Prices coming down?

[Yihang]

Originally Posted by daletournier

I wouldn't agree with that at all! Once again you need to look deeper. The longest economic expansion in US history, yes BUT also the weakest or one of the weakest ,certainly the most propted up.

Without QE 1-3 and other stimulus the economy would of collapsed, let's not forget historically low interest rates for a decade. The Fed tried to unwind its balance sheet and just couldn't do it. The economy has been on life support since 2008, more so now.

That's what everyone is saying but the robinhood kids will just think 'ok boomer' while buying tesla stocks at 700 P/E ratio. So far they are right.

[Sonny36]

Maybe we're in Depression 2.0 and don't know it. Evidence? The food banks, etc., with thousands of people lined up in cars, are the soup kitchens of the 1930s. Only difference is it's families lining up, not unemployed males. Ah, the Republicans: the soup kitchen party.

[Davy J]

Originally Posted by Sonny36

Maybe we're in Depression 2.0 and don't know it. Evidence? The food banks, etc., with thousands of people lined up in cars, are the soup kitchens of the 1930s. Only difference is it's families lining up, not unemployed males. Ah, the Republicans: the soup kitchen party.

Stupidest post in the whole thread..............

You know, people that are hoping to save $25,000.00 on a $300,000.00 boat.

Waiting in a soup line.............

[Statistical]

Originally Posted by ranchero76

I dreamed about this lifestyle, but it looks like it won't happen in this life.

In this LIFE? What are you 97? Either we will have a vaccine or someday 70%+ of the world will have become infected. Either way we will have herd immunity and life will go on. Obviously the vaccine is the preferable route but the end state is the same.

Look at the recent videos on YT from sailing channels. They mostly about "how to spend time in one place without ability to go anywhere". It might be fun for a month. Or two. But not for a year.
And on some channels people already selling the boats after very long refits, without even trying to start cruising.

Youtube as a source of highly vetted information that represents the typical person? Once again if you are saying "I need to go cruising because my Dr told me I only have a year to live" then yeah this is some crap timing but the situation today won't exist for decades. We will adapt as humans always have ever since they made a sharp rock by banging two rocks together.

[Lake-Effect]

Originally Posted by wolfgal

the fed invents money and gets it out there buy technically buying assets, junk bonds, all kinds of things... this is usually called quantitative easing but there are other ways that the Fed can control flows of money (like raising or lowering the interest rates, controlling yield control curves, etc). a metaphor for this could be putting grease on the mechanical parts of a financial system so that the whole thing does not freeze up and go into gridlock

I don't think the Fed buys crap like junk bonds; I think they mainly buy blue-chip, conservative stuff. Also, I think that the interest rate stuff is as or more important than buying in, because the continued availability of low-cost liquidity is what keeps the machine greased, as you say.

a lot of money has been printed, but the two ways it flows out is through monetary policy and fiscal policy, two very different levels.

While the money involved in monetary policy tends to stay at the top (with the cream percentage), Fiscal policy involves the stimulus cheques, etc and serves to keep people in their homes and enough food on their plates for a while... it also helps small businesses, etc.

...the fact that, due to the distribution channels, this "printing" doesn't really help on the ground all that much is a real big problem. you may have noted how Powell has been begging congress to make some FISCAL decisions. this means that Powell has noticed that this money, this liquidity is not really getting to mainstreet where mom-n-pop businesses are shutting down, companies are laying people off, where folks are not able to pay rent/mortgages and are standing in food lines, etc.

I pretty much agree with this. I do believe that unlike post-2008, there has been more money flowing directly to those most in need (and most likely to spend it almost immediately). Other countries like mine (Canada) have been more proactive in supplying money to those laid off and to small businesses to maintain staff, and I believe it's been to good effect.

the difficulty with the way this money flows out has also deepened the wealth gap like never before. even before c-19 hit, 81 percent of all of the globe's resources and wealth was owned by 11 percent of the globe's population. an outgrowth of the printing is that that 11 percent have much, much more now...

I don't know if that's immediately true. Threads like this ("where's my bargain boat??"), and other recreational spending confirm that we in the boat-owning class aren't exactly hurting, and our spending, particularly on goods and services, will help keep some employed.

