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  • There Is Such A Thing As A Free Lunch After All [View article]
    The Fed is not an agency of the United States Government, but rather is a private corporation owned by the member institutions. It has a charter from the US government, and there are special laws which were written to govern the Fed's activities. But there are laws written to govern the activities of many private companies and the fact that it is our nation's central bank does not make a part of the government.

    The Fed isn't mentioned anywhere in the constitution at all.

    As such, it isn't constrained by constitutional limits on federal power. It can act as it pleases, which we saw when the Fed created several trillion dollars out of thin air on it's own authority during the crisis. It purchased all sorts of things - government debt, distressed securities, warrants and preferred shares of many banks, etc.

    The Fed could just hire a contractor to build high speed rail to connect every major city in the US, and create the money out of thin air to pay for it.

    It would be entirely within the Fed's authority to do so.
    Dec 11, 2013. 04:14 PM | 1 Like Like |Link to Comment
  • Is Permanent Monetary Stimulus The New Normal? [View article]
    The divergence between labor productivity and wages, beginning around 1970, coincides exactly with the widespread adoption of computerized automation technology in many industries, especially manufacturing.

    These technological advances allowed economic output per labor unit input to decouple, and with that decoupling lead also to the decoupling between output and wages.

    So, with a free labor market no longer an efficient mechanism for distributing purchasing power, we see the growing inequality we have today - capital investment became the driving force growing output rather than improvements in the labor force, and the gains of that capital investment accrued (rightly) to capital and not labor. Capital suddenly accrues far more puchasing power than it can use efficiently and labor lacks the power to purchase as much as it could consume. Rising consumer debt masked this until fairly recently, but at this point, labor has reached the point at which it cannot reliably service more debt.

    Whatever the mechanism, the correct action is to raise the purchasing power of those at the bottom of the economic scale. Those higher up on the scale will benefit from the improved business conditions that comes with consumers having purchasing power.

    Permanent monetary easing primarily benefits those that already have more purchasing power than they are using.

    Far greater transfers directly to low income citizens will be far more efficient at improving economic growth.
    Nov 23, 2013. 02:12 PM | 2 Likes Like |Link to Comment
  • 'You're Not An Economist' [View article]
    Cullen, the most ironic part of the whole "you're not an economist" attack is that the ones most likely to level it against you have nothing but disdain and disrepect for formally trained economists such as Keynes and Krugman.

    Seems to me that among the Conservative hard-money austerity crowd, having no formal training as an economist would be a positive attribute. But these seem to be your biggest critics.
    Jun 26, 2013. 08:15 AM | 2 Likes Like |Link to Comment
  • All Eyes On Asia After Another Precious Metals Sell-Off [View article]
    Well, no.

    What we had from $10 silver (which was in 2006, just 7 years ago) was a huge speculative bubble driven by futures traders - traders who only have to "front" a small fraction of the face value of the contract to buy it). Traders were betting on two distinct and powerful delusions about the future:

    1) That the modern banking / monetary system was going to collapse and that in its place we would return to barter / physical PM's for trade and that buy buying PM's now, you believe that you'll be "the king" once the collapse occurs.

    2) That monetary intervention would spiral out of control and that owning metals would be "proof" against monetary debasement.

    Traders, knowing that these beliefs were fairly widespread and fairly deeply held capitalized on that knowledge as the housing bubble, credit crunch, and great recession struck. Traders bid up silver to the moon, never taking delivery but just rolling forward and paying the storage fees. Now they control much of the "above ground" stock and are feeding it back into the market.

    Now, buyers at $20,$25, $30, and higher (and there were plenty jumping on the bandwagon at the end) are selling at a loss; the traders who SOLD the futures contracts at those prices are making a killing.

    Here, Jack, look at these pretty shiny coins. I'll trade you one for your cow.

    Who gets the better end of THAT deal? You can't milk the coins or eat them, you can only try to exchange them for another cow later. And guess what, it'll take a lot more coins now than poor old Jack has go.
    Jun 25, 2013. 07:22 AM | 3 Likes Like |Link to Comment
  • Gold Needs A New Catalyst [View article]
    My hunch is that gold is headed back to around $700, that's about the inflation adjusted value of gold's last minimum around 2000, and that it will take another 3-4 years to get there.

    But I find the commentary on Tim's articles pricelessly entertaining, which is why I follow him. You couldn't make this stuff up if you tried.
    Jun 20, 2013. 08:51 AM | 2 Likes Like |Link to Comment
  • Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
    Tesla has been a massive beneficiary of federal largesse - DOE grants, low interest loans from the DOE, DOE loan guarantees, etc., and let's don't forget that Uncle Sugar pays $7500 of the purchase price of each and every Tesla model produced by giving a $7500 tax credit to the purchaser.
    Jun 12, 2013. 05:14 PM | Likes Like |Link to Comment
  • The Bizarro World Of Tesla Longs [View article]
    It is physically and financially impossible for Tesla to become the dominant auto manufacturor.

    Long before that happened, a traditional manufacturor with larger capital reserves, decades of manufacturing experience, huge resources of capital equipment, and a large and well funded engineering and design team will introduce it's own product and saw Elon Musk's legs off.

