2020 US Presidential Election

[Juan]

The FED is supposed to act independently, but how can they raise the rates to a level sufficient enough without bankrupting the US government? The fallout from that would be devastating, and that's the dilemma they now face for printing endless amounts of free money. Have you ever wondered why they haven't raised the rates already, and why they constantly use delay tactics? It's because they can't afford to service the debt at a higher rate.

They will service the debt when all our euros are converted to US dollars and go to the US to get better yields than the ones paid in bankrupt Europe.

The FED is going to win again the central banker's game and Lagarde, who is a disgrace for Europe, will be sitting there doing nothing while the euro collapses.

For Trump, manipulating the FED was his way of staying in power and ending his term.

For Biden, preventing the FED from doing what has to be done, this is, raising interest rates, would mean being kicked out of office. Americans, like Europeans, are losing purchasing power at an accelerated pace, to the point that people no longer want to work, or do overtime, or being productive at all...

...it reminds me of the old Soviet saying... "they pretended to pay us, and we pretended to work".

 

[Ed209]

They will service the debt when all our euros are converted to US dollars and go to the US to get better yields than the ones paid in bankrupt Europe.

The FED is going to win again the central banker's game and Lagarde, who is a disgrace for Europe, will be sitting there doing nothing while the euro collapses.

For Trump, manipulating the FED was his way of staying in power and ending his term.

For Biden, preventing the FED from doing what has to be done, this is, raising interest rates, would mean being kicked out of office. Americans, like Europeans, are losing purchasing power at an accelerated pace, to the point that people no longer want to work, or do overtime, or be productive at all...

...it reminds me of the old Soviet saying... "they pretended to pay us, and we pretended to work".

They are trying to inflate away the value of the debt by printing more money. The FED themselves are borrowers and can't afford to pay more than 2%. They shouldn't be paying interest to anyone, but they have borrowed something like $6t! It's crazy.

The US government should attempt to reduce their budget deficit by about $3t a year to reduce their debt burden. This would mean a lower living standard in the US until they get back on track and become more productive again. That really is all they can do, but the public won't vote for cuts, and therein lies the problem. Overspending gets you votes, and budget cuts don't.

They cannot raise the rates high enough to fight inflation without them bankrupting themselves, and if this were to happen, it would have disastrous consequences for everyone. So, they will continue inflating the currency because a yearly $3t cut won't wash with the voters. The irony here is that it will affect the poorest people the most. This is because they don't own any assets to soak up the inflation like rich people do. They will watch their cash slowly become more and more worthless whilst rents and consumer goods go up.

It's a sad situation that many are completely unaware of.

 

[Paul1980]

So those people buying 100 "doors" to rent out, on artificially low interest rates, are natural "demand and supply", in your opinion?

With the inflation at 7% interest rates should be at least at 4%, and they are at zero percent. That's just economic manipulation by central banks. The FED should raise interest rates now, instead of waiting till March.

No, nothing is absolute. But there is a huge demand for single family housing which isn't completely due to low interest rates in some markets.

 

[Juan]

No, nothing is absolute. But there is a huge demand for single family housing which isn't completely due to low interest rates in some markets.

There's a flipper from Florida that posts regularly in an investment forum. I have known this person online for years. He is a former investment banker and trader, and reoriented his career towards a private real estate investment practice.

Well, this person used to flip homes in Florida; around 2012 he purchased the homes at $50k per unit, renovated them and flipped them for maybe a 50% profit (on $65k - $70k). These were distressed properties in bad neighbourhoods...

Nowadays the ask price for those homes, in a bad neighbourhood that maybe has improved only a little, is $400k - $450k. Tell me if that's not a real estate bubble...

And that investor is a professional, meaning that he flipped homes professionally, and made a valuation of those units, and knew perfectly the value of the assets he was trading, buying and selling...

From 2012 "gurus" that sell online "get rich fast" investment courses have sprouted like mushrooms, together with a series of TV programs focused on encouraging flipping, home renovation, build to rent and all sorts of real estate schemes that in reality are not profitable, and can only keep running on artificially low interest rates.

A healthy economy with market interest rates cannot support any of such schemes, and certainly cannot support individuals, people who earn a medium salary, purchasing on credit "100 doors" (mortgaged, this is, highly leveraged) to rent out.

