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  • Originally posted by Ronson View Post

    Yeah. Paying it off now with a relatively strong dollar would cost more than paying it off down the road with a weaker dollar, since the actual amount won't change. We're getting some hardwood flooring done now that we had initially planned for next year, but the first payments aren't due till January.
    I just figure I can earn interest on the money in savings or have it available for an emergency if needed. The monthly payment on the bed is not a hardship so why not? I normally would have the money in a stock fund but right now it's safer in a money market fund.

    Comment


    • Originally posted by Sparko View Post

      I just figure I can earn interest on the money in savings or have it available for an emergency if needed. The monthly payment on the bed is not a hardship so why not? I normally would have the money in a stock fund but right now it's safer in a money market fund.
      I may be anticipating incorrectly, but I figure if my $1 will only be worth 90¢a year from now, I can lock in a price and then pay 10% less down the road. So a $1000 purchase in 2022 becomes $900 when paid in 2023 (again, this is avoiding interest payments). I know the wife wants a new bed and yours sounds like a good purchase. I'd rather get the driveway fixed (I have a growing pothole).

      I am trying to envision a situation where we might experience deflation in the near term, but I can't see it. It's such a rare event under any circumstance.
      "You should just assume going forward that if I am ever wrong it is a typo" - Backup
      "
      Reality simply does not change based upon consensus or desire." - rogue

      Comment


      • Originally posted by Ronson View Post

        I may be anticipating incorrectly, but I figure if my $1 will only be worth 90¢a year from now, I can lock in a price and then pay 10% less down the road. So a $1000 purchase in 2022 becomes $900 when paid in 2023 (again, this is avoiding interest payments). I know the wife wants a new bed and yours sounds like a good purchase. I'd rather get the driveway fixed (I have a growing pothole).

        I am trying to envision a situation where we might experience deflation in the near term, but I can't see it. It's such a rare event under any circumstance.
        I guess that;s true too. The bed would probably cost me more 3 years from now if I waited. But I needed it now anyway. My back has been bothering me and I wanted a bed that was adjustable. I had an old sleep number bed but you couldn't raise the head and feet, and it didn't have as much padding as the new one. The new bed is really nice. It even tracks your sleep in an app. Bit off topic, sorry.

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        • The Dow is below what it was when Biden took office

          I'm always still in trouble again

          "You're by far the worst poster on TWeb" and "TWeb's biggest liar" --starlight (the guy who says Stalin was a right-winger)
          "Overall I would rate the withdrawal from Afghanistan as by far the best thing Biden's done" --Starlight
          "Of course, human life begins at fertilization that’s not the argument." --Tassman

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          • Originally posted by rogue06 View Post
            The Dow is below what it was when Biden took office
            He stopped the stock market from inflating!

            Comment


            • The situation perfectly summed up in one article...

              Markets Crash as Monetary Laughing Gas Fades

              (bold emphasis mine)
              The main issue in the economy is that there are two generations of market participants who have only witnessed expansionary policies. That is why the most pressing question for investors is not where earnings are headed or what the rate of change in economic growth is, but when central banks will pivot.

              The Federal Reserve and other big central banks have caused a massive crisis. On the one hand, major central banks’ balance sheets have stayed intact in local currency in 2022, and the path of rate hikes is quite accommodating. Markets, on the other hand, are collapsing. How is this possible? Because central banks believe their actions carry no consequences as there is a legion of economists that twist facts to say there is no problem. However, the contrary is true. Markets and politicians are so accustomed to easy money that even the slightest normalization causes havoc around the world.

              The first issue is that the great majority of the world’s $90 trillion in reserves is invested in a carry trade against the US currency. The second is that negative nominal and real rates have zombified the corporate world and led governments to feel that debt is unimportant. The third issue is significantly more serious. Investors and governments have been made to believe that announcements of rate hikes and liquidity reductions should be ignored because policymakers ignore them anyhow.

