patrick.net

Tampajoe says

Dan8267 says

Had housing prices been allowed to fail instead of debasing our currency, there would be more home owners today, and when I say home owners, I mean people owning equity in their houses rather than simply counting mortgage debt.

Actually, sans intervention, there would be more renters paying high rents to investment companies. More people would have been foreclosed and more houses would be owned by private equity companies that were snatching up foreclosures wherever they could.

So true. Anyone worried about inequality and the onrush of feudalism should recall non-intervention would have predicated the greatest transfer of wealth any of us have witnessed in our lifetimes. Why it is that the typical GOP elitist was so enraged?: the buying opportunity that zero-sum vultures dream of was diverted. Instead, those with some cash, some credit and some nerve were able to make good stakes a couple of years after the crash. What the Aristocracy really wanted did not transpire. We would have had a much differently structured recovery, if, in fact, we had survived it.

Rew says

"What is clear is that the world will soon need a massive and coordinated spending push by governments to create demand and bring the broken global system back into equilibrium.

There are not enough intelligent Republicans in our country to accept this. In this deflationary condition they will advocate austerity.

Rew says

Trump = Hasten the day : protectionism, embrace the deflationary cataclysm,

He'll give the elites a second bite at the "blood in the streets" apple. If that moron is elected I'm going to increase my cash/liquidity to 75% and wait for it.

Here is essentially what I believe to be true about the post-recession ('08) by central banks, and how they screwed the fundamental, foundation of the economy up, by using radical zero-bound monetary policy to reflate financial asset prices, massively distort natural rate of interest and break the yield curve, etc:

"The PPT and/or Fed Head 'put' have probably burned more investors than any other concept in the history of the markets.

I'm not saying that the radically activist central bankers and the pseudo/quasi-governmental technocratic group known as the working group on financial markets don't try and prevent market meltdowns.

I'm saying that the best they can accomplish is to delay the meltdowns, and that ironically, they make the inevitable meltdowns worse than they would have been if the forest fires weren't suppressed (allowing the brush and scrub to accumulate in prolific fashion).

In another irony, it's many of their very actions and radical interventionist policies that ratchet up the risk present in markets, which always and forever will unwind in a disorderly and messy fashion.

I remember the Greenspan 'put' being talked about frequently and openly in '99, just when people were starting to get worried because of the insanity of the dot.com malinvestment, and the same thing happening regarding talk of the Bernanke 'put' back in 2007, but in reference to hopium that The Bernank would save a much wider/broader swath of assets from tanking.

Well, guess what? Neither 'put' did jack shit. They merely served the purpose of allowing insiders time to unload their basket of over-inflated assets on dumb money speculators."

The Fed reserve and other central banks (BOJ, ECB, BOE, PBOC) are serial bubble-blowers, folks. They've exacerbated financial and economic crises, extending their duration and increasing their severity.

Here is essentially what I believe to be true about the post-recession ('08) by central banks, and how they screwed the fundamental, foundation of the economy up, by using radical zero-bound monetary policy to reflate financial asset prices, massively distort natural rate of interest and break the yield curve, etc:

"The PPT and/or Fed Head 'put' have probably burned more investors than any other concept in the history of the markets.

I'm not saying that the radically activist central bankers and the pseudo/quasi-governmental technocratic group known as the working group on financial markets don't try and prevent market meltdowns.

I'm saying that the best they can accomplish is to delay the meltdowns, and that ironically, they make the inevitable meltdowns worse than they would have been if the forest fires weren't suppressed (allowing the brush and scrub to accumulate in prolific fashion).

In another irony, it's many of their very actions and radical interventionist policies that ratchet up the risk present in markets, which always and forever will unwind in a disorderly and messy fashion.

I remember the Greenspan 'put' being talked about frequently and openly in '99, just when people were starting to get worried because of the insanity of the dot.com malinvestment, and the same thing happening regarding talk of the Bernanke 'put' back in 2007, but in reference to hopium that The Bernank would save a much wider/broader swath of assets from tanking.

