Plus, 24 out of 50 states in the US are mandating a personal finance class in high school. On the other hand, love has broken the boundaries of dating apps to connect people on Strava & Duolingo.
It is interesting to see the ways in which couples meet nowadays. Despite college enrollment being on a general increase since the 1950s, “college” or “grad school” have declined as means through which people find a partner. A lot of people (including myself) are not fans of the online apps but for some reason it seems to stick. Would be interesting to see the “relationship survival rates” based on how people met. Are they more likely or less likely to stay together based on how they met.
You bring an excellent point on the survival rate of relationships based on how they met. I would be curious to find that.
Although I am a younger millennial, and I see people who are looking for relationships on multiple dating apps, I am still a "meeting in real life" kind of person. That is probably because, I was lucky to meet my partner in grad school.
But the interesting dynamic is that despite people still going to school and college IRL, an increasing portion are still choosing to find partners through online apps. Is it lack of trust in IRL or more options availability in online apps or just a social norm...hard to tell.
Glad I should never have to look at dating apps, it looks like a disaster. I would think that now that more women (maybe more than 50% sometimes) are attending post secondary education it would be more common to meet there. Maybe they are just in different programs or not ready to settle down yet? I'm an engineer and if there hadn't been a dance organized for engineers and nurses I would not have met my wife.
I am biased towards IRL, but I know I am a outlier in my generation, where most of the people rely on dating apps. Agree, that today's social setting should "technically" make it easier to meet people more easily IRL, unfortunately, that has not been the case.
Nice post, Amrita! Not sure about discussing dating apps on a financial blog, but I’m an “old fart in training” - the chart showing the historical changes of how people “ hook up” was interesting tho.
Imho inflation is definitely on the way down - election year, pandemic - era supply chain kerfuffles being resolved and probably improved , and ( cross your fingers) greedflation being exposed and stamped out when found. Consumers will reassert their voices and the merchants will listen- or else!
If the Fed has the sense to meaningfully reduce their rate (100 points or more) then the RE market won’t have that boot on its neck of unaffordable mortgage rates. Very encouraging to see rents already starting to drop, single family home rentals will remain scarce until the short - term (B and B) hustlers are taxed like the hotels that they are undercutting- besides, many neighbors have legitimate grievances with short term “party animal” tenants. As I commented in a previous post, many corporate owned used homes are awaiting refurbishment. Don’t hold your breath.
It would be nice if the Treasury would provide us with 1-, 2-, and 3-year TIPS so we could answer the question about having gotten past the most recent period of over-target inflation.
Now... to your questions; grain-of-salt my thoughts, based on my 'scale' score below 😁
- No, I don't think we have fully beaten inflation BUT there is hope; I would not have said that this time last year.
- I'm rolling with ING's outlook. USB is being far too dour, and I don't trust either Barkleys or GS (with '24 being an election year, and considering their alleged political leanings, I don't know if they are dropping projections or propaganda).
- I'm admittedly on the lower end of the financial knowledge scale, though due to years of research on precious metals I can bump it up a wee bit... 2.5, maybe?
- Dating? Nay. Not dating APPS, per se, just dating in general 😂😂 Happily single here.
Thanks again for your efforts here; off to drop a restack...🫡
1) I would agree with you that we still have to be careful around declaring victory on inflation too soon. Too many forces still at play and will be in this decade, such as government spending, aging population, etc.
2) Makes sense.
3) Research on precious metals? For individual investment research purposes or is that your job?
Not my 'job,' per se, but more of a passion. I got bit by the 'gold bug' in the mid-90s, and the idea of 'money which has intrinsic value on its own' took root. Since then I've learned all I could about gold, silver, and other metals, along with how to track their markets. Been doing so since...
Amazing, I never paid much attention to gold, until after the pandemic, when the whole dynamic of monetizing debt and inflation became very clear to me, this is the first proper economic cycle that I am witnessing in my adult life. During the 2008 GFC, I was still too young and naive to really understand what was actually going on.
