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Federal Reserve: "QE caused inequality & a massive bubble that will blow up"

https://www.politico.com/news/magazine/2021/12/28/inflation-...
cordovan marketing idea space
  12/28/21
Check You Emails
violet hell sandwich
  12/28/21
...
primrose charismatic foreskin
  12/28/21
...
self-absorbed cobalt haunted graveyard
  12/28/21
There’s no way they can raise rates enough to get infl...
boyish opaque point hominid
  12/28/21
worth trying 20% interest rates just to see what happens ๐Ÿ”...
Chrome Concupiscible Scourge Upon The Earth Brunch
  12/28/21
They’ll just inflate the currency to oblivion and repl...
boyish opaque point hominid
  12/28/21
...
mischievous rehab
  12/28/21
...
Federal Personal Credit Line
  12/28/21
it's brrrr all the way down
Arrogant Contagious Liquid Oxygen Kitchen
  12/28/21
They'd have to raise rates by like 10% to curb inflation, bu...
unholy thriller stage
  12/28/21
*stock market which, tbf would be the economy given the b...
cordovan marketing idea space
  12/28/21
LOL! a 3 or 4% interest rate would send US into depression
elite walnut heaven
  12/28/21
The only counter argument I can think is that they would rai...
Federal Personal Credit Line
  12/28/21
basically if they raise rates above the % GDP then the gover...
unholy thriller stage
  12/28/21
Reminder that the Fed averaged over $100 billion per month i...
Federal Personal Credit Line
  12/28/21
...
soul-stirring striped hyena
  12/28/21
They can't actually solve inflation anymore with rate increa...
rough-skinned crusty dysfunction plaza
  12/28/21
Globalization is very deflationary, and it's not going anywh...
sooty seedy hissy fit mental disorder
  12/28/21
yeah, i just bought an android tablet for 69 dollars and use...
Arrogant Contagious Liquid Oxygen Kitchen
  12/28/21
Yep- also, look at the increase in crop yields since the 197...
sooty seedy hissy fit mental disorder
  12/28/21
All those efficiencies have been realized. You would need to...
rough-skinned crusty dysfunction plaza
  12/28/21
Fertilizer prices gave already skyrocketed
cordovan marketing idea space
  12/28/21
Didnt mean to imply they hadn't just got tenses wrong. I jus...
rough-skinned crusty dysfunction plaza
  12/28/21
1. Do not look at bond yields as an indicator of market expe...
rough-skinned crusty dysfunction plaza
  12/28/21
Lacy Hunt is a highly respected bond expert. He still thinks...
sooty seedy hissy fit mental disorder
  12/28/21
Appeal to authority? On XO? Really?
cordovan marketing idea space
  12/28/21
Hunt is a massive bond purchaser, not just some pundit. So y...
sooty seedy hissy fit mental disorder
  12/28/21
Yes he is just betting V continues to drop. I guess having b...
rough-skinned crusty dysfunction plaza
  12/28/21
Hunt manages $4B. That’s literally nothing in FI M...
cordovan marketing idea space
  12/28/21
He also can't explain negative rates with a deflation hypoth...
rough-skinned crusty dysfunction plaza
  12/28/21
Read the new Market Wizards. The traders with biggest gains ...
Federal Personal Credit Line
  12/28/21
Its been crystal clear that since 2008 the bond market has b...
rough-skinned crusty dysfunction plaza
  12/28/21
But the Fed's tapers on QE have already been announced and s...
sooty seedy hissy fit mental disorder
  12/28/21
Your asking me in bewilderment if the Fed could possibly bac...
rough-skinned crusty dysfunction plaza
  12/28/21
so you are saying that the fed will not tighten AND that inf...
Arrogant Contagious Liquid Oxygen Kitchen
  12/28/21
If Powell hadn't already been re-nominated I might agree, bu...
sooty seedy hissy fit mental disorder
  12/28/21
Were you not alive in winter 2018 when the market imploded a...
cordovan marketing idea space
  12/28/21
Bernanke, Powell, Yellen, all need to be strung up.
passionate doctorate
  12/28/21
harsh but fair
Turquoise Bipolar Office Feces
  12/28/21
Thank god at least Powell is a goy so they can’t blame...
multi-colored property legend
  12/28/21


Poast new message in this thread



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Date: December 28th, 2021 11:51 AM
Author: cordovan marketing idea space

https://www.politico.com/news/magazine/2021/12/28/inflation-interest-rates-thomas-hoenig-federal-reserve-526177

Between 2008 and 2014, the Federal Reserve printed more than $3.5 trillion in new bills. To put that in perspective, it’s roughly triple the amount of money that the Fed created in its first 95 years of existence. Three centuries’ worth of growth in the money supply was crammed into a few short years. The money poured through the veins of the financial system and stoked demand for assets like stocks, corporate debt and commercial real estate bonds, driving up prices across markets. Hoenig was the one Fed leader who voted consistently against this course of action, starting in 2010. In doing so, he pitted himself against the Fed’s powerful chair at the time, Ben Bernanke, who was widely regarded as a hero for the ambitious rescue plans he designed and oversaw.

