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Salmo trutta

Salmo trutta
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  • The Perils Of Pauline And The Power Of Monetary Policy [View article]
    Short-term sell in 2 weeks. Longer-term sell in mid-July.
    Apr 19 01:29 PM | 1 Like Like |Link to Comment
  • Yellen Talks About New Higher Capital Requirements For Banks [View article]
    "but also in the newly stimulated Eurodollar market"

    The E-D market was the direct result of the Pentagon running deficits. These deficits were so large that they overshadowed the private sector's surpluses. I.e., the U.S. ran net liquidity deficits that created a surfeit of foreign short-term claims against the U.S. dollar. But the private sector was not responsible. The private sector ran only 1 deficit in the years 1950-1967. It was the pentagon that was responsible for the dollar ceasing to be convertible into gold.
    Apr 19 11:54 AM | Likes Like |Link to Comment
  • Yellen Talks About New Higher Capital Requirements For Banks [View article]
    "Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) that eventually became the largest holders of residential mortgages in the country"

    As predicted by Dr. Pritchard (Ph.D. economics, Chicago 1933), in June 1980:

    "One of the principal purposes of the Act (DIDMCA of March 31st 1980), was to provide the housing industry with a reliable source of funds. That may be achieved through various governmental and quasi-governmental corporations. But the role of the S&Ls in housing finance will probably diminish significantly. By becoming commercial banks and having a larger spectrum of loans to choose from, the S&Ls will act like banks and whenever possible eschew 'borrowing short and lending long' "
    Apr 18 06:46 PM | Likes Like |Link to Comment
  • Yellen Talks About New Higher Capital Requirements For Banks [View article]
    "What happened to this system?"

    We got:

    "A sworn fore of bureaucrats, Mr. Wriston often joked: “Regulators sit by while snails go by like rockets.” He devoted much of his career to diving through loopholes in bank holding-company legislation or wriggling free of interest-rate restrictions. As Mr. Zweig shows, Mr. Wriston presided over an encyclopedic range of innovations-among them negotiable CDs, term loans, syndicated loans, floating-rate notes and currency swaps-that ended forever the moribund banking of the 1950s and ushered in our razzle-dazzle age of finance"
    Apr 18 06:41 PM | Likes Like |Link to Comment
  • Yellen Talks About New Higher Capital Requirements For Banks [View article]
    "Communities needed "local" banks"

    That's how we got credit unions.
    Apr 18 06:37 PM | Likes Like |Link to Comment
  • Capital Markets Are Not Buying What Talking Heads Are Selling [View article]
    "The 10-yr note has rallied while the Fed has been curtailing its asset purchases and talk of accelerating growth has increased"

    QE, & declines in some inflation indices, combine to suppress yields:

    (1) Import (End Use): All commodities

    (2) Producer Price Index: All Commodities

    (3) S&P Case-Shiller 20-City Home Price Index©
    Apr 18 06:32 PM | Likes Like |Link to Comment
  • The Perils Of Pauline And The Power Of Monetary Policy [View article]
    I predicted the "flash crash" 6 months before & within one day:

    flow5 Message #10 - 05/03/10 07:30 PM
    The markets usually turn (pivot) on May 5th (+ or - 1 day).

    The exact same thing was said about "Black Monday". And the pundits claimed that "Black Monday" was also due to "program trading". The pundits also claimed Feb 27 2007 (like Black Monday), started across the ocean. In fact, both were home grown.

    And I hope no one ever fully understands my numbers.
    Apr 18 04:15 PM | Likes Like |Link to Comment
  • The Perils Of Pauline And The Power Of Monetary Policy [View article]
    "Best of all, no one has really come up with a convincing explanation for why this happened nor can anyone really guarantee it will not happen again"


    Written on Mar 30 11:31 am prior to the MAY 6th FLASH CRASH:

    "Contrary to economic theory, & Nobel laureate Dr. Milton Friedman, monetary lags are not "long & variable". The lags for monetary flows (MVt), i.e., the proxies for (1) real-growth, and for (2) inflation indices, are historically, always, fixed in length (mathematical constants). However the lag for nominal gdp (the FED's target??), varies widely."

    Assuming no quick countervailing stimulus:

    jan..... 0.54.... 0.25 top
    feb..... 0.50.... 0.10
    mar.... 0.54.... 0.08
    apr..... 0.46.... 0.09 top
    may.... 0.41.... 0.01 stocks fall

    Been saying this for the last 6 months. Should see shortly. Stock market makes a double top in Jan & Apr. Then the real-output of final goods & services falls/inverts from (9) to (1) from Apr to May.

    Recent history indicates that this will be a marked, short, one month drop, in rate-of-change for real-output (-8). So stocks follow the economy down
    Mar 30 11:31 am

    The FED was able to inject liquidity to offset this decline. The FALL in these numbers was later erased.
    Apr 18 01:56 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    "In the last tightening cycle, which occurred from June 2004 to July 2006, with the FF going from 1% to 5.25%, stocks rose"

    My point is that forward interest rate guidance (Optimal Control Path of Interest Rates), provides false signals. I.e., Keynes's liquidity preference curve (demand for money) is a false doctrine.

