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U.S. Economic collapse question. (self.preppers)

KNUBBSWeathering all storms. が 投稿

A lot of my associates have drastically cut back on their prepping since the Federal Reserve's tapering of QE had a positive reaction in the stock market (per mainstream media). Is there any reason to still worry about financial meltdowns still occurring? I prep for multiple reasons, so a positive market won't stop me from being ready for life.

Note: I do not understand the complex aspects of the modern U.S. market. Any help would be great!

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[–]edhelerPrepared for 9+ months 5ポイント6ポイント  (2子コメント)

We are in a pretty big stock market bubble at the moment due to QE. Most of the QE is just ending up on the banks balance sheets but a little bit has persistently been leaking into the stock market. The biggest thing to watch with tapering is the rate on the 10-year bond which is rising. 3.5% is considered a severe danger area by a number of economists. If it continues to rise the Federal Reserve may have no choice but to increase QE. The level of danger of a crash is increasing. There is always a chance that a crash could turn into a collapse but it's dependent on mass psychology which is impossible to predict.

[–]KNUBBSWeathering all storms.[S] 1ポイント2ポイント  (1子コメント)

The biggest thing to watch with tapering is the rate on the 10-year bond which is rising.

In other words, less return to the buyer of the bonds. This could easily make investors shy, right?

[–]edhelerPrepared for 9+ months 3ポイント4ポイント  (0子コメント)

If people previously purchased bonds they would lose money if they sold them. They could still hold the bonds to maturity and not lose money. The Fed can't afford to let interest rates rise very far because it could blow up everything. So, if rates keep rising the Fed will have to intervene and the only way they can do that is by increasing QE. It will be an indication that the Federal Reserve is losing control over the market. The people who understand this are probably already out of the market.

I think the larger problem is that investors don't know how to operate in an environment with rising interest rates. We have had falling rates for 30 years. In a falling interest rate environment you leverage to the hilt to make more money. In a environment of rising interest rates leverage can kill you.

[–]jihiggs 3ポイント4ポイント  (1子コメント)

spending power of this country is dwindling and has been for 10 years, it will cross a threshold where the artificial inflation my federal pumping will no longer be able to support its house of cards, somthing will give. it wont likely end in a complete crash, it will be slow with the real impact being felt in 5-10 years.

[–]KNUBBSWeathering all storms.[S] 1ポイント2ポイント  (0子コメント)

it wont likely end in a complete crash, it will be slow with the real impact being felt in 5-10 years.

So, much like another massively large number of unemployed federal workers?

[–]msiley 1ポイント2ポイント  (1子コメント)

It's a phony economy suspended by low interest rates and manipulated data. They changed the way they calculated the GDP so of course that's positive. Unemployment is going down but so is the pool of workers.

Anecdotally, many people I know are buying a house they can't afford. Once again pushing the boundaries of their budget. It's like deja vu all over again. Stock market up and people are up to their eyeballs in debt.

[–]KNUBBSWeathering all storms.[S] 0ポイント1ポイント  (0子コメント)

Stock market up and people are up to their eyeballs in debt.

I can agree with that. I budget all of my extra cash toward my current debts. The only thing that I may do is get myself into a small mortgage in a few years. A good portion of money down, of course.

[–]enictobi 1ポイント2ポイント  (1子コメント)

Don't use the stock market as an economic indicator. Stocks are valued based on the value of money, that is, they are subject to inflation. Since markets are closer to the QE "tap" they are more affected by the freshly released money.

Keep an eye on the CPI, not only how it looks, but how its been changed. Also watch economic growth in terms of percentage. If it doesn't hit 3% for several consecutive quarters, then we're still not on track, no matter what the stocks say. Stocks are driven my emo humans and algorithmic machines, not solid economics.

The best indicator of the economy is the labor participation rate. The unemployment rate is important, but people whose lives are already post-collapse will drop out of the work force and no longer be counted as unemployed. Also, watch youth unemployment.

Collapse is underway, but seeing it is more like watching grass grow and less like watching fireworks go off. It won't be Madmax or Fallout. It will be more like 2000 Argentina and 1989 Russia in slow motion.

The most important thing to keep an eye on is the status of the U.S. dollar as the world reserve currency. If we lose that, we're thunderfucked and things will move fast from there.

Good luck and enjoy life!

[–]KNUBBSWeathering all storms.[S] 0ポイント1ポイント  (0子コメント)

thunderfucked

Yes! Hilarious.

I have come to the same conclusion as well, through my own research and feedback from internet communities. It seems like the best thing to do is to continue on my road to self-sufficiency, and debt-free prosperity. Good luck to you as well!

[–]arrozconplatano 3ポイント4ポイント  (1子コメント)

If the fast food restaurants end up replacing employees with computer terminals like they are threatening to, unemployment will skyrocket and might cause a chain reaction of sorts

[–]KNUBBSWeathering all storms.[S] 2ポイント3ポイント  (0子コメント)

This seems like something that is unstoppable, since it is already happening. Threats are not even needed if you go into most retail locations these days.