How Does the Government Regulate Exchange Rates?

How Does the Government Regulate Exchange Rates?

Money mix of foreign currency notes

By Kimberly Amadeo   Updated May 09, 2021  Reviewed By Thomas J. Brock

The government indirectly regulates exchange rates, because most currency exchange rates are set on the open foreign exchange market (forex). In some countries, like China, the exchange rate is fixed, and the government directly controls it. This control of the yuan, in turn, affects the U.S. dollar. The yuan is loosely pegged to the U.S. dollar.

Government Influence

The U.S. government has various tools to influence the U.S. dollar exchange rate against foreign currencies. The nation's central bank—known as the Federal Reserve (Fed)—is an independent arm of the government. It indirectly changes exchange rates when it raises or lowers the fed funds rate—the rate banks charge to lend to each other.

For example, if the Fed lowers the rate, this drives down interest rates throughout the U.S. banking system and increases the supply of money, which tends to weaken the dollar relative to other currencies, given the anticipated inflationary pressure. The diminished rates also tend to weaken demand for dollar-denominated assets, which can have a knock-on effect on the value of the currency.

Treasury Department Role

The Treasury Department is a government agency that also indirectly affects the exchange rate. It prints more money. This printing increases the supply and weakens the dollar. It can also borrow more money from other countries. That's done by selling Treasury notes, which increases the supply of money and increases the U.S. debt, and both will send the dollar's value down.

The third government tool is the use of expansionary fiscal policies. Generally, these policies weaken the dollar, because they increase the supply of money.  However, these policies can also improve economic growth, which tends to attract domestic and foreign investors to dollar-denominated assets. This demand can often overshadow the expansion in the supply of dollars.

To continue reading, please go to the original article here:

https://www.thebalance.com/how-does-the-government-regulate-exchange-rates-3306087

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6 Factors That Influence Exchange Rates

6 Factors That Influence Exchange Rates

By Jason Van Bergen

 Aside from factors such as interest rates and inflation, the exchange rate is one of the most important determinants of a country's relative level of economic health. Exchange rates play a vital role in a country's level of trade, which is critical to most every free market economy in the world.

 For this reason, exchange rates are among the most watched, analyzed and govern mentally manipulated economic measures.

​But exchange rates matter on a smaller scale as well: they impact the real return of an investor's portfolio. Here we look at some of the major forces behind exchange rate movements.

​Overview

 Before we look at these forces, we should sketch out how exchange rate movements affect a nation's trading relationships with other nations. A higher currency makes a country's exports more expensive and imports cheaper in foreign markets; a lower currency makes a country's exports cheaper and its imports more expensive in foreign markets.

A higher exchange rate can be expected to lower the country's balance of trade, while a lower exchange rate would increase it.

 Determinants of Exchange Rates

 Numerous factors determine exchange rates, and all are related to the trading relationship between two countries. Remember, exchange rates are relative, and are expressed as a comparison of the currencies of two countries.

The following are some of the principal determinants of the exchange rate between two countries. Note that these factors are in no particular order; like many aspects of economics, the relative importance of these factors is subject to much debate.

 1. Differentials in Inflation

As a general rule, a country with a consistently lower inflation rate exhibits a rising currency value, as its purchasing power increases relative to other currencies.

During the last half of the twentieth century, the countries with low inflation included Japan, Germany and Switzerland, while the U.S. and Canada achieved low inflation only later.

Those countries with higher inflation typically see depreciation in their currency in relation to the currencies of their trading partners. This is also usually accompanied by higher interest rates.

2. Differentials in Interest Rates

Interest rates, inflation and exchange rates are all highly correlated. By manipulating interest rates, central banks exert influence over both inflation and exchange rates, and changing interest rates impact inflation and currency values.

Higher interest rates offer lenders in an economy a higher return relative to other countries. Therefore, higher interest rates attract foreign capital and cause the exchange rate to rise.

