Lukester's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/241158/comments http://seekingalpha.com/article/89416/comments?source=feed#comment-237281 237281
Japanese policy makers were constrained in the 1990s by the fear that the yen would hyperinflate if they used currency depreciation as a tool to meet demand for money. The Fed today can meet the demand for money with neither the gold standard to constrain it nor serious fear, at least at this point, of the dollar hyperinflating. As long as the US can depreciate the dollar, commodity prices will not deflate.

4) Commodity price inflation is a leading indicator of future wage inflation. A few months ago we posted the Fed's research that demonstrates this. If this inflation goes on long enough, rising wage inflation is an eventuality. As this is a global inflation, we will see global wage inflation.

5) Rates of change, and thinking in two dimensions at once. Falling demand is not in and of itself deflationary. If it were then we'd see commodity price deflation in Zimbabwe. Combinations of rates of change in demand for goods and demand for money compared to the rates of change in the supply of goods and money are inflationary or deflationary. There are four variables not two as the deflationists conceive.]]> Sat, 23 Aug 2008 14:45:03 -0400
Japanese policy makers were constrained in the 1990s by the fear that the yen would hyperinflate if they used currency depreciation as a tool to meet demand for money. The Fed today can meet the demand for money with neither the gold standard to constrain it nor serious fear, at least at this point, of the dollar hyperinflating. As long as the US can depreciate the dollar, commodity prices will not deflate.

4) Commodity price inflation is a leading indicator of future wage inflation. A few months ago we posted the Fed's research that demonstrates this. If this inflation goes on long enough, rising wage inflation is an eventuality. As this is a global inflation, we will see global wage inflation.

5) Rates of change, and thinking in two dimensions at once. Falling demand is not in and of itself deflationary. If it were then we'd see commodity price deflation in Zimbabwe. Combinations of rates of change in demand for goods and demand for money compared to the rates of change in the supply of goods and money are inflationary or deflationary. There are four variables not two as the deflationists conceive.]]> http://seekingalpha.com/article/89416/comments?source=feed#comment-237277 237277
[ Eric Janszen from iTulip: ]

QUOTE:

3) The dollar and inflation. In the minds of those forecasting commodity price and wage deflation, they have not made the connection between over-indebtedness and currency values. They can see collateral values vaporizing, the volume of loans issued contracting, and credit contracting, the conditions of a debt deflation. But because their analysis is ideological they cannot see the essential contribution of Keynes to our way of thinking about this problem, because he observed correctly is that what happens under these circumstances is that the demand for money greatly intensifies. If that demand is not met, commodity price and wage deflation results. Under the gold standard in the early 1930s, that demand could not be met. When FDR took the US off the gold standard the demand for money was quickly met and inflation resulted.
]]> Sat, 23 Aug 2008 14:41:39 -0400
[ Eric Janszen from iTulip: ]

QUOTE:

3) The dollar and inflation. In the minds of those forecasting commodity price and wage deflation, they have not made the connection between over-indebtedness and currency values. They can see collateral values vaporizing, the volume of loans issued contracting, and credit contracting, the conditions of a debt deflation. But because their analysis is ideological they cannot see the essential contribution of Keynes to our way of thinking about this problem, because he observed correctly is that what happens under these circumstances is that the demand for money greatly intensifies. If that demand is not met, commodity price and wage deflation results. Under the gold standard in the early 1930s, that demand could not be met. When FDR took the US off the gold standard the demand for money was quickly met and inflation resulted.
]]> http://seekingalpha.com/article/89416/comments?source=feed#comment-232677 232677
Surely you can't be hauling this ancient straw man argument out of the cupboard? I expected something more from you. Financial asset and material asset markets as you know far better than I, move in large multi-decade cycles. To employ your father's recollections of the "performance" of his gold and silver investments (which he purchased in 1979-1980?) across the next 25 years is the very essence of a straw man argument. Quite apart from anything else, if your father purchased gold and silver in those two years he was relying on some extraordinarily poor macro cycle advice! Any housewife with a modicum of astute sense in 1980 would have noted gold had already been in a bull market for 15+ years and it was hence becoming considerably "long in the tooth"?