    The money supply (& commercial bank credit), can never be managed by any attempt to control the cost of credit (i.e., thru pegging the interest rate on governments; or thru "floors", "ceilings", "corridors", "brackets", IOR, etc).
    Apr 17 03:38 PM | Likes Like |Link to Comment
  • Yellen Talks About New Higher Capital Requirements For Banks [View article]
    It began with the General Theory, John Maynard Keynes gives the impression that a commercial bank is an intermediary type of financial institution serving to join the saver with the borrower when he states that it is an “optical illusion” to assume that “a depositor & his bank can somehow contrive between them to perform an operation by which savings can disappear into the banking system so that they are lost to investment, or, contrariwise, that the banking system can make it possible for investment to occur, to which no savings corresponds.”

    In almost every instance in which Keynes wrote the term bank in the General Theory, it is necessary to substitute the term financial intermediary in order to make the statement correct. This is the source of the pervasive error that characterizes the Keynesian economics, the Gurley-Shaw thesis, the elimination of Reg Q ceilings, the DIDMCA of March 31st, 1980, the Garn-St. Germain Depository Institutions Act of 1982, the Financial Services Regulatory Relief Act of 2006, the Emergency Economic Stabilization Act of 2008, sec. 128. “acceleration of the effective date for payment of interest on reserves”, etc.
    Apr 17 03:27 PM | Likes Like |Link to Comment
  • Yellen Talks About New Higher Capital Requirements For Banks [View article]
    Higher CB capital adequacy requirements back during the early 30's didn't prevent the Great-Depression.

    "The era of credit inflation began"

    No. The Fed tried to counter the decline in AD (aggregate monetary purchasing power), due to the decline in the volume of savings that was being transferred (invested & matched), through the non-bank financial institutions. I.e., the Phillips Curve was denigrated as monetary savings became impounded within the CB system (i.e., as the BOG raised the CB's Reg. Q ceilings on 5 separate occasions beginning in 1957).

    1935 2.5%
    1957 2.5% to 3%
    1962 3.0% to 4% (for some categories)
    1963 4.0% (for all categories)
    1964 4% to 4.5%
    1965 to 5.5%

    This lead to dis-intermediation within just the non-bank financial sector (the thrifts, e.g., MSBs, CUs, & S&Ls). But the CBs suffered no dis-intermediation as dis-intermediation for the CBs isn't predicated on interest rate ceilings (due to the many gov’t backstops afforded the member banks).

    Net changes in Reserve Bank credit since the Treasury-Reserve Accord of 1951 are determined by monetary policy objectives, not the savings practices of the public (and not yet by fiat money or Federal fiscal deficit financing). The CBs could continue to lend even if the non-bank public ceased to save altogether.

    1966 is the paradigm. Reg. Q ceilings were twice lowered for the commercial banking system exclusively. The net result was that the non-banks recovered (the credit crisis was ameliorated), the commercial banks became more profit (while CB credit expanded at normal roc’s).

    The non-banks do not compete with the commercial banks for savings. Savings flowing through the non-banks never leave the CB system as anyone who has applied double-entry bookkeeping on a national scale would know. And why should the CBs pay for something they already own?

    Big money center banks can only "cannibalize the deposits of the local community and siphon the funds off to lend in the larger city" (like borrowing in the E-D market), if they're allowed to buy their liquidity as opposed to following the old fashioned practice of storing their liquidity. But even then, the lending capacity of the TBTF banks is dependent upon monetary policy (not the savings practices of the nonbank public).

    “they could buy all the funds they wanted at going market interest rates”

    You can’t take money out of the banking system unless you hoard currency or convert domestic currency to foreign currency (& if you live locally there’s no reason for its conversion). I.e., the size of the CB system remains unaffected (only the distribution of deposits changes).

    And all E-D deposits are created abroad:
    See: "The Euro-Dollar Market": Some First Principles - Milton Friedman

    And Euro-dollars have never been a problem:

    See: "Eurodollars and the U.S. Money Supply" – Anatol B. Balbach and David H. Resler
    Apr 17 03:19 PM | Likes Like |Link to Comment
  • Deflation Risk Is Low And That's Good For The Dollar [View article]
    MV=PY is not Irving Fisher's "equation of exchange". MV=PT is.
    Apr 17 01:43 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Bankrupt you Bernanke followed a contractionary monetary policy for 29 consecutive months (beginning in Feb 2006 - at the top of the housing market). I.e., the rate-of-change in monetary flows (the proxy for inflation) was negative (less than zero) for 29 consecutive months.