 The impact of higher interest rates is mitigated, however, if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down. The opposite relationship exists for decreasing interest rates - that is, lower interest rates tend to decrease exchange rates

3. Current-Account Deficits

 The current account is the balance of trade between a country and its trading partners, reflecting all payments between countries for goods, services, interest and dividends.

A deficit in the current account shows the country is spending more on foreign trade than it is earning, and that it is borrowing capital from foreign sources to make up the deficit.

 In other words, the country requires more foreign currency than it receives through sales of exports, and it supplies more of its own currency than foreigners demand for its products.

The excess demand for foreign currency lowers the country's exchange rate until domestic goods and services are cheap enough for foreigners, and foreign assets are too expensive to generate sales for domestic interests.

 4. Public Debt

Countries will engage in large-scale deficit financing to pay for public sector projects and governmental funding. While such activity stimulates the domestic economy, nations with large public deficits and debts are less attractive to foreign investors. The reason?

A large debt encourages inflation, and if inflation is high, the debt will be serviced and ultimately paid off with cheaper real dollars in the future.

In the worst case scenario, a government may print money to pay part of a large debt, but increasing the money supply inevitably causes inflation.

Moreover, if a government is not able to service its deficit through domestic means (selling domestic bonds, increasing the money supply), then it must increase the supply of securities for sale to foreigners, thereby lowering their prices.

Finally, a large debt may prove worrisome to foreigners if they believe the country risks defaulting on its obligations. Foreigners will be less willing to own securities denominated in that currency if the risk of default is great.

For this reason, the country's debt rating (as determined by Moody's or Standard & Poor's, for example) is a crucial determinant of its exchange rate. ​

5. Terms of Trade

 A ratio comparing export prices to import prices, the terms of trade is related to current accounts and the balance of payments. If the price of a country's exports rises by a greater rate than that of its imports, its terms of trade have favorably improved.

 Increasing terms of trade shows greater demand for the country's exports. This, in turn, results in rising revenues from exports, which provides increased demand for the country's currency (and an increase in the currency's value).

If the price of exports rises by a smaller rate than that of its imports, the currency's value will decrease in relation to its trading partners.

6. Political Stability and Economic Performance

 Foreign investors inevitably seek out stable countries with strong economic performance in which to invest their capital. A country with such positive attributes will draw investment funds away from other countries perceived to have more political and economic risk.

​Political turmoil, for example, can cause a loss of confidence in a currency and a movement of capital to the currencies of more stable countries.

 Conclusion

​The exchange rate of the currency in which a portfolio holds the bulk of its investments determines that portfolio's real return. A declining exchange rate obviously decreases the purchasing power of income and capital gains derived from any returns.

 Moreover, the exchange rate influences other income factors such as interest rates, inflation and even capital gains from domestic securities.

 While exchange rates are determined by numerous complex factors that often leave even the most experienced economists flummoxed, investors should still have some understanding of how currency values and exchange rates play an important role in the rate of return on their investments.

https://www.investopedia.com/trading/factors-influence-exchange-rates/

"Different Paths to the Same Finish Line"

From Our Archives:

"Different Paths to the Same Finish Line"

Dinarville seems to have some undeniable divisions in it – which kind of reminds me of the three sects in Iraq. Each one sure of their path and beliefs, and ‘they’ are right – or somehow more correct than the other two.

It seems to me, there are those that follow the Elders, Dragons, Chinese – Landa Global (zap) – bonds and their redemptions….

Then those that are following global economics, implosion, crash, the changes internationally in banking, old system out while new system comes in….

We have the republic folks, believing in our constitution being restored to the way it should have remained before we were all duped…

And we have the Iraq newshounds, following each move made there, each step of each law, watching them follow a well laid out blueprint and many of these folks know more about THEIR government than they do their OWN!

Many of these groups claiming this all 'has nothing to do with the other!'

Unfortunately, it’s sad when each of these sects in dinarville speak so terribly of the others – and develop such venom towards another's beliefs, one guru against another, and dinarians follow that lead.…. I say – BIG DEAL! Who cares..

