Kuppy ....... Fed

[NoahA]

So what in theory happens if a country goes bankrupt?
What is worst case scenario if US were to declare bankruptcy?
I often thought when you had Trump as a president that that might happen. It was how he did business. Go broke and start over again.

I doubt it gets that far. The printer will be turned on way before then. Hyperinflation is way more likely than a default. And even before hyperinflation gets too bad, it will just be the move to a new dollar, call it the CBDC. Just like they announce that gold is illegal, they will say the old currency is illegal to hold, so you must surrender whatever you have in exchange for those digital dollars. I just don't know what happens to the debt. Will the students rejoice? Will home owners with 95% still owing on their house yell "long live the president!!!"?

What I'm hoping happens is that after the DXY peaks and goes the other direction, it will of course be beneficial at first for the US, since this strong dollar is hurting in various ways. But then it will drop too far, and they will need to start supporting it. Then maybe some peg to bitcoin would be really nice.

 

[piezoe]

That's fair enough. However, you'd think that they'd occasionally be pro-active rather than reactive. Even guys like Summers, who's far from a heterodox economist, where sounding alarm bells about inflation almost a full year before any rate increases.

I completely agree with this. I think the Powell fed especially has been poor at foreseeing what was coming down the road and been slow to react and not very imaginative. I thought Powell was a bad choice to lead the fed, said so at the time, and why.. The fed started to taper QE when the Pandemic hit, then they reversed course. I understand why. But once the Congress passed emergency fiscal measures to address the slow down and unemployment due to the virus, that should have been the signal to the fed to begin marching in place rather then reversing course. Fiscal measures were the best way to address the pandemic's drag on the economy. All we needed was to hold rates low but not take them lower still. We already had special loan programs in place to address the pandemic. The Fed's action was overkill.

 

[JackMorgan]

kuppy is a hysteric

you listen to him you go broke

 

[SunTrader]

I completely agree with this. I think the Powell fed especially has been poor at foreseeing what was coming down the road and been slow to react and not very imaginative. I thought Powell was a bad choice to lead the fed, said so at the time, and why.. The fed started to taper QE when the Pandemic hit, then they reversed course. I understand why. But once the Congress passed emergency fiscal measures to address the slow down and unemployment due to the virus, that should have been the signal to the fed to begin marching in place rather then reversing course. Fiscal measures were the best way to address the pandemic's drag on the economy. All we needed was to hold rates low but not take them lower still. We already had special loan programs in place to address the pandemic. The Fed's action was overkill.

Low rates, especially 0%, are a form of money printing. You want it both ways, to criticize on one hand and explain away on the other.

 

[piezoe]

Low rates, especially 0%, are a form of money printing. You want it both ways, to criticize on one hand and explain away on the other.

What would you do differently.?

You are possibly confusing temporary money from fractional reserve banking, i.e., credit, with semi-permanent money printed by the government. By the way, the outward appearance every time you use your credit card is that of using zero interest "credit". Of course it is not really zero interest because the card company is charging the merchant "juice" who is, perhaps unconsciously, passing the cost (interest) on to you. I doubt you want to start calling these high interest --- high when annualized --- short term loans "printing."

 

[SunTrader]

What would you do differently.?

You are possibly confusing temporary money from fractional reserve banking, i.e., credit, with semi-permanent money printed by the government. By the way, the outward appearance every time you use your credit card is that of using zero interest "credit". Of course it is not really zero interest because the card company is charging the merchant "juice" who is, perhaps unconsciously, passing the cost (interest) on to you. I doubt you want to start calling these high interest --- high when annualized --- short term loans "printing."

Years and years of it ... and still more years and years till they take it all back - which everyone and their brother knows they will not take it all back - is not temporary just like inflation is not transitory Mr Powell.

 

[piezoe]

Low rates, especially 0%, are a form of money printing. You want it both ways, to criticize on one hand and explain away on the other.

If you want to say the temporary money from low rate, fractional reserve, private bank lending is "printed", then I suppose when these loans are paid off you will want to call that "shredding".

 

[schizo]

The USA isn't going to go 'bankrupt'. What may well happen is few years of austerity along with a nasty recession and bear market. It took Volcker just two years to kill inflation, which in those days was far higher and more entrenched than today. Nonetheless, such would crush all kinds of contemporary expectations about infinitely rising asset prices, or the God-given right to "quiet quit" and Zoom-meeting your way through a six-figure job.

But you forget one important thing. Back then, we weren't saddled with humongous debt as we do now.

WHAT ABOUT NOW??

 

[SunTrader]

If you want to say the temporary money from low rate, fractional reserve, private bank lending is "printed", then I suppose when these loans are paid off you will want to call that "shredding".

You know fractional reserve private banks don't set rates or have the authority, by and of themselves, to create money .

 

[BKR88]

Kuppy history ... partial.
https://www.forbes.com/sites/hanktucker/2022/09/21/irrational-exuberance/?sh=5968da3d3723