It won't stop soon (probably at least not before the US presidential elections this year). FED has their hands tide. If they stop the market goes WAAAAAAAY down (S&P could drop even 50-60%), if they continue: the dollar supply will inflate and (somewhat counter-intuitively) the cost of servicing both own (USD denominated - raising interest rats) and foreign currency denominated debts will rise (as inflation is not uniform throughout the economy and USA is not the only player on the currency markets).
The question I have is how exactly is FED injecting all that new printed money into repo, as it is basically just about selling and repurchasing of "loan collateral". Does this mean that FED prices that collateral higher then the market would? Are they buying worthless shit of the market pumping the price??
I am not sure I understand their strategy correctly, but to me that sounds like a recipe for disaster.
>The purpose of this is to maintain inflation at 2%
The purpose is far from it. It is being down to keep the stock market up and the appearance of a strong economy to ease the market tensions. This raises the inflation.
> Inflation doesn't "prop the stock market"
That is exactly how it works. "Inflation" is the inflation of monetary supply. Raising prices are the result. You do know that inflation is not uniform throughout all markets, don't you? Currently rising US stock prices are an expression of currently occurring inflation in their financial economy.
> Please don't speak of you're economically illiterate
OMG. You are so funny. Check yourself before you wreck yourself 😂
>Currently rising US stock prices are an expression of currently occurring inflation in their financial economy.
That... Is not how it works, at all.
I really wish there was a "I'm talking to a teenager" flair on this sub.
What is "hoarding" wealth? That's otherwise known as saving money.
> there's no productivity growth.
Inflation doesn't create productivity or growth. It depletes it. Inflation distorts the market causing people to invest in losing-bets when those losing bets beat inflation.
> This is not why Bitcoin is good.
This is absolutely the #1 reason Bitcoin is good. Its called sound money.
> Please stop making the rest of us look like economically illiterate clowns.
You're right. You certainly don't need help with that..
Wealth is only hoarded if it is not invested. A low inflation rate is desired precisely because you don't want it to appreciate in value on its own (deflation), as that encourages hoarding.
Please don't speak if you don't understand basic econ.
Literally none of that giant diatribe is true. If you were an intellectually honest person who I believed would change his mind based on new information I'd break it down for you. But you're not.
Literally every economist agrees on the nature of low inflation being beneficial for capital investment and growth. People do not risk investments over long periods when they can't account for the risk involved. We know your because this is exactly what happened in the first half of the 20th century.
It's amazing that on Reddit you have C-average college kids who think they know more than every economist combined. It takes a specific kind of arrogance to be that stupid.
> Literally every economist agrees on the nature of low inflation being beneficial for capital investment and growth.
Yes, everyone agrees that the lower the inflation is the better. I agree, you agree, everyone agrees.
> If you were an intellectually honest person who I believed would change his mind based on new information I'd break it down for you
I think through things. I try to explain them to others. All you can do is insult people. Its sad really. I'd have a discussion with you if you tried to discuss something, but you really just want to feel superior without actually trying to explain or teach anything.
> think they know more than every economist combined
How ironic that you're so arrogant you think you know what every economist thinks. Shows how little you've actually explored economics.
Please stop using [weasel words](https://en.wikipedia.org/wiki/Weasel_word).
> precisely because you don't want it to appreciate in value on its own
So you're saying you need price inflation because you don't want price deflation. Real solid logic there.
> that encourages hoarding
You haven't even tried to justify the claim that "hoarding" (aka saving) is bad.
> Please don't speak if you don't understand basic econ.
I could say the same to you bud. You clearly are just parroting over-simplified rhetoric. That doesn't count as understanding "basic econ". Read this: https://www.reddit.com/r/BitcoinDiscussion/comments/czdlzf/thought_experiment_minercontrolled_emission/eyzgvki/
*sigh* I feel like I need to use really small words with you so you can understand.
If you have money, and that money will grow by next year all on its own, you won't invest it in something that might make you lose it. Further, you won't invest it in something that will return less than it will grow. This is called "common sense" and it's exactly what happened before monetary policy.
As it happens, that causes a shortage of free capital for investment, which in turn causes economic growth to stall.
