Economics

[Kimura]

Most threads are fun when you can gang up on the minority opinion.

By the way, on a side note, I don't understand this whole "devaluing" and "debasing" meme by the hard money crowd. The dollar doesn't have a baseline or base so to speak.

The Federal Reserve started to add reserves back in '08 when the Lehman Brothers shit storm surfaced. Reserve balances did skyrocket (not really important), settling at $3 trillion give or take.

The dollar still went up. Your charts are what raised my curiosity. Take a look at the Federal Reserves trade-weighted index. This tracks the dollar's exchange value against countries all over the world.

Here:

Actual URL click HERE

And what happened to the dollar? It went up. When When the FED started to take action the index was 95, it reached 99, now it's over 100. Peter Schiff continues to parrot the debasing nonsense without someone correcting him on his bullshit.


Edit to add:

I responded to your trade deficit post, btw.

Here

Still, gold went to $1921, and rose by multiples against all fiat currencies.

That doesn't happen if everyone is feeling all warm and fuzzy about fiat currencies.

FTR, all these dumbass central bankers were selling gold below $300 in 98-99, 1,000 tonnes p.a. Central banks have been net buyers of gold over the past 2+ years. It's been my experience that listening to economists is great way to lose money.

And here we are, with no doomsday scenario. Gold is a commodity and subject to all that entails.

Yup, if you were an investor who bought gold during the last bull market, around thrity years or so ago, you're still waiting to get your money back. If I run this through a cursory inflation adjusted deal, they're still waiting to get their fucking money back.

For inflation adjusted dollars, gold will have to reach around $2300/oz. so those investors can basically break even, yet gold has a cult devotion as some magnificent investment and hedge against inflation.

If we look at stocks, which have earned in the thousands of percent, or even back in the 70s, when they were shitty, had you bought quality stocks, you would have had a nice rate of return with some sweet dividend action.

Like I told Tania, I'll stick to stocks and bonds.

Do you agree?

 

[Toro]

Ftr

silver will one day be below $10 again.

 

[Toro]

By the way, on a side note, I don't understand this whole "devaluing" and "debasing" meme by the hard money crowd. The dollar doesn't have a baseline or base so to speak.

The Federal Reserve started to add reserves back in '08 when the Lehman Brothers shit storm surfaced. Reserve balances did skyrocket (not really important), settling at $3 trillion give or take.

The dollar still went up. Your charts are what raised my curiosity. Take a look at the Federal Reserves trade-weighted index. This tracks the dollar's exchange value against countries all over the world.

Here:

Actual URL click HERE

And what happened to the dollar? It went up. When When the FED started to take action the index was 95, it reached 99, now it's over 100. Peter Schiff continues to parrot the debasing nonsense without someone correcting him on his bullshit.


Edit to add:

I responded to your trade deficit post, btw.

Here

Still, gold went to $1921, and rose by multiples against all fiat currencies.

That doesn't happen if everyone is feeling all warm and fuzzy about fiat currencies.

FTR, all these dumbass central bankers were selling gold below $300 in 98-99, 1,000 tonnes p.a. Central banks have been net buyers of gold over the past 2+ years. It's been my experience that listening to economists is great way to lose money.

And here we are, with no doomsday scenario. Gold is a commodity and subject to all that entails.

Yup, if you were an investor who bought gold during the last bull market, around thrity years or so ago, you're still waiting to get your money back. If I run this through a cursory inflation adjusted deal, they're still waiting to get their fucking money back.

For inflation adjusted dollars, gold will have to reach around $2300/oz. so those inbestors can basically break even, yet gold has a cult devotion as some magnificent investment and hedge against inflation.

If we look at stocks, which have earned in the thousands of percent, or even back in the 70s, when they were shitty, had you bought quality stocks, you would have had a nice rate of return with some sweet dividend action.

Like I told Tania, I'll stick to stocks and bonds.

Do you agree?

Bonds suck.

I do own a lot of distressed debt though.

I also own a lot - and I mean A LOT - of insurance stocks.

 

[Mr.Jeffery]

I dont disagree that stocks and bonds are great for making quick money if you know how to ride the wave. Im more concerned that each bubble gets bigger every time. the bubble i fear is the one that is about the dollar its self.

 

[AmazonTania]

It doesn't matter if US external debt was denominated in Euro, Yen, Swiss Francs or even Rubles. It would be a problem regardless. For example, the hard currency crowd constantly mentions Weimar Germany as some awesome example. Wiemar had their industrial capacity wiped out during the war which left their output controlled by other countries. Their debt was also denominated in Sterling. The more they printed, it wasn't being offset by an increase in the supply of real goods and services, thus resulting in hyperinflation.

I've never really used Germany as an example. Zimbabwe or Iran maybe. I do use Germany as an example for Stimulus believing statist and how they believe that the Government can create money from nothing and stimulate the economy.

Never.going.to.happen. Hyperinflation is much more than a monetary phenomenon. It's a chaotic economic progression which leads to rejection of the sovereign currency.

Worse case scenario, but I don't know...

He lost his clients a SHITLOAD of money. I wouldn't ask him for directions let alone investment advice. His ridiculous decoupling theories, his New Zealand and Chinese stock picks, etc. were a total bust. If you want to come out on the right side of a trade, just do the EXACT opposite of lunatics like Schiff and Bass. Seriously, I'm not joking.

There were total bust at first, as he believe that these foreign currencies would appreciate relative to the USD and these currencies would good for purchasing foreign stocks once the value of the dollar plummeted. He was wrong in this regard, but this was only for the year 2008. These currencies are much higher today relative to the USD, especially the NZD, AUD and NKD.

Watch this if you don't mind listening to Peter Schiff's voice...

[ame=http://youtu.be/x3TIo009RoA]Peter Schiff talking about Mish Shedlock - YouTube[/ame]

What reality?

The general reality regarding the laws of economies and how economist generally have no problem distorting it for as long as they can. They've even gone as far as to manipulate the data, especially on how GDP is going to be calculated in the future.

The debt ceiling is trivial. It's a political ploy by austerity ghouls and ideologues. There is zero correlation between debt-to-GDP ratios and growth.

A monetarily sovereign country like the US, the UK, Australia, Canada, Japan, etc. cannot go bankrupt or default. The only default would be a voluntary default, which is probably against the law and unconstitutional in the US at least.

Not necessarily. Defaulting is defined as being unwilling or unable to pay obligations as promised. Slight upticks in interest rates (especially for Japan) would cause any one of these countries (maybe not Australia) to default. In Japan's case, their debt is so massive that even a slight raise in interest rates would mean that the Government's entire revenue would be allocated towards the interest payments alone.

