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Neil_Anderson

 
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  • Tesla Will Become The Victim Of Its Own Success [View article]
    Huh?
    Aug 19 01:32 PM | Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To dgy

    Wow, it isn't often that some self-righteous bozo quotes me out of context and then stuffs their own ill-chosen words in my mouth.
    Gee, thanks.

    Let's take look at the "offensive" quote in full context:
    "BTW, the S.S. tax is not nearly as progressive as the Federal Income Tax, and when you consider that S.S. benefits are disportionately allocated to the long-lived, and the wealthy tend to out-live the poor, well, what you have is a regressive tax in which the poor are literally supporting the rich ..."

    Take a look at what you posted:
    << Your SS claim that "the poor literally supporting the rich" is one of the biggest exaggerations I've read here. >>

    I shouldn't have to point out that you contradict yourself in your next breath: << It's valid that the wealthy consume a higher share in retirement >>

    So, first you call it a horrible exaggeration, then you admit it's valid, and then you stuff your own ill-chosen words into my mouth.

    Priceless.
    Aug 19 01:13 PM | 1 Like Like |Link to Comment
  • Tesla Will Become The Victim Of Its Own Success [View article]
    To keefwotspeaksthetroof

    "So, is Musk's buyback promise unconditional?"
    Funny how this simple question remains unanswered.

    << "It would have to be conditional on Tesla remaining in business" >>
    Gee, thanks for that pearl of wisdom. Ingenious.

    << How long can they go on losing money for? >>
    Tesla can continue losing money for years after their stock price comes back down to earth, if GS and others have enough faith in the company's potential to underwrite new stock issues or lend money. And that faith depends on what percentage of the car market is potentially theirs to steal from the conventional car manufacturers.

    Tesla's SEC filings show them losing money? Did you expect real profits at this point in the game? Dude, Tesla is still in the proof of concept mode. This is just the "Opening Ceremony" like at the Olympic Games. Tesla may ultimately fold, but no one (especially not you) has any compelling case for why that should be a foregone conclusion so early in the Games.

    I expect Tesla's stock price to go up & down with an upward drift, you know, just like the stock market.

    Tesla could easily "lose money" (either measured by cash flow or true profitability) for another 10 years even if car sales climb skyward, because Tesla will surely start other projects (to double down on the EV disruption) that are cash flow drains. Unfortunately, what you seem to be counting-on for failure is part & parcel of any new business's research and development. All Tesla needs is roughly 5% of the US market to do astoundingly well, as foreign sales are gravy. Good luck with your puts and shorts, you're gonna need it.
    Aug 19 07:41 AM | 2 Likes Like |Link to Comment
  • Tesla Will Become The Victim Of Its Own Success [View article]
    To keefwotspeaksthetroof

    << "So, is Musk's buyback promise unconditional?"
    It would have to be conditional on Tesla remaining in business. >>

    Oh, I get it … what you're actually saying is that you don't know.
    Thanks for your honest and straight-forward answer. It's refreshing.
    Aug 18 11:44 PM | Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    << I showed you how monetization of debt happens. >>
    Hardly.

    << ... USA can monetize all the debt it wants, and there is no rule preventing it. >>
    Vague.

    << If the Fed never sells off the bonds it purchased during QE, that will be monetizing the debt, for example. That's call money printing. >>
    Close.

    << ... as you believe that the US govt shouldn't monetize the debt. >>
    Huh?

    << But that's not the point. >>
    Truly?

    << The point is, it can. >>
    So?

    << The flimsy excuse that you provided, that some random dude believes that for proper monetization the Fed has to buy the bonds directly from the Treasury >>
    Proper?

    << The Treasury can sell the bonds to the public and the Fed can buy the bonds [from] the public, and the net effect is that the Treasury is selling bonds to the Fed via a bank. It is still monetization.>>
    Good!

    << You talked big about how I am wrong >>
    Big?

    << and Warren Buffett is wrong as well on this topic. Yeah, right. >>
    Topic?

