06-16-2021, 03:49 PM
(06-16-2021, 03:09 PM)crimsonghost747 Wrote:(06-16-2021, 01:19 PM)divmenow Wrote: Powell is an A hole lol What a premature for Powell to say about a possible couple rate hikes 2023 ??
What else can he say?
Inflation is kicking up and interest rate hikes are the most effective way to keep it under control. But you can't raise rates now since that would be destructive to a market riding ridiculous leverage at all-time highs.
So you say "yeah we will see end of 2023" and then keep pushing it forward when necessary.
I remember this stupid game being played from 2009 through 2019. I remember rates getting so eye-wateringly high that I immediately dumped all of my A credit rated DGI stocks so I could buy bonds on margin.
There were so many taper tantrums and speculative taper tantrums that were purely based on rumor, but nevertheless the market kept going up.
I keep going back to the basics:
1. The United States government cannot function with rates back at historical norms, given where the debt is.
2. The United States government is prohibited by the Constitution from defaulting on its debt (Fourteenth Amendment, Section 4).
3. There will be no meaningful cuts to any spending that matters as a substantial percentage of the budget (Medicare, Social Security, and the world's largest jobs program - the United States Military). To do so is political suicide for any party that tries it.
4. That leaves inflation (through the Fed and Treasury continuing to work together to apply modern monetary theory, as they have for decades). U.S. deficits are just a sovereign controlling a global reserve currency increasing the amount and rate of flow of that currency, to stimulate economic activity and growth. There is a difference between managed inflation and hyperinflation. Hopefully the Fed and Treasury don't cause the latter.
Point 4 is where I get caught up on Bitcoin and cryptocurrencies. The U.S. government zealously guards the sanctity of it reserve currency, the almighty Petrodollar. It has allowed us to enjoy outsized economic dominance and growth for roughly 50 years. The first decade after Nixon abandoned the gold standard/Bretton Woods was pretty rough, as the revolutionary change to fiat caused a lot of inflation at the beginning, but since then careful management of that system has brought the U.S. far more wealth than GDP alone should have. The U.S. has every reason to try to regulate Bitcoin out of existence, as it presents a threat to the Dollar, and we don't like threats to the Dollar (Middle Eastern countries have been invaded shortly after threatening to price oil transactions in Euros, surely just a coincidence). That said, anyone who has lived in a country like Nigeria or Venezuela where the government devalues currency at will, imposes currency controls, or otherwise casually seizes people's assets and life savings, knows the value of an asset that can't be inflated, and that allows direct transactions between people without a government intermediary standing between them. Unstoppable force meets immovable object.