U.S. stocks in free fall

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drk
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Re: U.S. stocks in free fall

Post by drk »

peskypesky wrote: Mon Jan 10, 2022 11:05 am I've been arguing for days with people on another financial forum about this. They all argue that there is NO WAY the Fed is going to raise rates, because it would cause the market to collapse and it would make it extremely hard for the government to service its debt. They all seem to firmly believe that the Fed has no choice but to let inflation keep doing what it's doing.
It's hard to see the two bolded assumptions coexisting, given that market collapses drive demand for US Treasury debt, making it "cheaper" for the federal government to service its debt. I don't believe the safe asset shortage has been resolved, so I doubt we're going to see that relationship unwind any time soon.

Of course, other than general financial stability, all of this is outside the legal mandate of the Fed.
Last edited by drk on Mon Jan 10, 2022 11:43 am, edited 1 time in total.
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Re: U.S. stocks in free fall

Post by canadianbacon »

willthrill81 wrote: Mon Jan 10, 2022 10:19 am The market appears to be throwing an old-fashioned tantrum over the Fed's recent announcements. Apparently, the market was dumb enough to think that the Fed wouldn't do anything at all in the face of 7% inflation. So much for 'it's all priced in'. :P
GS updated their projection over the weekend to 4 rate hikes this year. That wasn't priced in (to the extent that any of this matters ... how many times have we seen market move first, narrative construction second?)
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Re: U.S. stocks in free fall

Post by T20three »

willthrill81 wrote: Mon Jan 10, 2022 11:07 amPeople seem to forget that the Fed's two stated primary goals are low inflation and low unemployment. Propping up stocks is not one of them.
People also seem to not notice that the fed governors are placing personal stock trades and front-running the market. Jay Pow has acknowledged the Fed put. While it isn't a stated goal, they have no choice but to support the market at this point, rates cannot rise significantly. If they got to 2% it would crash the bond market, the fed would then go QE infinity.

The fed will support the market, but they will keep us in suspense on the current price of the fed put. But it's there, and they WILL keep inflating the dollar. I made the novice mistake of believing differently in 08-09. Expensive mistake.
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Re: U.S. stocks in free fall

Post by willthrill81 »

T20three wrote: Mon Jan 10, 2022 11:43 am
willthrill81 wrote: Mon Jan 10, 2022 11:07 amPeople seem to forget that the Fed's two stated primary goals are low inflation and low unemployment. Propping up stocks is not one of them.
People also seem to not notice that the fed governors are placing personal stock trades and front-running the market. Jay Pow has acknowledged the Fed put. While it isn't a stated goal, they have no choice but to support the market at this point, rates cannot rise significantly. If they got to 2% it would crash the bond market, the fed would then go QE infinity.

The fed will support the market, but they will keep us in suspense on the current price of the fed put. But it's there, and they WILL keep inflating the dollar. I made the novice mistake of believing differently in 08-09. Expensive mistake.
So are you shorting LTT right now?
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Re: U.S. stocks in free fall

Post by BoogyBogle »

Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
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Re: U.S. stocks in free fall

Post by rich126 »

All those people who believed things were different this time with tech stocks that had little earnings are getting crushed. We'll see if this will affect housing. Eventually it will IMO. The ones that get destroyed are those who believe every drop is a buying opportunity and double or triple up. Declining stock prices on stocks with good and solid earnings is one thing but with stocks that have no solid earnings and were trading at highly speculative prices is another thing.
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Re: U.S. stocks in free fall

Post by willthrill81 »

BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
If it was obvious, then does that mean you successfully timed the market? If so, when will you buy back in?
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

rich126 wrote: Mon Jan 10, 2022 11:51 am All those people who believed things were different this time with tech stocks that had little earnings are getting crushed. We'll see if this will affect housing. Eventually it will IMO. The ones that get destroyed are those who believe every drop is a buying opportunity and double or triple up. Declining stock prices on stocks with good and solid earnings is one thing but with stocks that have no solid earnings and were trading at highly speculative prices is another thing.
Agreed. I'm baffled by the rigidity in the argument of housing being bulletproof this time around. 2008 may have involved bad mortgages, but 2020-2021 we had a true blue "housing fad". Different symptoms, similar outcome IMHO. We own a home, not relishing the thought of a 30% drop in value, but we are equity dense. I feel very bad for the 800K homebuyer with 0% down who bought 3-6 months ago, however.

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Last edited by JoinTheLocalizer on Mon Jan 10, 2022 12:03 pm, edited 1 time in total.
BoogyBogle
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Re: U.S. stocks in free fall

Post by BoogyBogle »

willthrill81 wrote: Mon Jan 10, 2022 11:53 am
BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
If it was obvious, then does that mean you successfully timed the market? If so, when will you buy back in?

