HauteHippie Posted December 17, 2008 Report Share Posted December 17, 2008 ZIRP has arrived here in the US of A... Another first as this situation continues to go from bad to worse. Bonds and money are now essentially interchangeable and the Fed can not manipulate interest rates any further. The dollar free fall has begun, and gold has shot up by ~$100/oz in a little over a week. Someone feel free to chime in with a glass half full perspective because I just can't see one. All I see is very serious trouble ahead... Oh, and BTW, anyone following the previous Economy thread might have read about the Fed's pondering over the issuance of its own bonds. I can now see why: it'll be a tool for them to soak up all the excess liquidity when the [censored] *really* hits the fan. (See last paragraph below) --- http://www.nytimes.com/2008/12/17/business...y/17fed.html?hp WASHINGTON Quote Link to comment Share on other sites More sharing options...
Pugwash Posted December 17, 2008 Report Share Posted December 17, 2008 An entire industry has been consistently wrong for two years; of course they're going to have to try some radical stuff. What's more, they may still be wrong. At least we get to call the 'experts' on their BS now. "Hey, Mister TV Pundit. You suck. You provably know nothing!" Quote Link to comment Share on other sites More sharing options...
HauteHippie Posted December 17, 2008 Author Report Share Posted December 17, 2008 But calling them 'wrong' assumes that they actually believed their own propaganda. Quote Link to comment Share on other sites More sharing options...
Shundi Posted December 17, 2008 Report Share Posted December 17, 2008 Oh yes...hereeee it comes! Quote Link to comment Share on other sites More sharing options...
Kris1 Posted December 17, 2008 Report Share Posted December 17, 2008 Cheiftang you are correct, we are heading for serious trouble. The U.S. economy is heading in the wrong direction & this will affect the rest of the world! Zirp will not work well in the U.S., The economy is more than stagnant, it Quote Link to comment Share on other sites More sharing options...
rocket754 Posted December 17, 2008 Report Share Posted December 17, 2008 I think this graph from the federal reserve will tell you how scared you should really be... This tells us that since the 80's we have counted debt as GDP growth...it's the same as me going to that bank to borrow 500k and then thinking I am well off because I have this loan money sitting in my bank account. We are here because of excess credit creation which The Federal Reserve caused, and their solution is more borrowing? That gives new life to the statement "when all you have is a hammer, everything looks like a nail." The economic realities are something I myself don't want to face but it will come.... Just think about all the things we can't have in order to come out of this... We can't have things for free. We can't spend more than we make. Houses can't sell for more than 3x incomes and be sustainable. Prices must come down. We can't keep charging up the nation's (or our personal) credit cards. We can't have both good-paying jobs in the US and $30 DVD players. Pick one but don't [censored] when the other disappears. We can't tax or spend our way out of this mess. The bad debt must be defaulted, and this will mean bankruptcies among both people and companies (including banks) - lots of them. This is inevitable. Quote Link to comment Share on other sites More sharing options...
Shundi Posted December 17, 2008 Report Share Posted December 17, 2008 If you'll watch the whole clip you can spot the two that eventually went to work for the Federal Government overseeing the financial crisis. Quote Link to comment Share on other sites More sharing options...
highoeyazmuhudee Posted December 17, 2008 Report Share Posted December 17, 2008 on the positive i bought 2 LCD tvs today. a 42" and a 46" samsung hmmmmmmmmmm........................... Quote Link to comment Share on other sites More sharing options...
tazzman Posted December 17, 2008 Report Share Posted December 17, 2008 Yesterday was a good day to be forex-trader Placed some long EUR/USD bets on 1.37, 1.39 and 1.40 with target at 1.48 during spring 2009. Regarding the US ZIRP, only the future will tell how far this recession will go. And as a Swede our RB will probably follow FED's cut and move towards 0 also.. ! Strange to do carry-trades with US as the borrowing curr. instead of the other way around.. The world changes quick.huh.. - take care all, tazz Quote Link to comment Share on other sites More sharing options...
