Recent comments by RE

robj wrote:

Doesn't Hegel play left wing on Bayern Munich?

No Frenchman Franck Ribery is a lock. Wink

I added this Rand Paul quote:

Rand Paul cryptocurrency: Of course he has wacky opinions about this.

With Bitcoin my concern always was whether or not something has real value. I could imagine a kind of coin that was exchangeable. This gets back to the whole idea of whether money has to be exchangeable for something to have value. What if Bitcoin or Wal-Coin was exchangeable for Wal-Mart stock? What if Wal-Mart, K-Mart, Kroger and maybe 20 retailers got together and issued a coin to deal against a basket of stocks? I think that might be something I'd be interested in investigating. If they do it with a goal of—I hope Visa and Mastercard are not listening—eliminating the credit card companies from the equation—what if Wal-Mart's doubling their profits from 4 percent to something like 8 percent?

Blackhalo wrote:

Can't we just ban FDIC insured banks from proprietary trading, and force them to divest one, or the other. That would at least remove the temptation.

That is relatively easy to do with a state sponsored money monopoly (the current environment).

Take the Rand Paul vision of private commodity money which potentially, according to him, includes equities. Now would you like the public to insure deposits?

EDIT

With Bitcoin my concern always was whether or not something has real value. I could imagine a kind of coin that was exchangeable. This gets back to the whole idea of whether money has to be exchangeable for something to have value. What if Bitcoin or Wal-Coin was exchangeable for Wal-Mart stock? What if Wal-Mart, K-Mart, Kroger and maybe 20 retailers got together and issued a coin to deal against a basket of stocks? I think that might be something I'd be interested in investigating. If they do it with a goal of—I hope Visa and Mastercard are not listening—eliminating the credit card companies from the equation—what if Wal-Mart's doubling their profits from 4 percent to something like 8 percent?

Rob Dawg wrote:

The sad. The sad is not just for you personally but for a society that has so failed on such basic levels that you can evolve to be so bereft of basic socialization that you can say something like this.

So you are against the bank monopoly and therefore for purely private banking?

Can you explain how that helps the public good? The 19th century is full of bad examples.

energyecon wrote:

Why? We have had a mixed economy, not some fairy tale of unregulated Randian unbridled capitalism. d_j posited the Fed gave a rip about housing because it was a retirement savings vehicle for at least one generation, which I contested with my comment re: it is about the banks, not the people & whatever illusions they may have about the role of their home in their retirement.

I simply don't see how, in our system, even before the Fed, one can separate banks from the public good.

Banks are the exclusive gatekeepers for the primary medium of exchange. If banks don't lend the economy crashes. It is therefore essential for a society to have healthy banks. However, as banks have a state sponsored monopoly position, government oversight is essential. It is oversight that inserts politics into all Fed and banking related policies including the public interest to maintain asset values for a significant part of the voting public.

If banks weren't subject to politics, they'd behave like hedge funds who prefer volatility over slow price developments. The bigger and better financed players wouldn't hesitate to fuel crashes as they could easily front-run them for outsized profits.

Bank resistance to limited oversight increases like Dodd/Frank should be an obvious tell.

Obviously the dual mandate wouldn't exist in a pure private banking system.

So it is in the Fed's and the banks' self-interest to give a rip regarding the public interest as otherwise their operational playing field gets curtailed. How far that goes depends rightly on congress.

Pigged KarmaPolice wrote:

I'm assuming at this point that there will not be a single-family housing prediction for 2015.

You brought this up numerous times and I finally did a quick search.

And here it is:

Question #9 for 2015: What will happen with house prices in 2015?  

The consensus of housing analysts appears to be for price increases of around 3.5% in 2015.

In 2015, inventories will probably remain low, but I expect inventories to continue to increase on a year-over-year basis. Low inventories, and a better economy (with more consumer confidence) suggests further price increases in 2015. I expect we will see prices up mid single digits (percentage) in 2015 as measured by these house price indexes.

ndk wrote:

Consolidation of "excess" reserves and Treasuries would be nice, especially if the Fed starts to issue CD's. I agree with this commentator:

This is where the article gets silly.

The near term inflationary pressure is really lower than one would expect from just looking at the monetary base. However, the hyperinflation risk is higher than one would think from just looking at the official debt and deficit numbers. Really, as far as the size of the potential money flood in hyperinflation, it is like the short term US debt is $2 trillion higher than people think.

The inflationary effect of this money is largely just at its creation.

