Fed broke financial markets; will stimulate the economy at any sign of trouble ...

[Marrk]

Interesting article.

The thesis of the author is there will not be a long term bear market- ever. The Fed will stimulate the economy to ensure no bear market, by printing money. The author implies the Fed can print money for a very, very long time before hyper inflation takes over.

Below is a picture from the article showing how easy it is for the Fed to "create" 8 billion dollars in seconds.

Bottom line from the article- nobody should be shorting equities.

From the article:
I am an optimist and I am a student of history. You only have to go back to the Global Financial Crisis to realize the rules of the game changed. Time in the market is more important than timing the market.

https://pomp.substack.com/p/quantitative-easing-made-market-bears?
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With all due respect, the Fed has a double mandate: price stability and maximum employment (with a target of 2% unemployment). That's it. They have no concern with markets, bear or bull.

 

[dubber09]

My question is, if we can print money out of thin air, why do we have taxes?

Keeping people working and in control, optics domestically and worldwide.

 

[joekingcorvette]

Never say never. I hope the market keeps going up but the balloon could burst. Nobody knows for sure.

 

[GON]

With all due respect, the Fed has a double mandate: price stability and maximum employment (with a target of 2% unemployment). That's it. They have no concern with markets, bear or bull.

My takeaway on the article was that the fed has and will continue to take actions to support a certain economic condition. A result of this, the stock market on a macro basis will only go up and can't go down, on a macro basis. No need to time the market to enter or exit.

The old saying " what goes up const go down" is no longer applicable to the stock market in a macro basis, at least in many of our lifetimes.

 

[Marrk]

My takeaway on the article was that the fed has and will continue to take actions to support a certain economic condition. A result of this, the stock market on a macro basis will only go up and can't go down, on a macro basis. No need to time the market to enter or exit.

Well, I'm not smart enough to make money in the stock market, but everyone says that, over the long haul, the stock market does well. The only problem is that "long haul" means 80-100 years. I haven't got that kind of time.

 

[joekingcorvette]

Buy the dips and don't try to catch a falling knife. Everything sounds good when the market is up but when it goes down it's pretty easy to lose that positive attitude. Available cash is always good to have when it comes to buying cheap depreciating vehicles and homes that people cannot afford. I hope the market keeps going up and if not everyone is pretty much in the same boat whether you realize it or not.

 

[SC Maintenance]

My takeaway on the article was that the fed has and will continue to take actions to support a certain economic condition. A result of this, the stock market on a macro basis will only go up and can't go down, on a macro basis. No need to time the market to enter or exit.

The old saying " what goes up const go down" is no longer applicable to the stock market in a macro basis, at least in many of our lifetimes.

No one has printed more money than the Bank of Japan - 300% of their GDP. Yet the Nikkei just recently hit its 1989 high - not adjusted for inflation. 35 years.

Thoughts?

 

[GON]

Well, I'm not smart enough to make money in the stock market, but everyone says that, over the long haul, the stock market does well. The only problem is that "long haul" means 80-100 years. I haven't got that kind of time.

I get that. I lost a lot of money in the market, but that was prior to 2008, and the to big to fail environment we have today.

I put away money in certificates of deposit, and own no stocks because of the losses I suffered years ago in the stock market. The problem is, the fed devaluing the USD means my savings have less buying power.

A admin on BITOG posted a strategy to buy no load S&P 500 funds. I believe his strategy, under the current fed policy, is a strategy that I would recommend for my family and friends.

 

[dubber09]

Never say never. I hope the market keeps going up but the balloon could burst. Nobody knows for sure.

Dollar amounts don't matter, value does.
Say two similar and comparable houses now and 20 years ago have same value, not same price in dollars. Shares going up in price may not hold same value, price in dollars can go up but value can go down with high inflation or low liquidity.

 

[Marrk]

I get that. I lost a lot of money in the market, but that was prior to 2008, and the to big to fail environment we have today.

I put away money in certificates of deposit, and own no stocks because of the losses I suffered years ago in the stock market. The problem is, the fed devaluing the USD means my savings have less buying power.

A admin on BITOG posted a strategy to buy no load S&P 500 funds. I believe his strategy, under the current fed policy, is a strategy that I would recommend for my family and friends.

Agree. Right now I believe it's still possible to find 5% interest on savings accounts with FDIC insurance, and index funds have long been a "safe" recommendation of the experts. John Bogle, I believe.

The Fed is cutting interest rates to moderate the rate of inflation, and it is working. I don't know what "devalue the dollar" actually means.

 

[GON]

I don't know what "devalue the dollar" actually means.

Here is a quick two minute video on the devaluing of the roman currency. Might help connect the dots on how it works.

 

[Pablo]

I jump on BITOG and @GON has started a new thread about investing, drinking, real estate. Everything normal.

But someone started a new random photo thread. We already have one of those!

 

[Marrk]

I jump on BITOG and @GON has started a new thread about investing, drinking, real estate. Everything normal.

But someone started a new random photo thread. We already have one of those!

Drinking while investing. Finally, something I know about.

 

[Pablo]

Drinking while investing. Finally, something I know about.

You should try it on prescription opioids. Lose money painlessly!

 

[Dave Hess]

https://en.m.wikipedia.org/wiki/Argument_from_authority

There’s some heavy hitters on BITOG…..

 

[eljefino]

Our government prints money and gives it to poor people ("stimulus") who spend it on each other, perking up the economy, until a rich guy gets it. He then stashes it in real estate or stocks. He's got no other ideas! The velocity of that dollar then slows waaaay down; it's not doing anything for the economy, but real estate or stock prices look better on paper, and upper middle class folk pat themselves on the back for being "so smart."

Maybe some day our fiat money will be a great way to get a cheeseburger, but for serious stuff we'll use shares of VOO or Blackstone, symbolic of owning one-trillionth of "the man."

 

[wag123]

So everyone who has a mortgage rate of under 4% is now an oligarch?

Think BIG picture.

 

[gfh77665]

So where on earth do you find the perfect economic / monetary system?

Look around the the globe and you will see incredible envy of the USA.

Notice the USD has been the worlds reserve currency since WW2. We are the best of the bunch.

Our system is FAR from perfect but its the best in the game. Be thankful! Quit gnashing teeth and enjoy the ride. I sure have!

https://www.cfr.org/backgrounder/do...r has been the,but that comes with drawbacks.

 

[Marrk]

Our government prints money and gives it to poor people ("stimulus") who spend it on each other, perking up the economy, until a rich guy gets it.

I'm trying to follow you here. What money does the government print and give to the poor? Since Reagan, our government has used tax cuts to give money to the rich . . . with the idea that the wealth will trickle down and "perk up" the economy. You seem to have invented a new theory: Trickle Up Economics. Or is your real name John Maynard Keynes? Come on, John. Be honest.

 

[Danh]

I'm trying to follow you here. What money does the government print and give to the poor? Since Reagan, our government has used tax cuts to give money to the rich . . . with the idea that the wealth will trickle down and "perk up" the economy. You seem to have invented a new theory: Trickle Up Economics. Or is your real name John Maynard Keynes? Come on, John. Be honest.

There are any number of federally sponsored programs to benefit low income folks. Medicaid, earned income credits, child tax credits, 0% federal tax rates, SNAP (food stamps), etc. Of course many of these are paid for with deficit spending, another whole subject.