patrick.net

mell says

Yeah, because they are addicted to cheap credit and buying crap and because interest rates are kept artificially close to zero, Time to stop the looting and start the prosecuting.

No, actually it's because all the money is going to the top 1% and the bottom 50% are living paycheck to paycheck out of necessity.

tatupu70 says

mell says

Yeah, because they are addicted to cheap credit and buying crap and because interest rates are kept artificially close to zero, Time to stop the looting and start the prosecuting.

No, actually it's because all the money is going to the top 1% and the bottom 50% are living paycheck to paycheck out of necessity.

Same thing, chicken and egg. Stop the printing, let prices fall so there is leftover and let interest rates rise to tse leftover will be put into savings.

Mick Russom says

Who dismantled glass-steagall?

Nothing is more revealing than the answer to this question.
None of the egregeous frauds committed by the largest banks could have occurred if they had not bribed their way off the leash.
All of the damage since can be laid at the feet of Bill Clinton.

lostand confused says

So are you saying having money and making smart investment decisions is maoist?

No, its simple self interest. Stop trying to masquerade it as anything more.

Reality says

That is IMHO, the real reason why they depreciate the currency: to collect more taxes.

NAILED IT. Inflation is a regressive tax.

Reality says

For what it's worth, my cars are 10-15 years old, and I'm wearing a 10+years old leather jacket indoors as I type this post because I keep heat setting down

Same here. I save for my kids future.

mell says

Same thing, chicken and egg. Stop the printing, let prices fall so there is leftover and let interest rates rise to tse leftover will be put into savings.

Maybe that's what would happen in your fantasy world, but here in the real world, prices might fall as more and more people lost their jobs. Not sure how that is a good thing. There would be no leftover because more and more people have nothing.

tatupu70 says

Maybe that's what would happen in your fantasy world, but here in the real world, prices might fall as more and more people lost their jobs. Not sure how that is a good thing. There would be no leftover because more and more people have nothing.

Linking price level (inflation) to jobs (employment/unemployment) is essentially re-stating the Phillips Curve theory, which has long been discredited. Prices falling is usually the result of productivity increase, for example the computer prices have always been falling for the last half century, but the industry has not been experiencing massive job losses for all those decades.

In real life, nothing really gets "leftover" but as prices fall enable people to maintain existing standards of living at lower cost, that in turn makes capital available for investment so that productivity can increase and start the next round of bringing forth new products and services as well as price cuts on existing goods and services. That's how free exchanges amongst individual human beings enhances standards of living.

The central bank inflation process, claiming to target "price stability" for an arbitrary goods/service basket, essentially tries to steal the bulk if not all the free market productivity increase for its real master the big banks: via debt service on conjured up money.

Newly create money does not reach everyone in the society all at once. Those who get it first gain at the expense at those who get it later because the former spends the money against the old price structure whereas the latter has to pay up for the new price levels as the inflation caused by the new money has already propagated through. Because the central bank hands out money primarily to the government and the big inefficient banks first, the result is shifting society resources from the more efficient and more productive small business and individual sector to the bureaucratic government and big-business sector. We already know that small and new businesses are the primary generator of jobs (those not efficient at it simply give up the human resources to others that can do better; that's the key, unprofitable ones don't stay in business wasting resources). Big old businesses and government are net job destroyers in the long run (they consume more than they produce). The central bank intervention forcibly shifting resources from the net-plus sectors to the net-minus sectors is where the overall job losses and poverty come from.

Reality says

Linking price level (inflation) to jobs (employment/unemployment) is essentially re-stating the Phillips Curve theory, which has long been discredited. Prices falling is usually the result of productivity increase, for example the computer prices have always been falling for the last half century, but the industry has not been experiencing massive job losses for all those decades.

Except that your example specifically made reference to reducing the money supply--not increased productivity.

tatupu70 says

Reality says

Linking price level (inflation) to jobs (employment/unemployment) is essentially re-stating the Phillips Curve theory, which has long been discredited. Prices falling is usually the result of productivity increase, for example the computer prices have always been falling for the last half century, but the industry has not been experiencing massive job losses for all those decades.

Except that your example specifically made reference to reducing the money supply--not increased productivity.

