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  • On 23 Apr 2014 in Middle class disappearing, millenials have to do porn to pay for college, Reality said:

    $61k a year to study woman's studies?? She will be doing porn for longer than the 4 years of college.

    Maher is making a good case proving people often become poor and desperate due to their own bad judgement, like having two children before either securing a steady mate/partner or having marketable skills, or like taking a $61k/yr program for 4+ years to get a degree in woman's studies.

  • On 23 Apr 2014 in The right's new public enemy number 1, Reality said:

    He is a Marxist operating in the exact same way as Karl Marx did a century and half ago: getting high and getting pussies through his good looks while peddling his nonsense philosophy putting down more productive men's way of earning pussies by building civilization. That was the summary of Karl Marx' life time achievement.

    We can have a meaningful discussion on his proposed knee-capping of high income earners after he agrees to let the government pour sulfuric acid on his face and cut his height to 5'5"so he is no more attractive than any other average man of the world in the street and in the bushes. Let's have equality in looks. Letting AF eat his pretty face would be a more humane alternative to sulfuric acid attack.

  • On 23 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Were you singing the praises of stocks in the Spring of 2009? how about 2003? What do you think failure to catch those bottoms would do to your average return compared to the index performances (which out-performs the vast majority of managed funds)? Both stocks and commodities run on 30+ year generational cycles. One can easily find 5 year net losses in either asset class. People singing the praises of any asset class is usually a good contrarian indicator. Remember those 2005 magazine cover stories praising real estate? That was a class of assets that never lost value across the nation up to that point, so it was alleged. How did that "investment" turn out in the next few years? Don't you think the people investing in RE at that time were in reality speculating on future RE value?

  • On 23 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Heraclitusstudent says

    Reality says

    That means higher tax burden on the productive sectors of the economy down the road.

    Well... new money is spent and earned by the private sector. A large part of the money of the private sector IS just the government debt. The *wealth* that was produced through hard work is in fact just paper offered by the government.

    So when you say it is "a burden for the 'productive' sector": this is not the case: in fact it is money given to the private sector and a fraction of it goes back as taxes.

    Newly printed money is not wealth. It is a new claimant on existing wealth. Government spending via its favorites taking up both material resources and labor is not much different from say dropping a cluster bomb or napalm into the middle of the city taking out the resources and taking out the labor from the productive economy. Cluster bombs and napalm blasts would too create new demand, in the classic broken window fallacy. Government spending in the economy is in fact little different from dropping cluster bombs and napalm blasts on the cities, as far as those resources and people's lives are taken out of the productive economy is concerned . . . and you know what, according to Keynesian GDP analysis, the process of bombing cities into oblivion like during WWII does generate GDP! Is that what we want as individual living human beings? A landscape like Stalingrad or Detroit?

    The key point here is that the government spends this money and it is spent over and over and creates nominal GDP (either as real growth or inflation), which means the debt becomes smaller, relative to that GDP.

    Debt burden on the economy can be reduced much more efficiently via debt write-downs and defaults. In that process, those who created the bad debts would eat crow instead of forcing the shite storm on everyone else as collateral damage.

    Again, it's important to understand where people are coming from.

    The fundamental driving force of the Keynesian ideology is the banksters (creators of the bad debts) not wanting to eat crow but prefer passing the mess onto others, and profit from the shite dinner served.

    The intellectual con job is carried out via the Equilibrium nonsense "Supply = Demand." It's the economic equivalent of the Zeno Paradox: alleging at any moment (point in time) a flying arrow is stationary, therefore the arrow can never get from point A to point B. The paradox is solved by recognizing that time can not be sliced into points but only segments. Within each infinitisimal segment of time the arrow is still moving (read up an introduction to calculus if you forgot what you learned in college or high school).

    Likewise, for a real life ever changing economy, there is no "Equilibrium Supply=Demand" at any moment, only segments of constant transition from one price point to another price point. Within each segment, if Supply is leading Demand, we experience prosperity; whereas if Demand is leading Supply, we experience natural or man-made disaster, and privation.

    How can Qualified Supply not equal Qualified Demand at any given moment? Because "qualification" is based on information, and information transmission is not instantaneous. At each and every transaction, the two parties do not have the exact same information. The market place is an information transmission mechanism. Keynesian nonsense presupposes all information being known to all participants. If that were reality, there would not be any profitable trade, and therefore would not be any market.

