Author Topic: Interest Rates and Demographics  (Read 565 times)

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Offline King Wenceslas

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Interest Rates and Demographics
« on: July 24, 2019, 02:14:10 PM »
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  • What happens now?  With a declining potential global workforce among the consumer nations (aka, declining potential consumers) the overcapacity of real goods, services, and assets (real estate, stocks, bonds, commodities)...a deflationary spiral is only exacerbated by low rates incenting even more capacity creation thanks to ZIRP or more likely NIRP (paying debtors to take out further loans).  The cheap money is also fueling innovation, automation, robots, and autonomous vehicles, etc. (all good things, in a vacuum) that are all further exacerbating the deflationary spiral via ever greater capacity absent creating like demand.

    This cheap money is rewarding asset holders more than wage gains among workers (particularly asset-lite or asset-less young adults who comprise the childbearing population). These policies of inflating asset prices are rewarding elderly and institutions who own the bulk of assets over the young adults who are being penalized with record rents, home prices, insurance, medical costs, day care costs, and student loans, etc..  All this is further delaying marriage and family formation and only pushing fertility rates toward the low variant.  The global population is set to peak far sooner and more dramatically than the UN's current 2100'ish date.

    Global commodity demand is likely to likewise collapse far sooner than anticipated and large overcapacities will likely stymy further green efforts.

    All the D's are now in play; in the rearview mirror are the deceleration of population growth and concomitant decelerating economic growth, interest rate distortions to provide false signals to the market resulting in excessive personal, corporate, and federal debt. The interest rate distortions have and continue to push asset price distortions. Currently deflation is sweeping the globe, leading to upcoming outright depopulation (Even the illegals will suffer. Caught in US with no work and no wealth. They will rue the day they came to the US.), depression, and ultimately corporate and/or national currency defaults.

    A terrible daisy chain of events has long been underway and although we still have better options, at every fork we seem to take the wrong turn.  In the not too distant tumult, those least responsible and those who played by the rules will likely disproportionately suffer the consequences as the bedrock on which they have built their homes, retirements, and dreams crumbles away.

    https://www.zerohedge.com/news/2019-07-22/how-plays-out-deceleration-distortion-debt-deflation-depopulation-default

    Offline forlorn

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    Re: Interest Rates and Demographics
    « Reply #1 on: July 24, 2019, 06:59:17 PM »
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  • been waiting on SH'ingTF for years. dont hold your breath 


    Offline King Wenceslas

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    Re: Interest Rates and Demographics
    « Reply #2 on: July 25, 2019, 11:26:20 AM »
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  • been waiting on SH'ingTF for years. dont hold your breath

    If you have only been waiting and not preparing then you have only yourself to blame.

    Offline King Wenceslas

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    Re: Interest Rates and Demographics
    « Reply #3 on: July 25, 2019, 11:39:15 AM »
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  • Here is the BEST economic forecasting entity in the world (They are professionals. They have paying clients. Its how they make their living):


    Quote
    "Holy Grail Of Indicators" Warns Of Economic Trouble For US Economy"

    Via Economic Cycle Research Institute (ECRI),
    The manufacturing PMIs have become the holy grail of indicators for many market participants. ECRI’s U.S. Leading Index of Manufacturing PMIs (USLIMPMI) anticipates cyclical shifts in the ISM and Markit manufacturing PMIs for the U.S. to a 2 2/3-year low in June and the Markit PMI fell to a nearly-ten-year low in July.

    The USLIMPMI, which typically leads cyclical turns in both PMIs by a couple quarters, turned down in early 2017 (chart, upper panel), and the PMIs followed suit in 2018 (lower panel). With the USLIMPMI falling back towards February’s decade low in May, it was clear that PMIs would remain in cyclical downturns, which has held true, as the ISM PMI slipped.



    The recent industrial slowdown, abroad and domestic, shows economic growth rates around the world are simultaneously moving lower -- and that could spell disaster for the global economy as a cycle of vulnerability could give way to a shock in the next several quarters that would usher in a world wide trade recession.