Investors would sell their bonds to account for inflation due to the Government increasing their tax rates. This pushes up average debt cost so that the total interests expense rises faster than tax revenues. Under this situation, the Government will inevitability defaults.

This can happen to any one of those countries. All that requires is a large enough debt and interest rates to rise fast enough. The alternative is defaulting through inflation. Sure, inflation is low because the Government says it's low. But if the value of the Dollar moves towards new all-time lows, there is no way foreign investors are going to buy this metric.

As long as US debt is denominated is US dollars, the US will always to be able to pay and service its debts.The federal government cannot involuntarily run out of fiat money. It has the constitutional authority to create as much as it needs without limit. The restraints are imposed by Congress. The US government is the monopoly issuer of the dollar. There aren't a fixed amount of dollars in a vault somewhere or a Chinese dollar factory for that matter.

Also, I don't get how it is unconstitutional for the US to default on it's obligations. That was never really an issue the first time the United States defaulted on it's obligations.

You have to realize that the federal government doesn't operate like household. A currency issuer is way different than a currency user. The Federal Government is not like a household; households can’t issue their own currency and make people use that said currency to pay taxes. This is critical. Our supply of dollars is always limited; the supply of federal government's dollars is a matter of policy.

It really annoys me when others assume that I believe the Government is like family deciding their own budgets. And if I had an ounce of gold for each time this point was attributed to me... Let just say I'd have alot of Gold.

No, the Federal Government isn't like a household. If anything, I'd compare the Federal Government and the US economy like a corporation, and the US dollar being a share of the American economy. The more outstanding shares the country has, the lower the share's value. This is pretty much the basic premise, but having a high valued asset should be in the interest of every investor and CEO. A strong dollar instills confidence in one's currency, confidence in one's economy, confidence in one's country.

I'm familiar with hedonic adjustments.

By the way, how do you define inflation? Inflation isn't measured as changes in expenditures.

The rate at high prices are rising and purchasing power is falling and general increases of the money supply.

The CPI doesn't really measure expenditures. That's a different deal. It measures average price changes. They update the basket to demonstrate any changes in expenditure metrics. The CPI aggregates the change in prices to measure up against the same standard of living. It's inconsequential whether or not American consumers can afford the new levels. In the event we can't afford it, we call that a declining standard of living.

I know that. At least, that's what I thought I was doing...

That's really cool. I always liked FOREX, but you can't half ass it. I have a few Slovakian friends who make their living on FOREX. These dudes work 16 hour days, constantly glued to the monitor, looking at Aussie dollars, selling Kronas, buying this or that currency for some client. It's insane.

Forex is a 24 hour market with over $5 Trillion involved, but the general concepts can be fun. I like it because it gives me a better fundamental understanding of foreign economies.

It depends. I've been like 75% accurate on my gold calls. I came in like $200 under what I thought the high would be a year or so ago. I think like all bubbles it will eventually pop. I trade gold through ETFs, I don't physically own any

If Gold was a bubble the Gold Mining Stocks would be soaring towards all time highs. You do see some pretty interesting ETF's when you invest currencies. I think I stumbled across a Bitcoin ETF just recently.

 

[AmazonTania]

Hyperinflation isn't a possibility in the United States, barring having our industrial capacity wiped out, massive civil war and/or corruption, and most importantly, having debts denominated in another currency other than the dollar. If, for example, our "public debt" was denominated in Euros or Yen, that would be a problem.

It might be a problem if it were the Yen. Not really so much regarding the Euro. The Euro is still trading near all-time highs against the Dollar. For what reason, I don't know, but mostly due to the monetary policy the ECB has decided to pursue, or rather, not pursue. Aside from this, there really isn't much of a demand for Euros and the economic strength of the Euro-Zone is still relatively weak. Despite this, the Euro-Zone is one of the few economies committed to a strong currency.

Aside from this, the United States has already experienced hyperinflation once. Certainly can be a possible scenario in the future but I believe Stagflation is more likely to happen.



There are those who have predicted a downturn, after the fact. And there are those who have predicted a recession, just a small slowdown. And there are those who just flat out denied it. I am aware there are those who have called it right, but I haven't seen to many who have called it the same way Schiff has down it.

And his investment strategy is almost identical to mine: Abroad diversification on foreign stocks, assets, ETF, currencies and commodities. By his own admission, during the financial crisis his portfolio has dropped over 50% during 2008. But if you look at some of assets on one of his former accounts, you would see that it would have done well today had this individual still was a client. It's very difficult to actually know how particular brokers are doing performance wise. It's against SEC regulations for us to discuss account performance.



That is very easy to say now. It know longer has to play by the same rules. Other modern economies do not have to play by the same rules. And when the US economy is forced to face reality, it bends the rules on it's own. Pretty soon, there is going to be an addition metric on how GDP is calculated all in the name of making the economy appear to be growing, when really it's not.

And I too believe that the government is going broke (not that it is not already broke). This is by the Government's own admission. Any neglect to actually raise the debt ceiling means that the largest economy in the world will default on a $3 million dollar treasury. I believe that the Government will default sooner or later. It can continue to lie to itself forever, but it can't distort financial markets forever.



During the 70's politicians were concerned that the inflation measurements was an 'overstatement.' So they took out housing prices and introduced it with rents, as rents tend to be more stable. During the 80's, a chain-weighted CPI was added to one of the metrics. And during the 90's, they introduced a metric called 'Hedonic Adjustments' and 'Substitutions.' The Fed is doing all the same things they've done in the past, and yet inflation can barely budge, which is very suspect. If I am right, real inflation is very close to where it was during the 1970's of 7 - 10%



Forex is just one of the things I do, but I also work in the commodities and stock market with general exposure to Foreign and Emerging Markets. I don't have a license to issue securities. I don't see how that would be boring. Sounds like a fun gig to me. Easy sure, but fun.




If wages are rising faster than the cost of goods and services, there is really nothing wrong with that. Today, the cost of living is either rising by the same amount or is rising faster, and this is bad. Contrary to popular belief, lots of good things happen when deflation happens. Corporation empires were built on making sure goods and services were affordable to the common man, which means falling prices.



The average income earners are generally middle statistical category and if your middle class is growing then the median income will be higher in a future point in history, whether you adjust it for inflation or not. It's really not telling you much to be honest.



Trade deficit does devalue a nation's currency. You have also overlooked a few things, but to see this we must start with some basic ideas.

If a country whats what you produce, then it needs your currency. Exporting creates an international demand for your currency as well as the demand for the goods and services of the foreign businesses. If you are purchasing your foreign car from a local dealer, this means your car has already been exported. This contributes to the nation's current account deficit, as the product was exported to your country for final sale.

