Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record • Hacker News Board

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#31

Post by colechristensen » Fri, Apr 24, 2020, 3:16 PM UTC

zaroth wrote: post #11

logicslave wrote: post #3

One interesting fact I learned the other day: IBM did 140 billion in stock buy backs in the last decade. They have a 100 Billion dollar market cap. I think that is a bit of what we have going on right now. A system propped up by injected cash, which works for now because everyone plays along. Most of this injected money goes into the pockets of the rich, who are the ones holding the assets that the FED is bailing out…

I’m not sure what your last paragraph has to do with the first three. A main purpose of buying a stock is to receive dividend payments. Buybacks are just a tax efficient dividend. The latest craze to make paying dividends sound evil is just strange.

Paying dividends is fine if you aren't firing workers or taking bailouts.

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#32

Post by RobertoG » Fri, Apr 24, 2020, 3:17 PM UTC

Eliezer wrote: post #10

And it's still not even remotely enough. 5-year inflation expectations running at 0.67%, CPI falling. The shock to aggregate demand is being allowed to exceed the supply shock. https://fred.stlouisfed.org/series/T5YIE

Fiscal policy is the obvious solution to aggregate demand problems, not monetary policy.

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#33

Post by Donald » Fri, Apr 24, 2020, 3:18 PM UTC

bequanna wrote: post #17

onlyrealcuzzo wrote: post #12

Earlier quoted context omitted.

Part of what allows a company to have insane cashflow is issuing corporate bonds at artificially low prices because the Treasury is manipulated by the Fed.

Not sure I follow. What does the US Treasury have to do with private debt issuances? Did you mean that interest rates are manipulated by the Fed?

New Fed programs have been stood up in the last month that directly buy corporate debt.

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#34

Post by quickthrowman » Fri, Apr 24, 2020, 3:23 PM UTC

mywittyname wrote: post #4

logicslave wrote: post #3

One interesting fact I learned the other day: IBM did 140 billion in stock buy backs in the last decade. They have a 100 Billion dollar market cap. I think that is a bit of what we have going on right now. A system propped up by injected cash, which works for now because everyone plays along. Most of this injected money goes into the pockets of the rich, who are the ones holding the assets that the FED is bailing out…

A stock buyback is theoretically the same as a dividend, in that it should reduce market cap by roughly the amount of the buyback. I do agree with your sentiment though. I feel like the wealthy in this country have developed the perfect scheme for leeching the wealth from this country. We will only know how bad it was after the postmortem, at which point, we will be (figuratively) dead.

Only it isn’t the same. Dividends are taxable, capital gains are only taxable upon closing a position.

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#35

Post by duxup » Fri, Apr 24, 2020, 3:27 PM UTC

DSingularity wrote: post #20

This is one of two last-resorts mechanisms by which the U.S. will maintain its hegemony. It may suck, but it is way better than the alternative.

>by which the U.S. will maintain its hegemony

By printing money?

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#36

Post by throwanem » Fri, Apr 24, 2020, 3:28 PM UTC

selectodude wrote: post #6

strict9 wrote: post #2

> 30.2% of US GDP How much further can they go? 26 million or so recent unemployment applications and the stock market is not off much from recent all time highs. This is more concerning than the initial falling knife mid-March.

The Bank of Japan’s balance sheet is at 110 percent of GDP.

I was about to make a joke that it looked like they could go about another 69.8%. Now I'm glad I waited.

What does that even signify, a federal bank owning >100% of its attached country's GDP? Debt in excess of produced value, i.e., the country being underwater?

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#37

Post by throwanem » Fri, Apr 24, 2020, 3:31 PM UTC

DSingularity wrote: post #20

This is one of two last-resorts mechanisms by which the U.S. will maintain its hegemony. It may suck, but it is way better than the alternative.

Attempt to maintain.

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#38

Post by tomweingarten » Fri, Apr 24, 2020, 3:33 PM UTC

est31 wrote: post #21

jonfw wrote: post #5

Earlier quoted context omitted.

You're not giving the whole picture if you don't mention that IBM's market cap has seen very significant decline over that time period. IBM has been producing insane cash-flow over this period and their strategy was to pay out dividends/buybacks rather than to invest in new markets Is IBM even getting bailout money? What does IBM have to do with the bailouts?

And dividends/buybacks are a reasonable choice. It moves the choice of whether to invest into new markets to the investors instead of dictating it from above. Companies like Google are blown out of proportion in comparison to the part that actually makes the money, all in order to find the next toothbrush product that may never come. The core Google products barely changed in the last 5 years, yet the employee count…

Even if we take at face value the idea that the products have barely changed, which I completely disagree with, this explanation vastly underestimates how many engineers it takes to scale the infrastructure it takes to run Google Search, Google Cloud, YouTube, etc.

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#39

Post by brianwawok » Fri, Apr 24, 2020, 3:33 PM UTC

zaroth wrote: post #11

logicslave wrote: post #3

One interesting fact I learned the other day: IBM did 140 billion in stock buy backs in the last decade. They have a 100 Billion dollar market cap. I think that is a bit of what we have going on right now. A system propped up by injected cash, which works for now because everyone plays along. Most of this injected money goes into the pockets of the rich, who are the ones holding the assets that the FED is bailing out…

I’m not sure what your last paragraph has to do with the first three. A main purpose of buying a stock is to receive dividend payments. Buybacks are just a tax efficient dividend. The latest craze to make paying dividends sound evil is just strange.

One strategy is dividends.

Another is to buy a stock at X, sell later at Y and hope Y > X

Both are valid. Oddly they are taxed differently.

Re: Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record

#40

Post by sixQuarks » Fri, Apr 24, 2020, 3:34 PM UTC

Loughla wrote: post #15

LordFast wrote: post #7

Earlier quoted context omitted.

Is it too jaded to say that it most likely has always been, for all time? And that we are simply more aware of it these days?

I think it's more subtle now, though, and harder to be aware of. Back in the day, robber-barons simply exploited the working class through substandard working conditions, and outright theft of money or property [citation needed]. Now, though, you need a deep understanding of global monetary policy, tax law, and labor laws to be able to connect the dots. So I would argue that now is different from earlier times in his…

That's the craziest part of all of this. The exploited actively support the politicians who cause maximum exploitation and vilify those who would actually help them. It's insane.