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This Bubble's Got Legs

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Re: This Bubble's Got Legs

#101

Post by cloakandswagger »

forgetsusername wrote: post #93
Wildgoose wrote: post #14

The financial problems originated with excess debt, but debts that are so large that they cannot be paid back - will not be paid back. Inflating assets via QE doesn't really address the real underlying problem. The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help. For example, when the Banks were technically insolvent then the opportunity should have been taken…

> The financial problems originated with excess debt, but debts that are so large that they cannot be paid back - will not be paid back. So in other words, you believe that financial problems are caused by too many assets? Because that's how a balance sheet works.

Nice attempt at applying your Econ 101 knowledge, but a balance sheet where the "assets" are made up of meaningless fiat created by debt instruments does not work like that.

Re: This Bubble's Got Legs

#102

Post by branchless »

skybrian wrote: post #79
cs702 wrote: post #56

According to the OP, we have a global "central-bank-led cash bubble" powered by "an ever flowing money hose." If you believe interest rates are being kept "artificially low" (whatever that means) by the "money printing" of central banks like the Federal Reserve and the Bank of Japan, then you will agree with the OP. In this view of the world, central banks are contributing to our current economic malaise: by keeping…

I believe the root of the problem is creating more money via institutions that don't need it. It would do a whole lot more good to give it to people who do need it and will therefore spend it. Their spending creates profitable business opportunities for others. People and institutions that already have plenty of money are "hoarding cash" (and real estate) because, after other needs are taken care of, what remains is…

The problem is banks are soaking up productivity by issuing money ahead of wealth creation. This sees them appropriate gains. It also has a distortion effect because people doing work who are clever see that there is no point working to create wealth as the real gains are to be made in appropriating wealth. Here you get eventually stagnation as all your physics PhDs are working for investment banks trying to arbitrage fiat tokens from .... PhDs in other investment banks.

Growth can and will return when the rentiers are lanced with land value tax, as the primary vector for money creation by banks is lending against land. When this ends growth returns.

Re: This Bubble's Got Legs

#103

Post by branchless »

cs702 wrote: post #56

According to the OP, we have a global "central-bank-led cash bubble" powered by "an ever flowing money hose." If you believe interest rates are being kept "artificially low" (whatever that means) by the "money printing" of central banks like the Federal Reserve and the Bank of Japan, then you will agree with the OP. In this view of the world, central banks are contributing to our current economic malaise: by keeping…

There is no hoarding. Banks create money out of thin air when they lend. Banks are not intermediaries of funds. Go keep your electronic tokens in their server, they can make more in the next row in the database.

https://bankunderground.co.uk/2015/06/30/banks-are-not-inter...

Central banks QE is stopping an implosion. Banks issued money that could not be paid back as one must pay back the original fee and interest. You have to keep issuing more money into the face of this or it collapses. You do this by reducing rates. Then you hit zero and people cannot borrow more. Then central banks have to step in to plug the yawning chasm which is borne of banks saying they were creating wealth whilst in fact they have been appropriating labour and when the apex is reached you get to see the truth.

And you can't get that back. We took fiat tokens and they drank real wine, used real gasoline etc and all in exchange for fiat created ex nihilo.

More fool us.

ps looking forward to a hacker news "your submitting too fast (on a topic about finance on a site where VCs lend you fiat and you return your labour)"

Re: This Bubble's Got Legs

#104

Post by agottem »

dragonwriter wrote: post #74
lifeisstillgood wrote: post #6

So, the article says dotcoms caused first bubble in 2000, houses in 2008, but this one is driven by central banks printing money. And there is no way they will stop printing so this is an infinite bubble There is sooo much wrong with that. As @rtpg says, that s stops not when Fed stops printing money but when market realises that the high asset prices "globally" become obviously unsustainable. The issue is that when…

> So, the article says dotcoms caused first bubble in 2000, houses in 2008, but this one is driven by central banks printing money. And there is no way they will stop printing so this is an infinite bubble > There is sooo much wrong with that Well, for one thing, its not true. In the US, for instance, the Fed stopped QE in 2014, and has not only stopped QE but raised interest rate targets slightly since. Central bank…

> In the US, for instance, the Fed stopped QE in 2014

I don't know if I'd phrase it that way. The Fed stopped purchasing new bonds, true, but they are still holding all the bonds they did purchase. Those bonds are rolled forward until they attempt to unwind. The QE experiment is, at best, half done.

