Nothing that was bad about the economy was allowed to fail in 2008. Normally during an economic event like that businesses that were unsound would go under and new ones without massive debt would have to be established and it would take time but eventually there would be recovery. Like what happened in Japan. So what we have been living in is a completely manufactured economy ever since then. What caused the stock market to go up so high since 2012? Debt. Cheap debt. First, the real inflation rate is about 3%. Second, the FED has been lending to banks at about 1% ever since the financial crisis. Every time they tried to raise the rate, as you should when the economy is strong, there has been pushback and the stock market would falter for a week or so. To me this indicates that without constant access to money at 2% less than the inflation rate, the economic wheels will stop turning.
Another big indicator that the growth seen after 2012 is completely fabricated is the lack of emerging industry or other economic developments that normally create economic growth. Normally a boom starts with a new frontier, like the internet created the dotcom boom. The subprime market created the housing bubble. The US becoming the manufacturing center of the world in the wake of WWII created the boom that boomers and the greatest generation got rich on. Right now we are in a situation where the present boom is a bubble founded on systemic cheap debt, the government is in debt to the FED, the banks are in debt to the FED and the corporations are in debt to the banks. People are up to their eyeballs in debt as well. Now where is all this money coming from and who can pay it all back? How is the money to overcome this debt going to be generated?
So right now we are running on a debt based economic bubble. So then coronavirus hits. We have about 1/3rd of the working population unemployed at this point. What does that lead to? First, we must look at what you are going to stop paying when you have no money. That means pragmatically a consumer would max out their credit cards and default on them because they are unsecured credit. Next you have luxury/entertainment services. Even if you opened up the entire service sector tomorrow, one third of the population doesn't have money in their pocket to go out to eat or to the bar or take a vacation. And remember, just because the service sector opens doesn't mean they start getting the same tips and hours they had during the boom. So how many restaurants and bars go under as a result? How many of them had mortgages? How many of them were renting? How many people simply can't afford rent? How many of those landlords now can't pay their mortgages? If you have read this paragraph you know that this means a lot of people are not going to be paying the banks a LOT of their monthly revenue. What does this cause? A liquidity crisis. This is why the FED has so much slated to be used in the REPO market. They know this is going to happen.
So, what you are seeing in the financial markets are a bunch of people who are absolutely delusional. The FED is pumping the market. The rich people are getting out of the market. This whole situation is complete and total clown economics and there is no way we are not going into a massive recession in the next six months. 2008 wasn't allowed to find the bottom because of government intervention. The sheer amount of debt the US government is going into over this is mindboggling. There is no reasonable way that our debt can be repaid or a budget surplus can be achieved without borderline hyperinflation making trillions of dollars seem like billions.
Charles Nguyen
The situation is hilariously bad and nobody wants to even acknowledge this because to do so is to say we have completely destroyed the global financial system by trying to say clever mathematics and consumer confidence are more real than the productivity and real growth of the economy.
Well now we get into another question, first, who controls the FED and who controls the world bank? You see, the financial structure of the world starts getting weird and theoretical at these levels. You can go to /x/ or Yas Forums and they will tell you it's reptillians or jews or the illuminati or the knights templar or the jesuits. The thing is, WHO it is doesn't matter. The reality is there is a group who are "controlling the supply of money" BUT all of their power is only power because the military and police of the countries they lend money to defend them, if that makes sense. So, what we are seeing right now is a system which will collapse without some kind of extreme intervention.
So, do you allow the entire economy to collapse and restructure and buy it all up and own even more of the world if you are these controlling interests? Do you take that risk of potential "revolutions" due to widespread economic collapse? Or, instead, do you prop up the existing system because money doesn't really mean anything since it is a mathematical concept at this point in time, and go for some kind of complete digitization of currency and keep the existing power structure you already have the most influence in?
Basically, the "elite" or whatever can try to manipulate this any way they see fit since they essentially can do whatever they want with money. But, if they let things get too bad they run the risk of wide spread public backlash. They also run the risk of widespread public backlash if they take too much for themselves and the "1%" as it were. So, that is really why I titled this "Pissearth Economics" because everyone knows it makes no sense and there is no real way to predict it, and debt and money are largely mathematical/theoretical concepts that don't mean anything.
I felt like clarifying a bit on the last post. I think the most accurate way to look at our world is that there is still a class of nobility, however it no longer is a political class but an economic class. You have what are best described as a class of Oligarchs who have incredible financial power, industrial power, huge real estate holdings, utilities and media holdings, etc. Now, as I have said, it is rather inconsequential who these people are, what is important is to see the forest and not be distracted by the trees. They have divorced themselves from political power because being involved in politics means public scrutiny. You don't need to be the king if the king has to ask you for money.
