Or in other terms "Money tanks while an unprecedented amount of it is printed".
When looking at a stock chart, don't forget it is not the value of the company you are looking at. It is the ratio of two values. Of the company and a currency.
When looking at a stock chart, don't forget it is not the value of the company you are looking at. It is the ratio of two values. Of the company and a currency.
Meanwhile, you’re taxed like crazy. Health insurance costs is a heavy burden on your earnings.
And any savings you have, will now be cut in half.
I feel like we just got robbed by the Fed. Again.
Imagine a company that borrows $1M vs a company that borrwos $1B and both pay an interest of 0%. The company that borrowed $1B has 1000x more firepower to build a big business. While the downside is the same for both companies: They could go bancrupt and pay back nothing.
Combine that with the fact that a big enough borrower will be "too big to fail" and will always be able to borrow more money to pay back the last round. In that case, the lended money is a gift independent of the interest rate.
They can then turn around and lend that money out to the rest of us at a higher interest rate, pocketing the difference.
Free money.
They're being propped up.
Let's say you bought a house ten years ago and the price has quadrupled. If you sold now, you could buy the same kind of house. No win, no loss.
However, if you took the money to (for example) hire people whose wages have merely doubled, you can now hire twice as many workers.
This is practically free money. Of course there's some speculative risk involved (the Powell Put) but it's modest.
Meanwhile, average consumers have to work their asses off to pay mortgages on overpriced houses.
Of course asset prices have taken a hit from an unfolding economic crisis - that's to be expected.
Yet, the new money on the FED balance sheet (an extra two trillion as of late) is going somewhere. The cheap loans are going somewhere.
It's going to prop up asset prices, no question about it.
What the Fed is doing, and what they have done for the past 13 years, had significant ramifications across the board.
Like, have you noticed your rent increase? While your salary remained stagnant? This is the result of the Fed. They have distorted all markets for everyone. This is the hidden inflation for everyone, that the government refuses to acknowledge.
https://www.afr.com/markets/equity-markets/five-reasons-the-...
https://www.refinitiv.com/en/the-big-conversation/episode-25...
Who prints more is hard to say. One reason is the question, which definition of money we look at. Only central bank money? Or also private bank money? And there are many other forms of money.
Even if we only look at central bank money, it is tricky: Central bank money is not only created at the central bank. But also in private banks. For example in Germany, the central bank just announced they will back up 100% of loans that private banks give to businesses. So the private banks now can loan money without risk. Basically printing central bank money on their own.
The USD is quite strong because there is a significant deflationary pressure due to demand destruction so the printing is currently offset by the lack of economic activity.
Currency marktes: Which ones did you look at? Which currency has not been printed in vast quantities lately?
Look at copper, oil, silver, gas, lumber, etc.