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It's the right thing to do in an acute situation where financing locks up.

I would argue it's obviously the wrong thing to do for years and years while all assets are mooning in value, and 1m jobs being added per month.

The Fed chairpeople we've had since the financial crisis have been spineless about normalizing the balance sheet because they always optimize for the short term. Pretty sad tbh.

Need somebody who actually cares about the future generations in there. Nobody wants to be the guy that makes your stocks or house go down in value, but that's exactly what's needed to give future generations opportunity, and not just a huge asset bubble that will inevitably burst some decades down the line.

Covid monetary policy will go down as an initial success that snowballed into a huge failure.

>I would argue it's obviously the wrong thing to do for years and years while all assets are mooning in value, and 1m jobs being added per month.

That's kind of what I was saying. They did this during 2009. Great, it was needed. They should have exited and brought to balance probably by around 2016 at the latest.

>The Fed chairpeople we've had since the financial crisis have been spineless about normalizing the balance sheet because they always optimize for the short term. Pretty sad tbh.

It's not necessarily 'spinelessness' they just realize what will happen when they do this. This 'balance' let them increase the bad situation in the bad and they later have to decrease it will make a great situation worse. If the situation isn't great and they make it worse. They could make something neutral into bad.

>Need somebody who actually cares about the future generations in there. Nobody wants to be the guy that makes your stocks or house go down in value, but that's exactly what's needed to give future generations opportunity, and not just a huge asset bubble that will inevitably burst some decades down the line.

That's kind of the thing right. This is about generational warfare. This is the worker shortage of 2030 starting now. This is the boomers trying to retire and move their investment to safe bonds but not enough bonds are available. So yields are well below inflation.

> To avoid collapse of the bond market the fed was the only one who could step in and print money to buy assets. It's the right thing to do. Nobody is saying they were wrong to do this.

I argue it’s not the right thing. I agree that stepping in is necessary SOMETIMES and at reasonable scale. The feds job isn’t to prop up the stock market.

Printing money greatly benefits the rich, who own all the assets. Low income individuals have their buying power destroyed as the US dollar becomes Monopoly money.

Why have we needed 13 years/5 rounds of QE? It’s enabled rampant equities/housing speculation while engorging wealth inequality.

The only explanation I can think of is our insane national debt. It’s such an easy solution to inflate all the debt away. American monetary policy has been straight irresponsible.

>I argue it’s not the right thing. I agree that stepping in is necessary SOMETIMES and at reasonable scale. The feds job isn’t to prop up the stock market.

Keynes went into depth about this. The temporary government measures are never temporary and the point of the original original post is the fed has literally declared it's not going to be temporary.

This is my point and your point. That in the end it became the wrong thing to do.

>The only explanation I can think of is our insane national debt. It’s such an easy solution to inflate all the debt away. American monetary policy has been straight irresponsible.

Exactly right and without question the intention. The problem is that when the USA does this, the USD will no longer be the reserve currency. Nixon killed the bretton woods agreement and it was only a matter of time before the USD lost its reserve currency status. Afterall, Keynes was the dude who built this design.

Unless some unusual and unexpected thing happens soon. Most countries are going to see the USD inflation and either drop the reserve currency entirely and freefloat against the forex. Or they'll basket some new currencies in. Yuan, Pound, Euro.

Done are the days of the USD as the reserve currency. This will be a disaster for everyone who currently uses the USD.

I expect the IMF to make some huge unexpected swings.

If any, what is your advice for poor and middle class Americans?

>If any, what is your advice for poor and middle class Americans?

Well first things first. Americans are mostly 'rich'. There's a political ploy about the 'disappearing' middle class but it's because americans became rich. Investment in education killed the 'middle class' by making them rich. Take this for example: https://www.pewresearch.org/fact-tank/2015/07/09/how-america...

Yes there are many americans who have poor as a mindset. 88% of americans were upper middle or high income. The amount of americans with a poor mindset is very low. As Dave Chapelle jokes, "You're not poor, poor is a mentality. The mentality that nobody recovers from. you're broke."

So getting back to the question, say you're poor or low income. These economic problems are not your concern at all. Your concern is breaking the mentality.

You need to learn abundance and confidence. Break the poor thought. The problem or why Dave chapelle says you rarely escape being poor is that the poor mentality is hostile toward this idea.

>Printing money greatly benefits the rich, who own all the assets.

I don't know why people use the phrase "printing money", when people use this word I honestly don't know what they mean. It could literally mean anything, this isn't sarcasm. The problem is that there is no such thing as "money printing" except printing of physical cash and that isn't what people are talking about. Nobody is worried that if people withdraw money or bank notes are damaged that the Fed must print physical bank notes.

This colloquial language really drives me nuts every time I see it. When you randomly choose the meaning of printing money there are surely some situations where it is obvious that it is benefiting the rich but is that really what people are talking about? I honestly don't know or can't know.

If you are really dense, you can consider lending to be money printing and lending definitively benefits the rich as the rich have most of the assets, including bonds and money in their bank account. Since interest is paid based on how much you own, paying more interest obviously benefits the rich because rich means more money which means more interest. So, if the rich save more, the bank must lower interest rates, or lend out more money to earn more interest. Once you reach 0% interest, the interest rate cannot be lowered anymore so the only option left is to lend out all money even when it is illogical and the economy doesn't need more debt. In that sense, you can argue that the government is borrowing money to keep interest rates above 0%. When you don't do that you get Germany where interest rates have become negative. Negative interest rates obviously don't benefit the rich because they are signaling that the rich have too much money and nothing to invest it on which means that money must disappear at some point. You lose more if you have more and there is a $100k exemption on most bank accounts.

