Hopefully this subject line will not get this post deleted, but: The Fed has interest rates at 0% - .25%; still paying reserve interest to banks; has become the effective counterparty to derivatives of the big banks; has devised programs such as CP, TALF, TARP, Cash for Clunkers, MBS, and others; Has stated they wont let a big institution fail again; Quantitative Easing; increase the money supply (M3) by crazy amounts. yet: CPI year over year is still negative; Credit continues to contract at the household sector; and M3 started declining too; Unemployment seems poised to hit 10% officially (17% if taking in all other underemployed); and: Still no apparent economic catalyst in sight; the consumer still appears tapped out; the government continues to spend, at the fed level, like it is 2004 thus: - Is the Fed, and the Government as a whole, officially impotent after all of those measures? - Will people wake up and realize that the Gov't can't "bail us out"? - Will deflation delever the decades of credit growth, regardless of anything else? Anyone else seeing the macro picture here?
.......................................... Good post.......... What is incredulous is the failure to diminish the size of govt.... Must...change the tax system.... Must ......change the securities system.... But nothing is happening in this regard..... It's as if the polys are brain dead.... Really sad state of affairs.... The question is ....why ?
Why? Gov't is always last to react. I think the bigger, more serious question that we have to answer is whether the Gov't can do anything to stimulate the economy? Even in the short term, even having it's balance sheet becoming the most levered hedge fund in the world, there has been no green shoots to speak of. More programs: Record stimulus bill, stimulus checks, new home buyer tax credit, and more. Bottom line: I'm starting to think that even if the government sent $50,000 to each and every household, whether that would even make it into the economy or be sent to delever their debts, or to the safety of savings. But I don't know if they can even politically do anything like that, especially with the "demise of the dollar" headlines. In other words, unless something changes the above, this is truly historic and a time we may look back on as the true tipping point.
Oh do I hear you. In fact, M3 has not changed by that much (which is the scary part), while the lower rings on the money supply have been sent to crazy levels. If M2-M3 contracts it's good night! And yes, in short what you are saying is that with all the extreme measures taking place, it is increadible that conditions have actually worsened! Colorado just lowered the minimum wage (for the first time since 1938!) due to a drop in CPI! The writing is one the wall!
You know, with your formatting and content I can pick you out on other anonymous forums pretty easy haha. not for nothin..
This entire thing is providing a test of my pet theory... the business cycle tracks the sunspot cycle... I was afraid that I'd have to chuck it since it appeared that the contraction was slowing and I got caught up in the reasoning that that meant "prosperity is just around the corner"... but in the cooler light of reason now, well the sunspot cycle is just barely sputtering to life and we are not expanding.. we have just contracted and we are holding right there, like a kid that goes under water and is holding his breath, we are just at a neutral point and not out of air yet.. but it could happen... People think I'm silly but really folks, if you can find the simplest answers to things you will have useful answers to things... people have correlated sunspots and global climate changes in the past and wrote off the economic effects to crop changes but I think it's about the atmosphere getting stirred up and affecting our mood.. I have a salt lamp in the computer room here, it produces negative ions and they produce a feeling of well being, sunspots ionize the upper atmosphere and my thinking is that that is mood altering.. currently, people all over the earth just aren't in an expansive mood and no amount of stimulus packages or award winning Toastmaster speeches by Obama are going to change that... we could break out the Brandy and cigars, Cubans even, and maybe some would get in an expansive mood but it would be very transient in effect.. nope, the Fed is powerless to do much about this situation... God is holding out on these atheistic leftist clowns that want to take over the health care industry.. it's a showdown of, well, Biblical proportions... and you heard it first right here on ET...