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US On The Brink of a Devastating Crash?

AdamEsk
Posts: 202
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1/10/2015 11:52:26 PM
Posted: 1 year ago
Scary word is spreading about a substantial crash in the US Stock Market, US Dollar, and overall economy. Do you believe it is coming soon, later, or not at all? What individual preparatory steps are needed to brace for impact?
twocupcakes
Posts: 2,750
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1/11/2015 3:05:54 PM
Posted: 1 year ago
At 1/10/2015 11:52:26 PM, AdamEsk wrote:
Scary word is spreading about a substantial crash in the US Stock Market, US Dollar, and overall economy. Do you believe it is coming soon, later, or not at all? What individual preparatory steps are needed to brace for impact?

The USA is not going to have a devastating crash is the near future.

What evidence are you basing this on?

Those predicting a near future economic depression are in the same boat as those who predict the rapture.
AdamEsk
Posts: 202
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1/11/2015 4:50:51 PM
Posted: 1 year ago
http://moneymorning.com...

Before you accuse me of being naive, Rickard brings up a lot of interesting points. People aren't spending money like they used to, and the Fed is printing so much currency, that the value of the dollar is going to plummet just like the currency in Greece. Not to mention the Stock Market has developed a bubble that is bigger than ever before and it is about to burst. This is just what I have been researching.
twocupcakes
Posts: 2,750
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1/11/2015 5:11:22 PM
Posted: 1 year ago
At 1/11/2015 4:50:51 PM, AdamEsk wrote:
http://moneymorning.com...

Before you accuse me of being naive, Rickard brings up a lot of interesting points. People aren't spending money like they used to, and the Fed is printing so much currency, that the value of the dollar is going to plummet just like the currency in Greece. Not to mention the Stock Market has developed a bubble that is bigger than ever before and it is about to burst. This is just what I have been researching.

Rickard brings up many hilariously stupid points. Rickard probably just wants to make stupid shock statements to sell his books and get his name in the Media.

Rickard was a member of LTCM (the hedge fund that had one of the biggest blow ups of all time). Not that it has anything to do with this. But Rickard is a Buffoon.

People aren't spending money because of the recession. Printing money is a smart economic policy to get people spending.

Rickard talks about how other countries can attack the dollar and make it worth less. But, a bigger problem would be that other countries prop up the value of the USA dollar to sell more exports to the USA.

Rickard just puts together a bunch of nonsense arguments to scare people into thinking a crash is coming.

To say that this is the biggest bubble ever is just nonsense talk. The upward sloping yeild curve should show that a depression is not a reasonable possibility.

Rickard is a clown.He prob wants to say nonsense so het gets mentioned in the media.
twocupcakes
Posts: 2,750
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1/12/2015 6:44:41 PM
Posted: 1 year ago
At 1/11/2015 7:30:05 PM, AdamEsk wrote:
You didn't provide any reasoning why a crash isn't coming.

Yes, I did. I mentioned the upward sloping yield curve (which means interest rates are expected to rise)

You also did not provide any reasons...you just cited an article with some other yahoo saying there is going to be the greatest depression of all time

Your reasons are people are spending less money, the fed is printing money and that the stock market is the biggest bubble of all time (you gave no argument why it is the biggest bubble, you just said so)

People spending less money is not an issue. Big recessions happen when people spend too much money and the spending cannot be sustained. Like, in the 2008 crisis people bought way to many homes and there were too many loans in the system.

Printing money is not an issue. You say this will devalue the currency. The FED has plenty of reserves and can prop up the currency if they wish. The economy is currently has not recovered from the recession and printing money will help.
Zaradi
Posts: 14,125
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1/12/2015 8:04:43 PM
Posted: 1 year ago
The following post has been posted as a favor to a user who is no longer on the site. Please be aware that responding to me is not the best way to respond to the post, as my personal knowledge of economics is utter sh*t.

