Kshartle wrote:You are so outmatched in any discussion that requires reason and evidence that you will try every pitiful verbal tactic you can imagine to provide the appearance of an argument.
Says the person who just called me a 12-year old and can't refute anything I've said or linked to. Me thinks we have a troll here, people.
Kshartle wrote:The slightest scratch at the surface exposes that there's nothing there.
Slightest scratch? You just sit around dismissing everything and calling people names all day. You haven't scratched anything!
Last edited by Gumby on Fri Sep 06, 2013 2:06 pm, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
It makes it harder than it already is to break out of whatever belief paradigm we are currently inhabiting.
Kshartle has the same perspective as most people out in the world seem to have. Maybe it's right. I don't know. What I do know, though, is that this conventional wisdom has not done a very good job of explaining the effects of certain monetary and fiscal policies for the past few decades.
It's certainly possible that we are just working up to a terrible inflationary catastrophe that will validate all of these worries and Kshartle and those of his ilk will be able to say: "You see!!! I told you so. It took a LOT longer than I thought it would, but I have now been proven right."
That could happen. Who knows?
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
MediumTex wrote:
I don't think there are any trolls here.
I actually REALLY appreciate Kshartle for taking the other side of this debate because it is an important debate to have.
I appreciate the chance to challenge my beliefs as well. That's why I take part in these discussions. It just seems odd that he can't openly discuss and analyze these contrarian ideas that challenge our conventional wisdom.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
TennPaGa wrote:
Yes, Gumby listed people who changed their perspective, but he acknowledged that it was not an argument. It was simply to illustrate that people are capable of changing their perspective on deep-seated views.
Why do you think he listed people who changed thier ideas? Do we need to change the subject into a disscussion of how people are capable of changing their minds? I mean really, do you think that was it?
It is ad-hominem. It is "Others have thought like you and changed their minds". So rather than actually provide evidence or reason it's an attempt to dismiss the position by saying others have thought that way and changed thier minds. It is a very basic tactic to avoid reason and logic to support your dissagreement. It goes on all the time here because only a few people ever call it out.
Kshartle wrote:It is a very basic tactic to avoid reason and logic to support your dissagreement. It goes on all the time here because only a few people ever call it out.
Well, we've already provided examples, with reason and logic, as to why the interest rate could fall to (near) zero. It's pretty clear that you're the one avoiding the chance to respond on those examples. Why won't you try to use "reason and logic" to refute those hypotheses?
Last edited by Gumby on Fri Sep 06, 2013 2:16 pm, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
Since I've only been here posting a couple of months my opinion is that there is an entrenched number of posters who follow the Cullen Roche MR in a cult like fashion and jump on anyone who disagrees. Instead of debating issues and following one line of thought such people repeatedly post the same mantras again and again. It serves no purpose in furthering anything at all. As soon as their arguments are vulnerable they change the subject and go off on a tangent with numerous metaphors which are irrelevant to the discussion.
I started this thread hoping to discuss technical charts but at the mere mention of bonds the MR gang start in with their mantras. It's tiring.
Mdraf wrote:As soon as their arguments are vulnerable they change the subject and go off on a tangent
It's so odd to hear you say that. All this time we've simply been asking people to refute our statements, and nobody seems to be able to do it. I mean, if our arguments are so "vulnerable" you'd think someone would have refuted them by now. But, nobody even attempts to do so.
Neither you, nor Kshartle has refuted a single statement that's been made about MR. Not ONE!
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
Mdraf wrote:As soon as their arguments are vulnerable they change the subject and go off on a tangent
It's so odd to hear you say that. All this time we've simply been asking people to refute our statements, and nobody seems to be able to do it. I mean, if our arguments are so "vulnerable" you'd think someone would have refuted them by now. But, nobody even attempts to do so.
Neither you, nor Kshartle has refuted a single statement that's been made about MR. Not ONE!
