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J Dub Lone Star

J Dub Lone Star
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  • A Depression With Benefits: The Macro Case For mREITs [View article]
    Brofman, sorry for the confusion.
    Jul 22 09:44 PM | Likes Like |Link to Comment
  • A Depression With Benefits: The Macro Case For mREITs [View article]
    Ahhh, your a snake oil salesman er economist. Your degree and your logic in the article show lack of abilities in mathematics.
    Jul 11 09:04 PM | Likes Like |Link to Comment
  • A Depression With Benefits: The Macro Case For mREITs [View article]
    Complete and utter hogwash! Depression probably, causes and solutions not a chance.

    You were absolutely correct regarding the fact that WWII was the ONLY thing that lifted the economy out of the 30s depression. Props for that because most that promote centralized economic control attempt to argue that it was FDRs spending campaign that did it (absolutely 100% incorrect).
    Jul 11 02:35 PM | 1 Like Like |Link to Comment
  • The Inflation Hoax [View article]
    Tim,

    While I understand your point and for my circumstances it is "So What" regarding the price of potatoes it is a matter of fortune and perspective there.

    Today just as in 1980, the minimum wage worker can't afford gold. To millions of people in the US even those above minimum wage that sack of potatoes or gallon of gas represents a much bigger % of their income and it matters greatly. This impact although small on the individual household budget when multiplied by the masses can have big impacts throughout the economy, especially on small businesses which are the engine of job growth.
    Jun 24 09:02 PM | Likes Like |Link to Comment
  • The Inflation Hoax [View article]
    Good article. I think someone else touched on this but wanted to highlight it.

    "The U.S. dollar has lost 96% of its purchasing power over the last XYZ years." On the surface, this seems like a logical statement. Everyone knows that you could buy a candy bar 30 years ago for 5 cents, while that same candy bar today costs $1.00."

    I agree with your argument that wages increasing offset and sometimes over compensate with the devaluation. However, I think the "goldbugs" statement is typically in the context of USD vs. gold as a store of value. Thus if you saved USD "XYZ" years ago and never invested them (and hadn't been earning money) you would feel the full uncompensated effect of the devaluation when you went to buy your candy bar.
    Jun 24 04:37 PM | 1 Like Like |Link to Comment
  • What Happens When Liquidity Disappears? [View article]
    dw,

    No offense intended, but I wasn't really talking to you. I used Astron. Gains post to try and give some readers thought to concerns with supporting centralize control (of anything but specifically with the FED). Your posts just happen to help me highlight that danger even more.

    I understand the temptation to think in terms of degrees rather than black or white but I think that is the very danger that I speak of. You can speak moderation but when crisis appear as they always do it boils down to a black and white choice, do you support empowering others to save you or do you accept that responsibility yourself.

    That's my opinion, yours may be different and I respect that.
    Apr 27 12:22 PM | 1 Like Like |Link to Comment
  • What Happens When Liquidity Disappears? [View article]
    dwdallam,

    Thanks for the comment. The "demand" issue hadn't crossed my mind so thanks for bringing it up.

    I didn't really intend to argue economic theory and I'm probably not educated enough in that area to offer a good counter argument. Your view on demand may very well have some merit.

    My comment was intended to point out the big picture view or paradigm if you will. I believe no system is able to avoid ups and downs (risk), whether it be a free market or centrally controlled one. But I think you have to pick your poison and I think it is a black or white choice.

    I'd like to believe that most people on SA support the fundamentals that the USA was built on including the concept of free markets. However, I believe people are easily misled to believe a slew of popularly accepted propaganda much of which taken at face value seems to be reasonable.

    Are recessions/depressions risky and painful? Yes. Do we expect our leaders to act to lower risk? Yes. Is it preferable to lower risk whenever possible? Yes.

    These are the simple foundations upon which the propaganda is built. They are difficult to argue directly because as humans we all want to avoid pain.

    But you have to understand the inherent nature of human beings to be fallible and thus there is no human built system which is capable of operating at 100% efficiency, which is incorruptible, and which can reduce risk to zero. The choice then becomes which system is more efficient, is less corruptible, and eventually less risky? Some might argue to the contrary but I believe there is no real hybrid in between. Does government create the economy or does private industry, I believe private industry creates the economy and I think this can be supported by epic failures of various tyrannical regimes throughout the entire human history and contrasted with unprecedented wealth creation developed under the USA's free market system.

    Thus my point. You are making a choice whether you know it or not. If avoiding pain is inevitable then you have to get beyond the obvious answer of yes we want to avoid it and ask what is the cost of avoiding it?