Contrast, if you are purchasing the foreign object from another country, it has yet to be delivered to you. If this asset requires shipping, this contributes to the nation's (your nation) capital account surplus. In a way you are essential participating in Forex or Currency Exchange. Engaging in a cross borders payment, you buy Euros in exchange for dollars (through a medium like paypal or something), you send Euros and they send the automobile that you want. The basic idea still applies. You want what another country has. The other country only accepts Euros. You purchase the Euros so you can purchase the automobile.

The things you are trying to describe are really different. Exporting creates an international demand for your currency. The more you export, the more people want and desire your currency. This essentially increases the value of your currency relative to other nations. This makes imports to their country more expensive, and exports to your country relatively cheap. As a result, they are forced to export more to keep the rate of exchange relatively stable.

So contrary, if no one wants what you sell, no one needs your currency. Your currency will remain relatively weak, and if you run a trade deficit it can potentially devalue your nation's current. Although, it doesn't mean that trade deficits are all bad, and vice versa for trade surpluses. It all varies from country to country. Economies like China and Japan rely very heavily on exporting, and this are forced to purchase US Treasuries in order to keep their currency relatively low. Strong Currencies like Australia, New Zealand, Singapore, and South Korea have to cut rates in order to keep the US Dollar strong relative to theirs. We've already seen record low rate cuts from three out of four of these nations just recently, as it is the only way they can keep selling exports.

Getting back to the Capital Account example, you are technically correct. Inflows in the country means that the a person has a bank deposit and that the investor has a Treasury (a financial asset, I guess). This increases your capital account surplus, but these are not to be confused with earnings. Inflows of the capital account could be transfers, debt forgiveness or in your case, borrowings. This doesn't take away from the fact that this money has to be paid back later in the future. These borrowings actually turn into earnings for the foreign investor.

As a result, this turns into actual earnings for the foreign investor, which gives the foreign country a legit capital account surplus. Capital flows out of the American economy, which gives america a capital account deficit, which is still harmful for our balance of payments and makes America the largest debtor nation in the world.



Not really a Paul fan. I like his son more, but I think these people know more than you give them credit for. But I know Peter is always up for a challenge. Why don't you give him a call?



That is if your investors are willing to take redemption in a currency that is worthless reserve notes. I do not believe they are. That is a current concern for everyone, even the head honchos at the Fed. Despite the fact that they are willing to cook the inflationary books.



Suit yourself. I am anxious to see where Gold is going to go once the FED starts to taper, and Helicopter Ben realises that he is the cause of what he is trying to prevent.

Oh yeah, Happy 4th!

I am a Brit, so July of 4th is only an American phenomenon. But thank you all the same.

If I am right, real inflation is very close to where it was during the 1970's of 7 - 10%

Wow, what makes you feel it is 7-10%?

A couple of months ago I decided to do an experiment comparing the price increases within a 10 year period of the 70's and the more recent decade.

I would compute the CPI increases between a particular decade. Then I would take a basket of goods, average them out according to the BLS CPI-U data and then compute the increases the same way. I remember doing this I found that my basket was in perfect alignment during the CPI in the 1970's. But when I would compare with a more recent decade, I found that my basket of goods outpaced the CPI on average.

I created all the charts myself, but I don't have the excel docs anymore. It takes a while to compute so I will probably create a thread on this particular topic.

 

[Kimura]

Still, gold went to $1921, and rose by multiples against all fiat currencies.

That doesn't happen if everyone is feeling all warm and fuzzy about fiat currencies.

FTR, all these dumbass central bankers were selling gold below $300 in 98-99, 1,000 tonnes p.a. Central banks have been net buyers of gold over the past 2+ years. It's been my experience that listening to economists is great way to lose money.

And here we are, with no doomsday scenario. Gold is a commodity and subject to all that entails.

Yup, if you were an investor who bought gold during the last bull market, around thrity years or so ago, you're still waiting to get your money back. If I run this through a cursory inflation adjusted deal, they're still waiting to get their fucking money back.

For inflation adjusted dollars, gold will have to reach around $2300/oz. so those inbestors can basically break even, yet gold has a cult devotion as some magnificent investment and hedge against inflation.

If we look at stocks, which have earned in the thousands of percent, or even back in the 70s, when they were shitty, had you bought quality stocks, you would have had a nice rate of return with some sweet dividend action.

Like I told Tania, I'll stick to stocks and bonds.

Do you agree?

Bonds suck.

I do own a lot of distressed debt though.

I also own a lot - and I mean A LOT - of insurance stocks.

What do you do if I may ask? Subordinated debt? Distressed securities?

Btw, Treasuries have outperformed gold. The following chart takes spot gold price divided by the 30-year Treasury. US bonds price have appreciated more than gold price. We also get some interest to boot.

 

[Kimura]

I've never really used Germany as an example. Zimbabwe or Iran maybe. I do use Germany as an example for Stimulus believing statist and how they believe that the Government can create money from nothing and stimulate the economy.

We can any historical examples you want. WWI hyperinflations: Russia, Poland, Austria, Hungary or Weimar. WW2 hyperinfaltions: China (1948 - Regime change, civil war), Greece (1944 - Regime change, civil war) , Hungary (1945 - War, foreign denominated debt) Argentina (1975 - 1991 - Foreign denominated debt.) , Zimbabwe ( Regime change, civil war, foreign denominated debt)

See a pattern?

Worse case scenario, but I don't know...

Hyperinflation is an exogenous event, plain and simple. It occurs in countries with war, no monetary sovereignty, destruction of output capacity, etc. The money printing is secondary to these exogenous events, a byproduct if you will.

There were total bust at first, as he believe that these foreign currencies would appreciate relative to the USD and these currencies would good for purchasing foreign stocks once the value of the dollar plummeted. He was wrong in this regard, but this was only for the year 2008. These currencies are much higher today relative to the USD, especially the NZD, AUD and NKD.

Watch this if you don't mind listening to Peter Schiff's voice...

Peter Schiff talking about Mish Shedlock - YouTube

Haha, I'll listen. I would LOVE to debate this guy on macro, micro, labor theory, monetary operations...... Jeeeessssuuus.

The general reality regarding the laws of economies and how economist generally have no problem distorting it for as long as they can. They've even gone as far as to manipulate the data, especially on how GDP is going to be calculated in the future.

That's a blanket statement. Economics is a social science at best. I do think the neoclassical approach is breaking down. I was fortunate enough to have some brilliant professors introduce me the post-Keynesian world as an undergraduate.

GDP is a national accounting identity, it's not conjecture, but well established fact.

GDP = C + G + I + (X - M) and Y = C + S + T

It's like current account balances and government deficits are connected or something!