 It’s not all that important what the rest of the gang thinks, or believes – they have waited just as long as the rest, sweated, hurt, and tried their best to hang in there based on what they believe.

All that's important is that YOU are comfortable with what YOU believe - that's all that matters at the end of the day, that we're ready.

Each one - of these sections of Dinarville – also seems to have a few leaders in their arena to choose from.. some which make a living at this, others that don’t.. again – who cares what they get.

Anyone noticed how extremely well respected and highly educated individuals believe directly opposite from the way you do?? doctors, lawyers, doctorate degrees in dinarville -

I think they can be found on each of these 'paths'....

I just find it extremely ironic – that each one of these different avenues seem to be reaching an end and in their final scene. Anyone else notice this?

The Republic folks are all giddy with excitement, the last leg, seeing what they have dreamed of finally coming to an end, etc….

The Bond Redemptions – are reported to be upon us for those that have lived the Chinese angle with every breath and dollar they have…

And Iraq is about to vote on their final laws, talking everyday about deleting zeros and international compliance of this, that, and more!

Is there only one road to the finish line? Who said so?…

Could there be truths in each path? Ha!!

I think it’s mighty amazing tho – that all of these paths seem to be in the final scene, right now – and never has that been the case in the past that I know of.

Goes back to the ‘we are one big Dinarian family’ – heck, families never get along with EVERYONE in their family – but it’s so darn true… and, over the last year or so – I’ve certainly become less judgmental when others have beliefs total opposite to mine…

Chances are – they will arrive at that finish line following their path precisely the same time as me!

Practicing Gratitude Can Lead To A Greater Appreciation For People And Experiences

Life Can Be Hard. Practicing Gratitude Can Lead To A Greater Appreciation For People And Experiences.

Maureen Ruh  Fri, November 12, 2021

What is gratitude? Is it an attitude, a feeling or an expression? How do you best describe gratitude and its effect in your life?  Broken down to a very simple level, gratitude is really about a three-step process of noticing what is happening in our daily lives, focusing on the good things and appreciating our lives.

It is important every day to notice even the small things that we experience (like sunshine, a drink of water) that we may have been taking for granted. Focusing on the positive aspects of our daily lives despite many opportunities to think negatively is important.

Changing our awareness and focus will then lead to a greater appreciation for the people, events and experiences that happen in our lives.

Gratitude brings us a multitude of gifts. It benefits us mentally, physically and emotionally. Several studies over time have shown the benefits that result from a consistent and active practice of gratitude. People who are grateful tend to feel happier, sleep better, experience more energy and have greater mental clarity.

Gratefulness causes our brain to release more positive neurotransmitters, such as serotonin, dopamine and oxytocin which can improve our mood. Gratefulness can lower the presence of the stress hormone, cortisol. Increasing positive brain chemicals while reducing stress brain chemicals can help to assist with certain mental health disorders, such as anxiety or depression.

Stress often disrupts sleep patterns. Research has shown that gratitude journaling for five minutes before bed (writing about or listing the positive events of the day) increases our mental well-being which can contribute to an improved quality of our sleep.

People who journal daily have reported better coping skills when life challenges arise. They have noticed increased mental strength and emotional resilience. These skills help them create positive solutions, stay grounded and regulate their emotions more easily in uncomfortable situations.

Gratitude can also help with personal self-esteem and in our relationships with others. When we are grateful for what we have and who we are, we are much less likely to compare ourselves to others. Practicing gratitude helps us to release toxic and negative emotions, such as envy and resentment, while strengthening our positive emotions and feelings, such as happiness and empathy.

To continue reading, please go to the original article here:

https://www.yahoo.com/news/life-hard-practicing-gratitude-lead-141913021.html

22 Utterly Clueless And Borderline Offensive Things Rich People Have Actually Said

22 Utterly Clueless And Borderline Offensive Things Rich People Have Actually Said That Rival "Let Them Eat Cake" Please Do Not Be Like These Rich People !!

