The U.S. Economy: Stand by for more worse news

[Michael]

That is just hogwash. You need to tell that to the local restaurateurs, or the truck drivers, or all the people who lose out on job interviews and are trying to get jobs . . . tell them the economy is not competitive. I think they might have a different opinion.

I did not say it was not competitive market, I said it was not free market.

Regulation of a market doesn’t necessarily make the market uncompetitive. For example health regulations, don’t make the restaurant industry uncompetitive. Quite the opposite, the trust instilled by a well regulated industry promotes competition. So your notion that regulation of an industry always makes it less competitive is just not rooted in reality.

I disagree. Restaurants don't need the government to inspect them, a private company can provide that service. Just as many certify Organic Food. A food service can be certified.

If you hate the rich so much, if you think they are such lizards, why do you accept their bankrolling of your political movement? Why do you advocate letting them do whatever they want whenever they want . . . you know, the whole Libertarian thing. Without government there is no entity powerful enough to restrain the wealthy. That is probably one reason why billionaires like the Koch brothers are aggressively funding and leading your ideology. They would love it if that nasty old government which prevents them from polluting the air, water and land and prevents them from stealing oil would just go away.

I don't hate anyone. Being "Rich" isn't the problem. The problem is the Monetary System and those that game it to profit off it AT THE EXPENSE of everyone else. Win-Lose is what the State does best. Win-Win and hard earned wealth is perfectly acceptable to me. Particularly IF we had currency competition as they would ensure those with money would continue to support the community they live in. THEY'D HAVE TO, or else find their wealth was soon worth nothing.

Well “too big to fail is gone”, all banks can fail now due to new regulation passed by the Democrats. Two, as has been proven to you umpteen times, the bailout did not result in generational debt. It resulted in the US government making profits to the tune of nearly a 100 billion per year for the last 3 years, reducing the “generational debt” you so like to demagogue.

HSBC, too big to jail, is the new poster child for US two-tiered justice system

DOJ officials unblinkingly insist that the banking giant is too powerful and important to subject to the rule of law

There is no magical trend line for interest rates. Interest rates will rise as economic activity picks up. That is normal and natural.

What's normal and natural is for interest rates to go up when banks need liquidity. When money is scarce, then the price of money goes up. Just like blueberries or anything else for that matter.


I'd suggest reading the HSBC article thoroughly.

 

[Billy T]

Billy T said in post 517:
"Currently most of the "money supply" is being recycled back to Fed or Treasury by beneficiaries of the new printing press money buying Treasury bonds or making "excess deposits" with the Fed. I.e. the banks don´t want to loan, with risk of not getting repaid, when 100% face value safe alternatives are available. ..."
and Joepistole asked:

I’m not sure what your point is here or how it is relevant. ...

I´ll let someone else explain why this is important (How this is currently delaying the normally associated rapid increase in inflation.).

...the decline in monetary velocity is due to the massive balances, over $1 trillion, which the banks have on deposit with the Fed, which just sit there and do nothing. {zero velocity} As a result, Bernanke and his overseas cohorts have succeeded in saving themselves from being hindered by a surge in inflation.

Austrian economists like Ludwig von Mises will tell you that ultra-low interest rates will create an orgy of speculation, in which markets create a huge volume of "malinvestment" - investment that should not economically have been made, and which has less value than its cost. Eventually-like it did in 1929, the volume of malinvestment becomes so great that a crash occurs, in which all the bad investments have to be written off, huge losses are taken and a wave of bankruptcies sweeps across the economy.

Since politicians hate periods of liquidation, they encourage ... growth. {TARP, QEs etc. It} will continue at current sluggish rates until the Federal deficit becomes so great that nobody will buy U.S. Treasuries. Again, without a Treasury market, there will be an economic collapse.

{Billy T insert: Fed is already buyer of 85% of new treasury issue and ~5% is bought by the likes of life insurance companies with well known future obligation IN FIXED dollar amounts. They don´t care that when widow collects her $100,000 that it will not pay one month of her rent. SUMMARY: Already less than 10% of treasure sales are to investors, and most are selling what they hold before suffering even greater losses as interest rates rise and bond values fall. China has been a net seller for two years and most central banks are selling dollar bonds to buy gold, real assets like minerals etc., or pay off debts.}

At that point, {Investors not buying new Treasury issue} you're likely to get all the inflation you want - it's basically what happened in the German Weimar Republic in 1923. The point is, Bernanke has created something of a new monetary ground, increasing the money supply rapidly without getting inflation. But it won't last.

For a more global POV See: http://moneymorning.com/2013/01/29/will-the-fed-end-qe-this-summer/
All major Western central bank "Feds" (& Japan´s) are also printing "thin air money" in a races to make their currency lose relatively more value to boost their exports and "blowing up" the "currency war balloon" that will end in the world´s worst global depression with China and its suppliers of needed imports (Brazil, Australia, etc.) only in recession; I have been explaining this for nearly 6 years now.

 

[joepistole]

Billy T said in post 517:
"Currently most of the "money supply" is being recycled back to Fed or Treasury by beneficiaries of the new printing press money buying Treasury bonds or making "excess deposits" with the Fed. I.e. the banks don´t want to loan, with risk of not getting repaid, when 100% face value safe alternatives are available. ..."
and Joepistole asked:I´ll let someone else explain why this is important (How this is currently delaying the normally associated rapid increase in inflation.).For a more global POV See: http://moneymorning.com/2013/01/29/will-the-fed-end-qe-this-summer/
All major Western central bank "Feds" (& Japan´s) are also printing "thin air money" in a races to make their currency lose relatively more value to boost their exports and "blowing up" the "currency war balloon" that will end in the world´s worst global depression with China and its suppliers of needed imports (Brazil, Australia, etc.) only in recession; I have been explaining this for nearly 6 years now.

