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Thread: The US Recovery

  1. #61
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    snapper,

    Savings are going down - despite QE
    i really don't understand this metric you're using. increasing the savings rate wasn't the point of QE. it's to goose demand.

    if you want a more accurate statement, it'd be "US personal debt is going down - to the order of 20+% - despite QE".

    Meanwhile 10 year bond yields and mortgage rates linked to them creep up.
    at around 2.1, it's literally less than half of what it was in 2008, even with the small creep up recently. we're back to the levels of April 2012.

    How you can call these 'stimulus' policies, both fiscal and monetary a 'success' is quite beyond me.
    even if you define success as fiscal consolidation-- which i don't--

    Government borrowing: Fiscal consolidation, American style | The Economist

    note the discussion about how the CBO was conservative with its estimate, as they assumed higher interest rates than is likely.

    ---

    THE Congressional Budget Office released an updated budget outlook today. Here's the big news:

    If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, the Congressional Budget Office (CBO) estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year—at 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP.
    The 4% of GDP deficit forecast for 2013 is even more remarkable when one notes that the figure for 2012 was 7%. That's a breathtaking pace of fiscal consolidation. CBO reckons that the deficit will continue to fall and will drop to 2.1% of GDP in 2015. Public debt as a share of the economy is also forecast to begin falling from next year. The CBO thinks that deficits will begin rising again from 2016 through 2023, and they might. But CBO guesses that the biggest cause of increasing deficit will be the impact of rising interest rates on interest costs. It forecasts that the yield on the 10-year Treasury will average 4.5% between 2015-2018. That doesn't seem unreasonable looking at Treasury rates over the past generation. But yields have rarely been anywhere close to that level over the past decade. Overall one has to conclude that pundits and politicians alike dramatically overstated the challenge of bringing down American borrowing and stabilising American public debt.

    One wonders how this news will be received in London. Since 2010 (when the coalition government took charge) Britain's growth performance has diverged sharply from America's. There was supposed to be a point to that pain; for its trouble, Britain was supposed to take the fast road back to fiscal rectitude. Instead Britain is badly lagging behind America on that score as well. There has been virtually no change in public borrowing as a share of GDP in Britain from 2011; it remains at about 7.5% of GDP. A very interesting contrast.
    Last edited by astralis; 01 Jun 13, at 15:35.
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    Welcome news indeed if you didn't blossoming bubbles created by all the stimulus about ready to burst... I ask again WHEN can you achieve 'escape velocity'? I mean GDP growth and your form of 'inflation' that relies on people not eating or use fuel would have to reach what level before QE could, in your opinion, be ended and the Fed could consider it's portfolio (at a loss but not really relevant as Bernanke has a monopoly on counterfeiting). If the stock market crashes next week - and the latest Fed minutes reveal talk of bubbles - can QE end or be 'tapered'?

    It is interesting that both yourself and DOR/David now admit that these policies are essentially about "financial liquidity" in David's terms and "goosing demand" (which I assume means increasing demand); things that the savings declining mean will ONLY increase debt for the average citizen. It is sufficient for today's 'liberals' to ensure - as DOR said previously - that when the average person goes to his/her ATM they can withdraw money. Doesn't matter that the money they withdraw buys increasingly less... some form of 'liberalism' this is that seeks to empower the bankers over the common person. Do you not see that your in pro establishment views you advocate and defend policies that are detrimental to precisely those whom you claim to be helping? It is NOT enough to have the ATM dispensing money - not 1/$85bn per month enough! You CANNOT create wealth from a magic pc - only money; a dilution and redistribution of the wealth that already exists - and of course more debt. Time to start facing facts.
    Last edited by snapper; 01 Jun 13, at 23:06.

  3. #63
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    snapper,

    I ask again WHEN can you achieve 'escape velocity'?
    this is not an economic term, and thus has no meaning. if you mean when bernanke will stop QE, he's already stated the parameters.

    I mean GDP growth and your form of 'inflation' that relies on people not eating or use fuel
    once again ignoring what i posted above. here, look at this some more. where is this shocking inflation you seem to think is 'hidden'?