Re: This Bubble's Got Legs

#105

Post by cloakandswagger »

ianai wrote: post #57
vadym909 wrote: post #47

This is scary as I moved to all cash a couple of years ago. I still don't understand how there can be a bubble in money. All I see around me is house and stock prices going up incredibly. Does a money bubble popping result in high inflation making my money in the bank worthless. Fuck. First I got burned in stocks, then in real estate, and now cash?

What could happen is your cash becoming more valuable in a deflationary spiral. My take is you're incurring the opportunity cost today on your cash reserves. Your present value is based on a belief that the future will be deflationary over inflationary. You could model this with an estimation of the present value of your cash holdings as a function of how long you hold it and your expected inflation rates.

This is an extremely risky proposition, because under no circumstances will the Fed ever permit long term deflation.

They will literally mail cash to individual households or have cash giveaways before that happens. Or, more simply, they ask Congress to pass a law stating that all cash reserves over a certain amount are heavily taxed or confiscated entirely.

My suggestion:

10% notional gold

10% physical gold & silver

10% Bitcoin

40% equities

30% cash

Re: This Bubble's Got Legs

#106

Post by havetocharge »

vadym909 wrote: post #89
sosborn wrote: post #81

Earlier quoted context omitted.

> First I got burned in stocks, then in real estate, and now cash? My advice to you is 1) Diversify 2) Stop trying to outsmart the market. These things are cyclical in nature and it can be difficult for individual players to 1) buy on the low end of the cycle and 2) sell on the high end.

That is what I thought I was doing. I bought a house in 2010 and sold at the then peak in 2013 :-(.

So exactly how did you get "burned" in real estate? Sounds like you made profit.

Re: This Bubble's Got Legs

#107

Post by pessimizer »

hga wrote: post #49
bradleyjg wrote: post #44

Earlier quoted context omitted.

Even taking the silly assumption, for the sake of this argument, that the federal government's finance is just like a giant household, its debt figures are fine. It has a debt-to-income ratio of 14.3, the highest possible credit rating, and assets that far exceed debt. Lenders would be tripping over themselves to lend to to such a household, and lo and behold lenders are tripping over themselves to lend to the USG. T…

I'd thought we'd reached, or will in short order, the debt to GDP ratio where, historically, countries sooner or later repudiate their debt one way or another (which of course includes inflation). Of course the Federal Government isn't a "giant household", it's worse in many respects, with the decision makers generally not thinking past the next election, whereas there's a chance in a household the elders will be thi…

https://duckduckgo.com/?q=debt+to+gdp+ratio+excel+error

Re: This Bubble's Got Legs

#108

Post by ianai »

cloakandswagger wrote: post #105
ianai wrote: post #57

Earlier quoted context omitted.

What could happen is your cash becoming more valuable in a deflationary spiral. My take is you're incurring the opportunity cost today on your cash reserves. Your present value is based on a belief that the future will be deflationary over inflationary. You could model this with an estimation of the present value of your cash holdings as a function of how long you hold it and your expected inflation rates.

This is an extremely risky proposition, because under no circumstances will the Fed ever permit long term deflation. They will literally mail cash to individual households or have cash giveaways before that happens. Or, more simply, they ask Congress to pass a law stating that all cash reserves over a certain amount are heavily taxed or confiscated entirely. My suggestion: 10% notional gold 10% physical gold & silver…

True and printing money is too easy a thing to bet against. We are truly in weird times.

Re: This Bubble's Got Legs

#109

Post by [deleted] »

CalRobert wrote: post #62
icantdrive55 wrote: post #32

Earlier quoted context omitted.

But the wealthy, who are the one's who have really benefitted from this free money will buy these chit boxes, and rent them out at outragious ROI. And so will the wealthy foreigner--with a lousy phone call. I've given up on more building. I think we need to open up areas where people can camp without breaking the law. Or, at least allow people to legally sleep in their vehicles. The fines/fees for breaking over strin…

It's really a shame that we've coerced people into earning an income to live, because the means of living that don't require money are largely becoming illegal. Where are you allowed to sleep for free in the US? You could perhaps get a wilderness permit and live in a national park for a time, but I'm not sure what the maximum period of validity is on them. Cities will cite you under anti-camping rules. There isn't re…

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