15 Jan 2022 3:04 am
[quote="IkeBana" post_id=1917693 time=1642207721 user_id=2740]
Any of you economic geniuses ready to take a stab at telling the rest of us exactly what this crash is gonna look like. What the underlying and obvious precipitating factors are gonna be? Or are we just musing about another stock market correction?[/quote]
During the Carter administration Paul Volcker declared war on inflation. With inflation at 10% he raised rates to 20%. Inflation persisted and continued to rise until it hit 14.8%. Unemployment skyrocketed at the same time. Eventually the prime interest rates hit 21.5%. It took 3 years to finally get inflation down to reasonable levels. But once successful inflation has been curtailed to low levels. Until recently. Imagine a situation where the interest on a $200,000 equivalent home today being 60,000/year! Imagine this following the discovery that your life's earnings of $5 million in today's dollars will purchase a #1 meal at McDonalds just 4 weeks later. Imagine your savings and the savings of everyone you know vanishing overnight. Store shelves empty and massive unemployment. This combined with subjugation of the nations of the world (and likely our own) in the chaos. But never fear Elizabeth Warren is on the task.
Using a realistic method to determine inflation suggests the real inflation level to be near 15.5%. We are told this is a temporary phenomenon due to COVID. We are already experiencing shortages and continued lock-downs remain problematic. Fed policy since the asset buy-back beginning in 2010 has resulted in the prime rate being buried at 0% to shield the Treasury from interest on the debt. So a primary tool at the FR disposal is no longer deployable. If the Fed raised rates anywhere near 21.5% financing the $30T debt would be crushing. The government could reduce spending to $0 and still couldn't meet it's obligations. The inevitable consequence is the Treasury would be unable to sell Treasuries and would find itself unable to borrow outside of the FR just printing dollars. This of course would cause even more inflation and begin a never ending positive feedback cycle which will rise without limits. It will be the only method of balancing the governments accounts and as the World's reserve currency would have wide ranging impacts throughout the world. Imagine if you will inflation so intense 150$ in your paycheck having the buying power of 1$ at the end of the day. The government issuing $5 quintillion bills (that's $5,000,000,000,000,000,000). So the government decides to convert quintillions to single dollars called Qdollars. It issues a $1 Qd note and 1 month later begins minting $10 Million Qd notes. This isn't make believe, it actually happened in Zimbabwe and to a similar extent in several other cases. Now picture this occurring in the US dollar. What Volcker did in 1980 isn't really an option to fight inflation due to the massive debt.
[hr]
[size=200][b][color=#aaaaaa]1[/color] Nomination[/b][/size]
[url=https://liberalforum.net/memberlist.php?mode=viewprofile&u=3386]Liberals are scum[/url] [size=85]Jan 15, 2022[/size]
[url=https://liberalforum.net/viewtopic.php?p=1917794#p1917794]Go to original post on Jan 15, 2022 5:39pm[/url]
Any of you economic geniuses ready to take a stab at telling the rest of us exactly what this crash is gonna look like. What the underlying and obvious precipitating factors are gonna be? Or are we just musing about another stock market correction?[/quote]
During the Carter administration Paul Volcker declared war on inflation. With inflation at 10% he raised rates to 20%. Inflation persisted and continued to rise until it hit 14.8%. Unemployment skyrocketed at the same time. Eventually the prime interest rates hit 21.5%. It took 3 years to finally get inflation down to reasonable levels. But once successful inflation has been curtailed to low levels. Until recently. Imagine a situation where the interest on a $200,000 equivalent home today being 60,000/year! Imagine this following the discovery that your life's earnings of $5 million in today's dollars will purchase a #1 meal at McDonalds just 4 weeks later. Imagine your savings and the savings of everyone you know vanishing overnight. Store shelves empty and massive unemployment. This combined with subjugation of the nations of the world (and likely our own) in the chaos. But never fear Elizabeth Warren is on the task.
Using a realistic method to determine inflation suggests the real inflation level to be near 15.5%. We are told this is a temporary phenomenon due to COVID. We are already experiencing shortages and continued lock-downs remain problematic. Fed policy since the asset buy-back beginning in 2010 has resulted in the prime rate being buried at 0% to shield the Treasury from interest on the debt. So a primary tool at the FR disposal is no longer deployable. If the Fed raised rates anywhere near 21.5% financing the $30T debt would be crushing. The government could reduce spending to $0 and still couldn't meet it's obligations. The inevitable consequence is the Treasury would be unable to sell Treasuries and would find itself unable to borrow outside of the FR just printing dollars. This of course would cause even more inflation and begin a never ending positive feedback cycle which will rise without limits. It will be the only method of balancing the governments accounts and as the World's reserve currency would have wide ranging impacts throughout the world. Imagine if you will inflation so intense 150$ in your paycheck having the buying power of 1$ at the end of the day. The government issuing $5 quintillion bills (that's $5,000,000,000,000,000,000). So the government decides to convert quintillions to single dollars called Qdollars. It issues a $1 Qd note and 1 month later begins minting $10 Million Qd notes. This isn't make believe, it actually happened in Zimbabwe and to a similar extent in several other cases. Now picture this occurring in the US dollar. What Volcker did in 1980 isn't really an option to fight inflation due to the massive debt.
[hr]
[size=200][b][color=#aaaaaa]1[/color] Nomination[/b][/size]
[url=https://liberalforum.net/memberlist.php?mode=viewprofile&u=3386]Liberals are scum[/url] [size=85]Jan 15, 2022[/size]
[url=https://liberalforum.net/viewtopic.php?p=1917794#p1917794]Go to original post on Jan 15, 2022 5:39pm[/url]