You might have confused me with someone else. The example I gave was regarding the computer industry, which is a classic example of productivity increase driving down price.

In any case, stop handing out newly printed money to inefficient government central planning agencies would automatically increase productivity. When the FED expands money supply, it does not go to everyone in the society all at once. It is the political cronies that get the new money first. That in itself produces inefficiency. If the money supply expansion stops, the central planning is reduced, and the productivity would increase as the resources are not taken from the productive private enterprise to feed the cronies flashing newly printed money.

Reality says

You might have confused me with someone else. The example I gave was regarding the computer industry, which is a classic example of productivity increase driving down price.

True--but the text you quoted was replying to another post (which was copied). Before you replied to me, you should have understood the context.

Reality says

In any case, stop handing out newly printed money to inefficient government central planning agencies would automatically increase productivity. When the FED expands money supply, it does not go to everyone in the society all at once. It is the political cronies that get the new money first. That in itself produces inefficiency.

The part about politicial cronies is debatable, but regardless--the answer is to stop cronyism, not shrink the money supply.

tatupu70 says

Reality says

Linking price level (inflation) to jobs (employment/unemployment) is essentially re-stating the Phillips Curve theory, which has long been discredited. Prices falling is usually the result of productivity increase, for example the computer prices have always been falling for the last half century, but the industry has not been experiencing massive job losses for all those decades.

Except that your example specifically made reference to reducing the money supply--not increased productivity.

No it didn't. Nobody is advocating destroying money - just stopping the printing. Sure, jobs will always initially be lost when supply tightens, but in the long they will be gained back while the economy stand on healthy footing (very little to no inflation). There is not much evidence that the massive printing and credit injection created a significant amount of jobs in the US over the past years, 8% is still horrid. And if you look at Germany post-war, it had some of the best economic growth during the 50s while some of those years showed deflation.

mell says

Sure, jobs will always initially be lost when supply tightens, but in the long they will be gained back while the economy stand on healthy footing (very little to no inflation).

lol--The jobs will be gained back because there is little to no inflation?? How exactly does that work?

I'm not saying money printing creates jobs, only that if you let credit markets dry up, jobs will be lost. And they won't magically return.

In order to really improve the employment picture, the income/wealth disparity must be fixed.

tatupu70 says

The part about politicial cronies is debatable, but regardless--the answer is to stop cronyism, not shrink the money supply.

FED / government money supply / spending into the economy is the primary means by which cronyism is carried out. There is no magic button that the FED can push that everyone's pocket will be fattened up by the same amount. Instead, when the FED creates money (or the government spending the money after FED buys government debt), it has to go to someone first. That someone is the crony!

FED "expanding money supply" is the most sickening form of trickle-down economics: The aggregate money supply expanding $1T by my getting $1T from the FED does not help you at all, but in all likelihood enables me to buy up everything that you wish to buy, ahead of you!

tatupu70 says

ol--The jobs will be gained back because there is little to no inflation?? How exactly does that work?

Just like how it worked for the US in the late 19th century, the period when the American standards of living improved the quickest. Just like the computer industry in the past half century: rapid drop in good price yet good paying jobs as productivity increase.

I'm not saying money printing creates jobs, only that if you let credit markets dry up, jobs will be lost. And they won't magically return.

Credit market would recover much quicker by writing off bad loans and bankrupting big old banks that made those loans. So that the rest of the society don't have to service those loans via bailouts plus interest on the bailout.

In order to really improve the employment picture, the income/wealth disparity must be fixed.

Income/wealth disparity would be drastically reduced if there were no FED and the government constantly squeezing the little guys to benefit the big oligopolies with special access to government.

Reality says

Just like how it worked for the US in the late 19th century, the period when the American standards of living improved the quickest. Just like the computer industry in the past half century: rapid drop in good price yet good paying jobs as productivity increase.

Again--productivity increases are not due to lack of inflation. Please don't confuse the two.

Reality says

Credit market would recover much quicker by writing off bad loans and bankrupting big old banks that made those loans. So that the rest of the society don't have to service those loans via bailouts plus interest on the bailout.

I hear this argument a lot. Explain to me how freezing the credit markets and eliminating all working capital for businesses would help the recovery? When healthy companies can't make payroll because there is no credit market and are forced to lay off or fold, that's going to help?

