Сергій Кабуд ( Кий ) (xyu) wrote,
Сергій Кабуд ( Кий )

theory on cheap Money

the humongous amount of money in forms of derivatives/credit started to grow in 198os but really got a boost after 1990

when i came to US in the late 80s i remember DOW between 2-3 thousand

well, up to 2000 it went thru the roof on dot com

then corrected by 9-11 shrunk

later went up to 14 thousand on real eastate and all

Then trouble started: optimism was ruined by a number of enemy strategic moves

Risks were recalculated

Oil expenditures went 5 times over housing expenditures

China was playing with exchange rates and was consistently
warned by americans to stop the dirty game

Equilibrium was lost.

Here come a crisis:

Assets deflate on the new high risks, energy situation is unstable, wars are brewing and of course world is going to lose around 40 tril
as a result of the above

I bet DC knows exactly what is going on.

They can not reduce all risks but they can try to channel loses and help to proper and fairly devaluate assets so that basic real economic engine will not stop working, human creativity will get ingaged in finding new things to do.

So they finally found this:

they make money cheap for one segment of the economy- mortgage rates, but mortgage rules will be enforced, so bigger down payment and stuff like it required

and more expansive to others. We will see who.

When money is lost on the level of trillions, -

new money the create will not reverse the deflation process!!!!

Also: people change their habits. They are scared to buy cars and have no car loans so they go ONLINE and buy WHATEVER

See, the more progressive segment (internet trade) gets a PUSH!

Amazing to observe!!!

Oil 46.79 -0.17 -0.36

Dec. 3 (Bloomberg) -- U.S. stocks rose for a second day as a jump in online spending and a record increase in mortgage applications lifted retailers and banks, overshadowing concern the worsening recession will reduce demand for commodities.

yeah not commodities but goods(high tech), high end services, online purchases!
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