Message from Tanner - SC in MacGuyver - Skills & Academics #noncrypto-investing
Yeah, just making sure, brother. :-) With being an attorney, I can be a little anxious...hahaha
We don't need FINRA and the SEC up in our grills...haha
"The Fed's "balance sheet normalization" will accelerate as 2018 progresses: In Q1, the Fed is scheduled to shed $60 billion in securities, in Q2 $90 billion, in Q3 $120 billion, and in Q4 $150 billion, for a total of $420 billion. This is scheduled to increase to $600 billion in 2019."
What does this mean really? We don’t really have reserve requirements anymore so this will just reduce the money supply by that much every quarter correct?
a quick google search tell me the reserve requirement is 10%
the jist of the article was talking about the yield curve
currently it is flat - ~50bp spread between the 10yr and 2yr
an inverted yield curve (short rates greater than long term rates) is a leading indicator a recession is on the horizon. we had this in 2006
the above quote shows that fed has ammo to keep the yield curve normal (short rates lower than long rates) which is a good thing
Trying to find the report but apparently banks have gone on record saying that they will make loans without reserves and find the reserves later. Maybe they are referring to the discount window
again, its importnt to watch cadence of fed rate increases.. too quick and it will trigger a recession i believe. 2-3 rate hikes it about right for 2018. 50-75bp increase puts us at ~2% fed fund rate
The increases you are talking about are to the discount rate, correct?
the federal fund rate is the minimum rate banks can borrow from other banks. the discount rate is the rate at which banks can borrow directly from the fed
the discount rate is 2% https://www.bankrate.com/rates/interest-rates/federal-discount-rate.aspx
Right but the fed reserve only controls the discount rate directly where as the fed funds rate is indirectly controlled correct
that is my understanding yes
@Zyzz have you read Gottfried Feders "Breaking interest slavery"? and what do you think of his pronouncements, or generally the argument against usury or borrowing money at interest? is money only a measure and an exchange or should it be treated as a commodity?
@REVNAT/PA I haven't read the book but my thoughts on charging interest on loans is as follows: no one in their right mind would give you money (for free) with the expectation that it'll be paid back at a later date. lending money has inherent risks (not being paid back) and a lender should receive adequate compensation for that risk(interest). additionally, if you are going to lend money out to someone, that means you are unable to use that capital. a lender deserves some form of compensation for being without his capital for that period. if usury were abolished i would not lend it out to anyone because there would be no payoff for me and i would be without my capital for whatever period of time i had lent it for
What about state run usury like they had in Colonial Pennsylvania
Usury is necessary, it is a market signal for the price of money's time value.
I think there should be a separation of currency and state. The state should not be in control of the supply of money, nor the interest rate of money.
@Deleted User i am unfamilar with that or how hitler did it in Germany. i generally view state run anything as inferior. socialism/communism are inferior economic systems. not saying capitalism is perfect (especially in this country) but governments getting involved in business almost always results in inefficiencies
I am as well but the colony of Pennsylvania had no taxes, just this bank. Sounds like a good deal
Usury is an immoral act that was considered a mortal sin for European peoples for a good long time. Debt creates enslavement, it fosters free loading and parasitism of the monied elites, it promotes instant gratification, increases the cost of living for everyone, it punishes children through public and private debts of parents (treasury or student loan). Even if all the moral, societal, familial dire consequences were ignored in order to have 'economic growth', there is nothing preventing anyone from _investing_ in a new business as opposed to lending the money. That is how concerns were set up from time immemorial. There is not one good reason why usury should be legal. All money changers should have their assets stripped and clawed back.
morality is for goyim, duh
Interest rate is not price of money (I guess maybe in the world of Mises with gold backed blah blah). In our fractional reserve system, lending comes first then "reserves" are conjured up. Money is literally free for the banks. Yet you still pay 15% on your credit card or 5% on your car loan or 3% on your studen loan. They can lend to anybody anytime as long as they think they will get it back. To say that there is a price on an item that is literally (to steal sjw parlance) infinite is just absurd.
His articles back during the 2008 recessions were very illuminating and explanatory to me.
In regards to the comment about “nothing preventing anyone from investing in a business”. Equity and debt have different risk and return characteristics. So yes, if you are more risk averse and you do not want to bear excessive risk then yes that is stopping you from investing in the equity.
Additionally, that is why mortgage securitization was such a great thing (invented by a Christian). It distributed risk to those who were most willing and able to bear it. Your community bank down the street does not necessarily want to hold your mortgage note for 30 years. Securitizing mortgages allowed him to sell off your note; freeing up his capital.
I have nothing that could be presented as a counter argument to what you set forth. I agree with what you said: if you have capital it is much less risky and more advantageous to lend the money then to invest the money; receiving rent payments enforced through student loan, mortgage, till tap, garnishments, professional license forfeiture and other statues, laws and legal devices. That IS better and my advice to anybody looking to deploy their liquid assets would be to do it in a fashion where the individual or individuals that are the recipients of said debt will forever transfer to you a portion of their future earnings, hopefully in perpetuity with no or minimal ability to escape the contract. That is good financial advice. Furthermore, should anybody in this Discord chat be in such an entrepreneurial position, I hope they remember me and allow me to participate in the chicanery they happen to luck upon. I am not beyond praying on pensioners with reverse mortgages to ensure my sons can get bottle service at a club to impress the sluts.
Since, this _is_ after all a practical investment channel, not an academic discussion so I don’t want to belabor the point but the question was raised by others. My intent was NOT to say that individuals should not chase yields or let their savings be eaten by inflation in order to prove to be the most righteous man standing. I have made substantial multi-year gains going short ABX indexes (betting against MBS) in 2008 and long precious metals. Financial speculation is a necessity today and no man can survive outside a monastery without taking a bit out of serpent’s apple. My intent is to say that it is a provable fact that usury besides being a sin is also an economically net negative policy, creating the very instruments like mortgages that have replaced a multi-generational asset accumulation and private ownership of homes into a system of perpetual renting where an average American today has almost no chance to ever own their own property whereas individuals throughout the world and throughout the history of this country prior to today were perfectly fine buying and owning property after a minimal period of saving. Even if it was not soul destroying, corroding practice, it is an economically destructive one whose merits and demerits would be open to argument some 100 years ago but today are open for all with eyes to see.
I agree that the current fractional reserve system is a scam. My point about allowing usury is only when assuming a “world of Moses”, as you say.
Anyone have and advice or experience selling call options on your long term hold Stocks for extra money?
@Belzec absolutely, one of my favorite things :) have any questions or looking for resources?
@Deleted User I told you I would update you if I got interested in an options trade. End of last week I bought OTM NVDA calls expiring day after earnings report
So I started following it last year, they have three target markets they get evaluated on: 1. Data Centers (like AWS or other cloud providers), 2. Gaming Computers, 3. Crypto mining. Most institutional investors (I understood from listening to their conference call) as of last summer were hyper focused on their datacenter growth, which they were OK on, and completely ignored their gaming computer and cryptocurrecy growth. My basic thesis is that NVDA is still king in crypto mining and the recent interest and legitimization on the futures exchanges may make investors finally wake up to that. On this thesis I'm also considering selling the calls going into earnings instead of after, since my experience is that it attracts lots of attention (read high premiums) and I think I got in a good spot with the strike.
sounds well thought out