Reality says

Income/wealth disparity would be drastically reduced if there were no FED and the government constantly squeezing the little guys to benefit the big oligopolies with special access to government.

Again--if you want to stop cronyism, go for it. But eliminating the Federal Reserve won't do it.

tatupu70 says

Again--productivity increases are not due to lack of inflation. Please don't confuse the two.

Glad you are finally separating monetary inflation from productivity increase and employment improvement. You are the one who kept insisting recovery, productivity increase and improving employment is impossible without inflation.

tatupu70 says

I hear this argument a lot. Explain to me how freezing the credit markets and eliminating all working capital for businesses would help the recovery? When healthy companies can't make payroll because there is no credit market and are forced to lay off or fold, that's going to help?

You are mistaken on what's a healthy company. A company that relies on "factoring" to make payrolls is not a healthy company anymore than an alcoholic relying on payday loan sharks to make rent payment is leading a healthy life. A company that does that sort of thing is essentially letting in the loan sharks to rent-seek the industry. The industry and its workers would be far better of having those companies liquidated so that the workers can go work for a far healthier company in the same industry that does not rely on loan sharks to make payrolls.

Since we are on a real estate forum, let me phrase it this way: the company that you have described is akin to a developer or home buyer that depends on zero-down NINJA easy loans to keep refinancing every month to make payments. The availability of such loans is not actually helping a healthy market but merely raising the cost of doing business and owning homes as such ponzi players are limited wasting resources that can be better utilized by other people running tighter ships. Of course the bailed-out banks love such characters as they allow the banks latch onto the fattest rent on money.

tatupu70 says

Again--if you want to stop cronyism, go for it. But eliminating the Federal Reserve won't do it.

Federal Reserve is the biggest enabler of cronyism. Everything it does is cronyism, simply because newly created money has to have specific points of entry into the economy, and those points of entry are precisely where cronies are located.

Reality says

Glad you are finally separating monetary inflation from productivity increase and employment improvement. You are the one who kept insisting recovery, productivity increase and improving employment is impossible without inflation.

Uh, not sure where you would have gotten that idea. I'm the one who kept trying to tell you that those are two different scenarios. You kept insisting that low inflation causes computer prices to go down.

Reality says

You are mistaken on what's a healthy company. A company that relies on "factoring" to make payrolls is not a healthy company anymore than an alcoholic relying on payday loan sharks to make rent payment is leading a healthy life

You obviously don't understand how corporations do business.

Reality says

Federal Reserve is the biggest enabler of cronyism

Obviously you dislike the Federal Reserve. Don't let it cloud your judgement, however. Removing big money from politics would do more to curb cronyism....

tatupu70 says

Uh, not sure where you would have gotten that idea. I'm the one who kept trying to tell you that those are two different scenarios. You kept insisting that low inflation causes computer prices to go down.

No I did not. I pointed out that the computer industry prospered despite computer prices going down . . . thereby refuting your assertion that only rising goods prices would raise employment and productivity in industries/economies.

tatupu70 says

Reality says

You are mistaken on what's a healthy company. A company that relies on "factoring" to make payrolls is not a healthy company anymore than an alcoholic relying on payday loan sharks to make rent payment is leading a healthy life

You obviously don't understand how corporations do business.

I own several corporations. Corporate borrowing habit is the result of favorable tax treatment of borrowing (result of bank lobbying) and past history of bailouts. That's exactly why our economy ground to a halt due to the debt burden. Recession is supposed to be a cleansing opportunity that corrects those bad corporate behavior that caused the problem to begin with. How else do you suppose corporations would be induced to wean off over-reliance on debt? The way you falsely accuse me of not understanding corporations exploitation of tax advantage of debt, you may as well accuse me of not understanding the corporate benefit of buying congressmen and senators!

tatupu70 says

Obviously you dislike the Federal Reserve. Don't let it cloud your judgement, however. Removing big money from politics would do more to curb cronyism....

Federal Reserve and the big bank interests that it represents are the biggest of big money in politics. Look up how much money the top banks contribute to political campaigns, and look up how much money the Federal Reserve spends on buying economists to write up favorable propaganda pieces.

tatupu70 says

There would be no leftover because more and more people have nothing.

