Is Denninger right about the coronavirus?

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Re: Is Denninger right about the coronavirus?

Post by Smith1776 » Sun Mar 22, 2020 5:40 pm

vnatale wrote:
Sun Mar 22, 2020 5:37 pm

Wouldn't that be a fairly low rate of increase for education expenses? Less than 4% compounded?


Vinny
You and my dad were both right...

It feels like more when you're the one paying it. :o :o :o
I still find the James Rickards portfolio fascinating.
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Re: Is Denninger right about the coronavirus?

Post by vnatale » Sun Mar 22, 2020 6:54 pm

Smith1776 wrote:
Sun Mar 22, 2020 5:40 pm
vnatale wrote:
Sun Mar 22, 2020 5:37 pm

Wouldn't that be a fairly low rate of increase for education expenses? Less than 4% compounded?


Vinny
You and my dad were both right...

It feels like more when you're the one paying it. :o :o :o
I paid for every cent of the cost of the last 3 1/2 years of my college education - junior / senior years for undergraduate and then master degree. I was certainly a lot more motivated having my money on the line.

Same as the way it was with food. I used to be known as the fussiest eater around. If a friend invited me for supper before responding I'd always first ask what his family was having. With my mother's terrible cooking I was always an "only three more mouthfuls" type kid. But once I started paying for the food there is NEVER anything that gets thrown out.

Vinny
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Re: Is Denninger right about the coronavirus?

Post by vnatale » Tue Mar 24, 2020 9:23 pm

More from his book--related to going back to a gold standard...

Vinny


History bears this out, and it also demonstrates that when you have a hard currency, you have just given the people who own that resource, such as gold mines, an enormous amount of power. Those who have control over a small resource can cause inflation and deflation at will by either holding back or flooding the economic system with their commodity. Those people can and will do so, first inflating the money supply to make it seem that credit is very easy and reasonable to obtain, and then pulling the rug out from under those who are foolish enough to take loans through intentional deflation. The bankers ultimately seize all the collateral that was pledged for those loans and throw the people into the street.


If you look from colonial times in the United States to now, you’ll find that before the Federal Reserve, there were tremendously disruptive bouts of inflation and deflation, and in some cases, the change in the value of a dollar in terms of goods and services reached 20 percent or more within a single year’s time. It is true that the average value of a dollar from the start to the end of that period did not change much, but you don’t live your life in a manner that allows you to cherry-pick the start and end dates of your monetary experiment. Instead, you have a time when you want to get married, start a family, build a business, and plan your retirement and a time when you ultimately expire. Changes in the value of the currency over short periods of time leave you with a terrible choice. If you borrow to buy a home or build a business, only to see the value of the currency rise 20 percent in the next two years, there’s a fairly decent chance you won’t be able to pay and will become bankrupt, simply from the deflationary pressure and not from whether you made a good or bad economic decision.


The real problem in all economies is the lending of capital with interest and the inherent leverage and compound function this introduces into the economic system. Attempting to grow credit and money to meet the demand of interest due on lent funds inevitably must, if continued on an indefinite basis, result in runaway inflation and destruction of the currency. Failure to do so must result in recession and in lender and borrower bankruptcies. This requirement for economic balance is a constant, and whether you’re living with a hard or fiat currency system is immaterial.


Hard money doesn’t solve the problems we face and in fact introduces new ones. Those advocating for this change are mostly individuals with glimmers of instant wealth in their eyes. Some have even claimed that the fair price to convert the U.S. money and credit stock to gold would be in the $20,000 per ounce range or more. The first question to ask someone who wants to return to the Gold Standard is “How much gold do you have, and will you forfeit all of it, without compensation, to get the gold standard you want?”


Make sure you duck when asking that question.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Is Denninger right about the coronavirus?

Post by vnatale » Tue Mar 24, 2020 9:37 pm

Now 63% through the book and it continues to be fascinating...Just read this page...Note what he has to say about owning gold. Libertarian666! A possibility??!!

Vinny


Part Two: A WAY FORWARD


Chapter 5


The Folly of Avoidance


Normally in a book of this sort you would find a discussion of how you can shield yourself from the certain-to-occur disaster. Some authors would advise you to buy gold, others to invest in foreign currencies, and still others to engage in a diversified strategy involving common stocks, bonds, and currencies across the globe, along with various commodities.


You will find no such recommendations here, for the simple reason that none of these strategies will prove effective to protect your wealth if our society does not change course. If you are one of the few who has the ability to pull on the levers of power in government, you might be able to become a pick-and-shovel seller in a sea of ever-increasing and unstable pyramid schemes. But unless you can amass billions and disperse it all over the world—and have the means to get to any of those locations on a moment’s notice and abandon those assets in places inhospitable to you—it won’t matter.


