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Salmo trutta

Salmo trutta
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  • Naive Keynesianism To Keep You From Believing Macroeconomic Idiocy Of Various Kinds [View article]
    Not very convincing. To appraise the effect of the federal budget deficit on interest rates, it is necessary to compare the deficit, not to the debt to GDP ratio (a contrived figure), but to the volume of current gross savings made available to the credit markets.

    The more alarming aspect of the federal deficits is not the effect on interest rates but the effect of high interest rates on the level of taxable income and the volume of taxes required to service a cumulative debt now exceeding $16 trillion. Both high interest rates and high taxes induce stagflation, thus eroding the tax base and increasing the volume of future deficits.

    And it's obvious that the burden of higher interest rates will be compounded. The burden becomes a function of the major portion of the debt, not just the current deficits. The burden, in fact, becomes exponential. In other words, if the trend is not stopped, the debt inevitably has to be repudiated.

    The mathematical facts were advanced from Dr. Merklein's article in 1978. Dr. Merklein made a projection as to when the National Debt would be repudiated (where a new dollar would be issued, & then political control would be transferred). The theoretical outcome after analyzing various scenarios conformed to what Dr. Franz Pick's of “PICK’S WORLD CURRENCY REPORT" said: “the dollar will be wiped out”; & called gov’t bond’s: “certificates of guaranteed confiscation”; & surmised that “the destiny of a currency determines the destiny of a nation", etc.
    Aug 21 11:36 PM | Likes Like |Link to Comment
  • Naive Keynesianism To Keep You From Believing Macroeconomic Idiocy Of Various Kinds [View article]
    It wasn't the CBs, but the investment banks (non-banks) - Bear Sterns, Lehman, Goldman Sachs, Morgan Stanley, and the wholesale mortgage securitization (underwriting and packaging), and international distribution arms of JP Morgan, Citigroup, and Deutsche commercial banks originating 75 percent of all subprime and high-risk RMBS & CMBS loans on their "trading books".

    TARP was un-necessary. Peak debt was political, not economic. High-risk, private-label, CDOs were given bogus AAA credit ratings provided they were "insured" via regulatory evading derivative financial instruments designed to evade capital requirement restrictions. But the CBs could have simply raised their loan-loss reserves and their write-offs over a period of several years thereby minimizing and absorbing their exposures. Leastways, "losses could be absorbed by the firm's more junior, permanent capital-the common equity first and ultimately long-term debt as well" (see David Stockman's "The Great Deformation").
    Aug 21 11:14 PM | Likes Like |Link to Comment
  • There Isn't $10.8 Trillion 'Stuffed Under Mattresses' Because Of QE [View article]
    No, interest rates are determined by the supply of and demand for loan-funds, i.e., Keynes's liquidity preference curve (demand for money), is a false doctrine.

    The transactions velocity of money fell as Bankrupt U Bernanke deliberately destroyed the NB's highly leveraged short-term (read daily roll-over), wholesale funding paradigm (their carry trade).

    As Alfred Marshall said: "Money is truly a paradox - by wanting more, the public ends up with less, and by wanting less, it ends up with more. All motives which induce the holding of a larger volume of money will tend to increase the demand for money - and reduce its velocity".
    Aug 21 09:55 PM | Likes Like |Link to Comment
  • Why The Wealth Effect Doesn't Work [View article]
    Nothwithstanding the fact that excessive financial investment (as opposed to real investment), was unsustainable (precipitating our Great-Depression).
    Aug 21 09:15 PM | Likes Like |Link to Comment
  • Why The Wealth Effect Doesn't Work [View article]
    "Savings do not disappear from the economy; they are merely channeled into a different avenue" The Austrian school is dead wrong.

    Keynes was stupid (in contradistinction to the General Theory, it's no "optical illusion"). It is an incontrovertiable fact. CBs create new money when they lend/invest. Never are the CBs intermediaries between savers and borrowers in the savings-investment process. The CBs do not loan out existing deposits (saved or otherwise). And the source of all time/savings deposits in the commercial banking system are demand deposits, directly or indirectly via the currency route or through the bank's undivided profits accounts (therefore the CBs pay for the deposits they already own). Thus monetary savings ("income held over beyond the income period in which received"), are "lost to investment", indeed to any type of expenditure.

    Eliminating Reg. Q ceilings decreased the supply of loan-funds and increased their cost. It decreased both the CB's and NB's profits. It increased write-offs, loan-loss reserves, and bank capital adequacy ratios. It increased the capitalization rate on earnings. It forced the Fed to follow an easier (inflationary), money policy. It causes stagflation (business stagnation accompanied by inflation).