As I previously pointed out to you, if what you claim is true, the Fed can easily remedy it and has testified before Congress that it is ready to do so should it become prudent to do so. When the velocity of money increases, the Fed can reverse doing what it has been doing, removing the money it put into the economy.

As for Mises, he is a Libertarian God and that is about it. He was and is the Libertarian idol, the Randian spokes model. The man was a lawyer by training who dabbled in economics. He didn’t believe in empiricism. Mises was a fervent supporter of the gold standard. Mises once refused to speak to one of his students for three years because his student argued for “fiat currency”. Mises also wrote in support of fascism. He viewed fascism as necessary against socialism. Socialism as successfully practiced in the US and around the globe according to Mises, should not have been the success it has been. So reality and history have repeatedly proven Mises wrong. That is why most economist and scholars don’t take Mises seriously.

"Within the post-WWII mainstream economics establishment, Mises suffered severe personal rejection: for example, in a 1957 review of his book The Anti-Capitalistic Mentality, The Economist said of von Mises: "Professor von Mises has a splendid analytical mind and an admirable passion for liberty; but as a student of human nature he is worse than null and as a debater he is of Hyde Park standard."[27] Conservative commentator Whittaker Chambers published a similarly negative review of that book in the National Review, stating that Mises' thesis that anti-capitalist sentiment was rooted in "envy" epitomized "know-nothing conservatism" at its "know-nothingest."[28] Economic historian Bruce Caldwell writes that in the mid-20th century, with the ascendance of positivism and Keynesianism, Mises came to be perceived by many as the "archetypal 'unscientific' economist."[29]" - Wikipedia

http://en.wikipedia.org/wiki/Ludwig_Mises#Criticisms

 

[Billy T]

... the Fed can easily remedy it and has testified before Congress that it is ready to do so should it become prudent to do so. When the velocity of money increases, the Fed can reverse doing what it has been doing, removing the money it put into the economy. ...

Yes you have several times said that and I have several times replied that that is a conceptual possibility, but not a realistic, practical one. I will admit that as more and more members of the FOMC foresee and speak of the danger of destroying confidence in the dollar, the Fed could (and may) reduce the rate of printing thin-air money. Say down from the current 85 billion per month to only 50 billion per month is several 5 billion reductions steps.

You however are claiming that the Fed can not only reduce support of the economy to and thru zero, but become a net seller of assets on its books without sending the US (and global) economy into depression. Interest rates have started to rise. That means the Fed will be pumping out more dollars, just to pay the interest on the steadily growing debt. Not only that, but fewer holders of Treasury paper are willing to "roll" it now when it matures. More "thin-air money" must be printed to pay off these not rolled bonds. Already the debt is so large that if interest rates returned to their historic levels, it takes at least 90% of US´s total GDP just to pay the interest (with noting left to pay off the maturing bonds, buy bullets for the troops etc.).

On top of all this, we have a dysfunctional Congress, skilled only at political maneuvering, blaming others and kicking the can down the road.

In view of these factors one can only cry ("laugh" is the usual word but things are far too sad to use it) that you seem to really believe that it is possible for the Fed remove say 4.2 trillion of thin-air money it will have made by Halloween 2014 (21 months from now). I.e. that is remove 200 billion dollars per month by asset sales. - A switch from adding 85 billion economy supporting funds to removing 200 billion per month without sending western world in the longest lasting and worst depression ever!

It would be educational for you to postulate some reasonable monthly rate of interest rate increases back to historic levels and some monthly increase of the debt for the next few years (in Excel) to get a value for the already "built-in required production of new thin-air money." That is a very optimistic estimate* of how much money the Fed would need to be removing from the economy each month by asset sales just to stop increasing the potential money supply.

*It assumes every bond holder does roll their maturing bonds to avoid needing to print money for paying them off also.

 

[Billy T]

Many times during the years, reports have surfaced the United States falls behind when compared to other nations in math and science. But how does this tie in with healthcare agencies? In some cases, healthcare agencies have to look abroad to find scientists that meet client requirements.

It goes back to the fact that we’re not producing them at our own universities. You have European candidates, you have Asian candidates who all come to the United States to study to get work experience here, or get academic experience here at the various labs or universities, and then take it home with them. We’re looking at people who are trained here, and then going back to Germany, to China, Japan, or Singapore. We’re not producing the amounts necessary to fill the openings of U.S. born scientists.

Yes, but US produces many more lawyers and wall-street types. :bugeye:

On personal note: This has been good for me in Brazil. I will soon undergo an exploratory operation to find what is the growth from my kidney (80+% probable it is cancer). My recent (and first) tomography scan discovered it. My doctor trained 8 years at JHU hospital, and is very experienced in minimal invasive laparoscopic procedures.

 

[Billy T]

... the biggest threat we are facing might be economic growth itself. Why? Because in a zero-rate environment, debt may matter little, but as rates rise, the leverage of debt weighs against one. Notably, it weighs against government itself, as financing deficits might become prohibitively expensive. The Greeks know what we are talking about; the Japanese might soon find out; but with trillion dollar deficits, the US, similarly, can ill afford to go back to paying interest rates on government debt that were the norm less than a decade ago. We allege the Fed is engaging in doping; the cheap money is like a fix for a drug addict.