    Attachment 33056

    It is interesting that both yourself and DOR/David now admit that these policies are essentially about "financial liquidity" in David's terms and "goosing demand"
    no one is "admitting" anything; those were the stated reasons behind those policies for -years-.

    things that the savings declining mean will ONLY increase debt for the average citizen.
    this is more foolishness. what the government is doing is a partial substitution for the fall in private demand, with long-term investments that will spur greater efficiency and technological development. these in turn create the basis for future private demand/economic growth.

    increasing demand does NOT necessarily mean reducing savings. if you need to see an exaggerated example of this, look to the example of china, where the savings rate was at some 30-40% yet demand went up by double digits every year.

    Doesn't matter that the money they withdraw buys increasingly less
    i've shown proof otherwise and you've demonstrated jack squat.

    Do you not see that your in pro establishment views you advocate and defend policies that are detrimental to precisely those whom you claim to be helping? It is NOT enough to have the ATM dispensing money - not 1/$85bn per month enough! You CANNOT create wealth from a magic pc - only money; a dilution and redistribution of the wealth that already exists - and of course more debt. Time to start facing facts.
    blah blah blah, SHOW ME THE DATA.
    Last edited by astralis; 02 Jun 13, at 00:57.
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  4. #64
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    Quote Originally Posted by astralis View Post
    this is not an economic term, and thus has no meaning. if you mean when bernanke will stop QE, he's already stated the parameters.
    Yes when unemployment hits his 'magic number' to match his magic pc that creates money out of nothing... I still don't understand WHY if Bernanke's 6.4% is sooo great that 6.3% isn't even better. Why not keep going and eradicate unemployment? If what he is doing is wisdom then why is it wisdom to stop?

    Quote Originally Posted by astralis View Post
    once again ignoring what i posted above. here, look at this some more. where is this shocking inflation you seem to think is 'hidden'?

    Attachment 33056
    Well I could show graphs for Big Macs or the alternative statistics from shadowstats etc or post graphs such as the one shown here: http://www.zerohedge.com/sites/defau...%20March_0.jpg which show real unemployment at over 11%... but these are mere 'contrived figures' and the Governments figures are entirely showing a 'true' picture in your view so it I won't waste your time saying truth which is unwelcome to your somewhat partisan ears.

    How about the Fed the Advisory Committee though? Do you regard their views as 'worth a pinch of salt'? Presumably the Lord High Bernanke should take some notice - in his off time of course when he's not busy creating more fiction. So this is what they say: "Members of the Federal Reserve’s advisory council, which includes the Board of Governors, have expressed strong concerns over the Fed’s low-interest rate policies and its bond-purchase program, which they say could trigger unmanageable inflation and an "unsustainable bubble" in the stock and bond markets.... “There is also concern about the possibility of a breakout of inflation, although current inflation risk is not considered unmanageable, and of an unsustainable bubble in equity and fixed-income markets given current prices,” according to the minutes of the council meeting. Some of the members of the advisory council, consisting of private bankers from each of the Fed's 12 banking districts, pointed out that near-zero interest rates could not be sustained in the long run.A spike in inflation could force the Fed to hike interest rates, hurting business confidence and consumer spending, and prove disastrous to the U.S economy, which is still clawing its way back from the debilitating effects of the 2008 financial crisis." Federal Reserve Advisory Committee Worries About Inflation, "Unsustainable Bubble" In Stocks And Bonds

    Now I know you won't take my word for it - and rightly so! - but when your own people within the system start warning it could all end badly perhaps it's time to reconsider?


    Quote Originally Posted by astralis View Post
    increasing demand does NOT necessarily mean reducing savings. if you need to see an exaggerated example of this, look to the example of china, where the savings rate was at some 30-40% yet demand went up by double digits every year.
    It does when wages are falling.

    Quote Originally Posted by astralis View Post
    i've shown proof otherwise and you've demonstrated jack squat. blah blah blah, SHOW ME THE DATA.
    Look you don't have to be a genius to work out that QE favours the banks as opposed to the man on the street or the even the homeless. You KNOW this is true. If you really need me to explain how it works and honestly don't understand I shall be happy to but I do not believe your feigned naivete.

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    snapper,

    Let’s bring it back down to earth. No solution or analysis suggested here has ever relied on people not eating or using fuel, so just drop that nonsense.

    When the economy recovers is an unknown; get used to it.

    The overly early exit from loose money is what drove the Great Depression into its second, late 1930 phase. Bernanke knows that and he isn’t about to repeat history.

