Economy, Banks, Gold, and other stuff.

[astralis]

priorities. deal with the heart attack first, then the cancer.

especially if the anti-cancer drug will worsen the heart attack.

[snapper]

you'll need to show me where i 'declined to answer'. first, you need to tell me which of the policies you're questioning, fiscal or monetary. either way, though, neither of them will cause bubbles because we are in a liquidity trap.

Your whole analysis of the US economy post 2008, in my view, depends on refuting that the collapse of 2008 was the collapse a bubble (which to my mind is impossible) AND denying that current US economic policy, fiscal and monetary, will not cause new bubbles. Unless you can plausibly deny either or both the US is headed for more of 2008 and therefore the policy practiced post 2008 is counter productive and not 'efficient' in the medium to long term.

this is incorrect. of course there was a bubble...there is proof, or there is no proof. austrians have been predicting another implosion since roughly 2009. the extreme test you speak of has already occurred-- it's called the worst economic recession since the Great Depression.

Are new bubbles being created? Does the Feds printing (well not even that - it's magic money pc) of $85bn per month in bond buying and mortgage guarantees have no effect? Presumably it does or they wouldn't be doing it right? Does it distort the market - create more bubbles? Do you really believe that a nation with a $1bn + deficit per year can borrow at negative real interest rates in normal circumstances? If not is not QE keeping the bond market surpressed... creating a bond bubble? How long do you think that can last?

priorities. deal with the heart attack first, then the cancer. especially if the anti-cancer drug will worsen the heart attack.

You are proscribing the same medicine that caused the cancer.

all of this amounts to saying "NONE OF THE DATA AGREES WITH ME, THUS THE DATA MUST BE WRONG AND MANIPULATED".

ie, every time you've made an assertion i've given you multiple proofs otherwise, and your response is to ignore it. or throw in questionable sources. (seriously, using Seeking Alpha-- a stock investment blog-- as your source?)

I discount data that is manipulated and doesn't provide any insight into how real people how are coping. Your obsession with economics as some form of number theory has no relevance to the real world and the US Government is using calculations that no other country uses... This should say something - even to you! I am of course myself more concerned from a trading point of view; I stand to make or lose real money in what's going on being an investor - as in fact do you if you did but realise it.

and now the full descent into conspiracy theory. NOW we're truly done.

Well if you want to know why it was done I'll tell you... The paper GLD markets, the COMEX, LME etc, have paper iou's worth 100 times the amount of real gold there is in the world. Some of the customers were even being 'rent' for the gold they thought they owned in this dubious trading scheme. They started asking for their gold when prices rose... Well surprise surprise it wasn't there! So these companies would potentially have to pay out in cash at the then current gold price of $1775 per oz or whatever it was... Ouch. So they shorted the paper market to depress the price and make it less expensive for themselves. The video I linked explains it but you probably don't want to see that.

For me it's all good... I bought on the low and demand for real gold is now backed up.

1. from a personal economic standpoint, good but incomplete. given stagnation of middle-class wages, elimination of defined pensions/benefits after retirement, and the uncertainty around SS, the average person must have a basic understanding of financial investing and economics to earn a decent return on what they have saved. the shift from defined pension to 401K and IRAs mandates this.

The 'average person' has no idea what on earth you are talking about. All he/she understands is that his/her bank is giving them next to no interest on their savings so he may as well buy something with whatever he has, which is precisely what you want no? It's also precisely the sort of thing that causes bubbles.

[astralis]

BF...i should have listened to you earlier.

[snapper]

BF...i should have listened to you earlier.

So you resort to ad hominem...

Look I respect your opinion, though I disagree with alot you say. I have tried, as best I can, to answer all the questions you have asked me explaining my view of the economic situation. I simply ask you this question: Bearing in mind QE of $85bn per month and (in my opinion) artificially low interest rates is this likely to cause, or have caused, more bubbles of the sort you agree caused the 2008 crash? For example do you think the bond yield is artificially suppressed by the Fed's buying? Lack of liquidity (paper money) and the artificially low interest rates between 2001 - 2007 to cure this perceived problem is exactly what caused the 2008 crash in my view.