"I believe the post in the OP demonstrates fittingly what is wrong with economics and more particularly with economists. Keynes once remarked that he changes his opinion when the facts change, but for many of his adversaries, this is far from the case. We have over six years of evidence that every claim made by the Peter Schiff"s, Rick Santelli"s, and Ron Paul"s of the world have not come to fruition: inflation has firmed and is presently falling due to falling global commodity prices; G.D.P. is beginning to pick up, and is projected to grow at about 3 percent in 2015; the stock market continues to reach record highs; the dollar has been appreciating due to stronger U.S. growth, weakening growth abroad in China, Japan, Europe and emerging markets, and the expectation a rate hike later on this year; and long-term interest rates have yet to spike. Heck, Peter Schiff recently contended that the Fed, after ending its QE3 asset purchases, would need to re-launch QE4 to prevent a stock market crash and a crash of the broader economy. The Fed has yet to do so, and continues to push toward liftoff, and the stock market continues to rise. Moreover, fed funds futures, or market-implied expectations of the path of the federal funds rate, remain relatively stable, though admittedly beyond FOMC projections"in other words, there is absolutely no sign or expectation whatsoever that low rates will persist long into the future, which would prompt long rates to spike.

These considered, there is absolutely no merit to the claim that there"s an impending crash. How someone could argue for the existence of an asset bubble at this time is positively baffling and preposterous. G.D.P. in Q1 contracted 2.1 percent, and with Q4 projections hovering around 2.6 percent, coupled with elevated credit standards, weak manufacturing numbers, lackluster wage data, and a still-sluggish housing sector, the odds of the economy overheating are slim to none"if we were ever faced with an asset bubble, we would be on the brink of overheating, though surely that"s far removed from reality. In fact, if you were to look at Treasury rates recently, you"d see that TIPS spreads are plummeting, with the 10-year Treasury trading below 2 percent and expectations subdued. Market participants are expecting perpetually sluggish growth, and post-crisis have flocked, persistently, to government debt as a safe haven. Lending institutions, also, have become significantly more risk adverse, which again helps to explain the weak housing sector and bank lending channels, as well as the grossly elevated excess reserve balances"which will not prompt future inflation because the Fed has no reason to engage in asset sales prior to raising rates, and could only create a problem if inflation expectations were to become unanchored.

The point I want to emphasize, though, is that the reason the economy is presently growing is not in spite of government measures, and a function of the mythical invisible hand; it"s by virtue of government measures. Even a cross-country analysis of post-crisis responses to the global financial crisis demonstrates that countries like the U.S. and U.K. who responded aggressively to the financial crisis in terms of both fiscal and monetary policy fared far better than countries who did not, like Europe and Japan. That aside, though, the reason we haven"t yet returned to pre-recession growth trends, which I think is just about the only thing that would silence these "Very Serious People," as Paul Krugman rightfully calls, is not because policy has been too expansionary, but too tight"it didn"t match the longevity of the problem, because we now know that prolonged downturns deal permanent damage to potential output. But the fact is, growth is picking up, wages of job switchers who aren"t bounded by contractual obligations"meaning their wages aren"t subject to nominal rigidities"have been picking up, the federal budget deficit is plummeting, the stock market (which, it needs to be said, is a horrid indicator of broader economic activity) has been performing exceedingly well, the dollar is and will continue to appreciate, and inflation is far below target and will likely plummet further.

Finally, though, and what I find most hilarious, is the cognitive dissonance amongst people of your ilk. Never mind that the proposal of people whom you agree with is to "allow the market to work""in other words, allow markets to clear and wages and prices to fall, which, via the Paradox of Flexibility, is disastrous at the zero lower bound for nominal rates and would in fact exacerbate the problem. But your argument hinges on efficient markets. But, if markets were efficient, as people on your side of this debate postulate, arbitrage would circumvent the underpricing of risk. In other words, we wouldn"t have asset bubbles"yet you continue to contend there must be one, somewhere, for the sake of ideological purity. Don"t let reality get in the way of a good story, I suppose.

Tl;dr: The definition of insanity is doing the same thing over and over and expecting different results. The "Very Serious People" have been proven wrong continuously, yet persist to spew their nonsense. There won"t be any end to it, because I suppose that"s what spurs fear and prompts gold purchases. It"s all utterly ludicrous. "
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