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Michael Clark

Michael Clark
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  • The 'War On Cash' Migrates To Switzerland [View article]
    The central banks postitively DO NOT WANT people changing their allegiance from US Dollars, Swiss Francs, Euros and Yen to gold. That is why they have been actively suberting the precious metals markets, to make them unattractive as an investment. But negative interest rates change all that.

    I'm still short gold technically. But when it turn back up I don't see any reason it will not replace fiat currency as an investment darling. The central banks have failed. NIRP is the end of central banks.
    Apr 26, 2015. 05:11 PM | 2 Likes Like |Link to Comment
  • Has The Fed Caused An Economic Slowdown? [View article]
    Does this mean no one can learn anything? Or that we are all self-taught?

    Salmo: I've never mentioned that I love your user name. I grew up fishing for German Brown Trout in the Platte River in Southern Wyoming. No fish finer.

    While I may have doubts that you are the alpha and omega, I have no doubt that the Brown Trout (and the Salmon as a symbol) ARE the alpha and omega.

    MJC
    Apr 25, 2015. 04:59 PM | 1 Like Like |Link to Comment
  • Oil's Plunge: Cause For Concern Or Celebration? [View article]
    We can demand our money back from the big banks. We just don't have the kind of leadership that is willing to do this, to bite the hand that feeds it with election campaign funding. We need new leadership and a new campaign mofel that is shorted and not at all expensive.
    Apr 23, 2015. 12:43 PM | Likes Like |Link to Comment
  • RESPECT FOR THE FED? NO. NOT MUCH. [View instapost]
    Can't argue with you there, Moon. My vision of what the FED SHOULD be doing and what they are doing is many miles apart.

    There is no question that the FED is positioned to make their friends, sponsors and associates richer and richer. If it benefits the society, well that's ok too, I guess.

    Audit the Fed. Arrest any law-breakers. Take it from there.
    Apr 23, 2015. 05:05 AM | Likes Like |Link to Comment
  • Was Monetary Policy Loose During The Housing Boom? [View article]
    the Fed was too loose during the boom and too tight during the bust.

    ____
    The FED should have begun tightening in 2001, when the business cycle ended. The FED's job is not to micromanage the economy. It is to macro-manage the economy. The FED's job is not to defeat deflation. The FED's job is to lead the economy through the major twin cycles of inflation or growth, sometimes called the Spending Cycle (1983-2001), and then out of that cycle into the other major cycle of non-growth, rest, also called the Saving Cycle (2001-2019).

    The first cycle, the Spending Cycle, the FED helps to fuel by lowering interest rates, broadly and smoothly, through the life of the cycle. The second cycle, the Saving Cycle, the FED helps to fuel by raising interest rates, broadly and smoothly, through the life of the cycle.

    This would be macro-managing the cycles of growth and non-growth. The FED jacking down rates in 2001, raising them in 2004, lowering them in 2006, and then instituting ZIRP and QE for the next decade shows that the FED does not understand its job. The FED is NOT supposed to stimulate massive housing speculation and debt assumption when the business cycle is ending. The FED needed to start making money more expensive in 2001 to avoid toxic debt buildup and asset bubbles in stocks, housing, commodities, and again stocks through the present.

    It is not enough that the FED has good intentions. The FED needs to have vision, to understand the concept of macro-management and leadership rather than to become transfixed by glamor and popularity in the popular media. The FED does not need to save the world and grab headlines by rushing to the aid of a helpless society or globe. The FED's job is to discipline the society when it needs to be disciplined; and to stimulate economic growth when the spending cycle, the Business cycle, returns.

    All the argument about micro-management issues the FED should pursue vanishes once we understand how Nature works. Nature breathes. Everything in Nature breathes. Expands and contracts. Nature expands for eighteen years; and then Nature contracts for eighteen years. This behavior is repeated endlessly.

    ...1911-1929: expiration, growth, Spending Cycle.
    1929-1947: inspiration, non-growth, Saving Cycle.
    1947-1965: expiration, growth, inflation, Spending Cycle.
    1965-1983: inspiration, non-growth, deflation, Saving Cycle
    1983-2001: expiration, growth, inflation, Spending Cycle.
    2001-2019: inspiration, non-growth, deflation, Saving Cycle.
    2019-2037: expiration, growth, inflation, Spending Cycle....

