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

[joepistole]

I knew you would attack source and not disuse his facts or logic. - A very standard response for you.

What facts? The guy has no facts. All he has are a bunch of crackpot beliefs that are not based on facts or reason. The guy doesn't believe the last 7 years were "real" for Christ's sake!

How about you pick something you think this guy says and defend it?

 

[Billy T]

What facts? The guy has no facts. All he has are a bunch of crackpot beliefs ...
How about you pick something you think this guy says and defend it?

OK. There are many facts, even in just this short section:

"... the powers-that-be used whatever methods were available to them to try to stimulate things. Back in those days, it was “cash-for-clunkers,” the new homebuyer tax credits and of course the whole zero-interest-rate thing. Then we had TARP and TALF in ’07 and ‘08. We had conservatorships of Fannie and Freddie, and AIG, which I’m sure nobody really understands. It’s all a “try to keep it together” {effort.}

I think we learned in ’07 and ’08, when Lehman went down, that the powers-that-be can’t allow a liquidation where a financial organization has to sell something, which unfortunately is what happened to Lehman and nearly took the whole system down. So subsequent to that, we’ve never had a liquidation.

Even, for example, in the Cypriot bank crisis, the Cypriot banks never had to sell anything because they just took from the depositors. It looks like the Greek situation that we have today; the Greek banks don’t have to sell anything because the ECB just comes in and supplies the Emergency Lending Authority. I think if you allowed the market to function as it should function, where values are determined by the market, we would see this sort of domino effect where the Greek banks would have to sell their loans off and then the Greek stock market would collapse, the bond market would collapse and then people [in countries] around them would start thinking, “Well, that could happen to me.”

So we have this constant interference by the powers-that-be to not let the markets function properly. In the bond market, it’s through low interest rates. "

Billy T comments:
He is absolutely correct in these facts and his obvious conclusion that the US government, like China's, is afraid to let the market place function normally, without MASSIVE interference. He does not (in this section) mention the most massive in human history intervention by the US government, so I will:

More than two trillion dollars of Fed buying Treasury paper. - A huge increase in bond buying outside of the free market, of course forces interest rates to artificial and historic low levels. (You do know, I assume, that greater demand from any source, for Treasury bonds does increase their prices* and drives interest rates down) Even China has not done more than two trillion dollars worth of interference with normal market place setting of values. This Fed buying is why the Fed owns more than any other holder of Treasury issue (China included). (About 75% of the total, as I recall.)

There are many other true facts stated by Sprot. After you discuss this set, instead of make personal attack on the bearer on facts you do not like exposed, I can mention some more. The full transcript of the interview (not a advertisement as you claim) is here:
http://www.proactiveinvestors.com/c...dont-want-to-admit-theres-a-problem-5751.html

AFAIK, Proactive Investors is an organization total independent from Sprot, but probably like others, me included, shares his general concern for the unprecedented, AND GROWING per capita debt burden being placed on coming generations, by major governments trying to avoid market place setting of values. - They can not afford to pay historic interest rates on their every growing debts - will delay the "day of reckoning" as long as they can, but that is not "forever."

* In this case of 2+ trillion government buying of Treasury debt by the Fed, it is more correct to say that the buying pressure prevented a collapse in bond prices instead of say that the bond prices were forced up, but still true that was the mechanism by which interest rates were driven down to less than 1/4 their historic average and made it possible for the government to carry / finance/ its ever growing debt. Not just the US but most major governments are deep in debt with it an increasing per capita burden on coming generations.

As we said in APL's space department when a satellite was in trouble and not responsive:
The world is in "deep yogurt" financially.

 

[Billy T]

Here is a 3 minute interview video with head of Goldman Sack's Asian division Mark Schwartz, broadcasted by CNN, money: http://money.cnn.com/2015/09/10/investing/china-dumping-us-debt/ -well worth watching if you want better understanding of China's recent impact on global stock markets.

Many are growing concern by China's recent dumping of US debt. For example:

Societe Generale analysts estimate that the People's Bank of China (PBoC) has sold at least $106 billion of reserve assets since its currency devaluation this month (August 2015)

Or:

Investors beware. The world may be heading into a massive recession led by China, Citigroup Chief Economist Willem Buiter said Wednesday.

Or

Bloomberg News reports that China is selling billions of dollars of its massive inventory of U.S. Treasuries

Or

Friday, alongside China's announcement that it had bought over 600 tons of gold in "one month", the PBOC released another very important data point: its total foreign exchange reserves, which declined by $17.3 billion to $3,694 billion. ... virtually the entire delta in Chinese FX reserves come via China's US Treasury holdings. As in they are being aggressively sold, to the tune of $107 billion in Treasury sales so far in 2015.

Below is that graphic. Note that about a year ago China started to have part of its US treasuries held in Belgium. Initially when Belgium's US Treasury holdings amount dramatically increased all at once (more than it annual GDP) was announced, I and many others, guessed the Fed was the true owner, not wanting the world to know how much it dominated the buying of Treasury paper, but it was instead China just transferring into the European market Treasury paper to facilitated dumping it.

Joepistole prefers to attack sources instead of discuss their content, so I give him many to say they are all just BS and / or have no factual content.

 

[joepistole]

Yes, growing the Fed's balance sheet by about three trillion dollars did have a stimulus effect, especially on aggregate stock prices, which some take as "increased wealth." Yes China strongly controls banks, and stock market too.

Well, we were not discussing stock market prices. We were discussing economic growth as reflected in GDP growth, not stock market prices. Do I need to tell you again what GDP is? So either your cognitive abilities are a little fuzzy or you are being deceptive.

What is your problem with the Fed’s balance sheet? Can you point to one problem caused by the Fed’s balance sheet? No you can’t. Because there are none…zip…nada.

I agree both the US and China, manipulate their increase in wealth and make GDP comparisons via the also manipulated exchange rates. IMO if you want to more accurately compare two economies you should not do that by manipulated exchange rates. The PPI is a better means, but still a quite flawed approach. What is more accurate is to compare how much the economies are actually producing - items that can not be so easily manipulated. For example, Tons of food, passenger or ton miles by rail, plane, car and trucks, KWHs of power generation, and trade balances and most importantly HOW THEY HAVE GROWN each year recently.

Who are you agreeing with, certainly no me? The US doesn’t fudge its economic numbers. The US is transparent. China does and China isn’t transparent. As for comparisons, the US doesn’t’ issue comparisons nor does it manipulate its currency exchange rates as does your beloved People’s Republic of China. And you should know that, as it has been discussed ad nauseum in this forum. You know BillyT, the truth matters. Using real numbers, using numbers provided by China which are manipulated to make China look bigger and better, China’s economy is about half the US economy. That’s a fact that hat been proven over and over. It’s one of the many facts you like to ignore.

