Mustecky

Mustecky
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  • 'Don't Bother Me With Facts, My Model Tells Me Everything I Need To Know'  [View article]
    I'm not arguing your point here, just trying to understand it. You say

    "The Riksbank, the Swedish monetary authority, lowered its benchmark rate to minus 0.25% from minus 0.1%"

    Which seems consistent with your point, But you also say

    "and said it would buy government bonds worth 30 billion Swedish kronor ($3.45 billion), an extension of bond purchases worth 10 billion kronor announced earlier. "

    Doesn't that add a second variable, which creates the question of the degree to which each independent variable affects the result? If so then is it fair to say either one of them did anything without accounting for the affect of the other?

    Sorry if I'm missing something obvious here, but a hint as to where I'm failing would be appreciated.

    Mustecky
    Oct 1, 2015. 11:25 AM | 1 Like Like |Link to Comment
  • Are Low-Yielding Bonds Still A Good Stock Market Hedge?  [View article]
    So if 60/40 is no longer wise, how would you change that?

    More bonds to make up for their diminishing value as a hedge, or fewer which leaves you with even less hedge? Is there a better alternative than bonds for hedging against stocks, that is practical for a fairly neophyte investor, with limited time to watch their portfolio as closely as a trader would.
    Sep 8, 2015. 11:42 AM | 1 Like Like |Link to Comment
  • Dollar Cost Averaging Versus Lump Sum Investing  [View article]
    Or What?

    You say

    "For lump-sum amounts, I would put a theoretical $1200 investment either at the closing prices for the previous year."

    I don't get the "either", there.

    However I do think its an excellent question to address. It certainly applies for me. I've been a life long saver, and have significant funds in interest bearing investments, a large portion of which I'd like to move into and keep long term in stocks. Which I can do in large pieces, or in lumps.

    I prefer a large well timed move, but its a hard decision.

    Regards Rick
    May 16, 2014. 10:50 AM | Likes Like |Link to Comment
  • A Foolproof Approach To Monetary Policy For Both Fiscalists And Monetarists  [View article]
    Would you consider the following suggestion, as a potential form of Fiscal Stimulus, to be used as you have indicated, only when monetary policy fails to increase NGDP.

    Create a new form of money, called say StemDollars (SDs).

    SDs have a nominal value of one Dollar at issue, and are legal tender.
    All SDs are dated, and their value decreases by some fixed amount, say 10 cents per month, from the date of issue.
    The Treasury then gives away a sufficiently large amount of SDs per month divided as equally as is practical, to all Americans below the poverty line.
    Banks are required to create and process non interest bearing SD accounts for anyone who asks, at no charge.*

    The result, The money gets spent. The money slowly disappears as the economy takes off, because their value fades away, and the Treasury quits issuing them.

    The reason I like this idea as opposed to the "Helicopter Drop", is that the helicopter drop doesn't pull the funds back out once the economy takes off. Plus it avoids the possibility of people saving rather than spending the money.

    * I acknowledge the difficulty of managing accounts of variously dated SDs might be tricky, but the financial community are the people that created derivatives, and they're the ones that got us into this mess, they out to be able to manage it.

    Regards Rick Vessell (Mustecky)
    Jun 15, 2013. 11:35 AM | Likes Like |Link to Comment
  • The Money Problem  [View instapost]
    So would you say the stimulus via present need based benefits (Food stamps, unemployment comp. etc.) has been sufficient at the consumer demand level? My own thinking is not, but I can see both sides of that issue.

    What scares me about increasing those benefits, is that although you can stop giving them as the economy takes off, you have no way to pull that money already out there back in.

    I suppose one might argue that unlike when attempting to stimulate the economy at the consumer demand level at a zero bound interest rate, the FED is pretty affective at reeling it in, since there is no zero bound to raising interest rates.

    Regards Rick Vessell (Mustecky)
    Jun 13, 2013. 08:08 AM | Likes Like |Link to Comment
  • The Money Problem  [View instapost]
    Why Not Do This?

    Create a new form of money, called say StemDollars (SDs).

    SDs have a nominal value of one Dollar at issue, and are legal tender.
    All SDs are dated, and their value decreased by some fixed amount, say 10 cents per month, from the date of issue.
    The Treasury Gives away say one billion SDs per month divided as equally as is practical, to all Americans below the poverty line.
    Banks are required to create and process non interest bearing SD accounts for anyone who asks, at no charge.

    The result, The money gets spent. The money slowly disappears as the economy takes off, because their value fades away, and the Treasury quits issuing them.

    * Granted the difficulty of managing accounts of variously dated SDs might be tricky, but the financial community are the people that created derivatives, and they're the ones that got us into this mess, they out to be able to manage it.

    Regards Rick Vessell (Mustecky)
    Jun 11, 2013. 10:35 AM | Likes Like |Link to Comment
  • My Advice To The New Head Of The Bank Of Japan  [View instapost]
    OK, That makes sense. Thanks. Rick
    Apr 9, 2013. 10:40 AM | Likes Like |Link to Comment
  • My Advice To The New Head Of The Bank Of Japan  [View instapost]
    I think I understand your point, that the target of Japans monetary easing is a higher inflation rate, not a specific monetary base size directly. And I agree that for the present situation in Japan that is a good strategy.