    This is not the way we usualy look at history. We have been taught to be rational and logical and scientific and to exclude everything that is not rational and logical and scientific. In fact, this perspective excludes a lot of reality -- everything that doesn't fit with its perspective or prejudice. This is the dominant view of the world no doubt, the scientific, the empirical. This fact does not mean the view is comprehensive and exclusively true. It only means that this left-brain daylight vision of the world has the most money and the largest armies. It says nothing about what is true.

    Clearly the comprehensive view would include as much of reality as it can, rather than insist on the polarity of the ego vision: one view is right and the other view is wrong. The philosophy that includes the largest picture of reality, right brain married to left brain, seems to me most likely to have the largest comprehension of what the world is, and how the world works.

    I wrote this earlier today, and it seems to fit quite clearly with the themes of this article. Forgive me for quoting it here.

    Respect for the FED? No. Not much. The FED has a very simple job to do -- micromanagement of markets is not their responsibility. The FED has only one job. To lead the economy out of its cyclical deflation by lowering interest rates; and to lead the economy out of its cyclical inflation by raising rates. The first part of this job the FED almost always does well; the second part it never does well. It is conceptually handicapped by trying to hammer a square peg (the idea that perpetual economic expansion is possible) into a round hole (aren't all holes round? The reality that Nature, and everything in Nature, breathes, expands and contracts). We are experiencing a classic denial of reality, based somewhat on good intentions. We need to follow Nature. We need BOTH expansion of spending and the evolution of civilization that goes with this AND the end of that expansion, rest, conservation of energy that is the basis of the rest season, and saving to replace spending as the driver of this dual cycle.

    If we know the cycles of Nature, and it is the FED's job to know this, the task becomes simple:

    Lower rates from 1911-1929; raise rates from 1929-1947; lower rates from 1947-1965; raise rates from 1965-1983; lower rates from 1983-2001; raise rates from 2001-2019; lower rates from 2019-2037....

    We are one-sided. We want only the pleasure side of life, the bright sunny side, the youth. But this is childish. Of course the child wants only candy. But are his parents supposed to give him only candy. If they do he never grows up; or he grows up stupid and fat with bad teeth. Where is the discipline here? The FED is supposed to be imposing discipline on the child. We expand, we get rich, we spend money, we are happy, the sun is shining. But then the day gets old, and the party has to end. The FED is unwilling to say that the party is ending. Lowering interest rates and flooding money into the economy to keep cost of carry debt low is a FED (a parent) who refuses to discipline his children. We become spoiled; decadent; eventually we will be overthrown as a nation because we have leaders who are afraid to give us bad news, that reality is not quite what we want. We have gutless parents who are willing to let the entire system we have created go bankrupt and disintegrate rather than to have to play the role of the bad guy who says "enough is enough. We have to face reality."

    We will get a strong Father figure who will put his foot down. This will bring in suffering and austerity, probably connected with war. That is what ususally happens in history when the Mother Principle rules too long and spoils the children and the Father Principle (which includes the concept of discipline, and self-discipline) has been shunted out of the picture (because he's not intellectually sophisticated enough to 'know what is real'). Civilization dies from a lack of self-discipline; and from a people who insist on being told only the good news.

    Remember Albert Einstein's description of wisdom: "Find what is essential, and eliminate the rest."
    Apr 23, 2015. 04:40 AM | Likes Like |Link to Comment
  • The Naked Truth [View article]
    I don't think only financial assets were inflated. Housing was also inflated. That is, inflated to halt the deflation in process. Housing is still overpriced. And this is because of FED intervention.

    Commodiites were also inflated. But commodity inflation ran out of gas exactly when the US Dollar recovered from QE Dollar destruction.

    The main target of QE was 1) backdoor and continuing bank bailout -- it was more politically acceptable to call it QE and ZIRP than another bank bailout; and 2) weaken the US Dollar. A strong Dollar is the main force of global deflation in the global economy. Weak Dollar inflates the global economy; Strong Dollar deflates it.
    Apr 23, 2015. 04:05 AM | Likes Like |Link to Comment
  • The Naked Truth [View article]
    Respect for the FED? No. Not much. The FED has a very simple job to do -- micromanagement of markets is not their responsibility. The FED has only one job. To lead the economy out of its cyclical deflation by lowering interest rates; and to lead the economy out of its cyclical inflation by raising rates. The first part of this job the FED almost always does well; the second part it never does well. It is conceptually handicapped by trying to hammer a square peg (the idea that perpetual economic expansion is possible) into a round hole (aren't all holes round? The reality that Nature, and everything in Nature, breathes, expands and contracts). We are experiencing a classic denial of reality, based somewhat on good intentions. We need to follow Nature. We need BOTH expansion of spending and the evolution of civilization that goes with this AND the end of that expansion, rest, conservation of energy that is the basis of the rest season, and saving to replace spending as the driver of this dual cycle.

