The market is SO WRONG at this point
- Thread starter orbit23
- Start date
I don't have any problem with that analysis.
I guess what i was trying to say is that the valuations have gotten so out of whack with the fundamental reality....
That we are at the point of peak delusion.
Delusion as in the gap between the perception and objective reality.
Pump the price high up enough and people will believe anything.
Eventually something will break and there will be a hard landing
It's election year, perhaps the history repeats itself and we get another "black swan" event?
That we are at the point of peak delusion.
Delusion as in the gap between the perception and objective reality.
Pump the price high up enough and people will believe anything.
Eventually something will break and there will be a hard landing
It's election year, perhaps the history repeats itself and we get another "black swan" event?
Give some examples?I guess what i was trying to say is that the valuations have gotten so out of whack with the fundamental reality....
That we are at the point of peak delusion.
Delusion as in the gap between the perception and objective reality.
Pump the price high up enough and people will believe anything.
Eventually something will break and there will be a hard landing
It's election year, perhaps the history repeats itself and we get another "black swan" event?
Apple.
Just looked at the high timeframe chart, this looks a lot like a top.
NVDA has some signs, but it's too early to say. NVDA and MSFT both seem in high bubble territory.
i don't know much from the above, i just found it randomly on twitter.
Also we've had the yield inversion and what not. There are many indicators flashing.
Problem being is that the market right now is not the reflection of the economy, but is based on the psychology of participants. And my statement is purely based off the psychology, but i guess it's starting to align with the charts(apple) also.
So when all these indicators started flashing and Ray Dalio said "Cash is attractive", the market bottomed and went up... But i guess at some point now people will have flipped positions and top will form at some point (might be too early still).
Apple's PE is around 26, NVDA's is mid 70's and sorta reflect their respective current growth rates. I see nothing wrong with that.Apple.
Just looked at the high timeframe chart, this looks a lot like a top.
NVDA has some signs, but it's too early to say. NVDA and MSFT both seem in high bubble territory.
i don't know much from the above, i just found it randomly on twitter.
Also we've had the yield inversion and what not. There are many indicators flashing.
Problem being is that the market right now is not the reflection of the economy, but is based on the psychology of participants. And my statement is purely based off the psychology, but i guess it's starting to align with the charts(apple) also.
So when all these indicators started flashing and Ray Dalio said "Cash is attractive", the market bottomed and went up... But i guess at some point now people will have flipped positions and top will form at some point (might be too early still).
As for mother of all bubbles market cap vs GDP, GDP is gross DOMESTIC product. Almost all big gaps are global. Many getting more of the sales/revenue/etc from out of the U.S..
As for psych, markets always reflect that - in bull and bear phases.
Not sure this is of any consolation to the bears, but ES made a lower low for the first time this year. Henc, let's see what tomorrow will bring. If it can break below yesterday's low, there might be a fighting chance.
This is, so far as I know, 100% correct.
I was under the impression you thought the Federal Reserve was a private for profit bank. It's not. It's very thoroughly a key part of our government's money operation. As your quote says, it is, among many other things, the banker for private sector banks and the Treasury's banker. It is not itself, however, a private, for profit bank. This is not semantics,...it's facts.
The issue of whether the Fed is a private bank was adjudicated in Wells Fargo. Why, I don't know, as the result was clear before Wells filed. The 1913 Fed was controlled by private banks, but ultimately by Congress ,of course, just as it is today. During the Great Depression, Roosevelt wrested power from the Central Bank when he devalued the Dollar, this made the Fed Chairman furious, but he was powerless to stop it. The new banking laws of the Roosevelt era superseded the old 1913 law and wrested primary control of the Central Bank away from the private sector banks and into the Reserve's Board of Governors and the FOMC, which was formed as a result of those same 1930s laws. And of course the entire Fed System remains a creature of Congress to this very day.
Congress, not the Fed, decides how much money the Federal Government shall spend into the Private sector when it authorizes purchases of private assets, goods and services, or orders transfer payments to be made. Congress also decides how much the Treasury shall Tax. Thus Congress via its control of deficits, not the Fed as so many of my ET colleagues believe, determines how much new money shall be created.
(All deficits represent shortfalls in the Treasury's Account. These "overdrafts" are covered by the creation of new money ("printing") accommodated by the Fed. But it is Congress , NOT THE FED, that determines how much new money shall be created!)
The Treasury issues new securities in amounts equal to new deficits. This naturally gives the appearance of the Government borrowing from the private sector; a convenient illusion for those politicians, such as Ted Cruz, who rely on "we can't afford it" whenever they want to kill a government program they are ideologically opposed to. It is impossible for any country to borrow in the same currency it creates. The U.S. can not go bankrupt, it can however decrease, or increase, the purchasing power of its money.
The Federal Reserve then, upon the advice and recommendations of its 400 odd, and bushy tailed, Ph.D. Economists, and consistent with current monetary policy, will decide how best to partition money in the economy between bank reserve accounts and Treasury securities. Operationally the Fed achieves this by buying or selling Treasuries on the secondary market, and never directly through the Treasury, because these "Bond Desk" transactions must register in private sector, bank reserve accounts rather than in the treasury's reserve account.
Treasury Securities are completely liquid and can be readily converted to Bank reserves. Because Treasury Securities represent a future obligation to expand the money supply by as much as their their face value plus interest, the best model, I believe, for understanding Government money operations is one that treats Treasuries as just another form of money, albeit a non-circulating interest paying form. Thus:
Total U.S. Money in the private sector = (Treasury securities) + (all other forms of U.S. money.)
All U.S. money, regardless of form, when in the private sector is a government liability and a private sector asset.
Deficits created by investments in our future (education, infrastructure, health, etc.) are always affordable so long as they can be justified by future gains in productivity or savings elsewhere. Deficits are our only way of expanding the total money in the private sector. As productivity grows so must circulating money grow to prevent deflation. Deficits that grow at a rate that exceeds projections for productivity are dangerous.
Last edited:
And there is your folly. I really liked your opening line of your response here.
But after that, you fell down.
I never suggested, in any shape or form, that the Fed determines the amount of money for borrowing. But when Congress comes knocking, the Fed comes answering, charging the US treasury interest on the money it borrows from the Fed reserve.
My nomination for nonsense post of the year.