    If the stock market crashes next week, those who foolishly thought it was actually worth that level will learn a lesson. If it doesn’t, those who foolishly thought it wasn’t worth that level will learn a lesson. Every upside has a downside when it comes to stock markets: every buyer implies a seller.

    What is so new about QE being all about liquidity, right from the get-go? Bank capitalization vanished when so-called AAA bonds held as core capital turned out to be worth nothing. To replace the core capital, banks had to either severely curtail lending or find another source. Since severely curtailing lending would have driven the economy further into the toilet, the government did what government’s are supposed to do: it minimized the pain.

    Having a working ATM isn’t “sufficient;” it is a sign that the policy is working. But, you are correct that it doesn’t matter that the money buys less, since that’s the normal state of affairs. In 1913-55, CPI fell year on year in 158 out of 504 months (31.4% of the time). Since then, it has fallen 8 times (1.2%) out of 688 months. []Download Data - Consumer Price Index for All Urban Consumers: All Items (CPIAUCNS) - FRED - St. Louis Fed
    Rising prices mean money’s worth less. Get used to it.

  6. #66
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    As the 10-year goes up the margin people pay on mortgages has to go up as well. Say 150 basis points above the 10 year.

    If it goes to 3 then the 15 mtg year should be 4.5% more or less.

    The problem here is not in the flow of buyers who are credit worthy. The problem in NPLs[non-performing-loans] and TDRs[troubled restructured] banks have on their books that are struggling to perform at current rates. What the rates going up means is they cannot subsidize their losses by pushing them out and slowly liquidating inventory. This shuts the exit through that door out.
    Pricing also gets pressured as rates go up you can afford less and less in price due to payment going up.

    There are a lot of dynamics that happen structurally. Go to SEC open up any bank and take a look at their net interest margin and then the margin they get on their assets and liabilities. Now if repricing happens fast enough all of their assets stay LONGER on their books and pay less while their liabilities creep up faster. Their new marginal book of business grows to increase rates but it does not offset the present value loss on any losses and or sticky liabilities because if you have a 10 year mrtg at 3% why refi?
    [I am still trying to think how it affects them in more different ways mind you]

    The deficit shrank for two reasons.
    1) tax hikes and expirations that occured this year as well as overpayments last year by people whom wanted to take advantage of lower rates whose payments registered this year. Ergo rates were lower in 2012 and a lot of companies paid special divs, people took higher bonuses and tried to get more money in that year as opposed to this year.
    2) frozen spending due to sequester in addition to oil imports dropping...

    All of this creates the perception that c+i+g+exim=y is growing. The problem is C is slowly but surely contracting (especially if you look at it in real terms. Ergo personal income has to grow at 1) population level + 2) inflation level without hedonic bs. It has not.
    Originally from Sochi, Russia.

  7. #67
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    snapper,

    I still don't understand WHY if Bernanke's 6.4% is sooo great that 6.3% isn't even better. Why not keep going and eradicate unemployment? If what he is doing is wisdom then why is it wisdom to stop?
    because this is a balance. he's judged that QE becomes more harmful than beneficial when unemployment hits a certain rate.

    but these are mere 'contrived figures' and the Governments figures are entirely showing a 'true' picture in your view
    the government figures are data that economists of all stripes use. i expect data from reputable sources. a random blog online doesn't cut it.

    Members of the Federal Reserve’s advisory council, which includes the Board of Governors, have expressed strong concerns over the Fed’s low-interest rate policies and its bond-purchase program, which they say could trigger unmanageable inflation and an "unsustainable bubble" in the stock and bond markets.... “There is also concern about the possibility of a breakout of inflation, although current inflation risk is not considered unmanageable, and of an unsustainable bubble in equity and fixed-income markets given current prices,”
    it's funny how you quote the same bankers whom you profess to despise and whom you think are rigging the system. note the use of multiple qualifiers, which i've bolded above.

    then there's the part which you didn't bother including.

    Although the council’s members acknowledged that the Fed’s current policies have aided a slow recovery,
    is there a risk? of course there is, although given the liquidity trap i think the risk is minimal. this talk about "could" and "might" cause inflation/an unsustainable bubble is different from your assessment, which is "will", if not "already has".

    It does when wages are falling.
    not falling, stagnant. one of the great questions of economics is why wages are generally sticky, ie they do not change much even during times of high unemployment.

    even then, though, demand can increase if employment increases. by utilizing underproductive sectors, you get an increase in both demand and overall savings.

