How Long Will The Printing Party Last?

SkyPilot said:
The market is always based on psychology, and in this game perception is the reality (the crowd is always wrong).
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I agree. It really doesn't matter to me whether the Fed's POMO are directly responsible or the perception of their effectiveness is what's driving the markets. The only thing that matters is the market's behavior. Good luck to us all
 
k0nkuzh0n said:
I personally think the FED's bond buying impact on the stock market is being blown way out of proportion. I'd venture to say that the IDEA itself that the FED's buying is 'pumping up' the market alone is so wide spread that it probably has a much bigger influenced the market than the actual transactions. Which is scary because we all know how quickly speculation can change course.
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The market is always based on psychology, and in this game perception is the reality (the crowd is always wrong).
 
So, I am thinking we will have to print even more $ to stop the USD from rising, which will pump up equities even more? And with no inflation (actually, some deflation I understand) the party continues well after curfue. Watch out when the constabulary shows up and breaks up the festivities. Until then, Party On! Woo Hoo!!!!
 
Not that this makes it right, but when everyone is doing it, nobody is doing it. It's a race to the bottom.

How will Ben respond to Japan's latest intervention?

The end game is, you hope you're not in office when the crash comes. Maestro managed to jump before his plane crashed.
 
I personally think the FED's bond buying impact on the stock market is being blown way out of proportion. I'd venture to say that the IDEA itself that the FED's buying is 'pumping up' the market alone is so wide spread that it probably has a much bigger influenced the market than the actual transactions. Which is scary because we all know how quickly speculation can change course.
 
Bernanke takes a "leak"...I laughed out loud when I saw Mr. Bowl's recommended reading...I could use a good laugh after lugging around 30 year old cans of beets, carrots, and tomato sauce all day for our food drive
 
I know one thing, if you can figure out when it will happen and get out the day before you will save a bunch of money!!
 
MrBowl said:
Are we seeing the first signs of the Fed easing on their policies? Things are changing. The global currency war is spreading. The dollar made a huge jump yesterday and the F fund got hammered. Bernanke's statements indicate that he's worried about an equities bubble now. Another debt ceiling deadline comes in a week. All of these things have the potential to shake up the markets. Take a look at these

Bernanke Takes a "Leak" | Zero Hedge

The Hilsenrath "Tapering" Article Is Out | Zero Hedge

Still, the rally is on and I'm in until I see better topping signs. Good luck
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As of last week, liquidity was still quite high. I'm seeing no signs of let up either. And for those who weren't aware, liquidity has actually been in expansion since July of last year. And given our autotracker is still under 40% exposed to stocks, I'd expect the downside to remain limited too.
 
Are we seeing the first signs of the Fed easing on their policies? Things are changing. The global currency war is spreading. The dollar made a huge jump yesterday and the F fund got hammered. Bernanke's statements indicate that he's worried about an equities bubble now. Another debt ceiling deadline comes in a week. All of these things have the potential to shake up the markets. Take a look at these

Bernanke Takes a "Leak" | Zero Hedge

The Hilsenrath "Tapering" Article Is Out | Zero Hedge

Still, the rally is on and I'm in until I see better topping signs. Good luck
 
The Fed is fighting Obama anti-growth policies and regulations - they may even try to buy more than the current $85 billion/month. What we are seeing now in the markets is Fed activity from back in January - this bull will run for several more years.
 
I am thinking that we cannot fight the Fed. As long as they insist on holding rates down, there is nowhere else for money to go but into equities or cash. So, I am going to continue to cautiously ride the wave until the money machine slows down, and try to hop to securities in time for the inevitable hyper inflation to set in. However, if the Feds goal is to wait until unemployement is down to 6.5% or so, it may be a long ride.
 
Correct!

I have heard that some of these central banks are quietly selling some of their treasuries and other holdings, but not nearly at the rate that they are buying them. Also, news stories last week said that some of them are quietly buying some equities, and the joke was that some central banks were becoming hedge funds.

How bad is the real situation? As you said the fed funds rate has been 0% for 4.5 years and we're looking at another 1.5+ years of this. I don't recall anything like this during a "recovery" during my lifetime. Plus, QE 1,2,twist, and 3. And, that has bought us sub-3% GDP, very slow job creation, and a participation rate that is at depression levels.

So, the items that should worry us - uncomfortable levels of gas prices, inflation, and interest rates - are nowhere to be found. If those items do creep up during QE then we might have a problem.

So far, though, these central banks have been masterful at isolating each little collapse (Greece, Spain, Cyprus, etc). I call it "separating the dominos". Those that have remained bullish in the past 4 years should be very happy and confident right now. It's a lesson I'm slowly learning. If this whole house of cards starts to sway I hope I will see the signs and move my investments to safety in time, but until then I want to do as well as I can. Timing a real crash is not easy, and those thinking a crash is imminent for the past 4 years have watched others more than double their money. That stings.
 
I

inthemoneystocks

New member
We all know that asset prices (stocks) are being supported by the central bank's easy money policies. Leading central banks such the Federal Reserve, Bank of England, Bank of Japan, the European Central Bank, Reserve Bank of Australia, and others have been either creating money, or lowering interest rates in order to inflate stock markets around the world. Usually, this action by the central banks will help boost the economies around the world by making money easier to borrow. It will also help to increase exports by devaluing the currency. The only problem is that every country is now doing the same thing simultaneously.

Is this money printing by central banks sustainable? If money printing solved all of the problems of the world why didn't the central bankers start this a long time ago? There would probably be no hunger or poverty in the world today. The problem is that money printing does not work for long periods of time. It will usually lead to inflation or another major bubble in stocks, commodities, or real estate. Just think about it, the policies made by former Federal Reserve Chairman Alan Greenspan could be the leading reason why the markets experienced the tech bubble in 2000, and the housing and credit crisis in 2008. This time around there are central banks printing money in almost every country and there could be giant bubbles building all around the world.

Below are a list of some of the easy money programs by the central banks:



  1. Bank of England: £375bn quantitative easing program, interest rates are 50 basis points
  2. Bank of Japan: The bank is increasing its purchase of government bonds 50 trillion yen ($520 billion). The benchmark interest rate in Japan was last recorded at 0 percent. Japan's economy is 1/3 of the United States.
  3. Federal Reserve (United States central bank) has a zero percent fed funds rate which is the overnight lending rate to the large banks. The Federal Reserve is also buying $85 billion a month worth of U.S. Treasuries, and mortgage backed securities. The Federal Reserve's balance sheet is estimated to be over $3 trillion.
  4. European Central Bank: the central bank just cut interest rates to 50 basis points from 75 basis points. The ECB also buys debt from nations such as Spain, Italy, and Portugal in order to keep borrowing costs low. They have several other monetary programs in place at this time. The European Central Bank's balance sheet is roughly at $3.45 trillion.
  5. Reserve Bank of Australia; they just cut interest rates to 2.75 percent today.
In doing some research I found that these central banks had printed over $17 trillion in new money over the past few years. This money printing is certainly helping the stock and real estate markets higher, but is it sustainable? What is the exit strategy when inflation starts to creep into the economy? How long can the money printing party continue?

Nicholas Santiago

 
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