  • On 23 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Heraclitusstudent says

    Reality says

    Most modern monetary systems do not actually allow printing of money per se, but having the government borrow the money into existence via sovereign bonds. That debt has to be serviced and paid back with interest. That means higher tax burden on the productive sectors of the economy down the road.

    Absolutely not. This is not a debt that has to be paid back.

    The fed has always a stock of treasury bonds and just buy new ones when some are paid back. This debt simply cannot be allowed to be paid back: this would destroy the money base. Also the interests are sent back to the treasury.

    So, while *accounted* like a debt, it simply does not work like a debt. This is just new money printed in existence.

    Only the FED's profit after its own expenses are given back to the Treasury. In other words, the economy now has to carry the burden of the FED operation itself, which involves bailing out mega banks with super well-paid executives as well as gaggles of academics to promote the FED itself.

  • On 23 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Heraclitusstudent says

    Yes there is something called capacity utilization which goes down during recession and coming out of a recession there is generally ample capacity which means supply can go up and absorb new demand without inflation.

    Low "capacity utilization" is indicative of capital obsolescence and malinvestment, not lack of "animal spirit." Juicing demand would only lead to bigger malinvestment. For example, when monitors and displays technology transition from CRT's to flat panels, capacity utilization rate in the industry was low because the CRT production lines were being gradually retired. Having the government placing a 10million order for displays to juice the capacity utilization rate would only crank out more obsolete CRT's, driving up prices for knobs and buttons, and slow down the industrial transition to new flat panel technology.

    The above is sufficient to show that new money can creates new activity, not just inflation, and consequently that you *can* use for a fiat currency to stimulate the economy, contrary to the beliefs of a number of gold maniacs out there.

    No, new money does not create new activity, but juice repetitions of old activities, and thereby taking up resources that would have been available to new activities.

    I'm not saying this because I agree with economic 'stimulus' as practiced nowadays, but you need to understand where people are coming from.

    Whenever the intellectual framework allows such "stimulus" administered by bureaucrats, there is an inevitability to how the economic "stimulus" as practiced nowadays: government bureaucrats are inept at picking winners and losers.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    FortWayne says

    How so? Incentivising companies to hire in US and to actually hire, instead of hoarding cash would increase monetary velocity. That would be opposite of "recession and depression".

    Protective tariffs would result in retaliation by other countries. That would lead to job destruction in export industries, and break-down in global division of labor.

    You'll get recession and depression when middle class gets wiped out and rich end up holding all the money.

    That's where both tax-and-spend and print-and-spend end up in. When the government officials are allocating the money, regardless from taxation or printing, the money go to their friends. Government officials are human beings too.

    Don't forget, nature of capitalism is that all the money ends up at the top.

    That's not correct. Free market capitalism is actually the most diffusive system among all the -ism's / social systems ever tried on this planet. Technological advance and consumer freedom of choice lead to old capital obsolescence and replacement by newly emerging capital. That is quite in contrast to the other systems where slave masters, feudal lords and government bureaucrats force consumers to live with old entrenched capital.

    Now you can either tax it away to make it flow, or you can print it away which leads to problems. I prefer the taxation at the top.

    Market competition can take down entrenched capital much quicker than taxation can. Warren Buffet gets capital appreciation in the $billions, but is only taxed some $10million or so. His tax rate on wealth accummulation is not 18% but more like 1%. By contrast, the 2008 market crash nearly reduced him to a mere millionaire in less than one year instead of his $60+ Billion net-worth.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Heraclitusstudent says

    Reality says

    The very purpose of more money printing is raising price; it is this raising of prices that allegedly brings out more production. There are always bottlenecks at any given time. We live in a world of limits; otherwise there wouldn't be a need for economics.

    There are very few bottlenecks when the world just added hundreds of millions of new workers to the global economy and the economy is coming out of a crisis that cut demand massively.

    There are bottlenecks everywhere: take for example steel production, do you use that to build more houses or more cars or more bridges or more mining equipment and mines to produce more steel? In what proportions? Millions of new workers would be wasted if the government allocate them to war making on each other, as they historically are prone to do when faced those problems.

    In such a world, the lack of demand is the main obstacle to more economic activity. And if you print money and give it to people to do some work, you don't increase inflation, you increase activity.

