/biz/ - Business & Finance

>>19561369
God i hope, i sold the most i could on friday and kept my precious metals etfs.

To oblivion we ride

nothing is going to happen

>>19561369

tl;dr we are all fucked

this has been long time coming

>>19561666

Either the Fed lets rates continue to rise, and everything tumbles down into a new Dark Age, or they impose a formal cap on rates and print ten of trillions to suppress them. Then we go into hyperinflation, and an even greater Dark Age. There is no alternative. It is one or the other.

>>19561702
>thinking the fed doesn’t have a jewish trick up their sleeve
ohhh no no no
I hope you didn’t trade based on your “””analysis”””

>>19561702
why do you think the interest rates will raise further? if printing 6 trillions doesnt do anything, printing one more trillions to buy even more of this doesnt matter neither

>>19561369
The Fed can’t print faster than every single other country can print. America hyperinflates last.

It’s your currency and it’s your problem

>>19561369
yes I was hoping for somebody with some expertise in this area. As I understand it, low interest rates incentivize borrowing which allows to purchase equities and bonds. Bonds prices has inverse correlation with its yield. So friday's pop in the yield meant investors were selling their bonds (to go into equities).

My question is how does fed printing trillions of dollars supposed to affect yields usually? Does more printing equate to more cheap money for investors to borrow to then invest in bonds? This means it drives up its prices and lowers its yields?

for number 2, you're talking about formal caps on treasury yield rates or the federal interest rates? Still learning here, would appreciate the input

Brainlet here:

What determines bond yields? Interest rates or inflation rate?

>>19561369
I just used all my money to buy stocks friday, am I fucked?

>>19561369
Who cares about a x20 in a crashing cuerency ? I own mining stocks myself but I haven't solved this yet.

>>19561748
There going to start printing 10s of or 100s of triilions

it's fine to just print money, the MMT guys are absolutely right

>>19561874
The fed buys bonds with printed money which increases the principal price of the bonds which in turn lowers the yield. Without the fed buying bonds interest rates would've hit 10% or 20% years ago.

>>19562709
Would it be wise to purchase some munis just as a hedge? In case rates do go up?

>>19561874

>you're talking about formal caps on treasury
yield rates or the federal interest rates

Yes, a cap on yields, or long-term interest-rates. National interest-rates have already been capped at 0%. A cap on long-term interest-rates can only be achieved at the cost of unfathomable amounts of money-printing, sometimes called Q. E. If even the trillions which the Fed has already printed could not suppress yields, just think what is in store for us. It could be ten trillion, twenty trillion--who knows. The second the Fed announces a formal nominal cap on yields, investors will know that hyperinflation is coming, that real yields are going to plummet, and that gold is their only safe harbour.

>>19562180

Investor demand determines bond-yields. Low demand means that yields go higher. But central banks can manipulate these yields down by printing money and buying bonds themselves--this is creating artificial demand. The problem is that, despite the trillions in money-printing, yields are still going up. The Fed can't keep them down. Nobody wants their bonds. If yields go up any more, the stock market will crash, just as it did in 2018. The Fed is now forced to make an impossible choice. There is no way out for it.

>>19563259
Why not just let it crash then? There is supposed to be a bust to the cycle...there cannot be perpetual boom.

>>19561874

>how does fed printing trillions of dollars supposed to affect yields usually

See >>19562709

>you're talking about formal caps on treasury yield rates

Yes, a formal cap on the yields on treasuries, or long-term interest-rates. National interest-rates have already been capped at 0%. A cap on long-term interest-rates can only be achieved at the cost of unfathomable amounts of money-printing, sometimes called Q. E. If even the trillions which the Fed has already printed could not suppress yields, just think what is in store for us. It could be ten trillion, twenty trillion--who knows. The second the Fed announces a formal nominal cap on yields, investors will know that hyperinflation is coming, that real yields are going to plummet, and that gold is their only safe harbour.