Banks have never limited loan issuance by reserves. Since it is primarily loan issuance and not reserves that expand M2/M3, the inflationary pressures are severely limited absent monetization.

merchants of fear wrote:

Discontinued data on the mega excess amounts of reserves of Depository Institutions not necessary?

Are you really that dense? Divide the series in millions by 1,000 and you have the discontinued series.

merchants of fear wrote:

That was why that data was discontinued?

Why not check for yourself?

merchants of fear wrote:

Why was it that excess reserves data was discontinued? Wonder where the excess reserves numbers are at now?

If you can use reserves in millions instead of billions, it's at the same place...

merchants of fear wrote:

Excess Reserves of Depository Institutions (DISCONTINUED SERIES)
2013-05: 1,863.346 Billions of Dollars

Aren't excess reserves good? If excess reserves were denominated in gold, the bugs would scream from the roof-tops how great it is.

Makes sense ...?

arthur_dent wrote:

nice try, but if you repeat it often enough it might become true. Take a look at the global balance sheet since 2007 and look at the US since 1980. Compare to historically sustainable levels. We've just about run the board on this attempt at convincing ourselves that a group of wise men printing currency can substitute for a real economy trading goods and services.

Again, just pathos without addressing the data.

Praxeology - Wikipedia, the free encyclopedia

Austrians argue that logical positivism cannot predict or explain human action and that empirical data itself is insufficient to describe economics which in turn implies that empirical data cannot falsify economic theory and that logical positivism is not the proper method of conducting economic science.

The economic voodoo cult. It takes believers!

arthur_dent wrote:

It works until the internal contradiction(usually in the form of debt/income) gets so large, the guarantors of the game (govts and CBs) are dwarfed by the liabilities.

Hmmm how could the opposite happen over the past six years for the first time since the 1930s?

Graph: All Sectors; Credit Market Instruments; Liability, Level / Gross Domestic Product - FRED - St. Louis Fed

Is this evidence of Austrians denying the usefulness of empirical data again?

Rob Dawg wrote:

...
For everyone else there is the economic freedom index. http://www.cato.org/pubs/efw/efw2013/efw-2013-chapter-2.pdf  Just look at the decline of the United States and the rise of Switzerland and then compare to per capita GDP.

Well, the U.S. did just fine, didn't it?

Constant GDP per Capita comparison since 1981:

FRED Graph - FRED - St. Louis Fed

yuan wrote:

The politics of banksters and infestors prevented and is preventing the Fed from doing its job. Its "independence" is very much overrated, IMO.

The Fed is walking a political tightrope. Because its charter is subject to congress it always has to look over its shoulder, rightly IMO.

It cannot risk its support base in congress, realistically.

greenchutes wrote:

I need to give 70%, instead of 50% of my income, as taxes, while apple continues to pay 2 or 3%.

I think I said with "tax increases on the primary beneficiaries" which doesn't exclude Apple, does it?

yuan wrote:

In a sense, quantitative easing is meant to benefit the wealthy. After all, it can contribute to GDP only by making those with assets feel wealthier and encouraging them to consume more.

I agree in part. IMO it raises investment which helps everybody eventually. However, to be truly effective, QE needs to be paired eventually with tax increases on the primary beneficiaries and then redistributed more broadly.

Pigged Sebastian wrote:

Well, whatever he's doing, I don't think we can call it QE. That's when the central bank buys undesirable assets to support their price, not assets that nobody wants to turn loose of.

Not really. Here is the primary objective.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf 

In exceptional circumstances, when interest rates are at their effective lower bound, money creation and spending in the economy may still be too low to be consistent with the central bank's monetary policy objectives. One possible response is to undertake a series of asset purchases, or ‘quantitative easing' (QE). QE is intended to boost the amount of money in the economy directly by purchasing assets, mainly from non-bank financial companies.

QE initially increases the amount of bank deposits those companies hold (in place of the assets they sell). Those companies will then wish to rebalance their portfolios of assets by buying higher-yielding assets, raising the price of those assets and stimulating spending in the economy.

Sebastian wrote:

Well, whatever he's doing, I don't think we can call it QE. That's when the central bank buys undesirable assets to support their price, not assets that nobody wants to turn loose of.

Not really. Here is the primary objective.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf 

In exceptional circumstances, when interest rates are at their effective lower bound, money creation and spending in the economy may still be too low to be consistent with the central bank's monetary policy objectives. One possible response is to undertake a series of asset purchases, or ‘quantitative easing' (QE). QE is intended to boost the amount of money in the economy directly by purchasing assets, mainly from non-bank financial companies.

