Does anyone care about the economy?

[malice]

I have to admit to enjoying stip's posts much more than i used to.

[stip]

I think it is two things:

1 - the hope for profits

2 - the constant injection of money in the financial system by the FED that causes a lot of distortions and "irrational exuberance"

I hear number 2 is also a cause of cancer, the reason why it is so hard to find time for sex when you have little kids, and a disappointing Pearl Jam week on Jimmy Fallon

[malice]

I think it is two things:

1 - the hope for profits

2 - the constant injection of money in the financial system by the FED that causes a lot of distortions and "irrational exuberance"

hope for profits... does that equate to soaring stock prices? I'm unsure what you mean.

also, when you say injection of money by the FED into the financial system - what specific financial system? Wall Street brokerages? or the larger financial system that encompasses all of the economy?

[broken iris]

Wall Street does not profit from investments in companies, they profit from the sale of securities. Whether or the company is profitable in the short term or long term (or about to go bankrupt) is irrelevant so long as they have someone to sell to.

[malice]

Wall Street does not profit from investments in companies, they profit from the sale of securities. Whether or the company is profitable in the short term or long term (or about to go bankrupt) is irrelevant so long as they have someone to sell to.

ok, so that starts to make a little more sense to me - as long as there's some kind of 'activity' within a public company's stocks, it's good for wall street since they handle these transactions (in bulk) - is that correct?

and subsequently, regardless of the fiscal damages to a company like Amazon, which is still a huge monster of a corporation, wall street loves them BECAUSE of the volatile nature of the company's profits/stock prices?

at what point does Amazon take too sharp a profit tumble and go bankrupt though? and how does that play out for the financial services industries? or the economy for that matter -

candidly, I don't know how it's so easy (apparently) for multi-billion dollar companies to go down the drain, but have witnessed it before with the likes of Nortel (which failed for a much different set of reasons, including acquisitions of other companies they had no business to acquire in the first place, and some hugely corrupt senior management execs, but that's another story) - and it leaves me with a sense of impending doom about almost any company's ability to remain profitable and the possible impact it has when they fail...

[doug rr]

I know next to nothing about amazon as a company but looking at the numbers they could easily keep bleeding for well over a decade with constant 25% greater sales revenue year in and year out..

[Human Bass]

I think it is two things:

1 - the hope for profits

2 - the constant injection of money in the financial system by the FED that causes a lot of distortions and "irrational exuberance"

I hear number 2 is also a cause of cancer, the reason why it is so hard to find time for sex when you have little kids, and a disappointing Pearl Jam week on Jimmy Fallon

Nah, just malinvestiments and inflation. What pretty much sucks already. But I would love to know how QE will create real sustainable wealth instead of an illusion of such.

[stip]

how much inflation has there been since QE started?

[stip]

to answer my own question (assuming this analysis is accurate)
http://www.project-syndicate.org/comme ... -feldstein

And if a bit of inflation helps with employment it would be most welcome.

[Human Bass]

I think it is two things:

1 - the hope for profits

2 - the constant injection of money in the financial system by the FED that causes a lot of distortions and "irrational exuberance"

hope for profits... does that equate to soaring stock prices? I'm unsure what you mean.

also, when you say injection of money by the FED into the financial system - what specific financial system? Wall Street brokerages? or the larger financial system that encompasses all of the economy?

Well, I should have put a "future" there. They perceive Amazon as having a large consumer base, good infra-structure and etc and that even though is suffering losses right now, it is a solid company with the means of getting better.

Besides the whole fiat money/fractionary reserves debate that Doks can explain way better, the FED has been injecting 80 billions in the financial markets montly, the infamous quantitative easing. But of course the money doesnt reach everyone equally, it first goes to banks (afterall the FED is directly tied and semi-owned by those banks) and the financial market where those banks operate. Those extra 80 billions is like some nice lighting that makes everything look a bit prettier than it is.

Im not saying that this the Amazon stock prices are the direct result of this stimulus, specially since the dollar still is the international currency and therefore this stimulus has a very complex and worldwide consequences that nobody can be sure of what is sustainable or not. As we say here, only when the tide regresses we see whon is naked and whom isn't.

