Money, the Economy, and the Fed.

[POINTER94]

http://www.youtube.com/watch?v=SWksEJQEYVU

A little different topic for the DC. But one that impacts all of us. I personally think he has gone off the deep end, but I readily admit I know little about these matters.

I am concerned that we should be sending money into a market teetering on an inflationary trend. Gas prices up, food prices up, and now flooding the market with cash and today they lowered the exchange rate by 1/2 a point. Why? Sounds like a fancy way to get the rest of us to prop up the big banks and the fools who tried to get something on the cheap. You get what you pay for. In Jims rant he said there were 14 million mortages written in the past 3 years, 7 million took the teaser rates. I didn't, not because I was some insightful financial genius, but because I can't believe you ever get something for nothing. I know exactly what my mortgage payment will be in 2022. Because a 30 year fixed at 6.75% was a good deal on its face vs. a floater at 6.25%. This smells to me like feeding inflation for the few and the short term instead of staving it off which benefits the majority of us long term?

Am I missing something? Someone straighten me out.....

 

[Haut Medoc]

Re: Money, the Economy, and the Fed.

The lenders themselves have toppled the house of cards & now the Fed has to pump money into the market.....
What a scam!......
I can see why Jesus loathed the moneychangers.....
The Amish have the right attitude on such matters, IMHO....​

 

[RubberFrog]

Re: Money, the Economy, and the Fed.

I never watch Jim Kramer. He is forced to eat his words every third day it seems....

You're missing a lot. The fed really needed to do this. Regardless of how you place blame for the subprime mess, the market needs access to credit and liquidity. There is plenty of liquidity out there, but an obvious credit crunch.

When the market starts falling, businesses start scaling back expansions (ie lower or negative job growth), consumers get nervous and stop spending (less demand translates to less manufacturing translates to less jobs aka layoffs).

Whether or not we partook in a subprime loan as indivduals is irrelevant to the market as a whole. These loans were rolled into countless financials (hedgefunds or otherwise). They are so huge and so pervasive that they have infected all levels of the market (seemingly). Even if you don't own a single stock, you are still impacted because the market sets the tone for the economy.

'29 all started as a credit crunch in an inflated market ( it was more complicated I know, but that was a significant component). Inflated markets always correct, but if they correct during a credit crunch... that can lead to a depression.

So here we are with an inflated market, do you really want to have a credit crunch while the market corrects?

edit: haut, I know it's fashionable to hate banks and lenders, but your explanation really has nothing to do with the cause of the situation, nor the solution to it.

 

[Skinnywater]

Re: Money, the Economy, and the Fed.

That was a very clear explaination RF.

Now in the process of stabilizing the economy this way is it possible they make it worse in the long run?

 

[RubberFrog]

Re: Money, the Economy, and the Fed.

Is it possible? Sure. Anything is possible! If you figure out a way to see into the future and predict the market (accurately!) let me know, because we'll be rich!

It is quite possible that this could simply postpone the inevitable. However, that isn't a bad thing. It gives us all time to prepare and adjust accordingly, rather than lose it all over night without a chance to respond.

The bigger concern over the feds action relates to inflation.

Most of the best economists in the world are in agreement, as evidenced by both the fed and the EU central bank infusing cash and lower interest rates into the market.

 

[Skinnywater]

Re: Money, the Economy, and the Fed.

Is it possible? Sure. Anything is possible! If you figure out a way to see into the future and predict the market (accurately!) let me know, because we'll be rich!

No honestly I'm purely passive and in read and learn.

Recently I've been very interested in these matters and how it all works since I'm the 1st generation in my family to even have a mortgage and savings accout at the same time.

 

[bassman284]

Re: Money, the Economy, and the Fed.

I think it's guaranteed to make things worse because the lenders have been shown that no matter how absurdly irresponsible they are, the Fed will bail them out.

 

[OldMercsRule]

Re: Money, the Economy, and the Fed.

No honestly I'm purely passive and in read and learn.

Recently I've been very interested in these matters and how it all works since I'm the 1st generation in my family to even have a mortgage and savings accout at the same time.

Skinny, I wish I could give advice but I can't, (it is against the law fer me as I'm no longer registered).

Buy and read Harry Dent's most recent book.

Ignore his wild projections of upside, (which may or may not happen). Pay real attention to what has happened in past demographic peaks. It will open yer eyes and partially prepare you for an event or series of related events that will effect everyone reading this (unless ya live on mars).

The demographic peak on the horizon is the biggest in history in the most important economy on this particular planet, it very likely will cause big changes. Knowing history will help anyone prepare for the event, (hopefully still a few years off). Your present situation looks very sound, (from what you said). This knowledge, (from readin' Mr. Dent's book) will help you a great deal.

Stay away from borrowing money at yer stage in life, (which looks like you are doing).

As Rubber stated: don't count on yer house as part of yer plan. My $.02. JR

 

[Skinnywater]

Re: Money, the Economy, and the Fed.

Skinny, I wish I could give advice but I can't, (it is against the law fer me as I'm no longer registered).

Buy and read Harry Dent's most recent book.

Stay away from borrowing money at yer stage in life, (which looks like you are doing).

As Rubber stated: don't count on yer house as part of yer plan. My $.02. JR

Thanks, I will read the book.

And I'm glad I asked because I was only comtemplating borrowing to invest into some rental props.

And yes, I was counting on my home as part of the plan.

So I guess I was getting a little antsy lately instead of keeping with a nice, low stress, quiet, comfortable retirement in a few years.