QE initially increases the amount of bank deposits those companies hold (in place of the assets they sell). Those companies will then wish to rebalance their portfolios of assets by buying higher-yielding assets, raising the price of those assets and stimulating spending in the economy.

azurite wrote:

and NAFTA was passed. Now it seems Obama's trying to persuade people the TPP is a good thing for them. White House targets Dems in trade blitz | TheHill

Free trade is generally beneficial to most parties. This should be obvious if one takes commodities as an example as they aren't distributed evenly across the planet.

If my country grows more food than it needs and yours has an iron surplus, in an open trade environment, overall competition for both food and iron should lead to a lower combined price level.

Without free trade, importers act as a bottleneck/control mechanism that keeps prices high for the benefit of skimming importers.

Take Switzerland as an example. The Swiss have many trade agreements but are extremely protectionist with their farmers leading to "certified" imports. This leads to huge price differentials just across the border, i.e. Germany.

Just look at the huge price differentials between Euro (free trade) and non-Euro countries in Europe.

Bilderstrecke zu: Vergleich des Statistikamts: Riesige Preisunterschiede in Europa - Bild 2 von 2 - FAZ

MaryAnn wrote:

Most US manufacturing employee's did the film on the job while their owners was giving China two hundred years of US technology. The generations of the future will need PHD's so stay in school if you have to live in impoverished living conditions.

How we conveniently forget.

We Were Pirates, Too | Foreign Policy

... But the Americans had no respect for British intellectual property protections. They had fought for independence to escape the mother country’s suffocating economic restrictions. In their eyes, British technology barriers were a pseudo-colonial ploy to force the United States to serve as a ready source of raw materials and as a captive market for low-end manufactures. While the first U.S. patent act, in 1790, specified that "any person or persons" could file a patent, it was changed in 1793 to make clear that only U.S. citizens could claim U.S. patent protection.
...
If anything, the early Americans were even more brazen about their ambitions. Entrepreneurs advertised openly for skilled British operatives who were willing to risk arrest and imprisonment for sneaking machine designs out of the country. Tench Coxe, Alexander Hamilton’s deputy at Treasury, created a system of bounties to entice sellers of trade secrets, and sent an agent to steal machine drawings, but he was arrested. While skilled operatives were happy to take U.S. bounties, few of them actually knew how to build the machines or how to run a cotton plant.

skk wrote:

wow.. link please. cos my mind boggles, boogles even at the implications and I'd like to check that out.

Interoperability Solutions for European Public Administrations - ISA - European Commission

justaskin wrote:

so glad that prevented the GS switcheroo that greased the Grecian Formula One win

No system is perfect, they evolve. But I'm certain the GS maneuver led to quite a few changes including on the audit side.

aClem wrote:

RE, you know I respect your opinions always. I am puzzled by just what this software is actually accomplishing though. Whom is it helping? How much is devoted to monitoring austerity or supporting what isn't doing much good? Maybe this is not an answerable question. I tend to ask such questions.

The EU supplies free software frameworks to its member states in order to automate the business of government. These frameworks take into account EU-wide laws. States can then customize them.

Take national accounts as an example. The EU version uses uniform EU accounting and process coding standards. This makes national economies comparable and facilitates rule enforcement like austerity as well.

However, without national accounts data deemed reliable by investors, bonds would be a much harder sell and therefore would raise interest rates.

I hope this helps a bit.

sm_landlord wrote:

Which is part of the reason that so many big systems fail spectacularly, or keep failing and can't seem to ever be fixed, or exhibit massive cost overruns, or some combination of the above.

I agree entirely.

sdtfs wrote:

I always know what you will do,...the sensible thing.

Good managers/politicians have to appreciate complexity. Today, any larger institution is utterly dependent on its software infrastructure. Government also requires interfacing with private business and individuals, see e.g. taxes and national accounts.

Major disruptions to this infrastructure take years of planning/development/implementation. Failure to do it right, risks economic calamity on its own nowadays.

Just a sample of EU software for member states.

Frequently Asked Questions - ISA - European Commission

Public administrations are expected to provide efficient public services to businesses and citizens across Europe. ISA, the programme on Interoperability Solutions for European Public Administrations, addresses this need. ISA supports and facilitates efficient and effective cross-border electronic collaboration between European public administrations. The programme enables the delivery of electronic public services and ensures the availability, interoperability, re-use and sharing of common solutions. A budget of 164,1Mio Euro has been foreseen for the period from 2010-2015.

