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I was thinking the exact same thing when considering buying some puts to protect a long portfolio today.

Recently, I did a blog on this exact subject. Blue areas are ones where fed funds are rising. http://scriabinop23.blogspot.com/2009/11/dispelling-recent-fed-funds-myths.html

In a gold standard, money supply is dictated by gold supply/demand fundamentals, not merely central bank interest rate policy. So if there is a shortage of flouride in the water, there is less gold on the market and thus less money supply (deflation).

I should add 4th conclusion: 4) Since reverse repo, IOR, and 'Fed CDs' have a similiar effect to outright Fed funds movement, the Fed only has 3 options: a. Sell MBS. (crater the mortgage market?) b. Raise Rates / Suck the Money up. c. Let inflation run its course and then...

It is an interesting point you make that Fed funds an IOR are essentially pegged to each other. Any banker who has to make choice to lend to the Fed vs. the Fed Funds market will take a higher IOR rate versus a lower Fed funds rate. The bank Fed funds bid will disappear if Fed pays higher IOR...

Good stuff. I think there is a bubble-calling tendency becoming embedded into our society. First tech stocks, then houses... everything ascending in price therefore must be a bubble, right? Twice burned makes a very skeptical investor/saver. Everyone wants to outsmart the prevailing...

If the supply curve for gold (or oil etc) were price elastic, I imagine there would be no room for such a risk premium.

How about an overvalued asset that has the bulk of its price movement fueled by speculation that it will 'rise forever.' (or some variation thereof) Credit fueled price ascent can't hurt. What is tough about valuing gold on a production cost basis is that a large part of the marginal cost is...

Just want to get the ET view. It seems everyone I meet who doesn't have much of an economics background thinks it is a bubble, while those who do don't think it is fairly valued. (Note: Today, gold hit all time high in euros)

Most of the time, call writing on stock positions (esp in low volatility environments) is an absurd proposition. It makes holding stock a -lot- riskier in the long run. (Why? Because when a stock finally runs in your favor, you don't get paid for the downside risk you are taking. Winners need...

http://www.investopedia.com/articles/financial-theory/09/calculating-beta.asp Beta of a portfolio is weighted average of all individual betas.

So if I created the cure for HIV but instead of selling it gave it away, it isn't worth anything according to you?

Lets say rent for mom's basement was $1000. I paid that out of savings. My discovery is worth $30000. I created an asset without increasing debt to correspond.

But you are ignoring the point --- it is worth something to humanity, just as the piece of art I produced. Lets say I retain it on my balance sheet and let museums keep it and show it. People benefit --- (or the same from my scientific discovery) --- We have a net gain to society without...

Actually with a little more thought, lets say I am an artist and make a painting but don't sell it. Lets say it has a market value (based off of my other work). I have not increased my debt to create this. Collectively, I have created assets from thin air without creating a liability. Since...

Let's say I create intellectual property and make a scientific discovery that is worth something. I've created an asset without accompanying debt. You are talking about the zero sum nature of money exchange. But the "system" I was referring to was the balance sheet of an *individual*...

Well you made the claim generally, and that was not correct. It is correct in terms of money creation, but not correct in other systems.

I was about to bring up the point of an upward revaluation of a gold miner balance sheet. There is no change in real gold assets, but a change in the balance sheet without increasing liabilities nor creating more debt. But then this goes into the whole zero sum stock value discussion world...

I see where you are going with this. But what's the point? Sure money creation is predicated on either debt creation in the economy (multiplier affected money) or debt creation on the Fed's balance sheet (base money). Base money, unlike bank created money doesn't feel the same effects of...

??? The only reason "someone in the real world" would loan to the US govt is if the real returns on their money were positive. That means they need to have faith the dollar will not devalue at a rate that exceeds their interest payment. And for another example, the faith one (particularly...