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Earlier quoted context omitted.
> "Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings, my friend." - US Presidential candidate, Mitt Romney, 2011
It's strange how they agree with that statement until it comes time for legal culpability or personal responsibility of any kind.
> Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there. Are we though? Thank god corporate profits are ok...
> "Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings, my friend." - US Presidential candidate, Mitt Romney, 2011
Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system? I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but…
If X dollars buys 1.2 times more stuff in the future (deflation) you will hoard your dollars and deprive the economy of them.
If X dollars buys 0.8 times more stuff in the future (inflation) you will buy things now and make investments.
The Fed isn't optimizing for people wanting mortgages today, it does controlled burns to try and prevent medium-term calamity. Look up the Volker shock, where rates were hiked beyond 20% to trigger recessions because inflation was above 10%.
Yen carry trade unwind, inflation in Japan, hit to the NASDAQ, AI bubble pops, Japanese investors pull money back home and Treasuries lose its largest foreign creditor. Who knows what happens next.
BTW, this is exactly what happened to Silicon Valley Bank in 2023 on a smaller scale.
Earlier quoted context omitted.
Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
Well, actually they have a new model. I call it the "Apple" model. Low volume sales on high value items where you can charge more. Even NVidia has moved to this model: make your money from selling high-end GPUs for Data Centers and forget the low-profit margin (GeForce) GPUs for gamers/consumers. The whole economy is moving to that model for many things.
> Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there. Are we though? Thank god corporate profits are ok...
> "Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings, my friend." - US Presidential candidate, Mitt Romney, 2011
Earlier quoted context omitted.
> "Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings, my friend." - US Presidential candidate, Mitt Romney, 2011
It's strange how they agree with that statement until it comes time for legal culpability or personal responsibility of any kind.
Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system? I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but…
Kashkari was part of the minority opinion. The Fed voted to keep rates steady, so I guess that means that the Fed is against the wealthy, bankers, and for the rest us?
It turns out that having lots of money is useful, including at taking advantage of the macroeconomic landscape. In a high interest rate environment, you get free money from yields. In a low interest rate environment, you get free money from leverage.
The Federal Reserve is one of the last competent parts of government. You don't blame the ER doctor for atrophy caused by being hooked to a ventilator after getting a heart attack caused by consuming only fast food. The ER's job is to keep the patient alive by making sure that oxygen is circulating well enough for the body alive. Likewise, the Federal Reserve's job is to make sure that money circulates in a way that keeps the economy alive. It's not their fault if the voters vote for politicians who enact terrible policy.
Yen carry trade unwind, inflation in Japan, hit to the NASDAQ, AI bubble pops, Japanese investors pull money back home and Treasuries lose its largest foreign creditor. Who knows what happens next.
What happens next is that US Treasury yields go to the moon, making previously bought treasuries nearly worthless. Most bank deposits in the US are instantly used to buy treasuries, so severe devaluation of those less-than-mature bonds on the secondary markets means that money held by banks is not really there. Should there be a larger than average number of people making withdrawals, bonds would be dumped on the sec…