Tapering called off

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Kshartle
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Re: Tapering called off

Post by Kshartle » Wed Sep 18, 2013 5:53 pm

Mdraf wrote:
TennPaGa wrote: And, again, you've not explained how the assessment of QE as an asset swap that has no effect on inflation is flawed.
Geez I spent all day explaining how all assets are not the same thing.  An "asset swap" as you describe it is a misnomer. It is not a "swap". One is cash the other is debt.  They can't be just "swapped".  I am not addressing inflation (in this thread). You bring up a new subject. Kshartle is dealing with that.
I've wasted too much of my life explaining these concepts over and over in increasingly simple terms here. When the cumulative weight of propping up ridiculous non-counter points crushes some people the subject is either changed or the electronic equivalent of sticking their fingers in their ears and say "na na na na na" goes on.

Je suis tres fatigue. J'ai fini aussi.

Can we discuss the merits of QE without this magical nonsense about it not having an impact?

Look at the markets for Christ's sake. Clearly there is an impact.

The US stock market dropped in Gold terms, Euro terms, Aussie dollar terms, foreign stock terms, just about everything but dollar terms. Anyone want to venture a guess as to why?
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Re: Tapering called off

Post by Gumby » Wed Sep 18, 2013 5:56 pm

Kshartle wrote:I've wasted too much of my life explaining these concepts over and over in increasingly simple terms here. When the cumulative weight of propping up ridiculous non-counter points crushes some people the subject is either changed or the electronic equivalent of sticking their fingers in their ears and say "na na na na na" goes on.
We aren't sticking our fingers in our ears. You are telling us the definition of Metallism — which we are well aware of — and we are telling you that Metallism might make a little sense if we had commodity money, but our society is based on Credit Money. That's all there is to it.

Come on Kshartle/Mdraf... even the Austrians don't agree with your denial of Credit Money.
Last edited by Gumby on Wed Sep 18, 2013 6:07 pm, edited 1 time in total.
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Re: Tapering called off

Post by MediumTex » Wed Sep 18, 2013 6:08 pm

Gumby wrote:
Kshartle wrote:I've wasted too much of my life explaining these concepts over and over in increasingly simple terms here. When the cumulative weight of propping up ridiculous non-counter points crushes some people the subject is either changed or the electronic equivalent of sticking their fingers in their ears and say "na na na na na" goes on.
We aren't sticking our fingers in our ears. You are telling us the definition of Metallism — which we are well aware of — and we are telling you that would all make sense if we had commodity money, but our society is based on Credit Money. That's all there is to it.
If private sector credit were to start rapidly expanding, under current policies we might have a problem with high inflation.

If and when that happens, I hope that Congress and the Fed will take measures to help prevent such inflation from occurring, perhaps by raising taxes and/or interest rates.

For now, though, private sector credit isn't rapidly expanding, and it's therefore not a great surprise that the Fed's policies are not translating into high inflation.

You have to look at the whole picture, including private sector credit.  If all you look at is what the Fed and Treasury are doing, you can't possibly get a clear picture of what is going on through the whole monetary system.

The time to do something about out current system will be when the economy has completely healed and private sector credit is expanding at a healthy rate.  At that point, the Fed should aggressively raise rates to make sure that credit expansion doesn't begin to fuel more speculative asset bubbles.
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Re: Tapering called off

Post by Gumby » Wed Sep 18, 2013 6:10 pm

Kshartle wrote:Can we discuss the merits of QE without this magical nonsense about it not having an impact?

Look at the markets for Christ's sake. Clearly there is an impact.

