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

To: TobagoJack who wrote (155932)	4/4/2020 6:46:28 AM
From: sense	Read Replies (2) \| Respond to of 218744

I'm uncertain what the impacts here in the U.S. will prove to be. But I do suspect there is an excessive tendency among some to equate uncertainty with doom, just as change is often equated with doom, more by those who benefit from lack of change and are ill adapted otherwise. Certainly I expect and count on some of that excess in emotion in the market functions... as generating trading opportunities for those with steadier nerves. It helps a lot to be correctly anticipating the events rather than being surprised by them ? I do think that within another week or two... better once the oil issues are settled... there will begin to be a much better ability to evaluate the effectiveness of the government response to date. I would be shocked if there aren't a few cracks left that are large enough for some to slip through... but losing a few in the cracks that open up isn't quite the same as "the big one" taking us back to the stone age ? The V shaped recovery gets more likely... the better job government does of "holding things together" until it can happen. Obviously, much can still go wrong... more as China seems not to be finding a limit or an end point in the infectious potential, even with long and extensive isolation ? Perhaps more universally available testing will make a difference... and that seems it is coming along more quickly now... more of a difference when it is paired with better treatment options that should reduce virus titres along with mortality risks... denying the virus its important difference making capacity... converting it back into "its just the flu" in fact. Not making any end game predictions, still, on "is the bottom in yet"... while remaining skeptical that it should be... the economic event being not only about the virus. I agree with yours in thinking there is something of a lack of adequate sincerity in the event... that, in the pause occurring now, seems it has more the feel of a blood donation than a blood letting. I do however think it is likely that there has been a collective bottom put in in some groups of stocks. Oil stocks, the smaller issues in particular, those who lack institutional support, or in this market, those who lack the support of stable institutions, were slammed not only by the market crash, but also with the implosion of oil prices... sort of a rogue wave or perfect storm combination. The apparent abatement of the doubling impact seems it will work to lift oil prices, and all oil market boats... just not all oil service providers... who will lag badly and suffer real and extreme reductions in the business, not just losing pricing support. Others may yet fail... as the resolution of demand destruction will take time still. Oil rising... will relieve oil industry and some financial system stresses... but will not resolve other problems that were clearly apparent already long before oil prices cratered. I expect those who are certain that replacing salaries (that have been gladly being earned) with smaller payments that are continued for not working... those being enabled through loans that convert to grants upon whatever qualifying events... must be an evil that will be realized in some combination of future extremes in inflation, or in the most dire possible consequences of moral hazard. I think most of that... is wrong. I think the error comes from misunderstanding value functions... from believing that "value" inherently follows laws that are immutable... but that are true only because we want them to be true... as if money, currency, work, productivity, and various market functions... are all fixed value functions like the laws of physics... that are seen as inviolable... (until we find exceptions in work arounds requiring new theories.) Perhaps some are actually more like the physical constants... where numbers are selected to balance out equations... but we don't know why they are what they are... or what functions they represent. It is always an error to mistake a casual familiarity with "constants" giving a comfort level... as an adequate substitute for actual knowledge. Six months from now... expect to see clever PhD students writing seminal works on the quantum tunneling of virtual money in lattices of strained economic systems... But all it will really be is what they really don't want, and the reason for the protestations: as it reveals to us that money being conjured into existence for us to use to survive... works exactly the same as money conjured into existence for the banks, only, to use to survive ? Only... with the popular distribution being equal but opposite in its wealth transfer and deflationary impacts ? There is a moral hazard risk... but it is that the event will expose the moral hazards that have always existed as an element in design of the banking system... as the banks are the moral hazard. There is an inflation risk in result too... as the deflation inducing wealth transfer effects of policy elements in QE are, if not unwound, at least subverted in impact... by the alternative channels enabling greater velocity that is not able to be throttled... limited... by the banks. With the corruption of the wealth transfer functions undone... there is a risk of a reversal in the liquidity of cloistered flows that have been frozen... If there is a flood causing inflation... it will not be because government gave people a bit less money than they had been earning for a month or two... but because the banks unfroze giant glaciers of deep frozen stored money in order to unleash that inflation they intend to blame on the idea of giving free money to anyone but banks. We have had universal basic income for a long time already, only it has been limited in the extent of its application...with the money flowing universally only to bankers ? That is almost certain to be an unintended consequence of particular bank failures...which might well have the perverse effect of thawing long frozen flows. Call it the global warming impact on the banking industry... resulting in a rising sea level in the monetary base ? That leaves it an open question how broad the impact of new flows resulting from the previously narrowly channeled glaciers might be... when they do thaw. The gold and silver markets are likely a concentrated instance... where significant economic activity has been held in abeyance by the artifice of fictionalizing the products of the activity, which no miners were paid to produce... However, as the virtual product has turned out to have non-virtual deficiencies that the market can detect and price, it seems "the event" is mooting the shell game. What other throats besides miners have the banks been stepping on ? Certainly all of private equity has been vastly over-advantaged by "rules" constraining capital flows... and a re-balancing is long overdue... which should result in an explosion of both innovation and new investment... and a long overdue re-direction of wealth flows from "the investor class" focused on "rules based" forced undervaluation in distributions based on the corruption of "who you know"... with flows redirected to the "innovator class" focused on "what you know", who'd rather get on with making things happen... rather than arrange to profit from preventing them happening. Otherwise, I don't see how "the event" response I see can be anything other than counter-deflationary... save in the potential limit in the shifting in balances if the issues drag on long enough that "just-in-time" becomes "we're-out-of-time"... so a risk in the limit that any quantity of money that chases after a rapidly shrinking supply of critical goods... ensures the critical issue is not "inflation" but.... "starving" ? Inflation concerns, for now, remain largely hypothetical... still over balanced by deflation risks... that being a primary reason for skepticism about having found a bottom. There is a very clear risk that a mere $6 trillion in money creation will not begin to resolve the $10 trillion dollar shortage... Dollar shortage = deflation ? Good to reduce that from $10 trillion to only $4... but, it should rise by another $10 trillion by the end of the year ? And, the dollar rose again, on Friday ? I've said for a long time that the next serious recession... would turn out to be a depression for the rest of the world... but not that bad, relatively mild, for the U.S. The virus has upended that expectation, only in part... not by altering the relative impacts... but by greatly altering the overall magnitude of the global event.