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  • Would A Sovereign Money System Be Flexible Enough? [View article]
    To Salmo Trutta

    Well, you need not ask about my credentials if two of the greatest economists that ever lived have ALREADY validated it. I suppose you're talking about two economists in the same league as M.Friedman, F.A.Hayek, R.Mundell, R.Lucas, etc.

    I guess we'll just have to take your word on it.

    However, be forewarned that if you're correctly concerned that you've leaked too much information already about your Vt and MVt, then I suggest you never speak of it again. Clam up, Salmo. The more you speak of it, the more likely Russian or Chineese agents may catch wind of it, figure it out, and exploit it to our national detriment, as you have asserted.

    (It is surely more likely that you'd be detained by a domestic agency, such as the CIA, and we'd never hear from you again.)

    Although many economists would find it doubtful that your proprietary secret would allow China and/or Russia to wreak havoc with our economy without wreaking havoc with their own respective domestic economies, that mutually assured collateral damage will never stop someone like Putin, who is bent on ruling the world at any cost.

    As an example, just try to imagine the world-wide ramifications of China and/or Russia causing world wide recessions (using your proprietary information). What collateral damage might Russia and/or China suffer?

    Well obviously, they'd lose tax revenue when the world economy enters a prolonged recession.

    But Putin would believe that the Russian people are already so deprived, that they would surely survive on nothing at all. Like in WWII and afterwards all the way up to M.Gorbachev, who made things even worse (before things got better under B.Yelsin).

    Let's momentarily consider the failure of Long Term Capital Managment in 1998, which was caused by Russia's surprise default, which was caused by a surprise over-estimation of economic activity in South Asia (or some where else, it doesn't matter), which created a surprise surplus of oil, which reduced the world price of oil, which caused Russia's default, because Russia depends on oil revenue. So you'd think Russia would want to avoid that.

    No, no, no. If Russia has oil, they don't need to borrow money to wage war, at least, not at the start. And since Russia's "Debt to GDP" ratio is merely 15%, once they start winning WWIII (especially possible if they plan well before starting it) they will find themselves able to borrow more money to wage war than the rest of the world combined.

    So, perhaps you are the lynchpin in Putin's best strategy of world domination. Let's hope neither Putin nor the CAI ever figures it out.
    May 21, 2015. 10:08 PM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    To Salmo trutta

    << This is proprietary information. I've already told you too much. I learned long before Winston Churchill did that you can pick and choose what you want to read. I don't read your posts. You don't have the prerequisites. Too many others have already picked up on my comments. What makes you so slow? >> May 21 2:04 PM

    If its truly proprietary, then draw up a confidentiality agreement,
    and I'll sign it. I'm not trying to take anything away from you.

    Answer my questions, and I'll test your hypothesis.
    If I confirm your findings, I will back you up in any arena.

    Or sign-up someone else who does have the prerequisites.
    Or do nothing.

    Your choice.
    May 21, 2015. 04:41 PM | 1 Like Like |Link to Comment
  • Warren-Vitter And The Lender Of Last Resort [View article]
    To Salmo trutta

    Honestly, I've already graduated from 7th grade.

    So, what do you use as a proxies for Vt and MVt?
    Why do you avoid the question? What are you afraid of?
    Aren't you confident in your work product?

    << And being let go, they went to their own company >>
    Would you like me to sign a confidentiality agreement concerning your work product? Draw one up, I'll sign it. I'm not trying to take anything away from you.
    May 21, 2015. 04:27 PM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]

    << I am good at pattern recognition. >>
    All humans are good at pattern recognition. So are computers.

    << Im not insulting you. >>
    Really? Well, what are these little gems:
    << your intelligence is like that of a cockroach >>
    << you simply will never understand. >>
    << Start using your brain >>
    << stop being an asshole >>

    << people give you a hand, and you then ask for an arm because you're too lazy to find out yourself. >>
    You mean "find out for myself" the deep secret Salmo has discovered, which only he and the CIA are party to? Excuse me, but if it's really that deep and hidden, it'd be near impossible to discover for oneself, right?
    Have you figured it out? No, not at all. You don't really know if his claims are credible or not, because you cannot produce them independently.

