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654 Advisors, LLC

 
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  • Gold's Sell-Off A Bad Omen For Equity Markets [View article]
    A competing explanation is that the gold-price run-up was based on widespread but erroneous assumptions about the effects of QE. (See Marshall Gittler's recent articles at CNBC, for example, or almost any post-Keynesian treatment of recent years.)

    http://bit.ly/18ntv21

    If so, then it doesn't *necessarily* imply that equities must follow gold down. Of course, it doesn't mean it won't happen either. Although several equity markets may be a bit stretched at the moment, you can find solid cases for both bullish and bearish intermediate-to-longer... views today.
    May 24 08:00 AM | 1 Like Like |Link to Comment
  • Forecasting The S&P 500's Returns [View article]
    Like the article, but a question about your takeaway. How concerned are you about the current valuations on those high-quality dividend payers?
    May 1 06:02 PM | Likes Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    hoop: "What if its a mistake for the Fed to ever contemplate an exit strategy? What if all these years of trying to manage by easing and tightening has been a mistake, and it has been that policy that has contributed to the rise and fall in asset prices? And if so, if BB still thinks he has to do this the same way Obama and Boehner (hows that for balanced) think they need to balance the budget, is there a way to anticipate such a mistake and position yourself to avoid the damage?"

    If you're concerned about the Fed's need to manage its balance sheet, look up 'interest-rate corridor'. It already has IOER in place. The balance sheet's size becomes irrelevant under that approach.

    Re asset prices, I think fiscal policy is the more important lever, and it is now tightening noticeably, offset by improving employment, private sector credit, housing, etc. The former (USG running deficits) is not as constrained as most politicians and economists think, while the latter (private-sector credit growth) is more constrained than they seem to think. But the party can last for awhile.
    Mar 17 08:17 AM | 1 Like Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    Mark: "Just a note on gold supply - under gold standard. Historical gold increases on annual basis averaged just over 1%/year. That was approximately equal to population growth."

    If we look at wholesale price indices, the rate of increase tended to be insufficient (i.e., deflationary) at times, especially during the classical period of 1873-1896; which makes sense, given that the world gold bloc expanded dramatically, but at the preexisting nominal parity between gold and GBP. (Any country that didn't lower its exchange rate in advance was asking for trouble.) That 30-year deflation, known as the Long Depression, was ended abruptly, along with the U.S. bimetallist movement that culminated in WJ Bryan's Cross of Gold speech, by massive gold discoveries in South Africa, coupled with new production technologies.

    You can see the movement of wholesale prices in Jastram's Golden Constant, available here (see charts in between pp 37-38): http://bit.ly/131aMKz
    Mar 17 08:07 AM | 1 Like Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    TVP: "So if the supply of gold doubles what do you believe happens to its value?"

    OK, we're getting somewhere, ignoring the jackassedness of your "religious" assertion. A couple of follow ups:

    Were *all* additions to the stock of monetary gold inflationary during the classical gold standard or not? If not, what was the optimal rate of growth of the existing stock?

    And if govt deficits and non-normal Fed operations are the analogue today to 19th century gold-stock additions, should the USG be balancing or running deficits or surpluses of USD liabilities?
    Mar 17 07:39 AM | 1 Like Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    Ray: "Clinton was good for the budget, as he got a brief surplus."

    The Clinton years were an utter nightmare for fiscal policy. Those "surpluses," by definition, meant less savings and more leverage in the private sector and for state and local govts. And all meaningful periods of budget balance or surplus in the U.S. have been followed by recession or depression. (Sample size may be too small for statistical significance, but the observation is probably not a coincidence.)
    Mar 6 11:48 AM | 2 Likes Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    TVP: "The only constraint to printing dollars is the massive poverty it will eventually lead to. "

    If you believe this, then to be logically consistent, you must also believe that mining (adding to the stock of precious metals) under a precious metals standard also led to impoverishment. Do you?
    Mar 6 11:39 AM | Likes Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    TVP to LK: "Sometimes you are just dense."

    Far from it. Why don't you just wave the white flag already? The man is dancing circles around you.
    Mar 6 11:30 AM | 3 Likes Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    @Ray: "MMT is "Austrian economic""

    Huh?!?!?

    MMT is just one branch of post-Keynesianism. Other schools may be more advanced in their theoretical development. Bottom line in my view is that unless you know how (and why) monetary systems have worked (and not worked) over history, whether precious metal/fiat, fixed/floating, convertible/inconverti... etc, it's hard to make solidly grounded assessments of the roles and implications of sovereign govt deficits and debt. Just my two cents.

