So, the Fed printing money and buying bonds would increase or decrease the severity of a possible depression?
Post by twetch#2584
Obviously increases the severity. Just like everything the Fed is buying , the bond market is turning to shit. So it's really just more veiled printing of money.
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- Block
- 635 507
- Time
- 2020-05-18T22:20:18Z
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- 17mNxa3wLR3UpkxzBHkTQ1ynn6boQ3zGjY
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- twetch
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- post
- Content type
- text/plain
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- twetch#2584
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I disagree, I think the sudden disappearance of credit and cash flows due to the pandemic would plunge the world in a much more painful crisis if it was not by the central banks injecting liquidity into the system.
Here's the endgame: USD loses so much buying power, due to money printing, that Fed can't buy debt or bail anyone out. Businesses can't transact in USD so neither can the Fed . Check and Mate ..depression happens whether anyone likes it or not.
This will happen if the inflationary measures outpace by a high degree the deflationary pressure of the credit and cash flows shrinkage.
But if the USD dies, it will be replaced, just like that. Cash is not a long term investment but it holds for daily use
Q: Why don't third world countries just reset their currencies successfully?
A: Because they lose all credibility in the world. No one wants to help them reset their currency because they are irresponsible and stupid.
I am not a fan of the system, though. I think the incentives on the credit creation are misplaced. This part of the system is responsible for crisis that push governments away from hard money.
OK. But you seem to think money grows on trees. The Fed is not doing anything other than delaying things and taking a shit on the USD. They certainly aren't making the problem smaller.
FIAT money grows on trees, and so does credit. Think that way, they would have to take a shit, they could choose to do that on the head of people and companies or on the currency.
Shitting on the currency is shitting on everyone. Good businesses will fail too instead of just the ones that can't compete in a free market.