Thread 61294906

Be real with me. Is a super depression around the corner?Or are we gonna be stuck in this slow, strangling recession for the foreseeable future? What do you think?

>>61294906 (OP)
pomni a cute

>>61294935
Yes she is, but please answer the question.

>>61294906 (OP)
As concise as possible:
For the last 45 years, the Federal Reserve has lowered interest rates from 20% down to basically zero.
Because rates were low, the USA slowly stopped producing and instead borrowed money in order to do lots of stuff, including investing in tech, but mostly consumption. The USA consumed, and it financed it with debt.
The whole world uses the dollar, as agreed in the post-ww2 Bretton Woods system.
Because of that, the world not only finances the USA by buying the debt (lending the money) but also finances the USA by just holding dollars, because as the USA prints those dollars, all these countries lose purchasing power which is transfered to the USA.
What's happening right now AND IS BEING IGNORED, is that INTEREST RATES ARE GOING UP.
People are too focused on the Federal Reserve and on the spending, which historically have been the only two things you need to look at. They are not noticing the interest rates going up.
What's about to happen: Interest rates are going to get attention when they go through 5% or so, and we are going to get a liqudity crisis. There is a lot of evidence that we already have a liquidity problem all over the place, but the market, companies etc are ignoring it for now based on the idea that we will get globally looser financial conditions.
Instead we will get higher interest rates, and when the Fed steps in to do QE, it will have to buy a lot more bonds and a lot more stuff than people realize right now. That means huge inflation, but that inflation, unlike before, will come with higher interest rates because the world in reality will not be able to finance the USA at this level, it will be impossible.
As a result, the second part of the USA's gravy train, the one where foreign companies, people and central banks hold dollars, goes away.
The dollars that currently exist are heading back to the USA, and the dollars that are about to be created will not be held like before. Inflation + depression.

>>61294980
That sounds terrifying. So it will be super stagflation?

>>61294991
yeah it will be simultaneously a world where dollars are extremely easy to get but debt and credit are more expensive nominally (though unlikely in real terms; the rate minus inflation rate = real return).
So what you get is a world where the dollar is less valuable but also necessary to continually service the new credit and existing debt that requires those nominal payments. Yes, you are paying the debt back with dollars that are worth less, but you have to pay back the debt with more dollars and service is with more dollars continuously, so it's kind of a nightmare scenario the lower down the foodchain you go.
We will have stagflation until the Fed eventually gives up and we hyper the debt so we can reset, or we go back to a gold standard (which the world is already telling us has to happen) but for that to happen a lot of people who have debt will get crushed unless they provide a super important or demanded service/product to the economy, which allows them to service the debt.

>>61294906 (OP)
A good rule of thumb is nothing ever happens. You might get a few scares, but life will continue on the trend-line of perpetually getting worse. HR nannystates will grow. You won't be able to afford an apartment or house. Everything will be a scam. It will get worse and worse and your peers won't even notice.

>>61295037
Over the next few months you will watch the 30 year US yield go up, and with that, the capacity of Americans all over the country to borrow money to buy houses with a 30year fixed mortgage.
that'll do the trick and get the Fed's attention don't you worry.
Two more fucking weeks.
By the way, if you had been betting on this over the last year you've tripled your money.

>>61294906 (OP)
she's so beautiful bros...

>>61294906 (OP)
>>61295070
What's her name.

>>61295074
Jessica

>>61294954
There won’t be a depression because there wasn’t a mania. It’s just slow decay.

>>61295059
>by the way if you’ve been betting on this the last year you’ve tripled your money
How, the 30yr yield is only 25 bps higher since a year ago Kek

>>61294906 (OP)
1. sofr rating just dipped snd global liquidity took a move up,

uk housing market, u.s. housing market BOTH have bubbles.

ai. is in a bubble

gold devaluing bc it peaked

multi trillions dumped from the stock market in a single year.

international holders of bonds dumped them price sky rocketed

people are defautiing on their auto lones

yep.

we are fucked 5 different ways it is already bad with one thing

covid dump and the 2008 bank collapses are going to look like a fun day at the park

shit might get so bad it might be a hoover style econmy

look up what is hooverville

remember you can be pissed but amricans have been through bad times and arnt immune to them happening again just because we live in the digital age

Deleverage
Pay off debts
Take profits
Have a position in cash
Keep DCA in long term investments
Own some hard assets
Don't make plans that would ruin you if things go bad in <5 years

>>61295140
>>61294980
alright so it's going to be a USD liquidity crisis that's either caused because it's too high or too low, and soon there won't be a maneuver space left to keep avoiding it
could it be that liquidity is going to be too high and too low at the same time? i think so

>>61295125
What will everybody buy if they are selling their treasuries, or they will not buy more of them with the dollars/euros they receive? Where will the money go?
I bet on that

>>61295234
war bonds.

possibly.

