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Michael Clark

Michael Clark
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  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    The shrill tone is the last warning. Then the society gets overturned. So, we should listen to the shrill tone. It is a message.
    Apr 4, 2015. 03:40 PM | 2 Likes Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    I agree. The FED's target is something else. Their mechanism for getting there is the FED FUNDS RATE.

    What the FED should target: inflation 1983-2001; deflation 2001-2019; inflation 2019-2037...

    Because we live in a divided 'rational' work where the ego believes 'growth' is good and non-growth evil, we cannot follow the two major cycles of economic sequences, GROWTH (SPENDING of energy and money) 1983-2001; NON-GROWTH (SAVING of eneregy and money) 2001-2019. We are victims of our view of reality. We want to always be on the good side; our egos demand it. But growth is good and bad; and non-growth is good and bad. Spending is good and bad; Saving is good and back -- that is, has good and bad results. That is why they alternate, to mitigate the negative effect (too much debt with SPENDING, not enough growth with SAVING).

    Cycles of Material Creation and Material Destruction are the Law.

    1911-1929: creation
    1929-1947: destruction
    1947-1965: creation
    1965-1983: destruction
    1983-2001: creation
    2001-2019: destruction
    2019-2037: creation

    We need to re-learn how to think. We need less good and evil, and less ego protection -- we can't always 'be on the right side'.

    GDP defines spending as good, and saving as evil. This is a real problem for us in terms of our understanding about limits. Higher interest rates are limits, discipline, something we are badly lacking in our society.
    Apr 4, 2015. 03:22 PM | 1 Like Like |Link to Comment
  • The One ETF To Avoid In 2015 [View article]
    Yes, Stephen. We agree. Strong countries have strong currencies.
    Apr 4, 2015. 03:13 PM | Likes Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    You have to understand both sides of the equation. You want perpetual growth. Nature does not grow perpetually. That is why GDP is a false measure.

    We have to plan for both sides of the equation: spending (growth) and saving (non-growth). Yes, the non-growth side is less fun. But Nature has Winter seasons that are vital to prepare for growth. Read about gestation process in nature and growth and think about gestation in economic terms.

    Gestation requires darkness and rest. We can't have light and material growth all the time. We have to also take the night, when the economy rests. 2001-2019 is a rest season -- no growth is possible.

    The ego wants to be on the good side; and the good side is growth. But this is a flaw in our thinking. Rest is also good. Sleep is good. Sleep regenerates our energy, and dreams help us to see what we must do and become during the next growth season. The Darkness is difficult. But we cannot live without it. Try not sleeping for a few days, see where your creative energy goes. The central banks are quite literally attempting to deprive us of sleep by stealing energy from the future (energy is money) to spend today to preserve what need to be destroyed: BAD DEBT.

    It is a very weak idea (lacking understanding and courage) to think that we can spend as much money as we want for ever and we will never have to pay it back. Do you understand the principle of Karma in Eastern religion? You don't spend what is not yours or you get a visit from the devil with all kinds of horrible tortures. You don't spend your granchildren's money before they are born. It is tantamount to eating the seed-corn.
    Apr 4, 2015. 03:12 PM | 1 Like Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    Thank you Fellowtraveler for pointing out the truth of what zero-bound interest rates are all about.

    Of course debt service is cheaper at zero percent interest. But there can be no global economic growth when we are protecting the debt load with all our money.

    We are suffocating economically. Interest rate movement is the breath (the oxygen) that let's us live.
    Apr 4, 2015. 03:01 PM | Likes Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    The only reason government debt is easy to service today is because the FED is forced to keep interest rates at all time lows -- many central banks are at negative interest rates today, which is a PERVERSION of the system. Please don't tell me how good everything is today with all our debt when the system must be a gigantic PERVERSION to justify that perspective.

    Can we keep interest rates at zero for the rest of human existence to protect this illusion that debt doesn't matter and we are all doing fine? Can we do this?

    I don't care where GDP is or would be. GDP is a false measure, which measures only spending. There are two sides the the economic wheel: SPENDING (1983-2001) and SAVING (2001-2019). One must nourish both sides of this wheel. It is a process, not a static system of eternal growth. Growth first (spending or expenditure of money and energy); then rest and regeneration (conservation of energy and money). As long as we don't address both sides of the wheel we are stuck, like Japan -- limbo. We can't get to the organic growth side until we destroy massive amounts of debt.

