View Single Post
 
Old 04-21-2018, 03:58 AM
Danny B Danny B is offline
Platinum Member
 
Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,090
Late credit cycle,,, liar loans,,, inflation

Where to start,,, What to cover?
For starters, look at this graph, http://realinvestmentadvice.com/wp-c...dFundsRate.png
Just in case that you believe that we are in some kind of linear zone of stability, rather than in a cycle. We're coming to the end of a credit cycle.
Everybody is starting to face this fact.
"warned that the credit cycle is on its last legs, noting that "in our view, a key driver is simply that global liquidity conditions are tightening, and markets are coming to the realisation that the process will be rocky."
"The bank also made a rare timing forecast of when it expects it to crack:

"Morgan Stanley concluded that "evidence is mounting that spreads have hit cycle tights – in other words, that bigger fundamental challenges in credit are 6-12 months away, not 2-3 years down the road."
" Late-cycle returns: asset returns YTD (annualized): commodities 23%, equities 5%, bonds 4%, cash 1%, US dollar -9%...“late-cycle” price action...last time asset performance ranked this way was 2007."
https://www.zerohedge.com/news/2018-...arket-was-2007

"lessons of the 2008 financial crisis“:
“The shareholders got bailed out. The boards of directors got bailed out. Management got bailed out. So from their perspective, there was no crisis.” “No other industry is levered likely the banking industry,” Kashkari said. "
"While I agree with Kashkari that Wall Street is forgetting the lessons of the 2008 financial crisis (and is participating in the development of another dangerous economic bubble), he seems to be absolving the Federal Reserve of its massive responsibility for inflating the mid-2000s U.S. housing and credit bubble as well as the current “Everything Bubble”
It wasn't the FED that made $trillions in liar loans. The Graham-Leachy bill allowed the banks to take all your money and loan it out. No qualified borrowers?? No problem, give them the money anyway.

"This was a reference to a time-honored banker adage, now mostly forgotten after nearly nine years of easy money: Bad deals are made in good times." "Chapter 11 bankruptcies spiked 63% in March from a year ago "
https://wolfstreet.com/2018/04/19/no...ything-bubble/

Armstrong on inflation.
"The assumption that an increase in the money supply is the root of all inflation is simply a theory that does not stack up to history. "
"Therefore, all the research that I have conducted demonstrates that inflation is by no means tied to the increase in the money supply, which is the entire reason nations borrow today. They think borrowing rather than printing is less inflationary. That is not true if the debt can be used as money."
He is on shaky ground here because he compares debt-money to gold -silver money.
"At times, the national debt of just about every major nation today has reached 70% of which is attributed to accumulative interest expenditures. As interest rates rise, the national debts will explode and because of this bogus theory of inflation tied to an increase in money supply, they will then raise taxes to try to reduce deficits. This will further create a Great Depression as deflation surges."
"The ECB has engaged in quantitative easing for nearly 10 years without producing corresponding inflation"
https://www.armstrongeconomics.com/a...pletely-wrong/
The monetary inflation is stuck in the upper loop. Specifically, in the bond market.

"Typically, inflation unfolds when there is CONFIDENCE in the future. Hyperinflation takes place when CONFIDENCE in government collapses. We are dead center. There is no real CONFIDENCE in the future so people are spending less and saving more"
This is sloppy thinking. There are 2 types of (price) inflation.
There are two main types of inflation: demand pull and cost push. Fueled by income and strong consumer demand, demand-pull inflation occurs when the economy demands more goods and services than are available. Cost-push inflation happens when the demand for goods increases because production costs rise to the point where fewer goods can be produced.
People are NOT saving more. They have maxed out their credit cards.

"What government refuses to look at is the bottom line. The more they raise taxes, the less disposable income the individual has in every class. "
https://www.armstrongeconomics.com/a...-unemployment/
__________________
 
Reply With Quote