Why Interest Rates Are Soaring

Discussion in 'Markets & Economies' started by hawkeye1, Mar 1, 2021.

  1. adze67

    adze67 Well-Known Member Silver Stacker

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    I have some doubts but I'm quietly confidant ;)
     
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  2. 66rounds

    66rounds Well-Known Member Silver Stacker

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    @mmm....shiney! 's response:
    images (3).jpeg
     
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  3. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    Actually no, this was my response:

    So, care to answer my question?
     
  4. leo25

    leo25 Well-Known Member Silver Stacker

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    I can't see inflation in the general economy (unless UBI kicks in), but inflation in housing is starting to go nuts again. And that alone is most peoples biggest cost of living.

    I wonder if the market goes into a full housing FOMO phase again, will the RBA cap credit supply (therefore creating a bid for money and increase rates) or will they impose banking lending limits and cap rates from moving higher?

    If they have gone this socialist already, what's stopping them from going the next step.
     
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  5. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    You'll have to explain to me how the RBA can do this. It's not something I'm familiar with.

    If the RBA does have the capacity then I think they will act very cautiously on this front. After all, they're trying to encourage us to ramp up debt to drive growth because they know wages aren't going to go up and underemployment is going to remain high.

    If anything I think APRA would step in.
     
  6. leo25

    leo25 Well-Known Member Silver Stacker

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    First they can stop adding new credit into the system, second they can sell bonds back into the market (which banks are forced to buy) thus pulling credit from the systems. Inter bank lending cost will go up as banks will have to bid for the limited credit in the system to meet reserve requirements for the new property loads they are making.

    And yes APRA will be the ones enforcing bank lending limits if they go down that path instead, but it will be at the request of the RBA.
     
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  7. leo25

    leo25 Well-Known Member Silver Stacker

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    RBA.jpg
     
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  8. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    So a complete reversal on what they're doing now?

    Nah, not going to happen. :)
     
  9. leo25

    leo25 Well-Known Member Silver Stacker

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    Never say never. Paul Volcker did it and whoever was in charge of the CB in Japan in the 80s did it. :) It all depends how bad inflation expectations get.
     
  10. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    Actually, what they're doing is socialising the capital losses. So essentially, it's crony-capitalism rather than socialism. Wealth is being transferred to the haves, rather than the have-nots. That's why I'm trying my hardest (well my wife is coz I'm a lazy SOB) to try and remain a "have".
     
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  11. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    See my crony-capitalist post above.
     
  12. leo25

    leo25 Well-Known Member Silver Stacker

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    They seem to be two words that describe the same thing. Socialism in action was always about extraction from the bottom to top, even though in words they promise top to bottom.
     
    Last edited: Mar 3, 2021
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  13. hawkeye1

    hawkeye1 Active Member

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    How Soros broke the Bank of England.

    Watch it and understand the monetary mechanics. Then you might start to understand that the US Dollar is about to undergo a speculative attack of it's own. And why a whole lot of people are going to join in. Why? Because there is a shitload of money to be made when Central Banks leave themselves open to attack. Especially when it is the Fed Reserve.

    As for the US dollar. If you measure it in Bitcoin it is undergoing significant inflation right now. And if that sounds a bit hyperbolic, think about how and why they manipulate the Gold Price. Unfortunately for them, Bitcoin can't be manipulated.

    Saylor put speculative attack on the table when he borrowed a billion late last year to buy Bitcoin. And he's following through with it with another billion now. And he's given out his playbook to all his rich friends. I can't see the Fed winning this one.

    This interest rate thing that just happened, that was just a little push to see what happens. And the Fed looked weak. And that's going to be a problem for them.
     
  14. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Sorry, but I can’t help it, It’s silly to talk about it in every thread, but what has the price of bitcoin got to do with inflation when it is not used for anything? It can go to a million tomorrow or zero and it won’t change the price of my coffee or train fare. At least for tulips, it can be used to decorate the garden.
     
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  15. hawkeye1

    hawkeye1 Active Member

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    I've said this to a couple of people out there who write financial blogs for a living. And that is, if you are not paying attention to Bitcoin and integrating it into your overall view of the markets, then you aren't going to understand what is going on.
     
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  16. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    I know what's going on. Everyone from Elon to Citi is busy pumping bitcoin if that's what you're referring to. I'm getting non-stop pumping articles on twitler and youtube. But for all the effort, it's range bound. :D

    Why waste time on this when there are still plenty of stocks that can rise 100-200% in 2 months and pays out 20% a year yield.
     
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  17. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    Growth stocks that are also paying 20% dividend? There's a new one.
     
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  18. hawkeye1

    hawkeye1 Active Member

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    And plenty of people saying stocks are coming to the end of a giant bubble phase (yes, I know, people say that about BTC too).

    Where do you get the 20% yield from?

    Did you also know that in the bitcoin world you can get yields of 5% or more. And that fiat currency can get even more on some of these crypto exchanges. I guess everyone's just going to be happy with keeping it in the bank for virtually nothing or putting it in the stock market, hoping for growth, when PE levels are already insane and hope the insanity increases even more.

    This is the problem the mainstream financial world has, due mostly to heavy central bank manipulation. Nothing makes sense. People can't find any certainty. Or yield. Meanwhile, over in the developing crypto financial markets, decent yields can be found in what is basically a free market. I wonder how this is all going to play out...
     
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  19. alor

    alor Well-Known Member Silver Stacker

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  20. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    there are still stocks hit by the pandemic, lockdowns and 2020 oil crash that had to suspend their dividends and with falling prices, the yield can get to 20% once the dividends are restored. though with the reopening rally, prices have risen a lot since nov, especially for the better ones.

    of course, you could still make more money from tesla and bitcoin than buying these stocks last year since they have risen by a much lower percentage. That's why some reopening stocks are still cheap, because big money is chasing tulips.

    wrcmad will know better. I'm not an expert in stocks nor am I proposing anyone buys stocks today but if there's a market correction of 10% or so, it will be a last "risk free" opportunity to buy such stocks.

    stock prices may rise or fall, zig zag in the short term, but what we should be playing is a repeat of the 2002-2006 trend, rising commodity and real estate prices.
     
    Last edited: Mar 4, 2021

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