Just saying this doesn't make it true. They've been refuted both in this thread and others. Usually Pointedstick tries, to his credit, to reconcile both sides and that's fine. But then it starts from scratch again in another thread.
moda0306 wrote:
1. However, this isn't some kind of hyperinflationary endgame
2. the government that is issuing this currency has been nice enough to give us interest that quite often eats up that inflation at no default risk.
3. Inflation is just simply not that big of a deal, and is mostly avoidable
God bless America, let me handle these.
1. This is a strawman you're creating. Please tell me when I've said this HAS to end in hyperinflation. You can create and knock down strawmen all day long like it's your job.
2. They are not being nice. This is the required price for their borrowing. They can't afford the market price anymore so they need the central bank to print and accomdate which is just theft from savers. They can't tax and legitmately borrow enough so they have to apply the stealth inflation theft/tax. This is basic basic basic and goes back to the Romans and berfore. Debasement of currency comes from the parctice of adding base metals to the real (gold/silver) money supply.
3. An individual can minimize it's impact and profit from it. But the ENTIRE population can't. You're changing the subject to how an idividual can deal with inflation. You can change the subject all day like it's you job but God it's irritating.
Kshartle,
1) I apologize for ascribing a hyperflationary endgame prediction to your assertions. I have heard that a lot from many Austrians that bash MR, so I took it a step too far and made assumptions about your predictions.
2) Regarding borrowing, why would the entity that issues currency ever have to borrow it? The "natural rate" of a currency issuer to borrow currency is obviously 0%. Anything higher than that just sets an interest rate floor.
3) My apologies for changing the subject. We can get back to macro-level pontificating now.
You assert that the government is engaging in gross manipulation of rates and money, but NONE of the expected indicators suggest this. The government may control the money supply, but they can't control the velocity of money beyond what they spend. The government can control interest rates on government debt, but the private sector sets its own rates in contracts on debt engaged in between its players.
Both inflation and private borrowing indicate none of the terrible "manipulation" that you claim. These are things one would expect to see huge indicators within when it comes to evidence of government-market manipulation.
1. Ok thank you. As I've said in the past....Not Austrian. Appreciate the recognition that I've never said hyperinflation is inevitable. I don't think it's even likely.
2. They aren't issuing it, they are borrowing it. It looks like they're issuing when the FED prints. It has the same effect as issuing when the FED prints because they just send the interest back to the gubmit. If they just issued it though rather than borrow it would signal to the market that the new dollars are permanent and would greatly increase inflation expectation. There would be no principle payback mechanaism to reduce the money supply or growth rate in the future like Ben keeps saying. He says don't worry about all the bond-buying creating inflation because we'll just let it mature and retire that currency from circulation. He's trying to have his fix without getting a hangover.
3. Hey no problem it's easy to go off in different direction. This started as a discussion about technical indicators on TLT and I brought up fundamentals of LTBs so......guilty.
What indicators are you talking about? I'm sorry but, if I'm talking about the likelihood of events that haven't happened yet, the fact that they haven't happened yet is not any kind of evidence that they won't happen. I'm talking about low interest rates in the long-run requiring more and more printing to buy bonds or higher rates and a cesation of monetary expansion making it impossible for the government at some point to pay all it bills. And the combo of all this is that at present, I don't see how a REAL return in LTBs can occur in the long-run.
The fact is these low rates have required a huge intervention and the pace has been growing.
Do you think the central bank can stop monitizing the debt and the government can refuse to issue new currency and in the long run still be able to keep up the interest and principle payments, which sit at 5 trillion a year or so? If you do....please share how?!?! I don't see it! I'm blind!
MediumTex wrote:
I don't think there are any trolls here.
I actually REALLY appreciate Kshartle for taking the other side of this debate because it is an important debate to have.
I appreciate the chance to challenge my beliefs as well. That's why I take part in these discussions. It just seems odd that he can't openly discuss and analyze these contrarian ideas that challenge our conventional wisdom.
It is odd what a doo-doo head I am. I'm just not equipped to discuss these and analyze how the natural interest rate is zero. I'm also not equipped to disscus how pigs should fly.