    Tesla doesn't even manufacture it's own vehicles - they purchase rollers from Lotus. This alone makes them an industry lightweight. And the real auto maker in the equation [Lotus] has the other buy the short and curlies. Lotus controls the flow of product. Not Tesla.

    Tesla and Ferrari have little in common, save this: They both serve niche markets.

    If the EV market ever becomes mainstream, Toyota, Honda, Hyundai, GM, Ford, etc. will be the major makers.

    Suppose that Toyota wanted to put Tesla out of business: A hostile takeover of Lotus would do the trick. Compare the market cap of the two companies. Tesla exists because none of the heavyweights have decided to squash it like a bug.
    May 29, 2013. 02:41 PM | 10 Likes Like |Link to Comment
  • Promiscuous Media [View article]
    Just like SeekingAlpha, Yahoo Finance, HuffPo, and every other site that allows users to post comments.

    It's not really any different.

    All are humungous wastes of time.
    May 29, 2013. 12:47 PM | 1 Like Like |Link to Comment
  • Why Public Companies Should Have Public Tax Returns [View article]
    Corporations are required by law to submit audited financial statements. It's not a privacy issue.

    People have a constitutional right to privacy.
    Corporations don't.
    May 22, 2013. 01:44 PM | Likes Like |Link to Comment
  • Why Public Companies Should Have Public Tax Returns [View article]
    By that doctrine, nobody every owes any taxes, because somewhere up the line, somebody payed taxes.

    Like me, my customers purchase my products with their after-tax income, so by your logic, all of my income should be tax exempt.

    Sorry, but your logic is fatally flawed.
    May 22, 2013. 01:43 PM | 1 Like Like |Link to Comment
  • Why Public Companies Should Have Public Tax Returns [View article]
    Under the constitution, PEOPLE have civil rights, including the right to privacy.

    Corporations, on the other hand, are NOT people (regardless of Citizens United) and don't have civil rights.

    Corporations can, and are, forced every day to respond to subpoenas, answering questions to which a human could plead the fifth.
    May 22, 2013. 01:41 PM | 1 Like Like |Link to Comment
  • Market Outlook 2015-2045 - Men Vs. Machines [View article]
    @ Nolesince87 -

    > "will be a greater and greater class disparity between "the have*s" and "the have-nots", in accordance with the principles of capitalism... "

    This is not a return to principles of capitalism, but a return to FEUDALISM. Right now, 4 heirs to the Walmart fortune own more wealth than the bottom 40% (120MM people!!) in the US. They live in seclusion, private estates with private security forces and private utilities, etc. The court of Louis XVI did not live lives so divorced from their subjects.

    > "Human minds are capable of far greater things than menial tasks so we should not mourn the loss of such jobs."

    SOME are, most certainly are not. No matter how much training you invest in many of us, we can't all equal Albert Einstein. It's like trying to teach a pig to sing.

    The era of using work to allocate consumption is ending. What will replace it? I coudn't fathom. But the proposition that in the wealthiest nation on earth that there are many who don't have an adequate food supply and about 1/6 with no access to comprehensive healthcare is all I need to know to know that the system we now have is HORRIBLY broken.

    We, as a nation, can afford to feed, house, and care for all of us, even the least among us. No one would be diminished by this. Unless, of course, you measure yourself by the misery in which you force those below you to live. I, for one, don't.
    May 21, 2013. 12:23 PM | 2 Likes Like |Link to Comment
  • Market Outlook 2015-2045 - Men Vs. Machines [View article]
    May 21, 2013. 12:10 PM | Likes Like |Link to Comment
  • How the Fed Could Fix The Economy -- And Why It Hasn't [View article]
    Actually, US manufacturing output is still about 60% more than that of China...
    May 20, 2013. 02:23 PM | Likes Like |Link to Comment
  • Market Outlook 2015-2045 - Men Vs. Machines [View article]
    Why so worried about robots? The line between them, and good 'ol automated manufacturing (transfer lines, CNC machining, etc) is blurry and all falls under the heading of automation - which has been going on for about 400 years, ever since the first tinkerer figured out how to connect build a windmill and connect it to a bucket lift, thus automating the pumping of water out of the polders in Denmark.

    Computers, though, connected to machinery, and now you're talking real job losses and its not just in manufacturing. In fact, the dominant job losses due to IT technology aren't even in the manufacturing sector.

    How many bank tellers have been replaced by ATM machines, how many 10 key operators have been replaced by computers with vision software, how many bookkeepers have been replaced by PC's with accounting software, how many switchboard operators have been replaced by automated 'phone tree' systems, how many typesetters have been replaced by desktop publishing, how many press operators have been replaced by photocopiers, how many retail personell have been replaced by self-checkout lanes?

    Tens of millions, and none of these are considered "manufacturing".

    If anything, manufacturing and construction are more resistant to computerized automation than some others.

    Eventually, every repetitive task will be automated. Only those capable of creative thought, or those who perform unique customized services, will find work. This is bad news, of course, for the majority of people, most of whom lack the patience, discipline, or genetic luck to succeed in creative endeavors.

    And don't ever mention DaVinci surgical systems to MD's.
    May 20, 2013. 12:59 PM | 1 Like Like |Link to Comment