Hoenig lost his fight. Throughout 2010, the FOMC votes were routinely 11 against one, with Hoenig being the one. He retired from the Fed in late 2011, and after that, a reputation hardened around Hoenig as the man who got it wrong. He is remembered as something like a cranky Old Testament prophet who warned incessantly, and incorrectly, about one thing: the threat of coming inflation.

But this version of history isn’t true. While Hoenig was concerned about inflation, that isn’t what solely what drove him to lodge his string of dissents. The historical record shows that Hoenig was worried primarily that the Fed was taking a risky path that would deepen income inequality, stoke dangerous asset bubbles and enrich the biggest banks over everyone else. He also warned that it would suck the Fed into a money-printing quagmire that the central bank would not be able to escape without destabilizing the entire financial system.

On all of these points, Hoenig was correct. And on all of these points, he was ignored. We are now living in a world that Hoenig warned about.

The Fed is now in a vise. Inflation is rising faster than the Fed believed it would even a few months ago, with higher prices for gas, goods and automobiles being fueled by the Fed’s unprecedented money printing programs. This comes after years of the Fed steadily pumping up the price of assets like stocks and bonds through its zero-percent interest rates and quantitative easing during and after Hoenig’s time on the FOMC. To respond to rising inflation, the Fed has signaled that it will start hiking interest rates next year. But if that happens, there is every reason to expect that it will cause stock and bond markets to fall, perhaps precipitously, or even cause a recession.

“There is no painless solution,” Hoenig said in a recent interview. “It’s going to be difficult. And the longer you wait the more painful it will end up being.”

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688785)



Reply Favorite

Date: December 28th, 2021 11:52 AM
Author: violet hell sandwich

Check You Emails

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688791)



Reply Favorite

Date: December 28th, 2021 11:54 AM
Author: primrose charismatic foreskin



(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688800)



Reply Favorite

Date: December 28th, 2021 11:59 AM
Author: self-absorbed cobalt haunted graveyard



(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688821)



Reply Favorite

Date: December 28th, 2021 12:00 PM
Author: boyish opaque point hominid

There’s no way they can raise rates enough to get inflation under control. In the 70s they went as high as 20% and ljl at that happening now with so much debt. Only choice is to keep the money printing ponzi going.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688826)



Reply Favorite

Date: December 28th, 2021 12:00 PM
Author: Chrome Concupiscible Scourge Upon The Earth Brunch

worth trying 20% interest rates just to see what happens ๐Ÿ”ฅ๐Ÿงจ

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688831)



Reply Favorite

Date: December 28th, 2021 12:02 PM
Author: boyish opaque point hominid

They’ll just inflate the currency to oblivion and replace the dollar with a CBDC

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688843)



Reply Favorite

Date: December 28th, 2021 12:09 PM
Author: mischievous rehab



(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688887)



Reply Favorite

Date: December 28th, 2021 12:25 PM
Author: Federal Personal Credit Line



(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688998)



Reply Favorite

Date: December 28th, 2021 12:01 PM
Author: Arrogant Contagious Liquid Oxygen Kitchen

it's brrrr all the way down

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688834)



Reply Favorite

Date: December 28th, 2021 12:01 PM
Author: unholy thriller stage

They'd have to raise rates by like 10% to curb inflation, but it would completely destroy the economy lol

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688835)



Reply Favorite

Date: December 28th, 2021 12:04 PM
Author: cordovan marketing idea space

*stock market

which, tbf would be the economy given the banks would blow up

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688857)



Reply Favorite

Date: December 28th, 2021 12:33 PM
Author: elite walnut heaven

LOL! a 3 or 4% interest rate would send US into depression

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689030)



Reply Favorite

Date: December 28th, 2021 12:33 PM
Author: Federal Personal Credit Line

The only counter argument I can think is that they would raise rates and crash everything so the rich can buy on the cheap. But I think that that has already happened more or less.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689033)



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Date: December 28th, 2021 12:03 PM
Author: unholy thriller stage

basically if they raise rates above the % GDP then the government becomes insolvent

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43688851)



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Date: December 28th, 2021 12:29 PM
Author: Federal Personal Credit Line

Reminder that the Fed averaged over $100 billion per month in MBS purchases for 2020. No wonder Big Finance is buying houses.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689023)



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Date: December 28th, 2021 12:37 PM
Author: soul-stirring striped hyena



(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689046)



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Date: December 28th, 2021 12:40 PM
Author: rough-skinned crusty dysfunction plaza

They can't actually solve inflation anymore with rate increases.

the cat is out of the bag with the money printing. They need to actually crush the balance sheet of the fed (rates would rise as a result, but more as a byproduct).