 

[Juan]

The US government should attempt to reduce their budget deficit by about $3t a year to reduce their debt burden. This would mean a lower living standard in the US until they get back on track and become more productive again. That really is all they can do, but the public won't vote for cuts, and therein lies the problem. Overspending gets you votes, and budget cuts don't.

They cannot raise the rates high enough to fight inflation without them bankrupting themselves, and if this were to happen, it would have disastrous consequences for everyone.

The US will bankrupt other countries first. Developing countries and third world countries that have their economies and currencies deeply linked to the US dollar.

That's how the US consumer will still keep standing. Because turmoil will hit first the countries that produce and send goods to the US.

 

[Ed209]

The US will bankrupt other countries first. Developing countries and third world countries that have their economies and currencies deeply linked to the US dollar.

That's how the US consumer will still keep standing. Because turmoil will hit first the countries that produce and send goods to the US.

The US hasn't had a trade surplus since 1975. They've been spending more money than they make for too long, like most countries, but they can run massive trade deficits because of the "strength" of the dollar and its reserve status. If they default, that all goes away.

 

[Juan]

The US hasn't had a trade surplus since 1975. They've been spending more money than they make for too long, like most countries, but they can run massive trade deficits because of the "strength" of the dollar and its reserve status. If they default, that all goes away.

Argentina will default... again. And other developing countries whose economies are tied to the dollar.

By the way, it would be interesting to know the views of Lagarde, as ex-IMF chief, on Argentina, a country she bailed out... now this useless Lagarde is in charge of the eurozone. God help us all.

 

[Ed209]

Argentina will default... again. And other developing countries whose economies are tied to the dollar.

By the way, it would be interesting to know the views of Lagarde, as ex-IMF chief, on Argentina, a country she bailed out... now this useless Lagarde is in charge of the eurozone. God help us all.

Back to the original point: that's why you won't see the Fed raise the rates to a meaningful level. They will carry on dithering about because they ain't got a solution, and they'll continue on the same course. If they were serious about inflation, and if they could actually afford a proper rate hike, they would have done it already. They'll probably go to 0.5 - 0.75% at best, and what's that gonna do?

What you'll see is the same wishy washy statements that they always come out with. They are basically using delay tactics. They know exactly how bad the situation is and could have acted earlier to contain the inflation, but they can't. So, they tell the public things like we need to see how it progresses as it may be transitory, etc. It's like 40% of your entire monetary supply was printed in the last year , of course there's gonna be rampant inflation. Even the elementary school kids know this. Why do you think they inflated the supply by such a ghastly amount? It's intentional on their behalf; it's because when you inflate the supply the debt which is crushing you becomes smaller, and the burden is passed onto the public. It's essentially taxing peoples savings and purposefully diminishing the purchasing power of everyone's dollars to help mitigate the problems that they're facing. I see two clear ways of reducing the problem, extensive budget cuts to get them into a surplus for a few years, or inflate the monetary supply. They obviously chose the latter, and it's a calculated decision. It's not like they accidentally left the printer running and then though, "fuck, Jerome, where's all this money coming from!" You can just imagine someone in the office saying, "it's coming from our printers, sir."

 

[kingsfan]

US government: "Oh no. How can we pay our debt?!?"

Meanwhile spends $727 billion a year on the military.

 

[Juan]

Back to the original point: that's why you won't see the Fed raise the rates to a meaningful level. They will carry on dithering about because they ain't got a solution, and they'll continue on the same course. If they were serious about inflation, and if they could actually afford a proper rate hike, they would have done it already. They'll probably go to 0.5 - 0.75% at best, and what's that gonna do?

What you'll see is the same wishy washy statements that they always come out with. They are basically using delay tactics. They know exactly how bad the situation is and could have acted earlier to contain the inflation, but they can't. So, they tell the public things like we need to see how it progresses as it may be transitory, etc. It's like 40% of your entire monetary supply was printed in the last year , of course there's gonna be rampant inflation. Even the elementary school kids know this. Why do you think they inflated the supply by such a ghastly amount? It's intentional on their behalf; it's because when you inflate the supply the debt which is crushing you becomes smaller, and the burden is passed onto the public. It's essentially taxing peoples savings and purposefully diminishing the purchasing power of everyone's dollars to help mitigate the problems that they're facing. I see two clear ways of reducing the problem, extensive budget cuts to get them into a surplus for a few years, or inflate the monetary supply. They obviously chose the latter, and it's a calculated decision. It's not like they accidentally left the printer running and then though, "fuck, Jerome, where's all this money coming from!" You can just imagine someone in the office saying, "it's coming from our printers, sir."