I am hugely bullish on the metals complex in the coming decade.
Dec 16, 2023·edited Dec 16, 2023Liked by Amrita Roy
I'm glad to hear you say that about the next decade, because those are my thoughts as well; nice to get confirmation from an actual expert.
With that noted? I am very concerned about the erratic behavior of the gold markets over the last three weeks. Last time I remember it being this chaotic was actually IN (if memory serves me right) 2008... right before the housing market collapse. I went to pull historical charts on Kitco to do some research, but oddly... they are experiencing a "cyber security incident," at the moment. Which is curious, for a myriad of reasons.
Anyhow, I am not making any predictions - could just be a hiccup in the markets - but until I see some stabilization with gold I am going to be... well, at minimum concerned.
Fun report on dating. People use tools (like apps) to meet their needs independent of what the developers have in mind. Online apps won’t go away any more than social media will due to the opportunities on networks created by weak ties but as people become more “app-fluent” they figure out how to marry goals (no pun intended) as you illustrated with Duolingo. Apps like Stava have the benefit of geolocation in the context of the activity which increases the efficiency of information quality.
Absolutely, and I think this will bring the whole business model of so-called dating apps into question, as people increasingly find other apps to marry goals (like you said) to possibly meet someone with aligned set of interests, which the dating app may not even have picked up on.
Plus, I feel that there is a growing fatigue amongst individuals who are on multiple dating apps, often for many years at a stretch, not meeting the "right" person. This is partially attributed to the whole algorithm and pricing model of dating app companies, but there may be early signs that people are cancelling subscriptions to some or all of these dating apps, and hacking their way through on other apps to meet someone.
Agreed and I think we'll see a lot of people looking for ways to manage information quality more broadly given the flood of content that is unreliable and often manipulative in intent. It increases the value of trusted and evidence-based sources. Interest focused apps are harder to fake (or at least a LOT of work to do so.) Activity maps on Stava is a pretty clear validation of an interest in running, biking, hiking etc., not just something that sounds good on a bio.
That's an excellent point and I absolutely love how well you have articulated it. I will be writing a post on dating apps and trends for next Thursday, I will definitely call out your comment, it just fits perfectly to the overall theme of what I will be publishing.
I've seen concerns that the geolocating aspect of Strava can be used as a stalking tool. Check your privacy settings! There had been a funtion for fly-by's so you would know who ran or cycled near you during an activity. Not sure how many woudl actually meet on this one if they didn't meet in person first.
Your concerns are well-placed, Chris. At the risk of dragging out my soapbox for digital literacy, key elements are understanding the privacy settings, using critical thinking, and validating information from multiple sources. Strava has a chat function but access can be restricted through the privacy settings. There is always "stranger danger" but the interesting aspect of activity-related apps that track activity is that it's hard(er) to fake than a dating app bio, so it implies some level of authenticity. To your point, however, to have a successful relationship people ultimately have to meet in person and I wouldn't want to rely on Strava data alone.
I didn't even think of fake profiles in dating apps, they must work for some but what a disaster. It is really a contract to only a few generations ago when young people might not have had arranged marages but might have been in communities small enough that they had a handfull of options and they had met them all at school or church.
Thanks for keeping your substack free. You are providing a great service to those of us who wouldn't know where to find this important information otherwise.
As for your questions.
1. No, inflation is only going to get better for this year's election cycle. Then its future depends on the outcome of the election.
2. I think all the big financial corporations will project inflation of interest outcomes to make themselves look good.
3. I put myself at the middle mark for financial knowledge. Only because I am 65 yrs old and have had lots of time to learn the hard way. But, I am still an accounting failure. Lol
4. As for dating apps, that's how I met my husband. But, I also see many people who use the dating apps get frustrated because they are normal people, not perfect models, so they get few to no responses for their efforts on the dating apps. For all the reasons already mentioned here, I love the idea of meeting people through other types of apps that get people with common interests together. It is also so important to meet in person (a lot of times) before making any kind of commitment. Unfortunately, in the world today fraud is just too easy and prevalent.
