
Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record - baronmunchausen
https://thesoundingline.com/fed-prints-another-205-billion-this-week-m2-growing-at-fastest-pace-on-record/
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strict9
> _30.2% of US GDP_

How much further can they go?

26 million or so recent unemployment applications and the stock market is not
off much from recent all time highs.

This is more concerning than the initial falling knife mid-March.

~~~
selectodude
The Bank of Japan’s balance sheet is at 110 percent of GDP.

~~~
throwanem
I was about to make a joke that it looked like they could go about another
69.8%. Now I'm glad I waited.

What does that even signify, a federal bank owning >100% of its attached
country's GDP? Debt in excess of produced value, i.e., the country being
underwater?

~~~
yeldarb
GDP is per year. Analogous to a person making $100k/yr with a $110k mortgage.

Edit: Although perhaps not that analogous because is this even technically
"debt"?

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ashtonkem
The analogy has always been strained, since national debt just doesn’t work
like personal debt.

Also, when you can borrow at sub-inflation rates, there’s rarely an incentive
to stop.

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RobertoG
It's the Bank of Japan who decide the borrowing rates, so, not problem in that
regard.

~~~
eslaught
Ok, but they don't control inflation. At some point, I think it's obvious that
printing money becomes counterproductive. But where exactly is that line?

~~~
ashtonkem
They don’t control inflation. But all of the warnings about hyperinflation
being “right around the corner” have remained hilariously false. So who knows?

~~~
WanderPanda
They only control their inefficiency around an increasing trajectory

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systemshutdown
Why are the feds able to inject so much money into the system these days
without much push back? While during the 2008 Crisis Hank Paulson had such
difficulty with getting 700 billion injected?

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sjtindell
That 700 billion was Treasury money. The Fed at the time also engaged in
trillions of dollars of quantitative easing, similar to what they’re doing
now. I would guess the reason the Fed is going all in this time is because
there was consensus among the decision makers that last time we were too slow
- we did QE but it took years. I assume they think that if we hit it hard now,
we can shorten the recession period. Also this time there is more unified and
obvious support from “the people”. Rather than bailing out bankers and all the
hazards that come with that, everyone is getting a check, so everyone is more
on board.

~~~
systemshutdown
Interesting. What is the difference between Treasury Money and money coming
from the Federal reserve? Was the 700 billion of Treasury money at that time a
loan that had to be paid back while today, they're simply increasing the money
supply?

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logicslave
One interesting fact I learned the other day:

IBM did 140 billion in stock buy backs in the last decade.

They have a 100 Billion dollar market cap.

I think that is a bit of what we have going on right now. A system propped up
by injected cash, which works for now because everyone plays along. Most of
this injected money goes into the pockets of the rich, who are the ones
holding the assets that the FED is bailing out. Modern extreme economic
inequality is a function of monetary policy, not political policy.

~~~
jonfw
You're not giving the whole picture if you don't mention that IBM's market cap
has seen very significant decline over that time period.

IBM has been producing insane cash-flow over this period and their strategy
was to pay out dividends/buybacks rather than to invest in new markets

Is IBM even getting bailout money? What does IBM have to do with the bailouts?

~~~
est31
And dividends/buybacks are a reasonable choice. It moves the choice of whether
to invest into new markets to the investors instead of dictating it from
above. Companies like Google are blown out of proportion in comparison to the
part that actually makes the money, all in order to find the next toothbrush
product that may never come. The core Google products barely changed in the
last 5 years, yet the employee count almost doubled. Great for the engineers
who get the cushy 200k comp jobs, but not great for investors.

