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  • Growth-Sapping Effect Of The Minimum Wage [View article]
    Californians are greedy. The minimum wage needs to be $500 hr. Think of all the additional consumer spending that would create, and then all the extra jobs that would lead to. This is clearly a moral issue and not an economic one, thus California needs to do this right away.
    Dec 11, 2014. 08:39 AM | 4 Likes Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "I blame them on Fizzbin markets."

    Which are not free markets.

    "Um, you have just elaborately maintained that in fact the free ones are not remotely real, "

    Which again is why you can't blame booms and busts on them.

    "As for what's scary, booms and busts aren't scary, None of it frightens any of us in the slightest. "

    Then why were you so hip on using draconian measures to get rid of them. Why are you so desparate to get gov regulations to stop all the horrid collapses you lay at the feet of free markets which you keep claiming don't exist.

    You need to get your story straight. The contradiction is an indication of fraud.

    Nice try though, but since I've heard it all over and over, it didn't have much chance at succeeding.
    Dec 10, 2014. 03:52 PM | 1 Like Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "Then free markets have no characteristics."

    No, that's like saying everything is nothing (I wonder if you will understand the reference, we will see).

    Its just like saying, "we would like a world free of child blood cancer". Even though we don't see that now, it doesn't mean we can't envision such a world and the benefits it would provide. Such worlds do have characteristics. All realities have characteristics. To say there is an existence without characteristics is yet another contradiction.

    "Fizzbin markets, such as Holland from the 16th century, England from the 18th, the US from its inception etc - those do have characteristics. They also have booms and busts - and growth and dynamism and prosperity"

    Yes, and yet again, the point is still that these were coerced markets, and thus the booms and busts were present. Thus you can't blame booms and busts on free markets.

    Markets are just reality. That's all they are, and all markets exists between two extremes of totally coerced and totally free. Totally coerced would wind up with greate booms and busts until all people disappeared, and totally free would see exponential growth and prosperity on a perpetual uptrend. See we see the logical outcome of both extremes, we have a situation where balance is not the goal. Instead the goal is to move in the direction of the most desirable extreme. Thus, we want to move more to the free market extreme, as that is the only extreme that is compatible universal goal of an ever increasing standard of living.

    Your doom and gloom perspective about free markets is driven by propoganda pounded into you by those that want to enslave you, or you yourself are pushing it because you want to enslave others.

    Reality doesn't have to be as scary as you are making it out to be. Instead, just the opposite is true. Free markets are a feature nature provides to allow us to have perpetually increasing standards of living. We just have to be willing to use our reason to embrace it.
    Dec 10, 2014. 02:34 PM | 1 Like Like |Link to Comment
  • QuickChat #276, November 27, 2014 [View instapost]
    I know most are trained in the conventional wisdom to think the following article is good news, but if you have read my posts on what a monopolized monetary system really does to gov notes (Fed notes, treas notes, etc), you will see why I say this article should be interpreted as not so good news.

    In a monetary system such as the US has (aka a central bank), taxes going to the gov that close a deficit and debt is tantamount to a rate increase from the central bank or shrinking of the balance sheet. In other words its risk-off.

    What the gov should do as the deficit closes, is to lower taxes. That staves off the quasi rate increase/balance sheet shrink via fiscal policy, leaves more Fed notes in the system for exchange and support for asset prices. Higher asset prices, like for equities, means lower financing costs for expansion and greater productivity.

    So, while I know the conventional wisdom is to look at a gov as a separate business in the economy, the reality is, it is a sub of the parent (the populace), and the notes it issues are really just a claim on the whole. Fed notes are really then just stock certificates that have the distinction of being legal tender. However, they still get their value the same way stocks do. They have to be a claim on desired assets. Thus, if asset creation goes up faster than note creation, the notes have more value.

    This is why, if the US had no IRS whatsoever, but asset production outpaced note production, you could have perpetually growing deficits and it wouldn't be a problem, just like Apple equity perpetually going up wouldn't be a problem.

    Its just the mechanics of the monetary system we actually have. We fear deficits because under a private monetary system, where the medium is gold instead of bank notes for example, the gov actually has to collect the medium to spend. The system we have now, has only really been around since the gold window was closed by Nixon, but since everyone's thinking has been forged by the prior centuries old system, that frame of thinking still dominates.

    Its hard to let go of that frame of mind, but if you want to better understand the direction of asset prices, letting go of it is crucial.
    Dec 10, 2014. 02:23 PM | 3 Likes Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "Are there any markets unpolluted with coercion? Ever, anywhere? We will wait.

