With America constantly printing money: A) stock prices should soon recovery strongly because companies will get more dollars for the same goods (with inflation), B) many American goods & services will become cheaper (i.e. those that don't parallel the inflation rate), C) consumers will want to unload their dollars faster--before inflation erodes away their buying power--especially because they earn about no interest in their savings banks. In addition, with America supporting the banks and distributing money to American tax payers, they are in essence redistributing wealth--away from foreignors, creditors, & the wealthy, which should benefit their local economy. Also, not much China (& others) can do about it because they need to keep their people working (to get their rice to eat) else there will be riots, and else their economies will get badly hurt. In short, do you not agree there should soon be a solid recovery?
No. Employment is weakening. Manufacturing is weakening. Housing is still in downtrend with no end in sight. They can print all the money they want. It will only lead to inflation on food and energy. The economy needs uptrending employment data, manufacturing data and housing data - none of which is occurring. New homes sales are running at an annualized rate of 590,000. Compare that to the 2,100,000 that was the data point in 2005. Is that not incredible? Given how much the U.S. economy has depended on housing over the last 8 years (as manufacturing eroded), that is a very ominous sign. Also, banks are not lending money to businesses or consumers (relatively speaking). They are using the discount window spread to deal with their own internal problems. See my thread titled 'Get The Hell Out.'
No, because the creation of availability of credit doesn't mean people will take it. Even if the credit to buy houses was as loose as it was in previous years, comparatively less people are likely to take a loan because the prospect for appreciation isn't as great. Japan printed like crazy and still went deflationary which I think we are doing. Money supply = money + USED credit Can you make as much credit available as you want, if ppl are less likely to take it than in the past, its deflationary.
We should be fine. It's a cycle many of us have seen before firsthand. Dumping cash into the economy will only prolong the agony. I am one of the lucky(?) who will be receiving one of Bush's "stimulus" checks. I can assure you I will not be rushing out to buy a new flat-screen.
Interesting theory OP. btw, bilow, the economy doesn't need data. rather it is what that data represents that would improve the overall economy.
I wouldnt really say recovery, more or less a "perception" of a market recovery. Bens still got a lot of tricks up his sleeve should this market continue to fall.... Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. November 21, 2002 Deflation: Making Sure "It" Doesn't Happen Here http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm A good read...it pretty much lays out his plan of action should, "its target interest rate, the overnight federal funds rate, fell to zero"
I hope the market really crashes , just in spite of assholes like the fed and the rest of these clowns in washington who are kissing the asses of wallstreet whores at the expence of everyone else .. fuk em all !!! jake
bellman, you are right to point out that data is less important than the facts that such data represents. The federal government and the federal reserve (a private entity) manipulate the data so badly, the data itself loses impetus. On another note, the theory of 'decoupling' is about to face a big test. Many have claimed that even if the U.S. consumer falters badly, other countries will be less affected by this, as they have become more 'decoupled' from the U.S. economy and consumer. We'll just see about that. If anything, I would contend that lower barriers of trade (lower tariffs, freer movement of goods and services, etc.) has made export driven economies radically more dependent on the U.S. Mining and resource-rich economies (Russia, Australia, Canada, Indonesia, the OPEC states, etc.) enjoying a roll in the hay because of the commodities boom are going to really be a case study if the U.S. economy suffers a steep and deep recession.
The problem is not on the demand side of the economy but in the supply side. The one no one dares to regulate or oversee. Printing more money will 80% lead to inflation and 20% to help the stagnating economy. In the long run is a loss since we are devaluating our currency even more; already we are consuming more of what we produce and the dollar fall will only make the bill more expensive to pay off. Also for the first time in human kind were are faced with one dilema "limited resourses and no new technoligies on sight to save our superconsuming system". Good luck.