(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689065)



Reply Favorite

Date: December 28th, 2021 12:43 PM
Author: sooty seedy hissy fit mental disorder

Globalization is very deflationary, and it's not going anywhere. For example, now that China isn't such a good cheap labor place, Indonesia is taking over. Most of the gold farmers in WoW are Indonesian now.

This phenomenon of moving production to the cheapest location didn't exist in the late 70s, nor are unions remotely as powerful now as they were then. So US wages can only go so high since we're competing with Indonesians, and if Americans only have so much to spend, then consumer prices can only rise so high.

Efficiencies cased by things like Amazon.com and Walmart also didn't exist in the late 70s. People had to pay what their local grocery store charged.

So I think we could get inflation under control with much, much lower rates than Volcker had to resort to in the early 80s.

More importantly than what I think, the 10 year bond yields show that the bond market thinks that.

https://www.cnbc.com/quotes/US10Y

No one would be buying 10 year bonds yielding less than 1.5% if the smart money doubted the Fed can and will get inflation under control.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689075)



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Date: December 28th, 2021 12:47 PM
Author: Arrogant Contagious Liquid Oxygen Kitchen

yeah, i just bought an android tablet for 69 dollars and used it to make a video with edited graphics and text and music and voiceover that same day using free apps and uploaded it to youtube where millions could (potentially) view it...

and I just went on the walmart site and ordered prescription vision swimming googles for $11...they will be here today, a week later...

both harnessing cheap asian labor via the internet and super efficient shipping...massively deflationary

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689088)



Reply Favorite

Date: December 28th, 2021 12:53 PM
Author: sooty seedy hissy fit mental disorder

Yep- also, look at the increase in crop yields since the 1970s:

https://ourworldindata.org/grapher/average-corn-yields-in-the-united-states-1866-2014

Transportation and shipping has also gotten more efficient- everything has. That Mexican roofing your house has a nail gun, not a hammer.

With all these increases in efficiency, it's real small-brain thinking to contend we can go back to the late 70s, much less the Weimar Republic. An acre of crop land yields 5x what it did during the Great Depression.



(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689111)



Reply Favorite

Date: December 28th, 2021 1:00 PM
Author: rough-skinned crusty dysfunction plaza

All those efficiencies have been realized. You would need to argue that many continue to improve at the same pace unabated for your stance to be valid. I highly doubt that housing construction will get much cheaper (holding to the same quality standard). Likewise, there is an upper limit on harvest yields given increasing restrictions on fertilizer and pesticide usasge etc.

Speaking of fertilizer, did you know a big input is nat gas prices. Do you want to know whats going to happen to fertilizer prices next year? Don't you think that will flow into crop prices?

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689150)



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Date: December 28th, 2021 1:02 PM
Author: cordovan marketing idea space

Fertilizer prices gave already skyrocketed

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689159)



Reply Favorite

Date: December 28th, 2021 1:17 PM
Author: rough-skinned crusty dysfunction plaza

Didnt mean to imply they hadn't just got tenses wrong. I just think its going to get worse.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689224)



Reply Favorite

Date: December 28th, 2021 12:57 PM
Author: rough-skinned crusty dysfunction plaza

1. Do not look at bond yields as an indicator of market expectations re: inflation. Someone going long the 10Y today at a massively negative real rate is not doing so because they expect to generate a real return in the future. They are doing it because the expect further Fed intervention to push yields lower, driving their bond investment higher. The bond market is now completely driven by market players betting for/against central bank intervention. Thats why half the bonds in Europe had negative yields for a while.

2. If you look at inflation and the damage it can cause, its mostly driven by higher housing costs, higher food costs, higher raw material inputs and logistics issues. Only that last one can be improved upon by globalization.

Housing is local.

Food is mostly regional, and to the extent that it is global, production is already occuring in the lowest cost parts of the world.

Raw materials prices are driven by scarcity of easily accessible materials and a lack of capital invest driven by climate policy. Neither of these can be changed by technology or globalization. The oil and copper markets are already globalized. Short of new inventions for extraction you have no more tailwinds on that front.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689136)



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Date: December 28th, 2021 1:02 PM
Author: sooty seedy hissy fit mental disorder

Lacy Hunt is a highly respected bond expert. He still thinks deflation is more likely than inflation.

https://mishtalk.com/economics/lacy-hunt-on-debt-and-friedmans-famous-quote-regarding-inflation-and-money

His bond purchases, and those of many others like him, are informed by this view that deflation is more likely, not by a belief that the Fed will distort the bond market indefinitely.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689161)



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Date: December 28th, 2021 1:05 PM
Author: cordovan marketing idea space

Appeal to authority? On XO? Really?

