Poll - When will the FED taper?

[doodle]

I feel like I've kicked down all 4 pillars to a structure but it continues to stand because of all the hot air still inside.



.

Good thing I wasn't drinking milk when I read this, it would have been coming out of my nose

[moda0306]

You are in the wrong if it's my property. You might succeed in stealing it from me though. History books have nothing to do with it.

Why is it your property? Cause you say so? Well, I say it's not your damn property.

You can give me every reason in the world why you think it's your property, if I don't speak your language or buy into your particular philosophy I don't give a crap what comes out of your mouth. Are you going to force me to believe your philosophy now? I thought you were anti force?

I have explained over and over where property rights come from, why they exist, why we have a right to defend them etc etc.

There are bunch of fallacious arguments above but I'm tired of pointing these out.

If you don't think people have a right to property then explain why. Just saying I'm wrong or coming up with ridiculous scenarios or creating strawmen is extremely lame.

If you think you can go around stealing people's property then please do it and report back how well it worked out for you.

In my estimation, we're just barely cracking the surface of "property rights."  You really haven't explained where property rights come from in a way that guides me to know and agree with those rights.

We FINALLY got to a point where you state that property rights are only present if you can assert those rights, but you're not stating where the right came from in the first place (or maybe I missed it).  Property only explains that something is owned by someone. I believe an apple can be owned by someone, but that an ocean cannot.  So I guess I believe in limited property rights.

The bigger or further away from you something gets, the more I start to question the legitimacy of the claim of legitimate ownership.

I don't see what's wrong with that. It seems very consistent with the principal of individual sovereignty.

[Kshartle]

In other words, you are saying that government force is illigitimate, but mob rule is perfectly ok?

yeah, murder is bad so beating people is perfectly ok. In other words, your statement is nonsense. I don't know the name of this fallacious argument but I'll just call it appeal to nonsense.

[Kshartle]

you're not stating where the right came from in the first place (or maybe I missed it).  Property only explains that something is owned by someone. I believe an apple can be owned by someone, but that an ocean cannot.  So I guess I believe in limited property rights.

The bigger or further away from you something gets, the more I start to question the legitimacy of the claim of legitimate ownership.

I don't see what's wrong with that. It seems very consistent with the principal of individual sovereignty.

I have stated it but perhaps not clearly. You own yourself and the effects of your actions. I'm beat and things are getting a little heated so I'm tapping out for now. In the mean time......if you think people don't have the right of property ownership maybe you can explain why?

[moda0306]

This discussion is like world war one trench warfare....

Persuasion has failed..Kshartle believes he has a right to property, I don't think he does. He wants to turn my favorite hunting grounds into a corn field. Violence ensues....it's the history of the world. Who is right? I guess that depends on who wins the war and gets to write the history books.

You are in the wrong if it's my property. You might succeed in stealing it from me though. History books have nothing to do with it.

Why is it your property? Cause you say so? Well, I say it's not your damn property.

You can give me every reason in the world why you think it's your property, if I don't speak your language or buy into your particular philosophy I don't give a crap what comes out of your mouth. Are you going to force me to believe your philosophy now? I thought you were anti force?

Exactly.


Saying that this is my property because I can defend it as my property because it is my property because I can defend it as my property.....

and it goes on and on my friends......

is not a legitimate logical framework.  Rights are a MORAL phenomenon.  Tell me why you have the RIGHT to defend property as if it's yours and shoot "trespassers," and PLEASE don't answer "because I can defend it and I made a pretty sign that says its mine," because the government's got plenty of guns and plenty of signs... are they legitimate owners of most of the country just because they have signs and the ability to defend those claims?

[Kshartle]

The bigger or further away from you something gets, the more I start to question the legitimacy of the claim of legitimate ownership.

I don't see what's wrong with that. It seems very consistent with the principal of individual sovereignty.

The size of property and the distance to the person has nothing whatsoever to do with their legitimate ownership. It does make it more difficult for them to assert their rights of ownership though.

[doodle]

In other words, you are saying that government force is illigitimate, but mob rule is perfectly ok?

yeah, murder is bad so beating people is perfectly ok. In other words, your statement is nonsense. I don't know the name of this fallacious argument but I'll just call it appeal to nonsense.

Since there are other people there has to be critera by which they recognize your legitimate ownership of property. Some might not recognize so you have to be able to assert it. If others recognize it they will help you assert it. They will help solve your problem and will not appreciate the people who don't recognize it. We don't want to live with thieves. We all know that is bad.