    Look you don't have to be a genius to work out that QE favours the banks as opposed to the man on the street or the even the homeless. You KNOW this is true. If you really need me to explain how it works and honestly don't understand I shall be happy to but I do not believe your feigned naivete.
    read: "i have no data so i'll just assert this is obvious and true." SHOW ME THE DATA.
    Last edited by astralis; 02 Jun 13, at 18:10.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

  8. #68
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    Quote Originally Posted by DOR View Post
    Let’s bring it back down to earth. No solution or analysis suggested here has ever relied on people not eating or using fuel, so just drop that nonsense.
    David I am sorry but I beg to differ. You and astralis both defend the US CPI calculation data. You are therefore basing ANY calculation you make based on US 'inflation' on an incomplete picture of true inflation. To compare British and US inflation - as was done in one of the previous threads I recall - is therefore comparing apples with oranges - as in the UK fuel and food prices are included in the inflation calculation. More worryingly the US calculation says nothing about how hard the 'average person' is finding life. It is an incomplete picture that is presented as a true reflection. This is a lie.

    Quote Originally Posted by DOR View Post
    When the economy recovers is an unknown; get used to it.
    Hold on... Didn't Bernanke kind of say when stipulated his 'magic unemployment' level?

    Quote Originally Posted by DOR View Post
    The overly early exit from loose money is what drove the Great Depression into its second, late 1930 phase. Bernanke knows that and he isn’t about to repeat history.
    No tapering then? I agree with you on this - he can't stop... ever!

    Quote Originally Posted by DOR View Post
    If the stock market crashes next week, those who foolishly thought it was actually worth that level will learn a lesson. If it doesn’t, those who foolishly thought it wasn’t worth that level will learn a lesson. Every upside has a downside when it comes to stock markets: every buyer implies a seller.
    If the market crashes and banks are threatened do interest rates go negative? If they collapse will you force the taxpayers of 50-100 years ahead to bail them out?

    Quote Originally Posted by DOR View Post
    What is so new about QE being all about liquidity, right from the get-go? Bank capitalization vanished when so-called AAA bonds held as core capital turned out to be worth nothing. To replace the core capital, banks had to either severely curtail lending or find another source. Since severely curtailing lending would have driven the economy further into the toilet, the government did what government’s are supposed to do: it minimized the pain.

    Having a working ATM isn’t “sufficient;” it is a sign that the policy is working. But, you are correct that it doesn’t matter that the money buys less, since that’s the normal state of affairs. In 1913-55, CPI fell year on year in 158 out of 504 months (31.4% of the time). Since then, it has fallen 8 times (1.2%) out of 688 months. []Download Data - Consumer Price Index for All Urban Consumers: All Items (CPIAUCNS) - FRED - St. Louis Fed
    Rising prices mean money’s worth less. Get used to it.
    Well it was you 'liberals' who claimed to be helping the average person; "main street" I believe they call it in the US. It is at least honest of you to recognise that you are not but are rather helping the 'institutions' whom the man on the street and the small business owner have already bailed out. One rule for the 'institutions' and another for everyone else - the 'plebians' in classical Roman terminology. Beware the Gracchi!

    I apologise for not replying to you astralis at the same time... time is short. For now let me comment that I showed you the gold price data that you suggested was falling back to pre TARP levels and that you are over 1/3rd wrong there ($500 odd out of $1,300+) but it makes not a jot of difference. How much food will $50 buy you now compared to pre TARP should I suggest be more your concern. Was gold a good investment pre TARP? Clearly... Not that I expect this to change your almost religious faith in a broken system of corruption and crony capitalism that prevents liberty or free markets.

  9. #69
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    snapper,

    as you're addressing both of us now.

    You are therefore basing ANY calculation you make based on US 'inflation' on an incomplete picture of true inflation. To compare British and US inflation - as was done in one of the previous threads I recall - is therefore comparing apples with oranges - as in the UK fuel and food prices are included in the inflation calculation. More worryingly the US calculation says nothing about how hard the 'average person' is finding life. It is an incomplete picture that is presented as a true reflection. This is a lie.
    i have addressed this point two times now. here's the third.

    Attachment 33064

    Hold on... Didn't Bernanke kind of say when stipulated his 'magic unemployment' level?
    this is not the same. everyone recognizes QE is an extraordinary measure. once unemployment hits a certain level, then those extraordinary measures no longer need to be used. that's not the same as recovery.

