OT - Dow plunges 1,175 - worst point decline in history

[notsew]

Originally Posted by MattTuck

The problem won't be spending, it will be where to borrow the money from -- in other words, finding a sucker willing to lend the government money. In the next few years, Social Security is going to switch from a net lender to the government to a net seller/redeemer of US government bonds.

Maybe how much it will cost to borrow money... do you think there would be a systemic enough change that the US would realistically be unable to borrow? its hard to imagine in this yield chasing world. a few extra basis points goes a long way.
(edit: This is meant as a serious question)

[sipmeister]

Originally Posted by nickl

Yes, that works very well in many banana republics. With ever increasing powers being usurped by the executive branch of the federal government and less restrained deficit spending we are gravitating in that direction anyways so let’s go full tilt into that black hole.

No thanks to the black hole!

Just curious how the Fed creates money out of nothing and then charges interest on it. That money isn’t real to begin with. The problem is fiat money: money backed by debt. Which is what they create.

[fa63]

Originally Posted by sipmeister

No thanks to the black hole!

Just curious how the Fed creates money out of nothing and then charges interest on it. That money isn’t real to begin with. The problem is fiat money: money backed by debt. Which is what they create.

I suggest reading "Sapiens" by Yuval Noah Harrari. He makes a compelling case for the "myth" of money and how it came about.

[likebikes]

djia worst week of 2019.

[pbarry]

And it’s not even close to being over.

[sipmeister]

Originally Posted by fa63

I suggest reading "Sapiens" by Yuval Noah Harrari. He makes a compelling case for the "myth" of money and how it came about.

Thanks for the tip! I’ll check it out.

[MattTuck]

Originally Posted by notsew

Maybe how much it will cost to borrow money... do you think there would be a systemic enough change that the US would realistically be unable to borrow? its hard to imagine in this yield chasing world. a few extra basis points goes a long way.
(edit: This is meant as a serious question)

Yeah, for sure that is a valid point when it comes to the real world. I watched a video a few weeks ago about how underfunded pensions are causing states to allocate additional money to those funds to bring them up to the statutory minimums, and this is causing a big inflow (levitation) into financial markets. And if the markets tank, this trend becomes more acute as these states would then have to increase allocations again.

So, there is an argument that people just have to put money somewhere. That being said, you'd have to look at what would happen to our interest rate if we lost reserve currency status, lost the lending facility of social security, and lost the demand from nations that export to the US and thus need to do something with their dollars. Maybe other investors would move into fill the void.

I personally think that COULD happen. However, only if the policy makers can credibly demonstrate that they can reign in the deficits. Not sure I want to make that bet. From my view, it seems there is more downside risk that we have a crisis of confidence and borrowing costs spike.

[dbnm]

Against my advisor and brokers advice, I keep large quantities of cash and gold hidden in my house.

[nickl]

To those interested in how the Fed creates money perhaps the following will help. Unlike some other authors that have written long dissertations and tomes on the topic, this is much more concise with less bias.

https://www.forbes.com/sites/michael.../#613444564013

[choke]

Originally Posted by RailTrailRacer

I am not sure either party has cared about deficits since Eisenhower. And certainly no party has cared about it since Nixon took us off the gold standard. There may be individuals within each party that, at various times, have agitated for fiscal rectitude, but at the party level there is no "fiscally conservative" party, and there hasn't been for a long time. It is a sad state of affairs.

The last time that the Federal Govt paid off the national debt was in 1835...... Andrew Jackson was the President.

[Elefantino]

Originally Posted by dbnm

Against my advisor and brokers advice, I keep large quantities of cash and gold hidden in my house.

Address?

[oldpotatoe]

Originally Posted by pbarry

And it’s not even close to being over.

Glad they don't 'trade' on the weekend..the goats are loose at 1600 Penn Ave..

[Tony T]

"Buckle Up"
China’s Currency Weakens in a Potential Challenge to Trump

BEIJING — China’s currency weakened past the psychologically important point of 7 to the American dollar for the first time in more than a decade, a move that reflects the growing severity of the trade war with the United States and that could indicate Beijing’s growing desire to find ways to retaliate against President Trump.
Monday’s move by itself will not change China’s trade relations with the United States. But the shift past 7 renminbi to the dollar could represent a new stage in the economic conflict between the two countries

[verticaldoug]

Originally Posted by sipmeister

No thanks to the black hole!

Just curious how the Fed creates money out of nothing and then charges interest on it. That money isn’t real to begin with. The problem is fiat money: money backed by debt. Which is what they create.

Obviously, the FED must be behind Tether and financing everything with bitcoin

[MattTuck]

Whee!

Anyone think we're going to hit -1000 on the Dow today?