Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-30-2019, 06:02 PM   #41
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 929
Global redistribution of wealth attempt. Market prop up attempt here before the election etc. Wont last forever. We will see a recession one of these days. Rates are already low, so it wont go too much lower. (Not like last time when we were printing fools) Then rates will again rise. Am guessing 5-10 yrs down the road. And we should be back to historic "normal rates".
My best guess anyway.
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-30-2019, 07:39 PM   #42
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by imoldernu View Post
A substantial article about the probabilities of negative interest rates.

https://apnews.com/f7eee4d172864885b246da733803ee6e
I doubt that the US Fed will let interest rates go negative since after the 2008 crash the US Fed dropped it to between zero and 0.5%. I believe the Fed realizes that US financial institutions may go bankrupt causing a panic just like the Lehman Brothers.

IMO, Europe went negative in order to stimulate the economy hoping that will increase borrowing and increase spending. The European government pays for the negative interest to prevent their banks from going bankrupt which means the European national debt increases. The European government wanted to avoid a recession which will create unemployment and unemployment increases political instability. Some europeans like to strike, riot, shutdown their country, and force their leaders to resign. However, it is my understanding that this plan is not working so they are working on another stimulus plan which will cause the government to go further into debt. Modern Monetary Theory of going into debt does not appear to be working.

Why are there buyers for bonds with negative interest rates? It is called TINA. There Is No Alternative. Losing 1/2 percent in a safe security is better to some buyers than losing a higher percentage in the European stock market which some European investors considered too risky.

I am just happy that I reallocated my 60/40 portfolio to 100% US treasuries about 6 weeks ago to lock in the relative higher interest rates. This means every time the Fed cut the interest rates, then treasuries's yield goes down but the value of my relatively higher interest rates treasuries goes up. I suspect the Fed will cut the interest rates to zero or 0.5% in 2020 and not let it go negative.
2177V is offline   Reply With Quote
Old 08-30-2019, 09:33 PM   #43
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 929
I doubt we will see 0-.5% again. Just dont see a "crisis" of the same magnitude as the last one. Just a plain old, normal, regular, cyclical recession...That wont drag on for years and years like the last one did. Bail outs & Printing money was not the answer. Nor was super low interest rates... One thing for sure, We will find out!
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline   Reply With Quote
Old 08-30-2019, 10:50 PM   #44
Dryer sheet aficionado
 
Join Date: May 2005
Posts: 35
Quote:
Originally Posted by samclem View Post
Or, German citizens could ask "Hey, the government can make money by loaning money--why not do more of that and lower taxes? If the govt can get funds from entities that are volunteering to give it, why take it through compulsion?" Of course, it's not that simple.
They have a large trade surplus. If they lowered taxes, they would run the risk of higher inflation with all the cash coming in from overseas flooding their economy.
__________________
It is useless to attempt to reason a man out of a thing he was never reasoned into.-- Jonathan Swift
Theo is offline   Reply With Quote
Old 08-31-2019, 07:38 AM   #45
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 1,346
Quote:
Originally Posted by almost there View Post
Global redistribution of wealth attempt. Market prop up attempt here before the election etc. Wont last forever. We will see a recession one of these days. Rates are already low, so it wont go too much lower. (Not like last time when we were printing fools) Then rates will again rise. Am guessing 5-10 yrs down the road. And we should be back to historic "normal rates".
My best guess anyway.
Looks like the printing presses have been fired up again.
The Fed has been buying treasuries again for the last 2 weeks.
https://econimica.blogspot.com/2019/...-fed-buys.html
Though to throw shade on the article, it suggests the Fed was selling during QT... it wasn't... it was letting bonds mature and not replacing them vs. actually selling.
Spock is offline   Reply With Quote
Old 08-31-2019, 07:41 AM   #46
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 1,346
Quote:
Originally Posted by almost there View Post
I doubt we will see 0-.5% again. Just dont see a "crisis" of the same magnitude as the last one. Just a plain old, normal, regular, cyclical recession...That wont drag on for years and years like the last one did. Bail outs & Printing money was not the answer. Nor was super low interest rates... One thing for sure, We will find out!
Historically the Fed has had to cut rates ~4-5% during recessions. Since rates started at about ~2.5% this time, there isn't headroom to cut that much in the next recession unless they go negative or QE/helicopter money again.
Spock is offline   Reply With Quote
Old 08-31-2019, 12:12 PM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 7,054
I remember the day when banks would charge an account holder for holding their money in a cash account. What you are discussing is a completely different scale but..
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 09-01-2019, 06:20 AM   #48
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 929
Quote:
Originally Posted by Spock View Post
Historically the Fed has had to cut rates ~4-5% during recessions. Since rates started at about ~2.5% this time, there isn't headroom to cut that much in the next recession unless they go negative or QE/helicopter money again.
Somewhat agree, depends on inflation and where rates are. A 4-5% cut is fine when rates are 10%. With an average rate of 5.18% 4-5% cut is not the norm. Were in an odd spot. Record low unemployment, low inflation, low interest rates. Rates are not the only bullet available. They just like rate cuts it as it juices the stock market. Why rates never came back (sooner) last time (2011) is anyone's guess. 1st time in history.
This next one will be the opposite of the early 80's of high double digit int rates and 24% unemployment. 2 bad quarters is not the end of the world. Will see...... (Might just be a global re distribution of wealth, if your a conspiracy theorist)
LOL LOL
Attached Images
File Type: png 1479417178_20325406_FN_WEB_CHART_INTEREST_RATES.png (585.6 KB, 28 views)
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline   Reply With Quote
Old 09-01-2019, 07:48 AM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 6,971
Quote:
Originally Posted by Brat View Post
I remember the day when banks would charge an account holder for holding their money in a cash account. What you are discussing is a completely different scale but..