Now this is a political problem for Joe Biden, who will be kicked out of office unless he forces the FED to act now.

People do not like to see how their meagre savings evaporate, and more important, how their salaries are heavily devaluated.

So it is not only about savings, but about salaries losing purchasing power. In Spain there are already strikes demanding salary raises.

 

[Ed209]

So it is not only about savings, but about salaries losing purchasing power. In Spain, there are already strikes demanding salary raises.

This is why the Euro currency was always a terrible idea. You've got countries like Greece, Ireland, Italy, Spain, etc, competing with powerhouses like Germany. This imbalance leads countries with weaker economies into massive debts. They would be much better off if they had sovereignty over their own currencies because it's easier to recover from an economic downturn and to retain the status quo, especially on the international stage. Let me explain: usually, when a country is struggling its currency will reduce in value, meaning its exports become artificially cheaper and it becomes more competitive to visit as a tourist. This gives that country a chance to rebuild. The problem is that they are now tied to the Euro so they'll get crushed by the stronger economies as there's no competitive edge anymore. This encourages debt to build because they are forced to "keep up" as they have no other choice.

The Euro was introduced to reduce friction on international trade and remove the need for risk insurance in case there was a sudden shift between two currencies after a trade deal had already been done, but it was done at the expense of basically bankrupting countries who couldn't compete with those who were performing well, and at the same time, the underperforming countries are holding back the countries that are doing well. It's a completely unbalanced and unsustainable idea.

Greece and Spain have basically lived beyond their means for too long just like the US, the UK, and many others have. Our productivity dropped off a cliff and we started to rely upon cheap labour in countries like Taiwan, Indonesia, China, etc. We are artificially living more prosperous lives at the expense of those providing cheap labour. It's always been a matter of time until we'd run into major problems as all these nations have spent and spent and spent, for years, without earning the money they are spending! What do people expect? Our quality of life should not be as good as it is right now, and people are going to be in for a shock, if and when, the reality hits home.

As I said previously, we should be cutting budgets to live to our means, or we all need to get off our asses and become more productive as nations again. We are living through the economic equivalent of being in a perpetual motion machine, and as we now through the laws of thermodynamics, they don't work. You need economic input to create an output, but for decades prosperous nations have been taking the piss.

 

[Juan]

Greece and Spain have basically lived beyond their means for too long just like the US, the UK, and many others have. Our productivity dropped off a cliff and we started to rely upon cheap labour in countries like Taiwan, Indonesia, China, etc. We are artificially living more prosperous lives at the expense of those providing cheap labour. It's always been a matter of time until we'd run into major problems as all these nations have spent and spent and spent, for years, without earning the money they are spending! What do people expect? Our quality of life should not be as good as it is right now, and people are going to be in for a shock, if and when, the reality hits home.

Spain never recovered from the Great Recession that started after Lehman's collapse. Greece was another big fish similar in size to Lehman, and was about to fall as well, around 2012 - 2014. Greece entered the Eurozone by making up its public accounts with the help of a few US investment banks. Fraud, we can call it...

Spain banked its recovery on tourists, this is, external demand, since the average Spaniard is every day poorer. Of course, COVID-19 blew all this up. There is also another factor: cheaper tourist destinations like Turkey and Eastern Europe.

Turkey offers really cheap vacation packages, it's way cheaper than Spain. Same goes for the Eastern countries and part of the Mediterranean.

The countries in Europe that kept its own currency have a wider array of tools to navigate the economic crisis. For instance, the Czech Republic has been able to raise its interest rates by 75 basic points in just one shot.

Russian financial markets are falling sharply this year. Around 15% down.

The US and the UK are withdrawing their diplomats from Ukraine. The possibility of war seems to be increasing.

If oil and natural gas continue going up inflation is going to rocket, putting pressure on central banks to make a move sooner than expected.

