Steven GrantParticipantMarch 25, 2020 at 6:11 AMPost count: 13
What’s your opinion on the stimulus?Sean HymanKeymasterMarch 25, 2020 at 6:51 AMPost count: 806
It hasn’t been passed yet. BUT, it can’t stop a downtrend/bear market. It can’t keep overvalued companies from going back to a state of undervaluation, through stock price declines. However, what it can attempt to do is to make a recession less deep than it would have been OR less in length than it would have otherwise been without it. That’s all it can do. There’s not a central banker or government that can “prop up” a market in a downtrend. They can only support markets in uptrends. Market participants wrongly believe that central bankers can be a “back stop” to the market to where it never goes down. They’re sadly mistaken. It’s why we have always had bear market declines in stocks that were always unavoidable.
In other words, they can’t stop the business/economic cycle expansion and contraction modes. The latter one has to come too because it wipes out excesses. Here’s the Dow Jones Industrial Average since 1915. Keep in mind, the Federal Reserve was created in 1913. They couldn’t prevent any of these bear market downtrends that I’ve circled.
Attachments:You must be logged in to view attached files.TSavageParticipantMarch 25, 2020 at 7:11 AMPost count: 12
First the bill was $50billion, then $1trillion, then, $2trillion and last night it was $6trillion. Why is all this money (adding to our debt) needed? Unless it’s for PPE, hospital equipment, testing, direct research, managing distribution, or extending unemployment benefits to temporarily laid off workers, I think it’s not needed. All banks should not charge for march/April loan payments..if your loan was for 30 years, it’s now 30 years and two months. Have that trickle down to leases and rents so small businesses and apartment folks benefit. Once this is over, folks will start spending again because they didn’t have all these expenses during the shutdown. Giving money to Boeing or any large corporation shouldn’t be done. Giving money to cruise ships or hotels shouldn’t be done. Maybe I’m being simplistic. if there is a reason why $6trillion is required please explain. I still don’t get it.Sean HymanKeymasterMarch 25, 2020 at 7:56 AMPost count: 806
While that seems like a lot of money, we have a $22 trillion economy. So if you pretty much shut that down…you’ve got a pretty big gap to fill in order to not make it implode. https://www.investopedia.com/insights/worlds-top-economies/Steven GrantParticipantMarch 25, 2020 at 9:31 AMPost count: 13
Thanks a for a prompt reply
So what do you think they should do?
Is there smthg they can do??
RegardsSean HymanKeymasterMarch 25, 2020 at 9:34 AMPost count: 806
There’s no asset known to man that can stay in an overvalued state (whether that’s housing prices, stock prices, etc.). There’s no government or central bank that can prevent it. And we shouldn’t even want it prevented. Why would we want things to remain overvalued aka falsely valued?
We shouldn’t desire the business/economic cycle to cease or only have upside but not downside. Instead, we should be wise and know that these cycles happen and prepare for them ahead of time.
There’s not a financial problem…there’s a lack of wisdom and stewardship at the root of the problem, which causes the symptom/side-effect of a financial problem.Scott GroverParticipantMarch 25, 2020 at 10:31 AMPost count: 7
Sean your description of economic cycles reminds me of this video of Murray Rothbard I saw a few years ago.Sean HymanKeymasterMarch 25, 2020 at 10:52 AMPost count: 806
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