As for the PPI, the difference between the PPI and the GDP has been repeatedly explained to you over the years. The difference between GDP and PPI is simply this; the GDP is based on real trades and real prices. The PPI you prefer isn’t. The PPI, as you should well know by now, is based upon theoretical trades and theoretical prices. That is the difference. Just because the real numbers using real data isn’t supportive of your beliefs, it doesn’t mean there is anything wrong with them.

China is at least half way finished with by far the largest and fastest urbanization of a rural population in human history. New cities, new rail system, new planes, trucks and cars - the world's largest and fastest growing expansion. Also China is the world's largest maker and market for modern items like cars, cell phones, computers, digital electronics, including cameras, etc. (real items, not stock prices) as a population several times larger than the US urbanizes with real purchasing power of salaries growing by double digits annually. - A rapidly expanding "middle class" of "urbanites."

Maybe that is true and maybe it isn’t. But it isn’t relevant. Let me remind you the discussion was about US economic growth these last few years. China also is the most populated country in the world. The US is third in population size. Here is another thing you are leaving out, the average wage in China is about 4.7 thousand dollars a year. The US has a mature economy, China doesn’t. China is a developing economy. As explained in my last post, just as small incremental nominal gains for stocks equates to huge growth rates, the same is true for China, because China is economically much smaller. It’s a developing country which is somewhat analogous to a developing company. The US is a blue chip, China is a risky startup.

Yes with comparison via manipulated factors like exchange rates you can make China's GDP half or twice that of the US, but when compared by real production, a more accurate picture emerges.

Lol, no, using China’s self-reported GDP numbers which we know are inflated and real market driven exchange rates China’s GDP is about half that of the US. That is the unpleasant fact you are trying to mask over. Your “more accurate” picture is based upon imaginary numbers based on a set of questionable assumptions and beliefs. I’ll take real numbers based on real data every day over fictional numbers based on fictional data. You on the other hand prefer fictional numbers based on beliefs and assumptions and fictional data. The most accurate pictures are based on real data, and not beliefs and assumptions (e.g. your PPI).

For example, China has in the last decade built more miles of high speed rail than the rest of the world, US included, and in last five decades; more housing, more airports, more water transport systems (Their NS water systems moves half the annual flow of the Nile River from the water rich SE to the NE Beijing region, which is dryer than US's SW.) That is real productivity, California can only dream of. That, and many other great boost in Chinese productivity, is not recognized in comparison of economies via manipulated exchanges rates.
Sadly, the US can not even keep AM Track's road bed in good repair - there are less than design speed limits for safety reasons in many stretches. High-way bridges in US collapse, too. China's global influence is increasing, not declining. Average Chinese is 100% sure his life will be materially much better than his parents was. Unfortunately, the typical American expects the opposite.

Well here is the part you are leaving out; those things have already been built in the US. The US has been building that infrastructure for a very long time. China hasn’t. The US already had the infrastructure China is building. China is playing catch-up.

And how is China’s building of infrastructure relevant to a discussion on US economic growth?

How is Amtrack relevant to American economic growth? Amtrack is a partially government funded corporation. And how do you know Amtrack cannot keep its roadbeds in good repair? Where is the evidence BillyT? As usual, you don’t have any.

And how is China’s your assertion China’s influence is growing relevant to a discussion of US economic growth? It isn’t. You are a sinophile BillyT and this is a diversion from the issue under discussion. China is certainly more influential today than it was when Nixon opened relations with China several decades ago, but that isn’t saying much. China began at almost zero.

As for Chinese workers, the average Chinese worker earns about 4,700 dollars a year. That’s about what the average Thai worker earns. Oh yeah, those rich Chinese workers! They have it so much better than their American counterparts! The average worker earns 10 times more. And did I mention all he labor strikes? http://www.wired.com/2015/04/inside-chinese-factories/

Yeah, Chinese workers have such charmed lifestyles. http://www.wired.com/2015/04/inside-chinese-factories/

Life for Chinese workers has changed over the years but change doesn’t equate to better. Are Chinese workers better off as poor farmers working and tilling the land or better being poor factor workers who work long hours under oppressive and abusive conditions and live and work in polluted filth, in conditions reminiscent of the darkest period of The Industrial Revolution? Do you really think that is better than America or better than a poor rural life style previously enjoyed by Chinese workers?

There is a reason why China has rapidly grown from a defeated WWII nation to the world's largest importer and exporter of goods.

Except as usual, you have your facts wrong. The US is the world’s largest importer, not China. Facts do matter BillyT. China is an export dependent economy and that makes China’s economy very vulnerable. China isn’t the world’s largest importer.

 

[joepistole]

China is also the world's largest producer of gold and often the largest importer of gold too, but some times is 2nd to India. China is the world's largest "creditor nation" and the US is the world's largest "debtor nation." China is reducing the dollar denominated paper assets in its reserves mainly by buying up real /physical assets, even in the US. For example, bought Smithfield Hams, the world's largest vertically integrated producer of pork products (That US company owned of hog farms, processing plants, and distribution network) a couple of years ago, but generally China prefers ownership of energy and mineral resources, still mainly in the ground.I understand that difference well. If I did not I could not have noted the fact that wealth is concentrating; However I now also note that most of the US's wealth increase is in the values of stocks, not new production facilities. Paper assets (and their "wealth effect"), unlike physical assets, can nearly vanish in a "black week" as they have in the past; so I am not much impressed by the ~200% gain stocks have enjoyed by / during the QEs /Fed's balance sheet expansion.

And what does all that China love have to do with the growth of the US economy, you know, the original issue under discussion? Nothing, absolutely nothing, it has nothing to do with the subject matter at hand. As previously explained to you, China’s American debt holding is a direct result of its trade surplus with the US. If China wants the American trade, it takes the dollars. China wants and needs American Dollars. The USA accounts for 20 percent of China’s exports. That means China’s economy is heavily dependent upon the US.

And why is gold production relevant? It isn’t. Gold is metal humans dig up at great expense, refine it and rebury in a vault. That has some value? It’s a silly human behavior. Unfortunately for you BillyT gold has no economic value other than some people like to hold it and own it on the hope that someday everything will go to hell in a handbag and we will revert to the dark ages.

