Hognutz
Has No Life - Lives on TB
PPT
CORONA Market Bloodbath: Middle East Stocks Crater; Kuwait Halted; Aramco Below IPO; Dow Indicated Down 500
- Thread starter CaryC
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kittyluvr
Veteran Member
The plunge protection team of course.
hiwall
Has No Life - Lives on TB
Let's say you have GM stock you want to sell. And I am thinking I might buy GM stock if I can find a bargain. It is selling around $25 and I place a bid for say $20. Either I get takers at $20 or I don't. And you might put a sell price of $25 on your stocks, either you get takers or you don't.
twobarkingdogs
Veteran Member
Soaking up the extra supply used to be the jobs of the market makers but I believe that the changes to the markets and the rise of the computers have basically put them out of business.
Today in times of mass selling you get more flash crashes as a flood of sell orders overwhelm the buy orders until a floor is finally hit.
We had one a couple of years ago where colgate dropped $20 in a matter of minutes. I remember because I had a stink bid order open for it which missed by 15 cents that day. Also sometimes a stock price just gets to good to not buy. When oil last dropped back in 2015 some of the pipeline companies had yields of 50%. That is why people like myself and bike junkie went shopping today. For myself I will monitor things and if they continue to drop I will adjust my desired purchase price down
tbd
vector7
Dot Collector
What Is the Difference Between Helicopter Money and QE?
By Steven Nickolas
Updated Oct 17, 2018
Central banks across the globe were struggling to spur economic growth in 2016. They had used nearly all their tools to attempt to spark economic growth, including negative interest rates and stimulus programs that buy bonds every month. The Bank of Japan and the European Central Bank cut their interest rates into negative territory, attempting to stop banks from hoarding money and encouraging lending to consumers to support growth. The International Monetary Fund (IMF) warned of fragile global macroeconomic growth, which could lead to turbulence in the global financial markets. Consequently, central banks ended up looking for new ways to spark economic growth, such as "helicopter money," which provided an alternative to quantitative easing (QE).
Differences Between Helicopter Money and QE
Helicopter money is a theoretical and unorthodox monetary policy tool that central banks use to stimulate economies. Economist Milton Friedman introduced the framework for helicopter money in 1969, but former Federal Reserve Chairman Ben Bernanke popularized it in 2002. This policy should theoretically be used in a low-interest-rate environment when an economy's growth remains weak. Helicopter money involves the central bank or central government supplying large amounts of money to the public, as if the money was being distributed or scattered from a helicopter.
Contrary to the concept of using helicopter money, central banks use quantitative easing to increase the money supply and lower interest rates by purchasing government or other financial securities from the market to spark economic growth. Unlike with helicopter money, which involves the distribution of printed money to the public, central banks use quantitative easing to create money and then purchase assets using the printed money. QE does not have a direct impact on the public, while helicopter money is made directly available to consumers to increase consumer spending.
Differences in Economic Consequences
One of the main benefits of helicopter money is that the policy theoretically generates demand, which comes from the ability to increase spending without the worry of how the money would be funded or used. Although households would be able to place the money into their savings accounts rather than spend the money if the policy were only implemented for a short period, consumer consumption theoretically increases as the policy remains in place over a long period of time. The effect of helicopter money is theoretically permanent and irreversible because money is given out to consumers, and central banks cannot retract the money if consumers decide to place the money into a savings account.
One of the primary risks associated with helicopter money is that the policy may lead to a significant currency devaluation in the international foreign exchange markets. The currency devaluation would be primarily attributed to the creation of more money.
Conversely, QE provides capital to financial institutions, which theoretically promotes increased liquidity and lending to the public, since the cost of borrowing is reduced because there is more money available. The use of the newly printed money to purchase securities theoretically increases the size of the bank reserves by the quantity of assets that were purchased. QE aims to encourage banks to give out more loans to consumers at a lower rate, which is supposed to stimulate the economy and increase consumer spending. Unlike helicopter money, the effects of QE could be reversed by the sale of securities.
Helicopter Money in Practice
Although helicopter money is an unorthodox tool to spur economic growth, there are less extreme forms of the policy if other economic tools have not worked. The government or central bank could implement a version of helicopter money by spending money on tax cuts, and thereafter, the central bank would deposit money in a Treasury account. Additionally, the government could issue new bonds that the central bank would purchase and hold, but the central bank would return the interest back to the government to distribute to the public. Therefore, these forms of helicopter money would provide consumers with money and theoretically spark consumer spending.
Helicopter Money
By Mark Gilbert
Imagine waking one morning to find extra cash in your account, a gift from your country’s central bank. That might sound outlandish — even some proponents of the idea admit it’s unlikely. But the concept of so-called helicopter money has been seriously debated by economists for several years, and is coming back into vogue. That’s because despite the trillions of dollars, euros, yen and pounds that central banks have pumped into the global financial system since the 2008 credit crisis, global economic growth is slowing once again. Helicopter money handed directly to consumers, the theory goes, would send us scurrying to the shops to spend our windfalls, boosting confidence in the economy. That increased demand would allow prices to rise again, a crucial step because a slide in prices, known as deflation, is viewed as creating the risk of extended stagnation. This renewed interest in an idea that’s almost half a century old is evidence that measures previously regarded as daring have become commonplace, repetitive — and increasingly ineffective.