    I apologise for not replying to you astralis at the same time... time is short.
    no worries. my issue with your posts remains the same, no data to back up your claims.

    For now let me comment that I showed you the gold price data that you suggested was falling back to pre TARP levels and that you are over 1/3rd wrong there ($500 odd out of $1,300+) but it makes not a jot of difference.
    this is purposefully misconstruing my remarks. the TREND LINE is down and i -BELIEVE- that it will fall back to pre-TARP levels in the near future. i'm not saying that it HAS done so.

    Was gold a good investment pre TARP? Clearly
    nonsensical. your entire point is that TARP and Fed action is inflationary. gold is supposed to be an inflationary safe haven. so now that gold is declining, what have you to say about inflationary prospects? other than it's all a massive conspiracy.

    Not that I expect this to change your almost religious faith in a broken system of corruption and crony capitalism that prevents liberty or free markets.
    i submit that it is YOUR belief in Ayn Rand libertarianism that borders on faith. i've backed up my theories with data. the overwhelming economic evidence, both theoretical and practical, favor my point of view. i've asked repeatedly for data from you that proves your point of view, and you've failed to provide any. other than using the Big Mac index once, and the Labor Force participation graph-- both of which i addressed.

    ----

    allow me to summarize all the relevant points of our argument now.

    1. QE/stimulus are inflationary. i first posted this:

    Attachment 33067

    then when you stated that it didn't account for food and fuel, i explained why economists don't include the two...but then also posted the graph earlier demonstrating how the index correlates strongly EITHER WAY.

    2. US borrowing will lead to unsustainable debt loads and interest rate increases. the CBO report (http://www.worldaffairsboard.com/ame...tml#post915790).

    US bond rates.

    Attachment 33065

    3. US unemployment has not declined and thus QE/stimulus has failed.

    Attachment 33066

    4. the US government is increasing both as a percentage of GDP and number of personnel.

    which i address here:

    http://www.worldaffairsboard.com/ame...tml#post913540

    if you have any other points you wish to address, i'll be more than happy to answer them. meanwhile i'll leave it to the rest of WAB to determine who has been backing up points with data and who has been relying on faith...
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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    Of-course people don't need to eat nor do we use any energy. All that oil, gas, and electricity prices are not necessary to live. How do you hedonically adjust a joule of energy, I rest my case it don't count.

    Yep and fruits and vegetables didn't go up in price 20%+ year on year. We can all eat gruel see no inflation there hedonically adjusting gruel for fruits and vegetables, and when gruel gets too expensive we can eat cardboard.

    Employment is exploding or is it imploding, who cares we can simply take the que from our Chinese friends and put up numbers first and then substantiate them by government releases later. Ipso facto instant growth, no need for industrial production or anything we got people who can magically create it via an excel spreadsheet.

    We are dangerously close to the 'gulp' moment. This is it in Turkey,
    Turkish Yields Surge Most on Record as Protests Hit Lira, Stocks - Bloomberg

    The yield on benchmark two-year lira bonds rose 71 basis points to 6.78 percent, the biggest jump since at least April 2005 when Bloomberg began compiling the data. The benchmark stock index plunged 10 percent, the most in a decade, and the lira weakened for a fifth day, sliding 0.8 percent to 1.8903 per dollar at 5:30 p.m. in Istanbul, a 17-month low.

    Clashes in Istanbul began May 31 and continued late yesterday in Ankara and Istanbul as protesters took to the streets calling for Erdogan, who has led the country since 2003, to resign. The unrest was ignited by police tear-gassing a park in Istanbul occupied by people who opposed plans to tear it down for a government redevelopment project. By June 1, tens of thousands had poured into the central Taksim Square, which demonstrators have now barricaded to keep police forces out.
    All those people don't give a sh#t about markets. What they do know is the spike in food prices vis a vis those bond yields and forex impact is very very real. What they also know is that it has been going on for some time and the government printed inflation numbers were imaginary for quiet a few years.
    The problem is when that spike in yields persists for a few days and you have refinancing needs that the sovereign can now meet with ever struggling currents of cash flow. You get this spiraling purchasing power collapse and deflation that is out of control. Ergo banks loose collateral since those assets get to be prices at crap levels while people loose purchasing power since cash flow in the economy is short circuited. Working capital is consumed (at greater rates than it is replaced) and you have this wonderful implosion we have seen so many times before. You think it can't happen here?