The issues we face as a nation are not limited to the United States. Since the dollar is currently the world’s reserve currency, if we hit the wall in the United States, economic repercussions around the world will be extremely severe. Becoming an expatriate may appear alluring, but it is fraught with danger; foreign nations are likely to become extraordinarily hostile to Americans, should we cause their economies to collapse as a result of our foibles. Large amounts of money can buy security, but do you really wish to live behind a barbed-wire fence and 10-foot-high concrete wall for the rest of your life? Travel to Jamaica and drive a few kilometers away from the tourist traps where cruise lines come into port, and you will see exactly what sort of fortress-style structure you will have to construct to be reasonably secure.


Likewise, if you follow the advice of many to buy gold, and the dollar collapses, you might believe you have successfully sheltered your wealth. Nothing could be further from the truth. While the government is unlikely to again attempt confiscating gold as it did in the 1930s, it is trivial to slap a 95 percent capital gains tax on the metal and demand that you document your purchase price for tax purposes. If the government takes such an action, your stash of $10,000 per ounce of gold turns into $500 in your pocket. The choice to deal in the black market will exist, but the risk of going to prison for tax evasion is hardly an attractive option.


For this reason, what you will find here are policy paths forward for our nation. These suggestions will not be painless for anyone in the Unites States, and there are powerful financial interests that align against all of them. They are designed to return the financial markets to a place that functions as a means of clearing payments while matching buyers and sellers, stripping the ability of various interests to blow Ponzi-style bubbles. They will require recognition of the insolvency of major financial institutions and government programs that have in fact been bankrupt for years but are trading on the premise of ever-increasing amounts of debt.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Is Denninger right about the coronavirus?

Post by vnatale » Tue Mar 24, 2020 9:40 pm

On the next page he is loudly singing to THIS choir (of one!)…

VInny




Chapter 5


The Folly of Avoidance


Normally in a book of this sort you would find a discussion of how you can shield yourself from the certain-to-occur disaster. Some authors would advise you to buy gold, others to invest in foreign currencies, and still others to engage in a diversified strategy involving common stocks, bonds, and currencies across the globe, along with various commodities.


You will find no such recommendations here, for the simple reason that none of these strategies will prove effective to protect your wealth if our society does not change course. If you are one of the few who has the ability to pull on the levers of power in government, you might be able to become a pick-and-shovel seller in a sea of ever-increasing and unstable pyramid schemes. But unless you can amass billions and disperse it all over the world—and have the means to get to any of those locations on a moment’s notice and abandon those assets in places inhospitable to you—it won’t matter.


The issues we face as a nation are not limited to the United States. Since the dollar is currently the world’s reserve currency, if we hit the wall in the United States, economic repercussions around the world will be extremely severe. Becoming an expatriate may appear alluring, but it is fraught with danger; foreign nations are likely to become extraordinarily hostile to Americans, should we cause their economies to collapse as a result of our foibles. Large amounts of money can buy security, but do you really wish to live behind a barbed-wire fence and 10-foot-high concrete wall for the rest of your life? Travel to Jamaica and drive a few kilometers away from the tourist traps where cruise lines come into port, and you will see exactly what sort of fortress-style structure you will have to construct to be reasonably secure.


Likewise, if you follow the advice of many to buy gold, and the dollar collapses, you might believe you have successfully sheltered your wealth. Nothing could be further from the truth. While the government is unlikely to again attempt confiscating gold as it did in the 1930s, it is trivial to slap a 95 percent capital gains tax on the metal and demand that you document your purchase price for tax purposes. If the government takes such an action, your stash of $10,000 per ounce of gold turns into $500 in your pocket. The choice to deal in the black market will exist, but the risk of going to prison for tax evasion is hardly an attractive option.


For this reason, what you will find here are policy paths forward for our nation. These suggestions will not be painless for anyone in the Unites States, and there are powerful financial interests that align against all of them. They are designed to return the financial markets to a place that functions as a means of clearing payments while matching buyers and sellers, stripping the ability of various interests to blow Ponzi-style bubbles. They will require recognition of the insolvency of major financial institutions and government programs that have in fact been bankrupt for years but are trading on the premise of ever-increasing amounts of debt.


The core of where our economy is today and where we have traveled from has come about due to the Wimpy syndrome. We began by eating a single hamburger today that we promised to pay for next Tuesday. But then next Tuesday came, and we didn’t have the money to pay for both the previously eaten hamburger and a new one for our empty belly. So we borrowed once again, and again.


All of this has pulled forward demand but has not led to actual prosperity. It has instead led to financial harm, as all borrowing comes with interest attached. The car we would have bought three years from now if we had saved was instead purchased today. Had we saved and waited the three years, our insurance bill would have been half of what it was, and there would have been no car payment. Yes, our car for those two or three years would have been scratched up and consumed a bit more gas, but it would have gotten us to work, and we would have spent the interest payments ourselves instead of giving that money to the banks.