Well, guess what? Neither 'put' did jack shit. They merely served the purpose of allowing insiders time to unload their basket of over-inflated assets on dumb money speculators."

The Fed reserve and other central banks (BOJ, ECB, BOE, PBOC) are serial bubble-blowers, folks. They've exacerbated financial and economic crises, extending their duration and increasing their severity.

Tampajoe says

increasing money supply increases demand

No it doesn't. Increasing the purchasing power of people's money increased demand. Increasing the money supply simply shifts the purchasing power and thus the demand from one set of people to another. There is no net gain. If Joe has more money due to the printing of money, then Bob effectively has less. Joe can buy more only to the amount that Bob can buy less. It's called a zero-sum game for a reason.

Tampajoe says

Rates earned on savings also increase with inflation. Unless you put it under your mattress, it doesn't matter. The delta between savings rate and inflation is pretty constant.

Not true at all. People had lots of money in money market accounts back in the 1990s because interest rates were well above inflation. Today they don't because interest rates are less than inflation.

Your statement is empirically false.

Tampajoe says

Incorrect. You believe that prices would have fallen further absent the easing. Which is false.

Now you are just contradicting with offering no justification.

The bottom line is that absent extreme measures, all markets revert to the mean. This is a universal law. Read Common Sense on Mutual Funds, one of the best books on investing ever written. The author, John Bogle, the founder of Vanguard, is very insightful.

Tampajoe says

Not at all.

More unjustified contradiction.

Tampajoe says

It's not polite to post what others think. Better just to post what you think.

That's exactly what I did. I posted what I thought the points you were trying to make, and I phrased it thusly. Understanding and confirming whether or not you understand the opposing point of view is an important part of a discussion.

Tampajoe says

True Keynesians believe that the correct solution depends on the situation.

A No True Keynesian Argument. That's sort of original.

Tampajoe says

inequality was at all time highs (like now).

Currency debasement increases inequality by transferring wealth from the middle class to banks and financial firms, neither of which produce any wealth.

Tampajoe says

Dan8267 says

One final thought. If Keynesian economics was right, the solution to every depression would always be the same thing: smash everyone's car and burn down everyone's house. The resulting demand for automobiles and construction would immediately end the depression and bring prosperity to everyone.

And the ridiculousness of this idea just never seems to be grasped by economists.

I think you need to read up a bit more on Keynes.

freespeechforever says

Dan, true Keynesians would shriek in horror at what neo-Keynesians such as "Space Man" Krugman have done to their name.

Economic Essays: John Maynard Keynes

Keynes was a great publicist for his theories. He would say things like:

"The government should pay people to dig holes in the ground and then fill them up."
People would reply. "that's stupid, why not pay people to build roads and schools"
Keynes would respond saying "Fine, pay them to build schools. The point is it doesn't matter what they do as long as the government is creating jobs".

Keynes would agree completely with Krugman about fighting fictional aliens to stimulate the economy. I guess John Maynard Keynes is also "no true Keynesian".

I firmly do not believe we have crashed at all, as yet. I think the tech, financial, and housing burps over the past 15 years were only portents of a much, much greater failure yet to come. When it comes to equities and real estate prices, I would look back to 1994 for a landing zone.

The huge inflation the Austrian Economists expected is right in plain sight - in the inflation of assets rather than CPI variables.

For 22 years, if an asset class important enough to wealthy gamblers was threatened, the Fed/Treasury/Central Banks Cartel stepped up and covered the worst bets to keep the casino open.

I don't believe we will see THIS tower pancake down to a nice tidy pile of rubble, however. The collapsing structure will likely be accompanied by wars on many fronts. The actual possession of commodities rather than the paper varieties of them will matter entirely. Complex battles will be fought over those in physical possession of them, over the physical lanes of commerce by which those commodities can flow, and over the private organizations which have meaningful leverage.