/biz/ - Business & Finance

>>16226947
Years later, economists will point to the 2008 financial crisis as merely the first significant event leading up to the 2020s Greater Depression

>2008-2009: Instead of allowing the economy to crash organically, world leaders and central banks take over private companies and print trillions to keep the bubble from completely popping. The world's debt is never allowed to deleverage and the bubbles are reflated
>2017-2018: Fed attempts to start reducing balance sheet and normalizing interest rates after a decade of near-zero
>December 2018: Markets not able to handle it, Christmas crash, Dow Jones -20%
>July 2019: Yield curve inverts, Fed reverses course after only being able to raise rates to 2.5%, starts cutting rates
>September 2019: Repo market almost collapses as effective rates spike to over 10%, highest level in decades. Fed starts pumping liquidity into the market with new disguised QE operations
>October 2019: Fed expands QE4 to highest rate since QE1, extends schedule out to Q1 2020

What's next?

>Sometime Q4 2019 - Q1 2020: Dow Jones reaches market peak?

>>16183068
The Fed knows we're screwed. That's why they tried to raise interest rates, because they were near 0% and in a recession you need AT LEAST a good 4% buffer to cut in order to prevent a deflationary death spiral. In 2008 it went from almost 6% to 0% and it still wasn't enough which is why they pumped massive QE as well. But this time around they didn't even make it to 2% before the market started to collapse last December. In trying to prepare for the upcoming recession they almost caused it. Now they're stuck, they can't raise rates or the market will collapse, and the more they cut rates the worse our debt/liability problem becomes because the yield on bonds goes lower and pension funds are forced to take higher risks in order to meet their required yield targets. Percentage of debt rated BBB (lowest rung above junk) is near ATH, hasn't been this high since dotcom bubble. Meanwhile they're forced to print more money (QE4ever) to keep zombies running with short-term liquidity, but that money only goes into the investment banks to fuel asset inflation and overvaluation, it never circulates to the consumers.

They "saved the world" in 2008 but nothing under the hood was actually fixed, so the next time it pops the resulting global depression will be much worse than 2008 would have been

https://youtu.be/1Lsxe5keB2A