Ludwig Von Mises

[RCG Trader]

Quote from Tsing Tao:

Suze Orman is a twat. We DID let Lehman go, and we're all still here talking about it. No meteor slammed into the planet, no oceans boiled.

We put a number of "emergency" procedures into place, some of them against the charter of the Fed, and never took them off. We never unwound anything and allowed the big banks to get bigger, and even more difficult to unwind when the next crisis comes. No regulation (or wrong regulation) was put in place to prevent or reverse any of the underlying causes that brought about the crash. Instead, we doubled down on the same stupid practices, left the same jackwagon in place who brought us cheap, irresponsible money in the first place and allowed corruption to go unpunished and worse, rewarded it.

I go back to this quote I read in the early days of 2009 - "Someone asked me what I would do...I asked them back: That depends. Do you want to throw up for 6 months straight and feel better after that, or be severely nauseous for 20 years?"

Nausea < puking. Just sayin. Perception/Reality. You get all the old saws.

 

[trefoil]

Quote from Tsing Tao:

No, not really.

You are simply advocating issuing more debt, buying our own debt and then spending the dollars borrowed in a fiscal orgy designed to add to GDP. If we were starting from a surplus condition, I would be inclined to agree with that process on a temporary basis. But we're not. We're starting that point from deep, deep in uncharted and leveraged territory. The Fed has gone where no Fed has gone before, and has come out to say it will continue to print until unemployment improves. That's amusing, because there's no direct correlation between printing money and hiring. The Fed can't really get business to hire. Money is as cheap as it has ever been and we're still not hiring folks. Hell, Japan is on ...what? QE9 or something? They're still stuck.

The Money supply can be used to control prices (if used wisely) but we're the only country in the world where our central bank as a mandate to control unemployment - something the Congress brilliantly added to it's charter in the 70s, if memory serves.

Right now, the QE is going to making bank balance sheets whole - and for speculative risk taking (as it drives the reach for yield). You think the aging population is all keen on taking that risk?

Reckless central bank action is what we have, and our chickens will be coming home to roost very soon.

Please excuse me for cursing, but sometimes ya just gotta:

HOLY FUCK! Did you not read what I wrote? Point me to where I advocated the Fed doing anything?
Read my post again, and if you want, answer what I actually wrote. Or not, your choice.

 

[Tsing Tao]

Quote from RCG Trader:

Nausea < puking. Just sayin. Perception/Reality. You get all the old saws.

Nausea is indeed better than puking. But not 20 years of nausea!

Anyone in their right mind would have chosen 6 months of massive difficulties in the economy, with the knowledge that, once fixed, we could return to the path of prosperity.

But those in power didn't want that, as it meant a change to the status quo. So we'll instead limp along for 20 years, and never really fix anything.

 

[Tsing Tao]

Quote from trefoil:

Please excuse me for cursing, but sometimes ya just gotta:

HOLY FUCK! Did you not read what I wrote? Point me to where I advocated the Fed doing anything?
Read my post again, and if you want, answer what I actually wrote. Or not, your choice.

Well, maybe if you wrote coherent sentences, I could understand your meaning better.

Quote from trefoil:

Don't need to do that. First of all, the US is the holder of the reserve currency, and needs to increase the supply by at least as much as the global economy increases just to keep prices worldwide even.

Looks to me like you have some sort of strategy for what the Fed has to do in order to "keep prices worldwide even"...whatever the hell that is. I took that to mean you are suggesting the Fed print in order to do...whatever it is you're referring to. I suppose I should have just replied "what the hell are you trying to say?"

Quote from trefoil:


You need to go further than that to deliver any sort of stimulus to the US economy. This of course assumes that the supply of money has anything to do with stimulating the US economy, which is not really true.
Strict Keynesianism is strictly fiscal, so what the Fed does with the money supply is of no consequence.

So you're saying the Fed can do anything and it has no effect on Fiscal policy? Do I have to pull out the Fed governor speeches that warn the Fed could be enabling reckless congressional spending by keeping interest rates artificially low?

Quote from trefoil:

As I've noted before, the Fed was tied down after the late thirties and not allowed to do much until Eisenhower began to loosen them up, finally, as the right is more comfy with monetary policy stimulus than fiscal policy stimulus.