 

[Michael]

Yes, but US produces many more lawyers and wall-street types. :bugeye:

On personal note: This has been good for me in Brazil. I will soon undergo an exploratory operation to find what is the growth from my kidney (80+% probable it is cancer). My recent (and first) tomography scan discovered it. My doctor trained 8 years at JHU hospital, and is very experienced in minimal invasive laparoscopic procedures.

I'm sorry to hear about the tomography findings. Let's hope that it's not cancer and if it is, that's localized and easily treatable.

 

[Michael]

As a comment on Austrian and Keynesian Economics, to put things into perspective, we don't do this with 'real' sciences. There aren't competing schools of physics. There is only physics. This happens with Economics and it's cousin, Psychology. Where entirely different "Schools of Thought" which led to drastically different outcomes (years of neo-Freudian therapy versus months of CT and etc....). For REAL sciences, like chemistry, biology, physics, .... scientists don't refer to some 1950s paper that says some derogatory remark about so-and-so. Example: ....."know-nothing conservatism" at its "know-nothingest." You'd be literally SCORNED out of a career for that sort of shenanigans. Either produce the goods, data from a repeatable experiment following hypothetical-driven methodology, or shut it. See, that can't occur with people, as humans can not be experimented with like mice and it can't occur with economics.


So, when thinking about Economics I think it's worth bearing in mind the severe limitations to the discipline. Because Economics actually IS a type of Psychology/Sociology. Which is why you'll hear words like "Keynesian" or "Austrian". It's like saying "Freudian" Psychology. In Biology there isn't really "Darwinian" Evolution. There is ONLY Evolution. Either you are explaining it correctly or incorrectly. There isn't really "Newtonian" Physics. There is ONLY physics. Either your equations accurately describe it or they do not. In Psychology there really is "Freudian" Psychology. It has concepts like the Id and Ego and etc... that simply can not be evidenced and are taken on 'Faith'. You can easily find credible Cognitive Therapists who have absolutely no "belief" in the Human Id and they will be lecturing at any major University next to someone who does. You will NEVER find a physicist who does not 'believe' in the Second Law of Thermodynamics. There's not a "School of Thought" that teaches some completely different type of Physics based on entirely difference axioms. People do challenge Theories (which is why they are theories and not Laws) ... but they do so by providing reproducible data.

This is NOT the case with Economics or Physiology. It simply is NOT possible to apply the methodology. Hence you'll hear Keynes refer to "Animal Spirits" (literally, he used the term Animal Spirits as part of his so-called 'Scientific' theories on the economy). Could you imagine a physicist giving a lecture and referring to unmeasurable "Animal Spirits"?!?!? She, or He, would be sneered off the stage.


Keynes wasn't an idiot, he purposely named his book The General Theory Of Employment , Interest And Money so it would sound a lot like Einstein's General Theory of Relativity and, then at the height of the Depression when people were looking to their "Leaders" (actually Civil Servants) for answers - here comes a VERY POLITICALLY ASTUTE Keynes (1st Baron Keynes of Tilton in the County of Sussex) with his book and it just so happens to suggest that the best way to 'fix' the economy was for Politicians to be actively involved in the free market! Music to a demagogues ears!

This is EXACTLY what any Politician looking to make a name and career for themselves would want to hear. It'd be like a God-send to a politician to hear that here was this General Theory (really no different than Einsteins General Theory) that was going to allow them (the Politician) to 'fix' the economy (and get re-elected and lot of power for doing so).

Get this, not soon after, the US Government started paying farmers to burn their produce and bury their livestock to pump up prices - WHILE Americans starved to death. That is insane. Once WWII started they could see with their own eyes how much of an influence they had over the economy. Some politicians even argued for NEVER ending the War - as it was so great for the economy. To this very day, Krugman STILL insists that War, killing women and children and blowing stuff up, is GOOD for the "economy" ....because you know, it really gets those "Animal Spirits" revved-up. He may not call for the outright murder of people... yet, but he still insists War (totally unproductive wast e of resources and labor) is GOOD for the economy.

It's literally insane IMO. And a lot like Freud's Id and Ego.


Something you may want to keep in mind as this one tiny group of 12 Private Bankers who have total control over our money supply and run our Central Banking Cartel .... headed by none other than one Chairman Bernanke set about selling Real Bonds on your children's Real future labor....in hopes that your "Animal Spirits" get moving along (oh, and to coincidentally bail out their buddies on WallStreet). Unless the system itself changes, your children will be forced (at the point of a gun) to pay back those Bonds. I personally find that sickening.


So, yes, we live in an insane world. Is it any wonder 90% of Americans also believe in a God of one kind or another - so, don't be too shocked our Central Planner in Chief, who ran one of our most prestigious University's, believes in Animal Spirits.

 

[joepistole]

As a comment on Austrian and Keynesian Economics, to put things into perspective, we don't do this with 'real' sciences. There aren't competing schools of physics. There is only physics. This happens with Economics and it's cousin, Psychology. Where entirely different "Schools of Thought" which led to drastically different outcomes (years of neo-Freudian therapy versus months of CT and etc....). For REAL sciences, like chemistry, biology, physics, .... scientists don't refer to some 1950s paper that says some derogatory remark about so-and-so. Example: ....."know-nothing conservatism" at its "know-nothingest." You'd be literally SCORNED out of a career for that sort of shenanigans. Either produce the goods, data from a repeatable experiment following hypothetical-driven methodology, or shut it. See, that can't occur with people, as humans can not be experimented with like mice and it can't occur with economics.

I think this clearly demonstrates your ignorance Michael. First, there are no competing schools of economics. Austrianism is a sham intended to give credibility to a fringe political movement. You keep attacking economics because the empiricism embraced by economics clearly demonstrates the absurdity of your positions.

