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  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    "No. We are talking about institutions that exist under positive laws, not about mere opinions all equal to each other. "

    But your assumption is that the "positive" is "positive". You haven't reasoned out what that would be true, and then if the empirical evidence supports your opinion. You have just made a bunch of assumptions, and then built a paradigm on those assumptions.

    "If a man has the opinion that everything a US federal court decides is irrational and ideological, it won't make the police force defer to his opinion instead of to the rulings of those courts."

    I never said it would. What I was pointing out, is that the established courts have and do send people to jail that shouldn't go to jail. Just because they are established does not mean they are legitimate. China uses their established court system to throw political prisoners in jail.

    "Legimate does not mean you like something or I like something. It means legally established, deferred to by all other state institutions, enforced, effective, operating, real, in broad daylight."

    Yeah, see, that's your problem. Under that definition, any atrocity a gov commits can't be challenged. What you are really describing is how a statist, authoritarian looks at things, and is always whining about law and order not being followed, as such, some minority groups needs to be rounded up and shot.

    "Nobody is arresting Fed governors for theft."

    And nobody arrested JB Colbert or John Law either, but that still doesn't mean that what they did wasn't stealing. To act like no gov can ever be an agent of theft, is to ignore Auschwtiz.

    Of course they claimed "work makes you free".

    "Your ideology can't tell the two apart "

    Actually, that's your hang up. Acting like everything a gov does is beyond reproach is the real head in the sand.

    "As a matter of public law in the United States, if you try to arrest a Fed official for theft you will be detained yourself for making an unlawful arrest. "

    The same thing would happen to someone trying to arrest a Roman Centurion that was occupying their country.

    "Reality. It is not optional. "

    Agreed, but the only one ignoring it here, is you.
    Feb 13, 2015. 11:52 AM | Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    "What you've stated above sounds like you deny the Fed has any legitimate role or function, at all, and ought to be illegal. "

    As a price control for money, what you stated is correct. However, I could see a legitimate role as a taxing mechanism, which is what it really is. The trick is that eveyone would have to understand it as a taxing mechanism and then understand, it would be the only one we need. As such, better controls and incentives could be designed for it. Now, it is viewed as something it is not. Thus, it winds up functioning as a taxing mechanism that transfers wealth from the general populace to the special interests which it really serves. Given that, it interests me to inform people how to take advantage of that, in order to mute the damage its mishandling can cause them.

    "If you do not have a central bank, then you cannot issue money into circulation by buying assets with newly printed cash"

    This is not true.

    "To this end, Shaw bought back the government bonds from commercial banks "

    Its just that trying to use a central bank to replace price sensitive mechanisms for producing money mechanisms lead to asset price distortion. It causes booms and busts.

    "The government intervention in the money market reached its height with Shaw. He resigned on March 3, 1907"

    ...and a few months later...

    "that took place over a three week period starting in mid-October"

    October of 1907, that is.

    This is the problem, they can't be consistent with their policies. So whether its the Treas or a full fledged central bank, they both have the same problem of not knowing what is TOO much or what is TOO little. Money should be created the same way smartphones are created, via price senstive markets. It's never really been tried before. Each time it gets going, the gov takes it over, and starts to create booms and busts. I'm just saying, admit this, and then learn to take advantage of it.

    "If you do not have a central bank, then the only way to issue money into circulation is by buying goods & services with newly printed cash."

    That's not true either. First we have to make a distinction between money and money mediums. Money is a contract for exchange. The money medium is the product that becomes universally accepted as a representation of that contract. The mediums have been lots of things. Rice, salt, tobacco, gold, silver, bank notes, ration tickets, etc. Each has pros and cons. Now we are seeing digitial innovations for money mediums. Bitcoins are one, and trophies in video games are another. The digitial is getting close to overcoming lots of cons of the old mediums. Gold is limited thus limiting transactions, but digital is not. Bank notes can be counterfeited thus subsidizing transactions, but digital can be encrypted. So, the idea that money mediums would not exist except for gov is just propoganda. It represents archaic thinking that lacks vision and innovation, which is typical for gov influence on prices and production.

    "This is called "unbacked" money."

    There is no such thing. Here's why...

    "buying goods & services "

    People didn't want gold because they could eat it or live in it or wear it, they wanted it because it could buy those things. The reason gold rose as a money medium is because it didn't wear away like rice or salt. Also, it couldn't be counterfeited like bank notes. However, it was limited, so it was not always around when you needed it. But, bank notes that were backed by gold, were only valuable, not because of the gold, but because of the goods and services gold could buy.

