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Saying what no one else wants to say first

https://www.bloomberg.com/news/articles/2021-07-15/u-s-initial-state-unemployment-claims-fall-to-pandemic-low?srnd=premium

The lower unemployment is bad for the market because the only thing still keeping the dollar valuable is its artificial scarcity.

Why are banks raising criteria to get a loan? It’s complicated but here are some reasons. Inflation hurts their bottom lines because they are in the business of selling debt and inflation erodes the value of debt. Also people have much more saved up after the pandemic and they are getting jobs now and expecting higher wages. Therefore banks are scared of inflation setting in because the dollar is no longer as scarce as it was. And if they start handing out loans then the dollar becomes even less scarce.

Continuing- the lower unemployment numbers today mean more people are making money and therefore there is less scarcity of the dollar and more inflation. Hence market down on good news.

What do you think?

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9 Comments

  1. What in the hell are you talking about. Banks ARE the inflation play because they need interest rates to go up to fatten up their margins. They cannot survive at low-interest rates because the loans they give out are shit yields. Once inflation kicks in and the fed act to raise rates to combat inflation, they can FINALLY beef up their loan books.

    You literally have no idea what you’re talking about.

  2. Banks are not scared of inflation. They are banking on inflation so that people borrow more money. If everything is fair priced and affordable then where is the need to borrow money?

  3. There are always jobs available. Without a doubt. There’s always jobs available.

    Mom and Pop (aka small business) needs workers now more than ever. It’s just that people would rather remain unemployed currently. The government checks are keeping them comfortable. AND FOR THE RECORD, I’m not against our government providing for its citizens- we paid the taxes. It’s our money. I’m merely pointing out the effect it clearly has in the population at large. Which is ppl are comfortable being unemployed now. Those checks remove incentive to go work. Small Business is being crushed due to no workers. No workers = no productivity = no revenue. Many workers = productivity = revenue = word-of-mouth marketing. That’s how America’s economy survived for centuries. Small Business. That’s the soul of this country.

    The irony here is that most won’t support small businesses (either as consumers or as employees) yet most dream to start their own small business with expectation of it being supported. And some turn bitter when karma bites them.

  4. You are right in saying that inflation erodes the value of debt. I.E. if i’m paying an interest rate to the bank of 2%, and there is inflation of 3%, the bank loses 1% of the value on their written loan. the primary thing you’re forgetting is that banks can implement any interest rate they want. therefore, they take into account the rate of inflation. Banks, I promise you, are not scared of inflation in the slightest. They are expecting inflation. The market is down, I imagine because of the chinese GDP missing its target growth rate this quarter by .1%.

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    if there is anything to know about economics, the only thing that matters to large financial insitutions and industries like the stock market is the happenings of LARGE economies. In which case, theres only 2, arguably 3. The U.S., China, Japan. The entirety of the stock market is not wondering or worrying about what banks are feelings with respect to inflation. It’s coming, we all know it is, so there’s no surprises. Certainly not for smart money.

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