I respect your right not to answer this if you chose not to - it doesn't bother me at all - I merely want you recognise for yourself that the medicine is the same as Greenspan post 2000.

I am not trying to be personal, as you sadly seem to have resorted to, just asking a question that you have no obligation to answer.

[USSWisconsin]

I believe he is referring to BigFella (BF)

[snapper]

Yes I am aware... BigFella who does nothing but ad hominem. See his previous posts in this thread and Cyprus thread etc...

[Bigfella]

BF...i should have listened to you earlier.

Told ya. She can keep doing this for longer than you without ever having to exit the bubble. I'll jump back in at some point (perhaps soon) when the mood takes me. I suggest you recharge your batteries for a while. There will be more tha nenough to tackle when you are ready again.

Yes I am aware... BigFella who does nothing but ad hominem. See his previous posts in this thread and Cyprus thread etc...

I make fun of you Snapper because it is the only rational way to deal with what you post. Occasionally I practice my debating skills by arguing a point here or there, but I have zero belief that you have any interest in debate. Your posts - great slabs of stream of consciousness really - exist in a perfectly constructed closed logical loop fuelled by websites that agree with your conclusions & an ideology as impenetrable as any doctrinaire Marxist. I've met a few. The similarities are scary.

Worse, you insist on using your 'insights' to produce prediction after incorrect prediction. When you get them wrong you magically forget, when you get an occasional one right you are a 'Cassandra' (forgetting that she was always right & always ignored. You are only getting part 2 correct). Speaking of which, how is that 'Italexit' looking? Remember the 'Grexit' & those Drachma you told us had been printed (I'm betting you are still treating that same source as credible). Remember when Cyprus was going to leave? Hyperinflation anyone? Care to pin down a date for Italy? I'll take a quarter in a particular year if you want. I notice that when astralis tried to pin you down you just sidestepped....again. At least if you limited yourself simply to economic discussions you might not look so foolish.

Jump up and down about the way I address you all you want, the fact that well informed people continue to take you seriously says volumes about how polite & patient they are If you insist on making the sort of statements you do you simply can't get self-righteous about people poking fun or getting frustrated. Having watched you repeatedly pretend on this thread that DOR is the one introducing a moralizing tone to economic discussions - you do know that I've been reading your economic sermons for years, don't you? - I'm more convinced than ever that my approach is by far the most sensible. Astralis & DOR have my utmost respect for persisting, but I suspect that like Tarek before them they will eventually tire of butting their heads against a brick wall & retire. I simply make occasional forays to point out yet more absurdities before retiring to watch as the show continues. As you seem compelled to share both your insights & predictions I assume it will.

[dalem]

Yes I am aware... BigFella who does nothing but ad hominem. See his previous posts in this thread and Cyprus thread etc...

But he does it with such a cute smile.

-dale

[snapper]

BigFella, they are not my insights but well noticed and publicly aired views of senior journalists and economists - that may happen to disagree with your analysis (of which I know nothing since you never offer one). Perhaps all the articles of Grexit and Brixit etc passed you by? The imbalances haven't gone away with the Draghi 'put'. I admit I view these things mostly through trading eyes and I am aware of the tyranny that can be created by manipulation of a currency. From today's zerohedge I find this: Europe Has Become A Totalitarian State | Zero Hedge I believe it to be about right... that is my opinion.

If you have some analysis of your own to contribute - something to say about the topic and not the person - pls do. If not get under a bridge.

[Bigfella]

You really think it is prudent that we continue down the deficit path?

No. By all means point out where I suggest we do. I think we should bring the deficit under control - but not in one budget. Slash & burn isn't a good idea.

We have watched other be consumed by their debt and you advocate that we follow their path?

Got a quote there GB? Where do I advocate that. If you want to have a discussion have at it. if you want to accuse me of something bring proof.

I said "That doesn't mean there aren't areas we can & should cut back in." I also suggest that we can cut back on deficits by increasing taxes from the low overall rate at which they sit. The tax take now is lower as a % of GDP than it was under Howard, though you wouldn't know it from the hysteria. People always remember a rise, never remember a cut. At no point do I suggest we keep running deficits indefinitely.