This is all literally intro econ. You don't know any of this. I'm embarrassed I've wasted my time on someone this dumb.
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God forbid we allow people to save money as they have for thousands of years throughout history.
Thank god the overleveraged banks that crash the financial system every few years with deleveraging of their Ponzi schemes can print inflation generating trillions of unproductive revenues for themselves. They are the heroes in this story.
Hmm I thought productivity came from capital investment towards increasing productive capacity and innovation.
When you devalue cash by printing money and pinning down interest rates you create malinvestment in monstrosities like WeWork. Sure you encourage people to spend fiat but that either comes through as inflation or asset bubbles. Tell me how housing bubbles increase productivity.
Your best argument for inflation is that governments can use it to fund basic R&D. But they could also fund it through taxes.
Think critically for a minute instead of parroting the Neokeynesian talking points that have never been empirically proven. Yes you can increase nominal GDP by inflating debts and bubbles but I wouldn't call that productivity.
>Hmm I thought productivity came from capital investment towards increasing productive capacity and innovation
Correct. Guess what happens when your currency is deflationary? People do not invest their capital.
> Think critically for a minute instead of parroting
If there was a Reddit Olympics award for Irony you'd win it
Companies would be forced to innovate and actually increase productivity through R&D and thereby lower prices of goods, in a deflationary system.
Savings are the reason why accumulation of capital happens, which can be either lent out or used to start a new business. More businesses means more competition. More jobs too.
Try running capitalism without capital and tell me how that works out. If you Keynesian cucks like to "stimulate" the economy so much, spend your wages as soon as you receive them and max out all your credit cards and take as many as loans as possible.
Its the failing European financial institutions that are causing the fed repo craze. Just look at the coincidence of high demand for the US 10-year treasury and USD. Some major US banks have large exposure to the european derivatives market.
This is not so simple. EU institutions have to factor in the currency risk so they have to (or rather should) hedge their US investments. This (most often) brings their true interest rate even below the negative ones in the EU.
The only way to profit in this situation is to take on higher risk and not hedge those transactions at all. This strategy breaks when bull market comes and results in UUUUGE loses.
Don't worry. Their time will come. Right now the price is set mostly by paper-gold prices. Wait till people realize that there is not enough gold to fulfill those obligations. It's gonna be a slaughter and the price will shoot up. Enjoy low prices.
> Talk about magic internet money.
Its very ironic that people see bitcoin as complex and the dollar as simple.
Nothing could be further from the truth.
The totality of bitcoin is a few pages of design details. Its utterly transparent and simple, possibly as simple as a money system can be. Its money reduced to the most elemental mathematical form.
The fiat dollar, in comparison, is an amazingly complex scheme. It spans multiple types of media, it can wink in and out of existence, it has miles and miles of pages of rules about its function, when and where and how it can be spent or redeemed, and those rules change all the time.
The dollar has no true settlement system; for things to settle, the main method is used is "wait a long, indeterminate time". Even the methods advertised as irreversible, such as cashiers checks, cash deposits, and wire transfers, can be reversed.
You cannot simply create a new server or hardware device and put dollars into it; only specially blessed computers can hold dollars. The protocols for how to send dollars electronically are secretive, and require special blessings from high priests to work. If you try to send or receive dollars from your computer to other computers without those blessings, it wont work, and would land you in jail.
The dollar is its own antiparticle, because a debt dollar and an earned dollar are the same.
The dollar system requires a huge set of wizards bureaucrats and administrators just to keep it functioning, and if they stopped it would spin out of control. And no matter how hard they try, it eventually spins out anyway, and they have to fight to pick up the pieces and start it over again, at a great cost to the public.