Not something you switch from overnight...

sdtfs wrote:

Haven't really thought about it. I'm more of a game player than an economist. I'm still bogged down on what a Greek win would look like. It still won't be pretty.

As an experienced software hand, I promise you that it likely takes years for an entity as large as the Greek state to switch to new software with a huge manpower commitment. It couldn't be done in secret.

sdtfs wrote:

I'll go out on a limb and actually make a prediction that Greece will start the plans to get the presses rolling or at least pretend to.

What convinces you that the Greek public sector doesn't need major software development/implementation to make this happen? I would be very surprised if they don't use mainly EU software.

Where does the private sector take the money from?

Blackhalo wrote:

Yeah, but Brian Williams is nominally, a news caster. Who in their right mind would believe anything out of O'Reilly? He's so over-the top, it's more of a parody, or satire. He has more in common with Jon Stewart, than Williams.

That's not how Fox sees it.

"The O'Reilly Factor" uncovers news items from the established wisdom and goes against the grain of the more traditional interview style programs.

The No. 1 cable news show at 8 p.m. for 10 consecutive years, O'Reilly's signature "No Spin Zone" cuts through the rhetoric as he interviews the players who make the story newsworthy.

Rob Dawg wrote:

Obama: 'Islam Has Been Woven Into the Fabric of Our Country Since Its Founding'

And people still give him a pass.

More underhanded but overt racism at work!

Islam In America | History Detectives | PBS

What is clear is the make up of the first real wave of Muslims in the United States: African slaves of whom 10 to 15 percent were said to be Muslims. Maintaining their religion was difficult and many were forcibly converted to Christianity. Any effort to practice Islam, and keep the traditional clothing and names alive had to be done in secret. There was an enclave of African-Americans on the Georgia coast that managed to maintain their faith until the early part of the 20th century.

Between 1878 and 1924, Muslim immigrants from the Middle East, particularly from Syria and Lebanon, arrived in large numbers, with many settling in Ohio, Michigan, Iowa and even the Dakotas. Like most other migrants they were seeking greater economic opportunity than in their homeland and often worked as manual laborers. One of the first big employers of Muslims and blacks was the Ford Company—these were often the only people willing to work in the hot, difficult conditions of the factories.

Disgusting.

Outsider wrote:

When does our coach turn into a pumpkin?

U.S. National Debt Clock : Real Time

Did you add private debt and divide by NGDP?

merchants of fear wrote:

nber study you linked yesterday was about commodity volitility not getting worse for 300 years I thought.
You can correct this but I remember it that way. Have the link handy?
I looked back 100 years for silver, gold, & oil and volatility worsened noticeably in the last 45 years.
You never responded to that point.

o.k., one more time. The study determined that OVERALL commodity volatility has not increased. To compare free floating prices of gold and silver to artificially pegged gold and silver prices is utterly ridiculous.

Also, did you check the left corner of your oil price chart?

However, let's not get distracted by individual data points, the issue was OVERALL price volatility.

However, to counter your individual data points I used whale oil. Here is another mind-boggler, cotton, arguably the most important commodity in the U.S. in the 19th century.

Cotton 19th Century

Cotton 19th Century Full

Note the range from a low of 1.5 cents to $1.50.

However, as mentioned above, single data points are of limited value.

merchants of fear wrote:

nber study you linked yesterday was about commodity volitility not getting worse for 300 years I thought.
You can correct this but I remember it that way. Have the link handy?
I looked back 100 years for silver, gold, & oil and volatility worsened noticeably in the last 45 years.
You never responded to that point.

o.k., one more time. The study determined that OVERALL commodity volatility has not increased. To compare free floating prices of gold and silver to artificially pegged gold and silver prices is utterly ridiculous.

Also, did you check the left corner of your oil price chart?

However, let's not get distracted by individual data points, the issue was OVERALL price volatility.

However, to counter your individual data points I used whale oil. Here is another mind-boggler, cotton, arguably the most important commodity in the U.S. in the 19th century.

Cotton 19th Century

Cotton 19th Century Full

Note the range from a low of 1.5 cents to $1.50.

However, as mentioned above, single data points are of limited value.

merchants of fear wrote:

Why does this discussion have to descend so quickly into name-calling?

Then don't lie when you attribute opinions.

Commodities will not be volatile according to RE's research link.

merchants of fear wrote:

Commodities will not be volatile according to RE's research link.