In Alberta we had CALM20, Career and Life Management for grade 11 students. It had an element on finaince and sex ed. A lot of people miss out on the finanace part. I don't think it sunk in really good at that point when I was keeping my life savings in cash in a little box in my closet. For a few months after high school while washing dishes to pay the rent I was writting down on a piee of paper every dollar I spent. A refresher for people a year or two after high school and or in post secondary education would have been useful.
Fully agree, I think after graduating from college, my idea of personal finance was limited to saving money and not putting it to any good use, while it earns no interest sitting in a savings account. There is some effective enablement programs that should be in place for individuals to fully understand the scope of what personal finance means and how it can be used to harness to achieve personal and financial goals, unfortunately most of that information is behind closed doors that you have to pay for, whereas it should be accessible to all for a much more thriving society.
>> "Dating Apps- Yay or Nay? Finding love on apps other than Dating Apps- Yay or Nay?"
I've also heard of couples who met on a gaming server, or in an internet forum. It makes sense: if people socialize in virtual spaces, relationships will form too. All good.
Game companies might be able to incorporate some match-making into their algorithms...hmm.
The Fed expects inflation to fall to 2.4% in 2024, while consumers expect inflation to fall to 3.4% in 2024. The consumer expectation has fallen from 3.6% to 3.4%, but it is still higher than what the Fed expects.
In fact, if you look at the consumers expectation for inflation in 2024, it is hovering around Core PCE today, so consumers are not expecting inflation to go down much further from current levels.
the FOMC meeting in December, indicated three cuts in EFFR - this year, right ? your thoughts on why the target is 2% - we all have agreed on it, but why is 2% the acceptable increase, as opposed to say, 2.5% ? deeply appreciate your time
I don't think I fully understand your question. Yes, the Fed is expected to lower rates by 75 b.p in 2024 as per projection. What did you mean, by the target of 2-2.5%. Are you referring to inflation?
Yeah, sorry I didn't explain it well. why is the federal target 2% for YOY inflation ? have we understood that things generally work well, when its at 2% (empirical evidence), or what's the reason for that 2% ?
Dec 19, 2023·edited Dec 19, 2023Liked by Amrita Roy
Reflecting on the response of Western countries, particularly central banks, to the Covid-19 pandemic and, more broadly, since the 2007/08 financial crisis, I have doubts about whether the inflation challenges have been truly overcome or ever will be since we have or soon will leave the area of cheap money.
The impact on the economy and individuals' lives has been profound, surpassing our way of linear thinking. More critically, when considering the immense debt levels of major economies like the US, Germany, and Japan, coupled with the US's response to the Russia-Ukraine conflict, such as freezing assets, I believe in a potential decline in the global demand for the US Dollar in the coming years or decades. Additionally, the current yields on US Treasuries may not be sufficient, especially when considering the significant amount of debt the US needs to refinance within the next 12 months, alongside its deficit, to attract buyers.
To conclude on a positive note, what thrived in an environment of cheap money may not necessarily survive as money becomes scarce and expensive. Also, owning things that governments can't just create more of could help navigate through an inflationary environment.
Great points, fully agree with you on the long term inflationary forces that will continue to linger, even if inflation continues to moderate, and if you look at market based indicators of future inflation, such as breakeven or inflation swaps, investors expect inflation to hover around 2.0-2.5%, whereas this was around 1.5-2.0% range post GFC.
Big implications for the mid to long term prospect of the USD, yes.
I wrote a post this morning on outlook and positioning, check it out
I have talked about government debt and its implications for the US in parts of Monday posts, but I will look to do a deeper dive into the question you raised.
If you ask me, in short, they have used the dollar as the world reserve currency and exported paper money in exchange for real goods, never having the need to stop it as long as the world reserve currency status remained. Furthermore, all the wars in which the US has been involved over the last few decades needed to be financed, but of course, officially, they will link this to other things like pandemics, financial crises, and so on.
