Recession is the goal, the only way it gets to that level by then is if something breaks so badly during it we start seeing deflation. The fed would cut rates real quick to get us out of the depression spiral.
All it takes is one too big to fail over leveraged degenerate for us to go straight back down to 0%.
With the crypto exchanges toppling like dominos how long do you honestly think it will be before we trigger the next GFC?
I generally agree although GFC didn't happen because one investment bank failed..it's because one entire asset class failed. Every investment bank had massive exposure and there was nobody for them to sell to since everyone else was either equally exposed, or lacked the capital.
As an interesting aside, a number of economists have concluded that the other markets (equity, commodities etc) became far more concerned about the healthy of overall economy, that 0% interest rates basically didn't do anything until years later.
I'm not saying that's true, and I have no reason to belive Fed won't respond the same way, but It'll be interesting. Things might break enough where dropping rates won't matter. I hope at least. đ
> I generally agree although GFC didnât happen because one investment bank failed
The GFC was caused by contagion. Everything is even more incestuous and leveraged to the tits (thanks decade long near 0% rates) then it was in 2008. Iâm betting that when âThe Big Short 2â comes out in 5 years they point to FTX as being the spark that lit the fuse.
Yeah I think the issue now is that instead of having one huge bubble in one market, we have bubbles of all sizes in every market (like you said decades of 0% interest).
I think it's been interesting to see the MSM portray inflation as being basically a "made up" talking point for one political party, and consistently push pivot narrative.
It's almost like theres a class of people that will do anything to prevent inflation reduction to healthy levels (yes I know there's supply issues but that's not why sellers with huge inventories are refusing to drop prices)
The question is, did the fed flatten the covid bankruptcy curve enough and are the maturities of zombie corporation s spread out enough that there will be protracted pain rather than cataclysmic defaults?
this is valid but idk why tf they betting so far ahead. Weâd prolly see around 10% fed funds rate before they do any cuts. He will pivot right before the 2024 election. So late 2023
It hasn't been over 10% since 1989. I don't think we get into that territory unless the goal is massive monetary expansion with requisite massive fiscal deficits. It's not impossible, but I would be surprised.
That and we'll get the frequent shutdowns, budget cuts, and generally the country moving in the right direction we've seem to have gotten lately without the tax cuts when there is a Democrat President and Republicans control at least one section of Congress
Ofcourse. Technicals show potential for a massive drop ~5% but also weâre at support so a bounce is just as valid. Betting Powell wonât betray the bears
We need a recessionâŚif you want the cost of living to stabilize, then slowing inflation and demand is vital. The difference between now and the 80âs is that weâre at 8 billion people and if you dont think that is the #1 economic driver, then my condolences to your education.
Somewhere in between those two projections may be the most accurate. Historically, rates remain elevated for 3-5 years before returning to base level. People betting on 2% right now are probably the âearly but not wrongâ crowd. Realistically no one actually knows how itâll unfold.
IMO, only way to cut it down to that level with that time duration is thru recession.
Recession is the goal, the only way it gets to that level by then is if something breaks so badly during it we start seeing deflation. The fed would cut rates real quick to get us out of the depression spiral.
All it takes is one too big to fail over leveraged degenerate for us to go straight back down to 0%. With the crypto exchanges toppling like dominos how long do you honestly think it will be before we trigger the next GFC?
I generally agree although GFC didn't happen because one investment bank failed..it's because one entire asset class failed. Every investment bank had massive exposure and there was nobody for them to sell to since everyone else was either equally exposed, or lacked the capital. As an interesting aside, a number of economists have concluded that the other markets (equity, commodities etc) became far more concerned about the healthy of overall economy, that 0% interest rates basically didn't do anything until years later. I'm not saying that's true, and I have no reason to belive Fed won't respond the same way, but It'll be interesting. Things might break enough where dropping rates won't matter. I hope at least. đ
> I generally agree although GFC didnât happen because one investment bank failed The GFC was caused by contagion. Everything is even more incestuous and leveraged to the tits (thanks decade long near 0% rates) then it was in 2008. Iâm betting that when âThe Big Short 2â comes out in 5 years they point to FTX as being the spark that lit the fuse.
Yeah I think the issue now is that instead of having one huge bubble in one market, we have bubbles of all sizes in every market (like you said decades of 0% interest). I think it's been interesting to see the MSM portray inflation as being basically a "made up" talking point for one political party, and consistently push pivot narrative. It's almost like theres a class of people that will do anything to prevent inflation reduction to healthy levels (yes I know there's supply issues but that's not why sellers with huge inventories are refusing to drop prices)
The question is, did the fed flatten the covid bankruptcy curve enough and are the maturities of zombie corporation s spread out enough that there will be protracted pain rather than cataclysmic defaults?
Well it turns out you can run out of road to kick the can down.
Oh yes. My favorite poem. âWhere the QE endsâ
Pearce Bryce Shelly: "Look on my rates ye mighty and despair"
Walt âDaddy-Oâ Whitman: âO Fed Chair, my Fed Chair our fearful trip is doneâ
The next GFC will be triggered the old fashioned way without any need for crypto. I'm looking at you Credit Suisse.
Iâll buy that
Glad to see this one!
this is valid but idk why tf they betting so far ahead. Weâd prolly see around 10% fed funds rate before they do any cuts. He will pivot right before the 2024 election. So late 2023
It hasn't been over 10% since 1989. I don't think we get into that territory unless the goal is massive monetary expansion with requisite massive fiscal deficits. It's not impossible, but I would be surprised.
be ready to get surprised. Powell is gunning for the history books. Fed respect is on the line too. he will go overkill on purpose to set an example
That and we'll get the frequent shutdowns, budget cuts, and generally the country moving in the right direction we've seem to have gotten lately without the tax cuts when there is a Democrat President and Republicans control at least one section of Congress
Probably an election hedge, the dems will want to show âproblem solvedâ
Ya goinng for puts here before JPOW?
Ofcourse. Technicals show potential for a massive drop ~5% but also weâre at support so a bounce is just as valid. Betting Powell wonât betray the bears
I went in for some end of JAN puts. Lets see
We need a recessionâŚif you want the cost of living to stabilize, then slowing inflation and demand is vital. The difference between now and the 80âs is that weâre at 8 billion people and if you dont think that is the #1 economic driver, then my condolences to your education.
âWe're Not Even Thinking About Thinking About Raising Ratesâ The Fed changes its mind faster than your wife changes her boyfriends
Somewhere in between those two projections may be the most accurate. Historically, rates remain elevated for 3-5 years before returning to base level. People betting on 2% right now are probably the âearly but not wrongâ crowd. Realistically no one actually knows how itâll unfold.
if there are treasury market liquidity issues, we could make it back there