    What confuses me, is your recommendation that they buy gold!
    In the 1930s most currencies were on a gold standard. Since the Yen is not on a gold standard today, why does that make sense?

    Rick
    Apr 6, 2013. 11:50 AM | Likes Like |Link to Comment
  • One Of The Best Strategies In Bond Investing  [View article]
    This seems to make since but I'm wondering, "whats the flip side of this?".

    Given that every investment requires two parties who both see a potential to profit. If buying a long bond, and then selling after a year or so, is the best deal always. Why would anyone want to buy it.

    This type of question can actually and probably should be applied to all investments, in my opinion.

    In what situation would you be the buyer rather than the seller in a situation like this?

    Regards Rick
    Feb 5, 2013. 01:31 PM | Likes Like |Link to Comment
  • Helicopter Money, The Logical Conclusion Of Demand Management?  [View article]
    Helicopter Money

    I like the idea of that, and I'm pretty sure I understand the concept. There is one aspect that troubles me though, which is this. Given the typical US persons spending habits regarding buying foreign manufacture goods, would we not to a large degree be financing countries other than our own, and thus not really helping our own economy so much?

    It seems to me that if we fail to address our trade deficit in some fashion, this idea may fail. Does anyone have thoughts regarding a practical way to resolve this problem as it relates to helicopter money. Or actually, in any context.

    Regards Rick (Mustecky)
    Oct 29, 2012. 10:50 AM | Likes Like |Link to Comment
  • Should Banks Get To Deduct Their Interest Costs?  [View article]
    Bode

    If I'm interpreting you correctly, You're saying that banks actually incur no real taxable interest expense (because money is so cheap right now)? If that is so, then the deduct-ability of interest expense, is a non issue.

    If deduct-ability is a non issue, than of course the cost of the tax expenditure to the government would be as well.

    However if the interest is deductible, regardless of whether its real or nominal, I don't see how the cost of the tax expenditure to the government could be less so. Its basically the other side of the exact same money.

    Rick
    Sep 28, 2012. 01:14 PM | Likes Like |Link to Comment
  • Should Banks Get To Deduct Their Interest Costs?  [View article]
    Hello Felix

    I'm still thinking the ideas in this article over. But while doing that the thought occurs to me, that it ignores the tax expenditure cost to the government as a significant factor in the analysis.

    Granted that would make it even more complex to think about, but it seems problematic to ignore that to me. Do you have any thoughts on the significance of that aspect of the issue.

    Rick
    Sep 21, 2012. 01:04 PM | 1 Like Like |Link to Comment
  • The Differences Between The Eurozone And The Dollarzone  [View instapost]
    Hi Chris

    I just wanted to let you know how useful your writing is to me. You are clear, sufficient while not overly long, and your thinking seems to be grounded in reality. You consistently help improve my understanding of macro economic issues.

    Thanks Rick Vessell (Mustecky)
    Sep 10, 2012. 09:47 AM | Likes Like |Link to Comment
  • Why Bernanke Should Not Rush Into QE  [View article]
    Asbytec. Thanks.

    Exactly. If I were going to call myself an economics fanatic, I think I'd try to learn a little more basic economics.

    None of the things the respondents and the author are talking about that have actually have had an affect on the deficit were done by the FED, and keeping rates low does not increase the deficit, it decreases it.

    By saying making borrowing cheaper, the FED is increasing the deficit by baiting the government to borrow more is missing every other of the many major issues involved in those decisions.

    They are using the FED as a target for attacking the issue of the government stimulus, and government spending, neither of which it is responsible for.

    There is plenty of room for discussion regarding the desirability of larger government spending, as well as how the FED should operate, but it is not within the legal power of the FED to increase or decrease the deficit. That isn't how it works.

    Taking that tack only weakens the other arguments being made. How much credibility do you think are going to have if you say things that clearly show that you don't understand a fiat money system, and FED regulations.

    Sorry for getting emotional. I just can't believe that you folks mostly don't know these things., Its scary!

    Rick
    Aug 26, 2012. 03:01 PM | 1 Like Like |Link to Comment
  • Why Bernanke Should Not Rush Into QE  [View article]
    Other than normal growth in the federal debt, due to population increases resulting in larger government size ( irrelevant to the shorter term crisis), the increase in debt due to willful stimulus has been comparatively small. The primary factor has been increases in expenditures that grow in bad times, such as unemployment, and food stamps etc. coupled with a massive decrease in revenue due to lower taxable incomes.

    The fed has contributed zero to that. Where is it exactly that you claim the fed has been a contributor to present growth in the US Federal deficit, if not by bond purchasing, or loans, neither of which affect federal debt. What FED operations are you talking about? I think I'm fairly well read on this, but you have me totally stumped.

    Rick
    Aug 25, 2012. 02:08 PM | 1 Like Like |Link to Comment
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