Dark clouds seen in the financial world that relies too much on credit

Ateneo Professor on Entrepreneurship

Rizal Philippines
July 23, 2019


From Politico Senator Elizabeth Warren warns of impending economic crash















A US Lady Senator Elizabeth Warren has warned Senate and the rest of the world over the weakness of the financial system:  too much reliance on debt (even by the Fed) of corporate world and of citizens (via credit card)  A little mistake could trigger an avalanche where there could be no escape.  Corporate and individual debt via credit cards is at an all time high.  To supplant the lack of creation of real wealth at USA (due to over reliance on outsourcing and purchase of manufactured goods made in China) banks have been generous to individuals and corporation..    The Dems complain that the wages  have not kept pace with rise in GDP and productivity and hence the gap is filled in by credit...

With the quantitative easing in US and Europe (Fed buying bank assets to pump in liquidity to the market) more money supply, more credit is made available to individuals and corporation.  Thus more debt, more less stability in financial markets..

Banks have created 97% of the money supply.  Not the FED, and this has been uncontrolled. 

Fed President: More QE Probably Needed Into Second Half of 2013

More money into circulation?  More dollars to flood the market?

When PHL was in trouble, the prescription was less money supply to rein in money supply.  More taxes, less spending, less budget by public to pay off foreign debt.  It was a bitter medicine.  Hence there were lots of demonstration, lots of anti imperialist slogans, stone throwing, anti US hatred and anti IMF tirades.

For USA though, it a lot of stimulus package, quantitative easing.  Is it working?

For the PHL the tight and disciplined fiscal policy worked.  Why can IMF, US Fed Bank impose the same for USA?

Or a different strategy and rules apply for the LDC and developed countries?

---------- Forwarded message ----------
From: Moneynews.com <newsmax@reply.newsmax.com>
Date: Tue, Jan 15, 2013 at 5:09 AM
Subject: Fed President: More QE Probably Needed Into Second Half of 2013

Obama Warns of 'Haywire' Markets if Debt Ceiling Hit Declassified: 'Financial War' Could Wipe Out 50% of Your Wealth San Francisco Fed's Williams: QE Probably Needed Into Second Half of 2013 Studies: It Could Take More Than 5 Years for Unemployment Rate to Hit 6.5% More Links: Video: Lost Decade Destroys American Dream Taste Prosperity . . . 3,981 People Achieved Millionaire Status Yesterday . . . Study Unveils Disturbing Truth About Retirement This email is never sent unsolicited. You have received this email because you subscribed to it or someone forwarded it to you. To opt out, see the links below. TO ADVERTISE For information on advertising, please contact Newsmax Advertising Sales via email. TO SUBSCRIBE If this email has been forwarded to you and you would like to sign up, please click here. Remove your email address from our list or modify your profile. We respect your right to privacy. View our policy. This email was sent by: Moneynews.com and Newsmax.com 1501 Northpoint Parkway, Suite 104 West Palm Beach, FL 33407 USA 1497134 11F0E-1

--
Jorge U. Saguinsin
To "be the best, do your best, expect the best" always

The US stock rally will end terribly.

Ateneo Professor on Entrepreneurship

 


From Moneynews

Jim Rogers, a noted international investor has noted that the rising stock prices are due for a massive sell off.  The rise in prices has not been rooted in sound fundamentals.  The loose monetary policy of US Fed is the sole driver of Wall St. stock prices.

Since 2008 the US Fed has kept interest rates to almost 0 and kept liquidity high allegedly to encourage investments and create jobs.

Is this strategy right?

Are QEs implemented so far producing the desired results for US economy

                 

Is Quantitative Easing (QE) - Liquidity Infusion good for the US economy?

Ateneo Professor on Entrepreneurship

From Moneynews

Is the Quantitative Easing (US Fed printing money, buying back bonds and treasuries) in effect injecting liquidity into the financial system, good for the US economy?

Donald Trump, a real estate mogul and now an outspoken US citizen thinks QE is giving the stock market false results.

Home buyers are not buying new homes, despite the added liquidity, because banks are not lending anyway.  Where is the excess liquidity going into?  Foreign investments?   Or stock market (maybe offshore) and does not go to intended beneficiary.

Past QE injected $2.3 trillion into the economy:   QE 1 Fed bought $1.7 trillion of mortgage backed securities from banks;   under QE 2 $600 billion worth of Treasury holdings were bought.  Under QE 3, $40 billion worth of securities would be bought monthly from banks to generate more jobs.  That extra liquidity, $2.3 trillion is increasing and will increase further. (Many think that gold is at $l,600 per ounce because it has now been the more acceptable currency and no longer the dollar;  the dollar has lost its value because of this excessive liquidity )

These moves ie injecting  liquidity into the market was done to avert depression;   however many think that the amount of infusion is too large and depresses the value of the dollar, and that much of this has been going into welfare like food stamps where 44 million Americans are enrolled.  Are they looking for jobs in a jobless economy.

Money News on Trump - Fed causing stock market to give false numbers