Its more complex than that. The currency is tending towards collapse, and its not damned if you do, damned if you dont.

War is probably the only way to cure the lethal cancer the dollar has at this point.

Inflation without wages going up is just as bad, potentially worse, then slight deflation and a proper deleverage.

We wont find out.

U6 is 15%, so whatever they are doing to today to keep UE low isnt really working either.

Reality says

for an arbitrary goods/service basket

Exactly. The basket changes and the currency index changes for them to promulgate the lie.

tatupu70 says

reducing the money supply

He might have been suggesting running the printing press at say, 10% of "full capacity" rather than having a while true :; do print money ; done loop that is executing at breakneck speeds. And I use the programming analogy to point out that in the past, physically printing it was required. Now days bernanke can inject trillions with computer keystrokes.

Robert Sproul says

Goldman Sachs

The politicians are owned by the banking cabal and megacorps and oligarchs. Anyone injecting L/R or other FOX/MSNBC rubbish are blithering morons at this point. They are about 90% of the population. Others in the top tier want the system that is working for them to continue to they pick a "team" and let the games continue to their benefit.

Reality says

There's nothing free market about the privileges.

Funny how "the man of the people" who's regime is in office isnt doing anything to fix this. Big surprise. But duckboy will defend this rat to the end. Because it suits him. The system serves him. Its like if he was a high ranking SS Oberstgruppenfuhrer at Krupps in 1935.

mell says

And if you look at Germany post-war, it had some of the best economic growth during the 50s while some of those years showed deflation.

The mark was a relative gold standard of currencies before it was made into a toxic piece of crap known as the Euro. Now they owe the Greek bums a living.

tatupu70 says

only that if you let credit markets dry up, jobs will be lost.

So with U6 @ 15% and the printing press on, how much longer are you going to debase this country and its currency before you try another tact?

Reality says

FED / government money supply / spending into the economy is the primary means by which cronyism is carried out.

Of course. And the banks always win, the ones that lose are consolidated into too big to fail banks, and We The People always, invariably ALWAYS lose.

Thats how it works.

Reality says

Income/wealth disparity would be drastically reduced if there were no FED and the government constantly squeezing the little guys to benefit the big oligopolies with special access to government.

Big government likes big banks and they like big business and they also like big police state spy-game companies like Google.

Its easier to cut deals with a bunch of mafia Dons rather than have a real, diverse free market.

tatupu70 says

But eliminating the Federal Reserve won't do it.

Its a start. Unelected shadow banking rats that refuse audits and debase currency to which there are no recourse is not working.

Reality says

.

Dont worry, the farm animals addicted to the easy money of Matt Lesko and NAR fantasies will only realize the mistake when they've lead their children to the slaughter.

tatupu70 says

Obviously you dislike the Federal Reserve. Don't let it cloud your judgement, however. Removing big money from politics would do more to curb cronyism....

Let's do both. End lobbying, and shadow banking. I'd be willing to bet you would be marginalized like Ron Paul (called a racist, etc), or you would be outright terminated.

Reality says

thereby refuting your assertion that only rising goods prices would raise employment and productivity in industries/economies.

Again--that was NEVER my assumption. As I clearly pointed out several times.

Reality says

I own several corporations. Corporate borrowing habit is the result of favorable tax treatment of borrowing (result of bank lobbying) and past history of bailouts. That's exactly why our economy ground to a halt due to the debt burden. Recession is supposed to be a cleansing opportunity that corrects those bad corporate behavior that caused the problem to begin with. How else do you suppose corporations would be induced to wean off over-reliance on debt? The way you falsely accuse me of not understanding corporations exploitation of tax advantage of debt, you may as well accuse me of not understanding the corporate benefit of buying congressmen and senators!

Wow--I don't know where to begin addressing all the inaccuracies in this paragraph. Corporations routinely use short term paper because revenues are somewhat unpredictable and bumpy. Surely you understand what working capital is, since you own so many corporations.

Reality says

Federal Reserve and the big bank interests that it represents are the biggest of big money in politics. Look up how much money the top banks contribute to political campaigns, and look up how much money the Federal Reserve spends on buying economists to write up favorable propaganda pieces.

Why don't you post a link for me showing how much the Federal Reserve spends buying economists? I'd like to see that.