    If we know the cycles of Nature, and it is the FED's job to know this, the task becomes simple:

    Lower rates from 1911-1929; raise rates from 1929-1947; lower rates from 1947-1965; raise rates from 1965-1983; lower rates from 1983-2001; raise rates from 2001-2019; lower rates from 2019-2037....

    We are one-sided. We want only the pleasure side of life, the bright sunny side, the youth. But this is childish. Of course the child wants only candy. But are his parents supposed to give him only candy. If they do he never grows up; or he grows up stupid and fat with bad teeth. Where is the discipline here? The FED is supposed to be imposing discipline on the child. We expand, we get rich, we spend money, we are happy, the sun is shining. But then the day gets old, and the party has to end. The FED is unwilling to say that the party is ending. Lowering interest rates and flooding money into the economy to keep cost of carry debt low is a FED (a parent) who refuses to discipline his children. We become spoiled; decadent; eventually we will be overthrown as a nation because we have leaders who are afraid to give us bad news, that reality is not quite what we want. We have gutless parents who are willing to let the entire system we have created to bankrupt rather than to have to play the role of the bad guy who says "enough is enough". "We have to face reality."

    We will get a strong Father figure who will put his foot down. This will bring in suffering and austerity, probably connected with war. That is what ususally happens in history when the Mother Principle rules too long and spoils the children and the Father Principle (which includes the concept of discipline, and self-discipline) has been shunted out of the picture (because he's not intellectually sophisticated enough to 'know what is real'). Civilization dies from a lack of self-discipline; and from a people who insist on being told only the good news.
    Apr 22, 2015. 10:03 PM | 3 Likes Like |Link to Comment
  • The Naked Truth [View article]
    ZONA,

    The more debt you hold, the more you need interest rates lower and lower to service that debt -- or you need expanding profits to service the debt no matter what the interest rates. But profits are shrinking; salaries are shrinking; tax revenues are shrinking. That is why we have ZIRP. To protect the loans the banks made -- to protect the banks. But there is a limit to squeezing this lemon. At a certain point the borrower doesn't qualify for more debt. He's 'full'. Then the big bang turns into the big crunch.

    At that point we need to deflate the debt bubble as fast as we can. We are at that point now. Oh, we can always go to NIRP, Negative rates. But what do negative rates do? They destroy currencies; and they unleash gold as an alternative to paper currencies. NIRP will inflate assets again -- but it will be a race to the end. We will wake up with massive profits on paper but the currency we use to buy the assets will be broken.

    Can one pump air into a broken Hindenburg. That is what central banks have been trying to do. But the broken Hindenburg is a black hole. It gobbles up all the matter in its neighborhood (to keep it in the air) but keeps losing altitude all the time. When the business cycle ends (as it did in 2001), then you have the long process of dismantling the old Hindenburg and building a new one. Once you pop the bubble it's not going to fly any longer.

    All things have limits. Expansion of money, debt, spending has limits. It's like the universe itself; the breath of God fills it; but then that breath changes direction, and the universe falls in on itself. No matter how much new money you throw into the black hole you will not be able to change a black hole into a white hole (which spews matter into the universe instead of sucking it out, as the black hole does) -- until the full process is completed. In this instance, the white hole is the creation of money; the black hole is the destruction of money. And, if my calculations are correct, the most recent transition from White Hole to Black Hole happened in 2001; and the next scheduled transition back to White Hole from Black Hold is 2019.

    There are rules (or laws) by which the universe is governed. Man's will is strong; but it is not all-powerful. Hence, humans get to learn and re-learn a lesson in humility every 36 years. Funny, they don't seem to learn though.
    Apr 22, 2015. 09:38 PM | 1 Like Like |Link to Comment
  • Oil's Plunge: Cause For Concern Or Celebration? [View article]
    Yes, a wonderful precedent for the TBTF banks. If they get in trouble, the taxpayers have to bail them out again. Isn't that right? Not really. Precedents are made to be broken.

    We are approaching the end of the Old World and the beginning of the New World. Will the banks still be in charge when the New World appears? Maybe not the same banks. It will be interesting to watch.
    Apr 22, 2015. 07:40 PM | Likes Like |Link to Comment
  • Oil's Plunge: Cause For Concern Or Celebration? [View article]
    You're right, Eva. I think you are at the nub, the center, of the global expansion, deflation process. The weak dollar seeks the world with debt-growth; and the strong dollar harvests the world, ends the expansion.