    << Feel free to have the last word. >>
    Thanks!
    Aug 18 10:31 PM | 2 Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    Thanks for the date & time stamped reference.

    You said "... the Govt can print its own currency if it is in a pickle."
    I said "Nope, there are laws that prevent that here in the US."

    The Treasury prints money, but can not issue it.
    The Fed issues money, but cannot print it.
    It's pointless for the Treasury to print money, if the Fed will not issue it.
    Finally, Uncle Sam does not control the Fed. (QED.)

    Nice try.
    Aug 18 07:39 PM | 1 Like Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor
    To Kyle10

    << Kyle, you are right. We do not have a debt problem. Any accountant would understand that. >>

    Both you guys are correct:

    Using Kyle10's figures, Uncle Sam borrowed $6 trillion from the Social Security and other Trust Funds ... but let's just refer to the $6 trillion as the Surplus, for simplicity.

    Let's assume "everyone agrees" that the $6 trillion Surplus was correctly calculated to postpone the bankruptcies of all the Trust Funds from 2020 to 2030, for simplicity.

    Macro Investor is entitled to assert that today's Federal Debt is $12 trillion, acknowledging that (1.) the Trust Funds will be bankrupt in 2020 and that it is Uncle Sam's obligation to bail them out forever thereafter and (2.) the cost of such bailouts from 2020 to 2030 is expected to be roughly $6 trillion. The $12 trillion is "pure debt", having no "future obligation" adulterating it. A future obligation is not a present debt. Macro Investor does not recognize the Surplus as an overpayment or obligation of any sort because the Trust Funds are practically bankrupt already.

    Kyle10 is entitled to assert that today's Federal Debt is $18 trillion, acknowledging that (1.) $6 trillion of that $18 trillion is Uncle Sam's future obligation to postpone the bankruptcies of Trust Funds from 2020 to 2030 and that it is Uncle Sam's obligation to bail them out forever thereafter and (2.) the Surplus is an overpayment of taxes, and like any other overpayment, it can be booked as a present liability, not a future obligation.

    =====================
    BTW, the S.S. tax is not nearly as progressive as the Federal Income Tax, and when you consider that S.S. benefits are disportionately allocated to the long-lived, and the wealthy tend to out-live the poor, well, what you have is a regressive tax in which the poor are literally supporting the rich.
    Thus, creating (part of) the Surplus through S.S. taxes seems inherently wrongheaded. Dr. Milton Friedman pointed the regressive effect of S.S. benefits out in the 1960s.
    Aug 18 07:13 PM | 2 Likes Like |Link to Comment
  • Tesla Will Become The Victim Of Its Own Success [View article]
    To keefwotseaksthetroof

    So, you ignored my simple little question?

    But you felt obligated to opine that any car manufacturer that improves it's warranty is doing so to protect the so-called Ponzi scheme? Did I get that right? On what basis did you form this opinion?
    Aug 18 02:17 PM | Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    << Why is it so hard for people to admit that they were wrong? >>

    Excuse me?
    Do you not understand that I firmly deny saying what you think I said?

    Why not simply provide a quote and date-stamp of my wrongful words?
    Is that too much to ask?
    Aug 18 12:04 PM | 1 Like Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    << No, you said that there are laws against monetizing the debt in the USA. You were wrong. Admit it, and move on. >>

    OK, OK, if that's what you really want to do, let's move on. But first, let me quote myself about "monetizing the Debt" for your benefit:

    "A decade ago, "monetizing the Debt" used to mean the practice of the central bank buying bonds directly from a government's treasury dept, which is illegal here in the US. Today, it merely means the central bank is buying T-bonds, which thereby back the dollar. Nothing illegal or even controversial."
    17 Aug, 08:56 PM

    No, they didn't change the law to allow the Fed to buy directly from the Treasury, it's still illegal. My statement refers to the fact that the Fed is required to buy bonds from the public bond market. There's a big difference between buying directly from the Treasury and buying from the public bond market. You ought to know that already, shouldn't you? I'm sure you did.

