Isn’t the US headed for a crash?

It seems likely to me.

It is. We are living on credit and have been long before these current events. Poor fiscal policy is the core issue and both the public and our Gov’t have no reserves for rainy days. The hard rain is not even here yet.

I’m expecting it. It’s tricky to know where to shelter. Cash is risky because of inflation. Bonds can even be risky due to the issues @ARE_you_kidding_me mentioned. I’ve been investing a significant chunk in international stocks, but if the US crashes, it’s going to take the rest of the international market with it.

They are throwing trillions at the economy and something has to give. I’m wondering where they are getting all of this money. And it has to be paid back somehow, someday.
I keep thinking I need to get my money out of my IRA and 401-k before the crash, but then I’m afraid to do that too.

Just the US?? Do you know that The Great Depression affected the entire world??

The extra 600 a week in unemployment runs out this month. Along with student loan payments being suspended. Along with the eviction moratorium.

Shit is about to get bloody unless they extend these things real fast.

I did read an economist say that in a crisis it is ok to just print more money and it does not necessarily have to be paid back. You do what you need to do to shore up the economy. I believe it is the job loss rather than a deficit that will cause the crash.

I do think the best one can do in terms of investments is have a conservative diverse account and hope to ride things out.

At the start of the pandemic, the stock market went down, which made perfectly good sense. I don’t know why it recovered and has continued to climb. I agree that a fall may be imminent.

You will be fine, chin up pip pip!

Do you all think specific stocks will continue to go up? Like Amazon, maybe healthcare, cleaning products?

@chyna Do you mean actually take your money out of your retirement accounts? Or, just move the money to “cash” within the account?

@ucme I think we will, if the mask rebels don’t spread this to a raging fire. Cali’s second shutdown is concerning.

I read on bbc.com this week that the UK is raising taxes and limiting healthcare benefits to avoid a crash.

@KNOWITALL All these doom mongerers should lighten up a tad :D
Yes, the deficit needs clawing back & so folks just have to bite the bullet, a necessary evil.

@jleslie Just move it to a stable interest rate instead of in stocks and bonds.

The US economy is in a nose dive now. The actual impact will likely happen soon after Biden is elected President. All blamed on a Trump of course.

@chyna “Just move it to a stable interest rate instead of in stocks and bonds.”

That won’t protect against hyperinflation. I think that’s a reasonable risk to hedge against right now. (I am not a professional, this is not investing advice).

@ARE_you_kidding_me The government has no operational fiscal constraint. It isn’t a household. It can’t go bankrupt. No bailiffs show up to repossess things. What’s more, it is the source of new money—it issues the stuff in the first place.

@chyna “I’m wondering where they are getting all of this money. And it has to be paid back somehow, someday.”

From itself, primarily through keystrokes on a computer. Money isn’t a thing that has to be gotten from somewhere: it’s not a commodity. It’s a measure of debt, which can be created from nothing. And what debt is is in this context is social obligation, which we redeem and pass around through repeated transanctions using this money. It’s how labour and resources are allocated and economic activity instigated in a capitalist economy. It needs money.

@KNOWITALL I don’t know what you read, but there’s been no increase in taxes in the UK, and nothing about limiting “healthcare benefits”. We have free and universal healthcare here.

@gorillapaws The probability of hyperinflation in the US is as good as zero. It’s deflation you need to worry about.

@Kropotkin Under normal circumstances I would agree, but if the Fed continues to essentially “print” money with reckless abandon, it is certainly a greater than zero risk. I would argue it’s a significant risk (as in greater-than 10%).

@Kropotkin Here’s the article I read.

Andy King, an official at the OBR, noted that this would mean either reducing the quality of UK healthcare or raising taxes significantly.

https://www.bbc.com/news/business-53402176

“government has no operational fiscal constraint. It isn’t a household. It can’t go bankrupt.”

There is no infinite well for Gov’t to draw from. They can “create” money by printing it but the value of that money has an upper limit. If the world loses faith in the reserve currency (the dollar) then we can’t leverage it for resources anymore. The US is about to pop the debt to GDP ratio which is seen as a warning to those who use the dollar that servicing american debt is no longer a stable investment.

@gorillapaws Most money in circulation comes from private sector borrowing from private banks, and not from the Fed.There’s little to no chance in the near future of the US experiencing a massive supply side shock. There’s no conceivable way the Fed will “print” so much money that it’ll both compensate for monetary deflation on the private sector side, and exceed the available capacity of the entire US economy.

@KNOWITALL The OBR is not the government. It provides so-called “analyis” and acts more like an advisory body. It’s also full of shit and run by people who don’t know what they’re doing or talking about. In effect, it’s a sort of neoliberal/fiscal conservative lobby group that does PR for bad policies.

@ARE_you_kidding_me There’s no risk of any of that. Countries aren’t going to stop exporting to the US and buying US bonds. I don’t know what “pop the debt to GDP ratio” means. There’s nothing significant or particularly meaningful about US debt to GDP. Japan has 230% debt to GDP, and no one is calling the bailiffs on them.

Understanding that the pandemic would initiate a sharp downturn, our lawmakers panicked along with the rest of us. While the public stripped the shelves of toilet paper and soap, the government threw money willy nilly at the problem with little regard to prioritizing need. That money was of course merely a mattter of speeding up the printing presses, and then throwing a blanket of cash over the country to smother the assured depression. The tactic worked in subduing the panic, but where was all of that extra money to go that was handed to those not requiring infusions of cash? You stash it against the likelihood of bad times. The bank pays you virtually nothing in interest, the stock market soars! As with management of the disease itself, the fiscal mismanagement is proving equally disastrous. The money allowed tens of millions of us to effectively lock down, but the absolutely crucial failure in leadership from the top dictated a fractured piecemeal approach to an epidemic with obvious and predictable results. There can be no clearer demonstration of what we should expect than those scenes of crowded beaches on Memorial Day and the 4th of July. The worst is yet to come.

@Kropotkin Got it, that’s why I thought I’d mention to @ucme, you never know anymore. Thanks! And good luck!

I say cut our losses. Strategically placed percussion explosions along the San Andreas fault. Let California float off west.

@Kropotkin “Most money in circulation comes from private sector borrowing from private banks, and not from the Fed”

You’re talking about the money multiplier, which is controlled by the Fed.

I’m talking about the Fed printing money to buy out bad corporate debt. That is not an infinitely scaleable operation. If other countries do lose faith in the dollar (even losing partial faith such that they sell significant percents of their US holdings to diversify in other currencies), it could kick off a chain reaction that can lead to hyperinflation, or at the very least enough inflation that it would significantly erode the value of securities held with fixed rates of return.

I don’t know about the country but we sure as hell are.

Some weird people seem to hope so.
I don’t understand that sort of unhelpful pessimism, but there you go.