And how do you know most of America’s wealth increase is attributable to its stock market? Where is your evidence? Two, the discussion was about income as represented by the GDP. That’s a little different than a discussion of wealth. So by attempting to redirect the conversation to wealth, you are being a little misleading or are being intellectually dishonest or slothful. The growth in American GDP has very little to do with the stock market and everything to do with goods and services being produced. I suggest you revisit the definition of GDP.

I tend to look at real achievements, like moving half the Nile's annual water flow to China's very dry NE, a greater separation than between water rich Washington State and water rationing California.How is this real difference* reflected in your exchange rate based comparison of China and the US?
You need to look at real achievements, not just wall-street's growing wealth, pumped up by Fed's growing holdings of US treasury's paper promises.Nonsense if that wealth is mainly associated with Wall Street's paper assets. Their value can change by + or - 3% in an hour - but true wealth in the economy only slowly changes - on time scale of weeks if not longer. Typically caused by technological innovation. For example the introduction of "containers" made the economy truly richer by reducing shipping cost. Or Hall's invention of electrolytic refining of Aluminum, converted that metal from much more expensive than gold, into soft-drink cans many just throw in the trash.

What you do BillyT is get lost and fixated on meaningless irrelevant detail which you do not understand and your lack of subject matter knowledge leads you to some bizarre and nonsensical conclusions (e.g. the collapse of the US Dollar). As previously explained and endlessly explained to you, what you are trying to do is mix measures of value with measures of production. You are conflating dissimilar things. There are measures of production and there are measures of value. GDP is a measure of value.

China is a developing economy. The US is a developed or mature economy. The US has been building bridges, roads and dams on a large scale for a very long time. China hasn’t. China is playing catch-up. You cannot honestly and intelligently compare the two as you have done. China is building infrastructure which didn’t exist. The US has already has that infrastructure. But again, that has nothing to do with the fact the US economy has been growing for the last 7 years – you know the original topic?
As I have written many times now, you are conflating wealth with income. GDP is a measure of income, not wealth. The growth in US GDP has little to do with the stock markets. GDP is a measure of the value of all goods and services produced during a period of time. It isn’t a measure of stock market returns as you believe it is.
Below is a chart of US GDP growth by industry sector. Show me the stock market sector, there isn’t one.



Once again for your edification, this is how GDP is calculated:
GDP = C + G + I + (X - M)
In this case the C is represented by Household Consumption which is $304.
The G refers to Government Spending which is $156.
I is gross private investment and is $124.
(X - M) is the net exports and in the table is shown to be $18.
http://www.econport.org/content/handbook/NatIncAccount/CalculatingGDP/Examples.html

And this is how GDP is defined (You should know this given how many times it has been discussed and explained):
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. -https://www.google.com/?gws_rd=ssl#q=gdp+definition
Now show me where in that equation does it include stock market price changes?

 

[joepistole]

BTW Hall did that after the Washington Monument in DC was completed so its top is a very tiny pyramid of very expensive chemically refined aluminum. Stock values changing are NOT real changes in society's wealth.

Changes in stock values do change the value of wealth. Stock certificates represent an ownership interest in a company. It’s how businesses are valued. That valuation includes the value of all the assets held by those corporations. So contrary to your belief, stock values do affect the wealth of individuals and nations, for you to believe otherwise in nonsensical and counterfactual. Using your logic, if you want to call it that, a person who owns a business or a home or a car which appreciates in value isn't wealthier and that is just plane silly. If I buy something and subsequently sell it for more than I paid for it, that's income and income is a portion of wealth. It's incremental wealth. It's what businesses do around the world every day.

But that has absolutely nothing to do with how GDP is calculated. Unfortunately for you BillyT there is no great conspiracy here. The unfortunate fact for you is the US economy has grown and continues to grow and the US Dollar remains very strong. And all this chaff will not mask the unpleasant truth for you.
And I have no idea why you think the chunk of aluminum on top of the Washington Monument is relevant to this discussion. Yeah, I know aluminum was once very expensive and now it isn’t. But that isn’t relevant to this discussion. It has nothing to do with the fact the US economy has grown and continues to grow since The Great Recession ended and the fact the economic remedies employed by the US worked.

SUMMARY: Make a real comparison, not one made by manipulated exchange rates.

The only one manipulating exchange rates BillyT is your beloved China. The only one wanting to make fictitious comparisons is you. Your PPI is based on fictionalized data. The GDP is based on real data, real transactions using real prices. Your PPI isn’t.

- - - - - - - -
* Another "real difference" is US's rail system, which is still running with engines and cars that belong in museums, instead of the world's largest network of highest speed trains and rails.

Well that is your belief, but like your other beliefs, it isn’t rational or well informed. The US rail system is partly private and partly public. Passenger rail is partially funded by federal and local government. Some US communities have invested in rail transportation systems like the Bay Area Rapid Transit (BART) and the New York Subway. BART is relatively new, it was constructed in the 70’s and runs electrically cars, similar to the New York Subway. https://simple.wikipedia.org/wiki/Bay_Area_Rapid_Transit

And then there is Amtrak, which is corporation which partially funded by the federal government and runs diesel powered trains across the country, but primarily up and down the East coast. The reason the US government took over passenger train travel is because passenger trains were going the way of the Dodo bird. They weren’t profitable. But people, Americans, still longed for the nostalgia of train travel. If you have ever traveled on a train, you would know it’s a great experience. That’s why diesel passenger trains still exist, nostalgia, that plus the fact freight train companies, private companies, have fought against a high speed passenger train. Currently, privately owned freight train companies own he tracks used by Amtrak. If the US were to build a high speed train system, new tracks would need to be built and freight train companies would lose the revenue they now receive from Amtrak for the use of their railroad tracks. That's probably the single largest reason why the US has not built a high speed transnational rail system. It has absolutely nothing to do with the US's ability to pay for it or any other inability you believe exists.

If the US wanted high speed national train service, the US certainly has the ability to make it happen. But technology is rapidly changing and it is very likely that within a few years your high speed trains will become obsolete because of these new technologies. China’s high speed trains you are so fond of will become obsolete soon. What will you then say about China?

In the US freight trains are entirely within the realm of private industry and they always have been. Commercial freight trains deliver goods around the country and to neighboring states every day and they do so because the diesel trains they operate are commercially viable. If high speed freight trains were commercially viable, I'm sure we would see them. But you don't see them even in your beloved China.