Yes, it looks like I successfully time the market in terms of contributing to my roth. I plan on buying in near the end of the year. I don't want to get political but the polls are showing the public are massively disgruntled with inflation and how its being handled. The Feds are gonna get pressured to deal with it before midterms and the only way they're gonna be able to do that is raise rates.
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Re: U.S. stocks in free fall

Post by bugleheadd »

good time to buy the dip
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Re: U.S. stocks in free fall

Post by burritoLover »

BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
Pretty obvious? From the market that has shrugged off every bit of bad news in 2021, including short-term high inflation and fed announcements of rate hikes?
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Re: U.S. stocks in free fall

Post by LadyGeek »

The discussion is starting to derail on (1) housing and (2) inflation (public sentiment).

Please stay on-topic, which is the US market (declining).
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Re: U.S. stocks in free fall

Post by marcopolo »

BoogyBogle wrote: Mon Jan 10, 2022 12:03 pm
willthrill81 wrote: Mon Jan 10, 2022 11:53 am
BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
If it was obvious, then does that mean you successfully timed the market? If so, when will you buy back in?

Yes, it looks like I successfully time the market in terms of contributing to my roth. I plan on buying in near the end of the year. I don't want to get political but the polls are showing the public are massively disgruntled with inflation and how its being handled. The Feds are gonna get pressured to deal with it before midterms and the only way they're gonna be able to do that is raise rates.
You might turn out to be right, but it seems awfully early to declare victory.
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Re: U.S. stocks in free fall

Post by alfaspider »

peskypesky wrote: Mon Jan 10, 2022 11:05 am
willthrill81 wrote: Mon Jan 10, 2022 10:19 am The market appears to be throwing an old-fashioned tantrum over the Fed's recent announcements. Apparently, the market was dumb enough to think that the Fed wouldn't do anything at all in the face of 7% inflation. So much for 'it's all priced in'. :P
I've been arguing for days with people on another financial forum about this. They all argue that there is NO WAY the Fed is going to raise rates, because it would cause the market to collapse and it would make it extremely hard for the government to service its debt. They all seem to firmly believe that the Fed has no choice but to let inflation keep doing what it's doing.
The U.S. will only have difficulty paying the existing national debt if it politically decides not to pay it. Remember that the national debt is currently denominated in dollars. The U.S. has the ability to will as many dollars into existence as it wants. Absent political backstops, the treasury could pay off the national debt tomorrow if it wanted to (and didn't care about the serious negative consequences of doing so). Simply paying off the national debt in one fell swoop would be extremely inflationary and problematic for institutions that rely on the availability of Treasury bonds.

Where high interest rates could be problematic is in future borrowing. If spending is not trimmed to account for increasing interest payments, over time too much borrowing could cause a lack of faith in the USD as a world reserve currency such that it begins to trade at an increasing discount relative to other world currencies. If things got really dire, the U.S. could be forced to borrow in a foreign currency to pay for domestic spending. If that were to happen, that would put a true currency collapse and hyperinflation on the table. But that would likely also imply a serious fall from the U.S. status as a major world economic player.
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Re: U.S. stocks in free fall

Post by Whakamole »

BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
7K, and it's barely gone down - though I purchased AVES (Avantis Emerging Market Value.)
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Re: U.S. stocks in free fall

Post by Robot Monster »

bugleheadd wrote: Mon Jan 10, 2022 12:11 pm good time to buy the dip
Perhaps!

"JPMorgan’s Marko Kolanovic Says It’s Time to Buy the Dip in Stocks" Bloomberg link
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Re: U.S. stocks in free fall

Post by jsapiandante »

BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
I don't plan to access my Roth until I'm at least 59.5 which is another 20 years from now. I'd like to assume that what's happening with the markets today will have no effect on the future when I need to tap into my Roth in 2042. People who are close to or are in retirement probably has the proper allocation to let them weather market fluctuations in the near term.
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Re: U.S. stocks in free fall

Post by Robot Monster »

Since we're soaring off the lows, isn't anyone gonna say it? C'mon. The bulls are fighting back! There.
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Re: U.S. stocks in free fall

Post by Tom_T »

Robot Monster wrote: Mon Jan 10, 2022 12:45 pm Since we're soaring off the lows, isn't anyone gonna say it? C'mon. The bulls are fighting back! There.
Weak hands to strong hands! :wink:
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Re: U.S. stocks in free fall

Post by fetch5482 »