    We have some 330% total debt to Gdp. Globally, debt to GDP has never been higher. The only time it was close was the 1930's, and then we had the Great Depression and World War to curb out debt gluttony, and it took some 18 years to get back to 130% debt to gdp, which is about ground zero for growth.

    How much unemployment would we have without FED interferrence? It is hard to tell. With FED interference we have lost millions who have left the work force because their unemployment insurance is gone and they have become NONPERSONS to the government. We are adding many bartender and waitress jobs. Many younger generation are now working at multiple part-time jobs to survive.

    The government is handing out rose-colored glasses showing how GOOD everything is. I don't care to wear them. Both parties are just as bad. If the Republicans were in power they would be doing the same thing. Keep the illusion going in order to stay in power.

    If you have to keep interest rates at zero and below zero for ever, something is WRONG. It's a perversion, as I say. Interest rates must go both ways. We've created a situation where they can only go one way, without the dissolving the whole system. But negative nterest rates will dissoolve the whole currency system, and will elevate gold back to a position of the only legitimate backer of any valid currency. That's where we are going if we don't begin to raise interest rates and begin to destroy debt.
    Apr 4, 2015. 02:52 PM | 2 Likes Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    I like what your write, Mark. I think the FED needs to be above, beyond, divorced from politics, if it is going to work. It's not an easy job, in a very political contemporary climate.

    I think what the FED is lacking is philosophy, the type of philosophy that allows for long-term vision and real leadership.

    If interest rates do go negative everywhere, then currencies will be toast. Then Chaos. Then, at the next beginning, currencies will be lashed to gold, and we will DESIRE the limits it creates. Chaos will create a desire for limits, because Chaos is lawlessness, limitlessness...which is what we have now, as you suggest. How does a child learn to behave? Limits.

    The Old World is dying. The New World (2019-2037?) will begin in strict limits and disciple; and this discipline will decay and becme what it always does, CHAOS again.
    Apr 3, 2015. 04:34 PM | 1 Like Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    In the beginning, there was Chaos. Only after did law and order appear.
    Apr 3, 2015. 04:27 PM | Likes Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    Yes. Complexity has become a new touch-stone of and justification for embezzlement.
    Apr 3, 2015. 03:51 PM | 1 Like Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    Me too. I thought higher interest rates rewarded savers who in turn used that nest-egg of savings to invest and create the Growth Cycle. I guess that's just too simple; must be more complex.
    Apr 3, 2015. 03:48 PM | 1 Like Like |Link to Comment
  • Major Stock Market Selloff Looms As The Fed's QE3 Ends [View article]
    My worst case Dow scenario is 8787. That would be about a 50% decline.
    Apr 2, 2015. 08:04 PM | Likes Like |Link to Comment
  • 3 New Red Flags Waving [View article]
    George Junior never admitted he wanted revenge on Saddam for trying to kill George Senior. But I think that was the driving emotional image for George. Of course, he needed an excuse. So that was weapons of mass destruction. That was just an excuse for the international press.
    Apr 2, 2015. 04:15 PM | Likes Like |Link to Comment
  • 3 New Red Flags Waving [View article]
    A "New" war? Yes. There is nothing new under the sun.

    I should have said...what? An old war has been re-awakened.

    In the sake of the crusades, these were all three wars at the same time: religious, monetary, and physical. And now Islam is the crusader; and we are the comfortable society just wanting the fanatics to go away.
    Apr 2, 2015. 04:07 PM | Likes Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    The economy is stagnant because we have too much debt. People cannot afford to take on more debt. Interest rates are lowered to help people, companies, governments more easily service their debt-load. But when interest rates get too low (zero-bound), then this liberalized debt servicing technique fails.

    So, now where are we? Negative interest rates will help those in debt service their debt, but it will also destroy currencies, inflate gold-as-a-replacment-c... value and trigger hyper-inflation. Negative interest rates are not a cure.

    There is only one cure. Higher interest rates, and the beginning (finally) of the deflation of the suffocating debt bubble which is the cause of secular stagnation.

    Of course, if one wants to destroy the currencies, and throw society into political and economic chaos, then more Quantative Easing and NIRP are the way to do this.