Two, you think all physicists agree on everything and you couldn’t be more wrong. Physicists just as in any other field are not of one mind on everything. There is a diversity of opinion about a host of issues in physics and in virtually any science. Because we don’t know everything, even the much vaunted theory quantum mechanics will at some point be thrown out and replaced with another theory.

So, when thinking about Economics I think it's worth bearing in mind the severe limitations to the discipline. Because Economics actually IS a type of Psychology/Sociology. Which is why you'll hear words like "Keynesian" or "Austrian". It's like saying "Freudian" Psychology. In Biology there isn't really "Darwinian" Evolution. There is ONLY Evolution. Either you are explaining it correctly or incorrectly. There isn't really "Newtonian" Physics. There is ONLY physics. Either your equations accurately describe it or they do not. In Psychology there really is "Freudian" Psychology. It has concepts like the Id and Ego and etc... that simply can not be evidenced and are taken on 'Faith'. You can easily find credible Cognitive Therapists who have absolutely no "belief" in the Human Id and they will be lecturing at any major University next to someone who does. You will NEVER find a physicist who does not 'believe' in the Second Law of Thermodynamics. There's not a "School of Thought" that teaches some completely different type of Physics based on entirely difference axioms. People do challenge Theories (which is why they are theories and not Laws) ... but they do so by providing reproducible data.

This is NOT the case with Economics or Physiology. It simply is NOT possible to apply the methodology. Hence you'll hear Keynes refer to "Animal Spirits" (literally, he used the term Animal Spirits as part of his so-called 'Scientific' theories on the economy). Could you imagine a physicist giving a lecture and referring to unmeasurable "Animal Spirits"?!?!? She, or He, would be sneered off the stage.

Keynes wasn't an idiot, he purposely named his book The General Theory Of Employment , Interest And Money so it would sound a lot like Einstein's General Theory of Relativity and, then at the height of the Depression when people were looking to their "Leaders" (actually Civil Servants) for answers - here comes a VERY POLITICALLY ASTUTE Keynes (1st Baron Keynes of Tilton in the County of Sussex) with his book and it just so happens to suggest that the best way to 'fix' the economy was for Politicians to be actively involved in the free market! Music to a demagogues ears!

This is EXACTLY what any Politician looking to make a name and career for themselves would want to hear. It'd be like a God-send to a politician to hear that here was this General Theory (really no different than Einsteins General Theory) that was going to allow them (the Politician) to 'fix' the economy (and get re-elected and lot of power for doing so).

Get this, not soon after, the US Government started paying farmers to burn their produce and bury their livestock to pump up prices - WHILE Americans starved to death. That is insane. Once WWII started they could see with their own eyes how much of an influence they had over the economy. Some politicians even argued for NEVER ending the War - as it was so great for the economy. To this very day, Krugman STILL insists that War, killing women and children and blowing stuff up, is GOOD for the "economy" ....because you know, it really gets those "Animal Spirits" revved-up. He may not call for the outright murder of people... yet, but he still insists War (totally unproductive wast e of resources and labor) is GOOD for the economy.

It's literally insane IMO. And a lot like Freud's Id and Ego.


Something you may want to keep in mind as this one tiny group of 12 Private Bankers who have total control over our money supply and run our Central Banking Cartel .... headed by none other than one Chairman Bernanke set about selling Real Bonds on your children's Real future labor....in hopes that your "Animal Spirits" get moving along (oh, and to coincidentally bail out their buddies on WallStreet). Unless the system itself changes, your children will be forced (at the point of a gun) to pay back those Bonds. I personally find that sickening.

So, yes, we live in an insane world. Is it any wonder 90% of Americans also believe in a God of one kind or another - so, don't be too shocked our Central Planner in Chief, who ran one of our most prestigious University's, believes in Animal Spirits.

Nice trip into la la land.

 

[joepistole]

Yes, but US produces many more lawyers and wall-street types. :bugeye:

On personal note: This has been good for me in Brazil. I will soon undergo an exploratory operation to find what is the growth from my kidney (80+% probable it is cancer). My recent (and first) tomography scan discovered it. My doctor trained 8 years at JHU hospital, and is very experienced in minimal invasive laparoscopic procedures.

I am sorry to hear this Billy T. I wish you and your family the best.

 

[Michael]

......there are no competing schools of economics. Austrianism is a sham intended to give credibility t......

Tell that to the Chicago School of economic thought Joe. Friedrich August Hayek, an Australian Economist, won the Nobel Prize in economics.

 

[Billy T]

{post 524, in part}... It would be educational to postulate some reasonable monthly rate of interest rate increases back to historic levels and some monthly increase of the debt for the next few years (in Excel) to get a value for the already "built-in required production of new thin-air money." That is a very optimistic estimate* of how much money the Fed would need to be removing from the economy each month by asset sales just to stop increasing the potential money supply.

*It assumes every bond holder does roll their maturing bonds to avoid needing to print money for paying them off also.

A less accurate, but easy approach is to take year long steps with the average interest rate applied to the average of year´s debt. On 23April2012 the interest on the ten year bond was at 1.39% and now, ~ 10 months later, it is at ~1.99%. That is rising at 0.06% per month, but to be conservative (and optimistic), I´ll assume average interest rate increase of LESS than 0.05% / month for years as follows:

2013@ 2.5%; 2014@ 3.0%; 2015@ 3.5% & 2016@ 4.0%, stopping well below the long term average interest rate.
Likewise, conservatively I´ll assume average debt (in Trillions of dollars) is as follows:

2013 $16.5*; 2014 $17.5; 2015 $18.5; 2016 $19.5 as the debt has been growing by more than one trillion dollars annually for last four year, and there is little reason to think debt growth rate increase will be reduced soon with many more baby boomers now collecting Social Security and GDP growing at less than 2%, plus food stamp / disability roles and per capital cost increasing, Medical costs of an aging population increasing, participation rate in the labor force rapidly declining, (Fewer workers per retired person paying into Social Security and average salary of those working declining in real terms etc. and don´t forget the US´s dysfunctional "kick the can down the road" Congress).

