patrick.net

Strategist says

Call it Crazy says

Strategist says

Why is the 92 million not in the labor force part of "The Not So Good News"?

Do you really want an answer to that??

Yes.

We need about 10 million to move from the not in labor for to full time jobs to be statistically healthy. Also, there is a concern (even from it's supporters) that the ACA will encourage those nearing retirement to stop working early.

That's not really answering the question.
Zerohedge is just a propaganda web site, designed for the sole purpose of misinforming the public. If Hitler was alive, he would have been proud of Zerohedge.

46013 Mikhail01 2014 May 5, 7:01am

The original "gun nut"............

......The original "homegrown terrorist, who was also a "White Supremacist", had a fascination for "assault weapons", AND associated with "citizen militia groups"..................

...................none other than the "Father of our country",

George Washington !!!

Yes, current day "mainstream" corporate media would label George all the above. I have another term for "Terrorist"...... Patriot. But then I don't adhere to a religion that calls for blood sacrifice so as to be (self) chosen. That seems to be the main difference in modern media and historical fact.

One should do a search for "Who owns American media".....and learn just who profits from their anti-Americanism and their corporate owned media constantly trying to pit Americans against each other. Once one does such a search, digesting said "mainstream" (corporate/Wall Street) media should be much more difficult, even with a public education.

46014

PeopleUnited 2014 May 5, 7:10am

There it is the Hitler reference. Hitler sure has a lot to be proud of these days doesn't he?

46015

rooemoore 2014 May 5, 7:11am

Strategist says

That's not really answering the question.

Zerohedge is just a propaganda web site, designed for the sole purpose of misinforming the public. If Hitler was alive, he would have been proud of Zerohedge.

Zerohedge may be a propaganda website, but the fact is that we do need more people in the work force. I'm sure Obama would agree.
BTW, pretty quick to Godwin's law, aren't you?

46016

Strategist 2014 May 5, 7:16am

Zerohedge may be a propaganda website, but the fact is that we do need more people in the work force. I'm sure Obama would agree.

Yes, all of us would agree to that.

BTW, pretty quick to Godwin's law, aren't you?

Had to look it up. Interesting.

Godwin's law (or Godwin's Rule of Nazi Analogies)[1][2] is an Internet adage asserting that "As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1"â€‰[2][3]â€”â€‹ that is, if an online discussion (regardless of topic or scope) goes on long enough, sooner or later someone will compare someone or something to Hitler or Nazism.

46017 myob 2014 May 5, 7:21am

And that is another reason why nobody can take Austrians seriously. Do you really contend that the time since the Fed is worse for boom/busts than the time before the Fed?

If you'd like to see the direct effect of the Fed, look here:
http://en.wikipedia.org/wiki/File:US_Historical_Inflation_Ancient.svg

This shows the inflation/deflation cycle since ~1675 to present.

You will notice that before about 1960, there had been economic cycles very frequently, with periods of inflation and deflation. Before the Fed, inflation was caused by regional banks issuing their own money, or gold discoveries, or simple lack of demand for the currency. Deflation was caused by demand, fallout if inlationary capital misallocation and such. What was very different is that deflation and inflation were cyclical over time, and roughly canceled out, yielding a fairly stable currency value.

During periods of inflation, modulo the time-delay of new funds affecting the economy, we had bubbles, speculation, and the same kind of bubble mechanics we have today. During periods of deflation, which we haven't seen since in 60+ years, the capital malinvested during the boom is liquidated through the system. Businesses which take unjustified risks go bankrupt, and their wiser competitors pick up their assets, creating a disincentive to take on too much risk.

The modern Fed effectively started in 1971, when it started issuing credit backed money and severed the gold convertibility from the Bretton Woods agreement. Since roughly that time frame, we have not had any deflation, since contrary to what the Fed states publicly, it has a single mandate - to keep the largest financial institutions from going insolvent, the much publicized dual mandate being the sugar which makes the pill easier to swallow.

The Fed is not the sole creator of economic cycles, but it's been an amplifier. Pre-fed cycles were generally not monetary cycles, they were speculative manias into some sector for the economy, like rail roads or real estate, and when these mania bubbles popped, their effects were less wide spread. The Fed, in an attempt to save banks from going under from taking too much leverage in these manias, turned speculative sector-bubbles into monetary bubbles, which affect the parts of the economy that use money, namely all of it.

I don't think their approach can work to dampen bubbles at all, since the mechanisms by which they do it are to spend credit into existence. This credit doesn't go to Joe Mainstreet, but rather big clearing banks, then wall street institutions, who can borrow at near zero to speculate into assets, and the only ones big enough to accommodate this much money are stocks and housing, which is why we see such gains concentrating there.