              All of this has resulted in an overindebted environment in which corporations with weak strategies found adequate cash to survive, and where multiple expansion in every sector, from listed to private ventures, was not an outlier but the norm. And this excess, which has been sustained over the previous fourteen years by absurdly lax policies conducted in times of expansion and recession, has fostered an addiction to gradually more aggressive monetary operations. Governments, businesses, families, and market participants are dissatisfied with a normalization process that keeps central banks’ balance sheets unnaturally elevated or interest rates significantly below inflation. They require more, quickly and consistently.

              We are taught that central banks must choose between recession and inflation. This is a logical fallacy. Central banks’ mandate is not to design bloated leveraged growth; rather, it is to maintain price stability.

              Recessions are not caused by central banks raising interest rates. They are the result of years of excessive debt, malinvestment, and reckless risk-taking.

              Markets are crumbling because the seemingly unstoppable expansion of prior years was based on a monetary illusion. Monetary laughing gas makes you smile but does not cure.

              Many analysts and investors have warned for years about undue complacency and unjustifiable valuations, only to be dismissed as doomsayers because all you had to do was follow the Fed.

              “Do not fight central banks,” was the warning, and most of us took it to heart. When central banks claimed they had to cease printing money because they had overshot in 2020, a sizable segment of the investor base rejected the idea. Many people began to argue that central banks had nothing to do with inflation and that they should keep slashing rates and printing money (“injecting liquidity,” they asserted). However, even though the DJ continued to spin records, the music came to a halt.

              With a minor fall in global money supply, no substantial reduction in central bank balance sheets, and extremely gradual rate hikes announced for months on end, markets have plummeted. However, markets cannot accept even minor changes. The junkie requires another fix, a large and steadily increasing fix.


              With negative real and nominal interest rates, the economy does not improve. It is in a worse situation. Negative real and nominal interest rates have resulted in a bloated, sluggish, and unproductive economy in which the inefficient are bailed out while the efficient are penalized. When money velocity fell, productivity growth stalled, and debt hit all-time highs, hardly one seemed to notice. Why? Because markets were rising, even the world’s worst-managed corporations could obtain loans at negative real rates.

              Some commentators now worry that central banks are tightening too quickly, despite the fact that they were silent during the most strange and dramatic increase of the monetary base in recent history.

              Those who championed a $20 trillion expansion in 2020 are partially responsible for the 2022 crash.

              However, there is a more serious issue. The current crisis, which policymakers have manufactured and allowed, will harm even people who did not benefit or profit from the excess. Unsuspecting citizens with no exposure to equities or bonds and who have never witnessed private equity valuations skyrocket will suffer from stagflation as their real salaries and deposit savings disappear and some lose their jobs.

              The current global economic trainwreck demonstrates the deeply unethical nature of printing money and allowing central banks and governments to become lenders and providers of last resort. It harms the middle class on its way in and destroys it on its way out.


              Artificial creation of money is never neutral. It favors the first recipients of newly generated currency, the government and the indebted, disproportionately, while severely harming deposits savings and real wages.

              The 2020 stimulus plan was the largest ruse ever played on humanity. It was unnecessary in the first place, because all that happened was that governments locked us all up because of a health issue. It was unnecessary to incentivize debt, expenditure, or money supply. It just established false bottlenecks in the chain of stimuli, resulting in a worse scenario.

              You received a check from a government that is now taking that amount and more through inflation, the tax on the poor, and a larger tax burden. As a result, there is more inflation, less growth, negative real wage growth, and now market collapses. It has resulted in larger governments and poorer citizens.

              No. I’ll say it again. The Federal Reserve does not have to choose between recession and inflation. They must decide between logic and financial repression.

              Those who complain about central banks raising interest rates too quickly should have warned about the 2020 lunacy. It no longer matters whether central banks pivot. The fallout from stimulus initiatives is already affecting economic growth and company profitability. Even if rate hikes were slower, markets would have seen a valuation reality check. Bubbles burst. Always. The only remaining question is when.
              "What am I doing here?" -- Joe Biden 2021

              Comment


              • He's also stopped gold from inflating. I see the price has hit a two year low - all though admittedly still higher than 5 years ago.
                "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

                "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

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                • What's happening in the UK, the derivative market and the BoE, and why it's very significant here in the states and the stock market, and how it relates to what the federal reserve is doing and likely will do?