Not necessarily. Defaulting is defined as being unwilling or unable to pay obligations as promised. Slight upticks in interest rates (especially for Japan) would cause any one of these countries (maybe not Australia) to default. In Japan's case, their debt is so massive that even a slight raise in interest rates would mean that the Government's entire revenue would be allocated towards the interest payments alone.

Um, no they wouldn't they can still issue Yen to service their debt. It's really that simple. We can always delve into the mechanics if need be.

Investors would sell their bonds to account for inflation due to the Government increasing their tax rates. This pushes up average debt cost so that the total interests expense rises faster than tax revenues. Under this situation, the Government will inevitability defaults.

Japan can issue as many Yen as it needs to service its debt as the sovereign issuer of the Yen. It really is that simple. There's no WAY that could not make payments on their debt. They understand this which is why nobody in the Japanese government is losing sleep.

This can happen to any one of those countries. All that requires is a large enough debt and interest rates to rise fast enough. The alternative is defaulting through inflation. Sure, inflation is low because the Government says it's low. But if the value of the Dollar moves towards new all-time lows, there is no way foreign investors are going to buy this metric.

The FED controls the interest rate all along the entire term structure. All the way out. It operates interest rates in a funnel system of sorts. There's no chance of inflation, it's not possible under the current conditions.

People have a misunderstanding about monetary operations. They view reality in a way which is mired in misconception and myth. This is pervasive from the common dude on the street all the way up to the White House.

The United States of America issues the US Dollar. It can spend it in ANY amount it wants to. Period. The only real issue here, the only thing we must consider, is whether or not that spending at some point leads to inflation. The ONLY way that can happen is if the government spends beyond the capacity of the economy to produce. In other words, when every single person in this country who is able to work is working, and when all of our resources are used up, that's when you have sustainable inflation. This is the conversation we should be having. And quite frankly, with a 7.6% unemployment rate, and millions of people out of work, industrial capacity far below our potential, a ton of unsold homes, and all this other excess capacity, what we should be doing is increasing aggregate demand. We need to spend more on eduction, infrastructure, education, R&D, transportation, health care, etc. These are things we did in the past, that created the REAL capital that was passed along from generation to generation. It's what made the US wealthy, it's exactly the thing we're not doing now. We've become sidetracked on this nonsensical issue about the US government running out of money when it is an impossibility.

Also, I don't get how it is unconstitutional for the US to default on it's obligations. That was never really an issue the first time the United States defaulted on it's obligations.

The Fourteenth Amendment basically guarantees the federal government must pay its debt. We didn't have the Constitution during the Revolutionary War. The US government has never defaulted, during the 19th century (1790) and the 19th century, states defaulted, they basically repudiated debt.

It really annoys me when others assume that I believe the Government is like family deciding their own budgets. And if I had an ounce of gold for each time this point was attributed to me... Let just say I'd have alot of Gold.

No, the Federal Government isn't like a household. If anything, I'd compare the Federal Government and the US economy like a corporation, and the US dollar being a share of the American economy. The more outstanding shares the country has, the lower the share's value. This is pretty much the basic premise, but having a high valued asset should be in the interest of every investor and CEO. A strong dollar instills confidence in one's currency, confidence in one's economy, confidence in one's country.

Money is a creature of the state. It's simply a unit of account, codified by a national government for debt obligations. Under our fiat system, debt is the relationship between the population and nation as a tax liability. It's effectively a tax credit of sorts which can be used to settle said debt.


By the way, if you're interested a fascinating and brilliant economist, look no further than Prof. Steve Keen of the University of Western Sydney. I recommend any of his books, his papers if you like to get wonkish. He's building a computer simulation around Hyman Minsky's financial instability hypothesis. He also "called" the global financial collapse, but not based on any axioms of a dead sociologist.

Here's an interview on the BBC:

[ame="http://www.youtube.com/watch?v=rGkmgnprrIU"]Here[/ame]

 

[AmazonTania]

I've never really used Germany as an example. Zimbabwe or Iran maybe. I do use Germany as an example for Stimulus believing statist and how they believe that the Government can create money from nothing and stimulate the economy.

We can any historical examples you want. WWI hyperinflations: Russia, Poland, Austria, Hungary or Weimar. WW2 hyperinfaltions: China (1948 - Regime change, civil war), Greece (1944 - Regime change, civil war) , Hungary (1945 - War, foreign denominated debt) Argentina (1975 - 1991 - Foreign denominated debt.) , Zimbabwe ( Regime change, civil war, foreign denominated debt)

See a pattern?

America is involved in several wars. It fits right in the inflation club.

Hyperinflation is an exogenous event, plain and simple. It occurs in countries with war, no monetary sovereignty, war, destruction of output capacity. The money printing is secondary to these exogenous events, a byproduct if you will.

Don't forget places with a printing press.

Haha, I'll listen. I would LOVE to debate this guy on macro, micro, labor theory, monetary operations...... Jeeeessssuuus.

Why don't you give him a call.

That's a blanket statement. Economics is a social science at best. I do think the neoclassical approach is breaking down. was fortunate enough to have some brilliant professors introduce me the post-Keynesian world as an undergraduate.

I probably started out as a Keynesian during my undergrad years as well. Then I had a life changing experience. I was watching television and I heard this one person speak. He was talking about FDR, and his general position was the FDR's New Deal didn't help the economy. Also that the Great Depression was the result of the monetary policy of the Federal Reserve and FDR's New Deal made it worse.

Now we can start anew with an entire discussion on what happened and what didn't happen. That is not the point. I grew up from the age of eleven to my early twenties and I never heard that argument once. I didn't know there were thousands of economist who believed this, nor did I know the basis of their positions on this theory. So I embarked on a personal project that summer and I started reading, alot. I've read books from the Keynesian theory, the Austrian School, the Chicago School and the Marxist-Leninist theories.

After that, it finally hit me and I came to a realisation. I wasn't taught to be educated. I was just taught to regurgitate lesson plans back to my statist professors. And to this day, I still read opposing points of view to keep my reading list balanced. Well, as balanced as I can possibly stand. I won't claim to be 100% knowledgeable on all different theories, but it's very easy for me to debate opposing viewpoints because I understand it so well.

GDP is a national accounting identity, it's not conjecture, but well established fact.

GDP = C + G + I + (X - M) and Y = C + S + T

The formula is not what is going to change, but rather how to compute the different components. The Investment component in particular.

Good thing about most social sciences, we can make things up as we go long, or deem it necessary. No wonder the physics club made fun of me!

Um, no they wouldn't they can still issue Yen to service their debt. It's really that simple. We can always delve into the mechanics if need be.