    Personally I think the reality is clearly the reverse of your claim. It takes draconian coercion of a specific kind to prevent booms and busts "

    Which has been my point for several posts now, but which you still want to keep ignoring and thus in classic style, keep repeating your original false assertion.

    So, one more time.

    As you note, the OPPOSITE is TRUE. There are no markets that are not polluted with coercion. As such free markets don't exist, therefore your attempt to claim that which does not exist is the source of the booms and busts can't be true. You have claimed that it doesn't exist, therefore you cannot blame that which does not exist as the source of the booms and busts.

    So as you claim...

    "It takes draconian coercion of a specific kind to prevent booms and busts "

    Well, we have been engaged in draconian measures and we still have booms and busts. As such, you can't prove free markets cause booms and busts, since, as you have stated...

    "Are there any markets unpolluted with coercion? Ever, anywhere? We will wait."

    What we have observed is exactly the prespcription you prefer, and what we HAVE observed is booms and busts. Thus, we have gov interference and we have booms and busts.

    Try and keep up.

    So one last contrast...

    "This is observed whenever there is actual financial capitalism"


    "Are there any markets unpolluted with coercion? Ever, anywhere? We will wait."

    You can't say something has never existed, and then say you have observed it.

    The stark reality is that for thousands of years we have had coercion interjected into what should be voluntary interactions, and the result is booms and busts. The coercion is for the sake of theft, and all theft must involve fraud. Fraud is fraught with inconsistency, so whenever you see inconsistencies such as, "free markets don't exist", and, "whenever we see free markets they cause problems", you know fraud exists and where there is fraud there is theft and theft means wealth transfer and that means you need to protect yourself.
    Dec 10, 2014. 01:51 PM | 1 Like Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "But I don't. I buy hand over fist. I use borrowed money in addition to my own."

    Well now, if there is a lesson to be learned in all of this, this is it. Free markets don't lead to boom and busts, only markets polluted with coercion do. Gov intervention in prices means gov is operating outside it logical role of property protection, thus, we have the polluting and distorting effect of gov coercion on prices. That means booms and busts on top of a real, producing economy.

    Booms and busts are wealth transfers. As long as gov regulation doesn't totally destroy productivity, gains in technology (which occur all the time), will keep real productivity and thus real income going. A gov central bank, a rail road subsidy, or an infrastructure project will create asset inflation and deflation around what would be a steady growth trend. In those booms and busts is the wealth transfer that can increase your own benefit from the lack of free markets. Indeed, understanding the wealth transfer nature of gov protectionist regulations is your biggest protection against having your wealth transferred away from you and to have the wealth of the less informed transferred to you.

    Learn to monitor the subsidy mix, and you will then be able to better predict the direction of asset prices and interest rates (which is really an expression of bond prices).

    Jason is employing the "buy the dip" strategy. The risk there is that you don't always pick the absolute bottom, but it does represent one strategy of utilizing the boom and bust wealth transfer nature of coerced markets. In free markets, everyone gets richer, maybe at different rates, but they all get richer. In coerced markets, one group gets richer, while another group gets poorer. Understanding the subsidy mix is how you avoid being in the group that gets poorer.
    Dec 10, 2014. 12:40 PM | 1 Like Like |Link to Comment
  • QuickChat #276, November 27, 2014 [View instapost]
    For the month of Nov, the Fed balance sheet has finally shrunk. It is down by $823 million in Nov. For Dec, it has grown by about $279 million.

    BOJ is printing, but the ECB has hit a brick wall with the Germans. Draghi has changed his language from "expected" to "intends". So, we may not even see ECB QE in 2015.

    This will slow things down, however, US economic data got a boost from NFP, so that's risk on. My earlier of comments for 2100 for the S&P and 2.50 for the 10 year still seem reasonable (though the pace towards 2.50 may be slower than expected).
    Dec 5, 2014. 04:30 PM | 4 Likes Like |Link to Comment
  • QuickChat #276, November 27, 2014 [View instapost]
    From the FHLB...

