@Zyzz that is bad for students, but is that bad for the overall economy in terms of stock market or whatever? This is going to sound supremely Jewish, but only looking at it autistically from an investment standpoint, it looks like this student loan debt will pressure people to take jobs on terms they might otherwise turndown or renegotiate because they are more at the mercy of their student loan payments. This lack of negotiating power on the part of labor would be beneficial for companies. Thus while student loan debt is bad for working people, I'm trying to understand if it is bad from the POV of hurting investments like stocks

@ThisIsChris I think you are right. The only impact this has is people with debt will not be able to consume as much (need to pay debt) and will be unable to buy homes (which isn't always a bad thing). They will just end up renting rather than buying a home. From an investors standpoint, this will not cause a bubble as they are not allowed to discharge debts in bankruptcy and there are plenty of ways for lenders to garnish wages.

I can see people with debt having less flexibility which will lead to them taking less risks from an employment standpoints (turning down job offers, quitting jobs, entreprenuerial endeavors, etc.)

savings rate is 2.9%

@ThisIsChris Entrepreneurship is way down partly because of student loan debt, and that’s not helpful for the market.

Also, that’s a lot of capital that would have gone to other more productive uses had the market manipulations not channeled so much of it into overpriced academia.

Every market manipulation has an easily observable benefit for a small sliver of the economy, and a larger unseen detriment.

I highly recommend this book for everyone in this channel, it’s a short easy read:
https://www.mises.org/library/economics-one-lesson

@Zyzz great chart, shows we are at the peak of the boom-bust cycle. We should prepare ourselves while times are good.

Everyone make sure you have enough saved to last a minimum of 6 months of unemployment.

And don’t expect unemployment payments from the government to be a fall-back plan.

Also, the FDIC only has less than 1% reserves for the FDIC insurance on your bank account, so in a crisis, your money will not be protected.

@Tanner - SC#6686 i agree. I have only small credit card debt that i pay off every month and a lot of cash on hand

@Zyzz WTF, you have credit card debt and you're giving investment advice? What's the APR on that, 15%?

as i said, i pay it off every month. ie: i do not carry a balance

also, even if i did carry a balance, not sure how thats relevant to my ability to give investment advice/analyze the current environment

It’s not debt if you don’t carry a balance. I thought you meant you were making payments against a carried balance.

As for advice, anyone who is paying 15%, 20% on cc debt obviously doesn’t understand finance, like a fat man giving diet advice. But that’s not the case for you.

I figured it wasn’t, given your analysis earlier was too sharp to be someone carrying a balance.

A lot of people get tricked into playing the stupid games the credit agencies have you play. They get a credit card and pay off 3/4 of it every month because having a small balance to charge interest to gives you a small 20 point boost. Just pay off the whole debt every couple weeks. That's what I do, and my credit is near perfect (or as close as you can get)

This looks ugly, where has all this money gone? Straight from the fed into bonds? Is there really 3x as much currency units today as existed 10 years ago?
https://fred.stlouisfed.org/series/M1SL

QE Infinity....

Everyone should be incredibly careful about giving personalized investment advice on here

@Darth absolutely, just yesterday pinned a notice to only invest money you can risk losing. Feel free to @ everyone to repeat every once in a while, I will try to do it every few days. See pins for an example

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

https://seekingalpha.com/article/4134596-dreaded-flattening-yield-curve-meets-qe-unwind

"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