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Caterpillar Inc. Message Board

  • toothtoothtooth toothtoothtooth Apr 13, 2013 8:24 AM Flag

    A fantasy brought to you by the Bernanke

    The following have peaked and are diverging while the SP500, Dow, and Nasdaq continue their upward march to record highs at least 2-3 times a week it seems. These "used" to be indicators for growth or contraction. Now they are just speed bumps on the Fed money printing train to prospertiy apparently.

    Dow Jones Transports
    Gold
    Silver
    Copper
    Oil
    Russel 2000
    10 Year Treasuries
    SP foward earning expectations
    Consumer sentitment indicators
    Monthly Jobs Report

    Those are just a handful i have personally read about or been tracking since feb/march until now.

    CAT is also following this same pattern, pretty much coorelating to the price of commodities (and almost tracking Gold to a T since late January.

    If you believe in fundamentals, which richard claims the stock market is based on, then CAT is definately telling the story of the global economy. Good luck with Bennys fantasy. Pumpers will claim this is cheap or that doesnt matter (like the blowhard Joe Kernan who finally questioned this week if stocks are only going up because of Bernanke.....3 years too late there bud, but thanks for catching up to reality) just like they did in 2007. And then one day a bank disappears. (or a country has its savings accounts stolen from by their own govt)....and people wonder, is this just a one off event? Must be......and 50% lower on the indexes a year later.....you get your real buying opportunity.

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    • Let's see...do I listen to the ramblings of an idiot or the thoughts on an internationally recognized expert in the wealth management industry?

      http://www.foxbusiness.com/industries/2013/04/12/dont-thank-fed-for-record-highs-thank-ceos/

    • Too bad you do not read a textbook and learn the Treasury prints money not the FED

      • 3 Replies to mmichaelr
      • Actually, the Fed does create "money". Treasury prints actual bills, but the FED can increase the money supply, which is more important to the banking sector. Paper/coin money are only material manifestations of "money" that is now mostly digital tallies on balance sheets anyway. If a bank is going to make at $500,000,000 loan to a business, do they hand them paper money, or a check that will allow them to transfer that amount, that number, from one account to another?

        The FED increases the money supply by expanding the balance sheet and depositing that "cash" into the banks' accounts at the FED in return for the bonds they purchase from the banks. No physical printed money changes hands during this, but there is more money is the total supply. This additional money gets kept in reserves and capital pools for loans. When they make loans with this extra money, it gets deposited into the accounts of businesses most likely. The business buys materials and makes sales... the employees get paid and buy more things. A lot of transactions, and yet not very many that actually require physical printed money to change hands... and yet the money supply (M2 and the like) have increased significantly.

        If the bank sells treasuries to the FED and frees up the cash and gives a loan to one of it's customers, for say $100,000, that money is transferred from an internal account at the bank to the customer's account... at the bank. They need to keep, what 10% of that amount as reserve? $100,000 deposit from the loan, $10,000 kept, $90,000 loaned back out. Say that goes to another one of their own customers. Another $90,000 deposit, 10% kept for reserve, and $81,000 lent out from that cash. Keep 10%, loan out $72,900. So on and so on. One $100,000 loan, can actually generate well over $500,000 in additional loans due to the way the banks operate, they way they keep their books and how their loans/reserves operate... all without needing any physical printed money.

      • Oh sorry,I forgot that is your only rebuttals mm. The treas loans the bankers the money for free, the invest in debt, then Bernank buys up the debt. I just prefer to skip the semantics and call it bernankes pinging press, since his orchestrated QE is a huge giveaway to the free market capitalist financial industry that wants no govt regulation, but loves its bailout son tax payer money.

      • He considers that an unimportant detail. He likes his thesis that uncle Ben and the Fed are the root of all evil. He actually should be thanking them for keeping him marginally employed. Had they not stepped in with 0.25% interest rates and QE^n he'd be feeding his family at the local soup kitchen. But he doesn't let that alter his thesis. In his mind this economic rebound is just a fed fueled mirage. Once the fog clears we'll all be in the poor house with wads of worthless money in our pockets. He rails against the Fed initiated inflation he sees behind every corner in spite of the fact that there is no evidence of any inflation in the system. Commodity prices are falling, interest rates are at decades long record lows, capacity utilization is less than 80%, unemployment is higher than desired and companies are unable to make price increases stick. Those are all sure signs that inflation is tame. But he's nothing if he's not consistent. He's been articulating the same routine for two years now. He likes his view of the world that it's all rigged against him so his failure is not his fault. He's just an innocent victim of an unfair system.

        Sentiment: Buy

 
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