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  • Fake Growth, Fake Money, Fake Jobs, Fake Financial Stability, Fake Inflation Numbers? [View article]
    "How is that wealth denominated?"

    It doesn't really matter, so long as the denomination is stable. Wealth is essentially the assets we create. How we measure that, whether its ounces of gold, or whatever is irrelevant. What is relevant is that the market has some standard in which to express that denomination, which is really just an expression of ownership. For instance, we call Fed notes dollars, and dollars were originally so many grains of gold. Well, who came up with how much of a grain a grain is? Why is a grain a grain? It doesn't matter. What matter was that it stayed constant, so people could measure their wealth in some meaningful denomination. If inches changed every month, that would make it more costly to build houses.

    "How is it pledged?"

    Because Fed notes have value in that they can ultimately be exchanged for real assets. That's why money mediums need to be a store of value. People don't value the paper or the gold, they value the houses, food, clothes, and entertainment it can be exchanged for. Fed notes have value to the extent the US populace can create assets to make them valuable. If you print notes faster than people can create assets, then the notes depreciate and people loose purchasing power. As such, by passing a law that monopolized bank notes and then by having legal tender laws, what you have done is use the power and force of gov to cause the American populace to pledge their wealth to making those notes valuable. In other words, its just a subsidy for banking. The Fed creates the notes that the primary dealers use to buy Treas, instead of having to go the marke to first get the deposits to buy gov Treas. Where did the Fed gets its wealth to buy bonds? It comes from the collective productive capacity of the US popluce to create the assets that those notes can ultimately be exchanged for.

    "If there's not to be a uniform currency and source of money supply, then what's your alternative?"

    Did you know that other countries have different currencies? Did you also know that trade still occurs between those countries? Currencies need to compete just like smart phones. Its how you create the incentives for the products to be better. Its why there are people that make a living trading currencies. Just because there were lots of different currencies doesn't mean it would be chaos. It would mean competiton to constantly make the products better. Trade will still continue, and innovation would allow people to select the best currencies, and also develop means for exchanges. It happens world wide, and it happens when you buy a movie ticket. There is no reason it can't happen everywhere.

    "but it's really a fatuous argument because governments have always exerted control over currency, regardless of its form"

    This is the real fatuous argument. So, if gov have always oppressed people, then we should continue that practice? Which you destroy with your next sentence.

    "If anything, our central bank is an improvement on past"

    First you use the past to justify the way things are, then you say we should diverge from the past. Make up your mind.

    "As for how it benefits banks, to the detriment of people, has always escaped me too."

    That's not surprising based on your use, or lack of, logic so far.

    "To me, much of the complaint about central banks often emanates from people making bad economic decisions"

    Which is what I find amazing. People can make mistakes, but yet when these same people join a central bank board, somehow they are now omniscient and can never be challenged. Yet above, you just claimed that the Fed is an improvement over old central banking. Well, If CBs are just scapegoats, then by criticizing the old CBs you are doing the same thing.

    I am just pointing out what you point out, but then refuse to admit.

    Govs are run by people, and people will respond to incentives that benefit themselves, even it means its at the expense of others. This is a reality of life, and to ignore it because of failed fundamentalist, dogmatic ideology makes you vulnerable.

    Like this...

    "and nobody can force me to borrow funds at a rate I don't accept"

    But you can't change the depreciation of the Fed notes in the system. You have to use them if you want dollar denominated assets. So, whenever you move into Fed notes to buy food or anything else, there is a period of time that your purchasing power is being eroded, whether you want that to be true or not.

    The real reason the central banks are the "usual suspects" is because they are understood. The attacks on people for showing their dangers is because that threatens the con. So, dissent must be quelled and a good tactic is the old bullying tactic. Unfortunately for the bulliers, it doesn't work on me.
    Nov 25, 2014. 11:38 AM | 1 Like Like |Link to Comment
  • Predictions For November - Part I [View article]
    "Sometime I think the leadership on the other side is more interested in keeping the captive vote they have instead of actually improving the lot of these individuals. "

    That is indeed their goal. All this talk about equality, compassion, tolerance, and a growing economy is just cover for their real incentive structure. They want to be a rich ruling elite (as Gruber exmplified) ruling over a compliant peasant class. Its really nothing different than what history has seen for thousands of years, all with the same propoganda to get people to fall for it. All though I will have to say the current propoganda is pretty effective compared to what we have seen in the past.
    Nov 25, 2014. 10:39 AM | Likes Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "Meanwhile, the Dutch invented financial capitalism by the simple reform of legalizing interest "

    They also had a proto central bank. So, yet again, there was no free market, because a free market does not have gov subsidies for banking.
    Nov 25, 2014. 10:36 AM | 1 Like Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "That is because they are imaginary and do not exist"

    Which makes my point yet again. You can't blame free markets for booms and busts and then say free markets don't exist.

    As such, the only fantasy here is between your ears. What you are trying to do is call gov intervention something it is not, and Capitalism something it is not.

    So, since we have booms and busts and since we have gov intervention (which means no free markets), what we have is the reality of gov intervention and booms and busts. By accepting that reality instead of some reality you are trying to invent, the factor of that reality can then be factored into our investment decisions.

