Quote from Ghost of Cutten:
You are talking about people who do not believe in creative destruction and markets clearing. However, since they are political actors, this is understandable - arguing in favour of a recession, job losses, and bankruptcies tends not to go down too well.
What is interesting is that she sees short-term economic weakness as something that both can, and should be avoided. The idea that economic weakness might be a necessary and beneficial process in order to push people to reallocate capital from shitty enterprises to good ones seems to be something she doesn't even contemplate.
The goal of economic action is not to avoid temporary economic weakness, it is to allocate resources as efficiently as possible. Losses, bankruptcy, and destruction are essential signals from the market to reallocate radically.
The original role postulated for central banks was to avoid liquidity panics i.e. where the market gets far more negative (for a short while) than the reality justifies. I.e. people having bank runs because of pure fear, rather than because the bank in question is actually balance-sheet insolvent. This seems like a legitimate policy, it's like buying near the lows of a market capitulation, basically. But somewhere along the line, central banking theory expanded from staving off banking panics by providing temporary liquidity, to trying to stave off any kind of economic contraction at all by debasing the currency.
Quote from S2007S:
Every time the market takes a small drop the only thing they can think of is more easing...its getting old, they pumped in tens of trillions of dollars in this market to sustain any continuous downfall a few years ago, now the market and economy have become to dependent on these handouts that anytime the market or economy looks weak the only thing they announce is the call for more stimulus. Thats NOT how an economy works. There is nothing left for this economy to grow, every time it has grown over the last 20-30 years its been through the creation of asset bubbles, aside from that there is nothing to sustain continuous growth in this economy at this point in time.
Quote from Trendytrader:
FED is totally clueless and effectively supporting the lack of fiscal discipline required from Washington to save this country from bankruptcy and financial ruin.
I don't remember the number but basically 90% of all mortgages are being funneled through FNM, FMCC, FHLM etc and ending up with the FED. No wonder they have trillions on their books now.
Remember quantitative easing (QE) sounds like a great thing but is actually nothing more than out right money printing, but we can't tell the sheeple that or they may complain that we are doing what the Wiemar Republic did and Zimbabwe are doing.
The other issue is that operation twist is now creating a new problem that is even more severe for the economy and anyone with a pension or retired. The FED have artificially pushed bond yields down so low and stated they plan to keep rates down indefinitely that pension funds are now having to recalculate their obligations based on long-term low bond rates. Updated actuary tables for pension funds are requiring companies to now put substantially more money aside to fully fund their pension obligations.
The bottom line is that savers, retired folks who are dependent on fixed income returns and company pension funds are all going to suffer. You can expect another pull back in consumer and company spending.....I'm seeing it in my company now.
On another note the local paper here has weekly home sales with buyer, seller and amounts listed. The last two weeks the mortgagee sales are now up to 1 in 6 maybe from 1 on 12. Looks like the paperwork backlog is being cleared out.
Isn't there an old Chinese proverb that "may you live in interesting times" yeah right!
Quote from S2007S:
This is how fucking pathetic this has become . . .
Quote from plyka:
The problem with the people who do understand economics like the Austrian types...... So the Usa economy has grown over the past 30 years it has actually done well for the most part. However this growth is in spite of the fed and gov not because of them. Without them in the way everyone would be far richer than they are, except the leeches.
Quote from Landis82:
What's truly pathetic is the fact that you have posted over 13,000 times on this site, and don't even trade for a living.
You've posted one PERMA-BEAR piece of drivel after another all the way up from SPX 850 three years ago. You are a total waste of bandwidth.