The Situation
In July, the U.S. Federal Reserve cut interest rates for the first time in more than a decade and is poised to continue driving borrowing costs down as the outlook for global growth dims. With Germany’s central bank warning that the euro zone’s biggest economy could sink into recession this year, the European Central Bank is also expected to ease monetary policy. Since most governments are unwilling or unable to pursue fiscal stimulus by lowering taxes or increasing spending, there’s pressure on central banks to reach deeper into their toolkits for ever-more unconventional policy tools. Helicopter money is back on the agenda because massive central bank purchases of government bonds — a policy known as quantitative easing — have already driven yields in several bond markets to record lows, so the scope for stimulating the economy by pushing borrowing costs even lower is limited.
The Background
Milton Friedman came up with the concept of helicopter money in 1969. The Nobel Prize-winning economist envisaged a whirlybird flying over a community dropping paper money from the sky as a thought experiment to see what a never-to-be-repeated increase in the money supply would do to spending and saving. The idea was made famous by Ben Bernanke in 2002 when, as a Federal Reserve governor, he referred to it while arguing that a central bank can always stoke inflation if needed. The nickname “Helicopter Ben” stuck, even though the playbook Bernanke followed as Fed chairman during the recession that followed the financial crisis stopped short of printing money and handing it out to consumers. In an April 2016 blog post, however, Bernanke said helicopter money may be “the best available alternative” under some “extreme circumstances.” In today’s debates, it’s envisaged that helicopter money would be distributed either by crediting people's bank balances or as a tax rebate. The key is that it would come from a one-time creation of money by the central bank, rather than being borrowed by the government or coming out of existing spending.
The Argument
“Monetary policy is exhausted and fiscal policy alone is not enough,” is how three former central bankers — ex-Swiss central bank chief Philipp Hildebrand, former Federal Reserve and Bank of Israel staffer Stanley Fischer, and Jean Boivin, ex-deputy governor of the Bank of Canada — made the case in August. Central banks, the trio wrote in an article for their current employer, BlackRock Inc., need to put money “directly in the hands of public and private sector spenders,” though they advocated a more cautious approach than an unlimited helicopter program. Other supporters of helicopter money argue that it may be less risky than quantitative easing, which has been blamed for fueling what some see as a bubble in global stock and bond markets. It’s also possible its benefits would be spread more broadly.
Opponents point out that helicopter money isn’t really free. Printing more money devalues the buying power of what savers have in their accounts, in the same way that a company selling new shares dilutes the holdings of its existing stockholders. Others say helicopter money is an overly complicated substitute for the fiscal stimulus governments should be providing. There’s also the danger that helicopter money could trigger much higher inflation than the 2% that’s currently deemed desirable, if people thought banks or governments might get addicted to its boost. And it might fail anyway: Given that nothing in economics is currently working out the way the textbooks promised, people might just save the windfall instead of spending it.
One thing many forget is many people have auto deductions for retirement programs that are automatically invested at whatever the price is at the end of the day. I would assume the investment co’s that manage these investments front load purchases to pocket the difference.
There is also PPT and other federal type institutions that support the market in direct and indirect ways.
There is also PPT and other federal type institutions that support the market in direct and indirect ways.
My feeling is the market goes up the market goes down why do we think the market should only always go up?
Are we a bunch of freakin babies?
If I was the administration I would direct the Treasury to purchase existing American based oil producers oil to fill the strategic oil reserve at a price of $45.00 bbl. This sends a message to Russia we won’t let you take out US production. To be honest I think the buffer of tankers sitting off Chinese ports mean that Russia’s price is backstopped by the glut of existing oil waiting to go somewhere.
I am now starting to think there will be a small bounce before the next leg down. The next leg down depending on timeframe might make an interesting snapback rally point.
I am not feeling full on panic yet. Just a big down move from excessive highs.
Are we a bunch of freakin babies?
If I was the administration I would direct the Treasury to purchase existing American based oil producers oil to fill the strategic oil reserve at a price of $45.00 bbl. This sends a message to Russia we won’t let you take out US production. To be honest I think the buffer of tankers sitting off Chinese ports mean that Russia’s price is backstopped by the glut of existing oil waiting to go somewhere.
I am now starting to think there will be a small bounce before the next leg down. The next leg down depending on timeframe might make an interesting snapback rally point.
I am not feeling full on panic yet. Just a big down move from excessive highs.
CaryC
Has No Life - Lives on TB
Well boys, ladies, it's been fun. Enjoyed the ride. But alas, it looks like the disaster over.
Trump announced a stimulus package, or prepping for one, and the ECB said they would pump money into the European economy. All's well, that ends well.
Dow up +800 at open.
'Course there's always tomorrow
Trump announced a stimulus package, or prepping for one, and the ECB said they would pump money into the European economy. All's well, that ends well.
Dow up +800 at open.
'Course there's always tomorrow
Well boys, ladies, it's been fun. Enjoyed the ride. But alas, it looks like the disaster over.
Trump announced a stimulus package, or prepping for one, and the ECB said they would pump money into the European economy. All's well, that ends well.
Dow up +800 at open.
'Course there's always tomorrow
I hope people picked up some stocks at the low. I heard that our annuities did as well as some friends that day trade. They made a killing even having the stocks come up off the lows of yesterday. People forget you make money both going up and down.
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