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Thread: Great Depression II?

  1. #11
    tWebber
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    Quote Originally Posted by seanD View Post
    It's a very strange situation we're in. Personally, I think the stock market will crash (gradually if not suddenly) back to the pre-Obama era in spite of the trillions they're pumping to keep it up. No way can the Fed alone keep that going no matter how much they pump into it. But it's always possible the impossible will happen. The stock market will stay up (though with wild and violent peaks and dips), sustained by Fed direct interaction, while the rest of the economy rapidly deteriorates. Man, that would be really strange, and everyone would know that the markets are a complete sham if that happens.
    So the illusion is being exposed. The illusion is that a booming stock market = a good economy. CNBC had an interesting article about it. They go through scenarios of why the market is booming (albeit very choppy) in spite one of the worst recessions/depressions we've had, only to show where those explanations still don't make sense, but they do include just a brief one sentence fact into the article...

    Certainly, the trillions in Federal reserve asset buying has helped enable the rally in risk assets that has lifted equities off their lows and bolstered valuations.


    No, it hasn't "helped." It's the MAIN driver behind the market/economy disconnect. And now this is evident for all to see. Even folks that know nothing about the federal reserve, what it does, and how its actions affect the markets know that it makes absolutely no sense the market continues to climb, in the midst of all this uncertainty, while the rest of the economy is biting the dust. Even an eight year old can figure out something is amiss.

    And it's very easy to prove this. In 2018, the Fed begin raising interest rates and began to normalize their balance sheet, the most they had done since 2008. The market throughout that whole year stopped the upward climb and went sideways. Then once the Fed began backstopping the repo market (an important function of the market because it provides liquidity exchanges between financial institutions) in the fall of 2019, the market once again shot up and reached record highs.

    Now the Fed is literally pumping trillions into the financial system, like a patient in triage on the brink of death being pumped with IVs, and it's BARELY keeping the market propped up. How much longer this will work is a mystery.
    Last edited by seanD; 04-26-2020 at 03:05 PM.
    "I was the CIA director. We lied, we cheated, we stole, it was like... we had entire training courses. It reminds you of the glory of the American experiment." - Mike Pompeo, Secretary of State (source).

  2. #12
    tWebber shunyadragon's Avatar
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    Quote Originally Posted by demi-conservative View Post
    Or will it be hyperinflation?
    Neither the Great Depression lased more than ten years. The Pandemic will be over in a matter of months like previous pandemics.

    The 1918-20 pandemic kill over 50,000,000

    The 1957 N2H2 pandemic killed more then a million worldwide, and 116,000 in the United States

    The 1908 09 N1H1 pandemic:
    Source: https://www.cdc.gov/flu/pandemic-resources/1918-commemoration/1918-pandemic-history.htm



    50 million worldwide with about 675,000 occurring in the United States. Mortality was high in people younger than 5 years old, 20-40 years old, and 65 years and older. The high mortality in healthy people, including those in the 20-40 year age group, was a unique feature of this pandemic.

    © Copyright Original Source



    This pandemic is not even close.
    Last edited by shunyadragon; 05-03-2020 at 02:48 PM.
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  3. #13
    tWebber Thoughtful Monk's Avatar
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    I have to agree with shunyadragon that it will be neither depression or hyperinflation.

    I think the economic impact will vary depending on state and economic sector.

    For states, I think the factors will be how fast they reopen and how effectively they supported business through this. I'm not hopeful for my state or county as both are still working to roll out their small business programs.

    For economic sectors, I think its going to be retail and restaurants will hurt the most. Look how many big retail chains have declared bankruptcy already. I saw a headline that major bankruptcy are at the highest rate since 2009. Locally, all Denny's have gone out of business.

    For me the most surprising is how much medical facilities are being negatively impacted. One local facility that specializes in low income customers just announced they are laying off about 30 people. I would not have predicted this.

    So how badly you're impact will depend on where you live and who you work for.
    "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

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  4. #14
    tWebber
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    For all intense and purposes, this is the economic collapse the doomsday preppers and the gold and silver stackers were expecting. The reason it's not as apocalyptic as it could have been (probably like 10x worse) is the Fed is printing trillions and trillions and trillions of dollars to keep everything propped up as best it can, including government debt. But this is basically it. Had the Fed not created all that money to prop everything up, it probably would have been Mad Max. Question is, where is it going to go from here?
    "I was the CIA director. We lied, we cheated, we stole, it was like... we had entire training courses. It reminds you of the glory of the American experiment." - Mike Pompeo, Secretary of State (source).

  5. #15
    tWebber Thoughtful Monk's Avatar
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    Well, the unemployment rate made an unexpected drop. Let's not celebrate too much over one point of data. It is a good sign that the recovery may come quicker than currently expected.
    "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

    "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

  6. #16
    tWebber
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    Quote Originally Posted by Thoughtful Monk View Post
    Well, the unemployment rate made an unexpected drop. Let's not celebrate too much over one point of data. It is a good sign that the recovery may come quicker than currently expected.
    The economy officially "opened up" a week ago in the midst of riots, so it's pretty absurd to think these numbers are even remotely valid. I've always suspected the BLS was fudging data in favor of Obama. Folks don't realize a whole lot of revision takes place with this data months, even years after the data is officially released to the public -- out of all the economic data, the jobs numbers are the easiest to manipulate. But they were never THIS overt about it even under Obama. It's a strange thing if they're now doing it for Trump, because folks are typically partisan driven.
    "I was the CIA director. We lied, we cheated, we stole, it was like... we had entire training courses. It reminds you of the glory of the American experiment." - Mike Pompeo, Secretary of State (source).

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