    On September 2, 2014, the Federal Housing Finance Agency (FHFA), the regulator of the Federal Home Loan Banks, issued a proposed rule that would significantly revise the terms of FHLBank membership for all members. As currently drafted, the proposed rule would:
    • Impose a new and continuing test on all FHLBank members that requires them to maintain at least one percent of assets in first-lien mortgage loans, including mortgage-backed securities, with maturities of five years or more. Current members would have to meet this test on an ongoing basis to maintain their membership in an FHLBank.
    • Require all insured depository institution members (excluding FDIC-insured depositories with less than $1.1 billion in assets) to maintain, on an ongoing basis, at least 10 percent of assets in a broader range of residential mortgage loans to maintain membership in an FHLBank. The range of qualifying loans would include first and junior liens and mortgage-backed securities.
    • Eliminate all currently eligible captive insurance companies from FHLBank membership.
    We believe the proposed rule does not appropriately recognize the many actions of Congress that have expanded the FHLBanks’ membership and mission, as well as access to FHLBank liquidity. As drafted, the proposed rule will inhibit the FHLBanks’ ability to execute their mission and ultimately will reduce liquidity, tighten credit, and restrict the flow of funds for housing and economic development.
    If you have questions about the proposed rule or an interest in submitting a comment letter to the FHFA by the January 12, 2015, due date, please call me at the number below.
    Dec 5, 2014. 04:04 PM | 4 Likes Like |Link to Comment
  • 321K jobs added in November [View news story]
    A little more color on the jobs report.

    Be wary of this.

    "The November jobs report is unabashedly strong and that will certainly color the December 16-17 FOMC meeting. The “considerable time” phrase that has been in the statement for some time looks at great risk of being rescinded. In addition, with moderate to dovish members like Stanley Fischer and Bill Dudley speaking this week of being comfortable with a mid-2015 fed funds lift-off, this report will only feed that comfort factor."

    Gov action causes market crashes. The question of when they do, is a question of the volume of the gov action. Raising the DR is risk-off for asset prices. A 25 bps raise may only hurt them slightly, whereas a 500 bps similar to 2004 to 2007 will produce another March of 2009.

    So, any signals from the Fed about lowering the size of their BS or raising the DR or both should put you on your toes to watch out for asset prices.

    Ideally, you want to sell at the top and then buy back in at the bottom right before the Fed starts to reinflate. Such a strategy maximize the wealth transfer that a central bank is capable of producing. For example in August of 2000 when the S&P was in the 1500s and the DR was still 6.25 is when you would have wanted to bail. That would have been the time to move to bonds. Then when yields on the 10 yr hit 2% in late 2008 and the DR at 50bps and talk of QE in the air, you sell your bonds for gains and move to cash. At this point you are waiting for confirmation of QE, and so between the end of 2008 and the beginning of 2009 is when you take your cash and go back to equities, when the S&P is under 900. You do this knowing that a printing CB is a consumption subsidy, and a consumption subsidy always shows up in equities markets.

    As equities get reinflated by the central bank, people are attracted away from bonds and rates go up (just as they have during every QE). Then you will have successfully protected your wealth and even added to it, all because you understand what is really going on, instead of what you are told is going on. You will never be one of the people who characterize crashes as sudden, unexplained events caused by free markets that don't even exist. You will instead be one of the reasoned people using information to protect yourself from the wealth transferring subsidies of gov instead of those running to dogma to make excuses for promises that were never delivered on.
    Dec 5, 2014. 01:11 PM | 2 Likes Like |Link to Comment
  • 321K jobs added in November [View news story]
    Amazing the difference one election makes.
    Dec 5, 2014. 12:37 PM | Likes Like |Link to Comment
  • Predictions For November - Part I [View article]

    If a gov passes a law to outlaw private healthcare and only have gov provided health care, what do you propose to do with people who provide healthcare but are not gov employees?
    Dec 5, 2014. 10:55 AM | Likes Like |Link to Comment
  • QuickChat #275, November 3, 2014 [View instapost]
    The regulators are also leaning on the banks for more liquidity. There are also proposed capital and other regulatory changes that would require banks to have a certain percentage of their liquidity in US Treas.

    That's a great setup if the Fed ever felt pressure to dump its Treas. The banks would have to buy them to meet their requirements to hold US Treas. Its also a permanent baked in the cake demand for US Treas from new players and not just the primary dealers.

    Also, the FHLB is proposing new rules that members keep at least 1% of their total assets in mortgage products in order to stay members. That requirement could be met by holding MBS. So, in theory, if such a reg goes through, that would mean higher demand for MBS and thus lower yields (even lower than they are now) going forward. Again, in theory, if you were in the market for MBS, you would want to buy before such a reg took effect.
    Dec 5, 2014. 10:32 AM | 2 Likes Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "Yes we can. We can prove, to a demonstration, from that very claim, that to the one making it "free markets" is not a real distinction out in the actual world sorting real referents into different categories, but is instead a mere abstraction registering said person's disdain for all of existence and everything it has ever contained. "

    Yeah nice try.