 

[Ed209]

US government: "Oh no. How can we pay our debt?!?"

Meanwhile spends $727 billion a year on the military.

That's the problem. They are spending like they are loaded, when in reality, they are broke. The US need to rein in their budget because right now they are equivalent to the guy that has a Ferrari, and a big mansion, but can't afford to pay the energy bills or put food on the table. It's all show and no substance.

 

[Carlos1]

US government: "Oh no. How can we pay our debt?!?"

Meanwhile spends $727 billion a year on the military.

No military, no country. Not sure you understand that.

 

[Luman]

US enemies are lining up to test Joe Biden
Tue January 25, 2022(CNN)

President Joe Biden is confronting a series of distinct but interlocking global crises and hotspots with US foes lining up to test the mettle of an under-pressure leader and their own sense that the United States is a retreating global power.

Biden made the kind of fateful decision on Monday that might be more at home in the tense 1970s, putting up to 8,500 troops on alert to rush to Eastern Europe to counter the Kremlin's move to force the US away from its Western flank. But his trial of nerves with Russian President Vladimir Putin, who is holding Ukraine hostage in a bid to reverse the West's expansion after the Cold War, is far from his only global headache.
On the other side of the globe, a strategic ballet of military might is playing out as the US and China maneuver armadas and warplanes amid tensions over Taiwan, and other disputed territories, in a long-term duel for dominance in the Asia-Pacific region. While the prospect of a Russian invasion of Ukraine is fixating the world right now, a future Chinese strike against the self-governing democratic island is the more likely trigger for a disastrous superpower conflict.

Read more here:
https://www.cnn.com/2022/01/25/politics/joe-biden-ukraine-russia-china-iran/index.html

 

[Juan]

Is it true that Biden called a journalist "son of a bitch" just because the poor chap asked the President about inflation?

I can't wait to hear the new excuses that useless Powell is going to make up in order to continue losing precious time to fight inflation...

 

[Juan]

I just post this interesting comment on how Carrefour is "run" or "managed"... because actually France is "run" by an ENA graduate (Emmanuel Macron) and going downhill:

"More or less the limits of the French elite (from ENA) who assume they can apply simplistic methods without any imagination: squeeze suppliers, ambitious sales targets, cost cutting, green washed marketing etc. If we judge Bompard on what he has done with Darty, there's no way he can fix Carrefour. ENA is a highly selective school where super smart people learn the French administration's rules and principles. It is not a business school. ENA graduates are notoriously bad in mathematics which is not in the ENA entry exam and not taught at the school. Running a business without a data analytics mindset is quite a challenge today. Thanks to ENA they get connections to the French government and administration, which helps to secure building permits, subsidies, and favorable regulations but that's all, nothing that can help with a challenging business context. These ENA CEOs jump from company to company, staying a max of 3 years, which makes it easy to make the figures look impressive but impossible to really measure their long term impact. It also makes it impossible for them to deeply understand the business they're running."

 

[kingsfan]

No military, no country. Not sure you understand that.

On the contrary. It seems we are the ones invading other countries.

Why do we need nearly 800 military bases in over 70 countries?

 

[Luman]

On the contrary. It seems we are the ones invading other countries.

Why do we need nearly 800 military bases in over 70 countries?

This is a huge waste of money and resources. There is absoulutely no reason for them to be in the majority of those places.

 

[Juan]

US politics is getting interesting. The dilemma is:

- Raising interest rates. JP Morgan said 9 interest rate hikes in 2 years.
- Facing uncontrolled inflation

The FED keeps talking nonsense and doing nothing.

The collapse is going to be epic.

 

[Ed209]

US politics is getting interesting. The dilemma is:

- Raising interest rates. JP Morgan said 9 interest rate hikes in 2 years.
- Facing uncontrolled inflation

The FED keeps talking nonsense and doing nothing.

The collapse is going to be epic.

Remember that they can't go above circa 3% without bankrupting the government. They shot themselves in the foot by printing too much money.

They are fools who haven't learnt a single thing from history, and this calamitous mistake of vastly debasing one's currency seems to keep repeating itself over and over again.

 

[Juan]

Remember that they can't go above circa 3% without bankrupting the government. They shot themselves in the foot by printing too much money.