Now, I think the Fed has no choice but to taper and accelerate the current credit bubble popping. There are two sides to transaction, and in credit, there is the borrower and the lender. Years of ZIRP/QA have started hurting big lenders, namely fixed return investors into bonds and treasuries, such as state pension plans, and Social Security, which collectively hold many trillions. While these lenders may all be a Ponzi-style sham to begin with, the Fed's actions make their already stretches budgets even worse by reducing the rate of return in the future, increasing unfunded liabilities, and typically triggering additional cash infusions. We can't afford to keep things like, say, CalPERS or CalSTRS solvent in this environment, so the Fed is forced to do a 360 since now it's hurting some truly enormous financial entities (and being the good utilitarians that they are, the'll always avoid doing the most harm based on their own understanding of the markets).

So, the answer isn't very simple, and Reality is only touching on some topical points in Austrian monetary theory. The Austrian school, in my opinion, provides some really good tools for analyzing what's going on, but people of an Austrian bent still disagree with each other (for example, Peter Schiff the hyperinflationist vs Mike Shedlock, the deflationist). Why was Mish right and Schiff wrong so far? Schiff overlooked the power of credit contraction and deleveraging, making a mistake of omission. An economic framework may help you analyze some facts, but it may not work if you neglected to gather all the facts.

The one thing the Austrians agree on with the Fed is that it creates distortions, and that it transfers wealth from society to the wealthy who are close to the money presses, and that it rewards companies for speculative risk, so we get more of that kind of behavior.

46018

tatupu70 2014 May 5, 7:34am

Also, there is a concern (even from it's supporters) that the ACA will encourage those nearing retirement to stop working early.

I agree that we need more in the workforce, but I wouldn't think people retiring early would be an bad thing. I would think allowing those folks to retire is a very good thing--those jobs are open for younger folks that probably need the job more than the early retiree.

46019

Vicente 2014 May 5, 7:36am

I like how that article ends:

The BLM's response was one sentence long: "We welcome Mr. Bundy's new interest in the American legal system."

46020

tatupu70 2014 May 5, 7:42am

OK--so given Mell's argument:

The modern Fed effectively started in 1971

Do the boom/busts look worse or better in the last 40 years?

How can anyone argue this point?

46021

HydroCabron 2014 May 5, 7:46am

Mikhail01 says

The original "gun nut"............

......The original "homegrown terrorist, who was also a "White Supremacist", had a fascination for "assault weapons", AND associated with "citizen militia groups"..................

...................none other than the "Father of our country",

George Washington !!!

Look up "Whiskey Rebellion".

When faced with a tax protest by early U.S. citizens, who refused to pay their share to settle war debt - Washington rode at the head of a military force (composed of state militias) to suppress them.

Washington would have put these pieces of shit on trial.

(Of course, being the poseurs that these original-intent, the-Constitution-says-what-I-say-it-does types always are, the traitors Washington was hunting down slithered back to their rundown shacks in the woods.)

46022 futuresmc 2014 May 5, 7:52am

Iosef V HydroCabron says

Calm down.

These are gun nuts, so it's all Constitutional & as the Founding Fathers intended.

The commerce clause proves this false. The Supreme Court has ruled that the definition of commerce is broad and can include things like going to work or taking a vacation somewhere where you intend to spend money. It would be difficult to find a way that entering Bunkerville by car wouldn't be an act of commerce, making the turning away of people at the checkpoint illegal.

46023

rooemoore 2014 May 5, 8:04am

rooemoore says

Also, there is a concern (even from it's supporters) that the ACA will encourage those nearing retirement to stop working early.

I agree that we need more in the workforce, but I wouldn't think people retiring early would be an bad thing. I would think allowing those folks to retire is a very good thing--those jobs are open for younger folks that probably need the job more than the early retiree.

Except for the fact that we will be paying for their healthcare. They will not have an income and under 65 so they will get ACA pretty much for free. I don't think this will be a huge issue, but I've heard that it is a concern by those running the ACA.

46024 mell 2014 May 5, 8:10am

Do the boom/busts look worse or better in the last 40 years?

How can anyone argue this point?

1) Deflation is not bad
2) Your graph doesn't address the question
3) But hey, I am not the one saying that 2008 was SO ZOMG BAD that they had to bailout the TBTFs and buffets of the world because other wise the worst depression evah would have devoured the whole world. So by that token 2008 was so pretty much unprecedentedly bad that the biggest bailout (heist) in history HAD to be enacted. So yes, the Fed et. al. caused the worst depression ever ;) Nobody says it's only the Fed, but they are certainly not helping main street.