Sat, November 6, 2021,

Recently, we asked the BuzzFeed Community to tell us the most clueless thing they've heard a rich person say or ask about money. Combined with some horror stories from rich bosses, we've rounded up some of the most out-of-touch comments rich people have made.

1."If you really care about helping elephants, you’d buy some and put them in a sanctuary." —sexyfart

TV Land

2."The owner of my former company said, when alerted to the fact that payroll had not gone through, that it was 'fine, because none of my employees are living paycheck to paycheck.' " —riggplustwo

3."When I was pregnant, I was talking to a friend of mine about how I was worried I was going to have postpartum depression after my baby was born. She told me, 'Oh, don’t worry about that; only poor people get PPD.'”  —zeeroworeez

Universal Pictures

4."In a class, we were talking about abusive work environments, and one girl was like, 'Well, I would just quit.' Several of us had to explain that just quitting your job is not an option for everyone. Sometimes you have to tolerate a horrible job while you look for a better one because you have bills to pay." —dellarock

5."I work in a bank so I have heard it all, but the worst was definitely a customer of ours that came in frequently. She once said, 'I wish I was poor like you guys. It’s too much work having all this money.'”  —hillaryd45fdef058

Bravo

6.“'I imagine my childhood was much the same as yours.' Said to me by a man in his family castle, as we admired his collection of classic cars."   —nikkinapalm

7."I was talking about how the washer and dryer in our rental busted as soon as we moved in. I was worried about how we would get another one. My boss gave me a look and said, 'You can get one at Best Buy for not that much, like $600 each? That's only $1,200.'"

"I responded, 'That's a lot of money.' She looked extremely confused. That was more than she paid me in two weeks; how in the world did she think I could afford that?" —Anonymous

ABC

8."I was having lunch with a former friend, and we were having a discussion about dental care. I mentioned that I had a tiny little discoloration on an otherwise healthy tooth. She told me I should just get it pulled and replaced with a veneer like it wasn't going to cost me an arm and a leg."  —fluffyblackcloud

9.*The CEO of my previous company asked for a mandatory donation of $150 to Toys For Tots in order to attend our Christmas party. The donation had to be from your own personal money — mind you, at the time I was making $12/hour."

"Here's the kicker...the Christmas party was hosted at a fancy hotel and a 'cheap' drink at the bar cost $12–$15. We asked if he would cover at least one drink for employees, and he said, 'I refuse to pay for my employees' drinks when there are children without toys on Christmas.' One year I spent $200 between the donation, two drinks, and an Uber home."  —Anonymous

To continue reading, please go to the original article here:

https://www.yahoo.com/lifestyle/22-rich-people-were-just-234602346.html

Be Ready For Anything in 2022

Be Ready For Anything in 2022

November 12, 2021  Information Briefing #171   by whitehatauxiliaries 

This will be a very brief article, our last for 2021.   First, let us take but a moment to review a few things.  In past articles and discussions, we predicted that:

Joe Biden could beat Donald Trump in 2020. He did.

Cryptographic Blockchain technology would continue to expand and positively affect the value of key ideas which would attract institutional interest and their capital resources. This is happening now.

The “revaluation” of certain war-torn currencies, and the expected instant wealth many expected from such, would continue to fail to materialize. It has.

Bolshevism would take root and grow in influence in both public and private sectors within Western and Western European nations, at the covert urging of the very same ethnocentric ideologs who were responsible for the creation of Bolshevism in the early 20th Century. It has.

Secluded dynastic Asiatic wealth would be prepared for release for responsible, non-usury purposes, and to, in part, assist nations with key infrastructure rebuilding. This continues to progress.

We could expand on and outline each above point with pictures and articles. But to do so would not allow brevity. So, we will not do so here. We will leave such a task to be performed in the comments section as a group effort. This is your site to experience, and, in large part, your written contributions make it what it is.

We will, instead, simply issue the very same warning to all of you which we have often times repeated in the past: BE READY FOR ANYTHING.