By the way, there is no direct relationship between your dollars and the lent out dollars. Even when you get a certificate of deposit and your money is illiquid, the bank still doesn't move that money, your balance is the same no matter how much of it is lent out. The money that is being borrowed is always "fresh" money. The special case is when you keep that money in demand deposits, your money is metaphorically lent out yet you can also spend it at any time! So liquidity actually increases.

>I don't know why people use the phrase "printing money", when people use this word I honestly don't know what they mean.

So this isn't just the creation of paper money but rather issuance of new money that mostly lives in imaginary numbers inside 'accounts' of various types.

> The problem is that there is no such thing as "money printing" except printing of physical cash

I think this is your confusion.

> Nobody is worried that if people withdraw money or bank notes are damaged that the Fed must print physical bank notes.

https://tradingeconomics.com/united-states/money-supply-m0

https://tradingeconomics.com/united-states/money-supply-m1

https://tradingeconomics.com/united-states/money-supply-m2

M0 is the printed money. Paper and coin. Call it about $6 trillion.

M1 is all the usual things. Bank accounts, money orders, cheques, and everything included in M1. So roughly $20 trillion in money. This is the money that could go buy something from a store.

M2 is all of M1 and M0, but also tacking on some very plausibly going to be money stuff. Roughly $1 trillion difference but it's there anyway. It's measured but not a big factor here.

The replacement of damaged notes will have no impact at all on any of these numbers. You literally can't see it there. Looking at 2009 is interesting, but lets keep to covid.

What we can see happen during covid is actual printed money increased bigtime. There's 3 trillion new $ running around. Basically 100% increase. So they absolutely did print new money in the physical sense.

We can also see from a bank account point of view. Going from $5 trillion to $21 trillion. So it's not just currency of bills. This can't be ignored. This is 'printed money' when people say they printed money. They absolutely did to an insane degree.

>This colloquial language really drives me nuts every time I see it. When you randomly choose the meaning of printing money there are surely some situations where it is obvious that it is benefiting the rich but is that really what people are talking about? I honestly don't know or can't know.

The total $ of the american people was increased over 400%. Poor people and even middle class are crying bloody murder... they sure didn't get any of the new $16 trillion. That's roughly $53,000 per person in the USA. If the poor didn't get it... who did? They got even more money?

>If you are really dense, you can consider lending to be money printing and lending definitively benefits the rich as the rich have most of the assets, including bonds and money in their bank account.

Not sure about density here but yes absolutely that's exactly right.

>Since interest is paid based on how much you own, paying more interest obviously benefits the rich because rich means more money which means more interest. So, if the rich save more, the bank must lower interest rates, or lend out more money to earn more interest.

"the rich" is not the jeff bezos. It's retirees. Retirees just gave themselves $16 trillion.

> The money that is being borrowed is always "fresh" money.

Freshly printed money.

“Printing money” is an easy way to describe the result of the federal reserve purchasing debt. When QE occurs, the fed buys bonds and MBS. They credit the seller’s account, and the securities get added to the Feds balance sheet. They don’t maintain cash reserves for this its straight up a credit without a buyer side debit. QE literally adds money to the financial system…hence “money printing”

The covid QE response purchases securities at a rate of ~1.5 trillion per year.

IMO after Greenspan, the Fed was basically captured by Wall Street.

I just don't know how anyone at this point can not say the Fed's job is to write puts under the equity markets when that is exactly what they have done for 13 years.

Not moving 50 bps this last meeting says it all.

>> We're going to look at new reserve currencies that are more stable

Yup. the fed sees it coming too. in one of their speeches they even hinted that the dollar may not be the global reserve currency forever.

>Yup. the fed sees it coming too. in one of their speeches they even hinted that the dollar may not be the global reserve currency forever.

I'm certainly not Nostradamus. Lots of people see it coming.

It's a huge benefit to being the reserve currency and when the USD loses it or really what's likely to happen... become far less important. The American people will be hurting quite a lot.

The big question, will the Yuan become much larger? They sure won't be if they keep spreading their efforts. Crypto might be something but would be hard.

We shall see what happens.

I have considered something, what if the USA knows this is coming and they made it appear like the USA is about to collapse. To have their enemies bet against them but then flip the book and they overextended. Sure does look like Russia right now overextended by a lot.

when the US losses global reserve currency status, it won't be the end of the world. Just look at all the past empires who had that status: Great britain, the netherlands, etc. they're all still around and still have 1st world living standards. there will be a slight drop in living standards, as imports go up in prices. you won't be able to buy as many PS2 and flat screen tvs, cars, blenders, etc. but i've got way more then enough of those already.

i am curious what you mean by looking for new reserve currencies as a function of a portfolio, does this mean simply going overweight non US stocks?

>i am curious what you mean by looking for new reserve currencies as a function of a portfolio, does this mean simply going overweight non US stocks?

This is significantly less important to individual investors. As an individual investor you need to simply not be in inflationary assets. Stocks, even US stocks is fine.

The USD being the world reserve currency and use by countries around the world as official currency means when the US government prints money... it's not really felt against the american people. It's felt against any country that isnt. When the USD loses it's reserve status or becomes far less important. The american people will start to truly feel inflation and the debt. Right now, this is absolutely nothing.

https://en.wikipedia.org/wiki/Special_drawing_rights vs https://en.wikipedia.org/wiki/BRICS

The BRICS summit this year will have Biden sweating bullets. They'll probably line it up against the US midterms. Ukraine wont be a subject at this summit but will be the most important subject.

Largely speaking, the USD when it drops will be very painful for the american people.