The cell phone we bought on credit would have been purchased six months later, and we would have less expensive cellular service as well. We would have paid $600 for our cellular service over the last year instead of $1,200.


The college our kids are attending today wouldn’t have come with a crushing cost that is impossible for any young adult to work their way through, consigning them to massive amounts of debt if they can’t get an academic scholarship. The dorms would still be cinder-block buildings, there’d be a TV down the hall in a common room, and the awful food would be served cafeteria-style. But our sons and daughters could flip pizzas part-time to attend school, and they would still be learning calculus, computer programming, physics, or the practice of law.


Our houses wouldn’t have ever cost $500,000 in a middle-class neighborhood. They would have cost $150,000 instead. Sure, they wouldn’t have fancy granite countertops, measure 2,500 square feet, and be adorned with Viking professional kitchen appliances, but you’d be able to afford to buy one on a common $50,000 household income with one parent staying home and raising the kids. We’d probably have fewer teen pregnancies, gangbangers, and other miscreants for good measure, simply because someone would be there when Junior got home from school to make sure he did his homework.


We wouldn’t have stolen the Social Security taxes in the 1980s and beyond. We could have decided in the 1980s to instead put each person’s earnings into an account with their name on it. A true trustee arrangement, which many people think we have for Social Security but in fact never existed, could have been put in place. To do that would have required an actual zero inflation target that was enforced, and when the first signs of the leverage explosion showed up in the late 1970s and early 1980s, along with deterioration in the GDP/debt imbalance, that was the time to do it.


But we did none of these things. We chose to promise to pay tomorrow for the hamburger we insisted on eating today. We elected people to Congress who sang a great song about balanced budgets and fiscal responsibility. But as soon as they were elected, they did nothing but borrow and spend money we did not have. To make matters worse, they nodded pleasantly while the Federal Reserve and our banks abused the monetary authority vested in Congress by the Constitution.


Now the bill for more than 30 years of our economic, fiscal, and monetary foolishness is on the table, and the waiter is tapping his foot.


Our history is one of serially blowing bubbles in an attempt to evade the consequences of the previous collapse. In 1980, there was $4.4 trillion in total debt outstanding in the United States. In 1990, that figure reached $13 trillion, triple the 1980 figure. In 2000, systemic debt reached $25.8 trillion, double the 1990 amount. And in 2010, we reached $52 trillion, yet another double.1
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Is Denninger right about the coronavirus?

Post by vnatale » Tue Mar 24, 2020 9:46 pm

PAGING KBG!!!!!!!!!

Vinny

If we refuse, as a nation, to take our medicine and proceed down the path you will find in the following pages, there is only one piece of advice that can be offered and one safe investment that has a reasonable chance of success. You need to own enough arable land outright to raise a subsistence level of crops, such as vegetables and fruit. You need sufficient livestock, such as chickens and goats, to provide protein and milk. You need the skills to successfully raise both crops and animals. You need a way to produce sufficient energy for your own needs without the trappings of modern civilization and distribution. You need guns and ammunition, because plenty of people will try to take your crops and livestock from you by force. Finally, you need neighbors who will protect and defend each other, because no matter how well armed you are, there is always someone with more and bigger guns, and everyone needs to sleep.


Even assuming you manage all of this, it does not guarantee success. History is replete with nations that have gone through government and economic collapses. There is a high probability that should we undergo such a collapse in the United States, we will emerge with a very different form of government than what we have now—a government marked by tyranny and brutality, much like the Third Reich, where simply being of the wrong race, color, or creed could consign you and your children to death.


For the future of the United States, let’s find a better way.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Is Denninger right about the coronavirus?

Post by vnatale » Tue Mar 24, 2020 10:08 pm

He continues to attack and hit hard! Love it!

Vinny

Chapter 7


Reforming the Fed, Lending, and Derivatives


The Federal Reserve Act contains the following in Section 2A:


The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.1


Where in that passage do you see “stable prices” defined as “2 percent inflation?” Stable means, in the dictionary sense, “firmly established; not changing or fluctuating.” Stable prices are essential to economic stability. When prices are increasing, actors in the economy are urged to spend money unnecessarily to avoid debasement of saved funds. The precise intent of the interventionist actions that have been undertaken from 2007 to 2010 is fundamentally dishonest for this reason in that it seeks to deplete savings and thereby destroy the foundation of capital formation.


It is essential to avoid distortions of this sort to remove the need for people to participate in asset bubbles, whether directly or via Ponzi-style proxies, to save for their retirement, for education of their offspring, and for their own personal needs and desires. Forcing individuals and corporations to either spend or invest savings lest they be debased creates speculation where it would otherwise not exist.