Sounds like a dictionary definition of mob rule to me.

[moda0306]

you're not stating where the right came from in the first place (or maybe I missed it).  Property only explains that something is owned by someone. I believe an apple can be owned by someone, but that an ocean cannot.  So I guess I believe in limited property rights.

The bigger or further away from you something gets, the more I start to question the legitimacy of the claim of legitimate ownership.

I don't see what's wrong with that. It seems very consistent with the principal of individual sovereignty.

I have stated it but perhaps not clearly. You own yourself and the effects of your actions. I'm beat and things are getting a little heated so I'm tapping out for now. In the mean time......if you think people don't have the right of property ownership maybe you can explain why?

What does "the effects of my actions" mean though?  That is so vague and ambiguous?  I mean I get it that if I carve stone into a beautiful work of art, that there is a natural sovereign connection to me there, but claiming land as my own because I think I saw it first?  Is that an "effect of my action?"

Yeah let's take a cool-down.  Have a great night/weekend.  Please try to understand I'm NOT trying to be purposefully dense.  I like my house and my yard.  I just think it's a complex social arrangement that makes it "mine," not some sort of underlying right to form the world around me as I choose.

[moda0306]

The bigger or further away from you something gets, the more I start to question the legitimacy of the claim of legitimate ownership.

I don't see what's wrong with that. It seems very consistent with the principal of individual sovereignty.

The size of property and the distance to the person has nothing whatsoever to do with their legitimate ownership. It does make it more difficult for them to assert their rights of ownership though.

ARRRRRRRGHGHGHGHGHGHH!!!!

You just said that you have to be able to assert your ownership of property to have a right to it... did you not?  Did I completely misinterpret what you mean by that?


I don't understand the point of a moral philosophy that focuses on rights if we're immediately jumping to our ability to defend said rights as a prerequisite to having the f*cking rights in the first place!!


(Take a deep breath)

K fellas have a good one haha.

[Kshartle]

In other words, you are saying that government force is illigitimate, but mob rule is perfectly ok?

yeah, murder is bad so beating people is perfectly ok. In other words, your statement is nonsense. I don't know the name of this fallacious argument but I'll just call it appeal to nonsense.

Since there are other people there has to be critera by which they recognize your legitimate ownership of property. Some might not recognize so you have to be able to assert it. If others recognize it they will help you assert it. They will help solve your problem and will not appreciate the people who don't recognize it. We don't want to live with thieves. We all know that is bad.

Sounds like a dictionary definition of mob rule to me.

It will when you think humans are a collection of vicious wild animals hell bent on murder and theft. This is an emotional issue.

[Kshartle]

The bigger or further away from you something gets, the more I start to question the legitimacy of the claim of legitimate ownership.

I don't see what's wrong with that. It seems very consistent with the principal of individual sovereignty.

The size of property and the distance to the person has nothing whatsoever to do with their legitimate ownership. It does make it more difficult for them to assert their rights of ownership though.

ARRRRRRRGHGHGHGHGHGHH!!!!

You just said that you have to be able to assert your ownership of property to have a right to it... did you not?  Did I completely misinterpret what you mean by that?

More difficult to assert does not equal illegitimate.

[Bean]

lol, this thread has exploded.

QE is making dollars that never existed before and thereby chasing out money from the bond market via lower rates.  This money goes to other uses, inflating the money supply of those markets.

Saying that QE means nothing, is like me giving you a fart in a jar to buy one your prized gold coin.  Nothing for something and also changing the supply of a limited resource that everyone else has to buy with something of actual value.

...unless you like smelling farts...fart sniffers! 

[moda0306]

Bean,

Why would those reserves chase other assets if the reserves are earning .25% interest from the fed, which is MORE than they were earning when they were t-bills.

And we have an unlimited money-multiplier, so the reserves aren't helping bid-up anything.  The ability to "bid up" those assets is already there... the variable that will trigger it would be credit-worthy borrowers, with the assets and income to justify a loan.

You really need to read up on the banking systems.  It ain't what it seems.  Sorry for the condescention.

[Bean]

Moda, we will just have to disagree.

These are the conclusions I have come to, right or wrong they are what I believe.  Just because you think I am wrong, doesn't really prove you right.

Sorry for the equal condescension, but maybe you just can't understand why you are wrong.

Edit: Weird we are opposite sides, but found the same portfolio.  What drew you to this portfolio?

[Gumby]

QE is making dollars that never existed before

Totally not true. The T-Bonds in our Permanent Portfolios are dollars represented as financial assets. If you have $100,000 Permanent Portfolio that has $50,000 saved as T-Bonds and the Fed gives you $50,000 in cash for those T-Bonds, two things happen.

1) You are no richer than you were before the transaction.

2) You are no more likely to spend your new dollars than you were before the transaction.

With QE, the banks are holding T-Bonds as financial assets on their balance sheet. QE swaps out those financial assets and replaces them with excess reserves. The excess reserves never leave the Federal Reserve. They are stuck there. They never enter circulation. They don't make people feel richer. They can't leave the bank and account holders at those banks don't notice any difference in their bank accounts.

However, banks will use those excess reserves to bid up financial assets — in an attempt to create some revenue with those reserves that are no longer earning the level of interest they were earning from when they were held as longer termed Treasuries.

The balance sheet of the bank never changes from before or after QE. Nobody feels any richer except for those holding financial assets that were bid up beyond their true value. But, as we know, that wealth effect is not real — it's irrational exuberance.

I realize that this doesn't line up with your world view, Bean, but those are the factual mechanics of a QE transaction.

A simpler way to look at it is like a glass full of ice cubes and water. When the Treasury spends, it adds ice cubes to the glass (a net deposit of a Treasury Bonds in the private sector, represented as ice cubes). The Fed can turn up the heat (via QE) and melt those ice cubes down into water (i.e. turning Treasuries into liquid currency). Melting the ice cubes does not change the level of H20 in the glass.

That's exactly what happens when the Fed swaps Treasury bonds for cash. The balance sheets of the banks do not change. It doesn't make them more likely to loan money because banks don't have any reserve requirements in the first place! (The reserve requirement has been zero since December 1990.)

[Bean]

QE is making dollars that never existed before

Totally not true. If you have $100,000 Permanent Portfolio that has $50,000 saved as T-Bonds and the Fed gives you $50,000 in cash for those T-Bonds, two things happen.

1) You are no richer than you were before the transaction.

2) You are no more likely to spend your new dollars than you were before the transaction.

With QE, the banks are holding T-Bonds as financial assets on their balance sheet. QE swaps out those financial assets and replaces them with excess reserves. The excess reserves never leave the Federal Reserve. They are stuck there. They never enter circulation. They don't make people feel richer. They can't leave the bank and account holders at those banks don't notice any difference in their bank accounts.

However, banks will use those excess reserves to bid up financial assets — in an attempt to create some revenue with those reserves. But, the balance sheet of the bank never changes from before or after QE. Nobody feels any richer except for those holding financial assets. But, as we know, that wealth effect is not real — it's irrational exuberance.

I realize that this doesn't line up with your world view, Bean, but those are the factual mechanics of a QE transaction.

A simpler way to look at it is like a glass full of ice cubes and water. When the Treasury spends, it adds ice cubes to the glass (a net deposit of a Treasury Bonds in the private sector, represented as ice cubes). The Fed can turn up the heat and melt those ice cubes down into water (i.e. turning Treasuries into liquid currency). Melting the ice cubes does not change the level of H20 in the glass.

That's exactly what happens when the Fed swaps Treasury bonds for cash. The balance sheets of the banks do not change. It doesn't make them more likely to loan money because banks don't have any reserve requirements in the first place! (The reserve requirement has been zero since December 1990.)

Let's say there was 1M of dollars out there to start out with.  They give me that 50k in cash via QE.  Are saying there isn't 1.05M in dollars now floating around out there competing for limited resources?

Why doesn't the FED just buy every government bond then if there is no impact?

So, let's dumb this down for my inferior intellect, instead of getting all fancy pants: 10 dudes and 10 chicks at a party. Another 3 dudes show up, but competition doesn't increase for picking the girls up

[Gumby]

Let's say there was 1M of dollars out there to start out with.  They give me that 50k in cash via QE.  Are saying there isn't 1.05M in dollars now floating around out there competing for limited resources?

The Fed is not allowed to throw money into the private sector without taking a financial asset of equal value away (and its illegal for them to buy tangible items). So, if there were $1 million in financial assets, and they gave you $50 thousand in cash via QE, they would have to take away $50 thousand in other financial assets (i.e. Treasury bonds). You would feel no richer after the transaction because there would still only be $1 million in total financial assets.

So, let's dumb this down for my inferior intellect, instead of getting all fancy pants: 10 dudes and 10 chicks at a party. Another 3 dudes show up, but competition doesn't increase for picking the girls up?

If 3 dudes show up, 3 dudes have to leave. I guess you could say that if 3 dudes with suits show up, 3 dudes with jeans/t-shirts on have to leave (after all, they are "different" dudes). But, the effect is the same in that there is no more or less competition for chicks.

[Pointedstick]

If 3 dudes show up, 3 dudes have to leave. I guess you could say that 3 dudes with jeans leave and 3 dudes with suits show up (after all, they are "different" dudes). But, the effect is the same in that there is no more or less competition for chicks.

…Unless the 3 new dudes are more desirable to the chicks, which is possible. But there are still the same number of dudes in the party, even if their collective attractiveness is different.

[Gumby]

Why doesn't the FED just buy every government bond then if there is no impact?

There is an impact. It impacts interest rates that ripple across the private sector. And banks and investors actually want to own Treasury bonds rather than cash. The banks demand them. It's difficult for the banks to earn interest on cash reserves that never leave the Fed, and investors also like the market volatility of T-Bonds in their portfolios (think LTTs in the PP!)

[Bean]

Let's say there was 1M of dollars out there to start out with.  They give me that 50k in cash via QE.  Are saying there isn't 1.05M in dollars now floating around out there competing for limited resources?

The Fed is not allowed to throw money into the private sector without taking a financial asset of equal value away (and its illegal for them to buy tangible items). So, if there were $1 million in financial assets, and they gave you $50 thousand in cash via QE, they would have to take away $50 thousand in other financial assets (i.e. Treasury bonds). You would feel no richer after the transaction because there would still only be $1 million in total financial assets.

By definition QE increases base money. So you are suggesting an increase to the monetary base is not inflationary?

[Gumby]

Let's say there was 1M of dollars out there to start out with.  They give me that 50k in cash via QE.  Are saying there isn't 1.05M in dollars now floating around out there competing for limited resources?

The Fed is not allowed to throw money into the private sector without taking a financial asset of equal value away (and its illegal for them to buy tangible items). So, if there were $1 million in financial assets, and they gave you $50 thousand in cash via QE, they would have to take away $50 thousand in other financial assets (i.e. Treasury bonds). You would feel no richer after the transaction because there would still only be $1 million in total financial assets.

By definition QE increases base money. So you are suggesting an increase to the monetary base is not inflationary?

Correct. It's an increase in base money, but a decrease in other financial assets of equal value. The total amount of assets doesn't change. (In fact, the private sector loses future interest income when Treasury bonds are handed over to the Fed.)

Base money is the money that banks hold at the Fed. It never leaves the Fed. Ever. It is only used for interbank transfers. The overwhelming majority of what people think of as "money" is really just various forms of other financial assets (private credit, commercial paper, agency debt, money market funds, Treasury bonds, etc.). The overwhelming majority of our "money" is not base money.

In fact, there is currently only $3 trillion in base money and $56 trillion in private credit instruments, $100 trillion in shadow banking (some of which includes the $56 trillion in private credit) and $16 trillion in Treasury bonds. These are all assets of the private sector that represent a sh*t load of purchasing power. The $3 trillion in base money is just used for the interbank transfers of that crap load of +$100 trillion of purchasing power. In other words, base money enables the transfer of our enormous credit-based monetary system between banks. And you really don't need all that much base money to accomplish that (~$1 Trillion before 2008).

Base money is basically only used at the end of the business day to settle the movement of that enormous amount of private sector credit between banks. If the Fed melts down a lot of those private credit assets into base money, it doesn't really accomplish all that much other than making banks scramble for ways to make up the lost income that would have been made in those various Treasury or credit assets.

[moda0306]

this thread sure went far and fast into some weird territory.

i think those expressing the "property is theft" - "property doesn't exist" point of view, have wandered into an "if a tree falls in the woods and nobody is there to hear it does it make a sound" argument,
i imagine they would all be just as upset as those of us who believe in property if someone punched them in the nose or tried to make them "squeal like a pig" and they would defend their person as if it was their own property in such a situation ...they would also be likely to take the view that the gold portion of their portfolio belongs to them (any who don't are welcome to send it my way),

and yet so much confusion when the same principle is applied to land??

Simon.

Let's not forget that "rights" are a man-made moral concept.  They aren't natural from a biological perspective or ecological perspective.

The idea that our bodies should be sovereign and under nobody else's direct influence is very well within the idea of individual sovereignty, even though we are all effectively stuck on a rock together.

The idea that our talents and tools we can build, even if it means making some modest claims from the natural state around us, should be ours, and tradable to others freely, is a very natural extensions.

Building a permanent residence on a plot of land is a bit more extensive, but is quite natural, but often accompanies vast other claims.

These vast other claims just build and build to the point where they are actually hindering others from enjoying their freedom, including folks who may have been using that land in less extensive, formal ways. 

Land is not the same as our sovereign bodies.  It's hardly a reasonable extension of them.  It's a natural ecological physical body that we may pluck from for benefit or inhabit a small part of like a squirrel, but to claim valuable natural assets as your own is ridiculous from a standpoint of individual sovereignty, because it actually inhibits others exercising their sovereignty by creating a greedy rat race to see who can fence, farm and defend them the quickest. If I don't want to participate, I'm left with nothing, because apparently my hunting on land wasn't good enough for those who wanted to turn it into a farm and call it their own.



Private property is a philosophical connection of external physical objects to our

[Bean]

By definition QE increases base money. So you are suggesting an increase to the monetary base is not inflationary?

Correct. It's an increase in base money, but a decrease in other financial assets of equal value. The total amount of assets doesn't change.

Base money is the money that banks hold at the Fed. It never leaves the Fed. Ever. It is only used for interbank transfers. The overwhelming majority of what people think of as "money" is really just various forms of other financial assets (private credit, commercial paper, agency debt, money market funds, Treasury bonds, etc.). The overwhelming majority of our "money" is not base money.

In fact, there is currently only $3 trillion in base money and $56 trillion in private credit instruments, $100 trillion in shadow banking (some of which includes the $56 trillion) and $16 trillion in Treasury bonds. These are all assets of the private sector that represent a sh*t load of purchasing power. The $3 trillion in base money is just used for the interbank transfers of that crap load of +$100 trillion of purchasing power.

Base money is basically only used at the end of the business day to settle the movement of that enormous amount of private sector credit between banks. If the Fed melts down a lot of those private credit assets into base money, it doesn't really accomplish all that much other than making banks scramble for ways to make up the lost income that would have been made in those various assets.

This is not entirely the truth.  Base money is also total currency in circulation.  Also the increase in base money allows for corresponding increases in the total money supply via the fractional reserve system.

[Gumby]

This is not entirely the truth.  Base money is also total currency in circulation.

I assume you are talking about the paper/coin currency in our pockets? You are talking about an infinitesimally small portion of total base money. The overwhelming majority of base money is money that just stays at the Fed and never leaves.

Also the increase in base money allows for corresponding increases in the total money supply via the fractional reserve system.

Not so when the reserve requirement is ZERO. The reserve requirement has been ZERO since December, 1990. In other words, banks can legally print/loan an infinite amount of money without the reserves to back it up. Giving the banks even more reserves does them no good in terms of the money multiplier effect when the reserve requirement is ZERO.

Furthermore, research from the Federal Reserve refutes the textbook money multiplier effect that we were all taught in elementary school...

“Changes in reserves are unrelated to changes in lending, and open market operations do not have a direct impact on lending. We conclude that the textbook treatment of money in the transmission mechanism can be rejected.”?

Source: http://www.federalreserve.gov/pubs/feds ... 041pap.pdf

The Fed's own research concludes that the Money Multiplier doesn't exist. And Japan's own experience and research showed the exact same thing almost a decade earlier.

And why not? When the reserve requirement is ZERO, it does a bank no good to turn its financial assets into base money. A bank doesn't need that much base money if the reserve requirement is ZERO. All it needs is enough base money for any potential interbank transfers that might happen.

EDIT: And, if you want evidence, the Fed tries to measure the money multiplier effect.

[align=center][/align]

As you can see, adding base money does not do anything to the money multiplier. It's actually less than 1. If you multiply anything by <1, you get less money

[Bean]

Still not the whole truth.

A depository institution's reserve requirements vary by the dollar amount of net transaction accounts held at that institution. Effective December 29, 2011, institutions with net transactions accounts:

Of less than $12.4 million have no minimum reserve requirement;

Between $12.4 million and $79.5 million must have a liquidity ratio of 3%;

Exceeding $79.5 million must have a liquidity ratio of 10%.

The numerical amounts stated above are recalculated annually according to a statutory formula.
Effective December 27, 1990, a liquidity ratio of zero has applied to CDs, savings deposits, and time deposits, owned by entities other than households, and the Eurocurrency liabilities of depository institutions. Deposits owned by foreign corporations or governments are currently not subject to reserve requirements.

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