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The Federal Reserve, the private bank that it is, has been buying $85B/month in US govt bonds for some time now. It is also the case that there is now about 3-4 times as much USD currency in circulation at this time compared to 2008. It can be theorized that this is largely one of the causes of the curiously elevated equities market today. It hardly makes sense what is happening when considering the big picture.
How can it be that stocks are so high amidst such an uncertain future? The housing market is still pretty stagnant, unemployment isn't doing great, interest rates are at an all time low so little profit is actually being made on all debt, the Fed will initiate QE soon, and the market is still at an all time high? Also, the Fed is going to soon raise interest rates from this 30 year bull period. This is a certainty as well - inspect economic history and what text books call "the business cycle". This is really just the private Fed, with undisclosed private shareholders, raising interest rates and the public has no say bc they have no power regarding the non-federal Federal Reserve.
First of all, it's probably true that many people will be holding bonds when prices drop along with QE. This will be a significant wealth transfer I think.
Secondly, it is theorized that stocks are bubbling or being artificially inflated right now due to all of this extra paper. Netflix and Telsa trading at 100x earnings? How?! All the while gold stays low in price. I mean come on. How? This is ridiculous. China is buying US debt like it's Xmas, along with gold reserves and infrastructure. 65M apartments are vacant in China, along with endless brand new ghost cities; I am sure this stuff is being built with the $1T in US bodt debt. And through the purchasing of physical gold, it would appear a lack of confidence in the USD from the foreign market too.
I do think this party has come to a halt, I just don't see what's actually backing the market right now besides the Feds paper and elevated post-2008 confidence. The most scary aspect of this entire thing is the the global economy is being backed by the USD; the worst mistake in economic history. We are passing our bad debt around the world, while printing lots of paper. There may be a lack in confidence to continue to buy US debt, along with it a lack of confidence in the USD. It will be like holding a mortgage backed security in late 2008. Everyone has US bond debt bc it's AAA, just like Fannie and Freddie and AIG and allllll those other guys which were "rock solid" investments for people all over the world.
Thoughts?
How can it be that stocks are so high amidst such an uncertain future? The housing market is still pretty stagnant, unemployment isn't doing great, interest rates are at an all time low so little profit is actually being made on all debt, the Fed will initiate QE soon, and the market is still at an all time high? Also, the Fed is going to soon raise interest rates from this 30 year bull period. This is a certainty as well - inspect economic history and what text books call "the business cycle". This is really just the private Fed, with undisclosed private shareholders, raising interest rates and the public has no say bc they have no power regarding the non-federal Federal Reserve.
First of all, it's probably true that many people will be holding bonds when prices drop along with QE. This will be a significant wealth transfer I think.
Secondly, it is theorized that stocks are bubbling or being artificially inflated right now due to all of this extra paper. Netflix and Telsa trading at 100x earnings? How?! All the while gold stays low in price. I mean come on. How? This is ridiculous. China is buying US debt like it's Xmas, along with gold reserves and infrastructure. 65M apartments are vacant in China, along with endless brand new ghost cities; I am sure this stuff is being built with the $1T in US bodt debt. And through the purchasing of physical gold, it would appear a lack of confidence in the USD from the foreign market too.
I do think this party has come to a halt, I just don't see what's actually backing the market right now besides the Feds paper and elevated post-2008 confidence. The most scary aspect of this entire thing is the the global economy is being backed by the USD; the worst mistake in economic history. We are passing our bad debt around the world, while printing lots of paper. There may be a lack in confidence to continue to buy US debt, along with it a lack of confidence in the USD. It will be like holding a mortgage backed security in late 2008. Everyone has US bond debt bc it's AAA, just like Fannie and Freddie and AIG and allllll those other guys which were "rock solid" investments for people all over the world.
Thoughts?
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