>>61295224
The USA could suppress the yields again if they wanted to, they could just buy them and create the dollars out of thin air. That would normally suppress yields except the CPI will go up. The price of eggs, milk etc. That will make holding US treasuries impossible because the real rate of return is negative so you have to make a choice:
Do you let the interest rates go up so people want to hold the debt, which 'fucks everything up' if you're Grant Cardone or any of these other idiots who have destroyed the USA frankly...
Or do you just buy up all the debt from people holding it so you can manipulate the rate lower manually. That amount of buying would just be endless, and it's why this is referred to as QE infinity.
it's a QE program that doesn't end. The dollar gets smoked and the price of everything soars.
Then you ask, well there's no problem because there's no more debt. Well forgetting the fact that people are actually relying on that income (money market funds, banks hold it to collateralize their loans, grandma has a portfolio full of bonds etc) you are still in a position where your entire economy runs on selling stuff foreigners made and sent to you, borrowing money from your neighbour to buy overpriced houses. This is a super duper great awakening and we're not far from this because like i said interest rates going up we're all sort of just ignoring that.

>>61295271
Okay you're the bank of china and you usually would take hundreds of billions of dollars a year and just buy treasuries and now you've stopped because you want to wind down the dollar in your system.
You buy war bonds denominated in Dollars now?

>>61295234
>if they sell their treasuries
Not happening though, again only 25bps change and that’s WITH QT

>not buy more of them
>where will the money go
>I bet on that
Ok, glad you made some dosh, I’ll make sure to laugh at you when the dollar milkshake sucks your free lunch right up

>>61295272
are you saying that the world financial system is a sinking ship and the government is propping it up artificially?

>>61295316
The US government was propping it up at first, then it had a lot of help from the whole world. The US government will be the last one propping it up that's what i'm saying.
>>61295316
The treasuries are being sold, not just by foreigners. Of this there is no denying. The Federal Reserve buying more of them is going to run into a problem; people will sell their bonds for a profit to a Fed buying them for more than they are worth. The inflation created in 2020 will be nothing compared to what's created soon, they aren't all a bunch of retards who are happy to contribute to the US economy's prosperity.

If you have dollar debt you need dollars, if you don't you don't need dollars...

>>61294906 (OP)
>dumb zoomettes dancing in clown outfit.webm

>>61295272
> The USA could suppress the yields again if they wanted to, they could just buy them and create the dollars out of thin air. That would normally suppress yields except the CPI will go up
>Or do you just buy up all the debt from people holding it so you can manipulate the rate lower manually. That amount of buying would just be endless, and it's why this is referred to as QE infinity.
How are these different? Most people complain about QE because they view it as printing money to suppress yields, except it didn’t lead to inflation the first 3 rounds lol

>The dollar gets smoked and the price of everything soars.
>Well forgetting the fact that people are actually relying on that income (money market funds, banks hold it to collateralize their loans, grandma has a portfolio full of bonds etc) you are still in a position where your entire economy runs on selling stuff foreigners made and sent to you, borrowing money from your neighbour to buy overpriced houses.
Grandma made a bunch of money from QE explicitly not allowing her bond portfolio to collapse, and borrowing money to buy a house that will increase in value makes sense. Guaranteed your about to hawk people buying gold at the top, these are shit arguments.

>>61294906 (OP)
just to say pomni a cute

>>61295348
>the treasuries are being sold, not just by foreigners
>the inflation created in 2020 will be nothing compared to what’s coming soon
Imagine actually selling the picobottom of bonds holy Kek. You people never seem to understand, if we our neighbors make poor investments with the money we send them, Ala 2008, then there’s no money to buy our productive debt. Why should the American public suffer just because we’re the largest economy and there’s nobody who can finance our debt fairly? Hence QE. Additionally 4 rounds of QE, and during the first 3 there was historically low CPI, and only when Orangutang in chief dropped literal helicopter cash did we get any inflation. Seems like pretty intense misinformation to say QE is causing inflation lol.