Tom_T wrote: Mon Jan 10, 2022 12:52 pm
Robot Monster wrote: Mon Jan 10, 2022 12:45 pm Since we're soaring off the lows, isn't anyone gonna say it? C'mon. The bulls are fighting back! There.
Weak hands to strong hands! :wink:
Looks like this is turning out to be a nothingburger day. All the losses are starting to get wiped out!
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Re: U.S. stocks in free fall

Post by HanSolo »

newyorker wrote: Mon Jan 10, 2022 9:35 am What the hack is happening?
Please post your answer, then we'll let you know what we think about it.
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Re: U.S. stocks in free fall

Post by Marseille07 »

Still a red day but recovering somewhat.
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Re: U.S. stocks in free fall

Post by peskypesky »

JoinTheLocalizer wrote: Mon Jan 10, 2022 12:02 pm I feel very bad for the 800K homebuyer with 0% down who bought 3-6 months ago, however.
I don't ever feel bad for someone who buys an 800k home.
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Re: U.S. stocks in free fall

Post by peskypesky »

gas_balloon wrote: Mon Jan 10, 2022 1:13 pm
Tom_T wrote: Mon Jan 10, 2022 12:52 pm
Robot Monster wrote: Mon Jan 10, 2022 12:45 pm Since we're soaring off the lows, isn't anyone gonna say it? C'mon. The bulls are fighting back! There.
Weak hands to strong hands! :wink:
Looks like this is turning out to be a nothingburger day. All the losses are starting to get wiped out!
Yeah, I put in 6 different limit buy orders when the prices were dropping. None of them executed.
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Re: U.S. stocks in free fall

Post by Robot Monster »

TheDoctor91 wrote: Mon Jan 10, 2022 9:36 am Goodbye qqq
Hello qqq
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Re: U.S. stocks in free fall

Post by CurlyDave »

The DAQ Came Back !!

NASDAQ up ever so slightly for the day. The QQQ heavy Curly Family Portfolio is up 0.05% for the day. A miracle. :sharebeer
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Re: U.S. stocks in free fall

Post by atdharris »

Looks like folks bought the dip once it hit -10%
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Re: U.S. stocks in free fall

Post by GP813 »

Lots of dip buying today!
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Re: U.S. stocks in free fall

Post by Kookaburra »

I predict a bloody red week.
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

Kookaburra wrote: Mon Jan 10, 2022 3:39 pm I predict a bloody red week.
Yeah, I concur. Not necessarily tomorrow but the week is still young.
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Re: U.S. stocks in free fall

Post by newyorker »

BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
How was it obvious? If so, why didn't you short it with your life saving?
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Re: U.S. stocks in free fall

Post by HomerJ »

newyorker wrote: Mon Jan 10, 2022 4:34 pm
BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
How was it obvious? If so, why didn't you short it with your life saving?
Yeah, and what's obviously going to take place next?
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Re: U.S. stocks in free fall

Post by drk »

BoogyBogle wrote: Mon Jan 10, 2022 11:50 am That gives them power to hike rates this month and say that they gave everyone a heads up already.
Eh? The FOMC can raise rates without warning. Announcing the intention to hike rates is just a signaling mechanism.
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Re: U.S. stocks in free fall

Post by grettman »

HomerJ wrote: Mon Jan 10, 2022 4:37 pm
newyorker wrote: Mon Jan 10, 2022 4:34 pm
BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
How was it obvious? If so, why didn't you short it with your life saving?
Yeah, and what's obviously going to take place next?

And depending on the time horizon, who cares?
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Re: U.S. stocks in free fall

Post by MortgageOnBlack »

burritoLover wrote: Mon Jan 10, 2022 12:12 pm
BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
Pretty obvious? From the market that has shrugged off every bit of bad news in 2021, including short-term high inflation and fed announcements of rate hikes?
While we're at it, I also saw the Jags beating the Colts yesterday too. Point is, any given Sunday (or market day in this case).
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Re: U.S. stocks in free fall

Post by Robot Monster »

CurlyDave wrote: Mon Jan 10, 2022 3:03 pm The DAQ Came Back !!

NASDAQ up ever so slightly for the day. The QQQ heavy Curly Family Portfolio is up 0.05% for the day. A miracle. :sharebeer
It was indeed a wonderful comeback! There was an army of dip buyers lurking in the shadows waiting to lunge. Who knew?!
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Re: U.S. stocks in free fall

Post by 000 »

Any thoughts on if we have we reached the bottom of this mini correction?
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Re: U.S. stocks in free fall

Post by zaboomafoozarg »

BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
I dumped $20k into VTSAX/VTIAX when I joined this forum in 2011, and it dropped 20% a couple weeks later.