The US stock market dropped in Gold terms, Euro terms, Aussie dollar terms, foreign stock terms, just about everything but dollar terms. Anyone want to venture a guess as to why?
We explained this already (literally a few hours before the market's reaction). QE increases excess reserves (while removing other financial assets) and those excess reserves are used to bid up asset prices in an attempt to get a return on those reserves that are no longer invested in bonds and to counteract negative real interest rates (i..e. from a paltry IOR). The jump in the markets are speculators front-running the asset bidding.
Last edited by Gumby on Wed Sep 18, 2013 6:54 pm, edited 1 time in total.
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Re: Tapering called off

Post by technovelist » Wed Sep 18, 2013 8:30 pm

As I've already explained, the Fed can never stop buying bonds, because if they do, the markets will crash.
Again I have been shown to be correct, but of course no one will ever admit it.
That's the fate of all Cassandras: always right, never acknowledged.
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Re: Tapering called off

Post by Pointedstick » Wed Sep 18, 2013 9:50 pm

technovelist wrote: As I've already explained, the Fed can never stop buying bonds, because if they do, the markets will crash.
Again I have been shown to be correct, but of course no one will ever admit it.
That's the fate of all Cassandras: always right, never acknowledged.
I actually do agree with you. I just don't think an end to QE would cause the economy to crash. The markets, sure. QE has clearly blown up a bunch of asset price bubbles.
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Re: Tapering called off

Post by moda0306 » Wed Sep 18, 2013 10:06 pm

technovelist wrote: As I've already explained, the Fed can never stop buying bonds, because if they do, the markets will crash.
Again I have been shown to be correct, but of course no one will ever admit it.
That's the fate of all Cassandras: always right, never acknowledged.
This is no different than gold in a growing economy.  Eventually there won't be enough gold to pay off all the debt plus the outstanding interest payments.  The lack of the growth of the gold supply would create a market crash, eventually.

So yes, tech, any fixed-supply monetary arrangement is bound to collapse.  If you tried to turn the dollar into such an arrangement, it's no different.
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Re: Tapering called off

Post by Kshartle » Thu Sep 19, 2013 8:01 am

technovelist wrote: As I've already explained, the Fed can never stop buying bonds, because if they do, the markets will crash.
Again I have been shown to be correct, but of course no one will ever admit it.
That's the fate of all Cassandras: always right, never acknowledged.
I will acknowledge it. I've been saying the same thing for a long time. Since I understand what QE is, what it does, and how it hurts the economy it's been clear to me that the economy will continue to deteriorate. Price fixing and counterfitting interferes with the distribution of capital. If it was small the economy could shrug it off. Now it's so large we probably need a full scale depression to repair the damage.

Don't worry, we'll get it eventually (Depression). Let's hope they don't don't nuke the economy by accelerating the printing beyond what can be deflated.

That being said, I think after a period of calm now that taper talk will go away, eventually the bad reports will give the FED cover to up the ante over 100 billion per month. I hope you have gold, silver, foreign stocks and foreign bonds in your VP.
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Re: Tapering called off

Post by Kshartle » Thu Sep 19, 2013 8:20 am

Gumby wrote:
Kshartle wrote:I've wasted too much of my life explaining these concepts over and over in increasingly simple terms here. When the cumulative weight of propping up ridiculous non-counter points crushes some people the subject is either changed or the electronic equivalent of sticking their fingers in their ears and say "na na na na na" goes on.
We aren't sticking our fingers in our ears. You are telling us the definition of Metallism — which we are well aware of — and we are telling you that Metallism might make a little sense if we had commodity money, but our society is based on Credit Money. That's all there is to it.

Come on Kshartle/Mdraf... even the Austrians don't agree with your denial of Credit Money.
This is what I'm talking about. 

Clearly I'm defining Metalism even though I've never heard of it and denying the credit theory of money even though I've never heard of it. Ohhh yeah, and I really don't care what Austrians think. Or Germans, or Lebanese, or Hutus or Tootsies.

What I'm stunned by is the inability of MR/MMT devotees and Cullen Roche acolytes to answer simple economic questions:

For Example I asked the following: If I print one trillion dollars (perfect counterfeits) do I have more purchasing power?

