Quote:
Originally Posted by OneHungLo
Yet won't take my simple $100 dollar bet that the DOW hits 30k by Jan 1st, 2020  |
I'm not sure I would make that bet either, even if the market does "crash."
The issue is that the FED is boxed in, and they really have limited options. Without going into the whole thing, I can summarize by saying that the entire "recovery" from the Great Recession has been caused by money printing - in all it's nouveau forms like Quantitative easing and negative interest rates. It's easy to make the economy
appear to be booming when it is paid for on credit.
The problem is that the amount of debt on government and corporate balance sheets is now unprecedented.
This means that the FED cannot raise interest rates in any meaningful way or they will bankrupt the Fortune 500 and the US government. In fact, they can't really end QE without causing a US dollar shortage that will result in a similar widespread bankrupting of global institutions.
The only remaining policy option is to cut interest rates to zero or negative and to increase money printing.
Money printing to solve the problems that have only gotten worse by living on the USA's 10 Trillion dollar credit binge will cause inflation that will be extraordinary (I'd say hyperinflationary, but that won't happen right away, certainly not by 2020).
With runaway inflation caused by massive money printing and negative interest rates, the stock market may well hit 30k by January 2020, but the VALUE will be far less than it is today (as measured by gold or oil or commodity prices).
So, there's the problem: the worse the economy gets, the higher the NOMINAL stock value may become, but the less valuable it actually is.
Now, offer me the bet in terms of the stock market priced in GOLD, and that'd be worth taking