Fed´s goal for termination of QE3, unemployment less than 6.5%, seems unattainable – in fact last change was an increase in unemployment from 7.8% to 7.9%. Even the Fed is admitting that the benefits of the QEs per dollar are decreasing and starting to question whether QE3 at 85 billion per month is not doing more harm (increased risk to dollar creditability) than good (productive stimulation of economy or reduction of unemployment rate.)
The QEs are more like a life support system, keeping the “economy patient” from dying.

*Certainly conservative as it is already, only slightly more than a month into 2013, at $16.4 trillion dollars.

Thus, in this conservative model, the annual interest costs (in billions of dollars) are:

2013: 16,500x0.025 = 412.5
2014: 17,500x0.030 = 525.0
2015: 18,500x0.035 = 647.5
2016: 19,500x0.040 = 780.0 Note interest cost problem is growing worse annually. In these four model years the annual interest cost has nearly doubled. The average annual interest cost for these 48 months is: 49.27 billion dollars per month.

So even assuming every holder of Treasure bonds agrees to roll them at maturity (instead of ask for payment of face value), just to prevent the growing cost of interest on the debt from adding to the money supply, Fed must switch from buying 85 billion per month to selling every month ~50 billion dollars of assets even if it had switched to become a net seller on 1 Jan 2013. By time Fed does switch (falsely assuming that it could**) to be net seller it will need to pull from the economy more than the 85 billion it is now adding each month.

---------------
** That “turn off” and complete reversal of the economic life support system would kill the “economic patient” – I.e. send the Western World into world´s worst, longest lasting, depression. The Fed will not do this only conceptual, but not practical, reversal of the thin air printing presses. Instead it will, as I long ago predicted, just keep printing money, until dollar loses almost all its value – Same as happen in Zimbabwe but perhaps not that extreme. At least then the fixed dollar part of the debt will be paid off and like Brazil, and many others did, the US will start over again with the “new dollar” perhaps equal to 1000 of the old “green back” dollars now in use.

 

[Billy T]

Now is negative change as more part-time workers and less overtime in the sluggish economy.

Growing population but lower participation in labor force, yet still an increase.

data of first two graphs combined by product.

The rate of growth in aggregate hours worked had fallen from 2.7% in January of 2012 over January of 2011 to just 1.22% in January of 2013 from January of 2012. The decline in average weekly hours worked accelerates the decline in aggregate hours worked in the economy. At the moment, this trend does not look to be stopping. With taxes rising and the Federal Government cutting spending this year, it's doubtful we see a reversal in trend. We may even see aggregate hours worked go negative year over year by the end of this year.

SUMMARY: As the debt grows by more than a trillion dollars annually, the real economy needed to pay it is growing worst every year. Stocks and commodities are up as the dollars they are measured in are down in real value and corporation mainly make profits from foreign sales, and make too few US jobs.

US is not producing goods and services equal to its import of them. – Why we have growing balance of payments problems and need to borrow from China etc. but China ceased to be a net lender two years ago. So now the Fed just prints the money needed to support US´s over consumption.

A growing population consuming more and working less every year! That is what Greece did, but as less able to borrow, Greece just lied about its debts.

How long do you think over consumption, declining production can last, without dollar collapse? My long standing bet is not past Halloween 2014.

 

[joepistole]

Tell that to the Chicago School of economic thought Joe. Friedrich August Hayek, an Australian Economist, won the Nobel Prize in economics.

I don’t have to. The so called founder of the Chicago School is already on the record as saying that. Friedman, the supposed founder of The Chicago School famously said, there are no differing schools of economics, only good and bad economics. You do know there is a school of economics at the University of Chicago?

As for Hayek and his Nobel Prize, it wasn’t awarded to just Hayek; it was also awarded to Gunnar Myrdal of Sweden in 1974. Hayek shared the prize with Myrdal. And Myrdal had opinions diametrically opposed to those of Hayek. Hayek always thought he was given the award to balance out the political ideology and not for his work. And he appears to have been correct in that belief. Nobel Prize committees sometimes use the awards to make political statements (e.g. awarding the Nobel Peace Prize to a relatively unknown one term senator from Illinois with NO international experience and who had just become POTUS).

And again your notion that a science is defined by the presence of “groupthink” and the lack of dissention and debate is just silly. It couldn’t be further from the truth.

http://en.wikipedia.org/wiki/Groupthink

 

[Michael]

I don’t have to. The so called founder of the Chicago School is already on the record as saying that. Friedman, the supposed founder of The Chicago School famously said, there are no differing schools of economics, only good and bad economics. You do know there is a school of economics at the University of Chicago?

And Keynesian, neo- or otherwise, would fall into the "Bad" Economics. Which is my point. It'd be like saying, there's no differing schools of Psychology, only good and bad Psychology and having one "School of Thought" teach that the Id and Ego exists while another teaches it doesn't exist. Friedman also thinks the Federal Reserve should be abolished, the ideal economic environment is Laissez-faire and is a Libertarian.