    SeekingAlpha is a collaborative website, which means we help one another. Please show me where anyone has given me "a hand" with an independent check on Salmo's incredible claims.

    If Salmo's incredible claims are independently proven correct, wouldn't that be of value to Salmo. and to you?

    Do you think doing an independent check involves no work and effort?

    << I know for a fact you are lazy and that irks me. What use is your "high" intelligence if its not accompanied by perspiration? >>

    More insults? Let me give you some simple logic in exchange for those baseless insults:

    If Salmo's claims are bogus, why waste my time?
    If Salmo's claims are true, then why re-invent the wheel?

    << personally I dont really care about being right or whatever >>
    Yes, I suppose that explains the lack of "hard work and perspiration" you've exerted at doing an independent check of Salmo's claims, as you have already admitted having no idea where Salmo's numbers come from.

    I hope my words and ideas here are someday useful and fruitful to you. If you think about it, all that I have said here could someday help you.

    What you don't realize is that I would be helping Salmo quite a bit if I did do an independent check and confirmed that he's absolutely right.
    And that's real work, because it has to be shown to be "statistically significant", which is probably something you know nothing about. You can google it and learn.

    IF I did reinvent the wheel, as you and Salmo seem to think should be my goal, then I would not be able to tell if my "wheel" was uniquely different from Salmo's "wheel" and I would then be able to claim that I had invented my own unique wheel ... after all Salmo never provided any sort of blueprint. And then of course, there would be no ethical reason for me to even mention Salmo's name when I receive the Nobel Prize.

    On the other hand, there will always people who delight in tricking others gullible enough to waste their time trying to prove or (disprove) bogus clams such as Big Foot, the Loch Ness Monster, UFOs, etc etc.

    So, what you don't realize is that my interests and Salmo's interests are actually aligned, but not in the way you would like. Think it through.
    May 21, 2015. 11:00 AM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    To Quin102

    You claimed to "sort of" know the answer to my question.
    So, I asked you for your "sort of" answer.

    And then you respond with nothing but insults and name-calling?

    So, is *this* is how you defend the honor of a man who needs his honor defended, because he cannot do so himself?

    Wow, what a chivalrous Knight thou art.

    Yet, we know Salmo has repeatedly made a lot of incredible claims about Vt and MVt. Is it really so unfair to ask the Wizard of OZ for simple answers to simple questions, so that someone can make a credible check of his incredible claims?

    Perhaps it is all because his claims are so incredibly overblown.
    That's the only conclusion that's consistent with all these facts.
    May 21, 2015. 07:41 AM | 3 Likes Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    To Quin102

    I'd be happy to see what ("sort of" in your words) answer you have to the question:

    "What proxies [does Salmo] use for Vt and MVt?"
    May 20, 2015. 04:12 PM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    To Salmo trutta

    << I figured it out for myself Neil. Maybe you should try harder. Everything I've said has been documented and repeated. >>

    Yeah, right, "documented and repeated" in a couple hundred vague comments like "a jig-saw puzzle with lots of extraneous pieces from other jigsaw puzzles". Who knows if "your" puzzle really holds together with self-consistency, or if it's doomed by fatal flaws? --> No one.

    The reason I went into such a long winded reply was to clearly demonstrate that I did read your post, and read it slowly for comprehension. You could have shut me up pretty quickly, if you had something significant to throw at me. But you didn't.

    I pointedly asked you one simple question ("What proxies do you use for Vt and MVt?") ... you responded with insults & anger, rather than proving yourself righteous, and me the fool.

    Your choice, not mine.
    May 20, 2015. 11:59 AM | 2 Likes Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]

    I should have added a comma to make it clearer:
    "Same can be said for other, more typical, buinsesses"

    Yes, the Fed is not typical at all.
    May 20, 2015. 12:52 AM | Likes Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    Salmo trutta

    << If you got off your...and looked at the numbers maybe you'd learn something. >>

    Please tell me why you think I deserve your outburst above.