Another personal observation, during my recent travels in the US, I somehow had the feeling that the average American has become poorer and more in debt as well. Therefore, the more important question for me would be: How is it possible that the US has accumulated so much debt, while some businessmen and government officials have become rich (some very rich!), but the average American has lost out?
By the way, there is one book that was recommended to me, which I plan to read soon: "The Deficit Myth" by Stephanie Kelton.
The Federal Open Market Committee (FOMC) statement shows no substantial changes in language, maintaining rates between 5.25 to 5.5 since the last increase in the summer. However, with inflation high, especially in the service sector, the prospect of lowering rates due to a weakening economy or another real estate-related debacle will put the Federal Reserve between a rock and a hard place. Lowering rates and flooding the system with dollars could further increase inflationary pressures, causing the yield curve to go vertical.
You perfectly echoed my concern that I voice loudly, despite the "soft landing" narrative taking hold of the market. At this point, I have realized that the market will most likely do its own "soft landing" by claiming all time highs as it has all the ingredients of falling inflation, bond yields and a 11% earnings growth expectation into 2024.
But, there are still some strong underlying inflationary pressures, with the level of government spending (which won't go down) and a net worth which is at all time high, that will keep the Fed cautious in the future.
Apart from any real-estate related debacle, there is also a looming liquidity event that may occur once the reverse repos are all exhausted within the next 4-6 months.
>> "mandate high school students take a personal course"
Should that say "personal finanace course"?
Either way, kudos to Utah. Teach kids to save, not to run up credit card debt.
Maybe they can throw in a class on Philosophy, as in "material goods don't always bring us the joy we think they would" 😅
I know, indeed kudos to Utah for taking such a step back in 2008.
It is interesting to see the ways in which couples meet nowadays. Despite college enrollment being on a general increase since the 1950s, “college” or “grad school” have declined as means through which people find a partner. A lot of people (including myself) are not fans of the online apps but for some reason it seems to stick. Would be interesting to see the “relationship survival rates” based on how people met. Are they more likely or less likely to stay together based on how they met.
You bring an excellent point on the survival rate of relationships based on how they met. I would be curious to find that.
Although I am a younger millennial, and I see people who are looking for relationships on multiple dating apps, I am still a "meeting in real life" kind of person. That is probably because, I was lucky to meet my partner in grad school.
But the interesting dynamic is that despite people still going to school and college IRL, an increasing portion are still choosing to find partners through online apps. Is it lack of trust in IRL or more options availability in online apps or just a social norm...hard to tell.
Glad I should never have to look at dating apps, it looks like a disaster. I would think that now that more women (maybe more than 50% sometimes) are attending post secondary education it would be more common to meet there. Maybe they are just in different programs or not ready to settle down yet? I'm an engineer and if there hadn't been a dance organized for engineers and nurses I would not have met my wife.
I am biased towards IRL, but I know I am a outlier in my generation, where most of the people rely on dating apps. Agree, that today's social setting should "technically" make it easier to meet people more easily IRL, unfortunately, that has not been the case.
Nice post, Amrita! Not sure about discussing dating apps on a financial blog, but I’m an “old fart in training” - the chart showing the historical changes of how people “ hook up” was interesting tho.
Imho inflation is definitely on the way down - election year, pandemic - era supply chain kerfuffles being resolved and probably improved , and ( cross your fingers) greedflation being exposed and stamped out when found. Consumers will reassert their voices and the merchants will listen- or else!
If the Fed has the sense to meaningfully reduce their rate (100 points or more) then the RE market won’t have that boot on its neck of unaffordable mortgage rates. Very encouraging to see rents already starting to drop, single family home rentals will remain scarce until the short - term (B and B) hustlers are taxed like the hotels that they are undercutting- besides, many neighbors have legitimate grievances with short term “party animal” tenants. As I commented in a previous post, many corporate owned used homes are awaiting refurbishment. Don’t hold your breath.
Coffee and a muffin it is, then!
Thanks and ‘Hasta la nextime!”
