DAMODARAN: The Fed's Latest Plan To Save The Economy Looks Like A Step Toward Insanit

[pupu]

http://www.businessinsider.com/aswath-damodaran-qe3-insanity-2012-9

"If the definition of insanity is that you keep trying to do the same thing over and over, expecting a different outcome, then we seem to be fast approaching that point with the Fed"

 

[nutmeg]

never heard of him

 

[Chausey]

But it is working. The markets are going up. Who in the room doesn't understand this? These economists hyperventilate because the Fed can't keep what they do a secret anymore. Which is nothing. It's just about money and debt, creating enough new debt to purchase the old debt. Wash, rinse, repeat. By the way, what the hell is the alternative? A DOW at 6000 or lower? 20% interest and 50% unemployment? It's not a perfect system, nobody said it was. But none of the ass hats are smart enough to invent a better system, so STFU and buy.

 

[nutmeg]

Quote from nutmeg:

never heard of him

I chcked him out. He's the guy who wrote the book:

Here's Why I Dumped All My Shares Of Apple

(before it get overvalued) and breaks 700$ but hey I'm busy keeping sane, oh and btw, have you read my new book:

why fb is worth 29$

(well it was you know, just before it was $30)

stay ttuned

sincerely

Professor longhair

(aka nutmeg)

 

[MKTrader]

Quote from Chausey:

But it is working. The markets are going up. Who in the room doesn't understand this? These economists hyperventilate because the Fed can't keep what they do a secret anymore. Which is nothing. It's just about money and debt, creating enough new debt to purchase the old debt. Wash, rinse, repeat. By the way, what the hell is the alternative? A DOW at 6000 or lower? 20% interest and 50% unemployment? It's not a perfect system, nobody said it was. But none of the ass hats are smart enough to invent a better system, so STFU and buy.

Define "working."

The S&P 500 is around the same level it was in 2000, yet gas prices are three times higher. Money markets, CDs and other "safe" investments are yielding near 0%. Unemployment has gotten steadily worse over the last 3-4 years. If you take out factor out all the manipulations re: workforce participation rates, the actual unemployment rate is close to 19%, not 8.1%.

Asset bubbles, in and of themselves, prove nothing about what's working.

 

[morganist]

Quote from pupu:

http://www.businessinsider.com/aswath-damodaran-qe3-insanity-2012-9

"If the definition of insanity is that you keep trying to do the same thing over and over, expecting a different outcome, then we seem to be fast approaching that point with the Fed"

It is not insanity they are not trying to increase growth they are trying to prevent the financial system collapsing. The money they are printing is to cover the future bad debt they know is coming. Simple maths if they don't have enough money in the economy then it is not possible to pay the outstanding debt back. This will go on till the baby boomers die.

 

[Chausey]

Quote from MKTrader:

Define "working."

The S&P 500 is around the same level it was in 2000, yet gas prices are three times higher. Money markets, CDs and other "safe" investments are yielding near 0%. Unemployment has gotten steadily worse over the last 3-4 years. If you take out factor out all the manipulations re: workforce participation rates, the actual unemployment rate is close to 19%, not 8.1%.

Asset bubbles, in and of themselves, prove nothing about what's working.

You make a valid point. How I define working is not collapsing, which is a low bar above the grand canyon below. The post below yours is the point. Money comes from debt, the whole thing is a pyramid that one day collapses. There's a lot of people in this country who think they will survive a total liquidation of 100% of the economy for a reset. They are not prepared to lose 80% of their wealth and then have enough to buy assets low years later. Young people have the debt, the old people have cash, savings and investments. The little cash they have left would not be enough to rebuild an economy. All of the old people that came out in 2009 to town halls were just bent about the fact the Fed had not fully bailed out the stock market and were afraid they never would. New highs now, no complaints.

 

[denner]

Quote from MKTrader:

Define "working."

The S&P 500 is around the same level it was in 2000, yet gas prices are three times higher. Money markets, CDs and other "safe" investments are yielding near 0%. Unemployment has gotten steadily worse over the last 3-4 years. If you take out factor out all the manipulations re: workforce participation rates, the actual unemployment rate is close to 19%, not 8.1%.

Asset bubbles, in and of themselves, prove nothing about what's working.

Took the words out of my mouth. The S&P 500 might be in the vicinity of where it was at the peak, but as we've seen in recent years every rally in stocks is outpaced by the rally in commodities (creating a stagflationary environment). Nevermind health care costs, tuition costs, food prices, property taxes, etc, etc...

We've been thru this re-flationary scheme several times now. For the vast majority of the populus, gaming stocks higher does very little for the middle class when it increases their cost of living, while wages stagnate.

 

[denner]

Quote from Chausey:

You make a valid point. How I define working is not collapsing, which is a low bar above the grand canyon below. The post below yours is the point. Money comes from debt, the whole thing is a pyramid that one day collapses. There's a lot of people in this country who think they will survive a total liquidation of 100% of the economy for a reset. They are not prepared to lose 80% of their wealth and then have enough to buy assets low years later. Young people have the debt, the old people have cash, savings and investments. The little cash they have left would not be enough to rebuild an economy. All of the old people that came out in 2009 to town halls were just bent about the fact the Fed had not fully bailed out the stock market and were afraid they never would. New highs now, no complaints.

You touch on the generational dynamic at work. The boomers want the higher stock prices at the cost of destroying whatever is left of the economy. If it boosts the value of their homes, they're good with that as well. The problem, as we continue to see in the data, is that goosing asset prices while the REAL economy stagnates does nothing for the "move up buyer", or in this case the upcoming generation of debt serfs. Saddled with non-dischargeable student debt and entry level jobs that aren't cutting it (if they can find any employment outside of a Starbucks barrista), they aren't going to be able to lift all of those boomer McMansions.

 

[Chausey]

It is sad and pathetic. Real growth is over. Now we're just betting on individual's decisions, not collective ones of the market.