    Please tell me what numbers to look at, you know, the numbers you have been asked about for MVt and Vt for a long time.
    May 20, 2015. 12:29 AM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    To Salmo trutta

    << [Neil said this:] "Please provide any example that proves me wrong [as I firmly believe its impossible to control velocity]" >>

    Your reply talked about 4 factors which increased demand deposit (DD) velocity between 1964 and 1981, the virtual elimination of Regulation Q (interest ceilings on time deposits), MoneyMarketDemandAccts and posited a partial summary: << High interest rates and expectations of higher prices have been both cause and effect of rising rates of Vt >>

    I guess that means there is a vicious self-reinforcing circle between the 3 forces: (1.) inflationary expections, (2.) the confirmation bias of higher prices and (3.) the renowned Vt, the vague statistic that is so important.

    Then you talk about << the DIDMA of 31-Mar-1980 >>, which, like other acronymed things, tended to cause even more velocity in Vt, then closed paragraph #3 with no particular point that I could discern.

    The 4th paragraph seems to touch on something decisive, as the words "rapid" and "precipitous" are close to "Leland Pritchard" (your mentor). However, although I freely admit I could not discern your point, yet I have a request - Please just tell us what raw data you're using as a proxy for Vt, you're making incredible claims about Vt without benefit of checking your incredible claims.

    BTW, when the Volcker Fed tried to kill inflationary expectations, they were not successful at first. GDP kept going up, even though the money supply growth was slowed and then went negative for a brief time, perhaps because expectations of inflation were so strong, having been cooked into the public psyche from 1946 to 1981 years. I'd bet that if Vt showed a surprising growth in that period, then so would the velocity of M2 or M1, depending on the production of bank loans.

    I'm also aware that mainstream economists were surprised by the post war boom, and today's economists are surprised that the post war boom is not reflected in the post war statistics, because of the relaxation of war-time price controls, quota limitations, quality issues etc.

    So, post war economists may have convinced politicians that inflation was better than a return to the depression, which is what economists expected when a few million soldiers demobilized back to their hometowns without jobs. Funny how that's not what happened, and strange that it's not apparent in the records. Anyways perhaps that plays into why inflationary expectations were so strong.

    <<the obvious fact that it is not the volume of money which determines prices and inflation rates >>
    Yes, quite true, and yes, quite obvious. If we had a 100% digital currency it's would be theoretically possible to do every transaction in the USA with just $1, that is, if the velocity of that $1 were equal to annual GDP, or (the slightly different) gDp.

    So, as you have been asked many times before, what raw data do you use as a proxy for MVt? And what raw data do you use as a proxy for Vt, (since your claims about Vt are so specific)?
    May 20, 2015. 12:16 AM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    To Salmo trutta

    << [Neil said] "If velocity were highly variable ..." Salmo replied --> Vt was 2.5 times more volatile than the money stock over a 50 year period. I.e., it was more important than money. Ditto during the housing boom/bust. Vt exploded as financial transactions (flipping, etc.), were consummated. >>

    What exactly is Vt?
    Or do you use a proxy because Vt cannot be measured directly?
    May 19, 2015. 09:09 PM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]
    RE: Velocity of money

    If the Fed wanted to increase velocity by reducing the money supply, money becomes more valuable, which is deflation, which can lead to depression. And "less money" drives interest rates up, which slows the economy. The velocity of money might actually decrease instead of increase, if the % change in the rate of output is greater than the % change in the money supply. Or velocity might be unchanged, or velocity might increase as desired.

    Velocity changes slowly enough that it can be predicted in all cases except the long run. This is why the Fed can change the money supply and have a reasonably reliable expectation on its effect on interest rates, and (albeit to a lesser extent) on GDP.

    Because velocity is stable (in the short run), the Fed can either control the money supply and let interest rates wander, or control interest rates (i.e., keeping interest rates within some range as decided by the eggheads in the Ivy Tower) and let the money supply wander.

    The Fed has never really controlled the money supply and let interest rates wander, even under Volcker they did it only for a short time (per JasonC and Salmo trutta).

    The Fed has been controlling interest rates, and letting the money supply wander, which means inflation is "uncontrolled". When inflatiion becomes a problem (which today would be seen as a "nice problem to have") then the Fed has to "reverse" course and (hopefully gently) apply the monetary brakes, which sends interest rates upwards. (I'll skip the parallel regarding deflation.)

    If velocity were highly variable, and the Fed had to control veloicty, the FEd would be forced to give up control of the money supply, inflation and interest rates, which sounds like a dire situation to me.

