Now I understand the Rate cut anger at ET

[Avid_Consumer]

i honestly believe there's a strong chance that sooner than any of us realize, we might see a rare opportunity for sweeping monetary and fiscal reform.

if the fed fails at containing the dollar it'll be the strongest chance this country has seen since 1913 to divest ourselves of a central bank and fiat. we need a specific plan to advocate a sustainable, symmetrical policy for ordinary people, most people.

we could see the end of systemic wealth transfer, print and spend, the malignant 'too big to fail' banking industry which destroys value for ordinary people, return to truly free markets, any number of things are possible when the last 30 years of irresponsible, and even predatory policy finally come home to roost

i know that sounds grandiose, it just seems to be happening

 

[makloda]

Good thread and good points being made by those pro and against the cut (and the cuts that might follow). Anybody that thinks there will be a negative longer term impact from the Fed action you can always take action now to buy yourself some insurance

Think inflation will run higher?
- Buy commodity futures (GC, SI, HG, CL, ZC, ZW etc. etc.) or the corresponding ETFs they now have (GSG, DBC, DBA, GLD, SLV etc.).
- Short bond futures

(OR: buy future options on the above positions so you only allocate part of your margin)

Think the US Dollar will become worthless?
- Buy commodity futures, e.g. precious metals (see above)
- Short (a portion?) of your USD exposure via forex against EUR or a basket of foreign currencies, e.g. EUR/GBP/CHF/AUD/NZD in a weighting of your choice.

(OR: buy (future) options on the above positions so you only allocate part of your margin)

You can always complain how bad things are but if you're 100% sure your view of the future (inflation, interest rates, commodity prices will turn out to be correct then take action and protect yourself. If you're right, you will be well covered. If you're wrong, you only lose the "insurance premium" (if you bought options).

 

[austinp]

<i>"Austin, Point taken, please accept my apology for the jab."</i>

Fully accepted, thank you for that. Heck, I've made the same error in here many times and regretted it later myself :>)

*

<i>"It's really comical reading all the ET humanitarians on this board talking about greater good. LOL. I love it how about a bunch out of out work sycophant daytrading leaches suddenly care about society. I also love how these people who could probably barely get Best Buy to return a phone call for a job app are suddenly world renowned economists that are so smart and have it all figured it out."</i>

Interesting diatribe. And refresh us all on what exactly your active role in the trading world is?

<i>"Let me ask you guys this. What do you think the consequences of letting the 100 trillion dollar credit markets collapse would be? That's right, 100 trillion!!!! That's in notional value. That's 100 trillion in credit derivatives, that is the glue that ties everything in this world together, EVERYTHING. It's the very lubricant of our society. From the food we eat, our schools, our churches, our power grids, our communication, our banks, everything. What do you think happens when we lose that lubricant and this big 100 trillion dollar piece of machinery breaks down. Without liquidity, that is what happens."</i>

Mav, there's the problem. Our society's fiscal future appears to rest solely on propping unfathomable debt with more debt. Is there no end to ability for endless debt in our lifetimes?

I live with two teens and work with many other kids most every day. It's fun to see them growing into adults, eager to face the world and what their future holds as young adults. It is natural to desire the very best for them, better than we had for ourselves. It is equally natural to worry about the problems they face, some where no viable solution seems to exist.

I'm not building bunkers, storing canned foods and donning a foil hat. I am concerned that inflation is thru the roof and our government does not acknowledge it one iota. I am concerned that a weakening dollar buys less and less of skyrocketing food and energy products we all subsist on. I am concerned that fixed income friends & relatives of mine are finding it impossible to make ends meet any more, with no ability to raise their income at this stage of their lives.

Aren't these legitimate concerns? Can we verbalize them in this forum, which is essentially just a virtual coffee shop for traders to discuss most aspects of life?

 

[kashirin]

Quote from Maverick74:


Let me ask you guys this. What do you think the consequences of letting the 100 trillion dollar credit markets collapse would be? That's right, 100 trillion!!!! That's in notional value. That's 100 trillion in credit derivatives, that is the glue that ties everything in this world together, EVERYTHING. It's the very lubricant of our society. From the food we eat, our schools, our churches, our power grids, our communication, our banks, everything. What do you think happens when we lose that lubricant and this big 100 trillion dollar piece of machinery breaks down. Without liquidity, that is what happens.

Wow, scary movie.
Don't mix liquidity problem and rates. I don't mind to provide liquidity to banks but it must be done with a penalty rate and not by cutting rates.
And there must not be 'too big to fail'. If Goldman fails - so to be.

If Goldman fails Fed takes temporary management and ensures smooth transition until Goldman is liqiudated

 

[Ivanovich]

Quote from maxpi:

Strong dollar is good for all in the US?? What about the manufacturing for export sector??

Where did I say that strong dollar was good for all in the US? Don't put words in my mouth.

 

[Pa(b)st Prime]

The Brazilianization of America continues.

Let them eat CROX.

Both Bernanke and Bush are brutally honest. It's all about ownership baby. Take those pitiful dollar denominated cash savings and shove 'em. Put that money to work where it belongs. In a house or stocks. Institutional lenders who borrow at the overnight rate and retail at 300bp over the 10yrTreasury are king. Savers....well you best learn to SPEND those depreciating chits in your wallet.

I suppose this move was caused by the new "inflation can't be controlled by CB policy" paradigm. There's certain truths there although MUCH of this commodity inflation is dollar related.

Who should prop up the dollar? If the American CONSUMER could give a fuck then why should monetary policy protect the dollar? Go buy a Buick guys.

And isn't it clear that the masses are best served by having rich asset holders put a dollar in the tip jar for ya?

This is the most complicated socioeconomic debate of our time.

 

[number22]

Quote from Hydroblunt:
No, never. The masses do not even understand what is going on and when it is gradual, they barely notice. Revolutions in third world nations happen over hyperinflation.....

I think you were contradict yourself over this; for example; Mexico peso has devalued in among common people many months before institution investor has realized during 90s.

Anyway; eventually what will happen is that taxes will increase faster than people's paychecks; the fact of matter is people has already realized they can not change the behaviors of governments and less encouraged to go to vote.

This kind viscous cycle is not healthy to our freedom and democracy; talking about we were the beacon of modem society; but it has filled with thief and lairs.

Love the movie; Wall Street. Rich own; the poor produce.

 

[gnome]

Quote from PohPoh:

No..I think it's just anger that the Fed didn't do what they should have done...
They are bailing out out the banks and the idiot investors of the country..
punishing savings and investment...
punishing the patient...

The Fed and Gummint are methodically destroying the buying power of the $USD... it will lead to bankruptcy for nearly all Americans.

And please, other ET'ers, don't give me that crap "weak dollar is good for stocks".

Logically....

1. The stock market will soar to 100,000, even 500,000 as the $USD gets pummeled down to "cents". It won't matter how many $USD have, they will barely (if at all) be accepted as a medium of exchange... little different from Monopoly money.

2. If you'll agree that the $USD losing 99% of its buying power is bad, then how can losing 50%, or 25% be good?

Astute ET'ers understand this.. what the Fed and Gummint is doing will ruin us all. THAT'S the source of the anger!

 

[gnome]

Quote from Ivanovich:

Where did I say that strong dollar was good for all in the US? Don't put words in my mouth.

Well, SOMEBODY should. A weak $USD benefits a few at the expense of the many. That's not how it's supposed to work in America.

 

[Tracy McGreedy]

The fed's job is supposed to maintain value of the currency.

F-

Quote from gnome:

Well, SOMEBODY should. A weak $USD benefits a few at the expense of the many. That's not how it's supposed to work in America.