I wonder if there are any substack love stories
Right? Why not? It has all the ingredients to be a successful matchmaker, similar to Duolingo and Strava.
That will be a fun survey to do on Valentine's day or something.
It would be nice if the Treasury would provide us with 1-, 2-, and 3-year TIPS so we could answer the question about having gotten past the most recent period of over-target inflation.
100%. That would be a better measure than to gauge it using consumer surveys.
Pure fire, as always!
Now... to your questions; grain-of-salt my thoughts, based on my 'scale' score below 😁
- No, I don't think we have fully beaten inflation BUT there is hope; I would not have said that this time last year.
- I'm rolling with ING's outlook. USB is being far too dour, and I don't trust either Barkleys or GS (with '24 being an election year, and considering their alleged political leanings, I don't know if they are dropping projections or propaganda).
- I'm admittedly on the lower end of the financial knowledge scale, though due to years of research on precious metals I can bump it up a wee bit... 2.5, maybe?
- Dating? Nay. Not dating APPS, per se, just dating in general 😂😂 Happily single here.
Thanks again for your efforts here; off to drop a restack...🫡
Thanks for playing along. Love the spirit.
1) I would agree with you that we still have to be careful around declaring victory on inflation too soon. Too many forces still at play and will be in this decade, such as government spending, aging population, etc.
2) Makes sense.
3) Research on precious metals? For individual investment research purposes or is that your job?
4) Looks like you are in your zendom.
Not my 'job,' per se, but more of a passion. I got bit by the 'gold bug' in the mid-90s, and the idea of 'money which has intrinsic value on its own' took root. Since then I've learned all I could about gold, silver, and other metals, along with how to track their markets. Been doing so since...
Hence, the .5 bump on your scale 😁
Amazing, I never paid much attention to gold, until after the pandemic, when the whole dynamic of monetizing debt and inflation became very clear to me, this is the first proper economic cycle that I am witnessing in my adult life. During the 2008 GFC, I was still too young and naive to really understand what was actually going on.
I am hugely bullish on the metals complex in the coming decade.
I'm glad to hear you say that about the next decade, because those are my thoughts as well; nice to get confirmation from an actual expert.
With that noted? I am very concerned about the erratic behavior of the gold markets over the last three weeks. Last time I remember it being this chaotic was actually IN (if memory serves me right) 2008... right before the housing market collapse. I went to pull historical charts on Kitco to do some research, but oddly... they are experiencing a "cyber security incident," at the moment. Which is curious, for a myriad of reasons.
Anyhow, I am not making any predictions - could just be a hiccup in the markets - but until I see some stabilization with gold I am going to be... well, at minimum concerned.
Fun report on dating. People use tools (like apps) to meet their needs independent of what the developers have in mind. Online apps won’t go away any more than social media will due to the opportunities on networks created by weak ties but as people become more “app-fluent” they figure out how to marry goals (no pun intended) as you illustrated with Duolingo. Apps like Stava have the benefit of geolocation in the context of the activity which increases the efficiency of information quality.
Absolutely, and I think this will bring the whole business model of so-called dating apps into question, as people increasingly find other apps to marry goals (like you said) to possibly meet someone with aligned set of interests, which the dating app may not even have picked up on.
Plus, I feel that there is a growing fatigue amongst individuals who are on multiple dating apps, often for many years at a stretch, not meeting the "right" person. This is partially attributed to the whole algorithm and pricing model of dating app companies, but there may be early signs that people are cancelling subscriptions to some or all of these dating apps, and hacking their way through on other apps to meet someone.
Agreed and I think we'll see a lot of people looking for ways to manage information quality more broadly given the flood of content that is unreliable and often manipulative in intent. It increases the value of trusted and evidence-based sources. Interest focused apps are harder to fake (or at least a LOT of work to do so.) Activity maps on Stava is a pretty clear validation of an interest in running, biking, hiking etc., not just something that sounds good on a bio.
That's an excellent point and I absolutely love how well you have articulated it. I will be writing a post on dating apps and trends for next Thursday, I will definitely call out your comment, it just fits perfectly to the overall theme of what I will be publishing.