Still turned out pretty OK though.
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Re: U.S. stocks in free fall

Post by Robot Monster »

zaboomafoozarg wrote: Mon Jan 10, 2022 5:30 pm
BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
I dumped $20k into VTSAX/VTIAX when I joined this forum in 2011, and it dropped 20% a couple weeks later.

Still turned out pretty OK though.
I just bailed on my commodities fund at the end of December in favor of Total Stock Market, and yikes, the timing on that sucked, so I very much appreciate your long-term point of view.
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Re: U.S. stocks in free fall

Post by rockstar »

Robot Monster wrote: Mon Jan 10, 2022 5:41 pm
zaboomafoozarg wrote: Mon Jan 10, 2022 5:30 pm
BoogyBogle wrote: Mon Jan 10, 2022 11:50 am Wow, I would hate to be the person who dumped all 6k into their Roth IRA on January 3rd. But it was pretty obvious we were gonna go through a major correction pretty soon with the Fed stating during their December FOMC that 3 rate hikes were coming in 2022. That gives them power to hike rates this month and say that they gave everyone a heads up already.
I dumped $20k into VTSAX/VTIAX when I joined this forum in 2011, and it dropped 20% a couple weeks later.

Still turned out pretty OK though.
I just bailed on my commodities fund at the end of December in favor of Total Stock Market, and yikes, the timing on that sucked, so I very much appreciate your long-term point of view.
I had a lot of dividends reinvested last month. They're all down. Hopefully, they come back sometime before I die. I don't know if I'll live as long as Bob Saget or Betty White. But it makes you think when folks die young.
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Re: U.S. stocks in free fall

Post by jimkitt »

If things got really dire, the U.S. could be forced to borrow in a foreign currency to pay for domestic spending. If that were to happen, that would put a true currency collapse and hyperinflation on the table.
You would think your 'friends' on that finance forum would be astute enough to realize most US debt is in US dollars. In a worst case scenario they literally can print itself out of debt. Sure there would be bad ramifications. However, it seems like the scenario might be the lesser of 2 evils.
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

jimkitt wrote: Mon Jan 10, 2022 5:44 pm
If things got really dire, the U.S. could be forced to borrow in a foreign currency to pay for domestic spending. If that were to happen, that would put a true currency collapse and hyperinflation on the table.
You would think your 'friends' on that finance forum would be astute enough to realize most US debt is in US dollars. In a worst case scenario they literally can print itself out of debt. Sure there would be bad ramifications. However, it seems like the scenario might be the lesser of 2 evils.
https://en.wikipedia.org/wiki/Carter_bonds

(In before "it's different this time") :)

Also, the Fed doesn't print money. Not physically and not virtually. It merely can regulate interest rates and issue reserve notes to commercial banking system to offset bank liabilities aka "money". But, this thread of discussion is outside the scope of markets. Jeff Snider is IMHO the foremost expert on this subject and understanding how QE cannot produce inflation. He seems to know more than just about anyone from the talking head shows, even folks like El-Erian.
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Re: U.S. stocks in free fall

Post by willthrill81 »

T20three wrote: Mon Jan 10, 2022 6:27 pm
willthrill81 wrote: Mon Jan 10, 2022 11:49 amSo are you shorting LTT right now?
No, also not holding LTTs.
So what are you doing?
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Re: U.S. stocks in free fall

Post by willthrill81 »

JoinTheLocalizer wrote: Mon Jan 10, 2022 6:05 pm Also, the Fed doesn't print money. Not physically and not virtually. It merely can regulate interest rates and issue reserve notes to commercial banking system to offset bank liabilities aka "money". But, this thread of discussion is outside the scope of markets. Jeff Snider is IMHO the foremost expert on this subject and understanding how QE cannot produce inflation. He seems to know more than just about anyone from the talking head shows, even folks like El-Erian.
The Fed doesn't just magically put money into people's bank accounts, if that's what you're referring to. But the Fed absolutely does create money. In fact, all banks create money when they make loans, as discussed here. The Fed can just do things at a far larger scale than an ordinary bank can.
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Re: U.S. stocks in free fall

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Re: U.S. stocks in free fall

Post by 000 »

T20three wrote: Mon Jan 10, 2022 6:27 pm
willthrill81 wrote: Mon Jan 10, 2022 11:49 amSo are you shorting LTT right now?
No, also not holding LTTs.
Are you in cash?
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JoinTheLocalizer
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Re: U.S. stocks in free fall