This is a popularised argument, not a real argument.

No-one is falling prey to the "gold is pure money and always has been" simplifications either. It can and does suffer huge swings on any annual basis. That it "pays no interest" however has got to be the most obtuse objection out there in our present decade however. However your thesis (buy financials because they are at a juicy discount) while suggesting readers "dump" all their gold holdings is a gadfly investment advice.

I reiterate, that you go to iTulip.com and read Mr. Eric Janzsen (feel free to comment there, newcomers are welcome!) Perhaps most to the point, read the most intelligent opinions you can locare (not the easy to contradict stupid ones) refuting your notion that we must be entering an environment wich will see financials prosper and gold wither. It is important that you do not purport to provide well grounded financial advice colums here without sober mindedly reading through the data (not opinions, data) provided by Mr. John Williams at shadowstats.com.

Now rather than entertain your father on international telephone calls, an exercise which conduces primarily to positive bias re-affirmation, why not forward this communication to your dad without further comment, while you BOTH then go to consult Mr. William's data at Shadowstats as a "grounding exercise"?

There is nothing remotely to do with an "offended gold bug's religious principles" reaction at work here Mr. Amberger. What is at work is the simple "reality check" that last time some of us readers of your comments checked the data, we still noted (sharply steepening!) negative real interest rates.

If you consider it robust financial advice in such an environment to steer your readers towards financials and away from gold in that environment, I think your rationalisations for this insight must involve some considerable acrobatic warping of the standard economic theory. Sharply worsening negative real interest rates are toxic to financial assets' income streams, to the stability of their collateral, etc, and that is not even venturing into the huge potential for the further decay of their "collateral". Negative real interest rates conversely, are highly beneficial to gold, nasty corrections notwithstanding.

Rather, it appears that you have gone the way of so many other "once-stalwart" analysts, in recent days, who don't always succeed in staying balanced on top of the ball - you've interpreted or rather "conflated", a severe reaction in the commodities sector, led by oil and gold, with a secular change of trend. An investor riding a secular trend makes the really big money - by staying long when it's apparent the past six year gold bull market would be highly anomalous to abort in mid-trajectory.

And any student of the long cycles (commodities vs. financials, running like clockwork in alternation the past century and before that too) readily notes it is indeed a mid-trajectory for this commodity cycle, and indeed there if your ead of the declining quality of ore grades in practically all essential minerals and then look up from your analyst's desk far enough to note we will hit 8 billion human locusts on the planet in another thirty years, it becomes apparent that this commodity cycle may be somewhat "anomalous" in it's "longevity".

A really astute analyst will go in search of the most intelligent proponents of a thesis contrary to his own, not go and consult with people who merely reinforce his theory with straw man arguments drawn from 1980.

No acrimony here at all Sir. Only cool assessment of the dubious merit of your market call, as it will bear upon the next five - eight years, particularly for the Americans and the British, who's currencies are in various stages of accelerating depreciation. In the USD case we may well have a sharp and persistent rally, even extending out many months in an extreme case - but anyone arguing that USD rally has real national fundamentals for legs is a pied piper of gadfly analysis, at leasty in my view. The USD is a share of USA INC. And USA Inc. is a "corporation" heading for the intensive care ward in the next five years, at least if we are to accept ex-Comptroller General of the US Govt. David Walker's testimony. Maybe he is too light-weight for you? Read Mr. John Williams, at very least. Or re-read him, if you have already read Williams and concluded that you had fully digested the data he presents.

shadowstats.com (where have you been Mr. Amberger?).

