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One thing a lot of people fail to see or think about is the federal reserve literally propping up the stock market with cheap available cash. This year, the fe
by flyGuyOnTheSly 6y ago
One thing a lot of people fail to see or think about is the federal reserve literally propping up the stock market with cheap available cash.
This year, the federal reserve not only added over $3T (trillion) USD to the money supply, they effectively inflated the money supply infinitely by removing the reserve requirements of partner banks (who add to the money supply by creating loans on collateral given to them) completely.
I am not kidding. [0]
As of March 26th 2020, banks literally need to hold no capital in reserve to hand out loans (aka inflating the money supply).
Stock values are increasing because there is an infinite amount of money floating around and most everybody you know is blissfully unaware of that fact.
We are in uncharted waters now. The reserve requirement was always 10% I believe from the day the federal reserve opened up shop. Now it's 0%. That is insanity.
I seriously worry the US is in for a taste of hyperinflation very soon.
[0] https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
- BurningFrog 6y agoRight, in this view stocks are not overvalued. The US dollar is. Not sure that is the dominant factor, but I'm buying Bitcoin for the first time in my life.