100th anniversary of the Federal Reserve.
morgansforever
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Anyone celebrate today? Curious if there was a ceremony of sorts at the FED? Maybe a party? I thought for sure a commem would have been produced for this historic day.
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"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>What happened during the program, however, was that both men made the candid and bold accusation that the Federal Reserve, for the first time in its history, has assigned itself the job of propping up the stock market. >>
Sad but very true. The same schmucks that are toasting the new daily stock market highs, were celebrating a doubling and tripling of their home values in 2006. Results of course will be the same.
Knowledge is the enemy of fear
<< <i>The stock market is at a record high because corporate profits are at record highs. Or you can continue to believe in manipulation theories and suffer from investment underperformance. >>
Much of the record profits come from record low free money from the fed. I could get rich if the fed loaned short term cash to me at .25% per annum. Take a look at the dividend yield on the SP 500. It is under 1.90%. That will not bode well with $4,000,000,000,000 of FRN's in the new norm money supply. Ten year notes are now at 3.00% from a low of 1.42% of a year and a half to go.
As 10 years rates go up, manipulated stock market goes pop.
7 years ago, home prices doubled in two years. Friends had every excuse. "as long as the sun keeps shining, prices will rise". "Calisfornia people are buying here, prices are cheap to them".
Bernanke himself said a year ago that he is trying to force money out of savings accounts and into riskier investments.
You want to be the last gagen in, be my guest.
<< <i>The stock market is at a record high because corporate profits are at record highs. Or you can continue to believe in manipulation theories and suffer from investment underperformance. >>
One reason coporate profits are at a record high is because corporate taxes are at a record low, coupled with stagnant wage/salary increases. Note that for a long time corporate taxes rode a parrallel path with profits but thanks to crony capitalism, installed corporate tax loopholes have help raise the profits:
But the primary reason is that while corporate profits are measured as a percentage of domestic GDP, the corporate profit sum includes overseas earnings. As pointed out by Carmine Grigoli, chief investment strategist at Mizuho Securities, "This profitability measure is misleading because it compares worldwide profits to domestic GDP over a time period when overseas profits’ share of GDP grew from roughly 0.5% in the 1950s to a bit below 3% today. By comparing only domestic components (profits earned only in the U.S. to U.S. GDP (the blue line in the chart below), we find that profit margins are nowhere near the peaks achieved during the 1950s and 1960s."
As noted by Barron's Sam Mamudi earlier this month "post-crisis profits are being juiced by overseas earnings."
The stock market is at record highs because of flash trading by casino banks using other people's money and their leveraged betting with FED reserve deposits (which have grown astronomically thanks to the FED). Once again, and not by accident, the FED is the enabler for some and the punisher for most others.
High interest rates will be the ultimate cure for high prices.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey