Everything In PP is Going Down

[Kshartle]

LC, PS, it's fine. There's no need for anyone (including me) to get bent out of shape over a dissagreement about a matter of fact. I just don't understand any argument against government manipulation of markets. They openly manipulate them. They come out and state their interventionist policies. They also do tons of acts covertly. It seems obvious they do covert acts to manipulate markets in addition to the overt and obvious ones.

I truly can't imagine you actually believe they don't. From my perspective it's like swimming in the ocean and saying you're not getting wet. But whatever, no big deal really.

[LC475]

[My opinion is] a matter of fact. I just don't understand any argument against government manipulation of markets. They openly manipulate them. They come out and state their interventionist policies. They also do tons of acts covertly. It seems obvious they do covert acts to manipulate markets in addition to the overt and obvious ones.

I truly can't imagine you actually believe they don't. From my perspective it's like swimming in the ocean and saying you're not getting wet. But whatever, no big deal really.

And, sure enough, nowhere do you say, "Harry Browne said it on his radio show, eh?  I respect Mr. Browne a lot.  I'll have to look into that.  You sure you don't have any idea which episodes he talked about this issue?".  I am so glad I didn't waste my time trying to find that for you.  You:

1) Already know, for sure, 110%, that you are right.
2) Do not even begin to understand the contrary point of view, by your own account.
3) Are beside yourself with incredulity that anyone could hold this view, which is not surprising, since you do not understand the view.
4) Have absolutely no interest in taking the time and mental effort required to understand the view.

I correctly diagnosed this in advance and saved myself a lot of time.  I am getting better at this communication thing!

[Kshartle]

[My opinion is] a matter of fact. I just don't understand any argument against government manipulation of markets. They openly manipulate them. They come out and state their interventionist policies. They also do tons of acts covertly. It seems obvious they do covert acts to manipulate markets in addition to the overt and obvious ones.

I truly can't imagine you actually believe they don't. From my perspective it's like swimming in the ocean and saying you're not getting wet. But whatever, no big deal really.

And, sure enough, nowhere do you say, "Harry Browne said it on his radio show, eh?  I respect Mr. Browne a lot.  I'll have to look into that.  You sure you don't have any idea which episodes he talked about this issue?".  I am so glad I didn't waste my time trying to find that for you.  You:

1) Already know, for sure, 110%, that you are right.
2) Do not even begin to understand the contrary point of view, by your own account.
3) Are beside yourself with incredulity that anyone could hold this view, which is not surprising, since you do not understand the view.
4) Have absolutely no interest in taking the time and mental effort required to understand the view.

I correctly diagnosed this in advance and saved myself a lot of time.  I am getting better at this communication thing!

1) I've given the reasons and numerous examples and rationale
2) The contrary viewpoint is just a stated opinion without any recognition of my questions or examples, just dissmisal.
3) I don't believe it because you haven't stated the argument
4) I am interested, that's why I asked the questions

Whether or not Browne said governments don't manipulate prices on his radio show is beside the point. I'm sure he didn't say that because it's so nonsensical and contradicts what he wrote in his best sellers that it would be an amaizing case of split personality.

Perhaps he said governments can only fight reality for so long and they eventually have to give up and you missunderstood it to believe that governments don't manipulate market prices. That latter belief is obviously false, as false as saying up is down and black is white.

When the Japanese government runs a deficit or the central bank prints trillions of Yen, do you not think this alters the market price of Yen?

[Kshartle]

[My opinion is] a matter of fact. I just don't understand any argument against government manipulation of markets. They openly manipulate them. They come out and state their interventionist policies. They also do tons of acts covertly. It seems obvious they do covert acts to manipulate markets in addition to the overt and obvious ones.

I truly can't imagine you actually believe they don't. From my perspective it's like swimming in the ocean and saying you're not getting wet. But whatever, no big deal really.

And, sure enough, nowhere do you say, "Harry Browne said it on his radio show, eh?  I respect Mr. Browne a lot.  I'll have to look into that.  You sure you don't have any idea which episodes he talked about this issue?".  I am so glad I didn't waste my time trying to find that for you.  You:

1) Already know, for sure, 110%, that you are right.
2) Do not even begin to understand the contrary point of view, by your own account.
3) Are beside yourself with incredulity that anyone could hold this view, which is not surprising, since you do not understand the view.
4) Have absolutely no interest in taking the time and mental effort required to understand the view.

