Fed Injection Postponing Economic Problems, Not Solving: Summers | Forex Factory

  • Fed Injection Postponing Economic Problems, Not Solving: Summers

    From youtube.com

    Lawrence. H. Summers, former U.S. Treasury Secretary, sees the Federal Reserve's latest move as right for the short-run, but sees trouble ahead for economic fundamentals. He joins host David Westin for an exclusive take on "Bloomberg Wall Street Week."
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RossEdwards
Apr 10, 2020 3:46am
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Read Further:
https://wolfstreet.com/2020/04/09/qe...-and-bailouts/
https://wolfstreet.com/2020/03/23/wh...rams-and-spvs/
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swd
Apr 10, 2020 4:35am
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I would not be surprised if "globally" there was some attempt to cancel debt incurred during Covid-19 rather than shove the colossal debt onto the taxpayer like with usual bailouts. Not sure how it would be done, and done fairly, EU have said already that canceling debt seems "unthinkable", but "unthinkable" today is reality tomorrow. These are very different times.
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swd
Apr 10, 2020 5:39am
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Quoting barkie
{quote} ... Cancel the debt and you blow up the complete financial system. What usually happens in times like this ...
The financial system globally is blowing up. Seen the FED balance sheet lately? Oil at lower than costs to pump and store. Treasury bonds having negative yield. Interest rates at near zero. FED buying junk bonds and equity ETF's? The FED picking winners now. What happens when QE stops working? Throwing a few more trillion at the markets and it does nothing. So then we have a war....
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swd
Apr 10, 2020 6:43am
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Things could be much different in the future, then again they might not be. Stocks could return to highs, after all the FED is now a giant hedge fund using FED money to give to Goldman and Blackrock to purchase junk and equity ETF's. That and the Saudi's taking further stakes in key oil companies like Equinor (EQNR), Royal Dutch Shell (RDS.A), Total (TOT), and Eni (E) through their wealth fund. Has this been a big old heist for elites to stock up on cheap assets? I don't know, but time till tell and I will keep on trading
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barkie
Apr 10, 2020 5:32am
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Quoting swd
I would not be surprised if "globally" there was some attempt to cancel debt incurred during Covid-19 rather than shove the colossal debt onto the taxpayer like with usual bailouts. Not sure how it would be done, and done fairly, EU have said already that canceling debt seems "unthinkable", but "unthinkable" today is reality tomorrow. These are very different times.
Not going to happen, government bonds are considered safe assets and banks, pension funds, insurers etc are often required to invest in this stuff. Other countries buy them as well.
Cancel the debt and you blow up the complete financial system.

What usually happens in times like this is that at some point a massive war breaks out and debt gets ramped up even more. Then after the war countries are forced to default on their debt and at the same time create a bunch of new debt to rebuild the country.

No politician is going to cancel the debt now because this is basically the same as signing your own political death warrant.
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