The latest memo from Howard Marks is really interesting:
Selected extracts:
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What was the amount that has been already spent? 16 trillion?
16 trillion x 5% (letâs assume the stock exchange wonât return a 7% since there is no bailout) = 800 billion
800 billion / 330million people = 2.4million
Every american could get 2 millions per year if the government invest those 16trillion in ETFs 
Did I miss a 0 somewhere?
Edit: 2400 dollars per person, not 2.4 millions. ops.
note: you canât invest 16Trillions in ETF without changing its worthâŠ
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Thanks for this post. I have been thinking about this already and arguing on facebook with some economists and other commenters. Everybody seems to think itâs right to help and that we need to do it, or the companies will go bankrupt.
Our governments (not only US, but also CH and PL) will pay us our salaries, they will give companies cheap loans so that they retain liquidity, they will buy out stocks to keep the price up. This way it appears everything is in check. Everybodyâs getting paid, nobody has losses (even mark-to-market ones!), so no reason to panic. Itâs the modern monetary theory in action.
To me it doesnât add up. Someone is paying for all this, money has no value apart from what it can buy. And for all the months we sit at home, there are goods and services that are not being produced. Can that period be made up once weâre back in action? I donât think so. Many factories operate at capacity and they canât just take more orders. Plus, the money we didnât spend on travel, entertainment, of haircuts, will not necessarily be spent on these things. A postponed haircut will not result in two haircuts. So the money will be spent on other things and these things should see inflation.
But thatâs just my ignorant understanding of this complex issue.
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Over a long time period a missed quarter wonât matter much though what matters is the general health of the economy.
Why do you think it results in inflation? Canât the central banks unwind their bond purchase as the economy recovers? (when people are more confident that all the companies wonât just become bankrupt)
And Iâd think most of the extra money that was injected was spent (people need to pay rent, food, etc.), the rest is price stabilization that shouldnât impact much (most financial actors sold everything to keep only cash, central banks stepped in an bought bonds (sovereign and corporate) to avoid more damage until thereâs some more sanity in the markets, Iâd expect financial actors to start buying those again, nothing was really created in the process, just central banks acted as a buyer of last resort)
They can, but has this happened in the past? When you look at the past, in times of prosperity, Fed has raised the interest rate, in order to lower it during recession. But each time, the raise was weaker and weaker, and this time they only could go down from 2.5%. We had 10 years of bull market and thatâs the best they could do?
Similar case applies to Fedâs balance sheet. After 2008 they engaged not only in loans but also in buying assets. In 2018 they announced they will start reducing it and just look how much they managed to reduce:
I think if Fed would raise the rates or lower the balance sheet any time soon, we would see a huge deflationary crash. The economy will have to play catch up for many years. And having helicopter money does not help growth. Giving people and businesses money means giving them purchasing power for buying things they havenât earned. It is unfair towards other businesses and people who earned their money fair, without government help and bailouts.
I would understand this measure as a one off short term solution to tackle the crisis, but we live in this reality since 12 years. Why do you think western economies have growth rates of 1%? I think itâs the price we pay for bailing everybody out and making sure nobody gets hurt.
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But in the previous post the concern was inflation, then your graphs are a good example that itâs sustainable since even with low interest rates and large balance sheets inflation hasnât picked up (sadly for the central banks, since theyâve been waiting for it the whole time).
Iâve been wondering about the reasons for it. People in this forum (@1000000CHF) said, that if not for the QE, we would have seen deflation on many products.
Think about it: due to technological advancements, products become cheaper to manufacture. So you could just lower the price, or you allow people to take loans in order to buy your products. Not only do they buy the products at the same price as before, but they also owe you interest. I donât know, maybe this is too much tinfoil-hattery for my own sake 
Youâve misinterpreted what Iâve said. I think we would see deflation if weâve got more tight monetary policy (gold standard, free banking or more hawkish FED, whatever). But I doubt QE is making a big inflationary pressure - itâs providing liquidity not increasing supply of money. In other words, it takes some less liquid âmoney-likeâ assets and replaces it with more liquid assets (money). This doesnât change the supply of, broadly speaking, money (money-like assets), but alters its composition.
Other important factor to take into account is that low interest rates (while having low inflation in the same time) is not only result of central bank policies, but also structural changes in the economy (mostly due to decreasing productivity by ageing societies on the demand side, and lots of savings/capital on the supply side). The best case of this is Japan - ultra-inflationary policy of BoJ, negative interest rates and hardly any inflation. It doesnât matter how much money youâll print, if thereâs nobody to spend it.
PS. I agree that these government measures are short-term necessary, but theyâll be long-term destructive. Especially that theyâre impossible to remove even during a bull market and economic expansion (as last 12 years has thought us).
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all these hedge fund managers are just talking their books⊠this just in from RJO:
800 billion / 330 million = 2424. 
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OuffâŠ
This reminds me of these bad-math-instances:
/
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Unfair! I did correct me already 
You know, itâs like âletâs take away those pesky zeroes now to simplify, I will add them back laterâ
ahahh. To be fair I noticed like 1 seconds after posting.
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indeed ! The bottom of the market is hard to find these days
Did you guys read the article in Science published a few days ago about modelisations of the months to come ?
Spoiler alert :
Résumé
Pretty gloomy until the discovery (and wide spread use) of a vaccine
The Guardian has a good resumĂ© of this hardcore technical piece of science, and youâll find a link to the original study.
Still thinking this?
Iâm tempted but I decided to wait this insanity over. I hope my wife wonât kill me. :-p
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Anti-lockdown protests spread in US⊠Murica FTW 
https://www.ft.com/content/c8f6f413-39c4-47ce-b1ff-0e02969cb612
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I just found a great visual illustration of quantitative easing (money printer goes BRRR)
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Oil price collapsed totally today, lol.
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-88% wt actual f âŠ
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