Now, with that in mind, a true financial collapse means a true governmental collapse. Police officers aren't going to risk their lives for no pay. Same goes for the military. The other reality faced by these individuals is that they have the whole world dependent upon their financial system. A private central bank is present in nearly every developed country. The people and the structure defending their accumulated assets is the combined military and police forces of the world. So, this is one reason why that governments are allowed to have "unlimited debt" in the tens of trillions of dollars, because it keeps their system working.
Now, the argument you will often see is that this printing of money and bailout etc. are going to cause inflation. The fact is, they are not. Inflation happens when the entire population has access to more money. If you are only handing out these trillions of dollars to keep maybe 10k people worldwide afloat, you are not going to see true inflationary effects at the consumer level.
To bring this back to the question "Who controls the supply of money?" we have to ask ourselves "Is the US government borrowing money from the FED to buy the assets of the very people lending the money to the FED in the first place?"
This is perhaps the most important question. Is the money the government is borrowing from the FED being paid to the people lending the money in the first place? Are the controlling interests in the World Bank that lends to the FED the same people who control the FED and do they have a stake in the private banks that the FED lends to? Does anyone even know the answer to this?
>There is no reasonable way that our debt can be repaid or a budget surplus can be achieved without borderline hyperinflation making trillions of dollars seem like billions.
Based retard, not understanding the first fucking thing about monetary policy or even what money is
The Fed is currently throwing money out of helicopters in a desperate attempt to stave off DEFLATION. If you don't understand that, and more importantly why that's happening, you're just going to look silly.
i feel like i was the only person in 08 saying raise rates to 10% let the market sort it out >but the retirement funds >but the pension funds and now the economy has been a zombie since and debt is the only fuel
Benjamin Garcia
>Are the controlling interests in the World Bank that lends to the FED the same people who control the FED and do they have a stake in the private banks that the FED lends to? Seems reasonable
Hunter Miller
>The Fed is currently throwing money out of helicopters in a desperate attempt to stave off DEFLATION No shit, because real wages have been stagnant for so long and corporations only innovation in the past fifteen years has been how to pay you less money for more work. Rather than giving people solid jobs and solid pay, they make people with student debt compete with H1B pajeets. Deflation follows the same damn mechanism that I laid out for WHY there is no inflation despite all of the money being printed. The money being printed is going to the pockets of people who already have a fat bank account and stock portfolio. It isn't going to the middle class. And you are calling me a based retard?
>The world is not the United States. >You don't understand the basic concepts involved here Enlighten me. Which basic aspect am I missing out on?
Nicholas Perez
What happens after home and 401k values tank? And there aren't as many jobs to go back to? And ppl arent spending money to keep the system rolling? Industries will consolidate.. rich get richer. And the rest of us take on some more debt (whether it be a govt bailout or sba loan) to live a slightly shittier existence? How do we navigate clown world?
Michael Butler
Either people get mad and do something or we enter into 21st century serfdom. It's pretty grim, but that is the reality we are facing.
I don't think people we know about at the political level are controlling interests in these private central banks. Somebody collects the profits from the FED, and if the fed is unprofitable, somebody collects the profits from the World Bank. Those are the people at the top.
Tyler Harris
Based posts user except >Now, the argument you will often see is that this printing of money and bailout etc. are going to cause inflation. The fact is, they are not. Inflation happens when the entire population has access to more money. If you are only handing out these trillions of dollars to keep maybe 10k people worldwide afloat, you are not going to see true inflationary effects at the consumer level You underestimate how power Gibs Politics will gain from this event, as well as scrutiny of where inflation is/has been going. Property, Education, Medical Expenses. All these things have been inflating for years to the point governments are now going to give them out.
Hunter Perry
>Property, Education, Medical Expenses. And I would argue that the primary driver of the rise in medical expenses, education and property value are all government subsidized programs. What would happen to property values if section 8 housing wasn't available? What would happen to education expenses if government subsidized student loans were not available? What would happen to medical expenses if Medicare and Medicaid were not available? Property is also a funny example because of how much is owned by wealthy people from foreign countries. Vancouver and California and Seattle all have inflated property value because of chinese "investors." Florida has inflated property values because of canadians, brazilians and snow birds all wanting to be there. Regions without non-local competition tend to be more reasonable.
Jaxon Cox
Well, our economic system can best be described as monetarist, in that it's the main lever for controlling economic expansion and contraction, and work is useful to the extent that it circulates money. So not understanding how money works and having opinions on economics is sort of like talking physics without a concept of gravity.
And it'd take forever to go through the theory of it, so I'll try to simplify it as much as I know how without distorting it too much.