 

[Billy T]

Data, in millions of dollars, from: http://www.treasurydirect.gov/govt/reports/pd/mspd/2015/opds082015.prn
Public Debt on 31/08/2015:
Held by public: 13,119,753; Held governmentally (Fed & Social Security, mainly): 5,031,397; Total = 18,151,150
Public Debt on 31/01/2015:
Held by public: 12,984,930; Held governmentally (Fed & Social Security, mainly): 5,097,364;Total = 18,082,294
------ Billy T notes:
18,151,150 - 18,082,294 = 68,856 billion dollar increase in seven months, or 9,836.57 billion dollar deeper hole each month.
If that rate just continues (does not accelerate) that is 110,038.84 Billion dollar increase in US debt in 2015, only.
Or 110,038,840 million dollars increase in 2015. Now on 4 July 2015* there were 321,700,000 Americans.
Thus ONLY THE 2015 INCREASE of each America's debt will be:
110,038,840 / 321,700,000 = 0.342,054,21 dollars.

Roughly speaking, if you did not want to increase the debt burden added to you children, etc. you need to increase your tax payment (on average) by 34.2 cents. You are not going to do that, I bet, so the per capita debt will continue to climb and become much harder to finance (carrying cost) if:
(1) interest rates double to only half their long term averages; OR,
(2) China continues to reduce its holdings of US treasury paper - I.e. sell /dumps / more than its dollar trade surplus.

IE The US seems to be, as we said at APL about a very sick satellite: in Deep Yogurt.
As a wise man once said: If you want to get out of a hole, stop digging it deeper.

* If you want US population up to the minute, the US census department has a "population clock" at: http://www.census.gov/popclock/
Also see the "debt clock" at: http://www.theusdebtclock.com/
Currently it is ticking up at 45 dollars and 49 cents PER SECOND!
Here you can see the break down of the debt as it changes: http://www.usadebtclock.com/
Some things change slowly. For example your share of the federal debt is now: 56,415 dollars, but growing; however as only tax payers will pay it the share per tax payer is: 112.851 dollars

But don't worry, without giving any facts, Joepistole assures us, all is well and getting better.

 

[joepistole]

OK. There are many facts, even in just this short section:
"... the powers-that-be used whatever methods were available to them to try to stimulate things. Back in those days, it was “cash-for-clunkers,” the new homebuyer tax credits and of course the whole zero-interest-rate thing. Then we had TARP and TALF in ’07 and ‘08. We had conservatorships of Fannie and Freddie, and AIG, which I’m sure nobody really understands. It’s all a “try to keep it together” {effort.}

OK, except for dates so far ok.

I think we learned in ’07 and ’08, when Lehman went down, that the powers-that-be can’t allow a liquidation where a financial organization has to sell something, which unfortunately is what happened to Lehman and nearly took the whole system down. So subsequent to that, we’ve never had a liquidation.

Now what does that mean exactly? Lehman went down. It was liquidated. It went into Chapter 7 bankruptcy. It wasn’t Lehman which nearly took the whole system down. It was all the other financial institutions your man fails to acknowledge which nearly took the entire system down.

What does your man mean when he says we have not had liquidation since Lehman? We most certainly have. It’s called bankruptcy. Companies go bankrupt all the time. And more specifically, there have been almost 500 bank bankruptcies since 2009. Most of them occurred in 2009. So contrary to you man banks were subsequently liquidated (i.e. sold off). So your man is factually incorrect. http://www.bankrate.com/finance/savings/map-of-failed-banks.aspx

Even, for example, in the Cypriot bank crisis, the Cypriot banks never had to sell anything because they just took from the depositors. It looks like the Greek situation that we have today; the Greek banks don’t have to sell anything because the ECB just comes in and supplies the Emergency Lending Authority. I think if you allowed the market to function as it should function, where values are determined by the market, we would see this sort of domino effect where the Greek banks would have to sell their loans off and then the Greek stock market would collapse, the bond market would collapse and then people [in countries] around them would start thinking, “Well, that could happen to me.”

Well, I don’t know if anyone has told your man, but the Cypriot state has absolutely nothing to do with events in the US. But that’s a nice recital of libertarian beliefs and those beliefs are not grounded in fact or reason. As your man clearly states, he believes the world would have been much better off in economic ruin. He would have let the economies of the world crash. He applauds economic destruction, because he believes a new libertarian nirvana will magically arise from the ashes.

The world, and more specifically the Greeks, didn’t and done share his glorious vision of mass unemployment, depression and widespread prolonged poverty. That’s why they acted to prevent the collapse of their economy.
So while you apocalypse devotees are all for economic chaos and disaster, most folks don’t share your zealous lust for destruction and massive and prolonged poverty.

So we have this constant interference by the powers-that-be to not let the markets function properly. In the bond market, it’s through low interest rates. "

Well we have constant “interference” in our economy because over centuries we have learned how to take care of our economy. Like other things we value, most of us want to take care of our economies (libertarians exempted) so that we all can prosper and avoid deep and prolonged depressions like The Great Depression. Silly us, prefer longer periods of economic prosperity and shorter periods and fewer recessions.

Billy T comments:
He is absolutely correct in these facts and his obvious conclusion that the US government, like China's, is afraid to let the market place function normally, without MASSIVE interference. He does not (in this section) mention the most massive in human history intervention by the US government, so I will:

Well that is your belief. But your belief is not grounded in empirical evidence or reason. That’s why no credible economist believes this crap. Show me some credible evidence which supports your belief your man is correct. You can’t, because it doesn’t exist.

And as been repeatedly pointed out to you and ignored by you, the US market is a free market. The US government doesn’t mandate prices. The US doesn’t control its markets like China or is currency. The US government does manage its money supply as other nations do. But it doesn’t fix the value of its currency as China does.

In the US markets are regulated to prevent fraud. But that isn’t the “massive” regulation you imagine.

More than two trillion dollars of Fed buying Treasury paper. - A huge increase in bond buying outside of the free market, of course forces interest rates to artificial and historic low levels. (You do know, I assume, that greater demand from any source, for Treasury bonds does increase their prices* and drives interest rates down) Even China has not done more than two trillion dollars worth of interference with normal market place setting of values. This Fed buying is why the Fed owns more than any other holder of Treasury issue (China included). (About 75% of the total, as I recall.)

Wrong again BillyT, the Fed purchased debt on the secondary market (i.e. the free market). And yeah, that can drive interest rates down. But that isn’t why the Fed took that action. The Fed bought debt, public and private debt, in order to provide liquidity to banks. So banks could pay their bills and loan money to individuals and businesses so those businesses and individuals could pay their bills. And it worked, and unfortunately for you the proof is in the pudding (i.e. the results).