We often hear it argued that 2 percent inflation is a normal rate of inflation. This sounds quite innocuous, but in fact it is not. Remember the law of exponents and that you work, on average, from age 18 to age 65, or about 45 years. That is, your earnings at 18 are worth in real terms 2.44 times as much per dollar as they are on your retirement date with a 2 percent inflation rate over that entire period.


This makes the premise of saving for retirement a bad joke. You should be able to simply sock away 20 percent of your income and retire with reasonable comfort. If you earn a median $50,000 a year for 45 years, you will have earned $2.25 million. If you saved 20 percent of that income with no growth whatsoever, you would have $450,000. Assuming your home is paid for by that time, and remembering that there is no appreciation and thus no tax due on this accumulated wealth as it is pure savings, you could spend $25,000 a year for the next 18 years, allowing you to live to 83. Note that Social Security, if it was simply put away for you instead of being a massive accounting fraud, would be 13 percent of your gross income, meaning you would have to save just 7 percent on a personal basis to have a retirement fund good to your mid-80s. Further, your home, being unencumbered, could be sold or the value extracted as you age to provide a further income boost.


Who wouldn’t like that system? This is what the Federal Reserve Act promises and has in fact promised since 1913. And it is what every Fed chairman from that date forward has serially and intentionally failed to deliver.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Is Denninger right about the coronavirus?

Post by Kbg » Tue Mar 24, 2020 10:33 pm

vnatale wrote:
Tue Mar 24, 2020 9:46 pm
PAGING KBG!!!!!!!!!

Vinny

You need to own enough arable land outright to raise a subsistence level of crops, such as vegetables and fruit. You need sufficient livestock, such as chickens and goats, to provide protein and milk. You need the skills to successfully raise both crops and animals. You need a way to produce sufficient energy for your own needs without the trappings of modern civilization and distribution. You need guns and ammunition, because plenty of people will try to take your crops and livestock from you by force. Finally, you need neighbors who will protect and defend each other, because no matter how well armed you are, there is always someone with more and bigger guns, and everyone needs to sleep.
LOL Vinny. By nature I am an optimist through and through, though for whatever reasons it gets harder to be an optimist as you get older. I don't like it, but my brain does it. I read and listen to a TON of history so the above is my conclusion for sure as to what you need for a semi serious crap hits the fan event.

Unfortunately, if it is bad enough most people simply get mowed down by events if they are in the wrong place...better to be lucky than good as they say.

Just a side note; in every historical period I have studied/read about and over almost 30 years of off and on in some not great places, if there is one skill that is immeasurably important to surviving in my view it is an excellent ability to read the winds of shifting power and align to strength. This is the stuff that will actually keep you alive (maybe).
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Re: Is Denninger right about the coronavirus?

Post by D1984 » Tue Mar 24, 2020 10:42 pm

vnatale wrote:
Tue Mar 24, 2020 9:40 pm
On the next page he is loudly singing to THIS choir (of one!)…

VInny




Chapter 5


The Folly of Avoidance


Normally in a book of this sort you would find a discussion of how you can shield yourself from the certain-to-occur disaster. Some authors would advise you to buy gold, others to invest in foreign currencies, and still others to engage in a diversified strategy involving common stocks, bonds, and currencies across the globe, along with various commodities.


You will find no such recommendations here, for the simple reason that none of these strategies will prove effective to protect your wealth if our society does not change course. If you are one of the few who has the ability to pull on the levers of power in government, you might be able to become a pick-and-shovel seller in a sea of ever-increasing and unstable pyramid schemes. But unless you can amass billions and disperse it all over the world—and have the means to get to any of those locations on a moment’s notice and abandon those assets in places inhospitable to you—it won’t matter.


The issues we face as a nation are not limited to the United States. Since the dollar is currently the world’s reserve currency, if we hit the wall in the United States, economic repercussions around the world will be extremely severe. Becoming an expatriate may appear alluring, but it is fraught with danger; foreign nations are likely to become extraordinarily hostile to Americans, should we cause their economies to collapse as a result of our foibles. Large amounts of money can buy security, but do you really wish to live behind a barbed-wire fence and 10-foot-high concrete wall for the rest of your life? Travel to Jamaica and drive a few kilometers away from the tourist traps where cruise lines come into port, and you will see exactly what sort of fortress-style structure you will have to construct to be reasonably secure.


Likewise, if you follow the advice of many to buy gold, and the dollar collapses, you might believe you have successfully sheltered your wealth. Nothing could be further from the truth. While the government is unlikely to again attempt confiscating gold as it did in the 1930s, it is trivial to slap a 95 percent capital gains tax on the metal and demand that you document your purchase price for tax purposes. If the government takes such an action, your stash of $10,000 per ounce of gold turns into $500 in your pocket. The choice to deal in the black market will exist, but the risk of going to prison for tax evasion is hardly an attractive option.