    Unemployment numbers take out the people who fall off the rolls. Ergo if you stopped receiving your unemployment check and may not be counted anymore.
    http://www.zerohedge.com/news/record...-rate-tumbles-(last year)
    http://www.csmonitor.com/Business/Pa...ployment-rolls


    As the rolls go down they stop counting them as unemployed ipso facto improvement in the rate. Awesome!!!
    Last edited by cyppok; 03 Jun 13, at 18:48.
    Originally from Sochi, Russia.

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    cyppok,

    Of-course people don't need to eat nor do we use any energy. All that oil, gas, and electricity prices are not necessary to live. How do you hedonically adjust a joule of energy, I rest my case it don't count.

    Yep and fruits and vegetables didn't go up in price 20%+ year on year. We can all eat gruel see no inflation there hedonically adjusting gruel for fruits and vegetables, and when gruel gets too expensive we can eat cardboard.
    having difficulty interpreting that graph above? or maybe it's just government propaganda?

    the last refuge for those who can't argue with data. "must be a conspiracy!"

    We are dangerously close to the 'gulp' moment. This is it in Turkey,
    Turkish Yields Surge Most on Record as Protests Hit Lira, Stocks - Bloomberg
    i assume you've taken out all your investments in cash, or better yet, have you turned them all into gold?

    turkey is experiencing considerably political upheaval due to the rather authoritarian islamist government there, this is not exactly a purely economic issue.

    let's put it this way. if we're so dangerously close to the 'gulp' movement, how would you like to take up that butter cookie bet that i offered to snapper? i'll give you a box of butter cookies if the US goes into a double dip recession in what, six months or a year's time.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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    Quote Originally Posted by astralis View Post
    snapper, as you're addressing both of us now.
    Well actually I was hoping to reply to previous comments first but it seems your lucidity or should it be loquacity forbids that. Already you ahead of me again!

    Quote Originally Posted by astralis View Post
    i have addressed this point two times now. here's the third.

    Attachment 33064
    As have I addressed the point you try to make by this graph that distorts truths 'on the ground' as it were. Tell me honestly if you have experienced no inflation since QE started? At least David is honest but you are rapidly descending into an apologist for economic tyranny. So what graph or statistic could I show you that you would accept? I give you some choices:

    Big Mac Index Shows Official CPI Underreports Inflation - Forbes
    Alternate Inflation Charts

    though I know that because you believe the sun is shining on Titanic it cannot sink.

    Quote Originally Posted by astralis View Post
    this is not the same. everyone recognizes QE is an extraordinary measure. once unemployment hits a certain level, then those extraordinary measures no longer need to be used. that's not the same as recovery.
    Very well. I can understand that but it begs some questions: What is 'recovery'? and if Bernanke is helping you get there with QE why would he want to stop?

    Quote Originally Posted by astralis View Post
    this is purposefully misconstruing my remarks. the TREND LINE is down and i -BELIEVE- that it will fall back to pre-TARP levels in the near future. i'm not saying that it HAS done so.
    So let me get this for real... cos quite honestly your understanding of trading and markets is amazing to me on this! You are telling me that gold prices will fall to $800 per ounce? Yes/No? If you believe this I dare you to make a put option on the $800 tag. Go for it! For $50 you stand to make $1000s IF you are correct. Show me your put... Put your money where mouth is or else stop advising those of us who DO have positions and some experience on the markets. We actually stand to win or lose from this madness. David has admitted he does not trade and is an armchair theorist as it were and there is nothing wrong in that. Will you dare to invest in your opinions? I would recommend you take professional advice before making a $800 put on gold... I would certainly advise against it as a non professional. You're better of shorting the DOW and S+P at present if they rally. I DO trade on my own account and have an input on my families positions. Naturally both I and my family take professional advice. I have never seen or heard of ANY professional investment advisor or indeed any investor that believes gold will drop to circa $800... It would break every mining company in the world and the price would rocket long before the $800 mark was reached as miners went broke at around $1100. We are nearing bottom on the gold market. There is a growing discrepancy between EFTs - paper futures - and real physical. The COMEX and LBMA markets cannot win the long term battle between those who hold the real metal and those who have promised investors to supply them; we's not selling. Paper is worthless in a metal market - particularly in the gold and silver markets on a bearish market. Yes I do believe there's a further sell off of paper GLD and EFT's to come - they haven't cleared their books yet to make up the divergence but $8000... not a hope in hell. Still interesting to see you actually make a market prediction and that I encourage! Perhaps you would care to tell us more of these predictions such as when QE can be ended or when real wages will start to rise?


