RE: A tale of two economists

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MileHighM -> RE: A tale of two economists (8/26/2011 12:33:18 PM)
quote: ORIGINAL: MrRodgers ...'maybe not as compared to other currencies ?' That IS the ONLY value to ANY currency. That defines the 'monetary' system. Why do you and others continue with the outright lie or complete ignorance in stating two things as fact, the dollar is falling...IT IS NOT. We (Obama/Bernanke) are 'printing up money ? BTW FDR's sec. of tres. was flat out wrong as the facts pointed out. With stoke of a pen, FDR put 2-3 million people to work in 90 days. Those were the facts on the ground. Is it too much for such obviously very smart people to figure it out...that the US is NOT, repeat...IS NOT printing money ? BTW FDR's sec of the treasury was flat out wrong and likely Ummmmm WRONG... I don't give a damn what the value of the dollar is versus other currencies, because that is only a relative matter when it regards to trade (lately presidents have liked the idea of a weak dollar because it helps increase exports). Inflation also effects the price of goods strictly from a commodities basis. The dollar IS FALLING with the respect to food, metals, energy, etc. which is funny because there is no supply shortage and demand has dropped due to slowing manufacturing numbers. Hmmm I wonder the fuck why, oh yeah, the dollar is taking a big shit!!! You are one of ten assholes who is dumb enough to believe the dollar is not falling. It is costing more and more and more to afford everyday things (That is inflation and the devaluation of the dollar). THEY ARE printing money because they said they are. THEY ADMITTED IT, DUMMY!!! they called it quantative easing to slip it past the public and fired up the presses. That is how you monetize debt. the debt is in dollars, so if you devalue the dollar, you devalue the debt. FDR's treasury secretary was flat out wrong? It was his policies and he was admitting failure, why would he do it? just for the fun of shaming himself? not likely, you are just want to hold on to a lie buddy. 2-3 mil got jobs, yet unemployement stayed above 10%, hmm why? 2-3 mil was a token number compared to the scope of unemployment and mass of people who were still losing their jobs in other sectors. The US floundered much longer than much of the rest of the world in coming out of the depression, we did nothing masterful to fix the situation. Honestly, if it takes 10 years to fix a depression, you might as well have done nothing, because I think a control economy untouched by meddling policies would have self corrected on its own in that time period. Both of these collapses were caused by the deregulation of the biggest fucktard theives in the world (AKA the investment bankers and other financial types). And, in both cases, the prudent thing is to just put em back in the box where they belong. The economy didn't collapse because of collapse in demand for product, it collapsed because the financial foundation behind the purchasing power of the US collapsed. None of that is fixed by stimulus. It is fixed by restructing the US debt, specifically individual privately held debt. How do you pay for it? Seize Wall Streets assests to forgive all that debt. It was their fault, don't bail them out, make them bail us out.

fmfclwu -> RE: A tale of two economists (8/26/2011 5:27:32 PM)
quote: ORIGINAL: MileHighM Ummmmm WRONG... I don't give a damn what the value of the dollar is versus other currencies, because that is only a relative matter when it regards to trade (lately presidents have liked the idea of a weak dollar because it helps increase exports). Inflation also effects the price of goods strictly from a commodities basis. The dollar IS FALLING with the respect to food, metals, energy, etc. which is funny because there is no supply shortage and demand has dropped due to slowing manufacturing numbers. Hmmm I wonder the fuck why, oh yeah, the dollar is taking a big shit!!! You are one of ten assholes who is dumb enough to believe the dollar is not falling. It is costing more and more and more to afford everyday things (That is inflation and the devaluation of the dollar). The facts would appear to disagree with you about inflation. (See attachment at end of post.) quote: ORIGINAL: willbeurdaddy You seem fairly knowledgable but have to resort to hyperbole and strawmen to support your position. The Austrians and conservatives have not predicted "hyperinflation", just increasing rates of inflation. And there is an extremely good reason that it hasnt occurred yet. No "conspriacy" is needed. Take a look at the excess reserves in depository institutions. The printed money has not yet hit the economy because nobody wants to borrow, and few want to lend. However, that can't last forever, and in fact there are some signs that excess reserves are starting to go down. They are at something like $1.5 TRILLION....10 times what they were before late 2008. If there is any sort of release of those reserves the fractional reserve multiplier means it is equivalent to 8 to 14 TRILLION injection of cash into the economy...as much as the entire GDP. If you don't think that is WHY inflation has been relatively mild, and you dont believe that that kind of cash injection MUST be inflationary, you arent as knowledgable as you pretend. This is Bernanke's dilemma I referred to earlier, and what I warned this board about after the stimulus. Once that pandora's box is open, it is extremely difficult to reverse. IF the stimulus had produced the economic growth claimed by the Keynesians it would have been hard enough. Verging on a technical new recession any attempt to combat inflation will further exacerbate the economic problems. The point is that Austrian and Keynesians disagree on whether or not those reserves should already be or will ever actually result in inflation. I wasn't just resorting to strawmen here. In the case of the WSJ, you have predictions of hyperinflation and sharp rises in interest rates from the stimulus, even back when the stimulus was being planned. They even declared victory on the interest rate front back in 2009. So far, the inflation most Austrians would predict should already be happening, well, isn't. And there's not much evidence that it's going to, despite your confident assertions: TIPS spreads currently indicate investors expect annualized inflation over the next ten years to be about 1.75%. If you really and truly expect inflation to be significantly higher, go make some money from it - park your assets in TIPS, metals, and foreign currencies that won't be experiencing inflation. (I personally have a good chunk of my investments in gold right now, not because I expect inflation, but because I think the S&P500 is about 15% overvalued right now. Based on long-run averages and historic P/E ratios, it should probably be somewhere around 950ish.) As for referring to the other side of the aisle as "enemies," I should mention that David Frum's quote was rephrasing an older quote: "Imagine, if you will, someone who read only the Reader’s Digest between 1950 and 1970, and someone in the same period who read only The Nation or The New Statesman. Which reader would have been better informed about the realities of Communism? The answer, I think, should give us pause. Can it be that our enemies were right?"

