Tight Money Coming?

A place to talk about speculative investing ideas for the optional Variable Portfolio

Moderator: Global Moderator

Post Reply
User avatar
bitcoininthevp
Executive Member
Executive Member
Posts: 465
Joined: Fri Sep 25, 2015 8:30 pm

Tight Money Coming?

Post by bitcoininthevp » Thu Dec 20, 2018 1:55 pm

Would like to hear the PPers thoughts on the fact that $50b/mo of liquidity is being taken out of the money supply (fed rolling sheet) combined with the rate hikes. Do you think we are in for a period of tight money?

"A period during which the growth of the supply of money in circulation slows down. This leaves people with less cash than they expected to have, and usually leads to a recession - a period of poor economic conditions."

More:
https://www.bloomberg.com/news/videos/2 ... view-video

Cash is the only asset in the PP that does well during tight money. Is anyone loading up on cash in their VP?
Kbg
Executive Member
Executive Member
Posts: 2815
Joined: Fri May 23, 2014 4:18 pm

Re: Tight Money Coming?

Post by Kbg » Thu Dec 20, 2018 5:38 pm

Well...I’d say it may or may not matter. The actual equation is money * velocity (fancy word for turnover). During QE money supply went up tremendously...velocity went down the whole time...net nothing and leaning hard toward deflation. If velocity picks up we could have another net nothing. I suspect velocity will pick up as the banks won’t be able to sit on it like they’ve been doing...assuming they want to make lending profits.
boglerdude
Executive Member
Executive Member
Posts: 1313
Joined: Wed Aug 10, 2016 1:40 am
Contact:

Re: Tight Money Coming?

Post by boglerdude » Fri Dec 21, 2018 12:08 am

Banks get 2.4% IOER simply for existing, and a 6% dividend from the Fed

Whats the CPI + assets, tuition, healthcare?
User avatar
drumminj
Executive Member
Executive Member
Posts: 319
Joined: Wed Jul 22, 2015 9:16 pm

Re: Tight Money Coming?

Post by drumminj » Mon Dec 31, 2018 8:14 pm

boglerdude wrote:
Fri Dec 21, 2018 12:08 am
Banks get 2.4% IOER simply for existing, and a 6% dividend from the Fed
Anyone interested in pulling together and starting a bank?????
Kbg
Executive Member
Executive Member
Posts: 2815
Joined: Fri May 23, 2014 4:18 pm

Re: Tight Money Coming?

Post by Kbg » Mon Dec 31, 2018 9:40 pm

Good gig if you can get it. :-)
Post Reply