For this reason, what you will find here are policy paths forward for our nation. These suggestions will not be painless for anyone in the Unites States, and there are powerful financial interests that align against all of them. They are designed to return the financial markets to a place that functions as a means of clearing payments while matching buyers and sellers, stripping the ability of various interests to blow Ponzi-style bubbles. They will require recognition of the insolvency of major financial institutions and government programs that have in fact been bankrupt for years but are trading on the premise of ever-increasing amounts of debt.


The core of where our economy is today and where we have traveled from has come about due to the Wimpy syndrome. We began by eating a single hamburger today that we promised to pay for next Tuesday. But then next Tuesday came, and we didn’t have the money to pay for both the previously eaten hamburger and a new one for our empty belly. So we borrowed once again, and again.


All of this has pulled forward demand but has not led to actual prosperity. It has instead led to financial harm, as all borrowing comes with interest attached. The car we would have bought three years from now if we had saved was instead purchased today. Had we saved and waited the three years, our insurance bill would have been half of what it was, and there would have been no car payment. Yes, our car for those two or three years would have been scratched up and consumed a bit more gas, but it would have gotten us to work, and we would have spent the interest payments ourselves instead of giving that money to the banks.


The cell phone we bought on credit would have been purchased six months later, and we would have less expensive cellular service as well. We would have paid $600 for our cellular service over the last year instead of $1,200.


The college our kids are attending today wouldn’t have come with a crushing cost that is impossible for any young adult to work their way through, consigning them to massive amounts of debt if they can’t get an academic scholarship. The dorms would still be cinder-block buildings, there’d be a TV down the hall in a common room, and the awful food would be served cafeteria-style. But our sons and daughters could flip pizzas part-time to attend school, and they would still be learning calculus, computer programming, physics, or the practice of law.


Our houses wouldn’t have ever cost $500,000 in a middle-class neighborhood. They would have cost $150,000 instead. Sure, they wouldn’t have fancy granite countertops, measure 2,500 square feet, and be adorned with Viking professional kitchen appliances, but you’d be able to afford to buy one on a common $50,000 household income with one parent staying home and raising the kids. We’d probably have fewer teen pregnancies, gangbangers, and other miscreants for good measure, simply because someone would be there when Junior got home from school to make sure he did his homework.


We wouldn’t have stolen the Social Security taxes in the 1980s and beyond. We could have decided in the 1980s to instead put each person’s earnings into an account with their name on it. A true trustee arrangement, which many people think we have for Social Security but in fact never existed, could have been put in place. To do that would have required an actual zero inflation target that was enforced, and when the first signs of the leverage explosion showed up in the late 1970s and early 1980s, along with deterioration in the GDP/debt imbalance, that was the time to do it.


But we did none of these things. We chose to promise to pay tomorrow for the hamburger we insisted on eating today. We elected people to Congress who sang a great song about balanced budgets and fiscal responsibility. But as soon as they were elected, they did nothing but borrow and spend money we did not have. To make matters worse, they nodded pleasantly while the Federal Reserve and our banks abused the monetary authority vested in Congress by the Constitution.


Now the bill for more than 30 years of our economic, fiscal, and monetary foolishness is on the table, and the waiter is tapping his foot.


Our history is one of serially blowing bubbles in an attempt to evade the consequences of the previous collapse. In 1980, there was $4.4 trillion in total debt outstanding in the United States. In 1990, that figure reached $13 trillion, triple the 1980 figure. In 2000, systemic debt reached $25.8 trillion, double the 1990 amount. And in 2010, we reached $52 trillion, yet another double.1
A couple of issues I see:

One, Karl Denninger seems to have a real axe to grind in blaming the skyrocketing cost of higher education on "fancy facilities" and "amenities" as he has mentioned this quite a few times. I'm not sure that his theory is actually borne out by the facts; see https://www.theatlantic.com/education/a ... ca/569884/ and https://www.insidehighered.com/news/201 ... st-college.

Two, when he mentions Social Security being diverted into individual accounts with each person's name on it I only hope he was referring to a portion of the increased FICA taxes after the Greenspan Commission in the early 80s (IIRC about 1/4 of those tax increases went to provide current benefits and the other 3/4s were used to buildup the Social Security Trust Fund) that went into the SSTF and not ALL of the increases (again, some of the increase went to pay current benefits) or even worse, ALL of the non-Medicare portion of the FICA taxes, period. Given that Social Security is still an essentially Pay-Go system how did he expect to pay benefits for current retirees now (or current retirees back in the 1980s) if every bit of the SS portion of FICA taxes got diverted to private accounts? One of the following three things is true: He is lying to us and trying to pull the wool over our eyes, he doesn't understand actuarial science (or even basic math), or he should've been much clearer in saying that only the portion of the FICA tax increases from the early 80s onwards that DIDN'T need to be used to pay current benefits (and certainly not ALL of the FICA tax!) should've been diverted to private accounts.