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T20three wrote: Mon Jan 10, 2022 6:27 pm
willthrill81 wrote: Mon Jan 10, 2022 11:49 amSo are you shorting LTT right now?
No, also not holding LTTs.
JoinTheLocalizer wrote: Mon Jan 10, 2022 6:05 pmAlso, the Fed doesn't print money. Not physically and not virtually. It merely can regulate interest rates and issue reserve notes to commercial banking system to offset bank liabilities aka "money". Jeff Snider is IMHO the foremost expert on this subject and understanding how QE cannot produce inflation. He seems to know more than just about anyone from the talking head shows, even folks like El-Erian.
Wrong. Currency is literally borrowed into existence, doesn't matter if you think they are hitting "ctrl-p" or not. Fed creates a bond, sells it to the open market, and turns around and buys it immediately back, which leads to the same effect as if they had hit ctrl-p. QE absolutely produces inflation because it's expansion of the supply of currency. Have you watched the stock market at all in the past 2 decades? Anyone saying different is a propagandist getting their audience lost in technical jargon.

The FED also purchases bonds and stocks via open market operations and the PPP (Plunge Protection Team). Have a look at the balance sheet.

https://www.federalreserve.gov/monetary ... esheet.htm
There is no such thing as a Plunge Protection Team. That is a zerohedge inspired conspiracy theory. :)

The Fed could not create sustained inflation with all of the QE in the world, QE1, QE2, QE-infinity. Just doesn't do anything meaningful, and even all of the PPP programs did little to stop the March crash from continuing. This is because again the Federal Reserve doesn't print money, doesn't do it physically and doesn't do it virtually. That we'll just have to disagree on. It was only when the "government put" came into existence (eg CARES etc), stimmy checks and basically direct payments to Americans that inflation started taking hold. That is why the Federal Reserve wants a CBDC, so that it can directly control inflation by being a direct banker to J6P.

Banks weren't really cooperating with the Fed as much as the Fed would've liked. That's why Uncle Sam stepped in and presented CARES et al.
Last edited by JoinTheLocalizer on Mon Jan 10, 2022 7:34 pm, edited 1 time in total.
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Re: U.S. stocks in free fall

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willthrill81 wrote: Mon Jan 10, 2022 6:31 pm
JoinTheLocalizer wrote: Mon Jan 10, 2022 6:05 pm Also, the Fed doesn't print money. Not physically and not virtually. It merely can regulate interest rates and issue reserve notes to commercial banking system to offset bank liabilities aka "money". But, this thread of discussion is outside the scope of markets. Jeff Snider is IMHO the foremost expert on this subject and understanding how QE cannot produce inflation. He seems to know more than just about anyone from the talking head shows, even folks like El-Erian.
The Fed doesn't just magically put money into people's bank accounts, if that's what you're referring to. But the Fed absolutely does create money. In fact, all banks create money when they make loans, as discussed here. The Fed can just do things at a far larger scale than an ordinary bank can.
The Fed doesn't create money, I guess we agree on that. Only commercial banks can do that by lending it into existence.

https://www.fxstreet.com/analysis/its-a ... 2106091300
Okay, if the Fed can’t print money, who can? The banking system. Nearly all money creation nowadays happens in the banking system. Now, banks aren’t literally creating dollars that we carry in our wallets (only the Treasury can create those), but what they can do is expand and contract the supply of credit. We have a credit based monetary system and the money supply expands and contracts through the creation and destruction of credit. Let’s say you deposit $100 into your bank. You are giving the bank your $100 in exchange for a bank deposit, which is an IOU that the bank owes you. Now, everyone, from banks to businesses, to households all have balance sheets. Assets fall on the left side and liabilities on the right side of the balance sheet. Money is created by commercial banks expanding both sides of their balance sheet (I will explain in a moment). It’s important to remember that one’s asset is another’s liability and vice versa. So, the $100 deposit shows up on the liability side of the bank’s balance sheet (because they will owe this money back to you) and cash (reserves) you gave them shows up on the asset side of their balance sheet.
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Re: U.S. stocks in free fall

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Sorry folks. I got off topic with all of the monetary policy stuff. Some of us won't come to an agreement on "money creation", but that's ok :)
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Re: U.S. stocks in free fall

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jimkitt wrote: Mon Jan 10, 2022 5:44 pm
If things got really dire, the U.S. could be forced to borrow in a foreign currency to pay for domestic spending. If that were to happen, that would put a true currency collapse and hyperinflation on the table.
You would think your 'friends' on that finance forum would be astute enough to realize most US debt is in US dollars. In a worst case scenario they literally can print itself out of debt. Sure there would be bad ramifications. However, it seems like the scenario might be the lesser of 2 evils.
They can't print the country out of debt while trying to hold down inflation. The two are antithetical.
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