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Discussion Starter #1
This news is just unfolding now, but apparently the US Federal Reserve has announced a massive amount of support for financial markets, an extension of QE and support for corporate bond markets. Different than 2008, it seems the Fed is not capping the amount of $ they will use to buy bonds (also known as printing money)
https://www.washingtonpost.com/business/2020/03/23/fed-unlimited-credit-coronavirus/

I expected this some time ago, as I think the US (and western economies generally) have been chronically weak since 2000. The last few years of 'strength' was fuelled by low interest rates/ZIRP/QE and, in my opinion, was a stimulus driven economic boom and stock rally. I always said it was artificial and dependent on stimulus. It came with a huge amount of corporate borrowing, which is now blowing up in our faces.

This reinforces my earlier thesis, which is that western economies have been fundamentally weak since 2000. By my count, we're now 20 years into chronic weakness (and reliance on stimulus) and I think there's easily another 10 or 20 years like this to come. This is a big reason that I carry a significant 20% weight in gold. Gold has already outperformed stocks for 20 years and if I had to make a guess, I think that trend will continue.
 

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and the market has shrugged it off and continued to drop as a result. Not sure if there is anything that can be done to reverse things. Are our governments out of bullets? With 500k applying for EI last week and many more to come there must be some longer term pain to bear.
 

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I don't Western economies have been weak, they have just been blindsided. Things were decent just a couple months ago.

However, now I think government intervention will ultimately hurt much more than it helps. Shuttering the economy and then handing out money is a very ineffective and costly way of addressing the pandemic. We should be protecting the most vulnerable, and those at low risk should carry on working.
 

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Unfettered paper money printing eh.. if only there was a modern digital currency with a mathematical monetary policy.
 

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and the market has shrugged it off and continued to drop as a result. Not sure if there is anything that can be done to reverse things. Are our governments out of bullets? With 500k applying for EI last week and many more to come there must be some longer term pain to bear.
There is talk in USA of using Milton Friedman's 'Helicopter Money'. Fed prints money, but sends it directly to public instead of into bond markets . Another type of bullet, I think originally suggested to be used to combat deflation.
 

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Discussion Starter #6
Some people are observing that this could be a setup for serious inflation. At first the extra money is needed, but once the disaster passes and business gets back to normal, all the extra money-printing causes inflation.

Who knows
 

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Unfettered paper money printing eh.. if only there was a modern digital currency with a mathematical monetary policy.
Then we could all have deflationary depressions everyday!

Just like when we used the gold standard and regularly had depressions.
 

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Everything in real life involves ups and downs as far as I can tell

Propping things up artificially just means there will eventually be bigger problems to face

Easy enough if it's the next generation's problem
 

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It seems like all they know how to do is lower interest rates and print money. When setting up my portfolio a few years ago, I listened to Ray Dalio and put 7.5% in gold. It's risen in value about 40% since then and still growing fast. Now I wish I had listened to Harry Browne and put 25% in gold!
 

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Discussion Starter #12
Beware though, gold is very volatile. And there's also no guarantee it will rise further, even if there is lots of money printed.
 

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It seems like all they know how to do is lower interest rates and print money. When setting up my portfolio a few years ago, I listened to Ray Dalio and put 7.5% in gold. It's risen in value about 40% since then and still growing fast. Now I wish I had listened to Harry Browne and put 25% in gold!
I also put 10% into bullion back when it was 1500-1700 cad an ounce. My only regret is listening to the barbarous relic crowd, doubting inflation pressure and not buying more. Now I am trying to add and coin dealers are either sold out or asking a $500 an ounce premium and a 3-6 week wait time. Meanwhile I am selling all the CAD I have because I think it's toxic.
 

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I think holding gold in the form an annuity using a Swiss insurance company is probably the safest way to hold it. Shortly after the last 90 year crash cycle in the US it was illegal to own gold. I think the safer bet is silver.
 

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The powers that be can do all the money printing they want it still does not mean it will cause inflation if people hoard money.
 

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They're printing like crazy, we're going to have an inflation problem.

I just hope the economic masters put down the textbooks and realize this is a depression due to the mandated shutdown, it actually isn't an economic problem.
That being said, the debt problem is really adding to it, I'm not sure how they'll keep the debt bubble from popping if this goes on for 18-24 months in areas like Toronto.

Oh, I think the Goldbugs were finally right.
 

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Trillions of dollars have been taken out of the economy, so $60 billion cash to people (the rest is tax deferrals and loans) isn't inflationary.

The more likely problem is deflation if consumers don't have money to spend. Homes and all asset values will fall.

Prices on everything will fall if companies have no paying customers for their goods or services.
 
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