Posted by rfmathis on 11th of Jun 2020 at 06:47 pm
There is always an inclination to try to match today, against
what happened in the past; and this is a credible way of predicting
the future. However, sometimes there are significant changes
from the past to the future. In 1930, there was no Fed, and
you could exchange fiat for gold. Then, fiat was tied to
gold, then fiat was disconnected from gold. The Fed, was
always hesitant about injecting liquidity (printing money), but in
the last 30 years has gradually increased its timing and magnitude
of injecting liquidity; to the point, we have no idea as to how
this latest round will impact the future. As you can see, in
the chart, below, the injection of cash for the 2007-2009 Bear
market was much quicker and stronger than their action in 2002 and
1990, ..... and we recovered nicely from that. So,
their thought is, let's increase it faster and stronger than last
time. Will we recover as nicely as we did in 2009; or is THIS
time different?
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There is always an inclination
Posted by rfmathis on 11th of Jun 2020 at 06:47 pm
There is always an inclination to try to match today, against what happened in the past; and this is a credible way of predicting the future. However, sometimes there are significant changes from the past to the future. In 1930, there was no Fed, and you could exchange fiat for gold. Then, fiat was tied to gold, then fiat was disconnected from gold. The Fed, was always hesitant about injecting liquidity (printing money), but in the last 30 years has gradually increased its timing and magnitude of injecting liquidity; to the point, we have no idea as to how this latest round will impact the future. As you can see, in the chart, below, the injection of cash for the 2007-2009 Bear market was much quicker and stronger than their action in 2002 and 1990, ..... and we recovered nicely from that. So, their thought is, let's increase it faster and stronger than last time. Will we recover as nicely as we did in 2009; or is THIS time different?