The Recession Megathread

[The Minsky Moment]

Dodd-Frank curtailed the emergency powers of the Federal Reserve so yes the power to prevent the spread of financial contagion has been compromised.

[Habbaku]

how do i short the world economy

[HVC]

how do i short the world economy

Bunker.

[The Minsky Moment]

how do i short the world economy

Gold is the traditional hedge but it is already very expensive.

[Habbaku]

how do i short the world economy

Gold is the traditional hedge but it is already very expensive.

Not at previous ATH, though, so arguably room for improvement.

Bitcoin it is.

[The Minsky Moment]

Bitcoin is going long on hot air.

[HisMajestyBOB]

Guns, ammo, and canned food are also fairly traditional.

[Tamas]

America's factory sector is shrinking for the first time in almost a decade -- a sign that the trade war with China may be hurting.

Data firm Markit has just reported that its US manufacturing PMI has fallen to 44.9, down from 50.4 in July.

This is the first time since September 2009 that this PMI has dropped below 50.0 -- the point that separates expansion from contraction.

[The Brain]

A-aah!!

[crazy canuck]

Interesting speech by the Fed Chair, particularly the bit about low inflation being the challenge of this era.

[Valmy]

Why would low inflation be bad?

I suppose it hurts our exports competitiveness?

[celedhring]

Why would low inflation be bad?

I suppose it hurts our exports competitiveness?

Somebody here will surely put it in better words than me, but in short it shows that demand is slowing down, since sustained consumer demand drives up prices. Slow demand then slows down business investments, etc... it can become a bit of a vicious circle.

[crazy canuck]

Why would low inflation be bad?

I suppose it hurts our exports competitiveness?

2% inflation seems to be the benchmark smarter people than us have chosen for a healthy economy - too low or too high from there is not so good.  Here is an article from 2017 - first one that popped up, describing why low inflation below 2% is bad.

https://econofact.org/whats-the-problem-with-low-inflation

In addition Picketty did a pretty good analysis of the relationship between low inflation and extreme economic inequality.

[The Minsky Moment]

Why would low inflation be bad?

It depends.

[Valmy]

https://econofact.org/whats-the-problem-with-low-inflation

Low inflation can be a signal of economic problems because it may be associated with weakness in the economy. When unemployment is high or consumer confidence low, people and businesses may be less willing to make investments and spend on consumption

Americans are...not consuming enough? All those pointed critiques of our consumer culture artists have kept making for the past century must have finally had an impact.