I've seen concerns that the geolocating aspect of Strava can be used as a stalking tool. Check your privacy settings! There had been a funtion for fly-by's so you would know who ran or cycled near you during an activity. Not sure how many woudl actually meet on this one if they didn't meet in person first.
Your concerns are well-placed, Chris. At the risk of dragging out my soapbox for digital literacy, key elements are understanding the privacy settings, using critical thinking, and validating information from multiple sources. Strava has a chat function but access can be restricted through the privacy settings. There is always "stranger danger" but the interesting aspect of activity-related apps that track activity is that it's hard(er) to fake than a dating app bio, so it implies some level of authenticity. To your point, however, to have a successful relationship people ultimately have to meet in person and I wouldn't want to rely on Strava data alone.
I didn't even think of fake profiles in dating apps, they must work for some but what a disaster. It is really a contract to only a few generations ago when young people might not have had arranged marages but might have been in communities small enough that they had a handfull of options and they had met them all at school or church.
Thanks for keeping your substack free. You are providing a great service to those of us who wouldn't know where to find this important information otherwise.
As for your questions.
1. No, inflation is only going to get better for this year's election cycle. Then its future depends on the outcome of the election.
2. I think all the big financial corporations will project inflation of interest outcomes to make themselves look good.
3. I put myself at the middle mark for financial knowledge. Only because I am 65 yrs old and have had lots of time to learn the hard way. But, I am still an accounting failure. Lol
4. As for dating apps, that's how I met my husband. But, I also see many people who use the dating apps get frustrated because they are normal people, not perfect models, so they get few to no responses for their efforts on the dating apps. For all the reasons already mentioned here, I love the idea of meeting people through other types of apps that get people with common interests together. It is also so important to meet in person (a lot of times) before making any kind of commitment. Unfortunately, in the world today fraud is just too easy and prevalent.
Thank you Catherine for such thoughtful responses to Friday5 questions. Couldn't agree more on the dating front.
In Alberta we had CALM20, Career and Life Management for grade 11 students. It had an element on finaince and sex ed. A lot of people miss out on the finanace part. I don't think it sunk in really good at that point when I was keeping my life savings in cash in a little box in my closet. For a few months after high school while washing dishes to pay the rent I was writting down on a piee of paper every dollar I spent. A refresher for people a year or two after high school and or in post secondary education would have been useful.
Fully agree, I think after graduating from college, my idea of personal finance was limited to saving money and not putting it to any good use, while it earns no interest sitting in a savings account. There is some effective enablement programs that should be in place for individuals to fully understand the scope of what personal finance means and how it can be used to harness to achieve personal and financial goals, unfortunately most of that information is behind closed doors that you have to pay for, whereas it should be accessible to all for a much more thriving society.
Adding a chapter on saving for retirement could be added.
100%.
>> "Dating Apps- Yay or Nay? Finding love on apps other than Dating Apps- Yay or Nay?"
I've also heard of couples who met on a gaming server, or in an internet forum. It makes sense: if people socialize in virtual spaces, relationships will form too. All good.
Game companies might be able to incorporate some match-making into their algorithms...hmm.
Absolutely, any app that brings people together, can serve the purpose of match-making. I think, that is quite natural, and in a good way.
Makes you think, if conventional dating-apps will lose some of its relevance in the coming years
>> "inflation is expected to drop to 2.4% in 2024 from current levels"
The chart there seems to indicate 1-year ahead expectations are higher than the 3-year & 5-year? Or, am I not understanding the two things?
Love your sub-stack. Thank you.
No, there are indeed discrepancies.
The Fed expects inflation to fall to 2.4% in 2024, while consumers expect inflation to fall to 3.4% in 2024. The consumer expectation has fallen from 3.6% to 3.4%, but it is still higher than what the Fed expects.
In fact, if you look at the consumers expectation for inflation in 2024, it is hovering around Core PCE today, so consumers are not expecting inflation to go down much further from current levels.