I correctly diagnosed this in advance and saved myself a lot of time.  I am getting better at this communication thing!

You realize the gold price was stuck at $35/oz for decades right? Do you think this was the market value of 1 oz.? How do you explain the rise to $300 in such a short period after the US goverrnment defaulted on it's promise to exchange 1 oz of gold for $35? Is it not obvious that the government fixed the price?

The minimum wage is $7.25 or whatever. Do you beleive that is the true market price of unskilled labor or has the government fixed the price by putting in a floor for unskilled labor, thereby making it illegal to hire people for less than the minimum wage? There is a market for unskilled labor, just as there is for bonds, stocks and gold, and the government has fixed the price here and manipulated the market. Participants can go against it, but now they have incurred the cost of additional risk should they be caught breaking the law.

[LC475]

Governments and central banks set their short-term interest rates,

Do they?  What do you mean by this?  Governments set the short-term interest rates of what?  What instruments, precisely, are the governments "setting" the short-term interest rates of?  And, secondly, how, precisely, are they doing so?

as well as the reserve requirements for their banks

It is true that the government/Federal Reserve does set the reserve requirement.

as well print or withdraw currency from circulation.

And this is also true.

If they declare that they will not allow rates

The rates of what?  Allow how?

[LC475]

The hurricane distorted/changed the market.

Are you saying governments are like acts of nature PS?

Why not?  Sounds fair enough to me. They're about as rational.  Perhaps a little less predictable.

Governments distort and change markets.  I would agree with that statement.

Governments manipulate markets?  That implies a high level of control.  When I manipulate a tool, I control it with my hands and make it do what I wish it to do.  That statement I cannot accept.  Government doesn't work.  Governments can and do distort, but the results of those distortions are not always predictable and they are certainly not under the governments' control.

To pretend that governments don't distort markets is just nonsensical.

To pretend that I do not distort markets could be considered nonsensical in the same way.  Everyone participating in a market distorts it one way or another.  I start buying cucumbers, the price of cucumbers will go up .000001 cents worldwide.  Distortion!  Bill Gates starts stockpiling megatons of cucumbers?  Distortion of a higher magnitude.  But Bill isn't "manipulating" anything.  The cucumber market still isn't under his control.

This is the point Harry Browne was trying to get across, or at least my humble attempt at conveying it.  The market is fundamentally out of control.  Even the biggest governments in the world cannot actually control the price of gold -- it's too big and too worldwide of a market.  The gold price will do what it's going to do, and no politician can stop it.  The important practical take-away for us is:

If there is high price inflation in the US Dollar, gold will go up powerfully.

It will go up powerfully.

There is nothing any politician, bank, organization,  nor person can do to stop that.

[LC475]

Whether or not Browne said governments don't manipulate prices on his radio show is beside the point. I'm sure he didn't say that

So it doesn't matter if he didn't, but yet you have a very strong and definite opinion that he didn't.  Does it matter or doesn't it?

I myself, I think it does matter.  It matters because I respect Harry Browne a lot as a brilliant and reasonable thinker.  So, when he says something like this, I listen to it, and I consider his explanation of why it is he thinks that way.  In this case, I listened to his explanation and found it profoundly insightful and, ultimately, completely convincing.

because it's so nonsensical and contradicts what he wrote in his best sellers that it would be an amazing case of split personality.

Exactly which of Harry Browne's books have you read in their entirety?

[Kshartle]

To pretend that governments don't distort markets is just nonsensical.

To pretend that I do not distort markets could be considered nonsensical in the same way.  Everyone participating in a market distorts it one way or another.  I start buying cucumbers, the price of cucumbers will go up .000001 cents worldwide.  Distortion!  Bill Gates starts stockpiling megatons of cucumbers?  Distortion of a higher magnitude.  But Bill isn't "manipulating" anything.  The cucumber market still isn't under his control.