>>19562180

Investor demand, strictly speaking, determines bond-yields. Low demand means that yields go higher. But central banks manipulate these yields down by printing money and buying bonds themselves--this is creating artificial demand. They have to do this, in order to service our enormous deficits, and prop up our colossal asset-bubbles. The problem is that, despite the trillions in money-printing, yields are still going up. The Fed can't keep them down. Nobody wants their bonds. If yields go up any more, the stock market will crash, just as it did in 2018. The Fed is now forced to make an impossible choice.

>>19563288

We are in so much debt, and houses and stocks are in such a bubble, that to let it all crash would give rise to a new Dark Age. All social programmes would disappear. All banks would collapse. There would be riots in the streets all over the world. The unsettling thing is that to default like this would be better than hyperinflating the currency--which means that, not only does the system collapse, but the currency gets wiped out too. But inflating the currency is the politically expedient option, because that delays the catastrophe a little longer, so that is what our political class will do.

>>19563291
if yields are plummeting that means investors are buying up bonds (b/c they're inversely correlated)? along with gold like you said.

So according to what you've been saying, to avoid catastrophe, fed will prob inc their rates marginally instead of capping? or is there a third option?

>>19563325
So what is the most sensible investment option? Say that an anon has an extra 2000 USD a month to invest...what should that anon invest in with the money?

>>19562512
Then buy gold

>>19563370

In order of corresponding risk and reward: Gold, silver, gold miners, gold junior miners, silver miners, silver junior miners. Either buy physical metals, or hold it overseas in a vault via BullionVault or GoldMoney. With respect to stocks, buy the GDX and GDXJ for gold, and the SIL and SILJ for silver. Do not buy paper ETFs like GLD and SLV; these are ponzi schemes without the metals which are said to back them.

>>19563370
>what should that anon invest in with the money?

Silver, buy silver.

>>19563408
>>19563419
Besides PMs...is there anything else to invest in?

>>19563370

In order of corresponding risk and reward: Gold, silver, gold miners, gold junior miners, silver miners, silver junior miners. Either buy physical metals, or hold them overseas in a vault via BullionVault or GoldMoney. With respect to mining stocks, buy the GDX and GDXJ for gold, and the SIL and SILJ for silver; these are index funds of the best miners, and will hedge your risk. Do not buy paper ETFs like GLD and SLV; these are ponzi schemes without the metals which are said to back them.

>>19563355

The Fed cannot allow rates to raise without incurring a stock market crash. Even a 2% rate would cause it at this point. They must either let them rise and crash the economy, or suppress them by money-printing and keep the ponzi scheme going. There is no third option.

>>19563325
It's not called the great reset for nothing,
https://www.weforum.org/great-reset/

>>19563370

Bitcoin. Or gold. But bitcoin is just a better designed gold.

I don't care what treasuries are at. It would be retarded to buy treasuries at any rate under 10% which is what real inflation it at (chapwood index). Fake, manipulated CPI will inevitably tick up as well now that not even computer ghz and pixels are increasing. Fed's mandate is stable prices, officially, they should care about nothing else. So if CPI goes above 2% then rate increases will come. Look at 1980s when rates went well north of 10%. Imagine 10% interest rates, stocks would probably drop 90%, while inflation occurs just the same.

You have a few months to get the fuck out of stocks, bonds, and any fixed return. Because the dollar will be worthless and the massive generational stock market ponzi scheme bubble is on its last legs.

>>19563431
>Besides PMs...is there anything else to invest in?
Ammo, Guns, and seeds

>>19563448
You a september bro?

>>19563448
I have been purchasing Chainlink tokens.

>>19563448
>Imagine 10% interest rates
This would be good for bond holders though would it not?

OP, thank you for this useful post about business and finance, a rarity on this board.

says the increasingly nervous anon for the 1938th time

>>19563545

No, interest rates going up means existing bonds go down in face value.

>>19563620
The principal value may go down but the coupon yield would go up right?