And for all your complaining about it, you cannot cite even one adverse thing which has resulted from the Fed’s purchases of debt. As has been endlessly pointed out to you, the Fed achieved its objective. It, combined with fiscal actions taken in the waning days of the Baby Bush administration and the Democratic administration and congress which followed, worked. It prevented a glorious and prolonged great depression. It reversed the economic decline and resulted in a growing economy, an economy that has since nearly reached full employment and has grown consistently for the last 7 years.

As for China, China’s announced economic stimulus was about twice the size, in relative terms, to the measures taken by the US. As previously and repeatedly pointed out to you, China’s economy and the US economy are very different and have differing problems. One is a developing nation; the other is a developed nation. One is an immature economy; the other is a mature economy.

Do you not remember my recent post in this thread in which I reference China’s announcement it will be spending 1.5 trillion of its cash reserve next year to stimulate its economy?

There are many other true facts stated by Sprot. After you discuss this set, instead of make personal attack on the bearer on facts you do not like exposed, I can mention some more. The full transcript of the interview (not a advertisement as you claim) is here:
http://www.proactiveinvestors.com/columns/sprott-s-thoughts/5751/eric-sprott-the-powers-that-be-dont-want-to-admit-theres-a-problem-5751.html

Oh my, another conspiracy. That's nonsense and that is why credible people, people who have some subject matter knowledge not taken from a conspiracy web site, don' few Sprott as credible. That's why Forbes called him a fanatic.

AFAIK, Proactive Investors is an organization total independent from Sprot, but probably like others, me included, shares his general concern for the unprecedented, AND GROWING per capita debt burden being placed on coming generations, by major governments trying to avoid market place setting of values. - They can not afford to pay historic interest rates on their every growing debts - will delay the "day of reckoning" as long as they can, but that is not "forever."

Yeah, as I have pointed out over the years, the world of full of crackpots.

AFAIK * In this case of 2+ trillion government buying of Treasury debt by the Fed, it is more correct to say that the buying pressure prevented a collapse in bond prices instead of say that the bond prices were forced up, but still true that was the mechanism by which interest rates were driven down to less than 1/4 their historic average and made it possible for the government to carry / finance/ its ever growing debt. Not just the US but most major governments are deep in debt with it an increasing per capita burden on coming generations.

Well if that is so, then why do interest rates remain low? New debt is auctioned off every week. That 2 trillion dollar debt has been purchased. So whatever effect it had on interest rates is long gone. The Fed ended its bond buying a year ago…oops.
http://www.reuters.com/article/2014/10/29/us-usa-fed-idUSKBN0II20O20141029

As we said in APL's space department when a satellite was in trouble and not responsive:
The world is in "deep yogurt" financially.

That’s fantasy BillyT.

 

[joepistole]

Data, in millions of dollars, from: http://www.treasurydirect.gov/govt/reports/pd/mspd/2015/opds082015.prn
Public Debt on 31/08/2015:
Held by public: 13,119,753; Held governmentally (Fed & Social Security, mainly): 5,031,397; Total = 18,151,150
Public Debt on 31/01/2015:
Held by public: 12,984,930; Held governmentally (Fed & Social Security, mainly): 5,097,364;Total = 18,082,294
------ Billy T notes:
18,151,150 - 18,082,294 = 68,856 billion dollar increase in seven months, or 9,836.57 billion dollar deeper hole each month.
If that rate just continues (does not accelerate) that is 110,038.84 Billion dollar increase in US debt in 2015, only.
Or 110,038,840 million dollars increase in 2015. Now on 4 July 2015* there were 321,700,000 Americans.
Thus ONLY THE 2015 INCREASE of each America's debt will be:
110,038,840 / 321,700,000 = 0.342,054,21 dollars.

Roughly speaking, if you did not want to increase the debt burden added to you children, etc. you need to increase your tax payment (on average) by 34.2 cents. You are not going to do that, I bet, so the per capita debt will continue to climb and become much harder to finance (carrying cost) if:
(1) interest rates double to only half their long term averages; OR,
(2) China continues to reduce its holdings of US treasury paper - I.e. sell /dumps / more than its dollar trade surplus.

IE The US seems to be, as we said at APL about a very sick satellite: in Deep Yogurt.
As a wise man once said: If you want to get out of a hole, stop digging it deeper.

* If you want US population up to the minute, the US census department has a "population clock" at: http://www.census.gov/popclock/
Also see the "debt clock" at: http://www.census.gov/popclock/
Currently it is ticking up at 65 dollars and 61 cents PER SECOND!
Here you can see the break down of the debt as it changes: http://www.usadebtclock.com/
Some things change slowly. For example your share of the federal debt is now: 56,415 dollars, but growing.

But don't worry, without giving any facts, Joepistole assures us, all is well and getting better.

LOL, yeah, except for all those nasty little facts you like to ignore. You know, those pesky unemployment numbers. The unemployment rate going from 10% to 5%. The fact hundreds of thousands of jobs are being added to the economy every month. The fact that US GDP has been growing steadily and consistently for 7 years now since the implementation of fiscal and monetary stimulus measures. And US debt services is less than 3% of GDP. Yeah, except for all those facts and more.

And I have repeatedly explained in great detail how you are overstating US debt, and how you don't understand US debt. But hey, you aren't one to let fact and reason get in your way.

 

[Billy T]

... Lehman went down. It was liquidated. It went into Chapter 7 bankruptcy. It wasn’t Lehman which nearly took the whole system down. It was all the other financial institutions your man fails to acknowledge which nearly took the entire system down.

Yes that was his point. IE it was dangerous to let a major financial institution fail, as the paper they had issued was nearly worthless and caused many other financial institutions to book big losses. - As he said the TPTB learned their lesson and never let another significant financial firm go bust. Certainly minor institutions and businesses have gone bankrupt - He is speaking of liquidations in the global financial system.

...the Cypriot state has absolutely nothing to do with events in the US

Not true it had some impact, but he was mainly illustrating the lesson learned - Can not let major institutions, or government go bust without significant risk of a propagating "domino effect" in the global financial system - Why the EU & IMF are bailing out Greece and the Ukraine, etc.
Really, as is obvious to almost all - They are "throwing good money after bad" as that "kicks the disaster can" down the road a few years.

...As your man clearly states, he believes the world would have been much better off in economic ruin. He would have let the economies of the world crash.

