Central Banks

cawacko

cawacko

Well-known member
Jesse Colombo is a financial writer who speaks a lot about central banks and our current economic bubble. Love this tweet from him yesterday:


My fear is that the inevitable implosion of our current global bubble will result in the populace demanding socialism due to their lack of understanding of central banking and its perils. They will mistakenly blame "capitalism." I will work to fight that.


https://twitter.com/TheBubbleBubble
 
Why do people think that capitalism/socialism have a dichotomous relationship to each other?

There isn't a pure capitalist nor socialist economy in the world, every nation has a mixed economy incorporating elements of both systems, the US hasn't been a straight capitalist economy since the 19th Century, if it ever really was such
 
archives said:
Why do people think that capitalism/socialism have a dichotomous relationship to each other?

There isn't a pure capitalist nor socialist economy in the world, every nation has a mixed economy incorporating elements of both systems, the US hasn't been a straight capitalist economy since the 19th Century, if it ever really was such
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You have to look at the survey's taken of millennials when they are asked the capitalist/socialist question and how they respond. The researchers asking the questions don't get into nuances.

Edit: And they sure as heck don't get into the CB in those surveys
 
cawacko said:
Jesse Colombo is a financial writer who speaks a lot about central banks and our current economic bubble. Love this tweet from him yesterday:


My fear is that the inevitable implosion of our current global bubble will result in the populace demanding socialism due to their lack of understanding of central banking and its perils. They will mistakenly blame "capitalism." I will work to fight that.


https://twitter.com/TheBubbleBubble
Click to expand...

The Fed needs to escalate the sale of bonds off its balance sheets. Start deflating the bubble in the treasury market while others are still buying up treasuries. With about $4.5T in bonds, they could get the long end of the yield curve back up to the point where they can raise short term rates in 2018 back toward 2-2.5% without inverting the yield curve
 
Superfreak said:
The Fed needs to escalate the sale of bonds off its balance sheets. Start deflating the bubble in the treasury market while others are still buying up treasuries. With about $4.5T in bonds, they could get the long end of the yield curve back up to the point where they can raise short term rates in 2018 back toward 2-2.5% without inverting the yield curve
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Is this the aftermath of QE?

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Corazón said:
Is this the aftermath of QE?

Sent from my Lenovo K8 Note using Tapatalk
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Yes, the norm prior to the financial crisis was about $500-600B on their balance sheet. Right now it is just north of $4.5T. They would be smart to speed up the unwinding of at least the treasury portion right now given current rates and pricing.
 
Superfreak said:
The Fed needs to escalate the sale of bonds off its balance sheets. Start deflating the bubble in the treasury market while others are still buying up treasuries. With about $4.5T in bonds, they could get the long end of the yield curve back up to the point where they can raise short term rates in 2018 back toward 2-2.5% without inverting the yield curve
Click to expand...

It's my belief we are in a Fed induced asset bubble and this bubble will pop (not sure when, I'm no Desh of course). They've kept interest rates too low for too long and allowed this bubble in the market and housing to inflate.

What's your belief?
 
cawacko said:
It's my belief we are in a Fed induced asset bubble and this bubble will pop (not sure when, I'm no Desh of course). They've kept interest rates too low for too long and allowed this bubble in the market and housing to inflate.

What's your belief?
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We definitely have a bubble, especially within the Treasury market. They can deflate this over the next few years by selling off their bond holdings. That will tend to cause long term rates to rise. In addition to that, I think the Fed takes short term rates to the 2.25-2.5% range by the end of 2018. That should help to slow down the real estate markets. If they do so, they can deflate the bubble rather than watch it burst.
 
Superfreak said:
We definitely have a bubble, especially within the Treasury market. They can deflate this over the next few years by selling off their bond holdings. That will tend to cause long term rates to rise. In addition to that, I think the Fed takes short term rates to the 2.25-2.5% range by the end of 2018. That should help to slow down the real estate markets. If they do so, they can deflate the bubble rather than watch it burst.
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I know each real estate market is different but in the Bay Area we are seeing prices beyond even '06 - '07 bubble pricing. No way this is sustainable.
 
Superfreak said:
The Fed needs to escalate the sale of bonds off its balance sheets. Start deflating the bubble in the treasury market while others are still buying up treasuries. With about $4.5T in bonds, they could get the long end of the yield curve back up to the point where they can raise short term rates in 2018 back toward 2-2.5% without inverting the yield curve
Click to expand...

There is no inflation, there's no cause for massive tightening right now. Let it get up to 2% at least.
 
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