To suggest that interest rates should naturally be zero is to suggest that money has no value or that humans are incabable of recognizing it has value or to suggest that humans in total prefer the gain of others to their own.
I hope it's blazingly obvious to everyone that with that little sentence the idea of a natural interest rate of zero is complete and utter hogwash.
So I do not feel completely alone in the world, anyone who agrees with my last sentece....please chime in.
I am prepared to defend it even if I'm the only one in the world who believes it.
What is the basis of your assertion that an entity that issues currency has a "natural" rate of higher than 0% if it wants to spend that currency on other things that government does?
If you think that having the government approach the debt market is a healthy internal check on government spending, we can have that argument, but that's a policy decision. It's no different than the argument over how the military should be organized or the EPA hierarchy should work.
But we have a system designed where the act of issuing currency by the government, by law, has to be done through open-market operations, usually buying government securities (I'd much rather have them do this than picking winners and losers in the private debt market, which they've done a little of). Once again, if you disagree with this, that's fine... I think it's a bit silly myself, but this is a policy debate, once again.
To me, we have a system build on gold standard mechanics, but hiding a more chartalist/bank-money combination of fundamentals. That's just the way it is. This means that taxation combined with a productive economy are what make our money valuable, not some yellow metal... and our national debt is an interest rate management tool.
If you really don't like the idea of the federal reserve being designed such that it's buying back bonds as it issues money, that's totally cool with me. This would have a much different affect on the markets though... First off, when the fed issues currency, it would have to decide whose balance sheet to put it on... and once that was decided (let's say $1,000 per American adult), since you didn't make them "buy" the money from the fed with their bonds, they've got fresh new assets to spend with, and therefore it would take far less "money-printing" to have an affect on our economy than our method today, where it doesn't make the private sector any richer/poorer on a nominal level.
Now it wouldn't have an interest-rate lowering effect... in fact it would probably result in a rise in interest rates as people expect more inflation and/or economic recovery.
But we don't have this system. The fed can't just throw money out of a helecopter, they have to buy financial assets out of the private sector, and have essentially decided that for the most part, it's better to get into a circle-jerk with member banks and the US Treasury than to pick winners or losers in the market by buying their debt. So essentially treasury bonds aren't really arms length lending transactions between the market and the government... they're essentially "money" with an interest rate dial to put a floor under the price of private borrowing. As long as that floor isn't too low or high, and the total amount of "clearing assets" in the economy is in balance with the productive world around it, you'll have relative stability. Right now, we actually don't have enough of those clearing assets in the economy to lubricate economic transactions and growth.
Please tell me how we are incorrect? To say that we are just full of $hit is a little bit rude. Is there anything you agree with in what I just said? If so, let me know... then we can focus on where we disagree and quit talking past each other.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
The whole concept of a "natural interest rate" seems sort of fishy to me, as if it's like trees, or the wind, or the tides. The interest rate is a human creation, and as such, it's either set by the market of by fiat. Or by an interplay of both, which is what we've got today. I have a hard time arguing that what it is at any particular point in time is unnatural. "Too high" or "too low" according to a subjective determination of what one believes it ought to be, sure. But it's really hard for me to see any "natural" value for it.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
Gumby wrote:
Well, we've already provided examples, with reason and logic, as to why the interest rate could fall to (near) zero. It's pretty clear that you're the one avoiding the chance to respond on those examples. Why won't you try to use "reason and logic" to refute those hypotheses?
Because I've never said the interest rate can't fall that low. You're only ever providing a fragment. I've said it can't fall that low absent a massive bond buying program that causing inflation, or an economic collapse that threatens the governments ability to service it's debt.
It's you who never addresses this. You invent arguments I've never made (strawmen), knock them down, and claim I'm not responding to them.
Gumby wrote:
Not true at all. Please link to the post where you successfully refuted a single point that's been made about MR. It hasn't been done to my knowledge.