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689168)



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Date: December 28th, 2021 1:08 PM
Author: sooty seedy hissy fit mental disorder

Hunt is a massive bond purchaser, not just some pundit. So yes, his opinion matters in rebutting what the guy above me posted about why bond yields are so low.

Doesn't mean that Hunt is necessarily correct, of course, but it's wrong to say bond yields are so low because the smart money thinks the Fed will fix the market.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689179)



Reply Favorite

Date: December 28th, 2021 1:13 PM
Author: rough-skinned crusty dysfunction plaza

Yes he is just betting V continues to drop. I guess having been between 1 and 1.5 for the entirety of recorded monetary history is outweighed by his opinion that it will stay at 0.5 for the foreseeable future.

You also missed the key data point: why are European bond yields NEGATIVE. That can't be driven by purely a call on deflation, by definition the only way to make money on a bond investment with a purchased YTM thats negative, is if it goes more negative. What is the only process by which that happens? If the ECB p buys those negative rate bonds.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689199)



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Date: December 28th, 2021 1:14 PM
Author: cordovan marketing idea space

Hunt manages $4B. That’s literally nothing in FI

Mohammed El Erian manages $3 TRILLION

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689202)



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Date: December 28th, 2021 1:16 PM
Author: rough-skinned crusty dysfunction plaza

He also can't explain negative rates with a deflation hypothesis UNLESS you dovetail that with central bank rate/QE actions (at which point the tail is wagging the dog).

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689220)



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Date: December 28th, 2021 1:10 PM
Author: Federal Personal Credit Line

Read the new Market Wizards. The traders with biggest gains traded bonds on expectations of central bank interventions.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689188)



Reply Favorite

Date: December 28th, 2021 1:15 PM
Author: rough-skinned crusty dysfunction plaza

Its been crystal clear that since 2008 the bond market has been exclusively just a betting market on central bank actions.

Maybe once you leave IG it becomes more about economic outlook at whatnot. But lol if he thinks the 10Y is driven by a genuine view on anything but what the Fed does over the next few years.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689212)



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Date: December 28th, 2021 1:20 PM
Author: sooty seedy hissy fit mental disorder

But the Fed's tapers on QE have already been announced and scheduled. By the middle of next year the Fed won't be buying any treasury bonds (correct me if I'm wrong). Are you saying the Fed is going to backtrack on that? Why on earth would they do that if inflation is going to increase as you contend?

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689241)



Reply Favorite

Date: December 28th, 2021 1:29 PM
Author: rough-skinned crusty dysfunction plaza

Your asking me in bewilderment if the Fed could possibly backtrack on its schedule to taper/end QE? Have you been alive for the past 13 years? Do you want to count how many false starts and backtracking has gone on each time the Fed tries to normalize rates and shrink its balance sheet?

Hell we all forget that before COVID, in the Fall of 2019, the Fed literally had to reopen and support the repo market with massive liquidity. This was at the same time it was trying to tighten.

The Fed will most certainly backtrack because they will not have the wherewithal to push through with taper and higher rates. It will destroy the economy and they will make the decision to let inflation run in order to avoid tanking the economy.

They will make the stupid decision to avoid taking the gross medicine and let the disease worsen. I think the bond market is right to have such negative real yields.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689294)



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Date: December 28th, 2021 2:13 PM
Author: Arrogant Contagious Liquid Oxygen Kitchen

so you are saying that the fed will not tighten AND that inflation will increase and 'run'? Where are interest rates going to be?

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689581)



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Date: December 28th, 2021 2:56 PM
Author: sooty seedy hissy fit mental disorder

If Powell hadn't already been re-nominated I might agree, but he has been, and he seems to take his inflation-fighting duty at least somewhat seriously. I don't see him backtracking on QE- the question is how high he will raise rates imo.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689806)



Reply Favorite

Date: December 28th, 2021 3:25 PM
Author: cordovan marketing idea space

Were you not alive in winter 2018 when the market imploded after he tried to reverse QE?

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43690002)



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Date: December 28th, 2021 1:14 PM
Author: passionate doctorate

Bernanke, Powell, Yellen, all need to be strung up.

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689207)



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Date: December 28th, 2021 2:58 PM
Author: Turquoise Bipolar Office Feces

harsh but fair

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43689820)



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Date: December 28th, 2021 3:28 PM
Author: multi-colored property legend

Thank god at least Powell is a goy so they can’t blame the Jews….

(http://www.autoadmit.com/thread.php?thread_id=4995169&forum_id=2#43690018)