    After all, this is an investing website, and wise investments require utilizing all the available data, not just the ones that mesh with a particular confirmation bias.

    As I said, you can go on being surprised at the downturns and up turns because you elect to exclude information that doesn't jibe with your personal fundamentalism, but I for one plan on protecting myself.
    Nov 25, 2014. 10:16 AM | 1 Like Like |Link to Comment
  • Predictions For November - Part I [View article]
    That's a good point.

    There will be no greater cause for freedom than liberating children and their families from educational tyranny.

    These guys are working on this.
    Nov 25, 2014. 10:06 AM | Likes Like |Link to Comment
  • QuickChat #275, November 3, 2014 [View instapost]
    "The yield is currently trading just around 2.31% level, and barring a major geopolitical event, will likely be the bottom of the trading range for the next number of months."

    And now I see 2.29 on the 10 yr. The QE patterns typically mean higher rates. However, geopolitical, regulatory impositions, can override the risk-on, and push yields down. What you want out of a QE pattern is risk-on where rates reach a peak during the QE, then QE is announced to end, you buy near the peak based on the announcement, and then wait for rates to fall, thus generating gains in the bonds.

    With so many mixed signals from the central banks, its tough to see the risk-on pattern.
    Nov 25, 2014. 10:03 AM | 2 Likes Like |Link to Comment
  • Predictions For November - Part I [View article]
    "Speaking of rants. "

    There's part of me that says Gruber was right. Which, if you think about it, is a dig at gov schools. Instead of getting the civilized and informed citizenry we were promised from gov schools, what we get is propogandized mobs. However, from Gruber's perspective, this is why these people should be ruled. From my perspective its a mistake that needs to be corrected.
    Nov 25, 2014. 09:41 AM | Likes Like |Link to Comment
  • QuickChat #275, November 3, 2014 [View instapost]
    "The second estimate of Q3 GDP came in at 3.9%, up from the 3.5% advanced reading and well above the consensus estimate of 3.2%. Final sales were revised up just a tenth, as an expected downward revision to exports was offset by revisions to consumption and business equipment investment. The bulk of the revision came from inventories, where growth was adjusted from $62.8B to $79.1B.

    "The wider trade balance more than offset upward revisions in personal consumption and equipment spending, showing mostly that a stronger dollar likely led consumers to increase spending on imports, which is a wash for GDP. The primary boost to the second estimate of GDP came from an over $16 billion increase in inventories, adding 0.45% to the GDP reading. After two consecutive quarters of $80bn+ increases in inventories, we will look to the fourth quarter to see if final sales can strengthen enough to clear the inventory buildup."
    Nov 25, 2014. 09:36 AM | 3 Likes Like |Link to Comment
  • QuickChat #275, November 3, 2014 [View instapost]
    Given the direction of the data and the position of the CBs worldwide, we still have a bias towards the risk-on.

    I still see the S&P moving to the 2100s and the 10 yr moving towards 2.50. Though, I have to say, I am a little worried about the 10yr. The last time we had major CB action was during LTRO. That's when the Fed was doing OT. During that period (no sizeable Fed balance sheet growth), the S&P clawed its way higher, while the 10yr stayed relatively flat.

    We seem to be experiencing some of that now. The Fed has announced the end of QE (though the BS is still slightly growing), but its not engaged in OT. It may be that the 10yr just takes longer to get to 2.50 with this current subsidy mix.
    Nov 25, 2014. 09:35 AM | 2 Likes Like |Link to Comment
  • QuickChat #275, November 3, 2014 [View instapost]
    "Treasuries caught a bid after yesterday’s strong 2yr auction and buying from month-end extension will compete with a better than expected 3.9% GDP print and upcoming 5yr supply. The better buying is being seen as a precursor to next week’s ECB meeting and the possibility of QE weighing further on rates. GDP came in stronger across the board with the only worry from exports as the high USD caused lower revisions. The GDP deflator was also up, as seen in recent PPI readings and the US continues to have reasons to diverge vs Europe. Interestingly the OECD report sees rate hikes in 2015 but comments on a strong dollar and Eurozone weakness as reasons to delay normaliz¬ing rates. The FT discusses bond liquidity as Project Neptune provides an intermediary for asset managers and dealers. "
    Nov 25, 2014. 09:30 AM | 3 Likes Like |Link to Comment
  • Fake Growth, Fake Money, Fake Jobs, Fake Financial Stability, Fake Inflation Numbers? [View article]
    "First of all that issue is not CBs but banking as an institution for economic growth. "

    Well, I'm talking about central banks (CB) not commercial banks, which would also be denoted as "CB".

    When a gov creates a central bank and monopolizes all bank notes (aka John Law or the Fed), what has happened is the wealth of the nation now stands behind those notes. So, instead of select investors pledging their wealth for a bank, the same way capital is contributed to a start up company, what happens is everyone in the country has been forced to pledge their wealth at the point of a gun (that's hardly a sign of a nation's greatness).

