Jump to content
Chapala.com Webboard
snowyco

Peso on the Move ... Where's It Headed ?

Recommended Posts

2 minutes ago, AngusMactavish said:

Sound like a Trumpism.

Sounds like you don't know your history.

Quote

Quantitative Easing 1 (QE1, December 2008 to March 2010) 1.4 Zero Interest Rate Policy (ZIRP) (December 2008 to December 2015) 1.5 Quantitative Easing 2 (QE2, November 2010 to June 2011 ) ...

https://en.wikipedia.org/wiki/History_of_Federal_Open_Market_Committee_actions

Share this post


Link to post
Share on other sites

Sorry, but you can not seem to understand humor and yes, I know my history of the Orange Guy.

  • Sad 2

Share this post


Link to post
Share on other sites

Your humor seems mostly about injecting your politics into this discussion.  Let's leave out the "Trumpism" and "orange guy" BS please.  Neither have anything to do with the history of QE.

  • Like 1
  • Confused 1

Share this post


Link to post
Share on other sites

The Fed kept the cost of renting money (borrowing, if you prefer) so bloody low that it became almost crazy not to rent some and take a chance somewhere. The idea was to keep business renting that money and plowing it into their companies rather than just pulling back which would have prolonged the recession. That was the theory at least. Good intentions do not always produce good results. Smart people realized they could rent money for next to nothing and then buy stocks on margin, also using OPM. As the market goes up, everyone is happy. When the landlord, Federal Reserve, ups the rent some renters flee the racket. The Market hiccups and more people flee. The brokers who rented the rest of the money that was borrowed get nervous and start making margin calls. Hey fella, put some more of your own money in. So it's put up or shut up. The REALLY smart people are waiting in the wings for the big crash so that they can jump in and make lemonade out of the other folks lemons. If you don't like the long timeline this entails, buy a few oil futures, wheat, pork bellies or really be daring and try the FOREX markets. Everyone knows a day trader who claims to have made it big, no? Why not you?

  • Like 1

Share this post


Link to post
Share on other sites

Exactly right again Pappys.  On the business side of things it has driven a bunch of bad mergers that happened because money can basically be borrowed for free.  No real value is created in these deals, a few people get rich, a lot of people lose their jobs and at the end of the day everyone but the speculators are poorer.

If and when the government has to pay long term average rates on its borrowings it is going to go broke in a hurry.  Interest costs will eat up the budget.  At just 3 percent, interest costs on the now 20 trillion debt are 600 billion per year.

 

Share this post


Link to post
Share on other sites

Follow the money...

NPR reports more 'blues' for ballooning US government interest payments  ... US Treasury's 10 yr notes slipped ... again

... even weaker ... to 2.45% this morning. .... sliding 1.15% in just one morning.

Compare the US Govt. $$ weakness ... and losses of confidence ... versus the European Central Bank's  strength at   -04% interest rates .... Germany's  govt. strength at -0.25%    ... and Japan's govt. strength at having to pay just 0.06% interest rates for their 10 yr debt financing.

The USA Govt  now
has to pay  40 times higher interest rates  than Japan,  to entice people to buy US debt.

as the US dollar also continues to weaken further this morning   to over $1.18 vs the Euro ...     US dollar weakens further to the Pound  ...  

US dollar weakens vs the Yen ....   and the US Dollar even weakened a full 1.1% this morning vs the MXN peso ...
(currency hedging moves by Mex. Gob.)


Then notice that people feel confident in  US CORPORATIONs ... continuing to buying more stocks at higher & higher historic record prices ... as $30 billion of new US money floods in monthly for US CORPORATIONS  + another $32 billion of overseas floods in monthly to buy into US corporations.


Unfortunately for our US Govt Debt interest payments, the same Big Money is shunning the US Govt debt, per US Treasury Secretary Mnuchin,  due to diminishing confidence in the US Govt's ability to enact their legislative agenda.

All these US Govt fiscal drops were not part of either Mnuchin's nor Yellan's announced plans.

Are all these US Govt. fiscal drops    just temporary hiccups ?


 

Share this post


Link to post
Share on other sites

What drives all of this has been explained here ad nauseam by a number of posters.  By your logic, Mexico's far higher interest rates are the fault of some politician instead of the result of a number of factors.

Japan's rates are easily understood in the context of the basically zero growth there:

https://www.nytimes.com/2016/09/21/business/international/japan-boj-negative-interest-rates.html

Quote

What sort of countries have negative rates?

Those with ultra-low inflation or deflation, meaning falling prices associated with weak economic growth. The European Central Bank, which oversees monetary policy for countries that use the euro, introduced negative rates in 2014. Denmark, Sweden and Switzerland, which are not part of the eurozone, also have negative rates.

As this reference noted, Japan is actually experiencing deflation.  Demographically Japan is in a very bad way with a rapidly aging population and fewer and fewer workers and consumers.  Japan basically has zero immigration and if current trends continue it is estimated Japan will pass the point of no return where it will be impossible to repopulate the country in just several decades.

There is no question the U.S borrows way too much money and this is unsustainable.  The past two administrations basically ran the printing press.  Thus far, this one seems to be going for a repeat performance.  All of this suggests that maybe gold instead of fiat currencies is the way to go since the latter are being abused by a great number of governments these days.

 

  • Like 1

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


×
×
  • Create New...