    The cost in my opinion is freedom. And if you agree that pain (risk) is inevitable then you are trading a brief reprise from risk for your freedom. Free markets and centrally controlled ones are polar opposites. You can't have you cake and eat it too. You cannot be a supporter of free markets and not accept risk. If you are not willing to accept risk then you do this at the expense of opportunity and growth as well as your freedom.

    That's probably more than enough talk but I just can't emphasize it enough. You are making a black and white choice whether you realize it or not. Empowering those promising to be able to reduce risk to zero is choosing a centrally control market over a free market. Before doing that I am only pointing out that you need to decide which system you believe is the better mouse trap because the cost of reducing risk is freedom and the price is high in my opinion.
    Apr 26 12:28 PM | 5 Likes Like |Link to Comment
  • What Happens When Liquidity Disappears? [View article]
    Tampat and JS,

    Thanks, appreciate the feedback. And Joseph I really appreciate your articles, knowing how long it takes me to post a good comment I know that the effort you put into these articles is staggering. Thanks.
    Apr 26 11:31 AM | 1 Like Like |Link to Comment
  • What Happens When Liquidity Disappears? [View article]
    A couple of counter point to your thoughts here for your consideration.

    First, you assume that the monetary and fiscal policies are not correlated. To test this I would question, do you believe the fiscal overspending could be achieved without the FED buying up nearly all the treasury debt thus keeping fiscal borrowing costs low? I'm not sure how you would support an argument of answering yes to that question so then I would argue that the FED action is not responsible but is actually irresponsible as an enabler or partner in over-spending.

    "People are quick to point fingers at the FED for QE but in reality it kept our economy from the brink of depression."

    First I would question the idea that it did accomplish keeping the US economy from depression. Unemployment remains extremely high especially when considering the losses in labor participation rate. Second, the GDP chart indicates we are moving into another recession and perhaps a depression.

    Second, I would ask a two part question first is this really a role we want to empower the FED to do (prevent recessions/depressions) and was preventing a depression a good thing? I would argue NO that is not a role we want to empower the FED to do and NO preventing a depression was not a good thing.

    I argue from this standpoint because I am a champion of "free" markets meaning I believe that private industry is the driver of both economic prosperity and economic freedom and that in order to achieve both in the most efficient manner that governments role should be minimized to creating regulations which promote private industry investment and growth and police corruption.

    Mr. Stuber's article supports my argument in clearly pointing out "It is the private sector actors that must act in order to achieve the goals the Fed wants to achieve." In otherwords, the FED cannot control the economy because we operate in a free market economy (theorectically) which necessitates that private industry control growth.

    My point is that when you support FED manipulation you are supporting the idea of centrally controlled economy and worse you are helping to empower them to control it by lending credibility that they are actually able to do so.

    Business cycles are part of a normal free market economy. Interfering or attempting to artificially control them is impairing or introducing inefficiency into the free market ability to regulate itself. This type of empowerment or control is a source of great corruption.

    If you agree with Mr. Stuber's article and realize the dangers of empowering someone to control the economy you begin to realize that all the FED has done has transfer wealth. This transfer has been from individuals and private industry (think more of small business) to mainly banks, very wealthy corporate exec's, and to politicians and/or their supporters (those benefiting from government spending).
    Apr 25 04:17 PM | 13 Likes Like |Link to Comment
  • Summary Of My Post-CPI Thoughts [View article]
    Always enjoy your thorough analysis. A little surprised you didn't mention the fall in commodity prices yesterday as a counter to the inflation is coming argument.

    It wasn't just gold/silver that sold off, oil and copper were also down yesterday. Seemed to me like a deflationary signal?
    Apr 16 02:40 PM | Likes Like |Link to Comment
  • Are There Ethical Implications To The Fed's Self-Proclaimed 3rd Mandate? [View article]
    Joseph,

    Understand your position there and I agree except on the timing. I'm saying that it will need to be an orchestrated event to the degree that the original buyers aren't going to flood the market with their holdings when there are no buyers out there.