Thanks for the answers guys. Let's keep this thread up to discuss America's economy and what we can do to survive. Also more Pomni pics.

Didn't read a single post. Kisses and cuddles with Pomni.

>>61294980
so what should i invest in? bonds? international stocks? gold? bullets?

>>61296164
Invest in AI-Robo-Waifu later. She will solve the rest for you while sucking your dick. Every man should and will want and have one.

>>61295376
>it didnt lead to inflation
It did lead to inflation but the demand for dollars was still there because the debt was still low enough, the US economy was more sound than it is today.
Yields are a function of the demand for dollars today and tomorrow. Bonds are future dollars obviously. So if you arent worried about the dollar you can buy bonds, especially fi the government can still fund via more bonds and can still also play games with bonds using bonds (borrowing money to manipulate yields via FED.
The inflation went into everything that was sensitive to rates. Housing, Stocks, bonds everywhere, gold, whatever.
What you didn't see was the producers of the world ask for more dollars on the basis that they were worth less. Nobody needed to sell anything in a world where you could just borrow cheap money instead and 'let the money ride'.

Now, you've got a different dynamic, the supply of dollars is going off the chart and there's objectively too much debt. The economy is only functioning right now with all this debt because we're assuring everyboyd rates are about to go down. But the holders of dollars today and more important future dollars wont hold them without being compensated for inflation anymore.
>>61295431
First, the people buying debt were producers in the USA and abroad. Somebody in 1980 who invested $1,000,000 in China and is worth $400,000,000 today, is able to buy bonds and send stuff to the USA in exchange for the IOU. That's how America works now.
Foreigners can also purchase bonds and they did. They arent anymore.
People are selling US bonds.
QE is the Fed buying bonds. It's the creation of dollars out of thin air without being borrowed into existence first.
The system was already kind of fucked but QE made it just too insane.
This was an inevitability.
>>61296164
Gold is what the central banks are buying, they won't stop.
Buy real things. Don't buy real estate right now, wait for interest rates to go to work.

So I should hold off on US bonds until we get to 5%?

>>61296301
I mean if you're really trying to 100% make money from the Federal Reserve and in your mind dollars are king sort of thing then yeah you would wait for them to get to the point where the Fed can't ignore this anymore because these yields aint stopping.
The yields will go up until the Fed basically unleashes the biggest can of ass whoop on the dollar ever.

>>61294935
>>61294954
>>61295070
not really, its androgynous looking because the creator is a tranny

>>61294906 (OP)
Fuck Pomni

>>61296223
> It did lead to inflation but the demand for dollars was still there because the debt was still low enough, the US economy was more sound than it is today.
Literally wrong though, pic related shows how QE2 and 3 happened during one of the lowest points in CPI history that wasn’t during a recession.

>But the holders of dollars today and more important future dollars wont hold them without being compensated for inflation anymore.
You’re just describing how bond pricing works, which is again why I’m making fun of you for selling the bottom of bonds.

>First, the people buying debt were producers in the USA and abroad. Somebody in 1980 who invested $1,000,000 in China and is worth $400,000,000 today, is able to buy bonds and send stuff to the USA in exchange for the IOU. That's how America works now.
As compared to
Yeah no shit that’s what happens when your money is more attractive than your industry. No real revelation here, I already mentioned we do that Ala Europe and 2008.

>Foreigners can also purchase bonds and they did. They arent anymore.
People are selling US bonds.
But this has nothing to do with the creditworthiness or outlook for US bonds, and everything to do with the appetite from foreign investors for U.S. securities. QE looks pretty fucking bullish when you realize it’s the U.S. gov buying its own dip and the bears are failing European and Asian markets.

>QE is the Fed buying bonds. It's the creation of dollars out of thin air without being borrowed into existence first.
The system was already kind of fucked but QE made it just too insane.
And this is different than reserve creation prior to 2008 how? The Fed exchanging long term bonds for reserves is how reserves were created prior to QE as well so it seems you don’t understand

>>61296803
Okay if you would like to finance us during this period go for it.

>>61296808
My bet is on emerging market bonds and crypto, I think Trump and cronies are collapsing global trade and the dollar system while not understanding the benefits we’ve cultivated from this paradigm, same as your own misunderstanding of our debt. I think private companies will take up the mantle via crypto and emerging markets will manage to capture larger chunks of global trade in a sort of Marshall plan round 2 where we fight globally to retain political influence and end up juicing countries economies again to align with us.