Dale hates when i say this, but it's still my opinion that because so much global wealth is actually in (and dependent on) "the system", and most of us (from anyone with assets - a house, and/or stocks, and/or a 401k or other retirement investments... all the way up to the mega rich) have placed more or less the same bet... that we all have an interest in not letting things fail. And so therefore I remain optimistic that recovery will happen. We all lose if it doesn't.

[Macblaze]

Originally Posted by Statistical

In this LIFE? What are you 97? Either we will have a vaccine or someday 70%+ of the world will have become infected. Either way we will have herd immunity and life will go on. Obviously the vaccine is the preferable route but the end state is the same..

You know that life isn't that binary right? Could be they get a mediocre vaccine, and the virus keeps on mutating (a la season flu), no one gets immunity and every year this thing sweeps around the world again and again. Then the question what mortality rate are we prepared to tolerate vs how much can societies adapt... The variations and possibilities are infinite. Nope. Definitely not a binary.

Back on topic, I keep wondering if demand is going to keep growing and that maybe its time to sell, sit on the cash and start shopping for the next boat...

[Statistical]

Originally Posted by Macblaze

You know that life isn't that binary right? Could be they get a mediocre vaccine, and the virus keeps on mutating (a la season flu), no one gets immunity and every year this thing sweeps around the world again and again. Then the question what mortality rate are we prepared to tolerate vs how much can societies adapt... The variations and possibilities are infinite. Nope. Definitely not a binary.

Back on topic, I keep wondering if demand is going to keep growing and that maybe its time to sell, sit on the cash and start shopping for the next boat...

If that is the case we will as a species live with and adapt to that. There isn't going to be a global lockdown which brings all tourism to include cruising to a halt for the next half century which is what the prior poster was lamenting.

One way or another tourism and travel will return. Not tomorrow maybe not even next year but it will.

[Tenedos]

In the meantime

L.A. rent is falling, with some big drops in luxury buildings (https://www.latimes.com/homeless-hou...lling-high-end)

Now would one expect a correlation between rents in luxury buildings and boat prices

[daletournier]

Originally Posted by Yihang

That's what everyone is saying but the robinhood kids will just think 'ok boomer' while buying tesla stocks at 700 P/E ratio. So far they are right.

Agreed! So far they are right, crazy world, fundamentals dont count anymore ...until they do. It's the bubble everything era. I really am at a loss of what to do. The robinhoid millenials are even making gold & silver the new Tesla currently......we will look back and say "what were they thinking ".

[daletournier]

Originally Posted by Lake-Effect

I don't think the Fed buys crap like junk bonds; I think they mainly buy blue-chip, conservative stuff. Also, I think that the interest rate stuff is as or more important than buying in, because the continued availability of low-cost liquidity is what keeps the machine greased, as you say.

I pretty much agree with this. I do believe that unlike post-2008, there has been more money flowing directly to those most in need (and most likely to spend it almost immediately). Other countries like mine (Canada) have been more proactive in supplying money to those laid off and to small businesses to maintain staff, and I believe it's been to good effect.


I don't know if that's immediately true. Threads like this ("where's my bargain boat??"), and other recreational spending confirm that we in the boat-owning class aren't exactly hurting, and our spending, particularly on goods and services, will help keep some employed.

Dale hates when i say this, but it's still my opinion that because so much global wealth is actually in (and dependent on) "the system", and most of us (from anyone with assets - a house, and/or stocks, and/or a 401k or other retirement investments... all the way up to the mega rich) have placed more or less the same bet... that we all have an interest in not letting things fail. And so therefore I remain optimistic that recovery will happen. We all lose if it doesn't.

https://www.vanityfair.com/news/2020...junk-bond-boom

Yes, they have bought Junk, that's the craziness of this, stuff isnt allowed to fail, all this does is dam up the financial downside for a late date with greater magnitude.

And of course the world will recover, it always does BUT it most likely wont go back to where it was ,or if it does it will be tempory and propted up even further with negative rates etc that distort markets.

I dont know why it's so hard to accept everything has a life span, this includes monetary systems, look at history they have come and gone, its normal....we are nearing the end if our current monetary system imho. There will be pain BUT in the end we go on and things improve.

Just because you and most others are heavily invested in the upto now status quo is in no way a guarantee of future success.

[daletournier]

Originally Posted by Statistical

If that is the case we will as a species live with and adapt to that. There isn't going to be a global lockdown which brings all tourism to include cruising to a halt for the next half century which is what the prior poster was lamenting.