    Hell I'd be selling right now if I had any equities to sell, but I don't and that is the point. A lot of other "retail" investors don't either. Think this has to change before you see an equities fallout.
    Feb 4 01:35 PM | 2 Likes Like |Link to Comment
  • Are There Ethical Implications To The Fed's Self-Proclaimed 3rd Mandate? [View article]
    Joseph,

    Who has been buying equities higher since March of 2009? Someone is holding $3 trillion or so net long equities since then and they are going to have to sell them to someone. I assume it will be the banks cashing out and transferring the losses onto the public. If there isn't anyone to sell to then I don't see how the selloff can begin.
    Feb 4 12:30 PM | Likes Like |Link to Comment
  • Are There Ethical Implications To The Fed's Self-Proclaimed 3rd Mandate? [View article]
    Joseph,

    I think the surprise will be how long it will continue. I also think that the high volume selloff will need to come from institutions as you are going to need buyers to enter the market in order for those purchasing on behalf of the Fed to exit. I think February is a little early for this, but in order to project this better perhaps some thought into what are the real constraints to continuing these policies?

    Regarding the ethics, not sure if you saw the recent article on ZeroHedge "How the Fed's Latest QE is Just Another European Bailout", but this seems to clearly illustrate that we have been silently financing a bailout of Europe. I don't recall any "mandate" for this, but I don't watch CNBC so maybe I missed it.
    Feb 4 11:13 AM | 2 Likes Like |Link to Comment
  • Employment - Further Detail [View article]
    Thank you for your reply.

    Yes, I agree the definition leaves quite a bit to be desired. "A general increase in the price of goods and services." Are services not simply wages? And I take "general" to mean, all prices equally and consistently.

    I understand your example, but I would counter with what if a headhunter calls me and tells me company X is willing to hire me for 10% more. I don't really care what the official CPI is and neither will my current employer, all either one of us know is that the market through competition is driving up wage prices. If my employer will incur costs and have difficulty replacing me than he counters and gives me the raise FIRST and only after reflecting on the impact of this on his profits does he raise prices. This is inflation due to growth and my paradigm of this is that it is wage growth that physically transfers inflation into the economy.

    That is my point in discussing it though. I think you can see some forms of inflation, something that isn't properly defined currently and you can mistake this for "general" inflation. I also think your understanding and analysis from a trading point of view are correct in that the trading mechanisms are pointing to an increase in some form of inflation.

    However, I believe that attempting to predict what will happen with prices in the near to mid-term has to rely on what your philosophy is regarding monetary/fiscal policy. Do you believe that the current policies are going to generate real growth or not and if there is any question to whether they will do you believe these policies are sustainable?

    Because you may be seeing signs in the technicals that "some form" of inflation is rising but I do not believe you are going to see true devaluation of cash until unemployment is back to growth rates and wages are increasing, allowing Joe Blow to bid up the price of IPhones and flat screen TV's as well as houses cause he know has a job and his wages are increasing. Further, I don't think the current monetary/fiscal policies are forever sustainable. Thus, there will be a time in the near future where if these policies will need to be reverted and without real growth deflation will occur as a result.

    Important issue to decipher as the way you play these scenarios is completely different.
    Feb 4 10:57 AM | Likes Like |Link to Comment
  • Employment - Further Detail [View article]
    "we'll get wage growth after the fact...wages trail inflation, they don't cause it. "

    You are much better educated in the economic arts than me so no disrespect intended, but my simple common sense makes me doubt this statement.

    You need more buyers and/or more money chasing the same number of goods to get price inflation as I understand it. Assuming this is true then it would seem that higher wages or increased credit are required to precede inflation.

    I suppose you could get raw material price increases before wage increases as a result of "anticpated" inflation due to lack of faith in a sovereign's ability to repay you, say for example with oil and having to transact in USD to sell your oil you see the mounting debt/loose credit for banks as eventual devaluation and thus you anticipate this by increasing the price for your oil. And increasing the price of energy would have immediate price increase effects on all other raw materials as energy is an input required to produce these materials.

    But otherwise it seems impossible to get price increases without first getting additional money into the system by either increased wages or credit.

    An argument might be made that more credit is the vehicle here with low interest rates expanding credit. But this hasn't translated into expanding credit. There is data out there showing banks, corporations, and households have been saving and not spending with the increased government spending only managing to replace what the private section has pulled back on.

    Thus, how are prices rising as a result of more dollars competing for the same number of goods? I am just not seeing that, I am seeing raw material prices inflated and wages dropping (either no pay raises to equal the rise in prices, no job at all, or your full time job being replaced by part time work.....all contributing to less money to compete for the same goods).

    Thus again I fail to see how you get true inflation (def: "The overALL general upward price movement of goods and services in an economy). All prices are not going up because wages are not increasing. Thus to me you cannot have inflation without wage increases first. And before you can get wage increases you have to get people employed first.

    Sorry for the long rant but quite an important subject to properly understand at this time.
    Feb 2 06:50 PM | Likes Like |Link to Comment
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