> only specially blessed computers can hold dollars. The protocols for how to send dollars electronically
Computers don't hold Dollars and there is no way to send Dollars electronically, since there is no electronic Dollar in existence. What you mean is that claims on Dollars sitting in a bank vault are exchanged via a message: "$5 Dollars owned by costumer 1 in bank A are now owned by customer 2 in Bank B". No Dollar is exchanged, when transmitting and confirming this message, but in the end actual Dollars claimed have to be exchanged, because a bank can go bankrupt and then the claims become worthless. The banks themselves don't even hold as many Dollars in their vaults and don't exchange them physically, but keep them in an account with a central bank. Then actual Dollars sitting in the central banks are shifted from bank A's to bank B's account. They are not shifted physically, but just in the books of the central bank. If the banks are with different central banks, it gets even more complicated. One might note that central banks do not hold actual Dollars, but just claims of banks. This is true, but these "virtual Dollars" can never leave a central bank, they have to be printed on paper. If customer 2 with bank B wants to withdraw his $5 and bank B's vault is empty, then bank B has to withdraw Dollars from its account with the central bank. If the central bank has no Dollar notes left, it has to print and physically ship them to the bank, simply because there is no electronic Dollar.
>Computers don't hold Dollars
... well actually, quite opposite to Bitcoin, those machines do actually hold dollars. The amount of dollars held in those machines is unverifiable. There is no way other machine can verify the amount of dollars on other dollar-holding-machine. It has to be reported. Those reports have to be trusted (hence the auditors). How valuable is that trust? I dunno, but I remember Enron 🤷♂️
Private banks' liabilities (which are claims by their customers) are a multiple of their reserves (either cash in vaults or reserves redeemable for cash held with the central bank = actual Dollars). This is what fractional reserve means, please look it up in the financial literature. Banks store these liabilities in their books, today electronically in computers. Since these liabilities are a multiple of the Dollars they have and are in existence (fractional reserve), these liabilities stored in computers can by no means be Dollars, they can be claims on Dollars only.
There is simply now law that defines an electronic Dollar in one form or another as money. Only physical Dollar notes is money, everything else is claims on money.
If a private or a bank shreds Dollars they lose actual money.
Central banks do shred Dollars, but they can reprint them anytime if needed (e.g. a banks needs cash from its reserves with the central bank).
> The protocols for how to send dollars electronically are secretive
ACH is far from secretive. It's old and pretty dumb, but it's not secretive.
Source: I've written ACH software more than once for different companies.
> ACH is far from secretive. It's old and pretty dumb, but it's not secretive.
The part that is secretive is the network topology, and how to connect and identify your node. The average person will not be able to participate in the in the ACH network or send natcha messages.
With bitcoin, you can fire up a node and it all autoconfigures.
To make a new node on the ACH network requires an elaborate ceremony, and those select few who are allowed to participate gain the title "processor" .
My fiat is in the stock market so I ride the wave of maintaining my capital.
Sorry poor fuck working wages.
I wish one day bitcoin can save you.
“One labor unit is worth “x””
That can’t be inflated.
Wait... yes it can... 600,000,000 Indians looking for work? They will do it for less? FUCK!”
bitcoin can’t save you from that.
Find a plot of land in Canada and be self sufficient. Only long game you can play.
This is actually so true. Im so baffled at how everyone is competing for jobs, yet noone thinks to get onto the recruiting side of things instead...
Now’s the time to be an entrepreneur and take advantage of this transitioning economy. There are planets worth of wealth to be made, but the majority of people continue to think in the old ways of “go to work, have boss yell at you, go home, have wife yell at you, go sleep”.
But ehh, so be it. It just means I get to be picky now and pick out the cheap talent.
Meanwhile, negative interest rates, more "money printing" to solve problems created by too much "money printing", the biggest pile of debt (relative to GDP) the world has ever seen, along with a huge and still widening wealth gap, leverage, front running, stock buy-backs, government debt, government unfunded liabilities, a demographic cliff approaching with baby boomer retirement, countries working hard to get out from under USD hegemony... I could go on.
Oh yeah, the SYSTEM is working just fine... if you're central banker or crony thereof.
Some little plot of land is not a viable option except for a very, very few.
I think Canadian property inflation is largely limited to the cities. I doubt that dude was talking about buying a plot of land in downtown Vancouver. Canada has a ton of rural land that I imagine you can still get pretty cheap.
I have gigabit Ethernet and live in a small rural shithole. (Comparatively)
There is some irony with you being in a Bitcoin forum, but suffice to say all you need to make a lot of money is a really good internet connection and skills.