I guess we got the term "jawboning" from what Samson was able to accomplish with the jawbone of a donkey. The story was to make us ponder the power of words. Powell is aware of that power. Trump was aware of his power when he incited the Jan 6 deadly riot.
In summary, depending on the circumstances, words can break our bones just as can sticks and stones.
Important disclaimer: All Facts Matter is not an investment Substack and my articles should not be viewed as any sort of specific investment advice.
That being said, if you have idle cash (with luck, one day I'll have enough paying subscribers to bless me with some idle cash! :D ), you want to look for investments that are going to deliver real value on your particular investment timeline. In other words, you want to have a gain that beats inflation by a suitable margin over the next month, year, decade, et cetera.
Is there real estate in your area that would deliver real gains over your investment timeline? Can you afford the cash investment? Those are obviously not questions I am going to be able to answer here.
What I would avoid is any investment on margin. If you have to go into debt to invest, recognize that debts are riskier now than they have been previously--the rising delinquency rates alone attest to that. If a real estate investment involves a mortgage, think long and hard before signing on the dotted line, and work through what your likely exit strategies will be. What precipitated the 2007-2008 financial crisis was a rise in mortgage interest rates and a disproportionately large number of adjustable rate mortgages--when the mortgage rates rose too high (thank you Ben Bernanke), people either could not refinance before the balloon payment hit or could not afford the balloon payment when it did hit. Subprime ARM defaults went ballistic, and all of Wall Street's lovely derivative products based on those subprime ARMs nosedived as a result.
Broadly speaking, there are no indications of a GFC-style event on the horizon. Delinquencies are up, but largely not for mortgage debt, and the two major classes of debt with rising delinquencies--credit cards and auto loans--haven't been the focus of a derivatives mania such as happened with mortgages in 2003-2007. The immediate risk of a liquidity crisis like the GFC is at the present time fairly low. However, with delinquencies rising, and the Fed still doing its damnedest to push yields up, the longer those two dynamics coexist in the market place the probability of a liquidity crisis begins to rise. Best way to stay out of that maelstrom if and when it hits is to not take on any large debts.
One out-of-the-box investment alternative could be to start a business. Labor force participation is still appallingly low, and as the ADP employment report showed, small businesses are getting jackhammered by the currently toxic labor markets. Finding ways to pull potential workers not in the labor force back into the labor force would not only be an investment that could generate real gains for an extended period of time, but would also be a direct contribution to the economic prosperity of your community (the sagest bit of economic wisdom ever penned is still Adam Smith's observation that the wealth of a nation is the productive labor of its people).
Again, this is not specific investment advice. I don't know your financial situation, nor your appetite for risk (which is an essential element of any investment), nor what types of investment you personally would find attractive, and absolutely am not positioning myself as one who knows what the markets are going to do in the next month, year, or decade.
Maybe Powell's theory is that if he collapses a sufficient number banks, this will suck enough money out of the economy to tame inflation? ;)
That would be a totally deranged and asinine strategy.
You might be right. I am convinced Powell really is that stupid.
Deranged? Sure. But it would probably quite effective at taming inflation -- LOL!
It might not. Powell would just pivot and turn the money spigot on like Bernanke did in 2008. Hell, they gave him a Nobel Prize for that lunacy.
I guess we got the term "jawboning" from what Samson was able to accomplish with the jawbone of a donkey. The story was to make us ponder the power of words. Powell is aware of that power. Trump was aware of his power when he incited the Jan 6 deadly riot.
In summary, depending on the circumstances, words can break our bones just as can sticks and stones.
So is it a good time to buy real estate? What if you have cash lying around which is losing value - what would you do?
Important disclaimer: All Facts Matter is not an investment Substack and my articles should not be viewed as any sort of specific investment advice.
That being said, if you have idle cash (with luck, one day I'll have enough paying subscribers to bless me with some idle cash! :D ), you want to look for investments that are going to deliver real value on your particular investment timeline. In other words, you want to have a gain that beats inflation by a suitable margin over the next month, year, decade, et cetera.
Is there real estate in your area that would deliver real gains over your investment timeline? Can you afford the cash investment? Those are obviously not questions I am going to be able to answer here.
What I would avoid is any investment on margin. If you have to go into debt to invest, recognize that debts are riskier now than they have been previously--the rising delinquency rates alone attest to that. If a real estate investment involves a mortgage, think long and hard before signing on the dotted line, and work through what your likely exit strategies will be. What precipitated the 2007-2008 financial crisis was a rise in mortgage interest rates and a disproportionately large number of adjustable rate mortgages--when the mortgage rates rose too high (thank you Ben Bernanke), people either could not refinance before the balloon payment hit or could not afford the balloon payment when it did hit. Subprime ARM defaults went ballistic, and all of Wall Street's lovely derivative products based on those subprime ARMs nosedived as a result.
Broadly speaking, there are no indications of a GFC-style event on the horizon. Delinquencies are up, but largely not for mortgage debt, and the two major classes of debt with rising delinquencies--credit cards and auto loans--haven't been the focus of a derivatives mania such as happened with mortgages in 2003-2007. The immediate risk of a liquidity crisis like the GFC is at the present time fairly low. However, with delinquencies rising, and the Fed still doing its damnedest to push yields up, the longer those two dynamics coexist in the market place the probability of a liquidity crisis begins to rise. Best way to stay out of that maelstrom if and when it hits is to not take on any large debts.
One out-of-the-box investment alternative could be to start a business. Labor force participation is still appallingly low, and as the ADP employment report showed, small businesses are getting jackhammered by the currently toxic labor markets. Finding ways to pull potential workers not in the labor force back into the labor force would not only be an investment that could generate real gains for an extended period of time, but would also be a direct contribution to the economic prosperity of your community (the sagest bit of economic wisdom ever penned is still Adam Smith's observation that the wealth of a nation is the productive labor of its people).
Again, this is not specific investment advice. I don't know your financial situation, nor your appetite for risk (which is an essential element of any investment), nor what types of investment you personally would find attractive, and absolutely am not positioning myself as one who knows what the markets are going to do in the next month, year, or decade.
I hope this answers your question!