As to the banks--I'm all for eliminitating money in politics. That is a completely separate issue from the Federal Reserve though.

Mick Russom says

U6 is 15%, so whatever they are doing to today to keep UE low isnt really working either

That's a false assumption because we don't know where UE would be without their efforts. Maybe it would be at 25%...

tatupu70 says

Again--that was NEVER my assumption. As I clearly pointed out several times.

Then please tell us again why you think monetary inflation is necessary for employment and prosperity.

tatupu70 says

Wow--I don't know where to begin addressing all the inaccuracies in this paragraph. Corporations routinely use short term paper because revenues are somewhat unpredictable and bumpy. Surely you understand what working capital is, since you own so many corporations.

That's what corporate reserve capital is for. Corporate captains running their corporations on short term paper is no better than individuals relying on credit cards for funding. That's not financial health for house keeping or healthy corporation.

tatupu70 says

Why don't you post a link for me showing how much the Federal Reserve spends buying economists? I'd like to see that.

The Federal Reserve spends over $400million a year buying research papers (in an industry that has only a few hundred practitioners). Here is a link to the more in-depth analysis:

http://www.lewrockwell.com/north/north962.html

As to the banks--I'm all for eliminitating money in politics. That is a completely separate issue from the Federal Reserve though.

The Federal Reserve is the very reason why those megabanks still exist! Otherwise, they'd have gone bankrupt in the last recession, and therefore wouldn't be around to pay the billions of dollars of political bribes to silence the American public.

tatupu70 says

That's a false assumption because we don't know where UE would be without their efforts. Maybe it would be at 25%...

4+ years into a recession, if not for persistently high debt load and high expected taxation (due to bailouts plus interest ultimately to be paid by future tax) preventing business expansion on one hand and government printing money to enable people file for UE benefits on the other hand, people would have had to find a job or start a business of their own! instead of sitting home and filing for UE benefits

Using government's own logic, if there had been no filing (and there wouldn't be if there is no UE benefit) there wouldn't be UE, so the UE rate would be 0% if there isn't FED printing the money to enable UE as a way of making a living.

KarlRoveIsScum says

I have a novel idea, why can't we print money to make jobs!!!!!!!!

Because unless what the job produces is valued more highly by the rest of the society spending their own money as free individuals than what it costs to maintain the job position, what you have created would just be like having someone digging a hole in the ground and another filling it back up.

The problem with those negative-sum jobs is that eventually you end up with a social upheaval on your hand, just like the original 1848 version in France.

The whole advantage of money system is keeping track of those incremental profitabilities of human endeavors. If you really have that much faith in central planning by a few wise men, why bother printing money at all, just issue fiat commands instead!

Mick Russom says

Of course. And the banks always win, the ones that lose are consolidated into too big to fail banks, and We The People always, invariably ALWAYS lose.

Thats how it works.

In the game of consolidation and concentration of power, ultimately nobody wins. The cattle may think he is harvesting the grass roots, and growing fatter, but the beef does not belong to the cattle but to the farmer.

KarlRoveIsScum says

Oh please!!! It's an institutionalized crime.

They work with economists,, colleges and universities. They work with teachers, students, and principles. Likely the people they work with end up at the FED!

Unless and until the theories are put to the market test in real life, what the institution with government funding doing is no different from the medieval church: forcibly collecting a tithe on the population while feeding a bunch of scholarstics singing praises of the state religion.

The result is not intellectual freedom or integrity.

tatupu70 says

Maybe it would be at 25%...

If that's what it takes to hit bottom and the deleveraging is completed, maybe then we can recover. But preventing corrections literally forever, mostly for political purposes, pretty much always ends the empire.

U6 is 15% now, reported is 8%, and what they are going to do is change how we report unemployment to keep this in an acceptable range, say, 4-9%, but we all know its a lie. The UE rate of 25% is what it takes to do a correction, if thats what its going to take, it will happen. It will just go unreported.

Reality says

megabanks still exist!

How quickly the words "too big to fail" left the vernacular. Nothing to see here, folks.

But but but, end glass steagall, promote goldman, do sarbox, dodd-frank, etc, and somehow, with all this going down, the big banks got even bigger and mixed retail and investment banking.