is the bubble due to burst?

The birthrates are strongly declining, the reason you see a (temporary) increase in total population is due to the increased life expectancy - but of course this is only temporary.

China just recently passed a law allowing 3 children per couple, and the strains on all European pension system is no secret.

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The average Life expectancy for the most part really hasn’t increased much in terms of how long a person lives even with the advances in medicine. The reason that the average has risen so much is the dramatic reduction in infant mortality.

 

Depends what time frame you are referring to: over the past 50, 100 years, life expectancy has greatly increased.

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and got much cheaper: have a look what 1 ltr milk costs 100 years before and what it costs now. so how long you have to work for this 1 ltr milk then and now. now much less time.

 

Interest rates are going up within the next 12-24 months. Perhaps sooner. Inflation is here and doesn't seem to be "transitory" The fed is going to have no choice but to raise, and the quarter point game isn't going to cut it this time. As soon as wall street gets a sniff of this (six months in advance is the general rule), the party is over.

The cheap money that has fueled this bananza will be history and the dow is going to reset one last time.

 

Define “cheap money” . Is it interest rates returning to Pre-2008 crash levels, Pre-911 levels (the real start of very low interest rates) or are they going to return to Carter era levels?

 

The Fed funds rate doesn't really matter. There were $750bb overnight in reverse repo at the Fed banks stored there last two nights as there's too much money/liquidity and banks don't want to see negative rates if they put it elsewhere overnight. The market decides the bond/bill rates anyway, not the Fed, and any form of yield curve control won't be happening. What the Fed will do later this year is not raise rates but quantitative tightening by reducing bond buying (which is insane for them to still do as of today). If they stop buying or even unload some to assets to member banks then that can see asset prices drop in response. Everything was fine through March, but since then asset prices across the board have jumped up with no real change in the dollars in existence (increase in money velocity with some FOMO I'm sure). That ratio is now almost at the 2008 bubble levels. It still has room to go up another 15% to meet that price bubble level unless the govt can print and handout a lot more money to bring down that when adjusted for monetary inflation (which they won't).

P.S. The Dow is not a good index to follow. It's a price-weighted index and not market-cap weighted so S&P would be a better one to look at.

 

Don't bet the house on it. Low rates are here to stay (see Japan/Switzerland), it's a demographic and technology driven change. There is simply too much money.

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All dreams and fantasies of gold bugs. We (may) will never see "high" rates again, this is a one way road for a very long time ahead.

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What is the opinion of collector cars ability to keep up with inflation or being inflation hedges going forward; stuff line 275s, Daytonas, Dinos etc?

 

If every home in America starts to get out of reach for citizens, gas hits 6 dollars, and groceries triple, you will see interest rates rise, and they will rise quickly. It's happened before, it can happen again.

 

you mean 1 gallon?
in europe we already have the ltr at 1,50€, that is about 6 € for 1 gallon what is more than 7 US $

 

Do you know what would happen to the dollar if they would raise rates...

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Desirable assets like those will keep up with monetary inflation in the longrun.

 

How did you think the US will service it's multi trillion dollar debt if rates are increased? The short answer: impossible.

High bond yields is something no government can afford.

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The US dollar is fiat currency and currently they "borrow" via debt monetization...moving money from one hand (Fed) to the other (Treasury). Banks only get involved in the transaction via the bond market as it's illegal for the Fed to directly buy bonds from the Treasury so they get around it that way. That's how the CARES act and all the other subsequent trillion $+ spending bills were funded. Wait until you see the money printing that happens after this current economic cycle finishes and we have another recession. 250 GTOs will be in the hundreds of millions, but obviously a dollar in 2030 won't be worth as much as it is today.

 

If you think interest rates are going up, you better get out of the stock market. It will fall like keys out of a Lear jet.

There is no way this trigger gets pulled before 2022, or maybe never.


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Do believe Washington will let this happen? I don’t.


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China can’t afford a falling dollar.


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considering that China’s goal is to replace the Dollar as the Reserve Currency with a Digital Wuan!

 

Someday much further up the road, yes. But, today? No.

 

I don't quite understand the logic here. If US interest rates go up, the dollar will increase in value against other currencies, as investors choose to buy dollars (and sell another currency) in order to get the higher yields. That, in turn, will mean that the cost of imported goods in the US will fall (and, unfortunately, the cost of US goods exported to other countries will rise).

So if that happens, the dollar will be worth more, not less.

As far as the effect on the federal government? Meh. The government will issue more bonds to cover the interest expense, and the Fed will buy them.

 

Its tricky, because if higher yields only exist because of inflation, you are no better off. In other words 0% yield and 0% inflation is roughly equivalent to 5% yield and 5% inflation. That doesn’t make the dollar worth any more. And actually, you would pay taxes on the 5% yield in this example so you would actually be better off with the 0% scenario. There are a lot of factors to the value of the dollar and it’s hard to think through them all.

 

Not going to happen.

 

Not necessarily. You are thinking of it from the point of view of a consumer, not an investor. As an investor, what are you going to do with your cash? Say, just making up numbers, you could invest it in a Euro account for -0.01%, a CNY account for +0.01%, or a USD account for 1%? Most rational investors are going to invest in the USD account in that scenario, which is going to drive demand up for dollars and down for Euros and CNY. Thus the dollar will appreciate in value compared to those currencies. And thus, priced in dollars, things from those countries will go down in price.

As a consumer, you are correct. And that is one reason why rates will tend to rise in response to inflation. There is a concept called "real rates" which refer to the interest rate minus the inflation rate, which is what you are getting at. When you have negative real rates (which we do now), that tends to be very stimulative for the economy, as it costs nothing to borrow money.