NewOCDaddy -> RE: A tale of two economists (8/26/2011 5:35:39 PM)
quote: ORIGINAL: MileHighM quote: ORIGINAL: MrRodgers ...'maybe not as compared to other currencies ?' That IS the ONLY value to ANY currency. That defines the 'monetary' system. Why do you and others continue with the outright lie or complete ignorance in stating two things as fact, the dollar is falling...IT IS NOT. We (Obama/Bernanke) are 'printing up money ? BTW FDR's sec. of tres. was flat out wrong as the facts pointed out. With stoke of a pen, FDR put 2-3 million people to work in 90 days. Those were the facts on the ground. Is it too much for such obviously very smart people to figure it out...that the US is NOT, repeat...IS NOT printing money ? BTW FDR's sec of the treasury was flat out wrong and likely Ummmmm WRONG... I don't give a damn what the value of the dollar is versus other currencies, because that is only a relative matter when it regards to trade (lately presidents have liked the idea of a weak dollar because it helps increase exports). Inflation also effects the price of goods strictly from a commodities basis. The dollar IS FALLING with the respect to food, metals, energy, etc. which is funny because there is no supply shortage and demand has dropped due to slowing manufacturing numbers. Hmmm I wonder the fuck why, oh yeah, the dollar is taking a big shit!!! You are one of ten assholes who is dumb enough to believe the dollar is not falling. It is costing more and more and more to afford everyday things (That is inflation and the devaluation of the dollar). THEY ARE printing money because they said they are. THEY ADMITTED IT, DUMMY!!! they called it quantative easing to slip it past the public and fired up the presses. That is how you monetize debt. the debt is in dollars, so if you devalue the dollar, you devalue the debt. FDR's treasury secretary was flat out wrong? It was his policies and he was admitting failure, why would he do it? just for the fun of shaming himself? not likely, you are just want to hold on to a lie buddy. 2-3 mil got jobs, yet unemployement stayed above 10%, hmm why? 2-3 mil was a token number compared to the scope of unemployment and mass of people who were still losing their jobs in other sectors. The US floundered much longer than much of the rest of the world in coming out of the depression, we did nothing masterful to fix the situation. Honestly, if it takes 10 years to fix a depression, you might as well have done nothing, because I think a control economy untouched by meddling policies would have self corrected on its own in that time period. Both of these collapses were caused by the deregulation of the biggest fucktard theives in the world (AKA the investment bankers and other financial types). And, in both cases, the prudent thing is to just put em back in the box where they belong. The economy didn't collapse because of collapse in demand for product, it collapsed because the financial foundation behind the purchasing power of the US collapsed. None of that is fixed by stimulus. It is fixed by restructing the US debt, specifically individual privately held debt. How do you pay for it? Seize Wall Streets assests to forgive all that debt. It was their fault, don't bail them out, make them bail us out. We almost agree. It wasnt de-regulation that caused the problem (other than Glass-Steagall), it was lack of enforcement of existing regulations and failure to regulate Fannie and Freddie when people were screaming that they were impending disasters. It wasnt fucktard thieves in business, it was fucktards in Congress named Frank and Waters that enabled the fucktard businessmen. We do agree the bailout should never have happened. The original plan to buy toxic assets might have been somewhat better, but still a bailout. BUT, most of the TARP money given to financial institutions has been repaid, and the psychology of doing something instead of nothing has merits. In fact more has been received through principal and interest repayments than has been paid out. However there is still money sitting there to be paid out, so the entire program isnt in a positive position. A projected net cost of about $100 billion may be worth the psychological gains. The real problem with TARP is the precedent and its resulting potential for moral hazard. How do you convince the "too big to fail" institutions that you WILL let them fail?