This is the point Harry Browne was trying to get across, or at least my humble attempt at conveying it.  The market is fundamentally out of control.  Even the biggest governments in the world cannot actually control the price of gold -- it's too big and too worldwide of a market.  The gold price will do what it's going to do, and no politician can stop it.  The important practical take-away for us is:

The point LC475 is a market is made up of buyers and sellers voluntarily exchanging. You buying the cucumber doesn't "distort" the market, it participates in and creates the market. The market only exists because of buying and selling. Buying and selling isn't a distortion, even if it changes the price. If the entire market for unicorns consisted of you having one to sell and me buying, your selling and me buying doesn't distort the market, it IS the market. Even if PS bids against he's not distorting or manipulating the market, he's helping create it.

If instead he stole the unicorn, or stole my money and used it to buy the unicorn, or pointed a gun at you and said you couldn't sell the unicorn, now he's manipulating the market. It ceases to be a fully functioning market (buyers and sellers exchanging value) and becomes a distorted version with an artificial price and supply/demand curve.

That's my point. Since government's control the currency of course they are distorting every market. Labor laws also do this as well as other actions. The point I was really trying to make is sometimes they take a special interest in certain markets and use the threat of violence as a tool to directly interefere with the price rather than just indirectly.

In the case of gold I suspect they directly interveneing to prevent the price from rising because it would signal the effects of their other distortions/manipulation.

I think we are just dissagreeing on the definition of a market. You are taking the view that the government is just another market participant or some kind of environmental-type factor. It's not either. It's humans actively making decisions and using the threat of violence rather than value exchange to affect the price of certain items.

If the brigand threatens to kill anyone who sets foot on the bridge, thereby causing everyone to use the other bridge, has he "manipulated" the market for travel accross the river or is he just another participant like the bridge owners and the users?

[Kshartle]

Whether or not Browne said governments don't manipulate prices on his radio show is beside the point. I'm sure he didn't say that

So it doesn't matter if he didn't, but yet you have a very strong and definite opinion that he didn't.  Does it matter or doesn't it?

I myself, I think it does matter.  It matters because I respect Harry Browne a lot as a brilliant and reasonable thinker.  So, when he says something like this, I listen to it, and I consider his explanation of why it is he thinks that way.  In this case, I listened to his explanation and found it profoundly insightful and, ultimately, completely convincing.

because it's so nonsensical and contradicts what he wrote in his best sellers that it would be an amazing case of split personality.

Exactly which of Harry Browne's books have you read in their entirety?

How to profit from the coming devaluation
How to profit from a monetary crisis
New profits from the monetary crisis
Inflation-proof your investments
How the best laid Investment plans.......
How I found Freedom......
30 min to financial security......
How to sell anything

[Kshartle]

There is nothing any politician, bank, organization,  nor person can do to stop that.

How did it stay $35 for nearly 4 decades in the face of inflation?

[Kshartle]

Governments and central banks set their short-term interest rates,

Do they?  What do you mean by this?  Governments set the short-term interest rates of what?  What instruments, precisely, are the governments "setting" the short-term interest rates of?  And, secondly, how, precisely, are they doing so?

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

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

[LC475]

The point LC475 is a market is made up of buyers and sellers voluntarily exchanging.

Agreed.

Since governments control the currency of course they are distorting every market.

Very true.  I am glad to see you have adopted my terminology of "distort" rather than the previous term "manipulate."  It conveys the reality more accurately.

The point I was really trying to make is sometimes they take a special interest in certain markets and use the threat of violence as a tool to directly interefere with the price rather than just indirectly.

Well, I don't know where you made or even hinted at that point, but it is one I can agree with.

In the case of gold I suspect they directly intervening to prevent the price from rising because it would signal the effects of their other distortions.

That would make sense, just as it makes sense that a government would intervene in the import-export market in order to benefit their domestic companies by giving them a competitive edge.  But, KShartle, I believe you can agree that the things the government does do not always work.  Do they?  Or do they?  Does the stated, or in this case secret and surmised, motive of the government in intervening in something mean that said motive will necessarily come to pass?

I would submit that it doesn't.  Violence doesn't always work particularly well as a way to deal with the complex world we live in.  Brute force can't always club its way to its goals.  Government plans do not always -- or even often -- work.

I think we are just disagreeing on the definition of a market. You are taking the view that the government is just another market participant or some kind of environmental-type factor. It's not either. It's humans actively making decisions and using the threat of violence rather than value exchange to affect the price of certain items.

No, actually I agree that governments are not market actors.  They are non-market actors, aberrations on the playing field.

