Heraclius wrote:GrumpyCatFace wrote:
Well, there were at least 2 instances in the last 10 years that were going to be a normal market crash, but were headed off by the Fed. At this point, the bubble is so big that I don’t know how we have a functioning economy afterwards.
We still haven’t seen 3% growth, and it’s actually down for Q4 ‘17. The dollar is declining at an alarming pace so far this year, but nobody cares because the stock market is blowing the roof off.
Things will look very different by spring.
But we saw 3.2% growth Q3 and it isn't like Q4 was unhealthy. 2.6% is still a strong growth level.
What's so bad about a declining dollar? It was pretty obvious Trump was going to lead to a declining dollar considering the constant mentions of bringing domestic industry back. One of the major ways of stimulating domestic industry is making international industry expensive, which requires a weak dollar. Why does this show some impending doom?
Nothing, unless you happen to have dollars. Or buy imported things with them. Or want to save them for your kids.
The foreign exchange rate is just the canary in the coal mine, for domestic inflation. Once that starts to take hold, we're in real trouble. It also means that the stock market has entered a blow-off phase, which will come crashing down shortly - thanks to absurd leverage and margin levels. We've broken every record for excessive speculation, blowing right past the marks in 2007. Once that happens, businesses start shutting down, and things get weird, quick.
We survived 2008 with
relatively little damage, because of the TARP and extreme QE spending. I'd argue that we would have been much better off by now without it, but it happened. And while it stopped a depression, it kicked off the biggest bubble the world has ever seen. When this thing ends, we are facing a complete re-ordering of economics and global systems. This is not going to be "just another one".
To put it in simple terms - we saved the banks, by handing them the treasury. Now they're going to take the rest.