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Author Topic: Are we in danger of recession soon, so yes, who's fault is it?  (Read 87 times)
Navier Stokes
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March 05, 2018, 04:14:44 PM
 #1

In a recent NYT article they stated that Trumps tax cuts might be working too well. So well in fact that they might "overheat" the economy and cause the federal reserve to increase interest rates faster than expected. This is the NYT so take it with a grain of salt but if this really is a problem that economists and investors are worried about, who is at fault here. Is it the republicans for cutting taxes too quickly or is it the federal reserve, or someone else I am totally forgetting?
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March 05, 2018, 04:24:40 PM
 #2

Not quite sure about that. It's all because of our economy. I guess solely federal reserve or republicans are not responsible for it. I guess they both AND some other facts are triggering this issue. But certainly, these two are the major causes.
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March 05, 2018, 04:56:30 PM
 #3

It is the expectation that interest rates are going to be increased at a rate faster than expected at the beginning of the year but I don't think that's an indication that we are close to a recession. I think we are still a number of years away. Just like with cryptocurrency the global market also has a cyclical nature, I would say it has been out of recession for a few years but is definitely not firmly in a boom yet, give it a few more years and then the economy might be 'overheating' as they say.

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March 05, 2018, 11:07:00 PM
 #4

In a recent NYT article they stated that Trumps tax cuts might be working too well. So well in fact that they might "overheat" the economy and cause the federal reserve to increase interest rates faster than expected. This is the NYT so take it with a grain of salt but if this really is a problem that economists and investors are worried about, who is at fault here. Is it the republicans for cutting taxes too quickly or is it the federal reserve, or someone else I am totally forgetting?

I think the people who own the news media want china's economy to gain value at the expense of america's economy declining. To a degree Donald Trump could have reversed the trade deficit which allowed china's economy to grow at the USA's expense. He might also have encouraged investment in america's economy by slashing corporate tax rates which deterred money flowing into the country. The federal reserve is raising rates which will likely counteract whatever positive effect lower corporate tax rates could have upon the US economy.

Whatever the facts, and whether or not people agree with my perspective, I think we might agree there is a tremendous amount of political spin being applied here. Attempting to read and decipher what is being said here is like walking through a minefield.

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March 06, 2018, 03:28:50 PM
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 #5

In a recent NYT article they stated that Trumps tax cuts might be working too well. So well in fact that they might "overheat" the economy and cause the federal reserve to increase interest rates faster than expected. This is the NYT so take it with a grain of salt but if this really is a problem that economists and investors are worried about, who is at fault here. Is it the republicans for cutting taxes too quickly or is it the federal reserve, or someone else I am totally forgetting?

I think the people who own the news media want china's economy to gain value at the expense of america's economy declining. To a degree Donald Trump could have reversed the trade deficit which allowed china's economy to grow at the USA's expense. He might also have encouraged investment in america's economy by slashing corporate tax rates which deterred money flowing into the country. The federal reserve is raising rates which will likely counteract whatever positive effect lower corporate tax rates could have upon the US economy.

Whatever the facts, and whether or not people agree with my perspective, I think we might agree there is a tremendous amount of political spin being applied here. Attempting to read and decipher what is being said here is like walking through a minefield.

If the article has spun it as 'the tax cuts are working too well and could lead to an overheating and a recession' then I would say that you could definitely be on to something, or it's just an anti-trump agenda (I would say this is more likely, especially from a NY based paper).

One thing is for sure in what you said and that's if interest rates are increased then that will definitely act to counteract the lower corporate tax rates as the cost of borrowing goes up.

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March 07, 2018, 01:18:43 PM
 #6

Recessions are usually caused by FRIGHT. Everyone stops spending at the same time. Or in the case of the banking crisis, all the banks stopped lending to each other at the same time because they didn't trust each other.

In a normal economy, different sectors will move up and down at different times, and as long as they are all not correlated, there shouldn't be a recession.

I can't see a recession happening this year myself, unless we get some sort of shock like a war.

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March 07, 2018, 01:38:12 PM
 #7

The White House's chief economic adviser, Donald kohn, resigned because of the steel and aluminium tariffs he announced last week.

Countries to trump PuGang aluminum tariff measures have fought back, if a global trade war "full-blown", interest rates could rise in emerging markets, trade war risk appetite drop may be behind the push the mainspring of rising interest rates.

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March 07, 2018, 01:44:42 PM
 #8

It is the expectation that interest rates are going to be increased at a rate faster than expected at the beginning of the year but I don't think that's an indication that we are close to a recession.
I think that interest rate will increases if there is an inflation and most of the time, the interest rate will fall down when there is recession in the economy. Monetary policy dictates the interest rate to the movement of economy.
Quote
I think we are still a number of years away. Just like with cryptocurrency the global market also has a cyclical nature, I would say it has been out of recession for a few years but is definitely not firmly in a boom yet, give it a few more years and then the economy might be 'overheating' as they say.
Economy is always experienced boom and depression, it does not complete the cycle it there is a stage to be bypassed. We can say that we are on top of economy as of now, but there is no stability in economy. Remember, we are now in booming later, we are in a depress stage. But somehow, we must pursue always that no matter how hard the crisis that comes to our lives, we always hold on.



