cinquemb 7y ago
        > You know when you hear about Japan being this futuristic society? You go and visit and you feel like they are "ahead" and have things figured out? Was there for a couple weeks in dec '18… kyoto, fujisan, hiroshima, tokyo… I didn't think this at all unless the "ahead" was meant in jest > Their economy is what our economy is going to look like. A short-medium term down and then long drawn out sideways market. Who knows when a recovery will be. So people can look forward to a 30 year bear flag? lol > Good time to refinance. Yeah, if you aren't already underwater facing no bids when trying to get liquid.

adventured 7y ago

It'll continue to be a band-aid, of course. Band-aids are useful. It's the Japanification of the US economy, including a similar Federal debt problem (which is the single biggest reason the Fed can never raise rates back to a normal level again). Japan still has a highly functioning country and functioning economy (one of the wealthiest and most productive on earth), even though their central bank policies and debt situation are an enormous mess. The US has a lot of household wealth (~$100-$110 trillion) that the Fed can debase on a perpetual basis, as a never-ending band-aid. Then there is all the other dollar based wealth around the world. They can run a never-ending $80 billion per month QE program and it'll barely scratch the massive US asset base (which over time, averaged, may well outgrow a trillion dollar per year debasement). Ideally you want to see the US Government bring its irresponsible fiscal situation under control, sooner than later, so that approach doesn't have to go on for 30 or 50 years (but nobody is going to hold their breath for that). The counter is to point out that foreign actors will pull their confidence in the USD during this process (increasing the real cost for the Fed to keep doing it), whether after 10, 20, 50 years - and that may well happen, but it's impossible to forecast when. This is especially true given the currency competitors are all a mess as well, with China overloaded with debt, Japan in far worse shape than the US, and the Eurozone with no growth and their own miscellaneous debt & economic problems.

fourstar 7y ago

Came here to reply with the same thing. Not sure who is downvoting me but my guess is people who weren't around back in '08 or are significantly out of touch with US economic policy (or general econ policy, that is). If you've downvoted me then you probably need to watch this: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0. This is a wet band-aid.

kmonsen 7y ago
We really need band-aids now, like in 2008. The problem is not the band-aid now, the problem is that we did not rip it off in the good times but instead spent all the money in irresponsible tax cuts for people that didn't need them.
- fourstar 7y ago
  No. We don't. We need more emphasis on value vs. growth. In what world is WeWork's valuation sustainable. Also who the hell is downvoting me? LOL. If you downvote, please comment here so we can debate. I'm dying to see you defend the bull market case (even sideways to slightly up which would be best case scenario).
  - cinquemb 7y ago
    Alot of people think that CB's should always be on call to cover their bad bets… like a gunman threatening taking a hostage if they dont get the cash grab they expect… To bad for them, there's collateral damage sometimes… only the strong will survive.
  - fourstar 7y ago
    > Alot of people think that CB's should always be on call to cover their bad bets… I think more people would probably hope that central banks don't make bad bets anyway. You know when you hear about Japan being this futuristic society? You go and visit and you feel like they are "ahead" and have things figured out? Their economy is what our economy is going to look like. A short-medium term down and then long drawn out sideways market. Who knows when a recovery will be. Good time to refinance.
    - cinquemb 7y ago
      > You know when you hear about Japan being this futuristic society? You go and visit and you feel like they are "ahead" and have things figured out? Was there for a couple weeks in dec '18… kyoto, fujisan, hiroshima, tokyo… I didn't think this at all unless the "ahead" was meant in jest > Their economy is what our economy is going to look like. A short-medium term down and then long drawn out sideways market. Who knows when a recovery will be. So people can look forward to a 30 year bear flag? lol > Good time to refinance. Yeah, if you aren't already underwater facing no bids when trying to get liquid.