I guess, to start, right now the Fed is reacting to a crisis situation, not acting, and the crisis is deflation. Right now trillions of dollars of wealth are fleeing Europe and the emerging markets and trying to take shelter in the USD, creating a massive demand for dollars that the circulating supply is nowhere near enough to supply. So, in order to prevent massive deflation, which is the real economy-killer, the Fed is printing money basically as fast as they can. That's why the money supply has exploded in a way that made the 2008+ QE look like nothing, but we're seeing zero inflation. Every dollar printed is being snatched up by foreign investors.
The actual effect is the evaporation of the wealth of South America and (mostly southern) Europe, which is basically demanding to finance our deficit spending at any rate of return. This will cause a vicious cycle of wealth leaves -> economy suffers -> more wealth leaves there. It's great for us, going to be an apocalypse for them.
Deflation is the real terror, not inflation. Deflation is when it becomes more profitable to keep cash in the bank rather than spending it, ie the entire economy locks up solid and you get 1929 all over again. That's what keeps Powell up at night and why the money printer is going brr.
>but the money's going to The Rich! wall st main st blah blah
"The rich" are commercial banks, they're the ones who get money from the Fed, that's how the counter works. The Fed can't loan you money. There's more
Caleb Garcia
>Florida has inflated property values because of canadians, brazilians and snow birds all wanting to be there >inflated >because there's high demand
That is not what inflated means.
Eli Myers
It is when you live there. But I understand your sentiment, high demand high price etc.
Michael Rivera
Yeah, it sucks to be a renter in a hot spot. My family passed up on a then-reasonably-priced detached home in one of the cities you mentioned back when I was a kid, which is now worth more than 20 times the price.
But high demand for an intrinsically desirable thing driving up its price is the literal opposite of inflation.
Liam Flores
In terms of the global market I understand what you are saying, high demand for the dollar=deflation=our goods become noncompetitive price wise for export=kills international trade = kills economy. How is it systemically stable to be lending out all these dollars to unstable economies though? Aren't we essentially issuing a bunch of sketchy debt to keep something unstable afloat?
Gabriel White
>deflation=our goods become noncompetitive price wise for export=kills international trade = kills economy.
It's far far far worse than that. Imagine if the dollar was appreciating by a few percent a year at the same time the stock market was down, like say what happened in March. What would you do if you had a billion dollars? You'd keep it in the bank where you'd get the best return, rather than losing it on Wall Street. And everyone else would too, sucking the supply of money out of the economy, which in turn increases the demand/supply ratio further, pushing up the value of the dollar more, etc etc, and all the money pours out of the system and it becomes impossible to buy or sell anything because everyone with money is holding onto it rather than spending or investing it. Buffett's famous "you'll try to use the ATM and there'll be no money in it" situation.
This is what happened in the Great Depression, and it's the central banker's nightmare, which is why we have constant inflation. Constant mild inflation forces the rich to keep investing and spending their money, because if they let it sit, it loses value.
But the Fed doesn't run the world, and it can't stop the smart money in emerging markets and the hideously mismanaged mess that is Europe from seeing the writing on the wall and wanting to get into a safe asset. The safest asset in the world is the United goddamn States Dollar, because it's backed by the Pentagon which makes a point of delivering a brutal messy and public death for any pissant dictator or president who talks about replacing it.
>How is it systemically stable to be lending out all these dollars to unstable economies though
No, they're lending US money. That's the thing. They are demanding we take their money and give them dollars at literally any rate of return.
John Richardson
When do we short
Jason Ramirez
Nonetheless though, there is undoubtedly a bailout going on for multiple industries and it will have to go on for the foreseeable future to keep businesses and then banks from failing due to how leveraged most companies are. I stand by my position that our economy is fundamentally unsound and founded entirely upon debt rather than economic productivity. Combating deflation is part of the FED economic policy, but 30 million unemployment applications are realistically insurmountable from an economic perspective. You are looking at a crash here.
>Imagine if the dollar was appreciating by a few percent a year at the same time the stock market was down I get that, so when faced with that, in addition to record unemployment, in addition to the collapse of the service sector that is going to result from the shutdown, in addition to the people who worked in that sector defaulting on unsecured credit, in addition to landlords and air b&b superhosts defaulting on mortgages, in addition to the housing price collapse that follows such real estate sectors being in trouble and a housing crisis 2.0 where the notes are worth more than the property, what options are really on the table to make all of this work? We are in straight up nightmare economics right now.
Brody Green
lmao
Then we get into the whole thing about the financial economy vs the real economy and if the real economy is what we commonly think it is, and if someone at the fry station at McDonald's is actually participating in the real economy