>>19563620
but then wouldn't investors pick that up for the nice interest rate? or are they not buying even with the high yield b/c they're sensing that hyperinflation is around the corner?

>>19563478
anytime close to but before the election

>>19563643
>sensing that hyperinflation is around the corner
Correct me if I am wrong...but equities are an inflation hedge correct? This would make bonds a deflation hedge right?

>>19563643

If the market was actually allowed to determine interest-rates, we can't even begin to imagine how high they would go. When Paul Volcker allowed the market to determine interest-rates in the 80s, they went as high as 20%. That was when the debt was a fraction of what it is now. The economy is so fragile today that even 2% rates cause the stock market to crash. At 20% rates today, government programmes would become unserviceable. No social security, no medicare, no schools--nothing. There would also be a total collapse of the banking system.

>>19563637
>>19563643

A bond's interest rate is fixed when you buy it. It doesn't change with the market for new bonds. For example if you buy a $1000 bond with 2% interest rates, and then interest rates go up to 3%. You're bond is worth less because people can just buy a 3% bond with less money and get the same payout.

>>19563690

Gold is the best inflation-hedge. Stocks are a poor inflation hedge, and those who invested in them during the inflationary 70s actually lost money in real terms; but it is better to hold stocks than to hold cash. If you hold stocks, you lose something; if you hold cash, you lose everything.

>>19563683
Having patience for this is difficult with so much going on. What would you recommend an individual purchase to prepare?

>>19563690

Contrary to popular belief stocks are not an inflation hedge, actually inflation is very bad for stocks. For one thing inflation is bad for the company's profitability as borrowing, capital, and operational costs increase. The other major effect is competition with less risky investments. If inflation occurs and interest rates go up, then stock's expected return will be discounted compared to the baseline risk free return. For example, say the fed rate is 2% and the market prices a stock expecting 10% growth with a certain amount of risk, if the fed rate goes up the "extra" return the stock will generate compared to just investing in government bonds will be less, so the market will price the stock lower.

Right now rates are so low if you want returns over real inflation stocks and very low grade bonds the only thing you can pretty much buy. If rates increase stock market participation and allocation will drop as less risky investments become more attractive. Rates going up to 10% which has happened in the past would obliterate the stock market regardless of inflation.

>>19563846
>Rates going up to 10% which has happened in the past would obliterate the stock market
How bad are we talking? A 50% drop?

>>19563874

When the ultimate crash comes, it will be just as bad as the Great Depression. A 90% drop. But this probably won't happen until 2022 or 2023, when the currency becomes completely worthless, and the central bankers finally decide to give up. Until then, we'll get another stock-market crash in the near-future, and, after that, hyperinflation, as the authorities desperately try to prop it up. Stocks will then soar in nominal terms, just as in the Venezuelan or Zimbabwe stock markets, but plunge in real terms.

Seeing -10% interest rates in the future is very bullish for bonds. This would mean your current fixed rate bond will be worth way more than newly issued treasury debt, and therefore your bond will be more valuable than newly issued bonds.

But yeah, you would have to be a sucker, or a bank to be buying negative yielding bonds. Banks typically buy them because they have no other choice since treasuries are "legally risk free". This is why Deutsche Bank is dying, they're being swallowed by the ECB. They still manage to make some money (barely) by lending out currency from the face value with a higher percentage yield, and they pocket the difference.

Banks create money from thin air, off of the face value of treasuries, and they lend those reserves out to corporations (your employer is paying you with this stuff since your employer is likely borrowing money to pay your wages). Stocks are what corporations sell off when they run out of income/cash to pay for the money they borrowed from the bank, and your 401k is effectively returned to your employer, who was willing to match up to X% knowing that their stock would crash one day (it's a return of their capital they lent you, and it was never yours to begin with).

>>19563874

If rates just went back up to 5-6% historical average, then easily 50%+ over a few years.

>>19563947
Does all of this also apply to municipal bonds?

