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  • Zillow Housing Data Portends A Housing Downturn [View article]

    High inflation is a credit risk issue. Even if you have monopolized the currency as a gov, if you are issuing notes that the market believes cannot be exchanged for valued assets in quantities that gives confidence to those notes, then you will suffer an inflation rate that can be tantamount to bankruptcy.

    So, if you issue Treas notes that are paid off in monopolized central bank notes and your economy isn't capable of producing assets that people want because your gov regulations have destroyed your productivity, what you will get is high interest rates and and high inflation.

    Just printing money does not mean you print wealth. As such, the fundamentals of the US and Arg are the same. As such, to say there is no relationship is to rely on semantics and not logic.
    Aug 21 02:57 PM | 1 Like Like |Link to Comment
  • Zillow Housing Data Portends A Housing Downturn [View article]
    "rates go up because the economy strengthens and demand increases"

    In a very short term that can be true, however, over time, a strengthening economy can also lead to lower rates. The reason for this, is a good economy in a world of bad economies becomes a haven for capital and labor. In that scenario, interest rates would go down or stay low just as would wage rates. The Dutch experienced a period of falling rates when they were freed from Spain, even as their economy grew. In fact, the low rates in the Netherlands prompted the British to make the specious conclusion that low rates is what led to the Dutch prosperity. So the British created the Bank of England in an attempt to lower British interest rates.

    What you want to watch out for is when interest rates rise because of credit risk. In that scenario, higher interest rates would lead to less home sales because fewer people could afford mgts. This would be true, because the credit risk would indicate a weakening economy (increasing unemployment) at a time when note issuance (Fed Res or Treas) was increasing. Think Argentina.
    Aug 21 01:50 PM | 1 Like Like |Link to Comment
  • Great News: The Fed Is Likely To Raise Rates Sooner Rather Than Later [View article]
    Raising the discount rate from 2004 to 2006 to over 6% and holding it there until the middle of 2007 didn't do such great things for the economy in 2007, 2008, and 2009.
    Aug 21 11:31 AM | 1 Like Like |Link to Comment
  • What Is Austrian Business Cycle Theory? [View article]
    Oh. I didn't even see that. I'll have to take a look. I was more interested in the Fisher quote. In fact, I more interested in general in these type of predictions that turn out to be wrong, but yet seem to be forgotten.

    I remember in 2010, Biden predicted NFP would go over 500k, and then be over 250k after that. Well, the next month we did get 500k, but after that it went negative, and we only saw it over 250k 4 or 5 times since 2010.

    Another set of predictions was in 2008 when BB started hinting at QE in order to lower rates. When the QE talk started, the 10 yr was at 3.75 or thereabouts. Then it went down to about 2.13, even before QE had officially started. Then in December of 2008, when QE was supposedly to have officially started, the 10 yr started to steadily rise and eventually hit 4%.

    We saw the reverse with taper recently, hence all my comments above with regards to the articles during the taper talk time making predictions that rates were going to go back up (which they did, during the period of talk). Then we got the taper, and rates went down.

    I'll have to take a look at Mauldin's predictions and see what I think.
    Aug 21 09:52 AM | Likes Like |Link to Comment
  • What Is Austrian Business Cycle Theory? [View article]
    "RE: Mauldin video "Are Central Bankers Building a Debt Bomb?"

    What video? Are you refering to my link to the Fisher video? Did it not work?
    Aug 21 09:27 AM | Likes Like |Link to Comment
  • What Is Austrian Business Cycle Theory? [View article]
    "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as they have predicted. I expect to see the stock market a good deal higher within a few months." - Dr. Irving Fisher, Professor of Economics at Yale University, one of the most important US economists of his day, speaking on October 17, 1929, a few weeks before the Great Crash.

    Contrasted with...
    Aug 21 08:38 AM | Likes Like |Link to Comment
  • What Is Austrian Business Cycle Theory? [View article]
    10yr UST:

    Currently at 2.370%, has broken below the major support level of 2.47% and has not yet bounced back this time. The rate got as low as 2.301% on Friday, which is right around the 2.31% support level we have been noting, before bouncing back slightly. The next support levels lower are roughly in the 2.15%-2.22% range, and then another major area at 2.05%. As the rule states, “what once was support now becomes resistance,” so the 2.47% now becomes the first area of resistance. The next levels are 2.56%, 2.65% and then 2.80%.
    Aug 19 05:04 PM | 2 Likes Like |Link to Comment
  • S&P 500 - Target 2000: The Wheels Are About To Come Off [View article]
    Boy, this is gonna be tight. We keep flirting with 2000, but economic data is still "iffy" and the Fed is on track to end the taper. We have been getting capital flight based on the fear being generated in Europe, and when that happens, you can get a divergence, where funds chase US equities and bonds at the same time. The result is equities up and yields down.