They can still issue Yen. No one well purchase Yen debt, but the Government can still issue it. But what it all hits the fan, there is really no way the Japanese Government is going to be able to attract investors without a high rate of interest.

Japan can issue as many Yen as it needs to service its debt as the sovereign issuer of the Yen. It really is that simple. There's no WAY that could not make payments on their debt. They understand this which is why nobody in the Japanese government is losing sleep.

There lies your problem. 23% of tax revenues are already being spent on tax revenue each year. The average debt cost is only 3.3% away from the point of which debt consumes the entire tax revenue. Whether or not Japan is able to keep it's debt cost from rising depends on whether or not it is able to keep it's foreign/sovereign investors.

For the exception of Government Bonds, prices have been failing. A large part of capital is already invested in these bonds. Any new bonds which the Government issues has to be taken from savings, which is steadily on a downward trend. And the country's trade surplus is declining, so the funds from Corporations are also on a downward trend. The savings from corporations and citizens are less than what the Government needs to borrow.

Foreign investors need to get involved, but they're use to reviving a higher rate of interest. This along with domestic investors who were use to earning a real Yield of 2%. More domestic investors purchasing bonds in the Japanese economy versus foreign investors will likely cause interest rates to rise further.

The FED controls the interest rate all along the entire term structure. All the way out. It operates interest rates in a funnel system of sorts. There's no chance of inflation, it's not possible under the current conditions.

People have a misunderstanding about monetary operations. They view reality in a way which is mired in misconception and myth. This is pervasive from the common dude on the street all the way up to the White House.

The United States of America issues the US Dollar. It can spend it in ANY amount it wants to. Period. The only real issue here, the only thing we must consider, is whether or not that spending at some point leads to inflation. The ONLY way that can happen is if the government spends beyond the capacity of the economy to produce. In other words, when every single person in this country who is able to work is working, and when all of our resources are used up, that's when you have sustainable inflation. This is the conversation we should be having. And quite frankly, with a 7.6% unemployment rate, and millions of people out of work, industrial capacity far below our potential, a ton of unsold homes, and all this other excess capacity, what we should be doing is increasing aggregate demand.

No one disputes that the Fed or the Government's ability to do whatever their heart desires. The question is: Will it turn out successful. I argue, no. No it will not.

The only way the Federal Reserve can keep rates low is by monetising the debt, by essentially expanding the balance sheet. Theatrically, the Fed can artificially suppress rates by expanding the $3 Trillion dollar balance sheet to much larger levels. Since the only market demand for US Debt is the Fed, there is essentially no market pressure for higher rates. The problem with this strategy is that banks do not control where the newly issued money goes. If it goes into the real economy, that is inflation. If it goes into assets, you'll merely have inflated asset prices.

If you want to keep printing money, you can. I still do not dispute that you can do this; however, the new money has to go somewhere. If it goes into the real economy the flood of new cash will spark inflation in the resources goods, services and labour cost are not the only prices increasing. This can result in a sharp spike in the price of oil and other commodities. Wheat, grain, corn, coffee, even Gold. If you choose the asset route, eventually commodities such as oil, grain, wheat and corn will also spike due to inflation. But not due to any fundamentals regarding supply and demand, but solely due to commodity speculation driven by money printing.

So far, we have really only seen the new money go into asset prices. It's in the stock market. It's in the bond market. It's desperately trying to inflate a housing market which is already shot full of holes and it is also in student loans.

Real Economy or Wall Street. You can't have it both ways. Personally, I hope you choose Wall Street. The real economy wouldn't know what to do with $40 billion dollars. New money is wasted on them...

We need to spend more on eduction, infrastructure, education, R&D, transportation, health care, etc. These are things we did in the past, that created the REAL capital that was passed along from generation to generation. It's what made the US wealthy, it's exactly the thing we're not doing now. We've become sidetracked on this nonsensical issue about the US government running out of money when it is an impossibility.

Well, the Government certainly has the spending on Education and Health Care portion down. Expenditures regarding those particular sectors have never been higher. Especially in regards to higher education.

The Fourteenth Amendment basically guarantees the federal government must pay its debt. We didn't have the Constitution during the Revolutionary War. The US government has never defaulted, during the 19th century (1790) and the 19th century, states defaulted, they basically repudiated debt.

Thank goodness I'm incredibly stupid, or else I would have figured that the fourteenth amendment was in regards to something else. And sure, the US has defaulted at least one in history. I'm certain of it!

Money is a creature of the state. It's simply a unit of account, codified by a national government for debt obligations. Under our fiat system, debt is the relationship between the population and nation as a tax liability. It's effectively a tax credit of sorts which can be used to settle said debt.

Money is much more than just a simple unit of account. Under a fiat system, my money has value because my nation says it does. It's merely a proxy for a different type of value, but as long as governments can ignore strong fundamentals, I guess it's still a step better than wall paper.

By the way, if you're interested a fascinating and brilliant economist, look no further than Prof. Steve Keen of the University of Western Sydney. I recommend any of his books, his papers if you like to get wonkish. He's building a computer simulation around Hyman Minsky's financial instability hypothesis. He also "called" the global financial collapse, but not based in on axioms of a dead sociologist.

Here's an interview on the BBC:

Here

Is this the part where I throw a suggestion your way?

I will his writings a little look-see on my free time.

 

[Toro]

And here we are, with no doomsday scenario. Gold is a commodity and subject to all that entails.

Yup, if you were an investor who bought gold during the last bull market, around thrity years or so ago, you're still waiting to get your money back. If I run this through a cursory inflation adjusted deal, they're still waiting to get their fucking money back.

For inflation adjusted dollars, gold will have to reach around $2300/oz. so those inbestors can basically break even, yet gold has a cult devotion as some magnificent investment and hedge against inflation.

If we look at stocks, which have earned in the thousands of percent, or even back in the 70s, when they were shitty, had you bought quality stocks, you would have had a nice rate of return with some sweet dividend action.

Like I told Tania, I'll stick to stocks and bonds.

Do you agree?

Bonds suck.

I do own a lot of distressed debt though.

I also own a lot - and I mean A LOT - of insurance stocks.

What do you do if I may ask? Subordinated debt? Distressed securities?

Btw, Treasuries have outperformed gold. The following chart takes spot gold price divided by the 30-year Treasury. US bonds price have appreciated more than gold price. We also get some interest to boot.

I run an investment department. Most would describe me as an allocator though that's not quite it. I used to be an equity PM. Professionally, in debt, I own senior loans, mezz and distressed. The insurance stocks are in my PA.

