The time will come when the fed will have to raise rates no matter what the economy is doing.
I still hold my call that they'll raise by year end.
QE4 is nonsense. Everyone knows that jig is up.
One 25bp raise is not going to trigger a catastrophe - more likely a relief rally when everyone realises the world didn't suddenly end.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
I still hold my call that they'll raise by year end.
QE4 is nonsense. Everyone knows that jig is up.
One 25bp raise is not going to trigger a catastrophe - more likely a relief rally when everyone realises the world didn't suddenly end.
I have to disagree.
Since QE1, a rate rise has been impossible and I have said this all along.
If it were possible, it would have already happened.
It will remain impossible.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Never say never, but December is looking unlikely, a bad winter is forecast, so march is unlikely. Realistically, mid 2016 is the earliest I can see.
Basic maths.
If you rely on borrowing rather than productive enterprise to fuel your economy, the only way you can boost your economy is to encourage borrowing.
You can reduce interest rates by only so much (until the market won't buy the debt anymore).
QE reduces interest rates by increasing the market for debt (you buy your own debt).
Once you start on QE, you can't increase rates until you unwind the QE.
Show me an example of successful QE and I will wind my head back in.
Any example will do, anytime in history, anywhere in the world.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Since QE1, a rate rise has been impossible and I have said this all along.
If it were possible, it would have already happened.
It will remain impossible.
I understand what you're saying Jimbo, but countering this plausible idea that central banks have painted themselves into a corner is an expectation now that after 7 years of stimulus something needs to happen. This in turn is tied up with the global market's view of the USD as a reserve currency. Stalling again or commencing another round of stimulus would reveal cracks in the machine of this great monetary experiment that IMHO would threaten the US dollar's reserve status.
I agree that it's entirely possible that they might have to drop again in the near future like Japan did (twice), although again they don't have the demographic headwinds that will require their government to continue to increase borrowing.
Also the US has a more diversified local economy, which makes it far more impervious to external trade shocks caused by large currency movements. Unlike Australia it still has a manufacturing sector capable of servicing the domestic market. You could even reasonably argue because of this that the US will see much more of a multiplier effect from the extra investmemt capital that will come their way due to a rate rise.
Jimbo
7 Oct 2015, 06:50 AM
If you rely on borrowing rather than productive enterprise to fuel your economy, the only way you can boost your economy is to encourage borrowing.
Sounds like you're confusing America with Australia
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Never say never, but December is looking unlikely, a bad winter is forecast, so march is unlikely. Realistically, mid 2016 is the earliest I can see.
It amazes me that people can't see through this "forward guidance" shit.
Mark Carney has been "forward guiding" an imminent interest rate rise since 2010. Five years later and Britain is on the verge of yet another "imminent interest rate rise".
But 100%, there will be no rate rise by The BoE in the morning.
Nor next month or next year.
No rate rises instigated by central banks at all.
Central banks have used up their bullets.
When rates go up again, they will be market driven, violent and uncontrollable. When sovereign and corporate debt becomes junk, so will the paper currency that supports it.
The circle jerk that is the global, debt based fiat monetary system is on the verge of coming (in its own messy pants).
John Frum
7 Oct 2015, 06:59 AM
I understand what you're saying Jimbo, but countering this plausible idea that central banks have painted themselves into a corner is an expectation now that after 7 years of stimulus something needs to happen. This in turn is tied up with the global market's view of the USD as a reserve currency. Stalling again or commencing another round of stimulus would reveal cracks in the machine of this great monetary experiment that IMHO would threaten the US dollar's reserve status.
You are failing to take into account the fact that every economist on the planet has read the works of Peter Schiff and his mates. They also watch CNN.
They know every angle, every possibility.
Rates up/rates on hold/QE forever/China Slowdown/King Dollar/Dollar toast. Every bet from every angle has been covered.
The stock and bond markets are trying to front-run the front-runners who normally clean up.
The losers will be the ones who jumped in or out a tad too late (maybe by a millisecond).
Where does that leave your "heard it at a barbeque" property investor?
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
It amazes me that people can't see through this "forward guidance" shit.
Mark Carney has been "forward guiding" an imminent interest rate rise since 2010. Five years later and Britain is on the verge of yet another "imminent interest rate rise".
But 100%, there will be no rate rise by The BoE in the morning.
Nor next month or next year.
No rate rises instigated by central banks at all.
Central banks have used up their bullets.
When rates go up again, they will be market driven, violent and uncontrollable. When sovereign and corporate debt becomes junk, so will the paper currency that supports it.
The circle jerk that is the global, debt based fiat monetary system is on the verge of coming (in its own messy pants). You are failing to take into account the fact that every economist on the planet has read the works of Peter Schiff and his mates. They also watch CNN.
They know every angle, every possibility.
Rates up/rates on hold/QE forever/China Slowdown/King Dollar/Dollar toast. Every bet from every angle has been covered.
The stock and bond markets are trying to front-run the front-runners who normally clean up.
The losers will be the ones who jumped in or out a tad too late (maybe by a millisecond).
Where does that leave your "heard it at a barbeque" property investor?
I think we are arguing about the height of the ledge the world's economy will jump from.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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