Three, it wasn't all (or even mostly) the fault of easily and cheaply available mortgage credit that drove the price of housing up; 30-year mortgages have been available since the 1930s, zero-down loans for veterans since 1944, low-down payment loans for non-veterans via the FHA since the late 1940s, and low-down or even zero-down loans via private PMI in certain forms since 1957...oh, and Mortgage rates were pretty low from the late 1940s to the early 70s and housing prices weren't nuts then.

Four, the explosion of debt since the late 70s and early 80s that he bemoans was aided/abetted/caused/enabled by several things:

On the Federal level, the supply-side belief that "tax cuts pay for themselves" and that therefore we can cut taxes again and again and never cut spending...even when it becomes obvious beyond a reasonable doubt that almost all tax cuts don't even come close to paying for themselves nor do they lead to higher economic growth.

On the corporate level, the ending of the near-prohibition of share buybacks (so it's now perfectly legally OK to leverage your company up by borrowing money to buy your own stock back), the heavier use of incentive-based executive compensation like options (so now execs have all the incentive in the world to leverage up to juice earnings per share) combined with MUCH lower tax rates on high incomes (if Uncle Sam is going to get 90% of every dollar you make over a few million you have a lot less incentive to leverage up to try and boost your company's earnings because you won't see a huge bump in after-tax income even if it does work as planned), debt-based leveraged buyouts of one public company of another (almost unheard of before the late 70s) and private equity companies doing the same thing taking companies private and loading them up with debt to pay for doing so (again, only became common in the last 30-35 years....before then, there were countervailing forces--like regulators, and unions, and just plain social disapproval--that would've looked dimly on a "load up the company with debt to pay for the buyout, pay ourselves a huge recapitalization dividend to celebrate, and then if the economy softens and the company can't pay the interest on the debt and goes into bankruptcy and has to lay people off...well, too bad; we've got ours already so f*ck everyone else" strategy by an LBO operator or private equity firm),

On the individual level, the loosening of usury laws, the toughening of bankruptcy laws, 40+ years of stagnant real wages for lower-class and middle-class earners, and healthcare/education/housing costs rising more in line with nominal GDP growth rather than just with inflation (which wouldn't have been so bad if average median wages had kept up with GDP growth and productivity growth...but they haven't by a long shot) is far more responsible for rising household debt burdens (and the fact that one breadwinner can no longer support a household) than the "I've got to have it now" mentality that Mr. Denninger seems to want to pinpoint as the main culprit.

Fifth and finally, I'm not even going to get into what his idea of a zero inflation target would do except to say that maybe Mr. Denninger needs to crack a macroeconomics textbook to study what "downward nominal wage rigidity" and "price stickiness" are and see how a zero inflation target would make those a lot worse issues than they already are.
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Re: Is Denninger right about the coronavirus?

Post by Kriegsspiel » Wed Mar 25, 2020 7:55 am

We began by eating a single hamburger today that we promised to pay for next Tuesday. But then next Tuesday came, and we didn’t have the money to pay for both the previously eaten hamburger and a new one for our empty belly. So we borrowed once again, and again.


All of this has pulled forward demand but has not led to actual prosperity. It has instead led to financial harm, as all borrowing comes with interest attached. The car we would have bought three years from now if we had saved was instead purchased today. Had we saved and waited the three years, our insurance bill would have been half of what it was, and there would have been no car payment. . . .

But we did none of these things. We chose to promise to pay tomorrow for the hamburger we insisted on eating today. We elected people to Congress who sang a great song about balanced budgets and fiscal responsibility. But as soon as they were elected, they did nothing but borrow and spend money we did not have. To make matters worse, they nodded pleasantly while the Federal Reserve and our banks abused the monetary authority vested in Congress by the Constitution.
Hmm, that looks familiar...
Kriegsspiel wrote:
Sat Feb 11, 2017 11:58 am
If you look at the things that are inflating out of control, they're mostly financial technology (bonds, stocks, insurance, etc), or things that can be financed with debt (houses, college, cars, medical bills, transportation infrastructure).

It seems like at some point in the semi-near past, there was a realization that growth is not possible when living "within one's budget," and future production was increasingly pulled into the present (with debt). At first, it was physical things (the aforementioned houses, cars, boats, subdivisions). This required natural resources like timber, fossil fuels, minerals. In a non-full world, with vast resources and not many people, it was possible to mine/cut/dig enough raw materials to make things, and people were productive enough to trade whatever they were making for someone else's stuff.
You there, Ephialtes. May you live forever.
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Re: Is Denninger right about the coronavirus?