    "An expansion of CB held time deposits is prima facie evidence of a leakage which collects in the form of unspent balances." This is the source of the pervasive error that characterizes the Keynesian economics - the Gurley-Shaw thesis.
    Aug 21 09:03 PM | Likes Like |Link to Comment
  • Naive Keynesianism To Keep You From Believing Macroeconomic Idiocy Of Various Kinds [View article]
    'everyone has been fed a total lie about government spending "crowding out" '

    Interest on gov't debt will crowd out the private sector as rates rise.
    Aug 21 11:27 AM | 2 Likes Like |Link to Comment
  • Searching For Fail, And Still Finding It [View article]
    How confusing. Do you group all repo transactions as if they are equivocal?
    Aug 21 10:53 AM | Likes Like |Link to Comment
  • Naive Keynesianism To Keep You From Believing Macroeconomic Idiocy Of Various Kinds [View article]
    (1) "it is no time for the Federal Reserve to be tapering its asset purchases"

    AD = real-output + inflation. We don't need anymore inflation. We need to incentivize new investment.

    (2) "It is especially no such time given the total absence of any evidence of any present or future upward deanchoring of inflation expectations"

    The last hurrah from the bond market is directly ahead.
    Aug 21 08:17 AM | Likes Like |Link to Comment
  • There Isn't $10.8 Trillion 'Stuffed Under Mattresses' Because Of QE [View article]
    (1) "it results from the confusion over what is “money” and what isn’t"

    Whether any new money is created by QE depends upon the Fed's counterparty (type of investor). And to say that it is just an "asset swap" marginalizes its economic impact. There are both: after-tax, income effects and asset effects (depending upon the size, type, and maturity of the particular issue(s) purchased by the "desk", and the disposition of the funds acquired by the seller).

    (2) "When the Fed implements QE they are not increasing the QUANTITY of savings in the economy"

    Not so simple. The quantity of savings does not necessarily equal the quantity of loanable-funds (it depends upon their location). Commercial bank held savings are obviously "lost to investment" (as CBs, from a system's standpoint, do not loan out existing deposits, saved or otherwise). Thus if savers transfer their balances (from the non-banks to the commercial banks), this will decrease the volume of loan-funds and tend to increase interest rates (as unlimited FDIC transaction deposit insurance did). Reversing this policy on Dec 31st 2012 provided some "escape velocity" (increased the transactions velocity of funds - Vt).
    Aug 21 07:55 AM | 1 Like Like |Link to Comment
  • Correction, Not Crash, Is What I Expect [View article]
    It's based on the Gospel of an inveterate "Fed watcher".
    Aug 20 11:06 PM | Likes Like |Link to Comment
  • The 'Secular Stagnation' Theory Is Massively Overblown [View article]
    Of the 90 employees I hired, 2 had to be fired - one for throwing up their dukes, and another couldn't ever seem to make it to work on time. Otherwise, they were all conscientious, productive, and goal driven. They were all over-qualified (I usurped HR's advertising and screening procedures)- but dealing with the inevitable turnover was easy with fast learners. But I think much of my success was related to geography rather than my management skills. Even so, my Fortune 500 division was always first and by a wide margin. I may have been labeled the "most creative", but if you set a good example (I put in 80 hours + a week), your staff tends to follow suit (i.e., good habits are learned).
    Aug 20 10:53 PM | 1 Like Like |Link to Comment
  • Correction, Not Crash, Is What I Expect [View article]
    Sorry, got interrupted and posted the wrong date - should be Oct 1st + or - one day.
    Aug 20 09:59 PM | 1 Like Like |Link to Comment
  • The 'Secular Stagnation' Theory Is Massively Overblown [View article]
    Right, and I've got some swamp land in Florida to sell you.
    Aug 20 09:39 PM | Likes Like |Link to Comment
  • The 'Secular Stagnation' Theory Is Massively Overblown [View article]
    Who have you hired lately?
    Aug 20 09:38 PM | 1 Like Like |Link to Comment
  • Correction, Not Crash, Is What I Expect [View article]
    Yes - Sept 8th (+ or - a day). It will become clearer as we approach that week. This plunge is harder to pin point (as there's no seasonal inflection point involved). But you can't rely on that date to trade the swing. Since you know the approximate time frame, you can use technical analysis to catch the move.
    Aug 20 09:09 PM | 1 Like Like |Link to Comment
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