But, I digress, I'm curious Joe, when Baron John Maynard Keynes of Tilton in the County of Sussex used the term "Animal spirits" in his 1936 book The General Theory of Employment, Interest and Money (which was titled to sound similar to Eisenstein's General Theory of Relativity) WHAT exactly is he referring to? Do you have a sample of these "Animal Spirits" I can see for myself? Can you point to ANYTHING in nature and say, yup, there it is an Animal Spirit.

Do you know Baron Keynes completely failed to predict the Great Crash of 1929 and lost pretty much everything. You want to know how he made his fortune back? By buttering in close with the Government. So, we can see why someone like Keynes (an anti-Semite by the way) wouldn't like Laissez-faire free-markets, because of them he lost his entire fortune. Of course he loved the State, it made him rich. Want to know who failed to predict the GFC? THE ENTIRE BOARD OF GOVERNORS AT THE FEDERAL RESERVE. Do you understand that when your theories are so incompetent you can't see the greatest economic collapse in 100 years, maybe ever, when it's staring you right in the face - then your 'theories' are proven to be wrong.


Do you see how simple this is? Very simple Joe. But the Federal Reserve isn't actually about making predictions - it's about maintaining the statuesque. Which is why when push came to shove, they SOLD OUT the middle class to maintain the VAST fortunes of the top 0.01%.


Preface to Keynes German Ed of his "General Theory" on Economics

“The theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory. Since it is based on fewer hypotheses than the orthodox theory, it can accommodate itself all the easier to a wider field of varying conditions. Although I have, after all, worked it out with a view to the conditions prevailing in the Anglo-Saxon countries where a large degree of laissez-faire still prevails, nevertheless it remains applicable to situations in which state management is more pronounced. For the theory of psychological laws which bring consumption and saving into relationship with each other, the influence of loan expenditures on prices, and real wages, the role played by the rate of interest—all these basic ideas also remain under such conditions necessary parts of our plan of thought.”

Oh, gee look here, in addition to sympathizing with Fascism, he's also a Psychologist. Tell me Joe, what's "Theory of Psychological Laws" mean?



When "The Great" Federal Chairman Alan Greenspan used the words "irrational exuberance" what exactly IS he referring to? Could you point to something and say, here it is, some "irrational exuberance". Could you give me an example of irrational exuberance Joe? How do you know you're not infected with irrational exuberance? Maybe you're looking at the 14000 Dow and it's giving you a case of irrational exuberance?!

I'd also like to know, which Psychological School of Thought was Keynes? How about Krugman? What about Greenspan? How much Psychology is there in Economics Joe? We already know there are VASTLY different Schools of Thought in Psychology. This is why I said, at the very beginning, Economics is a type of Psychology. Which is why you'll see the great disparities in Schools of Thought. It's a CLEAR SIGN that the discipline is NOT well grounded in Science. AND it's not! It's NOT POSSIBLE to apply the Scientific Method to macroeconomics. IMPOSSIBLE JOE.

DO
YOU
UNDERSTAND
THIS
?


Not possible.


Tell me Joe, when Bernanke talks about "Confidence" in the market, what is this thing he called "Confidence". Could you put some in a test-tube for me? I'd like to take a look myself? Which School of Psychological Thought does Bernanke belong to? The one from Stanford that says putting children in daycare breaks the bond with the mother and is detrimental to their mental development and well-being OR the one that runs the Australian Government and hands out Public Tax Money (aka: Vouchers) to PAY mother to put their 6 WEEK OLD INFANTS into LONG-TERM so-called Daycare.

Because you see Joe, if we happen to have a Sociopath running our Fascist Economy then it's more than likely we're going to see a lot of little sociopaths.... and gee, after 50 years of Progressive Economics, we do.




In closing, if you cared to step back and see the forest for the trees, to actually look at things from a different perspective, you'd find yourself confronted with this simple question: Is the initiation of force moral or immoral? Ethics clearly states it's immoral. It's that simple. If you build your society, of which economics is a fundamental aspect of, as fundamental to society as water is to fish, then you should do so morally. Which is why I continue to tell you, TAKE A LOOK out your palace window Joe. Smell anything yet?

 

[Michael]

Look here, at one of Australia's MOST prestigious School of Economics:

Daycare at Macquarie
(Long Day Care 6 weeks to 5 years)


Sometimes the problems with society (and the economy) are right in front of your face, where they've always been. Which is why you won't see them.

The Faculty of Business and Economics has a worldwide reputation as a leading business and economics school.
Macquarie is ranked in the top two percent of universities globally.

 

[joepistole]

And Keynesian, neo- or otherwise, would fall into the "Bad" Economics. Which is my point. It'd be like saying, there's no differing schools of Psychology, only good and bad Psychology and having one "School of Thought" teach that the Id and Ego exists while another teaches it doesn't exist. Friedman also thinks the Federal Reserve should be abolished, the ideal economic environment is Laissez-faire and is a Libertarian.

LOL, unfortunately for you, mainstream economists don’t share your beliefs about “bad economics”. The facts are that disagreement within a discipline does not mean the discipline is not a science. Groupthink maybe good for your particular ideology, but it does not make for good science.

As for Friedman, he never said he would abolish the Federal Reserve. That is you taking liberties with the truth again. Friedman was definitely a harsh critic of the Fed, and he had some valid criticism for the Federal Reserve. But he never threatened or recommended destruction of the Federal Reserve.

But, I digress, I'm curious Joe, when Baron John Maynard Keynes of Tilton in the County of Sussex used the term "Animal spirits" in his 1936 book The General Theory of Employment, Interest and Money (which was titled to sound similar to Eisenstein's General Theory of Relativity) WHAT exactly is he referring to? Do you have a sample of these "Animal Spirits" I can see for myself? Can you point to ANYTHING in nature and say, yup, there it is an Animal Spirit.