Kshartle wrote:To suggest that interest rates should naturally be zero is to suggest that money has no value.
Sorry, but that's not what a 0% interest suggests. If I trade you $1000 in cash for $1000 in 0% 30-day T-Bills, neither of us is any richer or poorer than before the trade. The bonds aren't worthless. The cash isn't worthless. They still both equal $1000.
Negative interest rates have existed on US government debt before. In fact, the last time it happened was right before the debt-ceiling crisis. When a credit instrument has a 0% interest rate, it doesn't make money worthless. It simply tells us that the credit instrument is no perceived risk.
And he isn't saying that all debts would have no interest — just the liabilities of the government. Private credit spreads would be adjusted based on their perceived risk. A fiat government has absolutely no problem paying its debts, so there is no perceived risk in lending money to a currency issuer.
You can dismiss this as "hogwash" but I am providing logic and reason in my response — even if you think it's flawed.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
Kshartle wrote:
God bless America, let me handle these.
1. This is a strawman you're creating. Please tell me when I've said this HAS to end in hyperinflation. You can create and knock down strawmen all day long like it's your job.
2. They are not being nice. This is the required price for their borrowing. They can't afford the market price anymore so they need the central bank to print and accomdate which is just theft from savers. They can't tax and legitmately borrow enough so they have to apply the stealth inflation theft/tax. This is basic basic basic and goes back to the Romans and berfore. Debasement of currency comes from the parctice of adding base metals to the real (gold/silver) money supply.
3. An individual can minimize it's impact and profit from it. But the ENTIRE population can't. You're changing the subject to how an idividual can deal with inflation. You can change the subject all day like it's you job but God it's irritating.
Kshartle,
1) I apologize for ascribing a hyperflationary endgame prediction to your assertions. I have heard that a lot from many Austrians that bash MR, so I took it a step too far and made assumptions about your predictions.
2) Regarding borrowing, why would the entity that issues currency ever have to borrow it? The "natural rate" of a currency issuer to borrow currency is obviously 0%. Anything higher than that just sets an interest rate floor.
3) My apologies for changing the subject. We can get back to macro-level pontificating now.
You assert that the government is engaging in gross manipulation of rates and money, but NONE of the expected indicators suggest this. The government may control the money supply, but they can't control the velocity of money beyond what they spend. The government can control interest rates on government debt, but the private sector sets its own rates in contracts on debt engaged in between its players.
Both inflation and private borrowing indicate none of the terrible "manipulation" that you claim. These are things one would expect to see huge indicators within when it comes to evidence of government-market manipulation.
1. Ok thank you. As I've said in the past....Not Austrian. Appreciate the recognition that I've never said hyperinflation is inevitable. I don't think it's even likely.
2. They aren't issuing it, they are borrowing it. It looks like they're issuing when the FED prints. It has the same effect as issuing when the FED prints because they just send the interest back to the gubmit. If they just issued it though rather than borrow it would signal to the market that the new dollars are permanent and would greatly increase inflation expectation. There would be no principle payback mechanaism to reduce the money supply or growth rate in the future like Ben keeps saying. He says don't worry about all the bond-buying creating inflation because we'll just let it mature and retire that currency from circulation. He's trying to have his fix without getting a hangover.
3. Hey no problem it's easy to go off in different direction. This started as a discussion about technical indicators on TLT and I brought up fundamentals of LTBs so......guilty.
What indicators are you talking about? I'm sorry but, if I'm talking about the likelihood of events that haven't happened yet, the fact that they haven't happened yet is not any kind of evidence that they won't happen. I'm talking about low interest rates in the long-run requiring more and more printing to buy bonds or higher rates and a cesation of monetary expansion making it impossible for the government at some point to pay all it bills. And the combo of all this is that at present, I don't see how a REAL return in LTBs can occur in the long-run.
The fact is these low rates have required a huge intervention and the pace has been growing.