Anything, you say? Yes. Anything.

Disruption of utilities, food, power, police protection, transportation. The sudden shock of natural disasters as well. Always be prepared to access emergency rations, water, fuel, arms, shelter and power.

Your personal means of survival should be the foundation of your existence.

Next year we will be looking for continued digital asset gains. We also anticipate the successful commencement of key Asiatic elders’ wealth transfers.

From there, if these two activities proceed along the lines we anticipate, the combination of both continued traditional institutional cash inflows, along with newly liberated Asiatic wealth participation (via key London Trust guidance), we could see valuations of an unimaginable magnitude follow as a result.

Because we enjoy a rare, direct connection with the key London principal who works with and guides the dynastic elders as they marshal their resources for release, we are in the best possible position to hear of, and potentially act on, any significant moves that may stem from the impact of their success.

Thank you for your continued readership, and have a safe and prosperous New Year.

Strength And Honor   WHA  S*P*Q*R

https://whitehatauxiliaries.com/2021/11/12/information-briefing-171/

Without Rule Of Law You’re Just A Banana Republic

Without Rule Of Law You’re Just A Banana Republic

November 10, 2021  Notes From the Field By Simon Black

In the year 552 BC in the province of Persis in modern day Iran, a local sheepherder started a revolt against his ruler, King Astyages of the Median Empire.  The sheepherder’s name was Cyrus, though he would become known to history as Cyrus the Great. Cyrus led the rebellion against Astyages for three years, winning the decisive battle in 549 BC; and with Astyages defeated, Cyrus went on to found his own kingdom that would quickly become one of the largest empires in the history of the world.

Cyrus’s new Persian Empire became vast and powerful. And Cyrus himself was revered by his subjects who believed he had been ordained by the god Ahura Mazda to rule over them.

But despite Cyrus’s autocratic power, the Persian Empire still had a very strong ‘rule of law’.

Whatever Cyrus decreed became supreme law of the land. Yet his rules were straightforward, fair, and stable.

He was not whimsical or petty. He did not change the rules at a moment’s notice, and he was very respectful of people’s individual freedoms.

Corruption was a capital offense. Any of Cyrus’s government officials who were found accepting bribes were put to death.

Lying also became a capital offense, which compelled politicians and bureaucrats to always tell the truth.

The court system was also highly revered; the king established the law, but judges settled disputes to ensure fairness across the board.  Anyone who refused to accept the decision of a judge was put to death.

And dishonest judges were flayed alive, with their skin used to upholster courtroom furniture as a warning to the next judge who filled the bench.

His punishments may have been harsh. But Cyrus’s goal was to establish a strong rule of law where everyone could have trust and confidence in the system, and everyone had to follow the rules.

Rule of Law is incredibly important; throughout history, societies with a strong rule of law flourished.

When laws are fair, predictable, and evenly applied, businesses can plan and prosper. People can confidently invest in the future. Economies grow and everyone wins.

Where the Rule of Law is weak and corrupt, the opposite happens. Businesses can’t plan anything because the rules are constantly changing. No one wants to invest because they feel like everything is going to be taken from them.   This is the sort of thing we’re seeing now in the Land of the Free.

Several weeks ago when Hunter Biden’s dad issued his royal OSHA decree, it was almost immediately met with a number of lawsuits.

Now, even beyond the obvious Constitutional and human rights issues, the nationwide mandate is extremely anti-democratic.

In a well-functioning representative democracy, there should have been a national conversation about a mandate. It should have been an election issue and essentially appear on the ballot. Voters should have had their say.

Yet that never happened. There was no national conversation. And any hint of discussion was shut down by the media and big tech companies. Any opposition was censored.

This is seriously supposed to be the world’s most advanced democracy?

Well it certainly took a while. But a US federal appeals court finally ruled a few days ago to temporarily block this nationwide mandate.

In a society where the Rule of Law is strong, the court order would be respected by all, including the federal government.

But that’s no longer the world we live in.