Post by vnatale » Wed Mar 25, 2020 9:07 am

Kriegsspiel wrote:
Wed Mar 25, 2020 7:55 am
We began by eating a single hamburger today that we promised to pay for next Tuesday. But then next Tuesday came, and we didn’t have the money to pay for both the previously eaten hamburger and a new one for our empty belly. So we borrowed once again, and again.


All of this has pulled forward demand but has not led to actual prosperity. It has instead led to financial harm, as all borrowing comes with interest attached. The car we would have bought three years from now if we had saved was instead purchased today. Had we saved and waited the three years, our insurance bill would have been half of what it was, and there would have been no car payment. . . .

But we did none of these things. We chose to promise to pay tomorrow for the hamburger we insisted on eating today. We elected people to Congress who sang a great song about balanced budgets and fiscal responsibility. But as soon as they were elected, they did nothing but borrow and spend money we did not have. To make matters worse, they nodded pleasantly while the Federal Reserve and our banks abused the monetary authority vested in Congress by the Constitution.
Hmm, that looks familiar...
Kriegsspiel wrote:
Sat Feb 11, 2017 11:58 am
If you look at the things that are inflating out of control, they're mostly financial technology (bonds, stocks, insurance, etc), or things that can be financed with debt (houses, college, cars, medical bills, transportation infrastructure).

It seems like at some point in the semi-near past, there was a realization that growth is not possible when living "within one's budget," and future production was increasingly pulled into the present (with debt). At first, it was physical things (the aforementioned houses, cars, boats, subdivisions). This required natural resources like timber, fossil fuels, minerals. In a non-full world, with vast resources and not many people, it was possible to mine/cut/dig enough raw materials to make things, and people were productive enough to trade whatever they were making for someone else's stuff.
Then the only, logical follow up question is...…..Have the two of you EVER been spotted in the SAME location at the SAME time??!!!

Vinny
Last edited by vnatale on Wed Mar 25, 2020 11:26 am, edited 1 time in total.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Is Denninger right about the coronavirus?

Post by flyingpylon » Wed Mar 25, 2020 10:06 am

Interesting post from Denninger this morning. I don't know enough to agree or disagree, but it's an interesting hypothesis about COVID-19 being an attenuated virus from an unfinished vaccine for SARS or MERS.

https://market-ticker.org/akcs-www?singlepost=3524114

Of course it has that unmistakable "off the rails" quality of most of his posts.
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Re: Is Denninger right about the coronavirus?

Post by flyingpylon » Wed Mar 25, 2020 10:17 am

MangoMan wrote:
Wed Mar 25, 2020 10:08 am
I thought it was accepted knowledge that the virus came from the Chinese wet markets randomly?
Maybe it came "through" the wet markets (as mentioned in the post) but wasn't just completely random.
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Re: Is Denninger right about the coronavirus?

Post by mdwilson1991 » Wed Mar 25, 2020 10:21 am

flyingpylon wrote:
Wed Mar 25, 2020 10:06 am
Interesting post from Denninger this morning. I don't know enough to agree or disagree, but it's an interesting hypothesis about COVID-19 being an attenuated virus from an unfinished vaccine for SARS or MERS.

https://market-ticker.org/akcs-www?singlepost=3524114

Of course it has that unmistakable "off the rails" quality of most of his posts.
Or you could read this instead.
https://www.sciencedaily.com/releases/2 ... 175442.htm

Conspiracy theorist or immunology Ph.Ds, who knows more about this?
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Re: Is Denninger right about the coronavirus?

Post by flyingpylon » Wed Mar 25, 2020 10:43 am

mdwilson1991 wrote:
Wed Mar 25, 2020 10:21 am
flyingpylon wrote:
Wed Mar 25, 2020 10:06 am
Interesting post from Denninger this morning. I don't know enough to agree or disagree, but it's an interesting hypothesis about COVID-19 being an attenuated virus from an unfinished vaccine for SARS or MERS.

https://market-ticker.org/akcs-www?singlepost=3524114

Of course it has that unmistakable "off the rails" quality of most of his posts.
Or you could read this instead.
https://www.sciencedaily.com/releases/2 ... 175442.htm

Conspiracy theorist or immunology Ph.Ds, who knows more about this?
Or I could read both things and not be any closer to knowing which is "right".
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Re: Is Denninger right about the coronavirus?

Post by Maddy » Wed Mar 25, 2020 11:06 am

I've followed Denninger for well over a decade now, and although I personally find him to be an insufferable narcissist, his seemingly insatiable desire to be right makes him loath to engage in unfounded speculation. His penchant for banning anyone who offers an opinion without reasonable evidence is legendary.
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Re: Is Denninger right about the coronavirus?