46025 BoomAndBustCycle 2014 May 5, 8:14am

We need about 10 million to move from the not in labor for to full time jobs to be statistically healthy. Also, there is a concern (even from it's supporters) that the ACA will encourage those nearing retirement to stop working early.

Um, that doesn't make sense. For EVERY early retirement worker.. there are probably 100 young people falling over themselves to take their high paying job.

Every 50+ worker who retires.. opens up enough salary cap to hire 2 or more millenials. So that shouldn't be a problem.

46026 myob 2014 May 5, 8:15am

Sure you can make prediction,

All else being equal, higher prices lead to lower demand (note the weasel words). You couldn't say "prices will be higher tomorrow" because there's insufficient information.

However, if some new process were developed for making, say, shoes, where it's much cheaper to manufacture them, you could make a prediction of "shoes will get cheaper in real terms, all else being equal". Why the weasel words again? Because the government could come in and institute a shoe tax on imported shoes or sometihng, which you simply can't predict.

If you're willing to make assumptions about certain things ,you can make reasonable predictions using Austrian modeling of the money supply, for example, but you have to acknowledge you can't make them with 100% certainty.

There are lots of "fudge factors" in the models mainstream economists use, things like the core deflator, or hedonic adjustments in CPI which amount to the same thing.

The difference that I see is that the Austrians admit the shortcomings of modeling behavior in a system where all the facts aren't know, and what you don't know isn't even known.

I mentioned Mish before, and his long term predictions have been right on the money! His approach is largely Austrian. He took the time to understand credit markets, and leverage and made those predictions.

I could argue that model driven economics also only works in hindsight, because it's failed to predict so many epic bubbles, and after each one, the models had to be amended. Why, for example, did Greenspan not see the bubble he blew, why did Bernanke not see that there was a housing bubble, and why did he even proclaim that fact repeatedly on TV and in front of congress?

None of these guys have a clue, but the Austrians admit it :)

46027

Heraclitusstudent 2014 May 5, 8:50am

Sedition

46028

indigenous 2014 May 5, 9:07am

How the hell do you predict what is going to happen with the number of transactions that occur in just one day. 7 billion times, what 10, 70 billion transactions per day times 365 x 10. No one organization can control that and that is where the trouble starts.

What is real is what is agreed is real. The crazy guy sees a pink elephant, he is crazy as no one else sees it. How do you predict that people are going to be willing to spend a years wages on a tulip bulb or 4 times that on a shack in the right zip code.

That is why bonds are the best predictor of the future as that is what is agreed to happen by investors. Money is just an agreement that something is valuable. One day you have the agreement and one day the agreement is different.

I don't how someone like Nate Silvers does his thing but even he says predictions are hard especially about the future.

46029 mell 2014 May 5, 9:23am

only Goldman Sachs has a perfect trading history,

Actually not even GS, only Virtu ;)

46030

tatupu70 2014 May 5, 9:33am

mell says

1) Deflation is not bad

2) Your graph doesn't address the question

1. Unemployment is bad. Deflation leads to unemployment. Therefore, deflation is bad.
2. The graph absolutely addresses the question of booms/busts. If you can't see that, you need to look again.

mell says

3) But hey, I am not the one saying that 2008 was SO ZOMG BAD that they had to bailout the TBTFs and buffets of the world because other wise the worst depression evah would have devoured the whole world. So by that token 2008 was so pretty much unprecedentedly bad that the biggest bailout (heist) in history HAD to be enacted. So yes, the Fed et. al. caused the worst depression ever ;) Nobody says it's only the Fed, but they are certainly not helping main street.

Speaking of not addressing the question. I'm not even sure what you're trying to say here.

46031

indigenous 2014 May 5, 9:45am

When I look at this type of work, I see it as damn near a 24-7 occupation. Mish sends out 2 reports a day 7 days a week.

The point is it hard work, much harder than digging ditches. It is based on methodology, logic, past experience, consuming a lot of information, and again hard work.

Buffet said that he used to read a half dozen newspapers front to back every day. And even he would be history if not for uncle Ben.

46032 mell 2014 May 5, 9:54am

I can't count the times I sold a stock at a local maximum that lasted for a while or forever so far, I also post stocks that I like once in a while, some of them doubled in a short time, haven't we all ;)

46033 myob 2014 May 5, 9:57am

1. Unemployment is bad. Deflation leads to unemployment. Therefore, deflation is bad.

This is an interesting statement, and it's partly true, partly false.