Do you think the central bank can stop monitizing the debt and the government can refuse to issue new currency and in the long run still be able to keep up the interest and principle payments, which sit at 5 trillion a year or so? If you do....please share how?!?! I don't see it! I'm blind!
The indicators I'm talking about are demand in excess of productive capacity (inflation) which is a natural private sector reaction to a gross manipulation upwards of the money supply...
... and much larger demand for loanable funds, which is a natural private sector reaction to grossly artificially low interest rates.
The question you pose is absolutely valid. There is no possible way that ANY currency can keep up with both growth and debt. Even if it was gold, eventually, the gold would run out, but there'd be a lot of debt owed in existing gold PLUS interest denominated in gold.
A fixed money supply is incompatible with perpetual growth and debt (even very healthy levels) to help facilitate that growth.
So you're right... if the government quit issuing currency and debt, especially if it continued to show it was going to do so in the face of a depression, it would be disastrous for both the private sector and the government's financial health.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
What is the basis of your assertion that an entity that issues currency has a "natural" rate of higher than 0% if it wants to spend that currency on other things that government does?
If you think that having the government approach the debt market is a healthy internal check on government spending, we can have that argument, but that's a policy decision. It's no different than the argument over how the military should be organized or the EPA hierarchy should work.
But we have a system designed where the act of issuing currency by the government, by law, has to be done through open-market operations, usually buying government securities (I'd much rather have them do this than picking winners and losers in the private debt market, which they've done a little of). Once again, if you disagree with this, that's fine... I think it's a bit silly myself, but this is a policy debate, once again.
To me, we have a system build on gold standard mechanics, but hiding a more chartalist/bank-money combination of fundamentals. That's just the way it is. This means that taxation combined with a productive economy are what make our money valuable, not some yellow metal... and our national debt is an interest rate management tool.
If you really don't like the idea of the federal reserve being designed such that it's buying back bonds as it issues money, that's totally cool with me. This would have a much different affect on the markets though... First off, when the fed issues currency, it would have to decide whose balance sheet to put it on... and once that was decided (let's say $1,000 per American adult), since you didn't make them "buy" the money from the fed with their bonds, they've got fresh new assets to spend with, and therefore it would take far less "money-printing" to have an affect on our economy than our method today, where it doesn't make the private sector any richer/poorer on a nominal level.
Now it wouldn't have an interest-rate lowering effect... in fact it would probably result in a rise in interest rates as people expect more inflation and/or economic recovery.
But we don't have this system. The fed can't just throw money out of a helecopter, they have to buy financial assets out of the private sector, and have essentially decided that for the most part, it's better to get into a circle-jerk with member banks and the US Treasury than to pick winners or losers in the market by buying their debt. So essentially treasury bonds aren't really arms length lending transactions between the market and the government... they're essentially "money" with an interest rate dial to put a floor under the price of private borrowing. As long as that floor isn't too low or high, and the total amount of "clearing assets" in the economy is in balance with the productive world around it, you'll have relative stability. Right now, we actually don't have enough of those clearing assets in the economy to lubricate economic transactions and growth.
Please tell me how we are incorrect? To say that we are just full of $hit is a little bit rude. Is there anything you agree with in what I just said? If so, let me know... then we can focus on where we disagree and quit talking past each other.
Why would there be an interest rate on printed money. Interest is paid on what is borrowed, not what is created.
Kshartle wrote:
Because I've never said the interest rate can't fall that low. You're only ever providing a fragment. I've said it can't fall that low absent a massive bond buying program that causing inflation, or an economic collapse that threatens the governments ability to service it's debt.
Kshartle wrote:
Why would there be an interest rate on printed money. Interest is paid on what is borrowed, not what is created.
Wait, I think you just agreed with moda and gumby. If the government creates money out of thin air, but ties it to an archaic debt issuance process that I think we all agree doesn't really need to exist, then it's really printing and not borrowing, and therefore its "natural" rate (ugh) is 0%, right?