Another superb source for tracking the very currency dysfunction which you so glibly overlook is Doug Noland, at prudentbear.com. You must know these two analysts perfectly well, but you seem to merely skate ate their revelations as would an MSM financial analyst. Whatever happened to all that old TAIPAN insight?]]> Sun, 17 Aug 2008 19:37:37 -0400
Surely you can't be hauling this ancient straw man argument out of the cupboard? I expected something more from you. Financial asset and material asset markets as you know far better than I, move in large multi-decade cycles. To employ your father's recollections of the "performance" of his gold and silver investments (which he purchased in 1979-1980?) across the next 25 years is the very essence of a straw man argument. Quite apart from anything else, if your father purchased gold and silver in those two years he was relying on some extraordinarily poor macro cycle advice! Any housewife with a modicum of astute sense in 1980 would have noted gold had already been in a bull market for 15+ years and it was hence becoming considerably "long in the tooth"?

This is a popularised argument, not a real argument.

No-one is falling prey to the "gold is pure money and always has been" simplifications either. It can and does suffer huge swings on any annual basis. That it "pays no interest" however has got to be the most obtuse objection out there in our present decade however. However your thesis (buy financials because they are at a juicy discount) while suggesting readers "dump" all their gold holdings is a gadfly investment advice.

I reiterate, that you go to iTulip.com and read Mr. Eric Janzsen (feel free to comment there, newcomers are welcome!) Perhaps most to the point, read the most intelligent opinions you can locare (not the easy to contradict stupid ones) refuting your notion that we must be entering an environment wich will see financials prosper and gold wither. It is important that you do not purport to provide well grounded financial advice colums here without sober mindedly reading through the data (not opinions, data) provided by Mr. John Williams at shadowstats.com.

Now rather than entertain your father on international telephone calls, an exercise which conduces primarily to positive bias re-affirmation, why not forward this communication to your dad without further comment, while you BOTH then go to consult Mr. William's data at Shadowstats as a "grounding exercise"?

There is nothing remotely to do with an "offended gold bug's religious principles" reaction at work here Mr. Amberger. What is at work is the simple "reality check" that last time some of us readers of your comments checked the data, we still noted (sharply steepening!) negative real interest rates.

If you consider it robust financial advice in such an environment to steer your readers towards financials and away from gold in that environment, I think your rationalisations for this insight must involve some considerable acrobatic warping of the standard economic theory. Sharply worsening negative real interest rates are toxic to financial assets' income streams, to the stability of their collateral, etc, and that is not even venturing into the huge potential for the further decay of their "collateral". Negative real interest rates conversely, are highly beneficial to gold, nasty corrections notwithstanding.

Rather, it appears that you have gone the way of so many other "once-stalwart" analysts, in recent days, who don't always succeed in staying balanced on top of the ball - you've interpreted or rather "conflated", a severe reaction in the commodities sector, led by oil and gold, with a secular change of trend. An investor riding a secular trend makes the really big money - by staying long when it's apparent the past six year gold bull market would be highly anomalous to abort in mid-trajectory.

And any student of the long cycles (commodities vs. financials, running like clockwork in alternation the past century and before that too) readily notes it is indeed a mid-trajectory for this commodity cycle, and indeed there if your ead of the declining quality of ore grades in practically all essential minerals and then look up from your analyst's desk far enough to note we will hit 8 billion human locusts on the planet in another thirty years, it becomes apparent that this commodity cycle may be somewhat "anomalous" in it's "longevity".

A really astute analyst will go in search of the most intelligent proponents of a thesis contrary to his own, not go and consult with people who merely reinforce his theory with straw man arguments drawn from 1980.

No acrimony here at all Sir. Only cool assessment of the dubious merit of your market call, as it will bear upon the next five - eight years, particularly for the Americans and the British, who's currencies are in various stages of accelerating depreciation. In the USD case we may well have a sharp and persistent rally, even extending out many months in an extreme case - but anyone arguing that USD rally has real national fundamentals for legs is a pied piper of gadfly analysis, at leasty in my view. The USD is a share of USA INC. And USA Inc. is a "corporation" heading for the intensive care ward in the next five years, at least if we are to accept ex-Comptroller General of the US Govt. David Walker's testimony. Maybe he is too light-weight for you? Read Mr. John Williams, at very least. Or re-read him, if you have already read Williams and concluded that you had fully digested the data he presents.

shadowstats.com (where have you been Mr. Amberger?).