In an economy with a market valued currency, deflation is itself not detrimental to employment levels. All it means is that goods get cheaper over time as productivity increases, so it helps savers, and investors and companies adjust their books accordingly. It rewards saving to spend vs borrowing to spend, but the economy finds a balance regardless.

We don't have a market based currency system, so deflation leads to unemployment because it is a symptom of deleveraging. The financial system ends up being borrowed short, and lent long and so it's subject to liquidity crises. Even when there isn't a crisis, fluctuations can destroy companies running at extremely high leverage ratios. In such an environment, mid-size businesses face a margin squeeze, as they have price-sensitive customers, but COGS are going up due to inflation (COGS tend to go up bottom up - first on things that come out of the ground, then the next stage, and up). This is what hurts employment. The fundamental problem is leverage driven insolvency, with a coating of bailout moral hazard which results in this being a widespread problem. Without bailouts and without such high reserve ratios, deflation isn't much of a problem _in an economy that's adjusted to it_.

When Mish and others talk about deflation not hurting, they're describing the first world that I mentioned. That's the one I'd prefer to be in. I don't think there's a way of getting to it without short term misery and pain as the leverage unwinds or the dollar collapses, but it's where we will end up eventually, irrespective of Fed action. Timeline? No idea. The dollar can't survive too many more bubbles of increasing amplitude.

46034

indigenous 2014 May 5, 10:12am

Ok Barney but I still want you to keep the one bullet in your pocket.

46035

tatupu70 2014 May 5, 10:13am

In an economy with a market valued currency, deflation is itself not detrimental to employment levels.

Not sure what you mean here. Fiat currency is market valued.

All it means is that goods get cheaper over time as productivity increases, so it helps savers, and investors and companies adjust their books accordingly. It rewards saving to spend vs borrowing to spend, but the economy finds a balance regardless.

That's one cause of deflation. We see it in electronics typically, but not many other places.

We don't have a market based currency system, so deflation leads to unemployment because it is a symptom of deleveraging

It has nothing to do with fiat or hard currency. Deflation typically occurs when demand falls--and that lack of demand could be caused by many factors: inequality, lack of confidence, etc.

This is what hurts employment. The fundamental problem is leverage driven insolvency, with a coating of bailout moral hazard which results in this being a widespread problem. Without bailouts and without such high reserve ratios, deflation isn't much of a problem _in an economy that's adjusted to it_.

Couldn't disagree with this any more strongly. Moral hazard is completely overblown as I've shown many times. And if everyone is getting bailed out, how does it cause unemployment??

The problem is lack of demand. And right now inequality is the cause.

When Mish and others talk about deflation not hurting, they're describing the first world that I mentioned. That's the one I'd prefer to be in. I don't think there's a way of getting to it without short term misery and pain as the leverage unwinds or the dollar collapses, but it's where we will end up eventually, irrespective of Fed action. Timeline? No idea. The dollar can't survive too many more bubbles of increasing amplitude.

They're describing a fantasy world that has never and likely will never exist. Productivity gains are at the expense of workers and drive inequality. This, in turn, leads to less demand. It has nothing to do with currency and/or the Fed.

46036

Rew 2014 May 5, 11:17am

"That's just inconvenient. Bunkerville wants them out."

Jeezers. I'd be calling the nat guard and local law in if I was a resident. A careful resident might be able to film a lot of the stops as evidence of detainment, breach of privacy, or if they go looking in a vehicle, unwarranted search.

They are going to go down pretty quick from here I think. Crazy.

46037

Tenpoundbass 2014 May 5, 11:23am

Yes bring it on, this administration could use a good ole fashioned Ruby Ridge.

46038

Shaman 2014 May 5, 11:51am

I still suspect this is a made-up or at least based on overblown facts. All the other stories about this from the MSM have been the same. All an attempt to sway the public opinion away from the ranchers and to the government's side. Why should I believe this?

46039

Tenpoundbass 2014 May 5, 11:54am

I don't know why the Democrats just don't get someone like Anderson Cooper to interview them. One of them are bound to slip up and mention they don't like colored or gay folk. Then the Twitterverse will descend on them with a vengeance.

Those bullets are no match for a disparaging hash tag.

46040 clambo 2014 May 5, 12:11pm

If there are guys stopping cars driving around that's wrong and illegal. Even cops need a probable cause or a traffic violation to stop you.

Yahoo of course is a suspect source for news.

To most people the biggest "story" is the rancher said some things that others perceived as racist.

The real story is that BLM was a bully, but media will make the rancher the story.

Having beliefs that someone calls "racist" is your right and there are some laws against things you may do but your thoughts and speech are yours.

46041

Rew 2014 May 5, 2:15pm