Now, you have once more dragged up tired comparisons with Europe. Debt levels in the economies there that are in trouble run from 100% of GDP to over 150%. If you skip to the bottom of this typically sensationalist Murdoch Press story on debt you will find that government debt in Australia is.....wait for it.....11% of GDP. Yep. The 'crisis' mentality is based on one of the lowest debt to GDP ratios in the OECD. It is one third that of Canada - not exactly a nation toppling on the brink of ruin. We've added about $20 bill to govt debt in the last 12 months. Assuming we keep going at that level it would take about 16 years for us to get to where Canada is now. It would take over 60 years to get us to the fabled European debt levels. Getting to 'Greece', a comparison trotted out occasionally by Liberal Party hacks & fellow travellers, would take closer to a century.

That 'path' is so long that few people I know would even be around to see us reach it - and that assumes we don't change anything.

Julia Gillard to leave Australians in $165 billion dollars worth of debt this term alone | News.com.au

As I indicated (and you apparently missed) I favour cutting the deficit. I just don't see a single means of doing it. As I also indicated in this post, I favour a grownup discussion about taxation & debt. Sadly we are about as far from that as can be imagined right now.

[Bigfella]

BigFella, they are not my insights but well noticed and publicly aired views of senior journalists and economists - that may happen to disagree with your analysis (of which I know nothing since you never offer one). Perhaps all the articles of Grexit and Brixit etc passed you by? The imbalances haven't gone away with the Draghi 'put'. I admit I view these things mostly through trading eyes and I am aware of the tyranny that can be created by manipulation of a currency. From today's zerohedge I find this: Europe Has Become A Totalitarian State | Zero Hedge I believe it to be about right... that is my opinion.

If you have some analysis of your own to contribute - something to say about the topic and not the person - pls do. If not get under a bridge.

Snapper,

If you put it in quotes it belongs to somebody else. If you don't you own it. Simply posting a link to 'zero hedge' every time you want to prove a point says nothing more than that you read that which tells you what you want to hear. Want to predict a 'Grexit', 'Brixit', Cyexit' or 'Italexit', put a time frame on it. Allow us to judge the quality of your predictive powers & that of the sources you rely on with some clearly defined points of failure. Astralis tried to pin you down & once again you dodged. Simply making vague predictions of doom on the never never is as insulting to the intelligence of people here as anything I have said to you. So is claiming a conspiracy whenever the data doesn't suit your conclusions. Undermines your moral high ground too. It remains a matter of fascination to me that a person who deals with global markets at a high level for a living comes here regularly to be lectured by you on why he doesn't understand global markets....and remains polite about it.

As for me, I do have analysis to offer - on the quality of your predictions & some of your statements. So far I'm doing better than they are, and I take full responsibility for what I post rather than blaming others or acting like I didn't say it. I don't plan to plan to step onto your chosen turf. Others with better qualifications have already done so & have repeatedly given up trying. I don't plan to follow their fate. I'm sorry if that frustrates you. Now you know how some of us feel reading what you post. The way I deal with that is to point out just a few of the absurdities contained therein.....and laugh. I laugh quite a bit. I suspect that upsets you even more. :)

[DOR]

snapper,

The average person isn’t a Wabbit; the standards are higher here (thank the diety or lack thereof of your choice).

. . . . .

Might the current policy cause more bubbles? Sure.

But, that’s not the right question, since we’re suffering from a massive shortfall in demand and confidence. The right question is, Are we doing the right things, fast enough and with enough firepower, to head off the collapse of the global financial system, the world economy and civilization as we know it?


That was the question asked in September 2008, when the folks in charge finally realized that things were going down the gurgler faster and further than anyone had seen in 80+ years. That’s the question that was addressed with the most extraordinary explosion of liquidity in the US, and the most bizarre commitment to austerity (in Europe) seen in about the same timeframe.

That is still the question, and it will be until we put a firm floor under both demand and confidence, go through the rough times, come out the other side, settle into something resembling normality and then go through yet another "typical" recession and come out the other side without the wheels falling off.