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March 07, 2018, 01:47:07 PM
 #9

In a recent NYT article they stated that Trumps tax cuts might be working too well. So well in fact that they might "overheat" the economy and cause the federal reserve to increase interest rates faster than expected. This is the NYT so take it with a grain of salt but if this really is a problem that economists and investors are worried about, who is at fault here. Is it the republicans for cutting taxes too quickly or is it the federal reserve, or someone else I am totally forgetting?

Only time will tell if this tax cut outcomes will be successful or US recession. Many economic wizard tells that the short term effect of tax cuts are beneficial but the long term would be disastrous because if the objective of tax cuts will not materialized then budget deficit will increase. I think as of the moment there is no point to agree or disagree since law is already approved. All we can do is help the government attain target objective of tax cut.

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March 07, 2018, 01:49:42 PM
 #10

In a recent NYT article they stated that Trumps tax cuts might be working too well. So well in fact that they might "overheat" the economy and cause the federal reserve to increase interest rates faster than expected. This is the NYT so take it with a grain of salt but if this really is a problem that economists and investors are worried about, who is at fault here. Is it the republicans for cutting taxes too quickly or is it the federal reserve, or someone else I am totally forgetting?

Obviously it is federal who will be responsible for this one. They will be the one who will cut the taxes and will get higher interest on the assets. I mean come on this is what happened with distinct thing recently in stock exchanges. When the investors were going to charge more than 2% interest then everyone went crazy withdrawing whatever they have in possession and killed the market.

This is what will happen when taxes will be cut faster. People will go crazy buying solid assets thus making it difficult for the time being.

   

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March 07, 2018, 02:03:45 PM
 #11

Many of us here has taken a huge profit last year and we have seen unnecessary price jump that make bitcoin holder huge profits. I think most of the cryptocurrencies and over price and because a huge corrections is happening we are seeing it as a recession.

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March 07, 2018, 02:31:07 PM
 #12

Many of us here has taken a huge profit last year and we have seen unnecessary price jump that make bitcoin holder huge profits. I think most of the cryptocurrencies and over price and because a huge corrections is happening we are seeing it as a recession.
I'm sure the recession was artificially triggered. Rich people see bitcoin as a great prospect for storing and transporting huge sums. This will lead to a stable rise in prices for this asset. Large traders want to buy a lot of coins and make good money in the future.

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March 07, 2018, 02:35:45 PM
 #13

Whoever the fault is, if we have some kind of crash/bear market like in 2008, Bitcoin price will moon.

Money will probably flow to assets with disassociate risk to stock market, like Gold and Bitcoin.

This is the time when we should move a good share of our profits to the stock market. SP500 ETF for a low price, for example...

Well, that's my plan. I hope it works =D

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nazaididuan1
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March 08, 2018, 09:58:50 AM
 #14

Many of us here has taken a huge profit last year and we have seen unnecessary price jump that make bitcoin holder huge profits. I think most of the cryptocurrencies and over price and because a huge corrections is happening we are seeing it as a recession.

Thanks to the huge economic benefits of BTC last year, many new digital encryption investors entered the market!

It's hard for them to accept the current market, and they panic and sell their digital currency at a low price!

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March 08, 2018, 10:31:39 AM
 #15

If a certain country has a negative economic growth, it is beyond control by government leaders, it is all their fault's, because government leaders are the instruments on how to fulfill economic growth on their country. Practically answer, if a certain country performs any opposite balance of power between leaders and their people or something without enough control of government leaders to their people and without unity, so it is simplifies causes into recession or negative economic growth because of lack of unity and control.
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March 08, 2018, 04:27:23 PM
 #16

It is the expectation that interest rates are going to be increased at a rate faster than expected at the beginning of the year but I don't think that's an indication that we are close to a recession.
I think that interest rate will increases if there is an inflation and most of the time, the interest rate will fall down when there is recession in the economy. Monetary policy dictates the interest rate to the movement of economy.

I would argue it's a little different. Interest rates are used to combat inflation but the interest rate falls normally come after we've entered in to a recession and are used to combat it, they then start to increase when we are coming out of it, that's all to say that the interest rate changes tend to come after the event instead of before. And monetary policy is the movement of interest rates so I'm not sure what you mean by the last part.

I think we are still a number of years away. Just like with cryptocurrency the global market also has a cyclical nature, I would say it has been out of recession for a few years but is definitely not firmly in a boom yet, give it a few more years and then the economy might be 'overheating' as they say.
Economy is always experienced boom and depression, it does not complete the cycle it there is a stage to be bypassed. We can say that we are on top of economy as of now, but there is no stability in economy. Remember, we are now in booming later, we are in a depress stage. But somehow, we must pursue always that no matter how hard the crisis that comes to our lives, we always hold on.

A stage cannot be bypassed, the economy will always go boom and bust. We are not at the top of the economy as of now. As I said before, the interest rate increases should act as a signal that things are improving greatly but it will be a while yet before they turn around. It also mostly depends on how things react to the changes, if spending and thus inflation cannot be limited with the interest rate increases it will only lead to more interest rate increases until it becomes too much and that's when we'll be entering recession.

I like to think of managing the economy and monetary policy similarly to running a bath. You have to find the right balance between hot and cold but the best way to do this is not to pump a lot of hot water then be forced in to large reactions and pumping a lot of cold water, it's best to pump the right temperature and slowly let the overall temperature of the water adjust to that. Likewise there shouldn't be large changes to monetary policy to try and instantly move to an ideal inflation it should be incremental changes allowing things to adjust slowly and smoothly.


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