Ha so this thread is already descending into what a screw up the economy is. I was hoping this thread would shed some light on what the plan is as the central bank sees it but apart from 'economy gets better' there doesn't seem to be any specific plan of what happens to the trillions in debt or the fact the market is hooked up to QE crack. Surely governments are dumb enough to have not considered this? Is there really no plan?
Maybe they are... but that still doesn't work out well. Insane inflation and/or currency devaluation will destroy the buying power of peoples' money... and the debt will be "accounted for" that way.
Although I'm in full agreement, lets not forget that timing is a bitch. I read an article just a few days ago about a pretty smart trader who had bet's against the Chinese Yuan since 2010 and closed that fund down just a few months before June of this year I think. Of course the drop has only been a few %, but he expects much more. But if this trade of his was going on 5 years, then his timing was clearly off. Likewise, as much as I don't see a way out either, I wouldn't bet against the great powers being able to keep this scam going for years to come.
They are indeed this dumb. Or maybe it's a case of everybody "doing what they gotta do" with nobody in charge of the bigger picture. Either way, yeah, in the overall picture, they are really, really dumb. They are repeating history so they should see it coming but not really. The way I see it it's good to study history to know which side of the trades to be on.
Your quest doesn't seem to be to understand the true position, it's to justify your crash bias and mock central bankers. To me, this means you should be open to the same introspection in 3-5 years. Look back at 2009-2011 and see how many arrogant traders put up terrible forecasts and openly mocked anyone such as myself that forecast a sustained bull market. For example, the concept of the SPX getting to 15xx was considered a joke on here. If we were to believe the financial media or some fairly illustrious posters on here, the US would be in a deep Depression right now. And the supposedly silly central bankers who helped create today's situation ( far, far better then a Depression ) are still being criticized despite being successful on most of their goals. So in all seriousness, reiterating the same old doomsday bs isn't getting any smarter now that the US is in a far more stable position then it was in 2008. The subprime crisis was a very REAL event that had real consequences on the world. The US had the additional aspects of funding absurdly expensive military projects and runaway executive pay perks. Central bankers have recovered nicely from the brink. To answer your question, I think that moderate inflation ( check ), a more stable US economy ( check ), ending or reducing "QE" ( check ), recovering US housing market ( check ) were all in play. Sure, government debt is much higher ( concerning ), but look up Debt to GDP figures and you'll see it's not unprecedented levels and certainly not the albatross that many on here think it is. More important really is employment levels. If people have jobs, it will all work out as it did in the 1970s and 1980s. And if people have jobs, the Fed tool kit will include higher personal taxes to pay off debt. This is coming, Americans paid far too little income tax in the past in relationship to government expenditures. This is the legacy of core baby boomers, who had it fairly easy their whole careers. This whole post is of course opinion, as are all the other posts. We can revisit this in the future, just like I love going back to 2009 and 2010 on here and seeing where people's heads were at. If I'm wrong, I still think Canada is a pretty safe bet to soldier on in today's world. Americans could possibly encounter some new hardships they aren't used to, sure.
Debt is around 80% of GDP, post WWII was the only other time in history it was higher, so yes not unprecedented but close. Over 100% of GDP is usually the tipping point for banana republics, Greece is at 175%, etc. - debt has already risen from 10 to 18 trillion over the presidents term, 8 more years with that level of spending (which is guaranteed due to Medicare and SSI) and the USA will be in the company of Greece.
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