Ya, and to be honest, I don't understand why debt never receded in prior recessions (as debt repayment > new loans = recession?)
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Why is there no inflation?
- Thread starter bonds
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Ya, and to be honest, I don't understand why debt never receded in prior recessions (as debt repayment > new loans = recession?)
Quote from achilles28:
Ya, and to be honest, I don't understand why debt never receded in prior recessions (as debt repayment > new loans = recession?)
Because each time there was supposed to be a "cleansing" of debt, the Fed kept encouraging more borrowing by lowering interest rates to reignite growth. Now the Fed is trying to do the same, except with negative rates.
Before the Fed, recessions actually caused interest rates to spike (and net defaults to occur) as money became scarce and was priced by the market. This occurred in recession of 1842, Panic of 1857, Panic of 1873, Panic of 1907, for examples. There was also a brief, but tremendous spike higher in rates in the early part of the 1931ish Great Depression.
I think if we think about it we all know why. The powers that be always pumped enough cash into the system so that we had faux recessions. Unemployment spiked and weaker business, to some degree folded, but the real prunning that recessions are meant to accomplish never happened.
We had a depression in the '30's and almost 80 years latter our first real recession began and no one in power has the stones to let it play out. My guess is that they are right. If it plays out it all falls into one sloppy pile. Thy are desperate for some velocity to return. If that music plays loud enough they figure one more round of "growth".
We had a depression in the '30's and almost 80 years latter our first real recession began and no one in power has the stones to let it play out. My guess is that they are right. If it plays out it all falls into one sloppy pile. Thy are desperate for some velocity to return. If that music plays loud enough they figure one more round of "growth".
Quote from achilles28:
Ya, and to be honest, I don't understand why debt never receded in prior recessions (as debt repayment > new loans = recession?)
Yup!
Quote from pikachu9:
Because each time there was supposed to be a "cleansing" of debt, the Fed kept encouraging more borrowing by lowering interest rates to reignite growth. Now the Fed is trying to do the same, except with negative rates.
Before the Fed, recessions actually caused interest rates to spike (and net defaults to occur) as money became scarce and was priced by the market. This occurred in recession of 1842, Panic of 1857, Panic of 1873, Panic of 1907, for examples. There was also a brief, but tremendous spike higher in rates in the early part of the 1931ish Great Depression.
There is huge inflation, just go to the grocery store and look very carefully at prices and the amount of product you are getting, over the years I have noticed many products cutting the amount of weight and ounces you receive, Ice Cream, Yogurt, Cereal, Chips, Tuna Fish, toilet paper, cookies...... the list goes on and on and on.....so not only are you paying more, but you are getting far more less!!!!!!!
Quote from pikachu9:
Because each time there was supposed to be a "cleansing" of debt, the Fed kept encouraging more borrowing by lowering interest rates to reignite growth. Now the Fed is trying to do the same, except with negative rates.
Before the Fed, recessions actually caused interest rates to spike (and net defaults to occur) as money became scarce and was priced by the market. This occurred in recession of 1842, Panic of 1857, Panic of 1873, Panic of 1907, for examples. There was also a brief, but tremendous spike higher in rates in the early part of the 1931ish Great Depression.
EXACTLY EXACTLY EXACTLY RIGHT!!!!
There was no "cleansing" of debt, it was extremely close to happening back in 2007, they should have let everything just reset and start fresh but that they did not do, they pumped trillions and trillions and trillions of worthless dollars into the system and lowered rates to historical lows, thats why today this economy is in far more worse shape than its ever been with all the pumping going on, the economy has not become so dependent on it that any slow down in money printing will send not only the US economy into a huge collapse but the rest of the world. Right now there are no tools and there is nothing set in place when the next economic fall comes, they have used everything possible to create this artificial economy today that the next fall will be something that the world has never seen before....no amount of money printing will help the next financial collapse.
Quote from Swan Noir:
We are pretty much all of the same opinion -- the next collapse will be a big bang event. Anyone guess when that will be and/or what the catalyst will be. I choose the word guess because that's what these things amount to.
Guess only. One scenario.
I think that the catalyst will likely be a "black swan event" since most information bad and good is already discounted.
That event is likely to involve a massive debt servicing liquidation beyond the ability of the bankers to stuff money into the system quickly enough to cover the gap. Perhaps one of an international insurance company, one of the international TBTF banks, or a moderate size sovereign country fails suddenly (within a week) (not the US but say G30), causing counterparty risk failures to freeze up and blow out across the system and a seize up of international trade exchange.
Similar to the Lehman crisis, but an inter-jursidictional entity this time or something outside the control of the US banking system directly.
Quote from bonds:
Money printing everywhere... 85 billion every month here, Europe and Japan printing like crazy...
yet prices seem to be coming in a bit in the supermarket, commodities coming in, gas coming in, gold coming down hard...
Why?
At what point is all this money printing gonna start to cause inflation here?
Here in NY, inflation is rampant. My YoY budget increased about 7.5%, all due to price increases. Food, gas, oil, school taxes (mostly due to Union healthcare and pension funding), health insurance, homeowner's insurance, and tuition lead the way. The government's definition of Inflation is a huge joke, IMO. I measure it by pure price increases, and most things in our area, are on the increase.