So I'm sure a few of you have been seeing that post circulating around Zig Forums today regarding the Fed and what it might be doing with bond yields (capping them and expanding fiscal stimulus). The post went on to explain that the Fed only had two options: Allow bond yields to increase thereby causing a stock market crash, or capping bond yields thereby stabilizing the equities market but simultaneously debasing the currency. I was talking to a friend about this and his comment was "well what if bond yields simply stabilize around where they're at?" After thinking about it I really don't have a good answer especially since I am just starting to delve into what makes the bond markets work. Can someone enlighten me as to what the answer would be to that question and why bond yields must either increase or be capped? Thanks in advance and sorry that this post isn't about cryptocoins.
Can someone explain to me what is about to happen with bond yields and the fed?
money velocity is slowing down, which is bad because this is deflation. keeping yields where they are won’t solve this. need to continually decease yields to exert inflationary pressure to offset this.
Yes but no velocity + increase supply = stagflation => hyperinflation
money velocity slowing down doesnt necessarily mean deflation what it means is money velocity is slowing down. what will happen is INFLATION and lots of it. the US dollar will become worthless toilet paper like zimbabwe
This
Couldn't you just make the argument that the velocity of money will steadily increase as coronashit restrictions are lifted and life goes back to "normal" for most people? That would begin to move us toward inflation thereby eliminating the need to decrease bond yields.
for reference, this is the post OP is referring to.
No one has money
Inflation will never happen
Retards
I was the one who made that post The problem is that, as stocks go up, bonds become increasingly undesirable. The yields are already so low that almost nobody wants them. So yields will never stabilize; there will inevitably come a day when they go too high and crash the market. A second problem is that yields, even at the pitiful level where they are right now, might already be too high to prop the market up. It collapsed 7% today, as we saw. This might be the beginning of the end.
I want jews to step in and save us from chynah
Should have added a third problem: Yields are only kept low by means of printing trillions of dollars. This is unsustainable, and yet it cannot be reversed--because yields cannot be allowed to rise. Inflation makes real yields go lower, and so this, in turn, is slowly and inevitably going to crash the bond market.
What is the actual issue with equities rising and bond desirability decreasing? If yields continue to remain low and people decide to park their money in stocks, why would yields ever increase and why would bonds even be a consideration as a viable financial tool? What is the consequence of that?
What the fuck this is huge
P. E. ratios are already far higher than they ever were in all of human history. Much higher than during the Dotcom bubble. There comes a point where parking your money in stocks doesn't make any sense. You're effectively holding worthless pieces of paper. At some point something becomes so overvalued that it's only going higher on the basis of the greater fool theory, like Hertz stock; and, in the long run, that is simply unsustainable. No bubble can last forever.
The other issue is, of course, that stocks will inevitably crash once hyperinflation takes over; which it eventually will, because money-printing alone is suppressing yields (). When Volcker allowed yields to reach true price-discovery in the 80s, they went to 20%. If that happened today, everything would collapse. Stocks and real estate would go down 90%, public schools would disappear, social security, medicare, pensions--all gone in the blink of an eye. So anybody who understands the economy knows that stocks are not a long-term store of value. That's why gold is going to go up the way it did in the 70s and 80s.
I am going to kill myself because of this post
Buy silver, user. NOW
Thanks. High iq post
So my question then would be this: If we have been doing tons of Q.E. this whole time in order to suppress bond yields and prevent an equities market crash, why have we not already seen the consequences in terms of accelerating inflation? To the average person, the logic would be to keep printing money in order to prevent collapse because it has worked up to this point. I'm in agreement that it can't go on forever but what leads you to believe it can't go on for 2, 4, 10, or 20 more years before the price must be paid?
Until now, the central bankers have managed to push a lot of the inflation into assets rather than the real economy. But this has created such a horrific depression, and gap between rich and poor, that they cannot get away with the same trick a second time. According to John Williams of Shadowstats, real unemployment is 40%. They are going to have to drop helicopter money on people this time in order to prevent a violent revolution. Helicopter money, in its turn, will push up consumer prices.