    Do we really think the government bureaucrats are better at telling people what activities to do than the various industries themselves?

    Printing money and spend it by the government would not increase real economic activities for at least two reasons:

    1. The government boondoggle projects would consume raw material and drive up their prices, which would inhibit private sector businesses that also need those same raw material. The result would be reduction in real productive economic activities.

    2. Most modern monetary systems do not actually allow printing of money per se, but having the government borrow the money into existence via sovereign bonds. That debt has to be serviced and paid back with interest. That means higher tax burden on the productive sectors of the economy down the road. We have arrived at that "down the road" now, just like they did in 1937 after a frenzy of money printing in 1934.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Heraclitusstudent says

    Prices only increase if the demand CANNOT be met. If you have a fixed amount of something, then yes, increasing the money supply just raises the price. But in most cases this is not the situation.

    At any given time, the production capacity for almost every thing (of economic value; i.e. not "abundant" like air in most places) is limited. Capacity increase takes time. That's why any commodity has any market value at all. The fact that there is a practically economically infinite amount of iron at the core of the earth does not drive iron price to zero in current market, nor does the practically economically infinite quantity heavy metals and helium in space do to those respective markets.

    If the supply CAN rise, then the equilibrium can be done at the same price. If you were producing 100 widgets and now the demand is 120, but you can easily produce 120 and raise your profit by 20%, then you will do that, or your competitor will do it for you and you will lose market share.

    It's usually a mistake to presume equilibrium when analyzing a market. In a real equilibrium, no business can make any real profit, so no business would even exist. Businesses exist because of transient arbitrage opportunities. When those opportunities are gone, the businesses often cease to exist. Look at Kodak.

    Given a large supply of idle labor and a large supply of raw materials, you simply can't explain why extra demand would cause prices to rise. They wouldn't. They would just cause more production. People would just do more of what they are doing.

    Economies enter recessions / depressions because old ways of doing things (turning raw material and labor to various stages of products in existing business models) were found to be unprofitable. Perhaps a sudden shortage of a specific input factor is discovered; perhaps that proverbial equilibrium point is reached and "destructive competition" has scaled to such a level that nobody can make enough profit to service loans that had been taken out on more rosy projections in the old days.

    The cure to this problem is not asking people to do more of what they were doing (as that was already found to be unworkable), but finding new ways doing things that can break the logger jam, and reduce the debt burden. That's the difference between Soviet Lada factories turning out in the 1980's more and more cars of 1950's old designs vs. newer and better cars showing up in the relatively free competitive markets.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    control point says

    iwog says

    Is it as childish as claiming you won an argument when everyone on the board thinks you're an idiot?

    Indigenious, clambo, and spydah_hh hold him in very high regard.

    Thanks for pointing out that Iwog was lying yet again.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Iwog,

    Don't you think it's a little childish to "dislike" every post from a poster just because you lose an argument?

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    Reality says

    The decision to buy vs. rent is not based on the need to have a house to live in, but speculations on future cash flow value and resale value.

    In some cases, yes. But it's not the only reason. And it's irrelevant to the fact that it's not speculation. Almost nobody buys solely for capital appreciation.

    You are still muddling water by drawing in all sorts of ancillary feelings. We are not talking about getting a house or not, but buying vs. renting (that's the real fundamental issue in a house purchase). That decision is pure speculation on comparing cash flows and comparing residual/resale values. It's just like buying/financing cars vs. leasing cars. It's a numbers games. You can get a car and a house either way. Both renters and owners get to send their kids to the local school, and both get to vote in local elections.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    Reality says

    No it does not, for not just one but two reasons:

    No matter how much you try to muddy the waters and distract from the fact that you are 100% incorrect, you continue to look the fool.

    Here's the bottom line--in your opinion, when someone buys a house, are they only buying it for the capital appreciation??

    If the answer is no (which it is), then it's not speculation.

    You are just incapable of logic. The decision to buy vs. rent is not based on the need to have a house to live in, but speculations on future cash flow value and resale value.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    iwog says

    So we're back to square one. You think speculation in the Forex and buying 100 shares of a blue chip stock are exactly the same thing and that anyone who thinks there is a difference is brainwashed.

    No comment necessary. I think everyone reading your words understands where you're coming from now.