    That wealth is eroded via the depreciation of the monopolized notes. In other words, inflation deflates your purchasing power. When the IRS takes your money, your purchasing power is equally deflated. So, in a monopolized bank note system, all banks become branches of the central bank. They all become taxing agents of the gov, because they all participate in the monopolized note depreciation.

    As such, since the CB can deflate your purchasing power, just like the IRS can, there is no need for an IRS to fund the gov. The gov is no longer funded by taxes taking away purchasing power, because the gov has now monopolized the money medium. Apple doesn't have to buy its own stock back to issue its stock. It just issues stock when it feels it is justified. Creating a central bank does the same thing.

    So while, CBs are indeed a part of the economy, when you make the leap from that to saying, "since they are part of the economy for growth, therefore we need to subsidize them", what you do is give them two roles. One is their natural role as part of the economy, and two as a taxing mechanism.

    "Instead he envisioned a Nation that could be the greatest on earth and not subject to control of power elites, such as Jefferson was. "

    But Hamilton thought that would occur by instituting an American version of mercantilism. Mercantilism is indeed control by the power elites. That is indeed a very European idea. Hamilton just wanted it to be US power elites and not European. Thus, Hamilton was a Federalist. He wanted a very strong central gov, indeed a king like President, to subsidize favor industries and supporters. (Which was probably more Morris' idea than Hamilton's).

    None of this is to say Jefferson or Hamilton were necessarily evil, but simply to point out they were not as monolithic as an 8th grade history book will make them sound.

    The founders had definitely been influenced by the likes of Anne-Robert-Jacques Turgot, Baron de Laune, Jacques Claude Marie Vincent de Gournay, Richard Cantillon, John Locke, Thomas Aquinas, the Physiocrats, the Scholastics, the Dutch experience after gaining freedom from Spain, etc, but its not as if all these ideas had come to their full flower. Even Adam Smith had his weaknesses with regards to the Navigation Acts and gov schools.

    So, while all of them had their own ideas as to the "greatness" of their new country, it wasn't as if they had all perfectly worked out how to achieve that greatness. Europe certainly thought it was great, because a wise ruling elite were in charge to keep the peasants in line. The founders were still touched by that, but they were also touched by the new ideas that had been percolating in the last century or two.

    The result was an attempt at a new modern society that will could one day be seen on the Earth. A society where force is not seen as part of the production process (like subsidies for banks or exports), and where all human interaction is voluntary. The US and its Constitution was a baby step in that direction. Perhaps a new and more enlightened society will one day take the next step in that bold direction and pickup where the US has left off after it has now stumbled and fallen.
    Nov 25, 2014. 09:27 AM | 1 Like Like |Link to Comment
  • Stability Of The European Union June 2, 2014 To ??? [View instapost]

    'Net [Bunds] supply in Germany is zero since they are in budget surplus this year and next, and they have written a balanced-budget amendment into their constitution'
    Nov 25, 2014. 08:08 AM | 1 Like Like |Link to Comment
  • Stability Of The European Union June 2, 2014 To ??? [View instapost]
    Its an old economic paradigm. You are told to work hard and succeed, but as soon as you do, they want to take what you have earned away from you and give it as a reward to those who did not work hard and succeed.
    Nov 25, 2014. 08:05 AM | 2 Likes Like |Link to Comment
  • Sell, Sell, Sell... The Central Bank Madmen Are Raging [View article]
    "Um no, that isn't what actually happened in the tulip bubble. What actually happened is that many men confused physical productivity for value productivity."

    No, your claim is that it was free markets. Free markets do not have gov subsidized coinage laws.

    Now, you have made the classic dogmatic, ideological dodge. You have moved from your original assertion that there were free markets with no gov interventions, to admitting that the markets were not free with lots of gov interventions, but now just having a rationalization for it.

    You will need to leave your fundamentalist dogma behind if you want to have credibility on an investing website. The point of all this is to understand ALL the factors (not just the ones that fit your confirmation bias) that affect asset prices and markets. By doing so, the ups and downs no longer become a mystery. They are only a mystery to those that have a political dogma they won't let go of.

    Gov coercion pollutes the pricing decision. As John Allison siad, "the problem with gov regulation, is not that it causes malinvestment, but that it causes everyone to make the exact same malinvestment at the exact same time." (aka, tulips).

    Like I said, you guys can go on being surprised over and over, blinded by the fog between your ears, but I for one favor using all the information at my fingertips.
    Nov 25, 2014. 07:59 AM | 2 Likes Like |Link to Comment
  • Predictions For November - Part I [View article]
    "I have made the argument from the beginning it's not either or."

    Which is an either or argument. You are offering a binary perspective. As such, if you don't even believe your own thesis, there is no reason why anyone else should.

    At the end of the day, what you are proposing is tyranny. You simply have a rationalization of gradiation to justify your suggestions that people should be shot and jailed because they don't accept your personal preferences and assumptions based on assertions.

    Your view of the world is a barbarous relic from primitive times that needs to be expunged from the human existence by more enlightened minds.
    Nov 25, 2014. 07:51 AM | Likes Like |Link to Comment