No not what he said at all. Just the opposite: He said the power that be learned the Lehman lesson well - would never again let a major financial player go bust as doing that is a large risk of global disaster - He is not even suggesting he want global disaster.
The fact that you imply by not bailing out Lehman the world would be in "economic ruin" / a "financial disaster" (as it almost was) only confirms the validity of his POV - namely the powers that be, learned they must kick the can down the road - not let a major financial institution go bust, even if they must "eat" a lot of paper that will be nearly worthless.

...Well we have constant “interference” in our economy because over centuries we have learned how to take care of our economy.

Get your facts straight. Only for less than 50 years has governments thought massive accumulation of debt and printing of "thin air" money was smart. Even the WWII debt was rapidly paid down, as all economists 50 or so year ago believed in "sound money" not the "thin air" money, some modern economist, think is wise policy which can continue forever, despite the steady upward climb of the per capita debt, faster than median salary purchasing power is increasing.

Are you not the least concerned that wealth is concentrating, and the middle class is shrinking; higher paying, 40hour/ week, jobs with good "fringe benefits" are being replace by Big Mac jobs with few benefits; Tax payer's share of the national debt has now climbed to more than 110 thousand dollars each and is still rising - an unstable and unpayable amount, except by large decrease in the value of the dollar.

These and many other fact (especially declining US influence in the world, as China's rises* and the chronic US trade deficits, that are growing, most years) concern me. Perhaps you will tell me where you bought your rose tinted glasses?

* As a recent glaring example of this relative shift in global influence, Uncle Sam, try as he might, could not stop even his closest friends from rushing to join China's AIIB, the rival to the US's controlled world bank.

BTW, in post 1287 I accidently said:
" ... however as only tax payers will pay it the share per tax payer {share of the growing national debt} is: 112.851 dollars."
I of course meant: 112,851 dollars - Here in Brazil, and many other places, the roles of the period and comma are reversed in financial statements.

 

[Billy T]

... except for all those nasty little facts you like to ignore. You know, those pesky unemployment numbers. ...

Yes I do tend to ignore the BLS's most quoted values as for example if you have a part-time job parking cars at foot ball stadium less than two hours per week you are "employed" and if you have been so discouraged by months of unsuccessful job applications and interviews, that you quit looking, you are not counted as "unemployed" no matter how much you want to work. etc. Some more reasonable definitions, IMO put the unemployment rate at 23%.

Ask any recent college grad how easy it is to get any job but a no-future "Big Mac" or part time job. Many are taking them when they can, as embarrassed to keep living in dad's basement, and thus get counted as "employed." As they say: There are three types of lies: lies, damn lies, and BLS statistics.

 

[joepistole]

Yes that was his point. IE it was dangerous to let a major financial institution fail, as the paper they had issued was nearly worthless and caused many other financial institutions to book big losses. - As he said the TPTB learned their lesson and never let another significant financial firm go bust. Certainly minor institutions and businesses have gone bankrupt - He is speaking of liquidations in the global financial system. Not true it had some impact, but he was mainly illustrating the lesson learned - Can not let major institutions, or government go bust without significant risk of a propagating "domino effect" in the global financial system - Why the EU & IMF are bailing out Greece and the Ukraine, etc.

He clearly advocated letting major institutions fail. The “powers that be” clearly understood the risk in letting Lehman go under. Republican congressmen didn’t. Your man didn’t constrain or mention anything about the “global financial system”. He referenced specific banks, Cypriot banks. He believes as he stated in your citation, the banks should not have received support and should have been allowed to fail. He lamented the fact Lehman was bailed out. Libertarians and your man Eric Sprott is a Libertarian vehemently object to government interference with the free market (e.g. bailing out banks) for any reason.

Libertarians like some of our religious fellows believe adherence to the faith cures all ills. Fact and reason be damned.

There is no magic in liquidation. There is no economic law which says liquidation must occur in order to regain stability. The problem banks faced, was capitalization. They were insufficiently capitalized given the risks inherent in their investment portfolios. It matters little how they were recapitalized, through government loans or private investors, banks needed recapitalization. In the US banks were recapitalized in rather short order. In Europe it took a while and recapitalization was at first spotty.

So his assertion that banks are somehow unstable because they were not liquidated is just plain silly and nonsensical. I suggest you go back and read what he said and what you wrote. You are clearly doing some revising. You are not being honest BillyT.

You and your man have clearly advocated the libertarian belief in nonintervention. Your man isn’t arguing for intervention as you now claim. He has argued for noninterference that means letting the banks go under.

And his claim wasn’t conditioned or limited as you now claim. Sprott said there have been no further liquidations and per my last post, that is clearly untrue. In the US alone there has been nearly 500 bank liquidations since The Great Recession.

You wrote citing your man Sprott: “Even, for example, in the Cypriot bank crisis, the Cypriot banks never had to sell anything because they just took from the depositors. It looks like the Greek situation that we have today; the Greek banks don’t have to sell anything because the ECB just comes in and supplies the Emergency Lending Authority. I think if you allowed the market to function as it should function, where values are determined by the market, we would see this sort of domino effect where the Greek banks would have to sell their loans off and then the Greek stock market would collapse, the bond market would collapse and then people [in countries] around them would start thinking, “Well, that could happen to me.” That is a classic libertarian noninterventionist position. You aren’t being honest BillyT.

Well clearly Mr. Sprott doesn’t understand the Greek debt crisis; either that or Sprott is being disingenuous. The problem in Greece wasn’t rooted in its banks but in its government. It was government debt, not private or bank debt which caused the crisis. And the Greek government bond market did collapse. Greece’s problems weren’t rooted in its banks but in its government and the fact the Greek state is no longer completely sovereign and no longer controls its currency. It is an EU member state.

Really, as is obvious to almost all - They are "throwing good money after bad" as that "kicks the disaster can down the road a few years.No not what he said at all. Just the opposite: He said the power that be learned the Lehman lesson well - would never again let a major financial player go bust as doing that is a large risk of global disaster - He is not even suggesting he want global disaster. Get your facts straight. Only for less than 50 years has governments thought massive accumulation of debt and printing of "thin air" money was smart. Even the WWII debt was rapidly paid down, as all economists 50 or so year ago believed in "sound money" not the "thin air" money, some modern economist, think is wise policy which can continue forever, despite the steady upward climb of the per capita debt, faster than median salary purchasing power is increasing.

And where do you get this notion of “good money after bad”? You seem to be speaking out of both sides of your mouth. On one hand you are now saying the investments in failing banks was need and out of the other side you characterize that action as “throwing good money after bad”. So which is it? Your man Sprott clearly states in the next paragraph he believes banks should be allowed to fail. He by no means endorsed rescuing Lehmann Brothers.