    Quote Originally Posted by astralis View Post
    nonsensical. your entire point is that TARP and Fed action is inflationary. gold is supposed to be an inflationary safe haven. so now that gold is declining, what have you to say about inflationary prospects? other than it's all a massive conspiracy.
    Gold relative to $ since TARP is a massive win and as Bernanke can NEVER turn off the taps that he has foolishly opened gold will continue to be the best safety for those who do not wish to be 'ruled' economically and otherwise. Seems though people like yourself have forgotten the words of the founders of your Independence and while claiming to be 'liberal' wish to inflict poverty on the ordinary person whose wages you admit are not rising in line with even reported inflation let alone real inflation which you chose to ignore. Some 'saviour of the people' you are. The fact is that if you truly wish to help the ordinary person we have to restore the free market and break this 'crony capitalist' system and the warmongers and Government Agencies (which are their own lobby groups) that go with them. I know this is hard - to give long held preconceptions always is but the truth is that wages are well behind real inflation and far from helping the ordinary person Bernanke and Obama are helping the institutions. I would implore you on my knees to understand this if I were in the same room as you for it means not only the only possible rescue of your nation but of your economic freedom. Sooner or later, unless you are extremely fortunate, your bank account will be 'bailed in' as will any pension accomodation you may have made, any '401' is likely to be first to be 'nationalised' meaning they steal your contribution and promise to pay it later - if they're not already bankrupt which by most terms every country in the 'west' already is. I am not saying this to simply disagree with you but because I honestly believe it and would not wish you to suffer; I do actually care about normal people and NOT "aggregate demand" whatever the hell that really means to real people.

    Allow me give more sources:

    http://www.telegraph.co.uk/finance/e...and-China.html
    http://www.bbc.co.uk/news/business-22653937

    The 'liberal' BBC's own economics reporter speaks of a 'currency war' that you deny the existence of... No cookies? How about the looming trade war between the EU and China; http://www.ft.com/cms/s/0/7f9f608e-c...#axzz2VD3LLA2X

    Quote Originally Posted by astralis View Post
    i submit that it is YOUR belief in Ayn Rand libertarianism that borders on faith. i've backed up my theories with data. the overwhelming economic evidence, both theoretical and practical, favor my point of view. i've asked repeatedly for data from you that proves your point of view, and you've failed to provide any. other than using the Big Mac index once, and the Labor Force participation graph-- both of which i addressed.
    I find it strange that David accepts that QE enriches the banks but you don't. So let me ask you this: Suppose the US stock market crashes (which the third Hindenburg omen this year suggests but forgive me... see;Morning MoneyBeat: Hindenburg Omen Rears Ugly Head - MoneyBeat - WSJ as I understand you don't trade) and banks 'profits' from the inflated get wiped, house prices fall etc.. what is proposed solution? Same question I basically put to David. I am genuinely interested to hear your proposed solutions when the current bubbles burst as the 'hindenburg omens' this year suggest.
    Last edited by snapper; 04 Jun 13, at 03:11.

  13. #73
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    snapper,

    What part of the US CPI calculation do you think doesn’t include food or fuel? Are you mistaking CPI for what is called “core inflation”? It’s an easy mistake, because the news media picked up on it without bothering to either understand it or explain it – and the difference between that and CPI – to the masses.

    CPI includes food and fuel, OK? It was never meant to be a complete picture of anything, not even prices changes (for that, use the GDP deflator). All it is intended to be is a very useful measure of one aspect of the consumer economy.

    And, it has zero to do with how hard the ‘average person’ is finding life. That’s a job for priests, psychoanalysts and social workers, not statisticians.

    And, that’s no lie.

    .

    Bernanke’s unemployment target is a macroeconomic indicator at a certain level. It isn’t a date, and there are a myriad of things that might happen between then and now to make it less than ideal as an indicator as to when the Fed MIGHT start THINKING ABOUT tightening the money supply.

    I’m curious why you equate a stock market crash with banks being threatened. After all, hasn’t there been a major effort to restrict their trading on their own accounts?

