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IMF cuts forecast for US growth in blow to Trump tax plan
Topic Started: 28 Jun 2017, 09:54 AM (2,113 Views)
b_b
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Lukey
28 Jun 2017, 01:00 PM
Ther has been talk of introducing negative interest rates where it actually costs you money to keep your money in the bank.

Janet Yellen just raised by .25% last month with possibly another in December as she believes the U.S has grown out of the great 10 year recession.

Time will tell!
Negative interest rate policy failed (as predicted by MMT back in 2009). http://bilbo.economicoutlook.net/blog/?p=4763

It acts as nothing more than a tax on Banks and/or customers, and does nothing to encourage private sector credit growth (which is never reserve/ESA constrained).

Japan now targeting a zero 10 year JGB instead (BTW, where are those Bond Vigilantes I was promised back in 2013?).

I can’t see NIRP ever happening here.
Edited by b_b, 28 Jun 2017, 01:21 PM.
(S – I) + (T - G) + (M - X) = 0
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Simon_S
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Guest
28 Jun 2017, 11:01 AM

If the US stock market was now to start collapsing at the emense levels near zero rates have now taken it, will now dropping rates 1% overnight to zero have the same effect that dropping it 6% overnight at the much lower levels it was back then in 2008 ?

It would be too late...

That would signal to markets that Central Banks and their policy has failed and they have essentially lost control and all bets are off...

Then it Becomes a case of Capital Preservation and Inter-Party Risk........Get to the Exit before everyone else does.



Lukey
28 Jun 2017, 01:00 PM
Ther has been talk of introducing negative interest rates where it actually costs you money to keep your money in the bank.
It only costs you money if you leave your money in the Bank.....

Why do you think Central Banks want Cash/Large Notes banned....
Edited by Simon_S, 28 Jun 2017, 01:29 PM.
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Tick Tock
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Simon_S
28 Jun 2017, 01:27 PM
It would be too late...

That would signal to markets that Central Banks and their policy has failed and they have essentially lost control and all bets are off...

Then it Becomes a case of Capital Preservation and Inter-Party Risk........Get to the Exit before everyone else does.




It only costs you money if you leave your money in the Bank.....

Why do you think Central Banks want Cash/Large Notes banned....
Yes this is why it may be better to keep cash $ gold/silver coins or bullion in a very good safe at home or a vault at a metal dealer? ;)
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Simon_S
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Lukey
28 Jun 2017, 04:26 PM
Yes this is why it may be better to keep cash $ gold/silver coins or bullion in a very good safe at home or a vault at a metal dealer? ;)
Very good idea.........Cheap insurance

But 'm sure property investors would prefer Debt...... :lol

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DragonGM
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Simon_S
28 Jun 2017, 04:36 PM
Very good idea.........Cheap insurance

But 'm sure property investors would prefer Debt...... :lol
"He who dies with the most debt wins" Isn't that the mantra?
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Elastic
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Rufus
28 Jun 2017, 10:07 AM
Not necessarily, but we are heading for lower rates in the USA.
You can see how slow credit growth has become here - http://moslereconomics.com/2017/06/25/credit-check-29/

That means the economy is currently slowing and the Fed will have to take action. It doesn't mean the economy is headed for a recession.

How will lower rates affect your plans? That's what you need to work out.

Lol - Simon thinks he is a trader, but I don't think he is in the true sense. More like he plays in the market a bit.
If that's what he wants to do then fair enough.

Traders need volatility, so they look for both good news as well as bad news. Simon is only concerned with bad news, which tends to make me think he's not approaching his task in a professional manner.
Pretty interesting to see that steep drop off in credit growth in the US. Almost seems like the Fed is ready to end this growth cycle with these IR rises.
Looks like this crack up boom is coming to an end and we might see a fall in the price of all assets.
Given that much of the credit growth has been leveraged on the back of growing asset prices this next one could be a nasty downturn since there won't be any significant IR drops to soften it.
I've often said that higher prices beget higher prices particularly in regards to Australian property because of the high prevalence of investors in our housing market.
The use of increasing equity to be released to leverage up further on the back of IO loans is a real problem if house prices fall.
It will suddenly result in investors being locked out of further borrowing which could exacerbate any downturn.
Anyway, watch this space.
Only a rat can win a rat race.