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
Kshartle wrote:Because I've never said the interest rate can't fall that low. You're only ever providing a fragment. I've said it can't fall that low absent a massive bond buying program that causing inflation, or an economic collapse that threatens the governments ability to service it's debt.
Well, let's stop insulting each other and just stick to this point then, because I would love to have this conversation.
Have you ever been able to prove that a massive bond buying program causes inflation?
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
Gumby wrote:
Not true at all. Please link to the post where you successfully refuted a single point that's been made about MR. It hasn't been done to my knowledge.
And earlier in this thread I posted a link to where you agreed that without future productivity to pay taxes the LTB are worthless
I wasn't in that conversation. And you never answered MT's questions in that thread
And you must have misunderstood our agreement. I never said that future productivity is needed to pay taxes. We agreed that you shouldn't spend beyond productive capacity because it leads to inflation.
You say, "The private sector has to pay future taxes to back up that government debt". But, it should be painfully obvious that taxes aren't necessary to "fund" a fiat government. A fiat government can operate without any taxes if it wanted to.
The whole "future taxes" argument only applies to currency users (states, local governments and EU countries) who can all run out of money.
Last edited by Gumby on Fri Sep 06, 2013 3:00 pm, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
What is the basis of your assertion that an entity that issues currency has a "natural" rate of higher than 0% if it wants to spend that currency on other things that government does?
If you think that having the government approach the debt market is a healthy internal check on government spending, we can have that argument, but that's a policy decision. It's no different than the argument over how the military should be organized or the EPA hierarchy should work.
But we have a system designed where the act of issuing currency by the government, by law, has to be done through open-market operations, usually buying government securities (I'd much rather have them do this than picking winners and losers in the private debt market, which they've done a little of). Once again, if you disagree with this, that's fine... I think it's a bit silly myself, but this is a policy debate, once again.
To me, we have a system build on gold standard mechanics, but hiding a more chartalist/bank-money combination of fundamentals. That's just the way it is. This means that taxation combined with a productive economy are what make our money valuable, not some yellow metal... and our national debt is an interest rate management tool.
If you really don't like the idea of the federal reserve being designed such that it's buying back bonds as it issues money, that's totally cool with me. This would have a much different affect on the markets though... First off, when the fed issues currency, it would have to decide whose balance sheet to put it on... and once that was decided (let's say $1,000 per American adult), since you didn't make them "buy" the money from the fed with their bonds, they've got fresh new assets to spend with, and therefore it would take far less "money-printing" to have an affect on our economy than our method today, where it doesn't make the private sector any richer/poorer on a nominal level.
Now it wouldn't have an interest-rate lowering effect... in fact it would probably result in a rise in interest rates as people expect more inflation and/or economic recovery.
But we don't have this system. The fed can't just throw money out of a helecopter, they have to buy financial assets out of the private sector, and have essentially decided that for the most part, it's better to get into a circle-jerk with member banks and the US Treasury than to pick winners or losers in the market by buying their debt. So essentially treasury bonds aren't really arms length lending transactions between the market and the government... they're essentially "money" with an interest rate dial to put a floor under the price of private borrowing. As long as that floor isn't too low or high, and the total amount of "clearing assets" in the economy is in balance with the productive world around it, you'll have relative stability. Right now, we actually don't have enough of those clearing assets in the economy to lubricate economic transactions and growth.
Please tell me how we are incorrect? To say that we are just full of $hit is a little bit rude. Is there anything you agree with in what I just said? If so, let me know... then we can focus on where we disagree and quit talking past each other.
Ehhh.......having a discussion on what I like or what I think is a good idea is something else entirely. It actually can be summed up easily and that would be everyone put down the guns and trade. Let peacful negotiation determine what money is, what interest rates should be, how much money substitues banks should lend against deposits, how we should organize defense.....
When did I say you guys were full of $hit?
The idea that money should normally be lent out at a rate of zero, even to a "repayment risk-free entity"....now that is some horse$hit. I think some are confusing the idea of interest with something else, I don't know what. Interest is paid on a loan.