Gold has sucked this year and has been in a brutal bear market since it peaked in April 2011. Gold has been a personal trade too. When I ran my fund 10 years ago, I was told I was the largest shareholder of gold stocks in the SE. I was buying gold stocks when it was $320 and people were telling me I was an old man and - literally - laughing in my face. I had no idea gold was going to go up to $1921 though, and the stocks would go up 10x-20x. I thought it might go to $500-600 one day. But I'm under no illusions. Gold is a commodity/currency that is to be traded, not owned. It is down 37% from the top, and silver is down by almost 60%. It is my impression that most people who are in gold don't understand commodities and how to trade them.

 

[Foxfyre]

We can vouch that silver has been wildly volatile and we have taken a beating on our modest investment in it. But then what commodities are not volatile? What commodites do not experience broad swings due to the slightest variables in supply and demand?

I think commodities are at best a gambling device to play with, and not a very prudent investment for the long haul. We have fun with them much as we have fun going to Vegas and risking some of our vacation funds at the craps table or slot machines. But put our whole nest egg at risk that way? Not smart, in my opinion.

But who do you trust? Read the financials and you have people making all sorts of statements about this or that financial investment as good or bad, near sure thing or risky.

All Bernanke has to do is make the slightest suggestion about changes in monetary policy and it can affect the market by several points. And if he makes a definitive statement that the financial market doesn't want to hear, it can trigger one of those black Fridays or Mondays or whatever.

We are truly helpless when it comes to the value of our money or our labor these days. I think we are long overdue in demanding a remedy for that.

 

[Kimura]

America is involved in several wars. It fits right in the inflation club.

Not really. We're talking hyperinflation. Inflation is a situation where prices increase faster than wages. Or a situation where both increase at the same time which tends to distort internal and external markets. A little inflation is part of a growing, healthy, robust economy. It will increase growth and consumption, prevents hoarding of cash, etc.

Why don't you give him a call.

Meh, he doesn't have any credentials in economics. He's a stockbroker. And a really shitty one at that.

I probably started out as a Keynesian during my undergrad years as well. Then I had a life changing experience. I was watching television and I heard this one person speak. He was talking about FDR, and his general position was the FDR's New Deal didn't help the economy. Also that the Great Depression was the result of the monetary policy of the Federal Reserve and FDR's New Deal made it worse.

The New Deal helped get the US out of the Depression. The was problem was that he drank some of the Kool Aid in the in beginning. He even ran on balancing the budget, etc.
Some of his economic advisers really didn't understand the gravity of the situation. They should have spent much more in the beginning. I'm talking orders of magnitude more. I've head the ahistorical and revisionist history. People don't seem to realize that FDR was also the leading anti-fascist on the world stage at time. If it wasn't for FDR, it would have ended badly for England. Badly.

Now we can start anew with an entire discussion on what happened and what didn't happen. That is not the point. I grew up from the age of eleven to my early twenties and I never heard that argument once. I didn't know there were thousands of economist who believed this, nor did I know the basis of their positions on this theory. So I embarked on a personal project that summer and I started reading, alot. I've read books from the Keynesian theory, the Austrian School, the Chicago School and the Marxist-Leninist theories.

After that, it finally hit me and I came to a realisation. I wasn't taught to be educated. I was just taught to regurgitate lesson plans back to my statist professors. And to this day, I still read opposing points of view to keep my reading list balanced. Well, as balanced as I can possibly stand. I won't claim to be 100% knowledgeable on all different theories, but it's very easy for me to debate opposing viewpoints because I understand it so well.

There's more interesting economists out there.

Carl Menger, the founder of the Austrian School, made a great contribution to economics with marginal utility. Hayek at least joined the reality-based community on occasion. von Mises and Rothbard were wrong about many, many things. Honestly, I don't believe Murray Rothbard understood macro.

There's Abba Lerner, GF Knapp, Michał Kalecki, Hyman Minsky, etc.

The formula is not what is going to change, but rather how to compute the different components. The Investment component in particular.

Good thing about most social sciences, we can make things up as we go long, or deem it necessary. No wonder the physics club made fun of me!

There's only one way to calculate GDP:
GDP = C + I + G + (X – M)

They can still issue Yen. No one well purchase Yen debt, but the Government can still issue it. But what it all hits the fan, there is really no way the Japanese Government is going to be able to attract investors without a high rate of interest.

There lies your problem. 23% of tax revenues are already being spent on tax revenue each year. The average debt cost is only 3.3% away from the point of which debt consumes the entire tax revenue. Whether or not Japan is able to keep it's debt cost from rising depends on whether or not it is able to keep it's foreign/sovereign investors.

For the exception of Government Bonds, prices have been failing. A large part of capital is already invested in these bonds. Any new bonds which the Government issues has to be taken from savings, which is steadily on a downward trend. And the country's trade surplus is declining, so the funds from Corporations are also on a downward trend. The savings from corporations and citizens are less than what the Government needs to borrow.

Foreign investors need to get involved, but they're use to reviving a higher rate of interest. This along with domestic investors who were use to earning a real Yield of 2%. More domestic investors purchasing bonds in the Japanese economy versus foreign investors will likely cause interest rates to rise further.

People purchase bonds as a place to park their wealth. It's a secondary function. The primary function of bonds are too drain excess reserves. Period. Period. Period.

Again, under a fiat system, bonds are not necessary. As a matter of fact, if people are so concerned about something as trivial as debt, we should just get rid of bonds. You can just credit commercial bank accounts as a national government. Granted, you won't earn any interest keeping your money in reserve accounts.

Sovereign governments don't borrow the national money of account they freely issue. We have to look at this from the consolidated government model. National governments tax to create demand for the national unit of account and regulate aggregate demand. In this scenario, deficits are a prerequisite to create net financial assets.

The Japanese government issues "public debt" so household savers can get a decent return without having to get into foreign-denominated currency. They can also maintain growth with spending which creates savings and keeps unemployment on the low side.

The Japanese central bank and treasury are fully aware of these facts. Their economists wrote brilliant papers about this.

Bookmark this post: There simply will not be a Japanese debt crash - not tomorrow, next year, five years or EVER. The reality of the situation is that the Japanese never have any problems issuing JGBs at low or miniscule yields. We bond traders understand which is why these arguments make me want to commit ritualistic Japanese suicide. Bushido style.

No one disputes that the Fed or the Government's ability to do whatever their heart desires. The question is: Will it turn out successful. I argue, no. No it will not.

The only way the Federal Reserve can keep rates low is by monetising the debt, by essentially expanding the balance sheet. Theatrically, the Fed can artificially suppress rates by expanding the $3 Trillion dollar balance sheet to much larger levels. Since the only market demand for US Debt is the Fed, there is essentially no market pressure for higher rates. The problem with this strategy is that banks do not control where the newly issued money goes. If it goes into the real economy, that is inflation. If it goes into assets, you'll merely have inflated asset prices.