Are you not the least concerned that wealth is concentrating, and the middle class is shrinking; higher paying, 40hour/ week, jobs with good "fringe benefits" are being replace by Big Mac jobs with few benefits; Tax payer's share of the national debt has now climbed to more than 110 thousand dollars each and is still rising - an unstable and unpayable amount, except by large decrease in the value of the dollar.

What have I ever written which would allow anyone to conclude I endorse the extreme disparity of income and wealth in the US? I have decried income and wealth disparity for many decades now. Income and wealth disparity doesn’t justify or rationalize your beliefs. And if you read the last BLS report you would know your machinations with respect to so called Mac jobs hasn’t been realized. It is fairly typical in the early stages of recovery to see the so called Mac jobs improve first and we saw that with this recovery. And as the economy has grown we have seen a growth in higher income jobs as evidenced by the last employment the economy has grown we have seen a growth in higher income jobs as evidenced by the last employment report.

And your per capita debt numbers are bogus too and for all the reasons that have been repeatedly spelled out for you every few months. It’s another one of those statistics you don’t like so you ignore.

So once again for your edification:
US Public Debt: Top of Form
13,156,747,896,787
Less Federal Reserve Notes: 2,461,943,000,000
Net Debt: 10,656,747,896,787
US Population: 321,732,600
US per capita debt: 33,123.00 dollars

That’s a far cry from your 110k dollars. But it’s the correct number.

These and many other fact (especially declining US influence in the world, as China's rises* and the chronic US trade deficits, that are growing, most years) concern me. Perhaps you will tell me where you bought your rose tinted glasses?* As a recent glaring example of this relative shift in global influence, Uncle Sam, try as he might, could not stop even his closest friends from rushing to join China's AIIB, the rival to the US's controlled world bank.

Except none of that has happened, China has created a new financial entity, but its success remains to be seen. The US remains the most powerful and influential nation in the world and its influence isn’t waning. Russia remains under some very tough sanctions. The US led collation tightened sanctions on Iran to the point where it has capitulated. It’s currency is the most held reserve currency. China’s militarism isn’t wining any friends with its neighbors. Japan is rearming and preparing is military. There is a quit arms race underway in the South China Sea. India’s prime minister, has moved away from China and towards a warmer relationship with the US. The US doesn’t have territorial designs on any country, China does and China’s neighbors are not oblivious to that fact.

One of the things you don’t understand and perhaps don’t want to understand is when you are a reserve currency, trade deficits are part of the gig. It isn’t a bad thing. Context is everything.
http://www.cato.org/publications/commentary/are-trade-deficits-really-bad-news

 

[joepistole]

Yes I do tend to ignore the BLS's most quoted values as for example if you have a part-time job parking cars at foot ball stadium less than two hours per week you are "employed" and if you have been so discouraged by months of unsuccessful job applications and interviews, that you quit looking, you are not counted as "unemployed" no matter how much you want to work. etc. Some more reasonable definitions, IMO put the unemployment rate at 23%.

Well you can believe what you will, you have clearly demonstrated that. But in the real world where most of us live, the unemployment rate is 5.1%. And yes, if you are employed, the BLS, the keeper of labor statistics, doesn't report employed people as unemployed...fancy that! It only counts unemployed people as unemployed. Words do have meanings BillyT. Unemployed means unemployed. It doesn' mean employed part-time, it means unemployed. As you should well know by now, the US (i.e. the BLS) also reports part-time workers, but they are reported separately.

Below is a portion of the text from the latest BLS labor report:

"The number of persons employed part time for economic reasons (sometimes
referred to as involuntary part-time workers) was little changed in August
at 6.5 million. These individuals, who would have preferred full-time
employment, were working part time because their hours had been cut back or
because they were unable to find a full-time job. (See table A-8.)
In August, 1.8 million persons were marginally attached to the labor force,
down by 329,000 from a year earlier. (The data are not seasonally adjusted.)
These individuals were not in the labor force, wanted and were available
for work, and had looked for a job sometime in the prior 12 months. They
were not counted as unemployed because they had not searched for work in
the 4 weeks preceding the survey. (See table A-16.)
Among the marginally attached, there were 624,000 discouraged workers in
August, down by 151,000 from a year earlier. (The data are not seasonally
adjusted.) Discouraged workers are persons not currently looking for work
because they believe no jobs are available for them. The remaining 1.2
million persons marginally attached to the labor force in August had not
searched for work for reasons such as school attendance or family
responsibilities. (See table A-16.)" - BLS

The bottom line here BillyT is you ignore data which clearly demonstrates your beliefs are wrong. Even if you classify all part-time workers as unemployed, you still don't get anywhere near the 23% unemployment you believe exists.

Ask any recent college grad how easy it is to get any job but a no-future "Big Mac" or part time job. Many are taking them when they can, as embarrassed to keep living in dad's basement, and thus get counted as "employed." As they say: There are three types of lies: lies, damn lies, and BLS statistics.

Oh, and how do you know this BillyT? You live in Brazil? So how many American college grads do you meet in Brazil? I have met a number of college grads not one has had difficulty obtaining employment. But anecdotal stories are hardly convincing and it's too early to measure how many 2015 college graduates will find employment. None of this is new. College grads have always been a bit nervous about obtaining a job. And much of it is dependent upon the field of study. The market for anthropologists or historians probably isn't that great. But if you are an engineering major, or a business major, well that is a different story.

 

[Michael]

Japan's Economic Outlook (Quarterly)

What Will Happen if China's Economic Bubble Bursts? Japan's economy has entered a temporary lull, but according to our outlook, will avoid recession.(No.186 Update)[Summary]. Prepared by Daiwa Institute of Research, the second largest brokerage in Japan.

Of all the possible risk scenarios the meltdown scenario is, realistically speaking, the most likely to occur. It is actually a more realistic outcome than the capital stock adjustment scenario. The point at which the capital stock adjustment is expected to hit bottom is at a much lower point than in the previously discussed capital stock adjustment scenario (see Chart 8). As shown in the bottom right portion of this chart, the actual economic growth rate will continue to register considerably negative performance. If China’s economy, the second largest in the world, twice the size of Japan’s, were to lapse into a meltdown situation such as this one, the effect would more than likely send the world economy into a tailspin. Its impact could be the worst the world has ever seen.

Who knows BillyT, you may get your prediction after all. Albeit, a bit delayed. I on the other hand believe Americans (and Japanese) will simply continue to slowly normalize to a lower standard of living. Anything that upsets the statuesque will quickly be papered over. As long as we have a planet to pollute with oil (and importantly, lots of oil) then there's no reason I can think of for this not to continuing for decades.