The point I disagree on is this: I believe that the people in the US government, despite the extra-market powers they have arrogated to themselves, cannot control the gold market.  Despite their trillions of dollars, despite their massive armies and resources, despite their ability to inflate, they cannot control the gold market.

This is a practical investment point, not a philosophical point.  I am not certainly not saying that anything the government is doing is good!  I am not certainly not saying that anything the government may be doing in regards to the gold market is good.  To the contrary: these things are bad for the economy.  What I am saying is that the US government, powerful as it is, cannot control the gold market.

[LC475]

If there is high price inflation in the US Dollar, gold will go up powerfully.

It will go up powerfully.

There is nothing any politician, bank, organization,  nor person can do to stop that.

How did it stay $35 for nearly 4 decades in the face of inflation?

To say it "stayed" $35 is, as you know, to apply modern terminology to an older situation where it did not apply.  Today, we have a free market price in gold, and also a free market price of the dollar, and the dollar and gold are two separate things.  Back then, the dollar was defined in terms of gold.  There was no gold "price" in terms of dollars -- the dollar was gold. 

What is the price of five-dollar bills in terms of dollars?  Why, it's been $5 for over a hundred years and longer!  Why?  Conspiracy?  No, it's because if you take in your five-dollar bill to any bank, or even many stores, they will convert it into five one dollar bills for you.  It's convertible.  Just so, during 1934 to about 1968, if you had thirty-five dollar bills you could bring them in and convert them to one ounce of gold (if you were a foreign government.  Private citizens could thus do the same thing, indirectly.).  One ounce of gold was like a thirty-five dollar bill, or coin.

It's meaningless to talk about the "price" of something in terms of something to which it's convertible.  It's meaningless to talk about the "price" of twenty-dollar bills in terms of fifty-dollar bills.  And just so it's meaningless to talk about gold ounces in term of dollars, if the one is convertible for the other. 

Thank you for pointing this out.

[LC475]

Governments and central banks set their short-term interest rates,

Do they?  What do you mean by this?  Governments set the short-term interest rates of what?  What instruments, precisely, are the governments "setting" the short-term interest rates of?  And, secondly, how, precisely, are they doing so?

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

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

You didn't answer the question.  You posted two different links.  I want to know precisely what you are claiming the governments set the short-term interest rates of.  There are at least a few candidates.  So rather than me guess, how about you just tell us?

[Kshartle]

This is a practical investment point, not a philosophical point.  I am not certainly not saying that anything the government is doing is good!  I am not certainly not saying that anything the government may be doing in regards to the gold market is good.  To the contrary: these things are bad for the economy.  What I am saying is that the US government, powerful as it is, cannot control the gold market.

"Control" is a strawman argument. That word carries baggage with it. They can clearly suppress the price. They may choose to stop because the cost is too high to continue the manipulation.

I have never used the word "control" when discussing the government's manipulation of the gold price. If I did, it would be qualified with the adverb "attempted".

I think we actually don't really dissagree having read though your responses.

[Kshartle]

Do they?  What do you mean by this?  Governments set the short-term interest rates of what?  What instruments, precisely, are the governments "setting" the short-term interest rates of?  And, secondly, how, precisely, are they doing so?

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

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

You didn't answer the question.  You posted two different links.  I want to know precisely what you are claiming the governments set the short-term interest rates of.  There are at least a few candidates.  So rather than me guess, how about you just tell us?

The fed funds rate and the discount rate.

I know it's the fed not technically the government. Read Browne's "How to profit from the coming monetary crisis" and he explains how the central bank is just an extension of the government.

[Pointedstick]

How does controlling the fed funds rate or the discount rate control short-term interest rates? Couldn't any bank that wanted to offer a different rate? When the Fed lowers to zero the two internal rates that it does control, if anything, doesn't that make the market for short-term loans more free because banks aren't distorted by the "free lunch" of risk-free interest for parking their money with the Fed? Food for thought.

[LC475]

"Control" is a strawman argument. That word carries baggage with it.

Yes, the exact same baggage carried by the word "manipulate," as I see it, just as I explained at the outset.  That is why I am glad we have been able to agree to abandon that term.

They can clearly suppress the price. They may choose to stop because the cost is too high to continue the manipulation.