                  UK has been experiencing even worse inflation numbers than the US.

                  The BoE (their central bank) was about as hawkish as the Fed was last year because of the (global) inflation problem.

                  Thus, long story short, the BoE started tightening just like the Fed, but long before the Fed started in March. UK inflation got as high 10% around the summer (interestingly, this was when they were actually in the process of tightening).

                  Aside from the absurdity of Truss pledging to cut taxes and initiate more stimulus at the same time the BoE was tightening (I can't stress enough the absolute INSANITY of this and I can only assume Truss probably had no knowledge about any of this to know how insane that was), the derivative market and UK's pension system started to implode. And so the hawkish BoE has now capitulated (in spite of inflation still being above 8%) and has started QE once again to bail out the pension system.

                  I've warned about the derivative market bubble many years ago, though I had no idea that insane bubble market could be sustained this long, but here we are.

                  I'll explain why this happened and why it's significant to the US market and the Fed moving forward. This is extremely complex, but I'll try and make it as short and simple as I can (as even I don't fully grasp the intricacies of it).

                  Basically pension funds hold assets like government bonds to fund the pensions. When central banks initiate QE, this means central banks' support of bonds causes yields on those bonds to fall because the bond is viewed as more secure (the concept being that the less risky the asset, the lower the yield).

                  Since a pension fund has to pay an interest to pensioners, falling bond yields won't cover this, so they have to buy riskier assets with higher yields. Since they can now borrow to buy these riskier assets (because the central has kept interest rates artificially low via QE), they can borrow a whole lot more, thus they become over-leveraged with these risky assets.

                  When the central bank removes its support by tightening, everything reverses, thus the rates that pension funds borrow shoots up and becomes more expensive. Margin calls then occur, meaning that the lenders want to see collateral to insure that the borrower (the pension fund) is good and can afford to keep paying the rising interest.

                  Well, now the pension has to scramble to sell other assets they're holding to get the money. This also has a feedback loop, because as pension funds are dumping assets into the market, this accelerates the reverse process.

                  As a result, the lenders start closing the accounts of the borrowers as a default. All of this has a cascading effect that just accelerates the crisis even more.

                  So the BoE has to reverse its tightening and continue QE in order to fund the defaulting bonds and settle everything down, and this is what the BoE has done.

                  The pension system of the entire western continent is just one example among numerous situations of both investment funds and companies being ridiculously over-leveraged with these derivatives, Credit Suisse bank being yet another among hundreds of potential market time bombs looming.

                  In short, you think the economic and market craziness is bad now, you've seen absolutely NOTHING yet. If the Fed continues tightening, the implosion that is our inevitable destination will be nothing short of breathtaking and horrific. This is why market investors are sure the Fed is going to capitulate at some point because they simply HAVE TO, as the consequences are beyond the scope of imaginable for them not to.

                  The debate between market investors is when this will happen, hence the reason we're seeing such crazy up and down swings in the markets? It's literally a tug of war between the two sides.

                  Once the Fed capitulates (if they do) -- heck, even giving any signs of capitulation -- the markets will likely take off like a rocket once again (how's that for legitimate price discovery and free market capitalism <sarc>), and so will inflation.

                  Personally, I'm still not sure this will happen because I've yet to figure out Powell's true motive. If Powell is actually sincerely trying to do the right thing for the plebs, then I have no doubt he'll capitulate at some point when the crisis becomes too horrific.
                  "What am I doing here?" -- Joe Biden 2021

                  Comment


                  • It's PPI and CPI week, where we get the inflation numbers for September.

                    I've said that any good economic news (like the supposed job report we got last week) will crush the market because they see that as bad news against the hope of Fed capitulation (a.k.a. "Pivot") -- where the Fed either stops tightening or actually reverses back to easing.

                    The ONLY bad economic news that the market will actually see as bad news is a higher inflation number than expected. If PPI and CPI come in hot, this could be the final catalyst that absolutely crushes the bond and equity markets, I mean, possibly below even 2008 levels.

                    Brace yourself.
                    "What am I doing here?" -- Joe Biden 2021

                    Comment

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