    Think of gold as a proxy for a stock certificate. People want stock certificates because they represent claims on assets. The more valuable the assets, the more valuable the stock certificates. In other words, the real backing for any money medium, gold or bank notes, is the stuff you can buy with them. As such, there really is no such thing as fiat in the sense there is nothing backing it up. If there were nothing backing it up, then there would be nothing you could buy with it. In other words, you can't print money, because money is a contract for exchange of assets, thus you would need to print assets (which is post scarcity, something we clearly do not have), but you can print bank notes (the medium).

    "Retrieving unbacked money from circulation is always more disruptive to the economy than retrieving backed money"

    As I noted above, there is no such thing as unbacked money. What happens is when gov destroys its monopolized bank notes, say, via an increase in the DR or a tax increase, is, it takes notes out of the system thus distorting the ratio of notes to assets. A better way for you to understand this, is to think of the Fed or IRS destroying Fed notes as akin to buying back treasury stock. Nothing has happened to the productive capacity of the company, all that has occured is the ratio of notes (stock) to assets has changed. It would actually be far preferable for the company to come up with some new asset production capability to make the additional stock so valuable that there would be no reason to buy it back.

    This is the basic functioning of a balance sheet. If you don't know how that works, send me an email to my inbox, and I will respond with the answer on this thread.

    A similar thing happens when monopolized banks notes are destroyed. Since we use these notes to buy stock, the less of them there are, the less of them are available to bid up stock prices. This is why you see equities markets drop following increases in the DR. Not always, because tax policy affects how many notes there are to bid up equities, and regulatory policy affects what asset classes will be chased, but if there is a dramatic enough move in the DR, then the subsequent note destruction will offset the other factors and lead to a drop in equity prices, which can be large enough to bring on a recession.

    Here's a chart that overlays the DR with recessions. If you don't know what the DR is, send me an inquiry to my inbox and I will respond here on this thread. Notice the 60s, 80s, and 90s. There was tax/regulatory relief in those periods, that offset increases in the DR by leaving Fed notes in the economy by not taxing them away.

    One of the biggest blunders by the current crop of CBers and their advocates is the notion that the money mediums need to be retrieved back in. We would probably all be better off, if they just left out there what they created, and live with a little higher inflation, rather than constantly causing all these recessions. A better way to deal with inflation is remove gov regulations on productivity that restricts asset creation. Inflation is just a ratio of notes to assets, as such, rather than "retrieve" the notes, focus on creating more assets. The improved ratio would quite the inflation.

    I do realize my thinking is about 500 yrs more advanced that most conventional wisdom, so I realize the policies we have will continue. So one of my goals (because it interests me) is to inform other poeple of what is going on, so they to can include all the variables in their analysis, and thus be able to predict the risk-on and risk-off scenarios. By doing so, they will be less apt to panic, and not wind up buying at the top and selling at the bottom.

    Also, let me guess, you think taxes "fund" the gov?
    Feb 13, 2015. 11:28 AM | 1 Like Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    "None of them are infallible, all of them are perfectly legitimate."

    Then its perfectly legitimate to criticize their existence. To CLAIM otherwise, is the type of fundamentalist dogma claim that illustrates those who are clinging to irrational ideologies. Its no different than those that defended the union of church and state. The attempt to categorize everyone that challenges the existence of such entities as kooks, is just the old "ridicule" argument aimed at quelling dissent rather than a reasoned discussion about the virtures of one course of action vs another.

    Again, you can hold to your fanatical beliefs, but trying to get me to change my mind by simply declaring that my disagreement makes me a whacko is not an effective strategy.

    All the empirical evidence and logical reasoning shows that price controls, including money mediums, must be based on force. And, force for prices is just another term for theft, and theft is just a consumption subsidy. It causes asset price distortion via inflation and deflation, and by recognizing that, you provide a way to protect yourself and even improve yourself.

    But asking me to give into propoganda is not even something Goebbels could have accomplished.
    Feb 13, 2015. 10:36 AM | Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    "Both Republicans and Democrats in Congress back new legislation that introduces binding currency rules for trade deals and imposes punitive import taxes on countries deemed to be “currency manipulators”. "

    Smoot Hawley anyone?
    Feb 13, 2015. 09:34 AM | Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    "Your world sounds more like Putin's world than mine"

    And its sounds like you world is more Goebbels' than Putin's.

    "Yes, sir: got it!"

    Apparently not.

    "is not unexplained, it's easy to understand and it's called the invisible hand of the market."

    It is for the things it can explain, but the point that free markets just cause these unexplained sudden collapses, it does not. Here is an example of where the conventional wisdom on the need for gov to regulate things such as interest rates leads people.