I think many banks do this now unless you have a minimum balance and/or direct deposit waiver.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is online now   Reply With Quote
Old 09-01-2019, 11:37 AM   #50
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Posts: 1,555
When banks starts giving out 2.0% interest or lower for a 30 year mortgage year, then negative rates are here because inflation is 2.5% or higher.
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is offline   Reply With Quote
Old 09-01-2019, 11:45 AM   #51
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 929
If 2% didn't happen in 2012 (3.66% average 30 yr)
I cant see it ever happening..........
That was a goat show.............
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline   Reply With Quote
Old 09-01-2019, 12:37 PM   #52
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Posts: 1,555
Quote:
Originally Posted by almost there View Post
If 2% didn't happen in 2012 (3.66% average 30 yr)
I cant see it ever happening..........
That was a goat show.............

We’re at 3.37% today ...

IMG_7291.jpg
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is offline   Reply With Quote
Old 09-01-2019, 12:59 PM   #53
Thinks s/he gets paid by the post
Badger's Avatar
 
Join Date: Nov 2008
Posts: 2,635
Quote:
Originally Posted by Sojourner View Post
Hahahah. Cool cartoon graphics gave a nice visual sense for what various amounts of cash look like. And I learned something else new: "hundo" is apparently a slang term for a hundred dollar bill. Don't think I'll be using that one, personally.





Cheers!
Badger is online now   Reply With Quote
Old 09-01-2019, 01:17 PM   #54
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 929
Quote:
Originally Posted by cyber888 View Post
We’re at 3.37% today ...

Attachment 32535
I think thats an add. 30-year fixed-rate mortgage fell to an all-time low of 3.31 in 2012.
Now were getting close to it. No idea why though? lol lol


3.66 today, 3.70 ave last week.

https://www.valuepenguin.com/mortgag...age-rates#nogo

https://www.bankrate.com/mortgages/3...ortgage-rates/

https://www.bankrate.com/mortgages/analysis/
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline   Reply With Quote
Old 09-01-2019, 02:55 PM   #55
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Posts: 1,555
I just think anything can happen. lol. Even below 2.9% will already put us in the negative interest rate as 25% tariffs are in effect causing more inflation.

Quote:
Originally Posted by almost there View Post
I think thats an add. 30-year fixed-rate mortgage fell to an all-time low of 3.31 in 2012.
Now were getting close to it. No idea why though? lol lol


3.66 today, 3.70 ave last week.

https://www.valuepenguin.com/mortgag...age-rates#nogo

https://www.bankrate.com/mortgages/3...ortgage-rates/

https://www.bankrate.com/mortgages/analysis/
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is offline   Reply With Quote
Old 09-01-2019, 03:19 PM   #56
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 929
I am fine with tariffs. Have had enough with China currency manipulation, Intellectual property theft, Built in obsolesce, Slave labor etc. Not to mention China import tax on American goods. (Do you know what it is?) We are so late to the party its not even funny.
But the media does not seem to get it.
Attached Images
File Type: jpg chartoftheday_8824_chinese_american_trade_balance_n.jpg (182.4 KB, 28 views)
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline   Reply With Quote
Old 09-02-2019, 05:17 PM   #57
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by Spock View Post
Historically the Fed has had to cut rates ~4-5% during recessions. Since rates started at about ~2.5% this time, there isn't headroom to cut that much in the next recession unless they go negative or QE/helicopter money again.
I agree that the Fed needs to cut rates 4 to 5% but they can't.... unless they go negative but this may bankrupt the banks. The other way is to stimulate the economy is QE/helicopter money which you cited. However, this may increase the $22 trillion national debt.