Post by Libertarian666 » Wed Mar 25, 2020 12:13 pm

Maddy wrote:
Wed Mar 25, 2020 11:06 am
I've followed Denninger for well over a decade now, and although I personally find him to be an insufferable narcissist, his seemingly insatiable desire to be right makes him loath to engage in unfounded speculation. His penchant for banning anyone who offers an opinion without reasonable evidence is legendary.
And those are his good points!
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Re: Is Denninger right about the coronavirus?

Post by Cortopassi » Wed Apr 01, 2020 1:28 pm

I can't help myself and continue to read him, and even though I hate his style, the numbers keep on making sense.

But, you just can't come out and say we don't need those ventilators. Those people have a 95% chance of dying anyway. Can you? Can the government possibly, in the next few weeks get to the point where it can reverse course and flip to we need to get back to work, so for all you at risk, you stay home, everyone else, back at it?

http://market-ticker.org/akcs-www?post=238757
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Re: Is Denninger right about the coronavirus?

Post by flyingpylon » Wed Apr 01, 2020 2:05 pm

Cortopassi wrote:
Wed Apr 01, 2020 1:28 pm
I can't help myself and continue to read him, and even though I hate his style, the numbers keep on making sense.

But, you just can't come out and say we don't need those ventilators. Those people have a 95% chance of dying anyway. Can you? Can the government possibly, in the next few weeks get to the point where it can reverse course and flip to we need to get back to work, so for all you at risk, you stay home, everyone else, back at it?

http://market-ticker.org/akcs-www?post=238757
He's also had some posts about the possibility that the coronavirus is being spread by hospital workers, which is something I've wondered about.

But you know, he uses too much bold, italics, and all caps so...
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Re: Is Denninger right about the coronavirus?

Post by Maddy » Wed Apr 01, 2020 2:21 pm

Hey, you're a good-looking dude, Cortopassi!

I agree--Denninger is making a whole lot of sense when he asks whether we should be turning the world upside down to insure that heroic measures are available to a population that is 80-95% likely to die anyway.
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Re: Is Denninger right about the coronavirus?

Post by Tortoise » Wed Apr 01, 2020 2:22 pm

flyingpylon wrote:
Wed Apr 01, 2020 2:05 pm
But you know, he uses too much bold, italics, and all caps so...
And his bare-metal HTML website with low-res animated smiley GIFs is straight out of Geocities circa 1995!

Bare-metal HTML can be a valid minimalist design choice, but when combined with the various combinations of bold, italics, underlining, and all caps, it kind of makes it look like a chain email forwarded by my grandmother. ;D
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Re: Is Denninger right about the coronavirus?

Post by Libertarian666 » Wed Apr 01, 2020 2:33 pm

Tortoise wrote:
Wed Apr 01, 2020 2:22 pm
flyingpylon wrote:
Wed Apr 01, 2020 2:05 pm
But you know, he uses too much bold, italics, and all caps so...
And his bare-metal HTML website with low-res animated smiley GIFs is straight out of Geocities circa 1995!

Bare-metal HTML can be a valid minimalist design choice, but when combined with the various combinations of bold, italics, underlining, and all caps, it kind of makes it look like a chain email forwarded by my grandmother. ;D
No kidding.
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Re: Is Denninger right about the coronavirus?

Post by flyingpylon » Wed Apr 01, 2020 4:10 pm

Tortoise wrote:
Wed Apr 01, 2020 2:22 pm
flyingpylon wrote:
Wed Apr 01, 2020 2:05 pm
But you know, he uses too much bold, italics, and all caps so...
And his bare-metal HTML website with low-res animated smiley GIFs is straight out of Geocities circa 1995!

Bare-metal HTML can be a valid minimalist design choice, but when combined with the various combinations of bold, italics, underlining, and all caps, it kind of makes it look like a chain email forwarded by my grandmother. ;D
I don't disagree... a white background and a sans-serif font would go a long way over there. But obviously, he doesn't give sh*t about such things.

Many of his arguments have merit though. Not saying I agree with everything, but I'm okay with reading a wide variety of viewpoints on things and I'm willing to look past design and writing style issues.
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Re: Is Denninger right about the coronavirus?

Post by flyingpylon » Sat Apr 04, 2020 8:36 am

Denninger’s latest plan to reopen. Comments?

Reopen NOW. Here’s How.
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Re: Is Denninger right about the coronavirus?

Post by Smith1776 » Sat Apr 04, 2020 8:43 am

We were discussing this in our web development lecture recently. Visitors to a website intrinsically determine the credibility of the site based on "true cues." Higher quality sites are deemed more trustworthy and credible, and generally this personal policy for web surfing works. Phishing sites for instance are enormously amateurish.

Having said that, the lack of modern web design on this Denninger fellow's site is kind of... endearing?
I still find the James Rickards portfolio fascinating.
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