    Such stories where all over the place in 2013, because people think central banks can do what they CLAIM they can do, just like the people that erroneously claim central banks are a legitimate part of the free market (typically by those that benefit from the wealth transfer).

    When you are willing to have a correct ideology instead of an ideology that requires you to ignore real variables in the equation, then the ups and downs of the market become more predictable.

    Hence, a comment of mine from June 2013.

    "If the Fed ends, tapers QE, I think the bond markets are wrong if they think rates will go up. Rates will fall. "

    "The blundering hand of Uncle Sam is the opposite."

    Uncle Sam's hand is blundering because it is price blind. In Uncle Sam's hand is a gun. Force is used for theft or as a defence against theft. A central bank is an example of force being used for theft. Theft is a consumption subsidy. It transfers wealth which inflates the recipient and deflates the victim. This is why you see the rich get richer under gov regulations, instead of everyone getting richer under free markets and capitalism. A free market is a market that's free from tyranny. As such, an opposition to free markets is an advocacy for tyranny and wealth transfer via theft.

    "THe invisble hand of the market allocates valuable resources automatically to their "highest-value use" because the use of the resource that creates highest value can (by definition) out-bid all lower-value uses. "

    This is true in a free market, but you can have a market that's not free. You can have a market that includes the pollution of coercion. Coercion leads to price distortions, which then prevents the "highest-value use", and allows the subsidization of activities that the market would purge but get protected because of political concerns. Hence, bank bailouts, auto bailouts, union bailouts, stock market bailouts, etc.

    The trick in all of this is not to have an ideology that excludes these realities, but to have an ideology that allows you to make and preserve wealth. If you don't, those with the ideology of transferring your wealth away from, will certainly do so. You have to learn to protect yourself and not follow the propoganda they would have you believe.

    Now, if you want to cling to such ideologies and keep losing money, that's your choice, but I choose to have an ideology that includes all the variables.
    Feb 13, 2015. 09:06 AM | 1 Like Like |Link to Comment
  • Where the 10-Year Is Headed Now [View article]
    The 10 yr has hit the 1.60s in 2015.
    Feb 13, 2015. 08:50 AM | Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    "They are entirely legitimate institutions that exist for well understood public functions following well established long standing laws"

    No that myth has been thoroughly debunked. There are still plenty of gov schooled people that believe it, well, because they went to a gov school.

    Anybody that is willing to just ignore variables in the market, like a central bank, simply because of the CLAIM that a central bank can do no harm, deserves to have their savings wiped out.

    Just because somebody claims something to be true, doesn't make it so, and think about their claim for a moment. The claim is a central bank and central bankers can do no harm. In other words, they are perfect, in other words, they are gods. Isn't it interesting that all throughout history, from pharoahs to ceasars, you have people in gov claiming to be gods.

    And they want to say I am the one holding to ideological fantacism. Yeah, right.
    Feb 13, 2015. 08:32 AM | 3 Likes Like |Link to Comment
  • Weekly Unemployment Claims: Initial And Continued February 12, 2015 [View article]
    "I'm gonna guess you are not from Florida? "

    It must be Illinois.
    Feb 12, 2015. 09:06 PM | Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]

    The real lesson is the damage that is done to ordinary people by the overall ideological fanaticism that leads to central banks and gov regulation of prices. The idea is that a supposed group of super humans have market knowledge that ordinary mortals do not. As such, they will be able to manage the economy with their superior price knowledge, aka Also Sprach Zarathustra.

    Instead, look at damage these people have caused. The massive wealth destruction, wealth transfer via theft, wars, death, and despair. Bernanke fell for this false vision of himself and these institutions, and the result was he engaged in destructive policies by drying of Fed notes with additional DR increases thus leading to the asset collapse that brought on the housing and stock market crashes followed by the recession.

    Its time to stop making excuses for this nonsense (ie "I'm critical of the Fed as well") , realize the emperor has no clothes, and move on to some grown-up policies. Barring that, the best advice for people is learn to protect themselves by realizing its not some unexplained free market force that causes everyone to make the exact same mistake at the exact same time, but rather the coordinated effort that only the coercive hand of a gov that can cause such orchestrated movements.

    As such, realize that its institutions like the Fed, or tax policy, or regulatory policy that causes these booms and busts, and the boom and bust can be relatively predictable if you understand what to look for. By doing so, you won't get caught off guard and allow these wealth transferring (theft) mechanisms to transfer your wealth away from you.

    This is an investing website. Its about improving and protecting your wealth, and if you want to have credibility, you have to stop saying outrageous and specious things, and start looking towards reality and what is necessary to build and protect wealth. So, the idea that out of control free markets cause these unpredictable crashes via some unexplained, mysterious herd mentality, will leave people vulnerable to wealth destruction instead of prepared as to how to defend their savings.