They are fools who haven't learnt a single thing from history, and this calamitous mistake of vastly debasing one's currency seems to keep repeating itself over and over again.

US stock indexes are erasing all gains. The Dow is already in the red.

And this taking into account that the FED continues to do absolutely nothing. In any normal country Jerome Powell would have been fired already.

 

[Ed209]

US stock indexes are erasing all gains. The Dow is already in the red.

And this taking into account that the FED continues to do absolutely nothing. In any normal country Jerome Powell would have been fired already.

I watched the meeting and it was a whole load of nothing. Basically, we might raise the rates, or we might not. We don't know what's going to happen yet, so we'll wait and see, blah blah blah. No concrete information whatsoever. It's like someone ringing into work and saying I might come in next week or I might not. What are their employer's supposed to do with that information?

US stock indexes are erasing all gains. The Dow is already in the red.

The markets always move up and down like a yo-yo after each sentence during these meetings. I think it's kinda funny. They are always reactionary, but it's difficult to know what to take from that because nothing of any substance was said.

If they go really hawkish then essentially risk-on assets will sell off and value stocks will grow.

 

[Juan]

The markets always move up and down like a yo-yo after each sentence during these meetings. I think it's kinda funny. They are always reactionary, but it's difficult to know what to take from that because nothing of any substance was said.

My take on it is the NASDAQ will continue falling.

 

[Luman]

This speculation about Biden replacing the retiring Supreme Court Justice Stephen Breyer with Kamala Harris, would be very good news if it is true. Biden can kill two birds with one stone: Appoint a black woman, which he said he would do, and take her out of the job of Vice President. She should not have either position but we are far more at risk, with her as Vice President, considering the frightening prospect that with a man of Biden's age, she is one heartbeat away from becoming the President.

'Could be credible': Speculation ramps up that Harris could be Biden's Supreme Court pick

As news broke about Supreme Court Justice Stephen Breyer retiring, speculation ramped up that President Biden could tap embattled Vice President Kamala Harris to replace him — keeping his promise to appoint a black woman to the High Court while opening possibilities of a less politically tainted running mate for 2024.

Former White House press secretary Kayleigh McEnany on Wednesday endorsed the unlikely notion that Harris could get the nomination as a way to end to the controversies surrounding her.

"I think it's a theory that could be credible," McEnany said while co-hosting the "Outnumbered" show on Fox News.

More here:
https://nypost.com/2022/01/26/specu...mala-harris-as-joe-bidens-supreme-court-pick/

 

[Ed209]

My take on it is the NASDAQ will continue falling.

In theory, this should be the case as money will come out of growth stocks and go into value stocks. However, the Fed didn't actually take any action, they just talked again as predicted. The markets will be uncertain until they provide certainty because nobody knows what's going to happen (because they are still dithering).

The base money supply is up 40-50% in the last year, and a lot more over the last 20 years, as we know.

Here's the M2SL data (base money supply):

When you plot this against the S&P 500, for example, you'll see that it still hasn't reached the same heights as it did 20 years ago. In fact, we are not much above where we were just before the 2008 subprime mortgage crash. I'm saying this to provide context; I am not implying that a rally is due.

The markets don't like uncertainty, and the Fed is paralysed because they can't do anything. That's why they are still using delay tactics. When you look at the Nasdaq and crypto, you can see where a lot of this stimulus money has gone. The Nasdaq, in real terms, isn't much different to what it was years ago. What we are seeing is lots of inflation in the charts themselves. They are reflecting the expansion of the base monetary supply.

This is the predicament people now face based on whatever policies the Fed will eventually implement: do they go to cash and lose 15% a year to inflation? Extremely unlikely, so what else is there? Bonds will be unattractive except for maybe TIPs; there's precious metals, value stocks, growth stocks (riskier), crypto (riskier), property, commodities, etc, etc. My point is that the money has to flow somewhere, and there's more of it now than ever; a lot more.

If the markets were to crash or correct more deeply, it would be an excellent opportunity for retail investors to get in and take advantage. Right now, I'm holding until there's clarity, as I said before, because nobody can pretend to predict what's going to happen next in a situation like the one we're in now. I don't plan on selling what I have left for years now, so by clarity, I mean before I buy anything.

