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central banks are in a bind: * raise rates -> the whole house of cards collapses as 10+ years of easy money have created a monster. * keep rates at zero (actu
by streamofdigits 5y ago
central banks are in a bind:
* raise rates -> the whole house of cards collapses as 10+ years of easy money have created a monster.
* keep rates at zero (actually negative) -> the monster keeps growing as people are basically forced to speculate
how this hairball will unwind is anybody's guess. in a sense the pandemic was a reprieve cause basically all risks globally have been absorbed into government liabilities through the massive and unprecedented support to the private sector
a return to biological "normalcy" may actually become an economic (or at least a market) abnormality...
- paxys 5y agoSomething a lot of people don't realize is that we are still in the 2008 financial crisis. The stock market has gone up, and many people are happy, but the fundamentals of the economy are far from solid.
- streamofdigits 5y agoits not just stocks. besides the real estate effect being discussed here you have like 500 different cryptocurrencies all shooting for the moon, streets laced with supercars, NFT crazyness, you name it all this amidst rising geopolitical tensions as the pax sino-americana and its supply chains are being dismantled it all feels quite unhinged and who knows what hidden liabilities have been created
- webinvest 5y agoThe best way out is through growth. In this case, that means growing the housing supply, If more homes come on the market or more individuals build themselves homes, the housing problem solves itself. If the central banks raise rates slowly at a quarter basis point at a time, it might not cause a crash. That is their current plan and I think it will work. Obviously they can’t in good conscience go raise rates 2% all at once.