    The lesson is that a central bank, progressive income tax, price regulation, subsidies, etc, are all protectionist measures designed to make the rich, richer and the poor, poorer. So if you don't want to be in the later class, its best to wake up to reality, and learn to watch for the signals that the Fed (or some other gov policy) is about to collapse asset prices, get yourself positioned accordingly, and the move back in at the bottom when the Fed (or any central bank) is about to reinflate those same asset prices.

    Its a pattern as old as the Bank of Amsterdam (and its free coinage laws) and the tulip bubble it created, or John Law and his monopoly of bank notes in France and the Mississippi bubble. What you want to do is become Richard Cantillon to his John Law, ride the asset bubble up, and get out before it bursts.

    Such an approach is the only valid and constructive thing to be said here.
    Feb 12, 2015. 07:47 PM | 2 Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    "Bernanke should be jailed for treason - for being solely responsible for causing the Great-Recession. It's no claim. It's an incontrovertible fact. "

    This is a shared view.
    Feb 12, 2015. 03:49 PM | Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    The Great Depression (as was the Great Recession) was caused by the incompentence of gov regulators (and spare me the attempt to make the case the Fed is a private organization and not a tool of gov).
    Feb 12, 2015. 03:46 PM | Likes Like |Link to Comment
  • QuickChat #277, January 7, 2015 [View instapost]
    "I said earlier that 2100 on the S&P and 2.50 was going to be tough to get to."

    I see 2087 on the S&P, and 1.99 on the 10 yr. ECB QE starts next month. If they can deliver, that may add the support necessary for the 10 yr to solidly move above 2% and on its way to 2.50.
    Feb 12, 2015. 03:18 PM | 4 Likes Like |Link to Comment
  • Stocks Will Roar Once Greece Is Cured [View article]
    Good point DD.

    What's going on here is not Germany vs Greece, or Greece vs the EU, or Germany vs the EU, its about a new aristocracy and their advocates attempting to deal with the tyrants dilemma.

    The aristocracy are the elected officials. Their advocates are the neo John Baptiste Colberts and John Laws, which are the banks and financial markets. The tyrants dilemma is that if you bleed the people past some breaking point, they revolt and throw you out (sometimes violently). However, if you hold off on how much you bleed them, then you reduce your cut of the wealth. Thus, the dilemma.

    In Europe (and now developing in the US), banks are really just arms of the gov. They are part of the taxing and wealth transference mechanism by moving gov paper and monopolized bank notes (the central banks). Basically, the banks are JB Colbert and John Law. People that run these institutions get rich just like JB Colbert and John Law (who face the same risks of Colbert and Law) by facilitating the financial markets in such a way as to allow the politicians to get their power by buying votes with social welfare programs. That power then allows them to regulate the markets to keep competition out, and protect the large entrenched interests (like seminationalized or even nationalized banks).

    So, what you really have here is a rich, ruling elite, vs everyone else. The trick is to keep the "everyone else" from figuring this out by the rich, ruling elite positioning themselves as "servants of the people". Its this last positioning that leads people to conclude that its the Germans vs the Greeks, or the Greeks vs the EU, when its really about an elite few trying to preserve their positions and wealth via not tripping over the tyrants dilemma.

    This is why none of them want the EU or the Euro to end. These things are the taxing mechanism that protect these entrenched interests. Again, what they are really trying to do is to figure out a way to keep bleeding the average European citizen (that pays for all this), without these citizens figuring out that, that's what these guys are trying to do.
    Feb 12, 2015. 02:25 PM | 3 Likes Like |Link to Comment
  • Stocks Will Roar Once Greece Is Cured [View article]
    Don't forget the regulators. The regulators gave sovereign debt a 0% risk weighting. In other words, there was 0% that sovereign debt would ever default. In fact, regulators will even tell you they do their exams based on a "risk based" approach.

    How's that working out for them?
    Feb 12, 2015. 01:26 PM | Likes Like |Link to Comment
  • Stocks Will Roar Once Greece Is Cured [View article]
    Yes, if a bank holds $10 billion in Greek bonds, and they take a 100% loss, that will flow right through to their Tier 1. If that hit drops them below regulatory limits, then you have another bank failure on your hands.

    What's interesting, is, in theory, if this resulted in a bank bailout, then instead of giving the Greeks a loan/bailout via additional Euros, the Euros would just go to the bailed out bank that took the hit for the Greek default.
    Feb 12, 2015. 11:47 AM | Likes Like |Link to Comment