fmfclwu -> RE: A tale of two economists (8/26/2011 10:21:16 PM)
quote: ORIGINAL: NewOCDaddy We almost agree. It wasnt de-regulation that caused the problem (other than Glass-Steagall), it was lack of enforcement of existing regulations and failure to regulate Fannie and Freddie when people were screaming that they were impending disasters. It wasnt fucktard thieves in business, it was fucktards in Congress named Frank and Waters that enabled the fucktard businessmen. We do agree the bailout should never have happened. The original plan to buy toxic assets might have been somewhat better, but still a bailout. BUT, most of the TARP money given to financial institutions has been repaid, and the psychology of doing something instead of nothing has merits. In fact more has been received through principal and interest repayments than has been paid out. However there is still money sitting there to be paid out, so the entire program isnt in a positive position. A projected net cost of about $100 billion may be worth the psychological gains. The real problem with TARP is the precedent and its resulting potential for moral hazard. How do you convince the "too big to fail" institutions that you WILL let them fail? The problem with blaming Fannie and Freddie is that the facts just aren't there. The toxic mortgage-backed securities that started this whole mess were written by the private sector, not the GSEs. Subprime loans securitized into MBSs by the GSEs actually defaulted at a lower rate than the national average, and subprime loans securitized by private sector investment banks defaulted at more than 3 times the national average. If you include all loans, private sector securitized mortgages were more than six times more likely to default than GSE securitized mortgages. The facts show that the one type of MBS creator that wasn't an "impending disaster" was the GSE. The actual moral hazard that existed before the bailouts was the deregulation of the ibanking industry. Private sector loan originators made a guaranteed profit any time they extended a loan without bearing any risk. Thoroughly vetting a potential debtor could only hurt the bottom line. As long as the ratings agencies (who, just coincidentally, were paid by the same i-banks that originated the loans and would lose business if the industry cooled down because investors perceived a higher degree of risk in MBSs) kept calling the mortgages good, and as long as investors trusted the ratings agencies, no one had any incentive to accurately evaluate the loan risk. TARP, while an underappreciated piece of legislation for the low final actual cost for the enormous safety net it threw out for the financial industry, simply continued the long term trend in the United States that if you're politically well connected, you should take huge risks, knowing the gains will be privatized if you win, but the losses will be socialized if you lose. The next big moral hazard that we're seeing the consequences play out for is the unregulation (not really deregulation, since the market was never regulated) of credit default swaps. Fun thought of the day - if Germany and France continue to react to the idea of Eurobonds with the same petulance that Republicans react to the idea that maybe it might be time to let a tax cut that was supposed to be a temporary way of reducing a surplus expire now that we're running a deficit, Greece is going to default. Their economy was unsustainable during the good times, and unless they can get access to significantly lower interest rates, they're not going to be able to dig their way out, especially with Germany forcing a tight-money policy on the whole Eurozone. Now for the fun part: no one has any f-ing clue who is going to get hosed when it officially happens. Ten years ago, the holders of Greek debt would obviously take the full haircut, and the result, while ugly, would at least have the virtue of being predictable. Now? Many holders of Greek debt are probably hedged with credit default swaps. Who wrote these CDSs? Have they been bundled into securitized packages and sold to other investors? And, CDSs being over-the-counter contracts instead of regulated exchange instruments, how many issuers of CDSs, facing enormous losses when they have to pay out, will simply default on their obligations? This whole situation has the potential to be absolutely fascinating ... in the cars skidding towards each other on a sheet of ice sense of the term.

