Taking questions after a speech, the usually hawkish Minneapolis Fed chief Kocherlakota says a fall off the so-called fiscal cliff would argue for additional QE. The "fiscal cliff" refers to the 2013 expiration of tax cuts and other benefits that some argue could throw the U.S. into recession. [View news story]
Why does increasing the monetary supply imply government manipulation and decreasing the monetary supply or keepit the same does not?
Government control of the monetary supply implies permanent manipulation. Even doing "nothing" is doing something. It's making the choice that the current amount of money is the right amount. There is no way of anyone knowing how much money is needed for an economy. However, if we will have monetary supply government control (which is all civilized societies have always had), we should respond to what the market is telling us. And what market is telling us is that the demand for the medium of exchange is huge and supply is not sufficient.
Japanese utilities plan to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants. Starting in June rates for some power plants will be four to six times higher during the peak hours of 1 p.m. and 4 p.m. than those for night time hours. [View news story]
Ahhh, supply & demand. You just can't beat it, no matter how hard you try. It is hilarious though seeing people completely not understand why less electricity produced should lead to higher prices. These concepts just bewilder people.
Japanese utilities plan to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants. Starting in June rates for some power plants will be four to six times higher during the peak hours of 1 p.m. and 4 p.m. than those for night time hours. [View news story]
Yes, bakkbakk, supply & demand is a fictitious concept. If you increase the price, demand does not go down. Go report this to all the economic academic apartments. This is ground breaking news.
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
Thanks for the kind words. I definitely share your attitude of always keeping an open mind. I am always aware of human's desire to find simple solutions to complex problems. Complexity and counter-intuitiveness makes us all unhappy.
Having said that, I am an EMH guy. I talk a lot about markets and the economy and people often tell me, "If you are so smart, why don't you go out there and make money in the market". I tell them it's impossible, because the market will always have more information than you will. In fact, most of my forecasts and commentary on the economy is simply reading what the market is telling me. For example, the past few weeks indicate that we will have a major slow down soon, especially if the European situation isn't resolved. This isn't a genius prediction. It's an obvious one.
In your search to open your mind up, I would suggest Scott Sumner's blog "The Money Illusion". Here is a recent post he had on EMH where he touches on some of the points we discussed here: http://bit.ly/JFLOTS
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
Actually no, I am that fundamentalist you deride. If you can find me an example of anyone who consistently beats the market, then I may consider an alternative. But there aren't any.
John Paulson was famous for predicting and making billions off of the housing market crash. Since then, his hedge fund has been a loser.
Bill Miller beat the market for 15 years and in just 5 years his entire out performance was wiped out.
There are countless stories like this.
If I tell you that 99% of the people, lose money at the casino, you won't dispute the fact playing at casino is a losing wager.
And yet, if I tell you that 99% of the people fail to beat the market, you will still point me at that at 1% and go, "SEE! SEE! It's possible!"
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
Well, I mean I'm just restating what's common knowledge.
No one can beat the market consistently. Technical analysis was derided by Warren Buffet. He once said "I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer"
Peter Lynch once said, "Charts are great for predicting the past."
There are tons of academic papers showing that technical analysis is useless. Here is one: http://bit.ly/JfPCNn
But I can tell everyone that you'll never beat the house at a casino and yet everyone still goes and plays.
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
Technical analysis is useless. Especially in these times. Reading the minds of Ben Bernanke and Mario Draghi would much more useful.
Besides, after November 2011 the market had one of its best stretches the few years.
Asia's closer to getting on board the regional trade pact bus, as Japan's Prime Minister Yoshihiko Noda boards a flight to Beijing and says he'll speed up negotiations on a trade structure with China and South Korea. The so-called FTA would match up in size with NAFTA and the EU. [View news story]
^^^^ No clue about how world trade works.
Why does everyone, conservative & liberal, think that self-sufficiency is something to aim for. Has no one read Ricardo or heard of comparative advantage? Basic econ here folks.
Citing higher inflation than would otherwise be expected, Minneapolis Fed President Kocherlakota suggests the country is closer to full employment than labor market gauges indicate (has the man never heard of stagflation?). He reiterates his view the Fed should consider exiting ZIRP in 6-9 months. [View news story]
If you're not bribing, you're not trying. A misquote of retired baseball player Mark Grace suddenly seems appropriate with a bevy of U.S. companies now under suspicion of engaging in systemic bribing in order to land new business. A whopping 81 public companies are reportedly under investigation for violating the Foreign Corrupt Practices Act. Headliners: WMT, AVP, QCOM, DE, LVS. [View news story]
phemale60,
I am sure that they don't intend to bring down globalization and world trade. They don't intend to do anything. I do not believe that they are malicious. They just do not think about the consequences of their actions.
