Nikkei plunges over 3% to 14-month low on Fed woes


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Wall Street lore of the 30s had it that when the shoe shine boys started giving stock tips was the signal that it’s time to bail. Another Minsky moment could well be nigh.

”...rapid instability occurs because long periods of steady prosperity and investment gains encourage a diminished perception of overall market risk, which promotes the leveraged risk of investing borrowed money instead of cash. The debt-leveraged financing of speculative investments exposes investors to a potential cash flow crisis, which may begin with a short period of modestly declining asset prices. In the event of a decline, the cash generated by assets is no longer sufficient to pay off the debt used to acquire the assets. Losses on such speculative assets prompt lenders to call in their loans. This rapidly amplifies a small decline into a collapse of asset values, related to the degree of leverage in the market. Leveraged investors are also forced to sell less-speculative positions to cover their loans. In severe situations, no buyers bid at prices recently quoted, fearing further declines. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.”

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investors fear that the world's largest economy may slow down if the Fed tightens its monetary policy drastically.

And if they let inflation run wild the economy is going to suffer anyway.

Milton Friedman informed us honestly how to deal with inflation, and unfortunately there is no happy path out of it. The current bunch of central planners need to hurry up and get on with it.

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A 3 % plunge! Terrifying!

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Kiddies, I remember way back in the 70s when inflation hit 12-15% in Australia. It was also the time when I got paid 15-18% interest from my bank account.

Are we returning back to those crazy times again in which spending is wise and saving is for fools?

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US economy grew 7 percent

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The more they keep printing money, the more they set themselves up for a catastrophic crash but as soon as they stop, a decline in the real economy. Damned if they do, damned if they don't. In the most advanced economies caitalism has devolved into a confidence game with the real economy and masses damned either way. Perfectly according to Marx's basic analysis.

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US economy grew 7 percent

After declining 8% so the net gain is -1%.

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Milton Friedman informed us honestly how to deal with inflation, and unfortunately there is no happy path out of it.

There is no way out of it at all without a brutal assault on the working class and of that doesn't cause mass social unrest (and governments don't start wars saying, "Look how bad that country is!"), within a decade the process starts again even though the working class never clawed back all that was taken from them the previous time. And on and on it goes until civilization ending war or social revolution. It's a mathematical certainty.

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After declining 8% so the net gain is -1%.

where are your numbers coming from?. q4 was up 6.9%, q3 was up 2.3%, q2 was up 6.7%, and q1 was up 6.3%

The US economy is bigger now than it ever has been.

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