ishtat
Literotica Guru
- Joined
- Aug 29, 2004
- Posts
- 5,768
The Federal Reserve is printing $120 Billion in new money every month and using it to buy US government securities, and US companies are massively increasing their debt. In contrast, companies outside of the USA are tending to issue new equity to shareholders rather than take on more debt. Which is better?
At the moment stock buyers are not factoring in the risk of the extra debt burden and consequent massive increase in liquidity. The issue is, will they do so before or after November; when they do, it will be very ugly for the stockholders and the economy. It will happen, it is only a question of when.
Powell is stuck between a rock and a hard place - if he turns off the liquidity tap the market and economy will tank. And the government seems devoid of fresh ideas.
At the moment stock buyers are not factoring in the risk of the extra debt burden and consequent massive increase in liquidity. The issue is, will they do so before or after November; when they do, it will be very ugly for the stockholders and the economy. It will happen, it is only a question of when.
Powell is stuck between a rock and a hard place - if he turns off the liquidity tap the market and economy will tank. And the government seems devoid of fresh ideas.