One way or another tourism and travel will return. Not tomorrow maybe not even next year but it will.

It has to! I'm in Fiji, all the shops at Port Denarau marina are closed, at this time of year they would normally be thriving, how dies a country like Fiji survive economically without tourists?

Its mind blowing to me. I doubt we will get a 100% successful vaccine based on history BUT I really hope we do and soon.

[tomfl]

Originally Posted by Yihang

So buy a boat and some gold billions now and move to new zealand? Sounds pretty sweet。

China gave zero hand outs during this whole thing. Not sure how that's going to play out.

Depends on how you define hand outs. The official banking system in China accounts for maybe half of the banking and the rest is made up of the shadow banking system. No one knows who handed out what to whom.

[Lake-Effect]

Originally Posted by daletournier

https://www.vanityfair.com/news/2020...junk-bond-boom

Yes, they have bought Junk, that's the craziness of this, stuff isnt allowed to fail, all this does is dam up the financial downside for a late date with greater magnitude.

Fair enough, but look what they're calling junk: Uber, Clear Channel, Caesars Resort Collection, MGM Resorts, and Ford. Big companies whose ratings have been downgraded, and who might reasonably be expected to improve.

Just because you and most others are heavily invested in the upto now status quo is in no way a guarantee of future success.

I expect that you are too, and as you've sagely observed about Fiji, "it has to" work towards reopening and tourism. No plan B for them, other than outside aid.

I too have hopes that some economic reform can be slipped into this recovery.

[Orson]

Wolf gal
You’ve made a long and bold post! Thanks. And for kibitzing noobs, I hope your post draws their interest. In broad strokes, you’re mostly on track. But I hope to both further contextualise matters and put various details straight. And share my amazement of the system we’ve got.

To begin with, why do we have a central bank at all? The Federal Reserve Bank serves member retail banks as the banker of last resort in a financial crisis. And what noobs neither know or appreciate is that we have evolved an economic system conditioned by socio-political needs, revised over time, with the Fed at the top.

Before we had a central bank, only the ultra rich and well-connected could quickly manage a run on the banks (ie, all cash being withdrawn, and thus closing it down or bankrupting it). For example, even the US Treasury had to ask J. P. Morgan to stanch the Panic of the summer of 1907. (SEE https://u-s-history.com/pages/h952.html)

Subsequently, in 1913, we got a ‘rich persons only’ income tax, and the Federal Reserve Act, which created the Fed.

Over the previous century, the US had three big recurrent social and political problems affecting the economy. First, the slavery problem. Second, expanding the territory and securing a continental nation. And lastly, the forgotten and fiercely fought debate: whether or not to have a federal or US bank?

Why should this be a problem? Alexander Hamilton was for such a bank because We Can Do Important Things with it. Jefferson opposed it for the same reasons, but taking the opposite side! Centralised power is dangerous, and public debt is corrupting.

And thus, US policy went back and forth for a century until 1913. Yet even today, as your post suggests or implies, wolfgal, we debate the need and justification for a central bank, roughly along the Trust and distrust lines of thought of the Founders.

In addition to bring bank of last resort — a function seen on display last spring and in 2008 — the Fed’s job is to manage the supply of money with the goal of suppling credit for consumers, but only as consistent with low inflation and higher unemployment.

Traditional economic science says that the last two policy goals are trade-offs. Employment can be raised with more available credit, or a larger supply of money circulating, but only at the cost of greater price inflation. And inflation can be a risky and politically damaging expense that steals from people holding local money (Turkey today, 40% per year), or even ruinous (Venezuela today, 2,000% or beyond), making economic planning impossible.

The current best measure of price inflation might be the current doubling in the price of gold. But with the impact of a pandemic so beyond living memory, this doubling might merely be a measure unprecedented economic uncertainty (a flight to safety for money). US government bond prices and interest rates reflect this, too. As does “purchasing power parity” which can be measured by the local cost of a MacDonalds meal, and both of these indicators do not reflect a problem — yet.

So, this is the framework of “monetary policy” because it is managed as a social good (credit fuels mass purchasing from homes to bank cards). But there is a larger social and political system within which the bank system works.

You mention fiscal policy, or federal government spending, which can help people have enough to eat and stay in their homes in crisis times like these. But in a banking crisis, trust stops, and the flow of money stops, then Labor stops because investing and spending stops. What then?