    Still, though, it might be enough. Like I said, this is gonna be tight.
    Aug 18 02:57 PM | Likes Like |Link to Comment
  • How Will The No Taper Surprise Affect Stocks? [View article]
    I could see sub 2% on the 10yr, either by the end of this year, or shortly into 2015.

    I found one of my comments from June 21, 2013.

    If the Fed ends, tapers QE, I think the bond markets are wrong if they think rates will go up. Rates will fall.
    Aug 18 11:08 AM | Likes Like |Link to Comment
  • How Will The No Taper Surprise Affect Stocks? [View article]
    "Interest rates will rise, regardless of whether the Fed maintains QE a while longer or tapers."

    On the date of this comment, the 10yr was at 2.73. As I write this comment its around 2.38. Just this past Friday I saw 2.33.
    Aug 18 11:01 AM | Likes Like |Link to Comment
  • Making The Rich Richer [View article]
    OK. Here is another one of those "OK, its happening everywhere else, but it will never happen here" stories. These stories are all meant to hide the realities of the incentive structures that occur when unaccountable and irresponsible politicians get in trouble.
    Aug 18 08:46 AM | 1 Like Like |Link to Comment
  • Interesting Times For All Commodities And Investments!! THE CHALLENGE ,PART 2 [View instapost]
    Collusion is a cartel. Cartels always fail. Even gov regulation that attempts to enforce the cartel eventually fails, like smuggling. Theres a great book out about how smuggling built the US. The smuggling was an end run around Britain's enforced cartels.
    Aug 16 09:08 PM | Likes Like |Link to Comment
  • Interesting Times For All Commodities And Investments!! THE CHALLENGE ,PART 2 [View instapost]
    If you could get one state in the union where there was no regulation of insurance, that state would have the lowest insurance costs and the lowest medical costs and a thriving medical tourism business.
    Aug 16 06:43 PM | Likes Like |Link to Comment
  • Taxes Don't Lie [View article]
    By the way, in December of 2012, the S&P was in the 1400s. Now its in the 1900s. The S&P didn't start struggling until the taper began. Also in December of 2013, the 10yr topped out at 3%. At that point, the consensus was that yields were about to go up. Now, they are approaching 2.30.

    What's going on is that the Fed is taking away the consumption subsidy via taper. Combined with that is lots of political turmoil, so we are getting the risk-off. In this environment, if we drastically raised income taxes, even more Fed notes would be taken out of the system, and asset prices (equities) would fall even further. That would produce even more risk-off, and the result would be even lower yields and higher unemployment.

    If income taxes were raised enough, you would get a full blown recession.
    Aug 16 06:41 PM | 1 Like Like |Link to Comment
  • Taxes Don't Lie [View article]
    Here's another example.

    "To this end, Shaw bought back the government bonds from commercial banks that owned them, increased the number of government depository banks, and in 1902, he told the banks that they no longer needed to keep cash reserves against their holdings of public funds. The intended effect of these actions was to provide a more elastic currency which would then respond to the needs of the market."

    This is basically QE.

    "He resigned on March 3, 1907, to become as the banker in New York City."

    I wondered what happened later that year in 1907. Hmmmmm.....

    "The panic was triggered by the failed attempt in October 1907"

    A consumption binge created by the gov for the financial markets has inflation show up for financial assets. Money in the financial markets results in people chasing stocks, bonds, commodities, stocks of commodity companies, real estate, etc, etc.

    More often that not, you can count on regulator panic, and the subsidy will be reversed. When that happens, the crash comes. If you learn to look for these policies, and learn to watch for their reversals, you can actually begin to predict the direction of equities and interest rates.

    Then, you will learn not to make predictions like this...

    "Tax Policy Will Send Unemployment Back To 9% And Tank Stocks - Dec 21, 2012."
    Aug 16 06:32 PM | Likes Like |Link to Comment