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Simon_S
28 Jun 2017, 01:27 PM
It would be too late...

That would signal to markets that Central Banks and their policy has failed and they have essentially lost control and all bets are off...

Then it Becomes a case of Capital Preservation and Inter-Party Risk........Get to the Exit before everyone else does.

I read an article that came last night. Was a fed chairman telling the abc I think it was , that the US stock market is running on fumes. We have seen it decribed on here as the road runner after just stepping off a cliff. He is somehow still floating up there, but with nothing whatsoever to support him. Just like the cartoon, we ALL know its only a matter of time before its starts falling hard and fast. Realistically, we are just biding our time until this happens. The problems of 2008 were not fixed but exasperated in a huge way. Credit levels at their limits at 6% in 2008, and now credit levels at their limits at 1%. Some claim the US will drop rates because things are looking shitty. Where would that then leave us ? Credit would then hit its limits at zero, which is probably not much difference than the levels of 1%. Then what ?


The difference between 2008 and now is that the US stock market is much much higher than is was in 2008 when collapse started back then. Zero rates over this time allowed companies to expand mines and the like in a big way. We now have a lot more mines and now as a result a huge and growing oversupply that is literally destroying prices as zero rates have created an abundant supply. Basically ,it tooks jobs away from the economy for the next genaration. The now astounding levels of mines and oversupply will now insure prices stay low for pretty much ever, as all mines are open and ready to go now should any shortage ever appear. The same thing has happened in residential construction over this time. Building all these properties all over the world. Thats what zero interest rates helped fuel. Its all those jobs that were bought forward as a result aswell, all those that will not be needed in future. There is also all the jobs that were created from the building industry, the truck driver, the tile and bathroom and carpet shops etc that all expanded as this building boom grew. All borrowed to expand as things thrived. Will just be more jobs to go when decline sets in.

We are now in a much worse position than in 2008 in many ways, and basically just biding our time folks.

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zaph
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Guest
29 Jun 2017, 09:08 AM
I read an article that came last night. Was a fed chairman telling the abc I think it was , that the US stock market is running on fumes. We have seen it decribed on here as the road runner after just stepping off a cliff. He is somehow still floating up there, but with nothing whatsoever to support him. Just like the cartoon, we ALL know its only a matter of time before its starts falling hard and fast. Realistically, we are just biding our time until this happens. The problems of 2008 were not fixed but exasperated in a huge way. Credit levels at their limits at 6% in 2008, and now credit levels at their limits at 1%. Some claim the US will drop rates because things are looking shitty. Where would that then leave us ? Credit would then hit its limits at zero, which is probably not much difference than the levels of 1%. Then what ?


The difference between 2008 and now is that the US stock market is much much higher than is was in 2008 when collapse started back then. Zero rates over this time allowed companies to expand mines and the like in a big way. We now have a lot more mines and now as a result a huge and growing oversupply that is literally destroying prices as zero rates have created an abundant supply. Basically ,it tooks jobs away from the economy for the next genaration. The now astounding levels of mines and oversupply will now insure prices stay low for pretty much ever, as all mines are open and ready to go now should any shortage ever appear. The same thing has happened in residential construction over this time. Building all these properties all over the world. Thats what zero interest rates helped fuel. Its all those jobs that were bought forward as a result aswell, all those that will not be needed in future. There is also all the jobs that were created from the building industry, the truck driver, the tile and bathroom and carpet shops etc that all expanded as this building boom grew. All borrowed to expand as things thrived. Will just be more jobs to go when decline sets in.

We are now in a much worse position than in 2008 in many ways, and basically just biding our time folks.
How's the shed, Ted?
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GloomBoomDoom
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Guest
29 Jun 2017, 09:08 AM
We are now in a much worse position than in 2008 in many ways, and basically just biding our time folks.
It's referred to as "malinvestment".
MSE
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stinkbug
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zaph
29 Jun 2017, 12:03 PM
How's the shed, Ted?
Lol. Is Ted allowed back to the zoo yet?
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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