Another superb source for tracking the very currency dysfunction which you so glibly overlook is Doug Noland, at prudentbear.com. You must know these two analysts perfectly well, but you seem to merely skate ate their revelations as would an MSM financial analyst. Whatever happened to all that old TAIPAN insight?]]> http://seekingalpha.com/article/89416/comments?source=feed#comment-227001 227001
I much appreciate your own work Mr. Szabo, and that of your stalwart (now former) associate, Antal Fekete, who enjoys a reputation for considerable sobriety and depth of thinking as to the decade facing us ahead.

Mr. Amberger's offhand comments here suggest he might benefit from shedding one or two of his conceits and "reading around" a little more broadly. A certain Mr. John Williams of Shadowstats, and a certain (now former) US Comptroller General "Walker", come to mind as an obligatory first stop on such a "reacquaintance tour" of our current economic landscape, for Mr. Amberger. Anyone wishing to sound breezy and glib on the topic of gold and silver's relevance today is skirting perilously close to becoming a "callow financial analyst", which is sooner or later, a risky analyst to follow. There was a time, for several decades past, when Mr. Amberger could get away with that sort of breezy dismissal of the need to seek shelter from a structural, very high inflation (not "hyperinflation", but cripplingly high inflation nonetheless) which the US is apparently now condemned to go through at some point in the next few years, but Mr. Amberger at least to my view does not have the margin as an analyst, to indulge that breezy dismissal any longer. He no longer has this license, not by my say-so, but by the say so of people like Comptroller General Mr. David Walker and Mr. John Williams, who has been tracking the government's approaching fiscal "hard landing" (more like a ripe tomato about to hit the concrete at speed) for many years. Mr. Amberger apparently needs to either shed his gadfly tone about his recommendations as a financial adviser confronting this fiscal mess upcoming, or "go back to school" and desist from dispensing financial advice while he gets up to speed on the larger issues behind gold's re-emergence.]]> Sun, 10 Aug 2008 03:35:47 -0400
I much appreciate your own work Mr. Szabo, and that of your stalwart (now former) associate, Antal Fekete, who enjoys a reputation for considerable sobriety and depth of thinking as to the decade facing us ahead.

Mr. Amberger's offhand comments here suggest he might benefit from shedding one or two of his conceits and "reading around" a little more broadly. A certain Mr. John Williams of Shadowstats, and a certain (now former) US Comptroller General "Walker", come to mind as an obligatory first stop on such a "reacquaintance tour" of our current economic landscape, for Mr. Amberger. Anyone wishing to sound breezy and glib on the topic of gold and silver's relevance today is skirting perilously close to becoming a "callow financial analyst", which is sooner or later, a risky analyst to follow. There was a time, for several decades past, when Mr. Amberger could get away with that sort of breezy dismissal of the need to seek shelter from a structural, very high inflation (not "hyperinflation", but cripplingly high inflation nonetheless) which the US is apparently now condemned to go through at some point in the next few years, but Mr. Amberger at least to my view does not have the margin as an analyst, to indulge that breezy dismissal any longer. He no longer has this license, not by my say-so, but by the say so of people like Comptroller General Mr. David Walker and Mr. John Williams, who has been tracking the government's approaching fiscal "hard landing" (more like a ripe tomato about to hit the concrete at speed) for many years. Mr. Amberger apparently needs to either shed his gadfly tone about his recommendations as a financial adviser confronting this fiscal mess upcoming, or "go back to school" and desist from dispensing financial advice while he gets up to speed on the larger issues behind gold's re-emergence.]]>