    Why would we even want to control velocity when it is already fairly stable?
    May 19, 2015. 03:38 PM | 1 Like Like |Link to Comment
  • Is A Fiscal Deficit Really 'Austerity'? [View article]
    Ooops, I meant to say it this way:

    ... and no one really thinks about why [Lord Keynes] advocated being so "financially conservative" after the application of "financially liberal" deficit spending.
    May 19, 2015. 02:01 PM | 1 Like Like |Link to Comment
  • Is A Fiscal Deficit Really 'Austerity'? [View article]
    To David de Los Angeles

    << ... if the deficit is falling, that is the opposite of what Dr. Keynes proposed, and thus "austerity". You are quite correct that that is not what Dr. Keynes proposed. He argued for increased *spending* and the opposite of that, decreased government spending, is indeed a deficit. >>

    I'd like to point up a small error:
    Lord Keynes did not advise deficit spending to cure a lingering recession.
    Lord Keynes did propose deficit spending to cure the Great Depression.

    Furthermore, Lord Keynes proposed deficit spending for Britain's economy in the 1930s, whose political structure allowed quicker economic action to be taken than our American political system, which is slow, due to building consensus, due to negotiation and compromise.

    Every economist ought to agree that a small amount of quick action is more effective than a large amount of slow action. So, it's arguable that Keynes' policy prescription for the Britain in the 1930s might be quite different than what he might advocate for the US in the 1930s.

    Furthermore, Keynes never knew what caused the Great Depression.

    Had Keynes known the cause of the Great Depression (which was the Federal Reserves' inappropriate focus on Moral Hazard, explained below), then it seems quite possible his policy prescriptions in the 1930s might have been quite different.

    The Fed caused the Great Depression by failing to be the Lender of Last Resort, and failing to expand the money supply. The Great Depression would probably have been a mere recession, had the errors been corrected early on ... the emphasis being on quick action.

    The Fed made these errors because they were (short-sightedly) focused on Moral Hazard, the idea that if a bank took excessive risks and went bankrupt, it would be "wrong" to bail them out. The short-sighted Fed was blind to "collateral damage": when one sick bank fails, it brings down healthy banks, because depositors panic.

    Moral Hazard is something that we always need to be concerned about and address, but not when the economy is plummeting. Moral Hazard can only be addressed before problems start.

    The point of all this is that it seems wrong to assert that Lord Keynes said anything about what we should do in 2015, since he died in 1946, and never knew the cause of the Great Depression, which started as a mere recession.

    My guess is that Lord Keynes would have advocated QE, instead of deficit spending, and then advocated deficit spending if QE were proved to be not enough.

    It is important to note that Lord Keynes always advocated paying off the deficit, as soon as the economy recovered. We've never really followed that bit of advice from Lord Keynes, and no one really thinks about why he advocated being so conservative after deficit spending.

    My guess is that he didn't want his beloved country to end up in the position the US is in today, wherein our political system is hamstrung (i.e., slow to reach consensus) by fear that the Debt is dangerously high: and that's because the Debt has been growing faster than GDP almost every year since 1946, which is when Keynes died.

    One of my other guesses is that Keynes surely suspected another war was likely because the economic conditions (esp in Germany) following WWI prompted Lord Keynes to write the book (which made him famous) that correctly predicted the rise of a demogoge in Germany. Keynes must have known WWI was funded by Debt, and one could argue that the ability to "borrow more" was a decisive advantage. Thankfully, today we don't have such rising threats as Hitler was from the mid-1930s through WWII.

    No sir, all we have to worry about today is ISIS, Kim Jung Il, Putin and our growing entitlements.
    May 19, 2015. 01:38 PM | 1 Like Like |Link to Comment
  • Would A Sovereign Money System Be Flexible Enough? [View article]

    << ... a legal fiction is a LOGICAL device for implementing a substantive rule by incorporation. It has nothing to do with the transactional reality of what it purports to be. >>

    I cannot complain about something that I like.
    I like your definition.

    Point, Game, Match, Set, Kramer.
    C'est la vie & devaju allover again
    May 18, 2015. 07:53 PM | Likes Like |Link to Comment