    ECRI predicted a recession months before the recession that began in December 2007 which brought on the Great Recession of 2008-2009 which brought on the collapse of Lehman Brothers and bankruptcy of General Motors.

    If something similar happens this time GE is going to go bankrupt (97 billion in debt) and many other SP500 zombie companies. Facebook and Twitter will be so much junk.

    This makes sense. With the arrival of the anti-church of Francis and possible world economic collapse this will bring on the socialistic/communistic world government and the arrival of the man of sin.

    Offline forlorn

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    Re: Interest Rates and Demographics
    « Reply #4 on: July 25, 2019, 01:21:23 PM »
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  • If you have only been waiting and not preparing then you have only yourself to blame.
    Don't hold your breath. 


    Offline Peter15and1

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    Re: Interest Rates and Demographics
    « Reply #5 on: July 26, 2019, 10:18:41 AM »
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  • The article is contradictory.  It says several times that "deflation" is occurring, but then talks about increase costs related to homes, insurance, etc.  Which is it, deflation or inflation?  It can't be both.  Plus, "cheap money" (an increaes in the money supply) runs the risk of creating inflation, not deflation.  Deflation occurs when there is a decrease in the money supply.

    I don't think the person who wrote this knows what they are talking about.

    Offline Pax Vobis

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    Re: Interest Rates and Demographics
    « Reply #6 on: July 26, 2019, 01:44:52 PM »
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  • I've heard several economists say that there will be both deflation and inflation, depending upon the asset (this applies for the USA).  For example, housing prices are generally WAY too high and will eventually be devalued because of 1) the baby boomers will be retiring and dying off in the next 5-10 years on a massive scale, 2) houses have been overbuilt for the last 2 decades, 3) the millennial generation isn't buying houses because they can't afford the extra debt on top of their student loans, 4) the increasing # of people on welfare and in poverty makes owning a house too expensive, 5) all the immigrants who come into the country aren't buying houses, they are renting 6) property taxes will skyrocket once the crazy-inflation hits on "basic" items like...

    1) food, since we import too much from elsewhere
    2) items imported from China and elsewhere  (think 90% of stuff at walmarts, targets, lowes, home depot, etc)
    3) gasoline

    The above 3 items will be hit with massive inflation because their products have been subsidized for decades, to keep them at lost costs.  But once governments across the world dump the international dollar and stop buying US treasuries, then if we want to continue to import this stuff (since we don't make it anymore, as our industrial/manufacturing base was killed off by NAFTA), then we will have to pay higher prices (i.e. we'll have to pay for this stuff in euros vs dollars). 

    Until the US is re-industrialized, then all imports will cost more...a lot more.  Meanwhile, housing prices and real assets will take a hit because there's too much supply for the demand.  As I understand it, the above 3 items would also deflate in price, due to the # of retirees and baby boomer deaths, except we have millions of immigrants coming into the country which will keep supply high on "the basics".  But they won't be buying houses, expensive cars or real estate.  Also factor into this the fact that the middle class is shrinking because of the rise of corporations and mergers, etc.  So the fewer middle class people mean that more are going into the lower classes for the first time, so their needs will be the same as immigrants, i.e. just the "basics". 

    Offline Simple

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    Re: Interest Rates and Demographics
    « Reply #7 on: July 26, 2019, 01:54:38 PM »
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  • Every broken clock is on time twice a day.


    Offline King Wenceslas

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    Re: Interest Rates and Demographics
    « Reply #8 on: August 22, 2019, 11:21:33 PM »
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  • ECRI (August 14, 2019):

    Our research showed that the Fed achieved soft landings – as in 1995-96 – when it started rate cut cycles the same month the inflation downturn signals from the USFIG arrived. However, recessions followed when the rate cut cycles began with lags relative to those downturn signals.

    In essence, what really seems to matter is not when the Fed stops rate hikes, but how promptly it starts the rate cut cycle following the inflation downturn signal.

    In the current cycle, that inflation downturn signal arrived in September 2018. But the rate cut cycle has only just begun – with a ten-month lag. As we noted many months ago, over the past 35 years such belated rate cuts have always been associated with recession.

     

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