HauteHippie Posted December 17, 2008 Author Report Share Posted December 17, 2008 This tells us that since the 80's we have counted debt as GDP growth...it's the same as me going to that bank to borrow 500k and then thinking I am well off because I have this loan money sitting in my bank account. We are here because of excess credit creation which The Federal Reserve caused, and their solution is more borrowing? That gives new life to the statement "when all you have is a hammer, everything looks like a nail." The economic realities are something I myself don't want to face but it will come.... Just think about all the things we can't have in order to come out of this... We can't have things for free. We can't spend more than we make. Houses can't sell for more than 3x incomes and be sustainable. Prices must come down. We can't keep charging up the nation's (or our personal) credit cards. We can't have both good-paying jobs in the US and $30 DVD players. Pick one but don't [censored] when the other disappears. We can't tax or spend our way out of this mess. The bad debt must be defaulted, and this will mean bankruptcies among both people and companies (including banks) - lots of them. This is inevitable. Absolutely! Not only is debt counted in GDP, but it's counted twice! The initial borrowed "income" is counted and then when it is used to consume goods it is counted again! And let's not even get in to how artificially low the inflation numbers are kept which have many benefits for the man, not the least of which is a propping up of GDP... And to expand upon your final excellent point, we can't PRINT our way out of this mess. But unfortunately, that's the last tool in the bag and one which Helicopter Ben is not shy about using. And so if there still is any doubt by anyone that this "deflation problem" is anything more than a massive head fake, then look no further than the St Louis Fed's graph of the monetary base: The obscenely troubling spike on the right hasn't entered circulation yet.... yet. So things still look deflationary. But it will. And then.... whoa Nelly. Quote Link to comment Share on other sites More sharing options...
HauteHippie Posted December 17, 2008 Author Report Share Posted December 17, 2008 Oh yes...hereeee it comes! Quote Link to comment Share on other sites More sharing options...
fat.tail.event Posted December 17, 2008 Report Share Posted December 17, 2008 The positives? The Fed and Treasury are pumping this patient so full of medicine that not only will he eventually get up off the table immediately after this utter financial labotomy, but he will actually begin running out of the room and down the hall. What the government isnt telling you is that this patient will blow up before he gets to the doors of the hospital. While our patient is still alive and 'running' we should all be able to profit immensely from the unintended consequences of the charts you guys put up. We should see some spectacular spikes (up and down) in many assets over the next few years. FX volatility is just the tip of the iceberg. Use your profits to buy a lot of fertile land. Your harvest in 2011 will make you look like a genius before the US Food Riots of 2012 Quote Link to comment Share on other sites More sharing options...
HauteHippie Posted December 17, 2008 Author Report Share Posted December 17, 2008 The positives? The Fed and Treasury are pumping this patient so full of medicine that not only will he eventually get up off the table immediately after this utter financial labotomy, but he will actually begin running out of the room and down the hall. What the government isnt telling you is that this patient will blow up before he gets to the doors of the hospital. Right. They're not telling us that the medicine is far worse than the disease. But thankfully we know this! While our patient is still alive and 'running' we should all be able to profit immensely from the unintended consequences of the charts you guys put up. We should see some spectacular spikes (up and down) in many assets over the next few years. FX volatility is just the tip of the iceberg. You bet. Just make sure not to take profits in US Dollars... Your harvest in 2011 will make you look like a genius before the US Food Riots of 2012 2012 sounds about right... Don't forget to stock up on ammo too, though. Quote Link to comment Share on other sites More sharing options...
Kris1 Posted December 18, 2008 Report Share Posted December 18, 2008 I never thought that a replica watch forum would have so many guys that understand the economy. Every time I try to show someone a graph they think I Quote Link to comment Share on other sites More sharing options...
Shundi Posted December 18, 2008 Report Share Posted December 18, 2008 Every time I try to show someone a graph they think I’m crazy wacko.gif That's the problem! Everyone who warned people...those of us who have been purchasing gold for the last year and a half or so were looked at as being overly cautious and way too pessimistic.... then you see the latest numbers, our "Official" ZIRP (It's been effectively zero for a few months now), consumer debt, national debt... I chuckled when I saw they were going after Madoff for his Ponzi Scheme because the irony is...our nation's debt structure has major aspects in common with Madoff's scheme!!! The Fed and Treasury are pumping this patient so full of medicine that not only will he eventually get up off the table immediately after this utter financial labotomy, but he will actually begin running out of the room and down the hall. What the government isnt telling you is that this patient will blow up before he gets to the doors of the hospital. Very well said. Quote Link to comment Share on other sites More sharing options...
HauteHippie Posted December 18, 2008 Author Report Share Posted December 18, 2008 Behold! A mainstream politician who seems to understand the debt crisis... Maybe he's acting a little too cavalier for my tastes, but it sure is refreshing nevertheless! Quote Link to comment Share on other sites More sharing options...
slay Posted December 18, 2008 Report Share Posted December 18, 2008 I would have said we would see a world war 3, but not with obama. I'm sure any other president would have started a war to save the US. against Russia, more likely China though, farther away from Europe. Quote Link to comment Share on other sites More sharing options...
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