 

[joepistole]

Japan's Economic Outlook (Quarterly)

What Will Happen if China's Economic Bubble Bursts? Japan's economy has entered a temporary lull, but according to our outlook, will avoid recession.(No.186 Update)[Summary]. Prepared by Daiwa Institute of Research, the second largest brokerage in Japan.
Who knows BillyT, you may get your prediction after all. Albeit, a bit delayed. I on the other hand believe Americans (and Japanese) will simply continue to slowly normalize to a lower standard of living. Anything that upsets the statuesque will quickly be papered over. As long as we have a planet to pollute with oil (and importantly, lots of oil) then there's no reason I can think of for this not to continuing for decades.

Well, we are a long way away from BillyT's prediction. As I have repeatedly said over the years there really is only two ways the US Dollar could suddenly collapse, a global catastrophe which wipes out mankind, in which case it really doesn't matter, or Republicans cause an intentional debt default as they have repeatedly threatened to do in the past. But that isn't what BillyT is predicting. He is predicting that one day people around the world and decide to sell all their US Dollars en masse because he believes he US debt situation is untenable. And it isn't, US debt isn't anywhere near untenable.

 

[joepistole]

What I do think will happen over the course of the next 50 to 100 years is a transition from a labor based economy to an ownership based economy. Human labor will have less and less value. So humans will need to find other means of producing income. And in the next 5 to 10 years we will see the first wave of this transition when automated vehicles begin to show up on our roads and in the process displacing drivers. Truck driving is a major source of employment.

This transition will require some innovative thinking. I'm guessing tax credits will be one way in which this transition will be bridged.

 

[Billy T]

... He {Billy T}is predicting that one day people around the world and decide to sell all their US Dollars en masse because he believes he US debt situation is untenable. ...

Not accurate description of my prediction. Will not be any "get out of dollars" day by "people around the world" but more gradual ceasing to buy US treasury paper by previously big buyers, like China, as happen about two years ago. This will force the Fed to buy a larger fraction as US debt continues to increase. Fed now buys about 80% and that fraction is slowing increasing on a year to year basic.

Many well off foreigners are still net buyers of treasury paper as the dollar is "the least dirty shirt in the clothes hamper." Many other governments are still in the printing thin air fiat* stage like Europe and Japan are with their per capita debt increasing, as a fraction of their GDP, even faster than the US's per capita debt is. So there is only volatility in the FX markets, not a steady trend down in the dollar's value wrt to say the Euro. That will come when "people around the world" realize the big buyers have already stopped buying US paper assets and they too begin to think they are a losing investment and want out. Mostly they will do this by selling stocks as in general, except via their insurance companies, they own an insignificant amount of US paper. (Insurance companies don't care about the value of the dollar as their obligations are to pay the widow a fixed number of dollars when "Hubby Dies." - If those dollars only cover her rent for a month- that is her problem.)

I'll make another prediction, without a specific deadline this time: The Dow Jones market average will go to 1500 before it returns to above 1800. A long "bear market" in equities is coming, but gold will still be above $1200/ oz then.

* if there is a strong sell off of equities when Fed does make its tiny increase in interest rates, then don't be surprised to see US's QE4 (but it may get a different name.)

 

[joepistole]

Not accurate description of my prediction. Will not be any "get out of dollars" day by "people around the world" but more gradual ceasing to buy US treasury paper by previously big buyers, like China, as happen about two years ago. This will force the Fed to buy a larger fraction as US debt continues to increase. Fed now buys about 80% and that fraction is slowing increasing on a year to year basic.

That's a change. Your predictions eventually, over time, became very date specific. Where is your evidence the Fed buys 80% of US Treasury Bills? As previously pointed out to you the Fed ended its bond buying a year ago. The Federal Reserve doesn't buy Treasuries when they are auctioned by the US Treasury, ZERO, NADA. So your assertion is clearly wrong.

"The Federal Reserve purchases Treasury securities held by the public through a competitive bidding process. The Federal Reserve does not purchase new Treasury securities directly from the U.S. Treasury, and Federal Reserve purchases of Treasury securities from the public are not a means of financing the federal deficit." http://www.federalreserve.gov/faqs/...owing-decisions-of-the-federal-government.htm

And this shouldn't be a surprise to you because it has been pointed out to you on numerous occasions over the years.

Many well off foreigners are still net buyers of treasury paper as the dollar is "the least dirty shirt in the clothes hamper." Many other governments are still in the printing thin air fiat* stage like Europe and Japan are with their per capita debt increasing, as a fraction of their GDP, even faster than the US's per capita debt is. So there is only volatility in the FX markets, not a steady trend down in the dollar's value wrt to say the Euro. That will come when "people around the world" realize the big buyers have already stopped buying US paper assets and they too begin to think they are a losing investment and want out. Mostly they will do this by selling stocks as in general, except via their insurance companies, they own an insignificant amount of US paper. (Insurance companies don't care about the value of the dollar as their obligations are to pay the widow a fixed number of dollars when "Hubby Dies." - If those dollars only cover her rent for a month- that is her problem.)

I'll make another prediction, without a specific deadline this time: The Dow Jones market average will go to 1500 before it returns to above 1800. A long "bear market" in equities is coming, but gold will still be above $1200/ oz then.

* if there is a strong sell off of equities when Fed does make its tiny increase in interest rates, then don't be surprised to see US's QE4 (but it may get a different name.)

OK.

All this nonsense about a Federal Reserve rate hike is really just nonsense. It's not like the Federal Reserve hasn't hiked interest rates in the past. Because it has, numerous times and without catastrophe. it really isn't the end of the world as some seem to believe it is. If the Fed increases interest rates it will be because it feels the economy has become or will soon become too strong and that would spark inflation. But with zero inflation and with concerns about China I think a rate increase at this time is not merited. The only argument of merit for the rate increase would be the strong jobs numbers.

 

[Michael]

* if there is a strong sell off of equities when Fed does make its tiny increase in interest rates, then don't be surprised to see US's QE4 (but it may get a different name.)

I'm thinking QE Air Pro

 

[Michael]

CNBC
"A global recession starting in 2016, led by China is now our Global Economics team's main scenario. Uncertainty remains, but the likelihood of a timely and effective policy response seems to be diminishing."
- Willem Buiter (9/15/15)
Chief Economist Citigroup

Looks like it's time to bailout the rich on the backs of the poor and what's left of the middle class, ah, but I repeat myself.