In fact, despite the clear and obvious judicial ruling which cites “grave statutory and constitutional issues”, the administration is still telling business to proceed with the mandate.

They’re flat out ignoring the court ruling. It’s extraordinary.

Sadly this is not an isolated event.

Recently a number of federal authorities raided the homes of journalists for supposedly being implicated in the ‘theft’ of the Ashley Biden’s diary.

If someone wants to report the theft of their personal property, this would ordinarily be a matter handled by the local police.

Only in a country without any rule of law would something so trivial involve federal authorities and the Justice Department.  This is political persecution, plain and simple.

The list goes on and on. Several weeks ago, for example, the head of the CDC simply invented special authority for herself to take control of the entire $10+ trillion US national housing market.

This is all the stuff of banana republics. And it’s amazing how the people in charge cannot understand why no one trusts the system.

The bottom line here is that a weak rule of law is just another indicator of serious rot. History is very clear on this point. And when you see that even the government refuses to respect its own system, it’s really time to get your Plan B in order.

To your freedom,  Simon Black, Founder, SovereignMan.com

Without Rule of Law you’re just a banana republic | Sovereign Man

The Same Stories, Again and Again

The Same Stories, Again and Again

Nov 4, 2021 by Morgan Housel

During the depths of the Great Depression in 1932 an Ohio lawyer named Benjamin Roth wrote in his diary:

People think if more money were printed business would be better. This is a false and vicious theory … I am personally very much concerned with the question of inflation and it seems to me there is a grave possibility it will come unless the government at once balances its budget. With an election coming this seems out of the question.

A few months later, he wrote:

There is also considerable discussion about the new science of “technography” which holds that new machinery has replaced many men in industry who will never find a job again.

When I first read those a decade ago I couldn’t believe how similar they were to what people said after the 2008 recession. Now they’re relevant again today. You can copy and paste those paragraphs into any current newspaper and they’d fit right in. Some things never change.

Roth felt similarly.

When writing his Great Depression diary he was struck by how similar the 1930s were to previous big recessions. “I have done considerable reading about the depressions of 1837 and 1873,” he wrote, “and I am amazed at the similarity to conditions today.”

A year later he researched the Depression of 1893 and wrote, “I am again struck by the similarity.” The way people responded to decline and how politicians behaved and how greed and fear controlled investment decisions seemed identical. Some things never change.

Anthropologist Franz Boas says, “Every culture has its own genius and should be judged in its own terms.”

Sure, but every culture and era also share universal characteristics that repeat again and again. The same attitudes, the same flaws, the same stories that show up all over the place. They’re reflections of how people’s heads work no matter where they live or when they were born.

Those common behaviors are what I find the most interesting from history because they’re not just trivia – you can be nearly assured that they’ll eventually impact your own life.

Social sciences get a bad rap because so many insights are hard or impossible to reproduce. I think the only solution is paying special attention to the few behaviors that have repeated themselves throughout history.

A few that stick out from economics:

1. No one knows how they’ll respond to risk and setback until they’re in the moment of terror.

To continue reading, please go to the original article here:

https://www.collaborativefund.com/blog/the-same-stories-again-and-again/

19 Facts About Billionaires That Are Sure To Make Your Skin Crawl

19 Facts About Billionaires That Are Sure To Make Your Skin Crawl

Wed, November 3, 2021

So — right off the bat and for a bit of perspective — one million seconds is roughly 11.5 days, whereas one billion seconds is more than 31 years.

With that established, let's dive into some of the most horrid facts about billionaires!

1.  The number of billionaires exploded during the past year (yes, that's during the pandemic) to its current total of 2,755.

This is alongside the statistic that nearly 20 million adults (or 9% of the national population of adults) don&#39;t have enough to eat on a weekly basis, according to the Center on Budget and Policy Priorities.&#xa0;

This is alongside the statistic that nearly 20 million adults (or 9% of the national population of adults) don't have enough to eat on a weekly basis, according to the Center on Budget and Policy Priorities.