Thanks for clarifying.
the FOMC meeting in December, indicated three cuts in EFFR - this year, right ? your thoughts on why the target is 2% - we all have agreed on it, but why is 2% the acceptable increase, as opposed to say, 2.5% ? deeply appreciate your time
I don't think I fully understand your question. Yes, the Fed is expected to lower rates by 75 b.p in 2024 as per projection. What did you mean, by the target of 2-2.5%. Are you referring to inflation?
Yeah, sorry I didn't explain it well. why is the federal target 2% for YOY inflation ? have we understood that things generally work well, when its at 2% (empirical evidence), or what's the reason for that 2% ?
Reflecting on the response of Western countries, particularly central banks, to the Covid-19 pandemic and, more broadly, since the 2007/08 financial crisis, I have doubts about whether the inflation challenges have been truly overcome or ever will be since we have or soon will leave the area of cheap money.
The impact on the economy and individuals' lives has been profound, surpassing our way of linear thinking. More critically, when considering the immense debt levels of major economies like the US, Germany, and Japan, coupled with the US's response to the Russia-Ukraine conflict, such as freezing assets, I believe in a potential decline in the global demand for the US Dollar in the coming years or decades. Additionally, the current yields on US Treasuries may not be sufficient, especially when considering the significant amount of debt the US needs to refinance within the next 12 months, alongside its deficit, to attract buyers.
To conclude on a positive note, what thrived in an environment of cheap money may not necessarily survive as money becomes scarce and expensive. Also, owning things that governments can't just create more of could help navigate through an inflationary environment.
Great points, fully agree with you on the long term inflationary forces that will continue to linger, even if inflation continues to moderate, and if you look at market based indicators of future inflation, such as breakeven or inflation swaps, investors expect inflation to hover around 2.0-2.5%, whereas this was around 1.5-2.0% range post GFC.
Big implications for the mid to long term prospect of the USD, yes.
I wrote a post this morning on outlook and positioning, check it out
https://amritaroy.substack.com/p/heres-my-2024-s-and-p-500-target
This comment makes me think we need a post about "How does a country that supposedly controls the financial power of the world even get into debt?".
I have talked about government debt and its implications for the US in parts of Monday posts, but I will look to do a deeper dive into the question you raised.
If you ask me, in short, they have used the dollar as the world reserve currency and exported paper money in exchange for real goods, never having the need to stop it as long as the world reserve currency status remained. Furthermore, all the wars in which the US has been involved over the last few decades needed to be financed, but of course, officially, they will link this to other things like pandemics, financial crises, and so on.
Another personal observation, during my recent travels in the US, I somehow had the feeling that the average American has become poorer and more in debt as well. Therefore, the more important question for me would be: How is it possible that the US has accumulated so much debt, while some businessmen and government officials have become rich (some very rich!), but the average American has lost out?
By the way, there is one book that was recommended to me, which I plan to read soon: "The Deficit Myth" by Stephanie Kelton.
Well articulated, I will check the book you recommended out.
The Federal Open Market Committee (FOMC) statement shows no substantial changes in language, maintaining rates between 5.25 to 5.5 since the last increase in the summer. However, with inflation high, especially in the service sector, the prospect of lowering rates due to a weakening economy or another real estate-related debacle will put the Federal Reserve between a rock and a hard place. Lowering rates and flooding the system with dollars could further increase inflationary pressures, causing the yield curve to go vertical.
You perfectly echoed my concern that I voice loudly, despite the "soft landing" narrative taking hold of the market. At this point, I have realized that the market will most likely do its own "soft landing" by claiming all time highs as it has all the ingredients of falling inflation, bond yields and a 11% earnings growth expectation into 2024.
But, there are still some strong underlying inflationary pressures, with the level of government spending (which won't go down) and a net worth which is at all time high, that will keep the Fed cautious in the future.
Apart from any real-estate related debacle, there is also a looming liquidity event that may occur once the reverse repos are all exhausted within the next 4-6 months.