    If you just read more slowly & thoughtfully, and you wouldn't get your panties all twisted in a knot.

    What I said was that if the Fed purchased bonds directly from the Treasury, that would be illegal and that's the issue I was talking about when I said - "I was just trying to explain that printing money to get out of a pickle is not the easy, simple, painless, and innocuous solution that you think it is."
    also on 17 Aug, 08:56 PM

    I was responding to YOUR ill-fated comment about "printing money to get out of a pickle on Aug 16 01:35 PM.

    If you just read more slowly & carefully, and you wouldn't get my panties all twisted in a knot, either.
    Aug 18 09:36 AM | 2 Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    A decade ago, "monetizing the Debt" used to mean the practice of the central bank buying bonds directly from a government's treasury dept, which is illegal here in the US. Today, it merely means the central bank is buying T-bonds, which thereby back the dollar. Nothing illegal or even controversial.

    It's become a meaningless cliche.

    But what you had said was this:
    << That's because the Govt can print its own currency if it is in a pickle. >>
    That is controversial and open to misinterpretation.

    I was just trying to explain that printing money to get out of a pickle is not the easy, simple, painless, and innocuous solution that you think it is.
    Aug 17 08:56 PM | 2 Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    << The government treasury must pay off government debt either with money it already holds or by financing it by issuing new bonds which are sold to either the public directly or the central bank, in order to raise the funds required to repay bonds that have come due. >>

    --> No, the central bank cannot be a consistent buyer of bonds. Sometimes the central bank must sell bonds, to reduce the money supply, to fight inflation. The Fed's dual mandate does NOT include "buying bonds to provide funds whenever needed by Uncle Sam", even though lots of people here at SA fervently believe so.

    << The central bank may purchase government bonds by conducting an open market purchase, i.e. by increasing the monetary base through the money creation process. >>

    --> Government bonds? Actually, the Fed seems to have discretion to buy any high quality asset, whether it is a U.S. bond, or M.B.S. or gold. But, if the Fed pursues a strategy that Congress deems sub-par, then Congress can pass laws requiring the Fed to do what Congress desires.

    --> There are lots of charlatans (like Ron Paul) in Congress who don't know as much economics as they fooled others in Congress into believing that they know.

    << If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury. >>

    --> Not quite right. The principal payment actually reduces the money supply, just as if the Fed had sold the bond. If the Fed wants the money supply to remain unchanged, the Fed must issue newly printed (or digital) money to buy another bond.

    << Thus, the treasury may 'borrow' money without needing to repay it. >>

    --> Yes, obviously, the Treasury can borrow money and never repay it, by rolling the Debt over, year after year. But, aren't you aware that the Debt has been growing and the additional borrowing each year has been fueling a significant portion of our wonderful GDP output, even today? We've seen the Debt grow from 60% of GDP in 1980 to over 100% of GDP in 2013. Thankfully, Uncle Sam's total spending has usually been about 25% of GDP, and only occasionally accounting for 29% of GDP output. Think about where we'd be if Uncle Sam couldn't borrow at low interest rates, or if the Debt were so large that it was obviously a drag on the economy.

    --> You seem to overlook the fact that the growth rate of the Debt ought to be "much less" than the long term growth rate of the economy, and yet no one really knows what our economy's long term growth rate is, nor how high the Debt can safely climb as a percentage of GDP. To even guess at these unknowns, you need to know our long term productivity growth, long term population growth (including immigrants) and true annual inflation rates.

    --> By the way, the economy does occasionally go into recessions, and yet the Debt has never been able to magically reduce itself to stay in step with the reduction in GDP. If investors are spooked that future U.S. entitlement obligations are problematic (which many already believe), then they'd force interest rates up. If you believe there's nothing to worry about because the Fed can always lower interest rates via QE, then you eventually have to ask yourself how would other countries view the strength of the U.S. economy that seems to lurch from one crisis to another, constantly using QE has a crutch? Are you aware that almost 30% of our Debt is owed to foreigners?