    At current price levels, buying and holding 100 shares of IBM (your original stock pick) at $192/share ($19,200) will probably experience far more volatile than buying then holding $19,200 worth of Euro or Japanese Yen or Swiss Franc in the next 6 months. Please notice, it's not a statement on which strategy will appreciate more, but simply stocks likely having far more volatility in the next 6 months.

    The perceived speculativeness of Forex market comes from exchange rules allowing higher leverage: 16x in Forex instead of the usually 2x to 4x for stocks. The difference is not in underlying assets but leverage level of your own choosing. In fact, the Forex exchange allowing 16x is largely because foreign currencies are usually much more stable than stocks.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    Dublin,

    The Wall Street and mutual fund industry have done a very good job brainwashing the masses, as your eloquent regurgitation shows (nothing personal). It is crucial that they paint a line between investing vs. speculation in order for people to part with their money. In reality, there is no clear difference between the speculation vs. investing (which is speculating on asset growth and returns). People understood that before the invention of 401k corralling people's money into trust funds for Wall Street banksters, and probably soon that of the treasury.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    No, actually you weren't. If you'll remember, the definition I posted contained this phrase

    "Those who engage in speculation have no reason for buying the asset, other than resale at a later time"

    So that pretty much kills your theory that buying a house is speculation.

    No it does not, for not just one but two reasons:

    1. It is not necessary to buy a house to live in a house. So the decision to buy instead of rent does not derive from the need to have a house to live in.

    2. On cash flow basis, the new home owner then is reselling the house's use to him/herself every single month at the owner-equivalent-rent (a term coined by BLS, accounting for the largest share of CPI). If the decision to buy the house instead of renting is based on owner-equivalent-rent being higher than mortgage payement (after factoring the cash flow equivalent value of down payment) then the decision was obviously speculation on the future cash flow difference, not the need to have a house to live in. If on a cash flow basis it is negative, then the main motivation for buying is likely even more speculative: on future RE appreciation.

    tatupu70 says

    And the definition of hedging contains this phrase

    "Making an investment to reduce the risk of adverse price movements in an asset"

    Nothing about capital appreciation.

    So, you're not right. By any definition.

    Inflation hedge has more broad ramifications than typical asset portfolio price movements. We were talking about commodities as inflation hedges. In that context, nominal capital appreciation in the commodity is the mechanism through which risk to inflation is reduced.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    bob2356 says

    Reality says

    t's like the difference between making-love/having-sex/fuck

    So there's no difference between a wife and a hooker? You must spend a lot of time worrying about hairy palms.

    The difference between the two is a legalistic one, regarding inheritance and shared responsibilities / rights. Being a wife has a longer investment time horizon (also speculative) than that of a hooker. I'm sure many hookers are wives, to their husbands.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    Reality says

    Of course I was correct. Any activity/decision of which outcome depends on future uncertainty is speculative.

    Yes, of course. When you make up your own definitions, you are always correct.

    I did not make up the definition. I was going by the definitions in the Marriem-Webster dictionary, and by the definition that you supplied. You are the one inventing your own definitions.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    iwog says

    I'm not the fucking retard insisting that buying 100 shares of IBM and gambling on the forex is exactly the same thing.

    They are not the same thing, but both are speculations. Don't tell me you are the idiot who thinks buying IBM stocks is not speculation on IBM stocks.

    The entire world understands the difference between investing and speculation.

    Really? The entire world? The majority of the world does not understand either investing or speculation. They are simply too poor. Your hyperboles make you a liar.

    Is buying 100 shares of IBM not speculation on IBM stocks? How about buying 100 shares of Kodak when it was a member of DOW 30?

    Even if it's just an analysis of downside risk, the words still have meaning and people still use them to communicate.

    Words have meanings. Your own projected meanings just happen to be wrong.

    Austrians of course don't believe in words and simply change their meanings whenever they wish. Real Estate might have fallen in price for 20 years in Japan, however since the Japanese money supply has steadily increased, YOU will say the Japanese have had 20 years of inflation.

    Inflation was defined by money supply long before there was an Austrian school of economics in the late 19th century. The cult for using CPI or any other price index did not come along until the early 20th century.

    Your cult is full of these dishonest manipulations and this is simply another example. It's the reason why Austrians are considered the laughing stock of the economic world.