 

[Juan]

If the markets were to crash or correct more deeply, it would be an excellent opportunity for retail investors to get in and take advantage. Right now, I'm holding until there's clarity, as I said before, because nobody can pretend to predict what's going to happen next in a situation like the one we're in now. I don't plan on selling what I have left for years now, so by clarity, I mean before I buy anything.

The opportunity of buying cheap already passed in 2020 (April and by the year end, October, November...)

Stocks are crazy overvalued.

Now it's the time when the economic crisis sinks in. It's a very different moment from 2020 when a black swan happened. When a crisis sinks in, markets go down and down and down, and it is a very bad idea to get into them until they reach the bottom.

 

[Ed209]

Stocks are crazy overvalued.

Now it's the time when the economic crisis sinks in. It's a very different moment from 2020 when a black swan happened. When a crisis sinks in, markets go down and down and down, and it is a very bad idea to get into them until they reach the bottom.

No disrespect, buddy, but do you ever read other people's responses? Everyone would agree that some stocks are currently overvalued, we've been saying this for ages on here, but you also have to factor in the vastly expanded dollar base.

I'm not sure if you read my previous post, or if you didn't understand it, but if you take the base supply of money and average it out across the last 20 years, on a like-for-like basis, the S&P 500 has still not reached the heights of the year 2000; it's about a third below and is currently sitting level with April 2007's prices.

Your final point is a little silly. When and if a major crash occurs, it's best to wait for signs of capitulation and then start DCAing into the stocks/assets that you like. Nobody can predict the bottom and it's not necessary to get in at the bottom either. If there was a possibility of being that accurate everyone would always buy at the bottom and sell at the top.

 

[Ed209]

I had a discussion about this with @AfroSnowman just the other day, but I'm going to make this post here because it's not only relevant to this thread, but it also means that everyone can read it.

So, the US - under the Biden administration - is trying to put through a bill that is anti-democratic and backward. There is one provision within the bill that is problematic as it uses language that should not be permissible without going through a democratic process. It is best explained by Charles Hoskinson in this live stream from yesterday, and I implore anyone with an interest in politics or economics to watch all of it (skip to 3:30 ish if you're in a rush):



Take note to what Charles Hoskinson says at 9:10 onwards because I agree with him 100%.

It looks like the banking lobby has got its hands all over this one, and it is to the absolute detriment of the rights and freedoms of all those who live in a civilised society. It also makes you question how free we really are when governments believe they can just impose their will like this. The bill would give the Treasury Secretary (one person) an unchecked and unilateral power to ban crypto exchanges and other financial institutions from engaging in crypto transactions with no prior notice, debate, or due process.

So, the US government want to act like a dictatorship it seems as this would go against everything they are supposed to stand for. They won't ban it because there's influential power within the crypto industry who will push back, in my opinion, but it needs regulation like anything else, and nobody is opposed to that. Most people are sick of waiting for governments to get their acts together regarding regulation (that's what makes it even more frustrating), but it's another thing entirely for them to give themselves the unelected right to ban it without so much as a public hearing or referendum. It's crazy. They are the ones delaying the regulatory process in the first place! As a side note, Canada approved a spot ETF straight away. The SEC has rejected loads of applications and their reasoning makes no sense since they approved a futures ETF (which is an incredibly shit deal for the public and institutions alike due to the fees).

None of this is democratic, my friends, regardless of your thoughts about crypto, and it demonstrates the power struggle that is going on between the banks and our freedoms. They want you to remain a slave to their bullshit monetary policies, it seems.

 

[Juan]

Your final point is a little silly. When and if a major crash occurs, it's best to wait for signs of capitulation and then start DCAing into the stocks/assets that you like. Nobody can predict the bottom and it's not necessary to get in at the bottom either. If there was a possibility of being that accurate everyone would always buy at the bottom and sell at the top.

People had a few months to get into the market after the 2020 crash bottomed. I am sure a few of them got in earlier, before the trend reversed, and lost money when indexes kept falling and they sold due to panic.

So the bottom line is that there is enough time to get in when indexes reach their bottom or reverse the trend.

I hope my explanation is clearer to you now. It is plain silly to buy stocks in a downtrend in times of economic crisis.