    Translation = since I can't prove my fantasy world, I will just make up a bunch of stuff so I can avoid the reality of logic and reason. Thereby just by accepting my initial false assumption, I can build an entire world of fantasy as long as I never question the falsness of my original false assumption.

    It is this unwillingness to look at all the variables that makes you guys so surprised when markets crash. When you understand how the gov subsidies lead to the asset inflation and deflation, then you won't have to stand around with your mouths open when the markets crash. Instead of saying "see, see, mysterious free market forces caused everyone to make the exact same mistake at the exact same time at a time that no one could have predicted, and let me also add that free markets don't exist, but they still caused the crash anyway", you will then be able to say, "just as I predicted, the Fed once again pulled in its subsidies by raising the DR 600 bps and asset prices fell, and then they increased their subsidies by lowering the DR by 600 bps and then started exchanging bonds for more Fed notes, and just as predicted, asset prices have risen".

    However, I expect you will talk more about pink unicorns and other fantasies like free markets that you claimed don't exist doing damage after you just claimed they don't exist. I don't really expect you to make up your mind.
    Dec 5, 2014. 10:13 AM | 2 Likes Like |Link to Comment
  • Fake Growth, Fake Money, Fake Jobs, Fake Financial Stability, Fake Inflation Numbers? [View article]
    "They do NOT pledge to back up loans or notes created by banks or capital raised by banks."

    You need to understand the economics of what is really going on.

    Fed notes have value can they can be exchanged for real assets. That means they are a store of value. People want value, so they want Fed notes. Fed notes are a claim on US assets. Those assets are made by US citizens.

    In every case where a central bank is established, the ultimate pledge of capital is the productive base of the populace behind the notes that CB will issue. Its the same principal as stock notes. As the productive capacity of the company grows, the stocks become more valuable. If you buy back stocks, the remaining stocks become more valuable. If you issue more stocks, the resulting outstanding stocks are less valuable individually. Stocks and CB notes are both notes. The desire of people to have them, rely on the perceived store of value they represent.

    A country and a company both work on the same principals. They are both a collection of individuals. What makes value is the know of the populace to make things out of resources. A company, just like a CB, has the ability to produce an infinite amount of stock notes, but that ability is not what makes a company successful. Knowing how to make things that solve the problems of people is what makes a populace successful. That know how comes from learning, and learning comes from paying the price of mistakes. Force plays no role in the learning process. CBs rely on gov force a private company does not. Hamilton did not understand this. The country prosperpered in spite of Hamilton's inflation and it prospered even when there was no central bank.

    The lesson is that the less tyranny you have the more prosperous the overall populace becomes, but also that getting rid of tyranny is very hard, as the presense of Hamilton illustrates, so that whenever you see tyrannical policies, like a CB, that means subsidies, and to protect yourself, you need to figure out how to have those subsidies benefit you instead of harming you.

    One way to do that is to exchange your badly managed (because of price insensitive gov regulators) central bank notes for far better managed (price sensitive) stock notes. Then when the CB does something stupid like raising the discount rate 600 bps which results in a market crash for stocks, then you can buy at the bottom safe in the knowledge the morons at the CB will go "whoops!" and bring the DR rate back down another 600 bps, thus allowing the stock markets to reinflate, and presto, the subsidies just transferred other people's wealth to you (who don't know what's going on - so they vote for it), and you prosper from all the flat earth economics (to which Hamilton subscribed).
    Dec 5, 2014. 10:04 AM | 2 Likes Like |Link to Comment
  • Fake Growth, Fake Money, Fake Jobs, Fake Financial Stability, Fake Inflation Numbers? [View article]
    "Are you suggesting that banks go back to the boom bust days when every bank had their own notes ??"

    You mean the days of the 1860s banking acts that let banks inflate on the base of Treas bills? Or the days when state deposit insurance funds encouraged so much moral hazard that the state deposit insurance funds kept going bust? Or the days of the OCC that supervised all the banks to make sure they were inflating on the backs of Treas bills? Or the days when LM Shaw used the Treas to engage in QE, then left in Mar of 1907 which was followed by the bust in Oct of 1907?

    You doom and gloomers only have the doom and gloom of your own policy preferences to fear. The world wide catastrophies you predict from free markets have never happened. All the boom and busts happen in the presence of gov subsidies.

    Once you learn to track the subsidies, then you can learn to track the ups and downs in the markets. You will never again have to stand around with your mouth open at the collapse in asset prices. You will be able to spot the gov policies that are going to make the collapse happen.
    Dec 5, 2014. 09:48 AM | 1 Like Like |Link to Comment