It's only airheads that cannot differentiate between:

Commodities will not be volatile

and

First, has commodity price volatility increased over time? The answer is unambiguously no.

greenchutes wrote:

Too bad the rabid statist hatred of anything which doesn't have crypto-magical significance and value bestowed upon it by the penumbra of divinely ordained priests

I just love the term statist as redefined by U.S. Libertarians/Austrians in conjunction with divinely ordained priests.

Libertarians/Austrians are the only branch of economics that calls its practitioners "philosophers". About as close to a priest as you can get.

[Rothbard] Hoppe, Rockwell and Rothbard's colleagues at the Mises Institute took a different view, arguing that he was one of the most important philosophers in history.

With its rejection of the scientific method, Libertarians/Austrians are a cult with the idealized "free market" the religion.

Chomsky:

"Remember that the United States is out of the world on this type of thing. Britain is to a limited extent, but the United States is on Mars. So here, the term 'libertarian' means the opposite of what it always meant in history. 'Libertarian' throughout European history meant 'socialist-anarchist.' The worker's movement--the socialist movement--sort of broke into 2 branches, one statist, one anti-statist. The statist branch led to Bolshevism and Lenin and Trotsky and so on; the anti-statist branch, which included left-Marxists like Rosa Luxumberg, kind of merged with a big strain of anarchism into what was called 'libertarian socialism.' So 'libertarian' in Europe always meant 'socialist.' Here, it means ultra-Ayn Rand or Cato Institute or something like that. But that's a special US usage having to do with the--there are a lot of things special here."

merchants of fear wrote:

as commodity price volatility increased over time? the answer is no Economics is hard

NO Kabuki Theater

Gold and Silver Prices - 100 Year Historical Chart | MacroTrends

Just point out the narrow-minded silliness of your post, here is whale oil:

http://www.theoildrum.com/files/TOD_whales_bardi_fig1.gif

greenchutes wrote:

It is a shame that fed-engineered noise makes commodities that much more volatile, but it is what it is.

Some have to flog their hobby horse others prefer facts...

http://www.nber.org/papers/w14748.pdf

Here we explore price data for primary products (commodities) and manufactures over the past three centuries to answer three questions: First, has commodity price volatility increased over time? The answer is unambiguously no. Indeed, there is little evidence of trend since 1700. Second, have commodities always shown greater price volatility than manufactures? The answer is unambiguously yes. Higher commodity price volatility is not some Prebisch-like modem product of asymmetric industrial organization - monopolistic and oligopolistic manufacturing versus competitive commodity markets - that only appeared with the industrial revolution. Instead, it was a fact of life deep into the 18th century. Third, do globalization and world market integration breed more or less commodity price volatility? The answer is less. ...

poicv2.0 wrote:

I recommend Tiburon water front property when attempting to prove that Palo Alton is affordable

Thanks. I will do so. Wink

poicv2.0 wrote:

Protip: Palo Alto should never be part of any argument about RE affordability.

I was going to use Ross and Tiburon next...

Yoringe wrote:

Guess who sits in Geneva and who ( Mirror mirror on the wall, who is paying for this all? ) pays these Prices....

As you know, lots of regular folk live in flats in Zurich. It's the median.

greenchutes wrote:

$1400 a sq ft in Palo Alto!

https://www.comparis.ch/immobilien/immobilienpreise.aspx

median condo price per sqft

Zurich $1,100
Geneva $1,100

median house price

Geneva $1,700,000.

Real prices have been reasonably steady for decades.

ndk wrote:

I'm not allowed to have my own theories anymore, but I think this is a useful framing of the problem. If we forcibly reduce the money supply today but don't change tomorrow's payout, then we're implicitly raising interest rates in the process. The opposite would be true if we were forcibly increasing the money supply(QE or OMO, whichever; the distinction is kinda arbitrary) through the purchase of dated securities by the central bank.

I agree. I prefer to describe the problem with nominal GDP in mind.

By saving we reduce velocity and reduce the money supply which very likely results in lower nominal GDP/income.

Lower nominal income forces a combination of fewer jobs and/or lower wages.

Given long-term contracts (labor and goods) contracts insulate the beneficiaries to a degree from wage cuts, creating the sticky price phenomenon.

With the uneven price development those with shorter or no contracts are fired first or experience reduced wages. This increases economy-wide downward price pressure resulting in the much higher likelihood of the deflationary downward spiral due to a continual reduction of nominal GDP/income.

This is why Hayek changed his mind and concluded that there is no benefit to deflation whatsoever.

arthur_dent wrote:

RE wrote:

So then you agree with this?

no

Then you are pretty unique and alone.

In YOUR economic theory what is the effect of reducing the money supply in a long-term contract world?