~~~
tomweingarten
Even if we take at face value the idea that the products have barely changed,
which I completely disagree with, this explanation vastly underestimates how
many engineers it takes to scale the infrastructure it takes to run Google
Search, Google Cloud, YouTube, etc.

~~~
basch
Saying "Google hasnt changed" is somewhat of a disservice to what Alphabet is.
Its an investment firm / publicly traded venture capital stock, and one of
their main holdings is Google. Their future growth potential is much more than
just Google, despite Google being their current source of revenue. I would
hope, over time, Google Ads being 80% of Alphabets revenue drops and drops,
and if I were investing in Alphabet that would be the reason, not to buy into
Ad Words ownership.

[https://www.forbes.com/sites/oliviergarret/2019/09/27/if-
you...](https://www.forbes.com/sites/oliviergarret/2019/09/27/if-you-want-to-
get-rich-invest-like-google-not-warren-buffett/)

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Eliezer
And it's still not even remotely enough. 5-year inflation expectations running
at 0.67%, CPI falling. The shock to aggregate demand is being allowed to
exceed the supply shock.
[https://fred.stlouisfed.org/series/T5YIE](https://fred.stlouisfed.org/series/T5YIE)

~~~
monetaryvirus
How is that supposed to work? I can understand if this were a normal cyclical
pullback, but this isn't a normal times; there is actual economic destruction
wrought by a real (non-monetary) shock to supply. In order to believe this
helps, you have to imagine it happening by this mechanism:

"Can you lend to our business that's not allowed to operate and probably won't
pay you back?"

'lol no. ... wait, I just got off the phone with our credit line. We can
borrow at 3% instead of 3.25%. What's your business model again?'

~~~
Eliezer
Usually, destroying some of the supply, but holding the flow of money fixed,
means that the remaining items will be bid up. If instead prices are falling,
it means that the secondary financial effects of the real shock are exceeding
the impact of the real shock itself. If the flow of money is slowing down, one
should create more money to avoid _worsening_ the real shock through financial
reverberations.

~~~
monetaryvirus
If there are actual, viable ventures right now, given the new conditions, then
their lenders' investment probably doesn't hinge on whether the Fed is
slightly more lose with credit than the ultra-loose policy it's had for the
past year.

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bawana
And there will be NO inflation because this money is largely going to
corporations who will figure out ways to maximize ROI -> invest it in the
financial market. So although there might inflation of equity prices (as seen
by the recovery of the S&P and other equities), the world is still out of work
and starving and without the dollars to drive demand and price increases of
goods and services.

We need to separate financial money flows (Gross Financial Product?) from the
GDP to really know what is going on.

~~~
shse
Real state prices will explode. That’s what happened after 2009 due to QE.

~~~
k3oni
I have a hard time believing that real estate prices will explode. From what i
can see the prices are expected to go down, mostly due to the fact that
there's less ppl able to buy due to many being out of work(some for a good
while probably as i doubt some jobs/positions will be immediately re-filled).
This same thing will cause many to go into foreclosure, this adding new supply
to the real estate market. Also banks already tightening credit/loans
requirements and availability. All this means larger supply than demand, no
reason for real estate to go up. This is all just starting, curious to see
what the end of 2020 will bring and start of 2021.

Also the market doesn't represent the economy and right now most of the money
goes into the market creating a false-positive idea that everything's fine.
Just my 2 cents.

~~~
bawana
Agree. It turns out that jumbo mortgage rates are higher than regular
mortgages. Banks cannot find buyers for the jumbos because of the anticipated
drop in real estate value from the COVID freeze. No one wants to lend to
people who might find themselves underwater on a mortgage. AGAIN.

~~~
WanderPanda
There is quite a lot of stuff going on here, but I think it can still swing
both ways. An adverse effect to the one you mentioned could be the flux of
debt / bonds to the central banks and the flux of printed money to the
investors. This money is looking to be invested (which happened to find real
estate post 2008)

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ackbar03
What's the saying these days? Money printer goes brrrrrrr?

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alistairSH
[https://brrr.money](https://brrr.money)

~~~
vzidex
Is the song that plays on this website commonly known? The only other time
I've heard it is in the video that the New Zealand mass shooter recorded, and
it makes me uncomfortable that it's the same song if it is indeed not common.

~~~
alistairSH
Not super well-known, but it has been used in a few dozen Youtube videos
(mostly based on Japanese manga or Pokemon).