    As if you know anything about "the economic world." For crying out loud, you did not even know how GDP was calculated before I told you. Until a few hours ago, you did not even understand how the US dollar was defined / pegged in the monetary world. You are a joke.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    iwog says

    Reality says

    OK--let me try this. What is the difference between investing and speculation, in your opinion.

    There is none. The perceived difference is only a psychological mechanism to make the practitioner feel better about him/herself. It's like the difference between making-love/having-sex/fuck. They are all exactly the same thing, perhaps with different shades of lipsticks applied.

    I can't imagine someone with more financial ignorance than you. It defies explanation.

    Given your own track record of utter ignorance, I take your disapproval as a compliment.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    Reality says

    Are you serious? That's how you debate? The dictionary definition obviously has me correct, and you wrong.

    How are you right? That defintion is more vague, but doesn't invalidate anything I've said.

    Of course I was correct. Any activity/decision of which outcome depends on future uncertainty is speculative.

    Hedging is not speculation. Hedging is a risk reduction mechanism. Nobody hedges hoping to make large capital appreciation--by definition they will be losing on their main investment.

    In the case of inflation hedge, exposure in the main portfolio is called LIFE. The choice is between having inflation hedge (against declining living standards due to inflation) vs. suicide.

    You know, the part of the portfolio that is being hedged. They will have lost money overall.

    When the government pursue an inflationary policy, most people indeed lose regardless what they do.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    Reality says

    What was cheaper, than what? Regardless, buying future cash flow is obviously a form of speculation: on future cash flow (or differential against mortgage payment).

    OK--let me try this. What is the difference between investing and speculation, in your opinion.

    There is none. The perceived difference is only a psychological mechanism to make the practitioner feel better about him/herself. It's like the difference between making-love/having-sex/fuck. They are all exactly the same thing, perhaps with different shades of lipsticks applied.

    I asked this question several posts back: how did you feel about your investment in Kodak stocks? Do I need to add "pets.com" to make it more clear?

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    Reality says

    Buying inflation hedges is hoping (nominal) capital gains from those hedge positions would offset inflation risks that exist in other aspects of one's life

    Wrong. Do you buy insurance hoping for an accident so that it will return more than you paid in??

    What does insurance have to do with this? What's wrong about my statement above? You don't hope for a (nominal) capital gain from the inflation hedge position to offset inflation in the event of inflation?

    BTW, insurance is a form of gambling/speculation, and therefore is prohibitted according to quite a few religions.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says


    Because you do not know for certain what will happen over the life of your stay, you decision is based on speculation on future cash flow difference. Also, notice, you said "sell it for no capital appreciation" in your own Freudian slip; you are speculating on no (massive) price drop!

    Not a slip--you asked how many people would buy if not hoping to sell for a higher price. I pointed out that most would if it was cheaper.

    What was cheaper, than what? Regardless, buying future cash flow is obviously a form of speculation: on future cash flow (or differential against mortgage payment).

    tatupu70 says


    Here is the Merrian-Webster definition of "speculation":

    =========


    : ideas or guesses about something that is not known

    : activity in which someone buys and sells things (such as stocks or pieces of property) in the hope of making a large profit but with the risk of a large loss


    ===========

    Looks like I'm 100% correct.

    You know you are wrong. Just give it up.

    Are you serious? That's how you debate? The dictionary definition obviously has me correct, and you wrong.

  • On 22 Apr 2014 in Actually Fixing Our Economy, Reality said:

    tatupu70 says

    Reality says

    So you say, despite the standard dictionary definition, and despite the definition provided by your own citation: buy low in the hopes of selling high. What kind inflation hedge would it be if the hope is to buy high and sell low? That of a Moron?

    Are you really this dense?? You're missing the key point of hedging. It's to reduce risk. Not capital gain.

    You are the dense one here. Buying inflation hedges is hoping (nominal) capital gains from those hedge positions would offset inflation risks that exist in other aspects of one's life. Once a class of assets are identified suitable as "inflation hedges," even more speculators would come in and attempt to front-run the hedge positions themselves. That's the crux of the debate. Commodities are usually identified as inflation hedges, therefore not only speculative positions are taken up as hedges but also additional speculators coming in to bid on them. FED money printing make those speculative positions profitable.

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