2.  That's 660 more people than last year — meaning a new billionaire was added to the tally every 17 hours. Their total net worth is $13.1 trillion, $5 trillion more than last year.

To put these wildly large numbers into somewhat of a perspective, the world's billionaires have a net worth that's higher than the GDP of the second richest country in the world, China.

3.  In fact, in the first month of the pandemic, U.S. billionaires collectively added $300 billion to their wealth.

4.  And while that's certainly horrible, it's not new. Following the Great Recession, billionaire wealth rose at a rate five times higher than that of the median U.S. household wealth.

5.  According to economist Jeffrey Sachs, the cost of ending poverty is roughly $175 billion each year for 20 years. This means that the world's billionaires could solve world impoverishment and still have almost $10 trillion left to spare.

  6.  Elon Musk is currently the world's richest billionaire, with $306.5 billion to his name. Even if you were to make $100 million per year, it would still take you 3,065 years to amass that level of wealth.

To break it down either further, that means earning roughly $11,415 an hour.

To continue reading, please go to the original article here:

https://www.yahoo.com/lifestyle/19-facts-billionaires-sure-skin-231348476.html

It Sounds Crazy

It Sounds Crazy

Oct 14, 2021 by Collaborative Team

It’s a rare person who wants to hear what he doesn’t want to hear. —Richard Cavett

Abig part of almost every story in history is that expectations move slower than facts. People become vested in their views of how the world works. But the world can work one way for a long time and then … boom … abruptly lurch in a new direction. Opinions crawl while events leap. It’s a tricky little thing.

In the 1960s, before he was old, Warren Buffett joked of taking advice from old investors. “They know too many things that are no longer true,” he said.

The strongest opinions form when a trend persists for years or decades, and a narrative of “this is just how things work” is the path of least resistance. It gets reinforced when that narrative becomes part of your identity – where you work, or how you invest your money, or who you hang out with and discuss what’s true.

But things change. Technologies become obsolete and markets exploit opportunities and people get bored with what used to excite them. Regulations change. Generations evolve. Accidents and chance push the world in ways that are impossible to predict. One damned thing after another. Sometimes those changes happen literally overnight.

So what happens when the world lurches but opinions lag?

You get situations where what’s true sounds crazy because people’s beliefs haven’t caught up with reality.

A few examples:

The S&P 500 gained 27% in 2009 – a fantastic return. Yet when asked in early 2010, 66% of investors thought it fell that year, according to a survey by Franklin Templeton. The idea that the market was surging sounded crazy because “the market crashed” was such a powerful narrative after 2008. People just clung to it.

The lowest-income workers have seen some of the largest recent wage gains in percentage terms. And that’s not just a pandemic quirk – it’s been like that since 2018. “Recent growth for workers with low wages has outpaced that for high-wage workers by the widest margin in at least 20 years,” the New York Times wrote last year. That sounds crazy because it’s so counter to the long-held narrative that high-wage workers are booming while the bottom stagnates and declines.

China’s demographics are so poor it’s going to face labor shortages in the coming years like few other countries have ever dealt with. Its total population is already falling. That sounds crazy because it’s the most populated country on earth and synonymous with rapid growth and endless pools of cheap labor. But its working-age population will decline by more than 20% over the next 30 years.

To continue reading, please go to the original article here:

https://www.collaborativefund.com/blog/it-sounds-crazy/

Full Federal Reserve Policy Statement Sept 22, 2021

Full Federal Reserve Policy Statement Sept 22, 2021

(Reuters) - Following is the full statement issued by the Federal Open Market Committee on Sept. 22, 2021:
  The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

  With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months, but the rise in COVID-19 cases has slowed their recovery. Inflation is elevated, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

  The path of the economy continues to depend on the course of the virus. Progress in vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

  The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent.

The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.

Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals.

Since then, the economy has made progress toward these goals. If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

To continue reading, please go to the original article here:

https://news.yahoo.com/full-federal-policy-statement-sept-182252343.html