>>19563947

Nominal negative rates on the national interest-rate is a real possibility, I think. Trump has already called for it. I don't think we'll see nominal negative interest-rates on bonds. We'll simply see some sort of cap on them at a very low level. But the very act of imposing a cap will be a tacit admission of defeat by the Fed, and certain signal that hyperinflation is on the way; since they can only impose such a cap by means of massive inflation. Hence yields will be strongly negative in real terms, but not in nominal terms. Strongly negative real yields will cause investors to drop bonds and flock into gold, just as they did in the 70s and 80s.

>>19563996

"Real" yields are already well into negative territory.

>>19561369
Buy xrp

>>19563683
What about the CME rule 589 on gold/silver on open with no sellers? That likely to be seen?

>>19564048

This is why I say "strongly negative" and not simply "negative." The formal cap will be a signal that the Fed is about to print ten trillion, twenty trillion--that hyperinflation is well and truly on the way. The negative real yields which we already have are why, since 2019, gold has already soared from $1200 to its recent high of $1750.

>>19561369
No dick. it means risk on,moneys leaving Tbonds for stocks. yeilds have to rise to be more attractive to investors.

>>19563996

Hyperinflation will be held in check so as long as debt exists in all facets in life. Since the average american taxpayer, corporation and bank borrows like a drunken fool, hyperinflation can never happen so as long as they're stuck servicing the debt.

So as long as you have a car to repair, bills to pay and money to burn, it is difficult for a reserve currency to hyperinflate. The Yen is a good example of this, where the Yen actually appreciated in value and began track the price of gold.

Now, if everyone all of a sudden payed off their debt, that would be a disaster to a reserve currency. But the average consumer is retarded, so I think we're fine.

As for the US dollar, oil keeps the dollar from inflating too much since every barrel of oil bought is a dollar debt created. I would worry if oil gets too expensive, but luckily we have the shale industry creating an upper bound to oil prices.

>>19564245
Assuming hyperinflation does occur...wouldn't it take decades for it to come to fruition?

>>19564278
Wouldn't that just be inflation? Hyperinflation is over a short period of time.

>>19564306
What I mean to say is, the hyperinflation event where everything hyperinflates over a short period of time won't truly kick in until much later. The demand for USD is too high and right now the FED is trying to prevent a deflationary collapse.

>>19564192

What it means is that bonds are so undesirable that even five trillion in Q. E. can't suppress the rates. That's how toxic they are. But if bonds yield 2 or 3%, the fragile markets will crash again, as in 2019. This is why the Fed is trapped. As stocks go up, yields go up. But, once yields go up, stocks will crash. Hence yields must be suppressed with hyper-inflationary money-printing.

>>19564245

The difference between the present time and what happened after 2012 is that the real economy, at long last, is completely done for. They can't simply re-inflate the asset bubbles this time and go on their way. They are going to have to drop trillions in helicopter-money onto the general population in order to avoid riots. This will cause hyperinflation in essential goods and services.

>>19563690
Yes. If the purchasing value of the dollar goes up then the interest - a fixed percentage on the initial investment - would become better through deflation. Furthermore when the bond matures the value of the bond will have more purchasing power than when it was initially bought. Have a gold star.

>>19564328
That was last month.. now the supply in inflating and the market APPEARS to be going up but production is at a standstill. Shits about to go full Venezuela. Pic related.

>>19564932

The stock market is a house of cards. The more it pumps, the more yields go up. The more yields go up, the closer the stock market gets to an almighty crash, to be averted only by a hyper-inflationary yield-cap.

>>19564932
The auto industry is getting up and running in some capacity.

>>19561369
>Somebody finally talking sense
>Bull shill cucks no where to be seen
Finally sensible financial advice on this vampiric money sink of a website.

>>19561369
wat do? buy btc?

>>19563291
What does this mean for xrp?

>>19565466

Crypto is a speculative gamble which you should only put 1 or 2% of your net-worth into. Precious metals are the real safe haven.