Several MR/MMT students responded:

1. Are you the Fed?
2. Depends on what you do with that $1 trillion. If the Fed were to buy a bag of dirt with that $1 trillion, that would be the equivalent of a helicopter drop (since the bag of dirt has no value) and it would be highly inflationary.
3. What if you built a bonfire with it and burned it all up?
4. I don't understand the question.. YOU don't have the power to print $1 trillion.
5. No. Your purchasing power doesn't change if you lost a financial asset of equal value — which is what would happen if a Primary Dealer got that money from the Fed.
6. You don't have more purchasing power after a POMO transaction
7. Then you are probably going to jail.
8. A counterfeiter is creating a fake financial asset that defrauds people into believing he has purchasing power. It's known as fraud. What's your point?
9. If private sector credit is contracting on your island, people might not even notice the extra money you are printing.

Now this is a question even a child can easily answer. Cleary I have more purchasing power. And since it can't be created by printing it had to be stolen from it's rightful owners.

There are other examples. Such as If A has zero money and B has $100, if B loans the $100 to A and gets an IOU in return, has their respective purchasing power changed?

If you explain to a child that purchasing power is the ability to buy stuff they will answer this easily.

The MR/MMT students really struggled with this one. Yes, no, I don't get it, I don't understand, A has more but B has the same, A doesn't have more etc.

No one got it right. A now has the purchasing power that B had. He has borrowed it. They cannot by loaning create purchasing power.

My question is, how does studying MR/MMT turn very simple economic questions into such mind-benders that getting the right answer would seemingly have to happen by accident?
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Re: Tapering called off

Post by Gumby » Thu Sep 19, 2013 8:26 am

Kshartle wrote:The MR/MMT students really struggled with this one.
KShartle... It's simply because you've asked a question that doesn't happen in reality. There are no perfect counterfeiters. Counterfeiters commit fraud. You can't expect a descriptive framework — based on reality — to answer a question about hypothetical fantasylands where counterfeiters are causing moral issues. It just ain't going to happen.

But, hey... Keep it up with the bedtime stories. I'm sure you'll figure something useful out from them.
Last edited by Gumby on Thu Sep 19, 2013 8:31 am, edited 1 time in total.
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Re: Tapering called off

Post by Kshartle » Thu Sep 19, 2013 8:31 am

Gumby wrote:
Kshartle wrote:The MR/MMT students really struggled with this one.
KShartle... It's simply because you've asked a question that doesn't happen in reality. You can't expect a descriptive framework — based on reality — to answer a question about hypothetical fantasylands where counterfeiters are causing moral issues. It just ain't going to happen.

But, hey... Keep it up with the bedtime stories. I'm sure you'll figure something out from them.
Which one doesn't happen in reality? People don't counterfeit or people don't borrow money? What alternate reality are you talking about?
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Re: Tapering called off

Post by Gumby » Thu Sep 19, 2013 8:33 am

Kshartle wrote:
Gumby wrote:
Kshartle wrote:The MR/MMT students really struggled with this one.
KShartle... It's simply because you've asked a question that doesn't happen in reality. You can't expect a descriptive framework — based on reality — to answer a question about hypothetical fantasylands where counterfeiters are causing moral issues. It just ain't going to happen.

But, hey... Keep it up with the bedtime stories. I'm sure you'll figure something out from them.
Which one doesn't happen in reality? People don't counterfeit or people don't borrow money? What alternate reality are you talking about?
There are no "perfect" counterfeiters. Counterfeiters commit fraud. You are basically talking about a crime and MR is simply a manual for the banking system.

For instance, your descriptive car manual doesn't cover crimes of car theft. That doesn't make the manual incorrect. It simply means that the manual isn't interested in discussing crime.

You have this desire to turn every conversation into a political one. And I just don't care about political conversations that much.
Last edited by Gumby on Thu Sep 19, 2013 8:37 am, edited 1 time in total.
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