    @Cynic, I agree MMT could be 'risky' in practice as in raising inflation risk, but most of its proponents are fully aware of that. What politicians would do with it remains to be seen (and their embracing it is very low probability), but most people don't vote for inflation, imo. Personally I'd like to see less risk of chronic underemployment and underinvestment and less emphasis on non-govt credit creation to spur nominal growth, which is what our current theoretical and policy frameworks tend to get us. But that's just me.
    Feb 28 10:21 AM | 1 Like Like |Link to Comment
  • The Debt Paradox That Everyone Should Be Aware Of [View article]
    "The diagram highlights the problem with excluding Trust Fund borrowing from reported debt."

    The problem with the diagram is that it doesn't touch on the source(s) of Private Savers' "savings." Until you close that loop, you're going to misunderstand the role of govt deficits and debt in our current system and needlessly pull your hair out. Suggest you Google "7DIF". (Sorry, pasting the link isn't working.)
    Feb 27 07:07 PM | Likes Like |Link to Comment
  • China And Gold: A Puzzling Anomaly [View article]
    TonyP4: "The following is an abstract of my new book "A Nation of No Losers...The following events may prevent a secular bull market starting in 2015 and postpone it to 2020:
    ...
    6. Huge budget deficit.
    If we continue to spend like no tomorrow and we cannot raise enough taxes, we cannot balance the budget..."

    ===

    You might want to rethink that one before running to the publisher, e.g.:

    How many times in its history has the USG run balanced budgets or surpluses? How many of those were followed by recession or depression?

    Given that the USG is the monopoly supplier of net USD financial assets, budget deficits are analogous to gold mine output under a gold standard. What would have happened under a gold standard if gold mines had run 'balanced' or 'surplus budgets' of gold?
    Dec 1 10:42 AM | Likes Like |Link to Comment
  • Monetary Policy Vs. Fiscal Policy And The Fed's Losing Battle [View article]
    muoio: "I for one am for the cliff and a return to fiscal sanity."

    Which means if this were the 19th century, you would argue for ending or severely curtailing gold mining (which would have made the Long Depression of 1873-1896 even worse than it was, and probably elevated WJ Bryan to the presidency...or worse).

    When a sovereign issuer is the monopoly supplier of net financial assets, "fiscal sanity" means almost the complete opposite of what it does for households and businesses. Please (you and many millions of others under the spell of Pete Peterson and all those worthless Clinton retreads) get your head around this.
    Nov 15 12:18 PM | 2 Likes Like |Link to Comment
  • Unemployment In Spain May Reach 33% In 2013 [View article]
    Someone should tell Jens Weidmann and the other circa-1932 francophiles at the Buba...
    Oct 14 12:57 PM | Likes Like |Link to Comment
  • Paul Ryan: Not Qualified to Chair the House Budget Committee [View article]
    bsorge: "Young man you are obviously not a student of history. Germany after WW1 tried to print money endlessly until it became worthless. This in turn led to a severe depression which finally gave rise to Hitler."

    Weimar hyperinflation was the proximate cause of National Socialism and WW2??? That's highly debatable.

    The Weimar inflation, as bad as it was, was relatively short lived. It was a high-probability risk given a world of fixed-exchange rates, WWI reparations, the loss of a significant portion of its industrial base, and (reportedly, I haven't studied this first hand) govt subsidies to striking expatriated German workers.

    But the primary causes of Hitler and WW2, at least in Europe, were the draconian conditions imposed on post-WW1 Germany combined with periodic but severe mismanagement of the global monetary system, especially the Bank of France's (and to a lesser extent, the Fed's) concerted move c. 1931-32 back onto the gold standard at 1914 parity.

    The irony is that Germany's current finance ministers and central bankers believe the more serious risk is Weimar-like inflation, and as a result they unwittingly urge the eurozone to behave like France did in 1932. Apparently Germans have forgotten how that ended for France...
    Oct 13 11:14 AM | 2 Likes Like |Link to Comment
  • Paul Ryan: Not Qualified to Chair the House Budget Committee [View article]
    ltsgt1: "That is true only if the dollar is not the global reserve currency. The dollar cannot be "printed safely" if other exporting nation feel unfairly cheated by the debased value of dollar."

    You are assuming that the U.S. is a small, open economy, when nothing could be further from the truth. OPEC (read Saudi Arabia, at least up to a recent or near-future point) is the only external institution with any power on this count, and:

    (1) that power is subject to all kinds of social, political, and possibly resource constraints (e.g., peak oil);
    (2) we have the world's supreme naval and military forces;
    (3) we are producing far more energy domestically than in years past.

    Fact is, other nations want to sell us stuff, and when they want to put the USDs they receive into a safe interest-bearing 'account,' they will be buying US Treasurys.

    Could this eventually change? Of course. But we'll be long dead, and in the meantime, there are many millions of people unemployed and countless real resources underutilized in the U.S.

    The 'reduce deficits' mentality gets the natural and obvious priorities exactly backwards. (Many of the people and organizations pushing it know better, but institutional momentum and public pandering are funny like that...)
    Oct 13 11:02 AM | 2 Likes Like |Link to Comment
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