You are taking liberties with the truth again Michael. Keynes was born a commoner. He did not earn his peerage until June of 1942. His peerage (i.e. barony) was awarded to him for his work in the field of economics.

Keynes used the term “animal spirits” to describe human emotions. And human emotions are important as they are drivers of virtually all human decision making. Is there a point to you ranting?

Do you know Baron Keynes completely failed to predict the Great Crash of 1929 and lost pretty much everything. You want to know how he made his fortune back? By buttering in close with the Government. So, we can see why someone like Keynes (an anti-Semite by the way) wouldn't like Laissez-faire free-markets, because of them he lost his entire fortune. Of course he loved the State, it made him rich. Want to know who failed to predict the GFC? THE ENTIRE BOARD OF GOVERNORS AT THE FEDERAL RESERVE. Do you understand that when your theories are so incompetent you can't see the greatest economic collapse in 100 years, maybe ever, when it's staring you right in the face - then your 'theories' are proven to be wrong.

So no one has credibility unless they . . . kind of sort of . . . make a prediction of economic gloom and doom? In order to have credibility as an economist every economist must accurately predict every depression and recession? No one can do that; no one has done that, including Von Mises, Hayek and your fellow demagogues. No one in any of the sciences knows everything. Only God is omniscient.

Economists don’t have credibility unless they are spectacular investors? If that is so, why do you go to such lengths in vain attempts to discredit the most successful investor of the last century, Mr. Warren Buffet who happens to be a Keynesian and did express his reservations about derivative securities and the risk they posed to the economy prior to recent crisis? It takes more than knowledge of economics to be a successful investor, for you to suggest otherwise as you have done is at best extremely naive.

As for your machinations about Keynes alleged hatred of the free market, they are just that machinations and the imaginings of deluded minds. Keynes didn’t hate or bear any ill will towards free markets. Nor was he any more “anti-Semitic” than any other man or woman of the time and place where he lived. And if you object to Keynes work as a civil servant, why are you silent about Friedman’s employment as a civil servant? And Friedman didn’t butter up Ronald Reagan when Reagan gave him government appointments? Here is the bottom line, you don’t have any evidence Keynes butter up anyone or received any untoward rewards or attention from government. Your opinions are very biased and not based on fact.

So in your view, the validity of Keynesian economics boils down to two predictions, one before Keynesian economics had been published, and you ignore everything else that has occurred in the last century? The reason Keynes macroeconomic ideas received so much success this last century, is because they work.

“In the 1930s, Keynes spearheaded a revolution in economic thinking, overturning the older ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands. Keynes instead argued that aggregate demand determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment. He advocated the use of fiscal and monetary measures to mitigate the adverse effects of economic recessions and depressions. Following the outbreak of the Second World War, Keynes's ideas concerning economic policy were adopted by leading Western economies. During the 1950s and 1960s, the success of Keynesian economics resulted in almost all capitalist governments adopting its policy recommendations.” – Wikipedia

It has already been definitively proven to you time and time again, that since the adoption of Keynesian economic policies, economic recessions have been fewer and shorter in duration and economic expansion has been stronger and longer and inflation has remained low. Those are some of the many facts you like to repeatedly ignore.

Do you see how simple this is? Very simple Joe. But the Federal Reserve isn't actually about making predictions - it's about maintaining the statuesque. Which is why when push came to shove, they SOLD OUT the middle class to maintain the VAST fortunes of the top 0.01%.

Hogwash, this is just more of your demagoguery. You are just repeating conservative talking points, ignoring the reality that has been repeatedly demonstrated to you for years now.

Preface to Keynes German Ed of his "General Theory" on Economics

That is more hogwash, it is not true. Instead of spending all your time in right wing misinformation sites and repeating the misinformation they promulgate, you would be better served by actually reading and doing your own research.

Oh, gee look here, in addition to sympathizing with Fascism, he's also a Psychologist. Tell me Joe, what's "Theory of Psychological Laws" mean?

You need to get your facts straight. If you are going to quote Keynes, do it. But don’t repeat the made up trash that is the bread and butter of right wing nut case web sites. This is not the first time you have been found falsely attributing words to an individual. If the facts supported your ideology, you and those who share your ideology would not need to lie.

When "The Great" Federal Chairman Alan Greenspan used the words "irrational exuberance" what exactly IS he referring to? Could you point to something and say, here it is, some "irrational exuberance". Could you give me an example of irrational exuberance Joe? How do you know you're not infected with irrational exuberance? Maybe you're looking at the 14000 Dow and it's giving you a case of irrational exuberance?!

I'd also like to know, which Psychological School of Thought was Keynes? How about Krugman? What about Greenspan? How much Psychology is there in Economics Joe? We already know there are VASTLY different Schools of Thought in Psychology. This is why I said, at the very beginning, Economics is a type of Psychology. Which is why you'll see the great disparities in Schools of Thought. It's a CLEAR SIGN that the discipline is NOT well grounded in Science. AND it's not! It's NOT POSSIBLE to apply the Scientific Method to macroeconomics. IMPOSSIBLE JOE.
DO
YOU
UNDERSTAND
THIS
?
Not possible.
Tell me Joe, when Bernanke talks about "Confidence" in the market, what is this thing he called "Confidence". Could you put some in a test-tube for me? I'd like to take a look myself? Which School of Psychological Thought does Bernanke belong to? The one from Stanford that says putting children in daycare breaks the bond with the mother and is detrimental to their mental development and well-being OR the one that runs the Australian Government and hands out Public Tax Money (aka: Vouchers) to PAY mother to put their 6 WEEK OLD INFANTS into LONG-TERM so-called Daycare.