MileHighM -> RE: A tale of two economists (8/26/2011 10:29:28 PM)
Well, lack of enforcement is defacto deregulation. tomato tomato arguement. well the fucktards bought off the politicians---and they were too dumb to realize what they were being bought off to do, yet profitted personally from it. I know that was paid back, and what did we get for it? They remain rich and the rest of the country is saddled with the debt they wanted us to take. We should have made them forgive part of the debt to get the bailout. They caused it and we pay the price, that is BS. Fuck the psychology of doing something. We needed justice and the government delivered wrist slaps.

MileHighM -> RE: A tale of two economists (8/26/2011 10:34:39 PM)
look at the chart, it excludes food and energy, what a total load of shit. without that data, it is moot. They are becoming the lionshare of expendature. That chart represents data manipulation in the name of propaganda. Sorry, not pulling the wool over my eyes. The manufacturing my company does is seeing large cost increases. we are cutting profits to try and keep prices down. That is a trend, but it can only go for so long before the back breaks. There is inflation, it is being fluffed with data manipulation, just you wait.

fmfclwu -> RE: A tale of two economists (8/26/2011 11:28:08 PM)
quote: ORIGINAL: MileHighM look at the chart, it excludes food and energy, what a total load of shit. without that data, it is moot. They are becoming the lionshare of expendature. That chart represents data manipulation in the name of propaganda. Sorry, not pulling the wool over my eyes. The manufacturing my company does is seeing large cost increases. we are cutting profits to try and keep prices down. That is a trend, but it can only go for so long before the back breaks. There is inflation, it is being fluffed with data manipulation, just you wait. Yes, I used core inflation, the measure that every serious economist in the world uses. Food prices reflect the recent weather more than underlying inflation trends, while energy prices basically say more about Chinese demand and Middle Eastern supply stability than underlying inflation trends. Of course, your complaint would be much, much stronger if you bothered to look up the actual data and provide it instead of throwing out an anecdotal story and asserting that inflation is rampant if you just look at a different measure. After all, I produced this second chart in under 60 seconds. If you're going to be serious about arguing monetary policy and inflation, I highly recommend bookmarking http://research.stlouisfed.org/fred/graph2/ You can see that overall CPI including everything doesn't significantly deviate from core CPI in the long run, but is filled with lots of useless noise that would cause the Fed to overcorrect every time Russia had a drought or a popular uprising occurred in the Middle East. [image]local://upfiles/603355/B3C890E62D30488CBD9D494359BCD27C.jpg[/image]

samboct -> RE: A tale of two economists (8/27/2011 6:06:00 AM)
fmfclwu- Thanks for your posts- nicely informative. Also, thanks for pointing out that Crum's response was a paraphrase, actually, that does make me feel a bit better. MHM- commodities may not be commodities any more. A lot of metals like copper were priced under the assumption that new mining technologies and better geology would always continue to reduce the costs of production. However, what's been happening over the previous decade is that ore quality is decreasing rapidly, which means that larger volumes are needed- and the costs of extraction are rising faster than improvements. Like our atmosphere and oceans, we've finally discovered that supplies of things are finite. Furthermore, the electronics sector and the fossil fuel replacement sector are using elements such as rare earths (most of which aren't really rare, but some are) that were never critical before. The solar sector is driving up the costs of silver, because unless the technology changes, we're not going to have enough. (OK, silver is a precious metal- but it's the same problem.) In terms of following any economist slavishly....From my perspective, economists generate models that are highly inaccurate. There's no way they can be accurate unless the following conditions are met: 1) The wealth of the world can be accurately represented at a given time. 2) Changes in the wealth of the world can be accurately tracked on a daily basis. Simply put, a lot of economists are looking at changes which fall into the noise of the data. Their models do not accurately represent the economy- but they can provide a useful framework to begin to make sense of what we see. Hence the prescription of doing stimulus, even with a massive debt load, still seems to be the best option, since belt tightening was tried before and it failed miserably. Also- don't forget the environmental factors that lead to the depression in the US being prolonged compared to the rest of the world- the drought leading to the dust bowl had great economic significance since a much larger percentage of our economy was tied to agriculture. That fact seems to often get lost... The moral hazards are clearly many...deregulation of the banking industry had the expected result, but also the lack of accountability in allowing the run up of a massive debt that began with Reagan with no plan to reduce it. I don't see why the banking industry should be different from the auto industry- if GM wasn't too big to fail, then no bank should be too big to fail. If it's too large and would do disrupt the entire industry- well, then it's too big to exist. I tend to think that a lot of the increase in size in banks is a holdover from the 70s-80s when Japanese firms were clobbering US firms because they had cheap money from large conglomerates which included banks. The Koreans are still doing the same thing. Somehow what we've done to try and be competitive hasn't worked too well.... Sam

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