If you want to keep printing money, you can. I still do not dispute that you can do this; however, the new money has to go somewhere. If it goes into the real economy the flood of new cash will spark inflation in the resources goods, services and labour cost are not the only prices increasing. This can result in a sharp spike in the price of oil and other commodities. Wheat, grain, corn, coffee, even Gold. If you choose the asset route, eventually commodities such as oil, grain, wheat and corn will also spike due to inflation. But not due to any fundamentals regarding supply and demand, but solely due to commodity speculation driven by money printing.

First of all, the term printing money is a term from the days of the gold standard. Under a fiat system, government spending is money creation. It's a matter of crediting commercial bank accounts. It's ex-nihilo, the entire process of money creation, a balance sheet operation.

We no longer monetize the debt, that's another term from the gold standard. Under the gold standard, the US money supply was limited to the amount of gold it had on hand.The government used to get gold by issuing certificates which were IOUs by Uncle Sam. These certificates were passed from person to person the same we pass around cash. This is where the term comes from. We 86'd the gold standard in 1933, but we continue to incorrectly use the term.

People also erroneously assume the Federal Reserve purchases government debt and this creates money in the banking system which somehow works it way into the general economy. The FED is prohibited from purchasing debt by the Treasury by law. When the FED purchases debt, the purchase is made from the public. These consist of bills, notes, and bonds already owned so to speak. The whole belief that the FED is required to buy US debt is utterly and patently false. US auctions are constantly oversubscribed by many times the available US paper. The US dollars sitting in those bank accounts are what's used to purchase bonds are in fact the result of government spending itself. Dollars don't magically appear in reserve accounts.

So far, we have really only seen the new money go into asset prices. It's in the stock market. It's in the bond market. It's desperately trying to inflate a housing market which is already shot full of holes and it is also in student loans.

Yeah, QE, it was supposed to generate the "wealth effect". I'm going to use some British slang: bollocks! It was a useless policy in my option.

Real Economy or Wall Street. You can't have it both ways. Personally, I hope you choose Wall Street. The real economy wouldn't know what to do with $40 billion dollars. New money is wasted on them...

The real economy is more important than Wall Street. I'm 36, I started on Wall Street when I was 22. Now that I'm no longer a delusional idiot, watching reruns of Wall Street and Boiler Room, I've finally realized we don't need Wall Street to have a prosperous and productive economy.

Seriously, it's needs more regulation and it should be taxed to discourage any rent-seeking behavior. As it stands today, they can destabilize whole the financial system, especially with high frequency trading, derivatives, credit default swaps, etc.

Thank goodness I'm incredibly stupid, or else I would have figured that the fourteenth amendment was in regards to something else. And sure, the US has defaulted at least one in history. I'm certain of it!

No, you're right, there was the Default of 1970 (post-war reorganization) and two or so in the middle of the 19th century. However, in the case of the the 19th century, it was the states that defaulted.

Money is much more than just a simple unit of account. Under a fiat system, my money has value because my nation says it does. It's merely a proxy for a different type of value, but as long as governments can ignore strong fundamentals, I guess it's still a step better than wall paper.

Yeah, it has value though seigniorage, regulation, legal tender laws, taxes and production.

Is this the part where I throw a suggestion your way?

I will his writings a little look-see on my free time.

Sure, if you feel so inclined to.

 

[Kimura]

Bonds suck.

I do own a lot of distressed debt though.

I also own a lot - and I mean A LOT - of insurance stocks.

What do you do if I may ask? Subordinated debt? Distressed securities?

Btw, Treasuries have outperformed gold. The following chart takes spot gold price divided by the 30-year Treasury. US bonds price have appreciated more than gold price. We also get some interest to boot.

I run an investment department. Most would describe me as an allocator though that's not quite it. I used to be an equity PM. Professionally, in debt, I own senior loans, mezz and distressed. The insurance stocks are in my PA.

Gold has sucked this year and has been in a brutal bear market since it peaked in April 2011. Gold has been a personal trade too. When I ran my fund 10 years ago, I was told I was the largest shareholder of gold stocks in the SE. I was buying gold stocks when it was $320 and people were telling me I was an old man and - literally - laughing in my face. I had no idea gold was going to go up to $1921 though, and the stocks would go up 10x-20x. I thought it might go to $500-600 one day. But I'm under no illusions. Gold is a commodity/currency that is to be traded, not owned. It is down 37% from the top, and silver is down by almost 60%. It is my impression that most people who are in gold don't understand commodities and how to trade them.

Nice. I always thought mezzanine and distressed presented interesting opportunities.

You ran a hedge fund? You don't come across as a sociopath. Just kidding...

I'm glad I've had a chance to post more on here. It makes for interesting discussion. I had ankle surgery a week ago, so I'm out of commission for the next two weeks.

Btw, you raise a critical about gold. The vast majority of people don't understand how the trade works or why we trade commodities.

 

[Kimura]

We can vouch that silver has been wildly volatile and we have taken a beating on our modest investment in it. But then what commodities are not volatile? What commodites do not experience broad swings due to the slightest variables in supply and demand?

I think commodities are at best a gambling device to play with, and not a very prudent investment for the long haul. We have fun with them much as we have fun going to Vegas and risking some of our vacation funds at the craps table or slot machines. But put our whole nest egg at risk that way? Not smart, in my opinion.

But who do you trust? Read the financials and you have people making all sorts of statements about this or that financial investment as good or bad, near sure thing or risky.

All Bernanke has to do is make the slightest suggestion about changes in monetary policy and it can affect the market by several points. And if he makes a definitive statement that the financial market doesn't want to hear, it can trigger one of those black Fridays or Mondays or whatever.

We are truly helpless when it comes to the value of our money or our labor these days. I think we are long overdue in demanding a remedy for that.

I actually like silver more than gold. It's better going forward, it has more industrial applications as well.

If you're looking for a place to dump a nest egg (a Roth or tradtional IRA), I'd go with mutual funds. Some of the REITs and aggressive growth funds are getting decent returns. If you're looking to be more conservative, there's bond funds where you can average 3%-5%. I'm heavy in REITs in the US.

 

[Foxfyre]

We can vouch that silver has been wildly volatile and we have taken a beating on our modest investment in it. But then what commodities are not volatile? What commodites do not experience broad swings due to the slightest variables in supply and demand?

I think commodities are at best a gambling device to play with, and not a very prudent investment for the long haul. We have fun with them much as we have fun going to Vegas and risking some of our vacation funds at the craps table or slot machines. But put our whole nest egg at risk that way? Not smart, in my opinion.