    Economic Growth is periodical. Economic growth is inflationary. Economic Growth is not inflation however, is not the same as inflation. They are two forces riding the same donkey. Increasing the inflation rate does not spur growth. Growth is primary. Growth stirs inflation. But when the Growth Phase of the Busuiness Cycle ends, as it did in 1929, in 1965, in 2001, then attempts to inflate to not create growth, they create asset bubbles, which are kind of monetary cancers.

    When the business cycle ends, higher interest rates are the only answer, not more debt to (euphemistally) 'extend the business cycle'. When the business cycle ends, it cannot be extended; it is over. Higher rates are like lower tides; they cannot be resisted. Higher rates at the end of the business cycle avoid massive debt bubble build-up (massive misallocation of capital), transfer the magic economic wand from SPENDING (Expenditure of Energy) 1983-2001 to SAVING (Conservation of Energy). These are laws of nature. Conservation of energy goes with rest, with sleep. Expenditure of Energy goes with waking, with building, and with day-cycle construction of the world.

    When the Day ends, only the fool goes on expending energy through the Night, believing that not sleeping will make him more rich and even stronger. Nature gives one cycle for building the world, and the other cycle for rests, thinking, dreaming, and restoring energy -- the Night experience -- so the next cycle of building the world will happen on time and with recharged vigor.

    The Spending Cycle (1911-1929; 1947-1965; 1983-2001) is about using the stored energy in one's metaphorical battery); and the SAVING CYCLE (1929-1947; 1965-1983; 2001-2019...) is about recharging one's battery.
    Apr 2, 2015. 02:47 PM | 7 Likes Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    I have a very simple rebuttal to Ben Bernanke's claim.

    "Contrary to what sometimes seems to be alleged, the Fed cannot somehow withdraw and leave interest rates to be determined by “the markets.” The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere."

    OK. I have no problem with the FED having to set the Fed Funds rate. Actually, if the FED were doing what I think is it's job, they should be leading the markets into expansion and then out of expansion through use of the Fed Funds rate. In 1983, the beginning of the Business Cycle, the FED should have begun lowering rates (which the essentially did, after Volker jacked rates up over 20%. Volcker was forced to do this because the FED did not do its job from 1965-1983 in raising rates steadily and smoothly). From 1983-2001, interest rates should have come down.

    Now where the FED erred was in not leading after 2001, when the business cycle ended. The FED needed to begin raising interest rates slowly and steadily from 2001-2019. If they had, they would have led the contraction as they also led the expansion from 1983-2001. It is very hard to rain on everybody's parade. The FED wants to make everyone happy. The FED likes to be the hero. But its job is to follow nature's laws of expansion followed always and inevitably by the end of expansion. Spending cycles must ALWAYS be followed by SAVING CYCLES, which requires higher interest rates.

    The problem is the FED wants to believe in permanent growth, even if they say they don't, otherwise we give equal weighting to both Spending and Saving (GDP does not) -- equal weighting to low interest rates (and expansion, expense or spending of energy) and high interest rates (rest, contraction, conservation of energy).

    The FED has to be willing to be the bad guy, the guy who turns out the lights, who takes away the punchbowl.

    The FED cannot be politicians. Politicians always try to please everyone. Politicians follow. Politicians always follow what the opinions they think will make them more popular. The FED has to be above the popularity issue. If the FED cannot rise above the politician role, then we need to get rid of the FED, find another way to run our system of money.

    I agree, Stockman is mostly right. And it isn't only his tone that makes people resist him; it is his message, which says, as I say, you cannot have growth for ever; and you cannot fake growth through debt growth, through stealing future earnings (taxes) to make handouts to corporations today, so they don't go broke.

    Capitalism, if we are going to let it work, must have both cycles of growth and cycles of rest, inflation and deflation; and Big Government attempting to mitigate the cycles, especially through Sociaism for the Rich, is not Capitalism but is Fascism, an Economic Fascism.

    Capitalism, for it to work correctly, must have failures, must have poorly-run and outdated companies go bankrupt. The bankrupcy process is for failing companies to not be saved, certainly not saved by taxpayer bailouts. Depressions and austerities determine which companies deserve to go on to the next expansion phase. The idea that all companies need to be saved from their own misjudgments, obsolescence, mismanagement -- this is what the FED is doing, attempting to bail out all companies with a broad swipe of their hand. Great companies will survive depresssions. Mediocre companies do not need to survive.
    Apr 2, 2015. 02:22 PM | 4 Likes Like |Link to Comment