They also have a very naive and idealogical view of things. What I think that they think about this, is that by enforcing this law, it will force companies to refuse to pay these bribes and they hope that this will mean at the corrupt local officials in the 3rd world countries will stop demanding these bribes. I doubt that this is what will happen. Most likely, the US companies will just be kicked out more and more from the developing countries.
If you're not bribing, you're not trying. A misquote of retired baseball player Mark Grace suddenly seems appropriate with a bevy of U.S. companies now under suspicion of engaging in systemic bribing in order to land new business. A whopping 81 public companies are reportedly under investigation for violating the Foreign Corrupt Practices Act. Headliners: WMT, AVP, QCOM, DE, LVS. [View news story]
I am not even sure what you are trying to say here phemale60? Let me explain to you real quick what happens here. US companies try to setup shop in foreign countries. Once it is clear that they will do so, the local officials try to harass them until they get paid off with bribes. It is terrible and unfair. Unfortunately, the US companies have no other choice but to pay off the bribes. Still, this is fine, because the profits they make still make the enterprise worth while.
BUT then they find out that the US Government will prosecute them for paying off the bribes they have been forced to pay. Unreal is the best word to describe this.
If you're not bribing, you're not trying. A misquote of retired baseball player Mark Grace suddenly seems appropriate with a bevy of U.S. companies now under suspicion of engaging in systemic bribing in order to land new business. A whopping 81 public companies are reportedly under investigation for violating the Foreign Corrupt Practices Act. Headliners: WMT, AVP, QCOM, DE, LVS. [View news story]
Unreal. This administration never disappoints in finding new ways to awe me in their stupidity. They could single handedly bring down globalization and world trade with their enforcement of this stupid law.
Our companies are forced to pay bribes to be able to conduct business in these other countries. Why are they being held accountable for this??
The best way to instill a sense of "urgency" in people to make investments and to take out loans is to raise inflation expectations. They will then want to get out of low interest Treasury bonds and then AND ONLY then will rates rise.
So, in effect, what the Fed should be doing is raising long term rates. But this is done by raising inflation expectations not raising short term rates using open market operations. The Fed is doing nothing of the sort. Anytime inflation perks up even a little bit, talks of exit strategy begin and just those talks are enough to cement the low inflation expectations the market has.
It's the same with BOJ. Except there it is even worse. Anytime inflation rises about 0%, Japan either begins talks of exist strategy or at times has actually raised rates. What is the market supposed to imply except that the monetary authority wants 0% inflation. And that's exactly what they get.
Money is tight RIGHT NOW. And money is tight in Japan RIGHT NOW.
You seem to associate low interest rates with loose money and there is your mistake.
The easiest money in the last 100 years in the United States occurred in the late 70s. Inflation was sky high, but so were interest rates. In fact, the highest interest rates in the last 100 years occurred during the late 70s AND that was the time of the highest inflation rate.
If you think about that for just a moment, that makes perfect sense. With the expectation that inflation will be high, people would only buy Treasury bonds if they got those huge yields. On the other hand, today in US and Japan, people are buying Treasury bonds at miniscule rates. Why would they do this? Because they expect inflation to be very low for years and years to come. And so even though the nominal rate is low, the real rate is comparable to what you saw in the 70s.
Taking questions after a speech, the usually hawkish Minneapolis Fed chief Kocherlakota says a fall off the so-called fiscal cliff would argue for additional QE. The "fiscal cliff" refers to the 2013 expiration of tax cuts and other benefits that some argue could throw the U.S. into recession. [View news story]
Government control of the monetary supply implies permanent manipulation. Even doing "nothing" is doing something. It's making the choice that the current amount of money is the right amount. There is no way of anyone knowing how much money is needed for an economy. However, if we will have monetary supply government control (which is all civilized societies have always had), we should respond to what the market is telling us. And what market is telling us is that the demand for the medium of exchange is huge and supply is not sufficient.
Japanese utilities plan to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants. Starting in June rates for some power plants will be four to six times higher during the peak hours of 1 p.m. and 4 p.m. than those for night time hours. [View news story]
Japanese utilities plan to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants. Starting in June rates for some power plants will be four to six times higher during the peak hours of 1 p.m. and 4 p.m. than those for night time hours. [View news story]
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
Having said that, I am an EMH guy. I talk a lot about markets and the economy and people often tell me, "If you are so smart, why don't you go out there and make money in the market". I tell them it's impossible, because the market will always have more information than you will. In fact, most of my forecasts and commentary on the economy is simply reading what the market is telling me. For example, the past few weeks indicate that we will have a major slow down soon, especially if the European situation isn't resolved. This isn't a genius prediction. It's an obvious one.
In your search to open your mind up, I would suggest Scott Sumner's blog "The Money Illusion". Here is a recent post he had on EMH where he touches on some of the points we discussed here: http://bit.ly/JFLOTS
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
John Paulson was famous for predicting and making billions off of the housing market crash. Since then, his hedge fund has been a loser.
