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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (135215)	8/24/2017 12:38:48 PM
From: THE ANT	Read Replies (1) \| Respond to of 218079

TJ. I think the markets are not necessarily going down as they are not overvalued in my opinion. Now that doesn't mean they will not fall tomorrow if enough people think they are over valued. I did scream over valuation of the stock market in 2001 and again the housing and stock markets around 2007/08 . I know housing is back to its peak and the stock market PE is near 18 but Fed rates were 5.25% September 2006 and are 1.25% now. My rule learned years ago was a increase of 1% real interest rates should make all assets fall by a about 30% and a decrease in real interest rates of 1 % would raise all asset values by 30%. Thus housing was overvalued in 2007 but not in 2017. The same can be said for the US stock market. Now if interest rates are going to rise then over valuation is ahead,but only for a short time. If one reads Steve Keen one would know that USA and Chinese GDP will go significantly negative if debt just stops growing and stopping it is. The market continues to be surprised by low GDP and low inflation but it shouldn't be. There're only two ways to print money in the US economy: the banks create it or deficit spending by Congress creates it. The Fed can drop interest rates and help the banks create money, but it looks like this source of money is running dry. I will argue that falling inflation and low GDP show there are not enough dollars in a world where the reserve currency is the dollar. I will argue that technology and the entire world coming on to the capitalistic system has left us with a large increase in productive capacity in the US and the world and that the economic system has not kept pace and is not producing enough dollars. World wide capitalism and technology improvements have led to a much larger engine but with the same amount of oil (dollars) No wonder the engine is sputtering. In this unusual environment Banks are not creating the money they should. The solution is easy and just requires that the US Congress prints this money into existence. No other country can do this as it would cause devaluation of their currency and an increase in their are dollar debt burden. That is China's biggest problem it can print as much as it wants but will the world except feed the evaluation of its currency. I will argue that the US can and should print trillions of dollars and not stop until they see the whites of inflations eyes. I used to be bothered by this scenario as I have always known that money does not grow on trees. More recently I've come to realize that the improvements in technology and the benefits of world capitalism have already increased the worlds economic engine size and the only reason this is not showing up in GDP is the lack of oil/dollars needed to run this larger engine. What looks like free money is actually GDP growth that did not happen because of the lack of dollars in the world, but which can still appear when the dollars are created Why the fear of inflation when it can be stamped out in a moment ,especially when it is not chronic? Brazil did away with 30% a month inflation in one year. Why the fear of deflation when Congress can print this money into existence in a heartbeat. Has anyone ever done a study that showed there was a limit to the amount of debt that can be created safely by a country with the world reserve currency. Foreign debt can be printed away whenever necessary and domestic debt cannot be passed on to the next generation. My child's debt is your child's assets This printing is coming one way or another. Either the US government wakes up and prints on the likes of infrastructure or assets adjust to zero percent fed rates and then eventually decline as inflation and GDP goes negative. If that happens the populace will be on the streets of Washington with pitchforks and guns and Congress will decide to spend at that time. Your gold will likely have to wait for this printing to start as gold is mostly money and reflects printing with an added premium for political uncertainty. Spend some time reading Steve Keen and Warren Mosler