    Did taxpayers have to pay for the Great Depression – which was much deeper and (at least so far) much longer than what we’re in – for 50-100 years? I didn’t think so.

    .

    Yeah, guilty as charged. Us LIBERALS (no quotation marks needed; we’re proud of the label) care about helping the average guy almost as much as we care about helping the folks below the average level. You nailed that one.

    But, what part of keeping the financial system from imploding do you think is against the interests of the average / below average person?

    Did you want some kind of TARP for small businesses? Frankly, I don’t think that would be appropriate, certainly not when there was such a dangerous threat to the global economy hanging over our heads. Wouldn’t make sense, would it?

    .

    Food prices. After falling year-on-year for six straight months, CPI-Food rose an average of 2.4% p.a. in March 2010 – April 2013. That period of food deflation, by the way, was the first since a single-month fall in April 1967, the first multi-month fall since November 1961-January 1962 and the longest fall since 1959-60 (13 months).
    See for yourself: []Download Data - Consumer Price Index for All Urban Consumers: Food (CPIUFDNS) - FRED - St. Louis Fed


    = = = = =

    cyppok,

    Unlike broader food prices, the CPI-Fruits and vegetables fell for 21 out of the past 48 months, again, year-on-year. The average rise over the past four years is +0.54% p.a.
    See for yourself: []Download Data - Consumer Price Index for All Urban Consumers: Fruits and vegetables (CUSR0000SAF113) - FRED - St. Louis Fed

  14. #74
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    David Sir would you care to answer question re the Hindenburg Omen that predicts a stock market collapse within 40 days (well 36 now) and how the US and other 'authorities' should respond should the omen be correct?

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    snapper,

    As have I addressed the point you try to make by this graph that distorts truths 'on the ground' as it were. Tell me honestly if you have experienced no inflation since QE started? At least David is honest but you are rapidly descending into an apologist for economic tyranny. So what graph or statistic could I show you that you would accept? I give you some choices:
    unless you're saying that Fed data which ALL economists use is "distorted", i fail to see your argument here. you seek to substitute personal claims for hard data. you use the "big mac" index, which was used by the Economist as a tongue in cheek way of measuring inflation, and not as a serious economic tool. then you give me yet another blog.

    i would be happy to be proven wrong, if you could, with serious data.

    and if Bernanke is helping you get there with QE why would he want to stop?
    because everyone realizes there is a potential downside to using extraordinary measures. once you get past an extraordinary situation, then extraordinary measures are no longer needed.

    So let me get this for real... cos quite honestly your understanding of trading and markets is amazing to me on this! You are telling me that gold prices will fall to $800 per ounce? Yes/No? If you believe this I dare you to make a put option on the $800 tag. Go for it!
    i believe there is a high likelihood that gold will fall to approx $900-1000/oz within a year or two, where it was around 2008.

    i'm more than willing to make a butter cookie bet on this. i don't trade commodities as a general rule, nor do i trade stocks, nor do i do short-term trades. i'm a boglehead, which means i put all my investment money into low-cost index ETFs and adjust on a yearly basis.

    Allow me give more sources:
    ugh, quickly browsing through your BBC article (which doesn't count as data...it counts as an opinion piece by one BBC editorialist...know the difference).

    "But the bottom line - for now - is that the world has decided to agree with the Fed chairman Ben Bernanke that the super-loose monetary policies being followed by Japan, the US, the UK and the rest are not zero sum "beggar-thy-neighbour" policies but "enrich-thy-neighbour" policies which, if successful, will leave everyone better off."

    you argue through insinuation and claims and lack of evidence. why is it that you accuse ME of "long held preconceptions" when it is ME that is showing you the data and YOU that's arguing it's all a conspiracy? note that i'm not responding to any of your theatrics, i am only responding to questions and claims that can be answered by data.

    just as i spare YOU from lectures as to why you want to keep people unemployed and starving with your inflation harping, please spare me from the continual haranguing and stick to a quantitative argument. thanks.

    I find it strange that David accepts that QE enriches the banks but you don't.
    once again, MORE insinuation. i never said QE doesn't "enrich the banks". of course it does. but it also kept them from imploding, which is more important still.

    I am genuinely interested to hear your proposed solutions when the current bubbles burst as the 'hindenburg omens' this year suggest.
    note that the hindenburg omen, which is at most a GUESS against a volatile market, applies only to the stock market and not to the broader economy.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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