They can do things which would, in isolation, cause the price of gold to go down, all else equal.  For instance, they could sell off large amounts of gold.  If they do that, the price of gold will go down, if all else were held equal.  However, all else is never equal.  And so for investment / speculative / predictive purposes, we cannot say that the price of gold is going to go up or down or stay the same in the future just because we understand certain things the government is doing and their results.  We just don't know.

I have never used the word "control" when discussing the government's manipulation of the gold price. If I did, it would be qualified with the adverb "attempted".

Cool!  As I explained, "manipulated" just implies far too great a degree of control for me to be comfortable with it.

Manipulate: handle or control (a tool, mechanism, etc.), typically in a skillful manner.

I think we actually don't really disagree having read though your responses.

Yes, that's probably true.

[Kshartle]

"Control" is a strawman argument. That word carries baggage with it.

Yes, the exact same baggage carried by the word "manipulate," as I see it, just as I explained at the outset.  That is why I am glad we have been able to agree to abandon that term.

They can clearly suppress the price. They may choose to stop because the cost is too high to continue the manipulation.

They can do things which would, in isolation, cause the price of gold to go down, all else equal.  For instance, they could sell off large amounts of gold.  If they do that, the price of gold will go down, if all else were held equal.  However, all else is never equal.  And so for investment / speculative / predictive purposes, we cannot say that the price of gold is going to go up or down or stay the same in the future just because we understand certain things the government is doing and their results.  We just don't know.

I have never used the word "control" when discussing the government's manipulation of the gold price. If I did, it would be qualified with the adverb "attempted".

Cool!  As I explained, "manipulated" just implies far too great a degree of control for me to be comfortable with it.

Manipulate: handle or control (a tool, mechanism, etc.), typically in a skillful manner.

  I spoke too soon. We do in fact dissagree on a number of concepts.

L you chose the definition of manipulate that applys to tools or mechanisim. That is not the definition of manipulate that describes the government's actions when intererring with markets. Below is the appropriate one (in my opinion) from Webster's:


"to change by artful or unfair means so as to serve one's purpose"

http://www.merriam-webster.com/dictionary/manipulate

Manipulate is a correct term to use, more so than alter or adjust because the two latter terms don't convey the unfair nature or their alteration. The government alters prices through the use of violence or threats of violence that they claim the legal right to use and everyone else is stripped of that same right, as well as the right of defense from the government (it is a crime to defend yourself from government humans attacking you, you must submit).

When the government buys or sells, or creates rules to limit the buying and selling of others in the gold market it is manipulating the market. Saying that they don't completely control it does not invalidate that they are in fact manipulating it, per the appropriate definition of the word.

You said they can do things to suppress the price "all things being equal". I actually dissagree. The actions they do to suppress the price, do so whether or not everything stays equal. Perhaps what you meant is they take action to decrease the price, and the price would only drop if everything else was equal. That would be correct in my opinion. Suppress and decrease are two different concepts. If the gold market would be going up by $100 a day absent manipulation and now with the government manipulating it the price is only going up $50 then it's being suppressed even though the price is still rising.

You are correct that there are factors that cause the price to rise and fall, other than government action. Yes one cannot predict with certainty that the price will rise or fall based on government action, it is just another factor. That factor is not invalidated by the other factors though as it appears you are claiming. That factor also meets the criteria to be described as "manipulation" though certainly not control (per what I consider the inccorrect defintion of manipulate chosen first).

I hope I've been clear and I hope if I've made an error in logic or thought you'll point it out.

[LC475]

  I spoke too soon. We do in fact disagree on a number of concepts.

No, you're just quibbling over semantics.

[portart]

As Harry said, "Anything can happen but nothing has to happen."  For example, lots of articles on when the market will correct or crash. However it could do neither and sit at these levels for years which is a form of correction without selling off.

[LC475]

Whether or not Browne said governments don't manipulate prices on his radio show is beside the point. I'm sure he didn't say that because it's so nonsensical and contradicts what he wrote in his best sellers that it would be an amaizing case of split personality.

For the record, here is where he said the things with which I agree, and with which you may disagree:

https://web.archive.org/web/20160324133 ... -04-10.mp3

My impression is that your view of things, Kshartle, is more similar to that of the two question-askers asserting an inevitable gold price explosion than it is to that of Harry.  Am I wrong?