Both the Great Depression, the years after the market crash of 1929, and the recent Great Recession (2008-9), were such emergency times. And yet, this year of pandemic is a similar emergency like those. But unlike those two earlier events, it is an external shock to trust we’re coping with instead of an internal one. We fear death by an invisible virus, not banks, not money, nor even people! (The virus literally exploits our hyper-social nature!)

Now you’ve said that Fed Bank chairman Powell works for President Trump. It might seem so, but that’s incorrect. The president appoints the members on Board of Governors who run the bank of last resort, which is owned by member banks, yet they are, in some sense, answerable to politicians. How does that even work?

Here’s is a huge lesson in America’s unique political culture because the Fed reflects the Ways of the Founders. They distrusted mobs and democracy. And their solution was borrowed from a French thinker, Baron Montesquieu. His ideas were championed by James Madison.

The solution to distrusting great centralised powers was to divide it or spread it around. Thus, we have a system of divided responsibilities: the President leads in carrying out policies; the Congress writes the laws; the Courts review laws and decide on their ultimate enforcement.

This is known as Federalism, and it applies to our political system both horizontally (President-Congress-Courts, like above), and vertically (local, state! and national).

Ok. So how does this idea apply to the banking system and the Fed? For example, the President can appoint members of the Board of Governors to the Fed, as well as the Chair (Powell). Congress must approve them. But only a vote by the Governors can remove them for their term. (And likewise, member banks have voting powers, too - but, frankly, I don’t know them, off-hand.)

Thus, even the Fed reflects the divided powers of the Founding idea behind federalism, including checks and balances (ie, one branch of government can review or block another part).

This means the US has a hybrid banking system, or an institution built out of political compromises. For example, during the Great Depression and Great Recession, many hundreds of banks failed in the US. But during both periods, no bank in Canada nor the UK failed!

How is that possible? Because they both have far fewer but much larger and more powerful banks. Remember? In the US from the start, we distrusted too much centralised power and authority. Therefore, instead of a dozen banks, we have thousands! Isn’t that amazing?

We have a weaker bank system, but gain much more local, or populist, control or oversight of the banks. Two banking and finance historians sum it all up in their history comparing those three nation’s banks (plus Brazil and Mexico) in their book title, that ours is a banking system that is “Fragile By Design,” because it was built out of the politics of compromise and social, or at least local, distrust.

[daletournier]

Originally Posted by Orson

Wolf gal
You’ve made a long and bold post! Thanks. And for kibitzing noobs, I hope your post draws their interest. In broad strokes, you’re mostly on track. But I hope to both further contextualise matters and put various details straight. And share my amazement of the system we’ve got.

To begin with, why do we have a central bank at all? The Federal Reserve Bank serves member retail banks as the banker of last resort in a financial crisis. And what noobs neither know or appreciate is that we have evolved an economic system conditioned by socio-political needs, revised over time, with the Fed at the top.

Before we had a central bank, only the ultra rich and well-connected could quickly manage a run on the banks (ie, all cash being withdrawn, and thus closing it down or bankrupting it). For example, even the US Treasury had to ask J. P. Morgan to stanch the Panic of the summer of 1907. (SEE https://u-s-history.com/pages/h952.html)

Subsequently, in 1913, we got a ‘rich persons only’ income tax, and the Federal Reserve Act, which created the Fed.

Over the previous century, the US had three big recurrent social and political problems affecting the economy. First, the slavery problem. Second, expanding the territory and securing a continental nation. And lastly, the forgotten and fiercely fought debate: whether or not to have a federal or US bank?

Why should this be a problem? Alexander Hamilton was for such a bank because We Can Do Important Things with it. Jefferson opposed it for the same reasons, but taking the opposite side! Centralised power is dangerous, and public debt is corrupting.

And thus, US policy went back and forth for a century until 1913. Yet even today, as your post suggests or implies, wolfgal, we debate the need and justification for a central bank, roughly along the Trust and distrust lines of thought of the Founders.

In addition to bring bank of last resort — a function seen on display last spring and in 2008 — the Fed’s job is to manage the supply of money with the goal of suppling credit for consumers, but only as consistent with low inflation and higher unemployment.

Traditional economic science says that the last two policy goals are trade-offs. Employment can be raised with more available credit, or a larger supply of money circulating, but only at the cost of greater price inflation. And inflation can be a risky and politically damaging expense that steals from people holding local money (Turkey today, 40% per year), or even ruinous (Venezuela today, 2,000% or beyond), making economic planning impossible.