Because you see Joe, if we happen to have a Sociopath running our Fascist Economy then it's more than likely we're going to see a lot of little sociopaths.... and gee, after 50 years of Progressive Economics, we do.

In closing, if you cared to step back and see the forest for the trees, to actually look at things from a different perspective, you'd find yourself confronted with this simple question: Is the initiation of force moral or immoral? Ethics clearly states it's immoral. It's that simple. If you build your society, of which economics is a fundamental aspect of, as fundamental to society as water is to fish, then you should do so morally. Which is why I continue to tell you, TAKE A LOOK out your palace window Joe. Smell anything yet?

The rest of your post is just a dump of irrational ravings. And as I have told you many times before, I find it odd that you think you are taking the side of the average Joe and Jane when your argument is to let the top 1% do whatever they want without restraint . . . that is the core of Libertarian ideology. And while you are not able to see fact, to see history, others are. That is why Libertarian ideology has been and remains a fringe ideology.

 

[Billy T]

Federal Reserve Bank of St. Louis President James Bullard said he expects U.S. growth to gain enough momentum to let the central bank reduce the pace of asset purchases as early as the middle of the year. “We should think about tapering or adjusting the program,” Bullard said yesterday in an interview in Washington. “If you get some good data for a couple of months, maybe you’d say, ‘Okay, we go back to $75 billion per month instead of $85 billion or something like that.”

The St. Louis Fed president said he expects the U.S. unemployment rate, 7.9 percent in January*, will drop to the “low 7s” by year’s end, which he said would meet the Federal Open Market Committee’s test of “substantial improvement” in the labor market needed to end purchases. “Yet it would be problematic to stop expansion of the balance sheet at year’s end without slowing purchases earlier, Bullard said. “You don’t want that cold turkey aspect to the program,” he said.

“If we got some good signs through the spring or the summer, then I think we could throttle back just a little bit without saying you are going to end the program on any particular day.”

--------------
*Up from 7.8% in December 12 is not moving in the optimistic direction Bullard forecasts. Other FACTS, not optimistic opinions, given in post 532 show US economy is getting worse, not better. Also see conservative** math model in post 533 of growing burden of just the interest payments on the debt.
BTW, the 10 year bond interest rate continues to climb (now at 2.04% not the 1.99% assumed in post 533, less than a week ago.)

** Conservative as it assumes all holders of maturing Treasury bonds will roll them instead of ask for payment of full face value in cash, despite that is just what and increasing number of holders are asking for. Germany is even asking for half of its gold to leave NYC deposit and return home. Speculation in Holland´s press is that Netherlands will soon do the same. Also speculation is that the reason it will take seven years for Germany to get its gold back is that US has "leased out" much of the gold to others. I.e. there are more "owners" than there is gold.

Germany asked for its gold back one month after the US treasury refused to let German officials audit / see it. It is beginning to look like there may be a run of extraction of foreign owned gold from the US before my predicted run on the dollar. Germany is officially the second largest holder of gold, but many believe (including me) that China holds more than Germany does, but already keeps it in China. How much they have is a high state secrete. Now that India has put a tax on gold imports China is both world´s larges buyer and world´s largest producer. Long ago, I suggest China, when ready, will back the RMB with gold for all central banks to make it over night the preferred reserve currency. Brazil, and many others are now buying gold for their reserves, and would prefer interest-paying, gold-backed RMB bonds to physical gold.

 

[Workaholic]

--------------
Germany asked for its gold back one month after the US treasury refused to let German officials audit / see it. It is beginning to look like there may be a run of extraction of foreign owned gold from the US before my predicted run on the dollar. Germany is officially the second largest holder of gold, but many believe (including me) that China holds more than Germany does, but already keeps it in China. How much they have is a high state secrete. Now that India has put a tax on gold imports China is both world´s larges buyer and world´s largest producer. Long ago, I suggest China, when ready, will back the RMB with gold for all central banks to make it over night the preferred reserve currency. Brazil, and many others are now buying gold for their reserves, and would prefer interest-paying, gold-backed RMB bonds to physical gold.

Came across this article about the German/US gold issue:

"The Bernanke shock and Germany’s gold repatriation" by Peter Schiff
http://www.resourceinvestor.com/201...-repatriation?ref=hp&t=precious-metals&page=2

The article is written by Peter Schiff, who some find controversial, however it includes some quotes I find interesting:

None of these theories are substantiated, but no matter how you slice it, Germany's request for its gold does not bode well for the future of the dollar. In fact, the Bundesbank's official statements are all you need to confirm the Germans' waning faith in the U.S.

Last October, after the Bundesbank had requested an audit of its Fed holdings, Executive Board Member Carl-Ludwig Thiele was asked in an interview why the bank kept so much of Germany's gold overseas. His response emphasized the importance of the dollar as the world's reserve currency:

"Gold stored in your home safe is not immediately available as collateral in case you need foreign currency. Take, for instance, the key role that the U.S. dollar plays as a reserve currency in the global financial system. The gold held with the New York Fed can, in a crisis, be pledged with the Federal Reserve Bank as collateral against U.S. dollar-denominated liquidity."

Thiele's statement can lead us to only one conclusion: By keeping fewer reserves in the U.S., Germany foresees less future need for "U.S. dollar-denominated liquidity."

 

[Michael]

Keynes used the term “animal spirits” to describe human emotions. And human emotions are important as they are drivers of virtually all human decision making. Is there a point to you ranting?

Let's stop and think about this for a minute.

Would you say "Human Emotions" are an important aspect of "Economics"?