Give it 10-15 years.
For an example of getting it wrong by giving up too soon, see 1937-39.

. . . . .

Don’t confuse cause and effect. A stunning loss of confidence – fear beats greed to a pulp – leads to a dramatic loss of liquidity. The lack of liquidity in certain specific financial instruments may cause a highly focused loss of confidence, but it is the escalation of fear over greed that drives that smallish and likely temporary loss of liquidity into a full blown crisis.

Hence, deal with the liquidity and you’ll be on the road to dealing with the confidence. And, since we have all the tools to deal with inflation if it gets out of hand – and don’t have such tools for dealing with deflation – there is every reason to err on the side of surplus liquidity, rather than risking an economy dying of thirst.

. . . . .

Economics is not math, but is informed by math. Understanding production, distribution and consumption without math is closer to biology than economics.

As with all math, GIGO. But, complaining about the results of a mathematical equation without dissecting which formula or data point is the problem isn’t helpful.

For you, “inflation should say something about how hard, or easy, it is for the man on the street and as eating is always going to be one their most important expenses not counting any rises in food prices is refusing to acknowledge the truth for the average person.”

Great. Fine. No problem. But, it isn’t necessarily economics. It might be politics, famine, education policy, religion, war, disease or a dozen other things. But, you want the single aspect, the economics, to give you the answer that fits your view based on all the other things.

Sorry, no can do.

. . . . .

Yes, I have read the decision to adjust how GDP is calculated. The last time was in the late 1990s (1998, I think) when software was added . . . about 30-40 years after modern software was invented and at least 10 years after it became economically important. This one is long overdue, and I’m keenly interested in why it has taken so long.

Since the calculations will be adjusted back to 1929, you won’t “see GDP magically increase in July due to their new method.” However, plenty of folk with political axes to grind WILL try to make that ignorant point, and those who don't understand how economics works will be at danger of believing them.

Reminds me of shadowstats.

= = = = =

gunboat,

Yes.

See previous discussion for details.

= = = = =


dalem,

Long, long time.

“My other piece of advice, Copperfield,” said Mr. Micawber, you know. Annual income twenty pounds, annual expenditure nineteen six, results happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, results misery.”
--Charles Dickens, “David Copperfield”, 1850.

[snapper]

As for me, I do have analysis to offer - on the quality of your predictions & some of your statements. So far I'm doing better than they are, and I take full responsibility for what I post rather than blaming others or acting like I didn't say it.

Never seen a prediction from you. As for my predictions: The end of the euro. Well in a way it's already happened as capital controls are applied to Cyprus. The ECB has recently lowered interest rates I note but that doesn't transfer to Portugal et al... The Germans do not want lower interest rates and the PIGS do. The Franco - German relationship is slowly breaking down see; Germany accuses France of being 'Europe's biggest problem child' - Telegraph If I knew WHEN it will collapse completely I'd be a very wealthy Lady sometime. That is something we all have to guess.

Regarding the US (and partly UK) financial positions I simply do not believe that a problem in an economy can be solved by writing $85bn into a computer every month. It's not a 'new' view or an 'insight' of mine. Many economists doubt the wisdom of such a policy and there's a whole school of thought dating back to the 1880s that with research by professional and well known economists that says the same. But of course you're not interested in the debate or the topic. So my prediction on the $... it will fall when interest rates have to start rising to counter inflation or when the next lot of bubbles burst. But I don't suppose you were really interested in that were you? Continue with your graffiti if you wish.

Might the current policy cause more bubbles? Sure.

But, that’s not the right question, since we’re suffering from a massive shortfall in demand and confidence. The right question is, Are we doing the right things, fast enough and with enough firepower, to head off the collapse of the global financial system, the world economy and civilization as we know it?


That was the question asked in September 2008, when the folks in charge finally realized that things were going down the gurgler faster and further than anyone had seen in 80+ years. That’s the question that was addressed with the most extraordinary explosion of liquidity in the US, and the most bizarre commitment to austerity (in Europe) seen in about the same timeframe.