Besides, we are already seeing inflation. See beef, lumber. Williams says that real inflation has been 5-10%. I'm seeing even mainstream websites take note of this now--it's not simply ZeroHedge et al. I was checking the dollar index on MarketWatch just now and saw this article:
"The government says there’s no inflation — except for the things people are actually buying"
Look at the comments section. Every single person agrees with the article.
"The most important and expensive things in people's lives have been climbing like crazy for decades, all while inflation has remained "stubbornly low." Housing, healthcare, childcare, transportation, food, and education are all extremely expensive and getting more expensive every year and yet somehow I'm supposed to be excited because flat screen TVs are cheaper than ever?"
P. S. Dominic Frisby, an economist who writes for MoneyWeek, just published a video giving ten reasons why inflation may show itself in the real economy this time. One example is the trade-war with China, another is the disruption in supply-chains owing to the coronavirus shutdowns.
user, as a young person with little debt, a steady job and decent savings.. what can I do to prepare for an event like this?
You probably know my opinion already, which is to invest in gold. If the markets are about to crash, there might be a temporary selloff in PMs, as there was in March. (This is much more likely to happen to silver than to gold.) If there is, then make that your entry point; but if not, just get in whenever you can.
This is how to invest:
1) APMEX, SD Bullion, JM Bullion, Miles Franklin, SchiffGold, are examples of credible bullion dealers in the U. S. If you buy hold-in-hand physical, you will have to pay a premium of at least 4%. To make up for this, buy CGT-free coins--in your case, these are American Eagles. While the stock-market trader who makes a million dollars has to pay $200,000 to the government, you will keep everything you gain.
2) To avoid paying high premiums, get an account on GoldMoney or BullionVault.com, where the premium will only be 0.50%--the same as it is for buying cryptocurrency on Coinbase. On these websites, you can buy real bullion which is held offshore in countries like Switzerland and Singapore. When the government confiscated gold in 1933, offshore bullion was left untouched.
3) You can also buy gold and silver mining stocks on any stock-broker. The GDX, GDXJ, SIL, SILJ, are the best indices for this. The miners are leveraged ways to make money on precious metals. If metals go up, they go up far more, and vice versa. For reference, when silver went up from 1 dollar to 2.5 dollars, the average small-cap silver miner went up 150x (not 150%). $100,000 was turned into 15 million. In 2008, those who invested in First Majestic made 17x their money.
4) Do not buy SLV or GLD. These are paper ponzi schemes without the metals which are said to back them. To learn more about this, listen to some of the recent interviews on Arcadia Economics.
Bond yields will cap themselves as long as we avoid NIRP
>perhaps the smartest thread on this board right now
>page 11
of course, if it isnt some new shitcoin IPO or jailbait pic why woulf it be popular
god I fucking hate this board
Thank you friend. I will look back on this thread some time in the future and remember the user who saved me from the 2nd Great Depression
kys peter
Buy the bottom user. This is a great opportunity to get a nice start.
T. In same boat
Thank you. I hope that my advice to you is correct. I can't guarantee it, but I have tried to tell you what I've done to protect my own self and what I believe and explained why I believe it.
Would silver be as good an investment as gold? Please explain to this brainlett mr.user, thank you.
Honestly I'm balls deep into Statera but I'm silently reading this thread and telling my friends about it. Even if nobody replies, the information moves around.
Gold is guaranteed to go up, because central banks hold it as money. Silver is very likely to go up even more, but not guaranteed to do so, because some people argue that it is now
an industrial and not a monetary metal. I disagree with those people, and hold half my savings in silver; but it is an argument which is at least worth considering. Neil McCoy Ward and David Brady have gone all in on silver and they are people whom I greatly respect.
If the markets are about to crash again, silver may or may not sell off again, as it did in March. If it does sell off, then make that your entry point. If silver goes down to $12 again and the miners go down 90%, don't hesitate to buy everything you can possibly get your hands on.