[Human Bass]

how much inflation has there been since QE started?

LOL @ trusting the inflation rate of the FED. I've heard of many americans complaning about how much expensive the groceries are, and even my own mother noted things are more expensive than usual the last time she went to the USA.

Besides that, preventing prices from falling is not a good thing when the fall is to correct distortions, prosperity doesnt always mean a ever growing curve in an econometric graph. And also the dollar is the international currency, it isnt contained to the USA, it causes distortions and inflation worldwide, specially in commodities, so yeah, the FED exports inflation, something extremely despicable. Most nations have central banks with mercantilist line of thought, so when there is an "invasion" of dollars that make the local currency value go up in relation to the dollar, the local central banks goes on devaluing the currency, what hurts the poor the most.

[stip]

how much inflation has there been since QE started?

LOL @ trusting the inflation rate of the FED. I've heard of many americans complaning about how much expensive the groceries are, and even my own mother noted things are more expensive than usual the last time she went to the USA.

Besides that, preventing prices from falling is not a good thing when the fall is to correct distortions, prosperity doesnt always mean a ever growing curve in an econometric graph. And also the dollar is the international currency, it isnt contained to the USA, it causes distortions and inflation worldwide, specially in commodities, so yeah, the FED exports inflation, something extremely despicable.

Anecdotal evidence is the best kind of evidence! Especially the 'I've heard Americans say things' kind.

[malice]

another article on Amazon. shorter and not as interesting but more informative about what Amazon's motive is, I guess...
http://www.businessweek.com/articles/20 ... -no-profit#!

[Human Bass]

how much inflation has there been since QE started?

LOL @ trusting the inflation rate of the FED. I've heard of many americans complaning about how much expensive the groceries are, and even my own mother noted things are more expensive than usual the last time she went to the USA.

Besides that, preventing prices from falling is not a good thing when the fall is to correct distortions, prosperity doesnt always mean a ever growing curve in an econometric graph. And also the dollar is the international currency, it isnt contained to the USA, it causes distortions and inflation worldwide, specially in commodities, so yeah, the FED exports inflation, something extremely despicable.

Anecdotal evidence is the best kind of evidence! Especially the 'I've heard Americans say things' kind.

When it comes to inflation, anedoctal evidence > governemt statistics. But see your own groceries, do not allow your faith in bureaucrats make you doublethink your own reality, do not fool yourself to think that the minister of truth is only possible in dystopian fiction.

[4/5]

Stip,
1. Do you think QE is sustainable indefinitely?
2. If not, then why not, and do you believe there are foreseeable consequences for having engaged in it on such a magnitude as the Fed has done?
3. If yes, how so?

[stip]

Stip,
1. Do you think QE is sustainable indefinitely?
2. If not, then why not, and do you believe there are foreseeable consequences for having engaged in it on such a magnitude as the Fed has done?
3. If yes, how so?

I don't know, is my most excellent answer.

[4/5]

Stip,
1. Do you think QE is sustainable indefinitely?
2. If not, then why not, and do you believe there are foreseeable consequences for having engaged in it on such a magnitude as the Fed has done?
3. If yes, how so?

I don't know, is my most excellent answer.

Fair enough. Well, since you mentioned the inflation rate since QE began, can I ask if you think it's possible for QE to keep going indefinitely with little effect on the inflation rate?

[stip]

Indefinitely is a long time. My point is that people have been saying the sky is imminently falling since this began, and I don't see rain.

[stip]

I also think other problems like wage stagnation and the inability of the job market to furnish enough good employment opportunities are far greater problems, whose impact is immediately felt and which pose a much greater threat to the American economy.

[sherpahigh]

I used to follow this thread a fair bit on the old board and while I haven't on this latest incarnation, the posters are all probably the same. Anyway, here's a video that participants and viewers of this thread alike would do well to find 30 minutes of their day to watch. Pretty basic stuff, but probably something to learn there for nearly everyone.