    --> Your statement seems to be based on a huge faith in QE, but did you look at Japan's experience over the last 20 years? If you're certain that "that can't happen here in the U.S." ... then, great, please explain why it can't.

    --> And you seem to forget that US hegemony depends on a healthy economy. If you don't mind having to learn Russian, then go ahead and vote for demagogues who promise the moon and tinker mindlessly with the economy.

    I apologize if I inadvertently put the wrong words into your mouth, but when you make vague statements followed by a vague insult, this is what you get. Think of it as an education.
    Aug 17 08:24 PM | 2 Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    << "The problem is "what" the money is spent on."
    A massive infrastructure building exercise would do the trick. >>

    If you're referring to the poor condition of our roads and bridges, then I have to agree with you.

    If government is going to spend monies on repairs that are truy needed, then if you have to borrow money to do the spending, it makes sense to do the spending when the economy is slow and interest rates are low. (I'm not talking about QE at all. I'm assuming everyone agrees a slow economy usually has low interest rates.)

    But having Uncle Sam borrow money to build things that society doesn't need should only be a viable alternative in dire circumstances such as the Great Depression. And since the Great Depression was caused by the FEd, and the Fed has learned a lesson about avoiding Depressions, it seems highly likely that taking Keynes' prescription to pay people to dig holes, and paying others to fill them in will never be a viable alternative.
    Aug 17 04:39 PM | 1 Like Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    << Which law would that be? >>
    That would be several laws. Sourced from Fed and Treasury websites:

    1.) Only the Treasury can print or mint dollars (i.e., paper and coin currency)

    2.) Only the Fed can issue dollars, and the only allowable method of issuing dollars is to buy "high quality" assets in a public market.

    Note: The Fed cannot issue dollars by simply giving dollars to Uncle Sam to spend. If this were to happen, such dollars would be "unbacked" ... just as the "Continental" was unbacked during the US Revolutionary War, from which we got the saying "Not worth a Continental"

    Note: It's against the law for the Fed to buy bonds directly from the Treasury. That's because both the Fed and Treasury are agents of Uncle Sam. Thus, no direct transaction between the Fed and the Treasury can be "at arm's length". Furthermore, any price agreed to (in a transaction directly between the Fed and Treasury) would not be a market-determined price. In other words, you cannot expect the bond market to happily ignore any transaction between the largest buyer and the largest seller in the bond market.

    Note: Replacing worn-out paper money is not "issuing" new money.
    That's just replacing old money with new money but I'm admittedly not sure who has authority to do that.

    3.) The Treasury can issue commemorative coins, but these are not legal tender (i.e., legal tender is a fiat). And without a fiat, the commemorative coins aren't real money. Sure, you can try to pay for something with a commemorative coin, and sometimes you might be successful, but you'll soon see why convenience is a defining characteristic of "money"

    4.) These laws are reasons why the "Trillion Dollar Coin" was not a viable strategy to circumvent the often recurring Debt Ceiling.

    5.) Followers of "Modern Monetary Theory" (M.M.T.) are either ignorant of these laws or believe the laws can be changed whenever needed. Side with them if you like, but I'd call M.M.T. nothing more than a "Medieval Monetary Conjecture" (M.M.T. = M.M.C.) because their monetary model is based on unbacked money, and their founding father (W. Mosler) is not an economist. However, he had a successful career in bonds.

    Note: Central Banking was invented around 1600, which is roughly the dividing line between Modernity and Medieval Times. Take your pick.
    Aug 17 04:26 PM | 2 Likes Like |Link to Comment
  • Japan's Keynesian Demise: A Cautionary Tale For Our Times [View article]
    To Macro Investor

    << That's because the Govt can print its own currency if it is in a pickle. >>

    Nope, there are laws that prevent that here in the US. You don't understand how the monetary system works, but you're in good company, neither does Warren Buffet.
    Aug 17 10:27 AM | Likes Like |Link to Comment
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