A lot of people do not understand that the government does not have many options available if the economy slows down. The last stimulus mostly made the rich richer.

I believe the Fed will cut interest rates to 0 to 1% and then do QE and the government will also have a stimulus program that will benefit everyone. They need to do this BEFORE the economy contracts and BEFORE the corporations start laying off people. Once people read about layoffs, people stop spending money. At that point, the recession is unavoidable.
2177V is offline   Reply With Quote
Old 09-02-2019, 05:27 PM   #58
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
FYI I cut and pasted the counties with the highest Debt to GNP ratio. USA's Debt to GNP has been increasing over the years which I find alarming. I do not want the USA to be associated with Japan, Italy, Greece and Portugal which all have slow national economic growth......


My point: With a huge national debt, USA does not have many options to spend itself out of a recession and therefore low interest rates are here to stay for a long time.

///////////////////////////////////////////////////////////////



What countries have the largest debt in the world? Here is a list of the top ten countries with the most national debt:
  1. Japan (National Debt: Ą1,028 trillion ($9.087 trillion USD))
  2. Greece (National Debt: €332.6 billion ($379 billion US))
  3. Portugal (National Debt: €232 billion ($264 billion US))
  4. Italy (National Debt: €2.17 trillion ($2.48 trillion US))
  5. Bhutan (National Debt: $2.33 billion (USD))
  6. Cyprus (National Debt: €18.95 billion ($21.64 billion USD))
  7. Belgium (National Debt: €399.5 billion ($456.18 billion USD))
  8. United States of America (National Debt: $19.23 trillion (USD))
  9. Spain (National Debt: €1.09 trillion ($1.24 USD))
  10. Singapore (National Debt: $350 billion ($254 billion US))
Japan, with its population of 127,185,332, has the highest national debt in the world at 235.96% of its GDP (although, notably, Japan is also one of the world's largest economies). This is followed by Greece, which is still recovering from the effects of its economic crisis and subsequent bailout, at 191.27%. Venezuela, which is currently undergoing serious economic difficulties, is also in the top five countries with the highest national debt, with a debt to GDP ratio of 161.99%. Several African countries also have high national debts, including Sudan (176.49%), Eritrea (129.43%) and Gambia (111.45%).
Of the world's major economic powers, the United States has the highest national debt at 108.02% of its GDP. China, the world's second-largest economy and home to the world's largest population (1,415,045,928), has a national debt ratio of just 51.21% of its GDP. Germany, as Europe's largest economy, also has a relatively low national debt ratio at 59.81%. Hong Kong, a major global financial center, has the lowest national debt in the world, at just 0.05% of its GDP. This is followed by the tiny Kingdom of Brunei with a population of just 434,076 and a national debt of 2.49% of its GDP
IMF data from the April 2018 IMF World Economic Outlook database.
2177V is offline   Reply With Quote
Old 09-02-2019, 05:48 PM   #59
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Posts: 1,555
Quote:
Originally Posted by almost there View Post
I am fine with tariffs. Have had enough with China currency manipulation, Intellectual property theft, Built in obsolesce, Slave labor etc. Not to mention China import tax on American goods. (Do you know what it is?) We are so late to the party its not even funny.
But the media does not seem to get it.
US is losing in the trade war and tariffs are paid by US consumers, not China. China is going to tap other markets and only the US farmers are losing out. The media gets it - the US government is not getting it.
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is offline   Reply With Quote
Old 09-02-2019, 06:07 PM   #60
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by cyber888 View Post
US is losing in the trade war and tariffs are paid by US consumers, not China. China is going to tap other markets and only the US farmers are losing out. The media gets it - the US government is not getting it.
I agree. USA had the right idea in addressing the unfair trade problem but the wrong strategy. In hindsight, USA should have allied with the Europeans, Canada, Mexico. Japan, South Korea, etc., and then addressed the problem together.

Instead, China used a "divide and conquer" counter-strategy. China raised the tarriffs on US goods while lowering goods from other countries and this protected the Chinese consumers.

Whether to go into a "trade" war or a "real" war, you generally lose if you go to war alone....with no allies supporting the USA's objective.
2177V is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
what will negative interest rates do? frank FIRE and Money 40 04-04-2016 01:11 PM
Negative interest anyone? alaska55 FIRE and Money 5 10-26-2015 11:44 AM
Understanding negative interest rates imoldernu FIRE and Money 11 04-30-2015 02:30 PM
Will CD Interest Rates Rise if Borrowing Rates Rise? John Galt III FIRE and Money 5 07-29-2011 11:58 AM

» Quick Links

 
All times are GMT -6. The time now is 12:40 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.