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Why QE can never stop

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posted on Dec, 18 2019 @ 09:04 PM
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The Repo market intervention by the FED was supposed to be a brief intervention to keep the Banks liquid, the problem is that they are increasing it , well you might ask what's the problem? , the FED can create money from thin air and can keep doing it for as long as they deem necessary. That's true but at some stage their will be consequences . The last time the FED wanted interest rates in the 1.5% was after the GFC it cost an injection of 1.5 billion, now it costs 1.5 trillion a thousand times more. So since the GFC all this easy money has gone into the everything bubble. As long as the banks keep lending on cars and houses, and people keep buying the debt it papers over a problem. We can see the problem looming its when people are all debited out, you can see that the pumpers are saying house prices are going to climb more and a few people have got F.O.M.O the banks keep lending because they have to. Trump wants to lower interest rates further because it would allow people to borrow more, so the excess cash has somewhere to go. Because if it cant find somewhere to go, the FOREX will have to go to 10% which will cause a collapse because all interest rates will adjust to real risk. The real unemployment rate is massaged because if people thought a recession was coming they would stop borrowing and cause one. Because its debt which is keeping it all going, the people with the most to loose are saying that everything is ok, which is giving them time to get into hard assets.
Since the Globalized Banking system is now interdependent , the whole of the Western world is now trading in dollars, the meager interest rate has to be paid in dollars, because its the only reasonably safe investment actually paying anything. The FED has to create these dollars, so when they hit the real economy , as surely they must if their is a drop off of confidence ,when shares sell off and bonds are redeemed, does the permanent intervention mean that their is a drop off in the confidence that the FED has enjoyed and they have to throw more and more fiat at the problem hoping at some stage the problem will go away. Because looking at the figures it does appear that since the GFC the system has been on life support and the patient is about to get the life support switched off.




posted on Dec, 18 2019 @ 09:08 PM
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a reply to: anonentity

Yes, we're really in a lot of trouble and it's not just the U.S.

The US still seems like a "safe" investment globally, but inflation will likely pickup and ultimately the purchasing power of our dollars will decrease in a more noticeable manner. I would say deflation should occur at some point, but TPTB do not like deflation because then tax revenue will go down and the gov. doesn't benefit while the common man does.

Very uncertain times my friend... stay diversified and careful with your investments, assets and everyday choices



posted on Dec, 18 2019 @ 09:13 PM
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The main issue with the repo markets is that the bigger banks didnt want to take the tbills the smaller institutions were offering

The question is here is why... is it because of the deficit the debt are some of these institutions sitting on crazy bonds over leveraged

Why didnt Jamie Dimon want the leveraged asset overnight or short term for repo



posted on Dec, 19 2019 @ 08:57 PM
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That guy did a vide0 today on the repo market and echo my sentiment that the collateral is bad or something along those lines

Over leveraged



posted on Dec, 19 2019 @ 11:22 PM
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a reply to: toysforadults

If the Repo and easy money continues, its not going into production because its only production which increases demand , its going into bonds and the share market, which pushes up the prices of the everything bubble. So the rich are the only ones getting any benefits. They cant do helicopter money because it will fuel inflation. The FED are in a Catch 22 situation will end badly, they probably know that the day the of debt is nearly over because the majority cant take on any more debt. Interesting times for the real economy. We can see unrest in many countries now, the list gets longer every week.




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