    Then as I predicted:

    POSTED: Dec 13 2007 06:55 PM |
    The Commerce Department said retail sales in Oct 2007 increased by 1.2% over Oct 2006, & up a huge 6.3% from Nov 2006.
    10/1/2007,,,,,,,-0.47,... -0.22 * temporary bottom
    11/1/2007,,,,,,, 0.14,,,,,,, -0.18
    12/1/2007,,,,,,, 0.44,,,,,,,-0.23
    1/1/2008,,,,,,, 0.59,,,,,,, 0.06
    2/1/2008,,,,,,, 0.45,,,,,,, 0.10
    3/1/2008,,,,,,, 0.06,,,,,,, 0.04
    4/1/2008,,,,,,, 0.04,,,,,,, 0.02
    5/1/2008,,,,,,, 0.09,,,,,,, 0.04
    6/1/2008,,,,,,, 0.20,,,,,,, 0.05
    7/1/2008,,,,,,, 0.32,,,,,,, 0.10
    8/1/2008,,,,,,, 0.15,,,,,,, 0.05
    9/1/2008,,,,,,, 0.00,,,,,,, 0.13
    10/1/2008,,,,,,, -0.20,,,,,,, 0.10 * possible recession
    11/1/2008,,,,,,, -0.10,,,,,,, 0.00 * possible recession
    12/1/2008,,,,,,, 0.10,,,,,,, -0.06 * possible recession
    Trajectory as predicted:
    Apr 16 06:14 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    The 1987 crash wasn't much different than 2010's "flash crash" (which I predicted 6 months in advance & within 1 day). And it's ludicrous to compare the Great-Depression with the Great-Recession.

    "It is hard for me to envision or accept that a substantial rise in the federal funds rate from 1% to 5.25% is not a tightening"

    Roc's in MVt = roc's in aggregate monetary purchasing power. Roc's in nominal-gDp is a proxy for roc's in all transactions in Irving Fisher's "equation of exchange".

    A “tight” money policy is defined as one where the rate-of-change in monetary flows (our means-of-payment money times its transactions rate of turnover) is no greater than 2-3% above the rate-of-change in the real output of goods & services. I.e., AD rose (didn't decelerate or contract) from June 2004 until February 2006:

    SA Real-gDp:

    1/1/2000 12365.2 ,,,,,,,
    4/1/2000 12598.7 ,,,,,,,
    7/1/2000 12614.8 ,,,,,,,
    10/1/2000 12682 ,,,,,,,
    1/1/2001 12645.7 ,,,,,,, 0.023
    4/1/2001 12712.8 ,,,,,,, 0.009
    7/1/2001 12674.1 ,,,,,,, 0.005
    10/1/2001 12705.2 ,,,,,,, 0.002
    1/1/2002 12824.6 ,,,,,,, 0.014
    4/1/2002 12894.7 ,,,,,,, 0.014
    7/1/2002 12956.7 ,,,,,,, 0.022
    10/1/2002 12962.9 ,,,,,,, 0.020
    1/1/2003 13028.6 ,,,,,,, 0.016
    4/1/2003 13151.8 ,,,,,,, 0.020
    7/1/2003 13374 ,,,,,,, 0.032
    10/1/2003 13525.7 ,,,,,,, 0.043
    1/1/2004 13606.6 ,,,,,,, 0.044
    4/1/2004 13710.7 ,,,,,,, 0.042
    7/1/2004 13831 ,,,,,,, 0.034 your tightening start date
    10/1/2004 13947.7 ,,,,,,, 0.031
    1/1/2005 14100.2 ,,,,,,, 0.036
    4/1/2005 14177.2 ,,,,,,, 0.034
    7/1/2005 14292.9 ,,,,,,, 0.033
    10/1/2005 14372 ,,,,,,, 0.030
    1/1/2006 14546.4 ,,,,,,, 0.032
    4/1/2006 14591.6 ,,,,,,, 0.029 first # under 3 percent
    7/1/2006 14604.4 ,,,,,,, 0.022
    10/1/2006 14718.4 ,,,,,,, 0.024
    1/1/2007 14728.1 ,,,,,,, 0.012
    4/1/2007 14841.5 ,,,,,,, 0.017
    7/1/2007 14941.5 ,,,,,,, 0.023
    10/1/2007 14996.1 ,,,,,,, 0.019
    1/1/2008 14895.4 ,,,,,,, 0.011
    4/1/2008 14969.2 ,,,,,,, 0.009
    7/1/2008 14895.1 ,,,,,,, -0.003
    10/1/2008 14574.6 ,,,,,,, -0.028
    1/1/2009 14372.1 ,,,,,,, -0.035
    4/1/2009 14356.9 ,,,,,,, -0.041
    Apr 16 06:08 PM | 1 Like Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    "bonds ended a long term secular bull market in May 2013 that started in 1982"

    The long-term secular bull market ended on July 25 2012 (2.46% Daily Treasury Yield Curve). I predicted the top in yields within 1 basis point (Sept 1981). I predicted yields would bottom in June 2012.
    Apr 16 12:44 PM | Likes Like |Link to Comment