Bill Miller beat the market for 15 years and in just 5 years his entire out performance was wiped out.
There are countless stories like this.
If I tell you that 99% of the people, lose money at the casino, you won't dispute the fact playing at casino is a losing wager.
And yet, if I tell you that 99% of the people fail to beat the market, you will still point me at that at 1% and go, "SEE! SEE! It's possible!"
That 1% is lucky. That's all there is to it.
It's Time for the Irish People to Rise [View article]
And if it was so easy to lower yields thru money printing, why is the ECB having such trouble then?
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
No one can beat the market consistently. Technical analysis was derided by Warren Buffet. He once said "I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer"
Peter Lynch once said, "Charts are great for predicting the past."
There are tons of academic papers showing that technical analysis is useless. Here is one: http://bit.ly/JfPCNn
But I can tell everyone that you'll never beat the house at a casino and yet everyone still goes and plays.
Technical bears take note: The S&P 500 has closed below its 50-day moving average for the first time since November, 2011, having dropped for seven of the past nine trading days. [View news story]
Besides, after November 2011 the market had one of its best stretches the few years.
Asia's closer to getting on board the regional trade pact bus, as Japan's Prime Minister Yoshihiko Noda boards a flight to Beijing and says he'll speed up negotiations on a trade structure with China and South Korea. The so-called FTA would match up in size with NAFTA and the EU. [View news story]
Why does everyone, conservative & liberal, think that self-sufficiency is something to aim for. Has no one read Ricardo or heard of comparative advantage? Basic econ here folks.
Citing higher inflation than would otherwise be expected, Minneapolis Fed President Kocherlakota suggests the country is closer to full employment than labor market gauges indicate (has the man never heard of stagflation?). He reiterates his view the Fed should consider exiting ZIRP in 6-9 months. [View news story]
If you're not bribing, you're not trying. A misquote of retired baseball player Mark Grace suddenly seems appropriate with a bevy of U.S. companies now under suspicion of engaging in systemic bribing in order to land new business. A whopping 81 public companies are reportedly under investigation for violating the Foreign Corrupt Practices Act. Headliners: WMT, AVP, QCOM, DE, LVS. [View news story]
I am sure that they don't intend to bring down globalization and world trade. They don't intend to do anything. I do not believe that they are malicious. They just do not think about the consequences of their actions.
They also have a very naive and idealogical view of things. What I think that they think about this, is that by enforcing this law, it will force companies to refuse to pay these bribes and they hope that this will mean at the corrupt local officials in the 3rd world countries will stop demanding these bribes. I doubt that this is what will happen. Most likely, the US companies will just be kicked out more and more from the developing countries.
If you're not bribing, you're not trying. A misquote of retired baseball player Mark Grace suddenly seems appropriate with a bevy of U.S. companies now under suspicion of engaging in systemic bribing in order to land new business. A whopping 81 public companies are reportedly under investigation for violating the Foreign Corrupt Practices Act. Headliners: WMT, AVP, QCOM, DE, LVS. [View news story]
BUT then they find out that the US Government will prosecute them for paying off the bribes they have been forced to pay. Unreal is the best word to describe this.
If you're not bribing, you're not trying. A misquote of retired baseball player Mark Grace suddenly seems appropriate with a bevy of U.S. companies now under suspicion of engaging in systemic bribing in order to land new business. A whopping 81 public companies are reportedly under investigation for violating the Foreign Corrupt Practices Act. Headliners: WMT, AVP, QCOM, DE, LVS. [View news story]
Our companies are forced to pay bribes to be able to conduct business in these other countries. Why are they being held accountable for this??
This is mind numbingly stupid.
Dual Mandate, RIP [View article]
So, in effect, what the Fed should be doing is raising long term rates. But this is done by raising inflation expectations not raising short term rates using open market operations. The Fed is doing nothing of the sort. Anytime inflation perks up even a little bit, talks of exit strategy begin and just those talks are enough to cement the low inflation expectations the market has.
It's the same with BOJ. Except there it is even worse. Anytime inflation rises about 0%, Japan either begins talks of exist strategy or at times has actually raised rates. What is the market supposed to imply except that the monetary authority wants 0% inflation. And that's exactly what they get.
The same is true for the ECB right now as well.
Dual Mandate, RIP [View article]
You seem to associate low interest rates with loose money and there is your mistake.
The easiest money in the last 100 years in the United States occurred in the late 70s. Inflation was sky high, but so were interest rates. In fact, the highest interest rates in the last 100 years occurred during the late 70s AND that was the time of the highest inflation rate.
If you think about that for just a moment, that makes perfect sense. With the expectation that inflation will be high, people would only buy Treasury bonds if they got those huge yields. On the other hand, today in US and Japan, people are buying Treasury bonds at miniscule rates. Why would they do this? Because they expect inflation to be very low for years and years to come. And so even though the nominal rate is low, the real rate is comparable to what you saw in the 70s.