I believe the song - artist is: Gas Gas Gas - Manuel

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fallingfrog
Here’s how I see this going (obviously just a guess): the entire corporate
financial system is now unprofitable without being bailed out with zero
interest loans every 10 years. This time around, the recovery will be slow, 10
years, then another, bigger bubble will form, that will pop and get bailed out
again, but the next time around it will cause fast rising inflation. The fed
will have to choose between either allowing hyperinflation to happen, which
will crash the dollar, or saving the dollar by jacking up interest rates but
allowing a second Great Depression to occur. I think they’ll choose the
latter. At that point, the right wing, funded by the desperate corporate state
which needs to stem the rising tide of labor activism, will blame coastal
elite liberals and immigrants for their problems and there will be some kind
of fascist coup, followed potentially by war, (but probably not). This will be
right at the same time as lots of mass movement of people due to climate
change is happening. If a war does happen it will be because of tensions
caused by people flooding across various borders. I cannot see any further
ahead than that.

~~~
core-questions
> At that point, the right wing, funded by the desperate corporate state which
> needs to stem the rising tide of labor activism, will blame coastal elite
> liberals and immigrants for their problems and there will be some kind of
> fascist coup, followed potentially by war, (but probably not).

You had me until "funded by the desperate corporate state", who want
absolutely nothing to do with the right wing. If anything, we'll see a
continued rise in Totalitarian Liberalism rather than any kind of right-wing
renaissance.

> there will be some kind of fascist coup

You need a Great Man for that, and there are none on the horizon.

~~~
fallingfrog
The corporate state in Weimar Germany was faced with a popular communist
movement, and to defeat it they threw money at the fascists, who they saw as
the only credible opposition. But, history never repeats, it may go down
differently next time. Just look at how the supposedly left wing media
responded to Bernie Sanders. When money is on the line, they will align with
the right wing. Plus, left wing is by definition a movement that opposes the
current power hierarchies in society. Look it up on Wikipedia.

[https://en.m.wikipedia.org/wiki/Left-
wing_politics](https://en.m.wikipedia.org/wiki/Left-wing_politics)

By that standard, none of the people you would call totalitarian liberals are
left wing at all, they’re just corporatists with socially liberal virtue
signaling. Trust me when I say that those people are the very first to
suppress labor strikes or call the cops on protesters. They would absolutely
support a fascist coup if it was their only way to keep their money, power and
influence.

~~~
core-questions
> Plus, left wing is by definition a movement that opposes the current power
> hierarchies in society. Look it up on Wikipedia.

A foolish movement that doesn't recognize that power and competency
hierarchies are endemic to nature and are a part of any human organization.
The moment the current system is torn down, the rhetoric of the Left fails as
it offers no actual method towards constructing anything meaningful - this is
left to men who actually build and maintain things, who all recognize the
fundamental nature of the hierarchy if anything is to actually be
accomplished. A few years after every leftist revolution, there's a shittier
version of the same basic hierarchy in place, equality is never achieved, and
as many people starve as before.

> none of the people you would call totalitarian liberals are left wing at all

Agreed, they're just the left-side position in the false dichotomy. And
probably none of the people you'd consider "right wing" are at all right wing
by the standards of the real right, they're just the right-side of the same
dichotomy, established to prevent anyone from actually upsetting the applecart
in the name of real change.

> They would absolutely support a fascist coup if it was their only way to
> keep their money, power and influence.

So would just about every normal working class citizen, if they had the
opportunity and if the populist values were sufficiently representative of
their own. The problem is that fascism has been grossly misrepresented as
simply being totalitarianism, when it is actually an ethos and aesthetic
towards the upward construction of a nation in the interest of its families
that is (obviously) considered undesirable by globalists.

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DSingularity
This is one of two last-resorts mechanisms by which the U.S. will maintain its
hegemony. It may suck, but it is way better than the alternative.

~~~
aeternum
Why is printing money a bad thing at this point in time?

I see two strong reasons that printing money is the right move:

1) Wealth inequality is high relative to recent history. Printing money is a
very effective way to even some of that out. Possibly the only form of 'wealth
tax' that can actually be executed successfully.

2) The US debt / GDP fraction is still relatively low compared to many other
countries.

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blawson
Inflation hurts the poorer the most - they don't have assets that are being
priced up due to inflation, while the cost of everyday life goes up.

~~~
aeternum
This also may not actually cause inflation. The QE performed by the fed during
the 2008 financial crisis did not create much inflation.