But who do you trust? Read the financials and you have people making all sorts of statements about this or that financial investment as good or bad, near sure thing or risky.

All Bernanke has to do is make the slightest suggestion about changes in monetary policy and it can affect the market by several points. And if he makes a definitive statement that the financial market doesn't want to hear, it can trigger one of those black Fridays or Mondays or whatever.

We are truly helpless when it comes to the value of our money or our labor these days. I think we are long overdue in demanding a remedy for that.

I actually like silver more than gold. It's better going forward, it has more industrial applications as well.

If you're looking for a place to dump a nest egg (a Roth or tradtional IRA), I'd go with mutual funds. Some of the REITs and aggressive growth funds are getting decent returns. If you're looking to be more conservative, there's bond funds where you can average 3%-5%. I'm heavy in REITs in the US.

Now that we are retired, the lion's share of our investment are in three or four starred rated conservative mutual funds, and because fund managers and conditions change over time, we do watch those fairly closely. We handle it ourselves as we have found we do pretty much as well as those we used to pay to to do it for us.

But for a bit of non-essential cash, it is still fun to gamble a bit with the commodities though we have been losing our shirts with silver the last several months. We're doggedly hanging on though hoping the pendulum swings back so we can at least break even.

 

[Friends]

I hear a lot of bad opinions about Keynesianism, which I think has served us pretty well for decades.

Which is akin to living on credit cards. You'd live pretty well for a while...until you can no longer make the minimum payments. Then the shit hits the fan.

John Maynard Keynes said that deficit spending is only appropriate when the economy shrinks, and when there is persistent high employment. He also said that when the economy is growing, and that when unemployment is low the government run a surplus and pay off the national debt.

From the presidencies of Harry Truman to that of Jimmy Carter the government rarely ran in the black, but the national debt was paid down as a percentage of gross domestic product. What helped was a very heavy tax load on the well to do.

History of the United States public debt - Wikipedia, the free encyclopedia

Top Tax Rate on Regular Income

Beginning with Ronald Reagan Republicans have corrupted Keynes insight by maintaining that it is always a good idea to cut taxes, and never a good idea to raise them. When the economy is in recession, as it often is during Republican administrations they cut taxes. When the economy pulls out of recession they say, "Hey tax cuts work!" and cut taxes some more.

The good economic numbers of the Reagan administration were due partially to the decline in the world price of oil for which Reagan deserves no credit.

Historical Oil Prices: InflationData.com

Those good economic numbers were due partially to the military Keynesianism that was the reality behind all that noise about "supply side economics." Reagan stimulated the economy with borrowed money while increasing government spending and employment with his military buildup.

Because the Soviet Union was collapsing this military buildup was unnecessary. Because Soviet leaders felt their power foundations falling beneath them, provoking a nuclear arms race with them was dangerous.

 

[Kimura]

We can vouch that silver has been wildly volatile and we have taken a beating on our modest investment in it. But then what commodities are not volatile? What commodites do not experience broad swings due to the slightest variables in supply and demand?

I think commodities are at best a gambling device to play with, and not a very prudent investment for the long haul. We have fun with them much as we have fun going to Vegas and risking some of our vacation funds at the craps table or slot machines. But put our whole nest egg at risk that way? Not smart, in my opinion.

But who do you trust? Read the financials and you have people making all sorts of statements about this or that financial investment as good or bad, near sure thing or risky.

All Bernanke has to do is make the slightest suggestion about changes in monetary policy and it can affect the market by several points. And if he makes a definitive statement that the financial market doesn't want to hear, it can trigger one of those black Fridays or Mondays or whatever.

We are truly helpless when it comes to the value of our money or our labor these days. I think we are long overdue in demanding a remedy for that.

I actually like silver more than gold. It's better going forward, it has more industrial applications as well.

If you're looking for a place to dump a nest egg (a Roth or tradtional IRA), I'd go with mutual funds. Some of the REITs and aggressive growth funds are getting decent returns. If you're looking to be more conservative, there's bond funds where you can average 3%-5%. I'm heavy in REITs in the US.

Now that we are retired, the lion's share of our investment are in three or four starred rated conservative mutual funds, and because fund managers and conditions change over time, we do watch those fairly closely. We handle it ourselves as we have found we do pretty much as well as those we used to pay to to do it for us.

But for a bit of non-essential cash, it is still fun to gamble a bit with the commodities though we have been losing our shirts with silver the last several months. We're doggedly hanging on though hoping the pendulum swings back so we can at least break even.

Good for you. It's nice to see people actually diversify. Commodities are tricky, they should only be gambled on if you had disposable income.

 

[Foxfyre]

Even with wise diversification though, it is touch and go in this highly volatile and skittish market. But where else can you put your money? Real estate is even more risky these days and interest is a lost cause to even remotely keep up with inflation. That is why even in a bankrupt Greece, their stock market is booming. All most likely a house of cards. You just hope you're invested in businesses that will survive no matter what.

 

[Kimura]

The US can never end up like Greece. We have haven't ceded any monetary sovereignty. We have structural problems - a byproduct of stagnant wages for the last twenty years. The government also hasn't spent nearly enough to stimulate aggregate demand. They've been focused on Wall Street, encouraging more of the same delusional an destructive behavior.

We still don't have a full employment policy, Medicare for all, an infrastructure program, a doubling of social security payments for our seniors and disabled. These are the things needed to create any type of real wealth and capital to help the middle class and all Americans.

We're such an infinitely wealthy country. It boggles my mind.

 

[Kimura]

Anybody here an economist? I've read a lot of opinions here and just wondering, that's all. I hear a lot of bad opinions about Keynesianism, which I think has served us pretty well for decades. Peter Ferrara could give a pretty good anti argument, but what nations can he give a working example of that were successful under his brand of economics.

People speak of Keynesian or Austrian economic theories as though they were FORMULAS for how economies ought to be run in every circumstance.

Keynesianism is a proposed RESPONSE to a specific economic circumstance (deflationary depression), and NOT a formula for how an economy ought to run all the time.

JM Keynes was a brilliant economist. He stumbled upon some concepts that weren't really part of the consensus at the time. Besides Sir Issac Newton ad Alan Turing, he's top 5 on my list of genius Brits.

99% of people that deride Keynes have never read the General Theory. It's a gaggle of idiots and ideologues who have an agenda.

Unfortunately, he died before he could complete his Magnum Opus. I'm positive he would have arrived at similar conclusions that Hyman Minsky arrived at.

Keynes unlocked the door for us. Modern Monetary Theory (MMT) has showed me the way so to speak.