The current best measure of price inflation might be the current doubling in the price of gold. But with the impact of a pandemic so beyond living memory, this doubling might merely be a measure unprecedented economic uncertainty (a flight to safety for money). US government bond prices and interest rates reflect this, too. As does “purchasing power parity” which can be measured by the local cost of a MacDonalds meal, and both of these indicators do not reflect a problem — yet.

So, this is the framework of “monetary policy” because it is managed as a social good (credit fuels mass purchasing from homes to bank cards). But there is a larger social and political system within which the bank system works.

You mention fiscal policy, or federal government spending, which can help people have enough to eat and stay in their homes in crisis times like these. But in a banking crisis, trust stops, and the flow of money stops, then Labor stops because investing and spending stops. What then?

Both the Great Depression, the years after the market crash of 1929, and the recent Great Recession (2008-9), were such emergency times. And yet, this year of pandemic is a similar emergency like those. But unlike those two earlier events, it is an external shock to trust we’re coping with instead of an internal one. We fear death by an invisible virus, not banks, not money, nor even people! (The virus literally exploits our hyper-social nature!)

Now you’ve said that Fed Bank chairman Powell works for President Trump. It might seem so, but that’s incorrect. The president appoints the members on Board of Governors who run the bank of last resort, which is owned by member banks, yet they are, in some sense, answerable to politicians. How does that even work?

Here’s is a huge lesson in America’s unique political culture because the Fed reflects the Ways of the Founders. They distrusted mobs and democracy. And their solution was borrowed from a French thinker, Baron Montesquieu. His ideas were championed by James Madison.

The solution to distrusting great centralised powers was to divide it or spread it around. Thus, we have a system of divided responsibilities: the President leads in carrying out policies; the Congress writes the laws; the Courts review laws and decide on their ultimate enforcement.

This is known as Federalism, and it applies to our political system both horizontally (President-Congress-Courts, like above), and vertically (local, state! and national).

Ok. So how does this idea apply to the banking system and the Fed? For example, the President can appoint members of the Board of Governors to the Fed, as well as the Chair (Powell). Congress must approve them. But only a vote by the Governors can remove them for their term. (And likewise, member banks have voting powers, too - but, frankly, I don’t know them, off-hand.)

Thus, even the Fed reflects the divided powers of the Founding idea behind federalism, including checks and balances (ie, one branch of government can review or block another part).

This means the US has a hybrid banking system, or an institution built out of political compromises. For example, during the Great Depression and Great Recession, many hundreds of banks failed in the US. But during both periods, no bank in Canada nor the UK failed!

How is that possible? Because they both have far fewer but much larger and more powerful banks. Remember? In the US from the start, we distrusted too much centralised power and authority. Therefore, instead of a dozen banks, we have thousands! Isn’t that amazing?

We have a weaker bank system, but gain much more local, or populist, control or oversight of the banks. Two banking and finance historians sum it all up in their history comparing those three nation’s banks (plus Brazil and Mexico) in their book title, that ours is a banking system that is “Fragile By Design,” because it was built out of the politics of compromise and social, or at least local, distrust.

I would argue central banks are both arsonist and fireman!.

In regards to the virus being an external threat, sure it is, BUT if there wasnt so much negative pent up energy in the form of debt which can be directly linked to central bank policies over the decades we wouldnt now have the very real economic threats that encircle us.

An external threat sooner or later appears, that's life, this is why you prepare in advance to weather a storm, you dont create more kindle.

We are economically fragile due to poor central bank decisions amongst other things. In 1913 the currency supply of the US was effectively given to a private organization.

The doubling of Gold is possibly a canary in the Gold mine regarding inflation or just a by product of negative yielding debt and crazy expansion of M1 money supply, gold really hasnt increased in value a great deal, if at all when compared to currency creation of recent decades, also as a safe haven, zero yield is better than negative yield thus the argument gold dosen't return you anything is now invalid.

It could be argued it's a case of not having "sound money" , something Bitcoin holders would argue (I own no cyptos). Without a governor currency creation is always abused, it's in mans nature, a lack of self restraint.

Label the feds printing money anyway you want ,at the end of the day its unbridled debasement that will/does have consequences. The virus just accelerates what is already in play.

Complicated topic that few, including me fully understand.