    As long as the dollar strengthens, oil is going no where. And the dollar should continue to strengthen, with occasional pullbacks. The world borrowed billions or trillions of US-Dollar denominated debt when QE was encouraging everyone to load up. They debts have to be serviced in US Dollars. As the dollar rises, that servicing becomes more and more expensive -- driving up the dollar even more -- until defaults set in. Then it is a different world. Defaults should be a major issue over the next ten years. This will hit global banks hard. And we've already have the central banks dole out trillions to protect banks from the first wave of the depression. A second wave will be truly taxing.

    Oil will only rise if the FED panics and institutes another round of QE. Which it cannot do, now that it is protecting the US Dollar against the Third World hooligans who want a new global currency. The FED wants to raise interest rates right when the Dollar is beginning to win the war against Russia and those other anti-US Dollar countries.
    Apr 22, 2015. 07:37 PM | 1 Like Like |Link to Comment
  • The Naked Truth [View article]
    The Emperor's Clothes are not easy to see. But it is dangerous to comment on the fact. So everyone pretends they see the same thing, smile, have another beer. That is convention.
    Apr 22, 2015. 07:27 PM | 1 Like Like |Link to Comment
  • The Naked Truth [View article]
    I agree with you, Peter. Except that last line about the stock market being 'far from the eupohoria stage'. Stocks have been euphoric ever since the world began worshipping the QE Doctrine -- and the ZIRP Theology.

    If interest rates do rise, stocks with discover anti-euphoria very soon, and abruptly. The strong dollar is deflating earnings all over the globe, and forcing foreign borrowers in US-debt to buy dollars hand over fist, forcing the dollar even high. This means defaults will be coming, first, in the emerging or developing markets; then world banks will get crushed again, as the default toxin spreads.

    The future will not be smooth or easy.

    Wait until homeowners begin fleeing from California -- which has already begun. Housing prices in California will collapse, because no one will want to live there with no water. Californians will spread to other states looking for homes to buy and work, driving up the prices of housing in nearby states. But those million dollar 2 bedroom bungalos in LA won't be selling for a million dollars any longer once the water runs out. Could be interesting?
    Apr 22, 2015. 07:20 PM | 1 Like Like |Link to Comment
  • The Naked Truth [View article]
    That 'safety net' has been purchased by trillions of created money (stolen from future world citizens) and ZIRP (safe income removed from retirement portfolios, with a guarantee that the markets would not be allowed to crash)...if we take another leg down in the global economy, that safety net will all be used up.

    Having said that, I agree with almost everything you say Convoluted. And you say it well.

    Remember, we have through 2019 to survive, at which time a recovery of a sort, an expansion, will begin. But having done a lot of things wrong -- protecting debt with low interest rates resists the destruction of bad debt that is supposed to happen from 2001-2019, and in every Deflation Season -- so one wonders what kind of a recovery and expansion it will be. If we have a terrific market crash and defaults come sweeping in in the next four years, we my do in four years what we refused to do in the last 14.

    Look at Japan. We are following in their footsteps in many ways. I believe Japan's next step is re-militarization and preparation for war with China as a way of waking their populace up to their pending death-sentence (and laws requiring people to breed).

    Central planning. Yes, it's a wonderful thing. "I just love the smell of Napalm in the morning."
    Apr 22, 2015. 07:12 PM | 3 Likes Like |Link to Comment
  • The Naked Truth [View article]
    Too much debt to have inflation. The central banks have been spending like crazy to give us 2% inflation and can't do it.

    From 1929-1947 we had massive debt but no real inflation was possible either, until we destroyed the debt, through a world war and a global depression.

    In the 1965-1983 Deflation Season, we had not debt, so we got a lot of inflation AND a lot of deflation; and a new word: STAGFLATION.

    Today, even more debt than in the 1929-1947 Deflation Season. Can't get inflation. Watch out for another leg down in this Great Depression, and World War III: they both seem on the horizon (if you are looking).
    Apr 22, 2015. 07:03 PM | Likes Like |Link to Comment
  • The Naked Truth [View article]
    Eric: Nice to read your writing. It is getting harder to find perspectives with which I agree here. (Siberia must be getting really full.)

    Keep telling us the truth. We need to hear it.
    Apr 22, 2015. 06:59 PM | 2 Likes Like |Link to Comment
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