That is still the question, and it will be until we put a firm floor under both demand and confidence, go through the rough times, come out the other side, settle into something resembling normality and then go through yet another "typical" recession and come out the other side without the wheels falling off.

Give it 10-15 years.
For an example of getting it wrong by giving up too soon, see 1937-39.

Well to state the obvious 'Austrian' response; if we are causing more bubbles we are repeating the same mistakes that landed us where we are.

Don’t confuse cause and effect. A stunning loss of confidence – fear beats greed to a pulp – leads to a dramatic loss of liquidity. The lack of liquidity in certain specific financial instruments may cause a highly focused loss of confidence, but it is the escalation of fear over greed that drives that smallish and likely temporary loss of liquidity into a full blown crisis.

Hence, deal with the liquidity and you’ll be on the road to dealing with the confidence. And, since we have all the tools to deal with inflation if it gets out of hand – and don’t have such tools for dealing with deflation – there is every reason to err on the side of surplus liquidity, rather than risking an economy dying of thirst.

I understand that there is a lack of liquidity but judging from the recent record high in the US stock market and the latest job numbers (below) I can't see how much more QE, after 4 years of it, will help.



From: http://data.bls.gov/timeseries/LNS11300000

Economics is not math, but is informed by math. Understanding production, distribution and consumption without math is closer to biology than economics.

As with all math, GIGO. But, complaining about the results of a mathematical equation without dissecting which formula or data point is the problem isn’t helpful.

For you, “inflation should say something about how hard, or easy, it is for the man on the street and as eating is always going to be one their most important expenses not counting any rises in food prices is refusing to acknowledge the truth for the average person.”

Great. Fine. No problem. But, it isn’t necessarily economics. It might be politics, famine, education policy, religion, war, disease or a dozen other things. But, you want the single aspect, the economics, to give you the answer that fits your view based on all the other things.

Sorry, no can do.

This I find very difficult to understand... Economics is ALL about people in my view. It isn't stones or trees that spend money and you can't understand what is true for people as 'economic individuals' by treating them as a mathematical equation or a mere statistic. In Austrian terminology it's called 'praxeology'.

Yes, I have read the decision to adjust how GDP is calculated. The last time was in the late 1990s (1998, I think) when software was added . . . about 30-40 years after modern software was invented and at least 10 years after it became economically important. This one is long overdue, and I’m keenly interested in why it has taken so long.

Since the calculations will be adjusted back to 1929, you won’t “see GDP magically increase in July due to their new method.” However, plenty of folk with political axes to grind WILL try to make that ignorant point, and those who don't understand how economics works will be at danger of believing them.

Reminds me of shadowstats.

Perhaps it is the US that alone in the world (to my knowledge) adopting such a calculation that is 'out of kilter'? How can we compare US GDP to any other nations GDP? That's my real problem with this new system.

[DOR]

Well to state the obvious 'Austrian' response; if we are causing more bubbles we are repeating the same mistakes that landed us where we are.

There's a difference between suffering from the aftermath of an unintended bubble and pulling an economy, kicking and screaming, back from the brink of disaster.

Perhaps it is the US that alone in the world (to my knowledge) adopting such a calculation that is 'out of kilter'? How can we compare US GDP to any other nations GDP? That's my real problem with this new system.

Not so strange; the US usually leads the OECD in improvement of data methodologies. And, there aren't a whole heck of a lot of $15 trillion economies with which to compare.

[snapper]

There's a difference between suffering from the aftermath of an unintended bubble and pulling an economy, kicking and screaming, back from the brink of disaster.

It is clear that we differ on fundamentals; building more bubbles is NOT a solution in my view. Let us agree to differ and see what happens.

Not so strange; the US usually leads the OECD in improvement of data methodologies. And, there aren't a whole heck of a lot of $15 trillion economies with which to compare.

A calculation that includes pensions that MAY be payed - ie are NOT payed yet - is an expectation of money that may be made not what is being made. In my view it is wrong and misleading to count 'future earnings' as profit today is misleading to say the least, at worst it's false accounting. How future pension payments can be used as a calculation of GDP is quite beyond me... this is an 'improvement'?