So, the blue songbird eventually returns in spring and brings with it the happiness of summer?

Quote from trefoil:

Monetary policy is ineffectual at best and has been shown to be so over and over, while fiscal policy is in fact effective and has been shown to be so over and over, including right now,as the US delivers its fiscal stimulus via the lamented increase in Federal debt, while the eurozone proves to anyone with eyes to see what the opposite does.

Great! So why is it again we are on QE3 or 4, or 5 if monetary policy is ineffectual at best?

Quote from trefoil:


As I already posted, the cycle there is to cut, see the tax take fall as economic activity falls off, cut again to balance things and see the tax take fall again as economic activity falls off again, then cut again...

I speak several languages, but none of them allow me to coherently interpret just what the hell you are trying to say in the last paragraph. I'd advise putting down the glass of whiskey and attempting to clear your head before responding.

 

[Ricter]

The money is merely a symbol, always has been. Therefore it can be destroyed just as easily as it can be created. That's never been easier, since paper is not central anymore. So, we're not "all going to die" (in the figurative sense) unless REALITY, ie. air, water, food, shelter cannot be produced here, on our territory. As long as those things can still be produced, men can always change the quantity and distribution of currency so that the game of trade and living can go on. But if you want the game to play like poker, that is, it's over when one guy (the few) have all the chips, it will get ugly. I suggest the rules of the game be changed to reflect the changing reality of production.

 

[Tsing Tao]

Quote from Ricter:

The money is merely a symbol, always has been. Therefore it can be destroyed just as easily as it can be created.

Can someone please ask the professor how the Fed can shrink it's balance sheet without upending markets into chaos now that it has them addicted to easy money?

I'd ask him myself, but he has me on ignore for his inability to counter my points.

 

[Lucrum]

Quote from Tsing Tao:

Can someone please ask the professor how the Fed can shrink it's balance sheet without upending markets into chaos now that it has them addicted to easy money?

I'd ask him myself, but he has me on ignore for his inability to counter my points.

Lil' Ricky has me on ignore as well, he claims it's because I'm too honest and candid for his girly man sensitivities. Personally I think he's just a chicken shit coward.

 

[pspr]

Quote from Tsing Tao:

Can someone please ask the professor how the Fed can shrink it's balance sheet without upending markets into chaos now that it has them addicted to easy money?

I'd ask him myself, but he has me on ignore for his inability to counter my points.

You mean that commie dog ricter? I don't know if he has me on ignore or not. He may since he got all upset that I couldn't see his comments aimed at me about 6 months ago.

If the Fed goes forward with its plan to buy an additional $40 billion in long-dated federal agency-backed debt and do so indefinitely, it will be adding nearly a half-trillion dollars a year to its already worrisome balance sheet. Shrinking the balance sheet to a more normal size by unloading all these long-dated assets will prove difficult, despite Chairman Bernanke’s brave assurances to the contrary. Almost by definition, this unwinding will occur as interest rates rise, making the sell-off difficult for the Fed and hard on the economy. Bernanke should find a convenient excuse to stop QE3 before he does any more damage.

http://www.heritage.org/research/re...e3-a-policy-predicated-on-irrational-behavior

 

[trefoil]

Quote from Tsing Tao:


Great! So why is it again we are on QE3 or 4, or 5 if monetary policy is ineffectual at best?

To ask the question is to answer it.
As for the rest, if you don't understand it, fine. I'm not here to teach you English. Try translating it into one of your other languages and then back to English. Maybe that'll help. Or not. I'm not interested in someone who responds as you do.

 

[trefoil]

I've posted this before, here it is again, the ultimate judgement, as far as I'm concerned, on the mere competence of Mises, much less his relevance to anything going on now. Simplistic and demagogic is all Austrian economics is, and that started with its, as they say in anthropology, "culture hero". The below has to do with a controversy in Austria over whether the central bank of the Austro-Hungarian Empire was attempting to maintain a pure gold standard, or managed its currency via manipulation of and placing restrictions on forward exchange, an approach that would violate gold-standard orthodoxy:

There can be no doubt that the reason why money rates remained low in Austria was that, as a result of the Central Bank's tactics, the transfer of short-term funds to London or Berlin, whether through covered or uncovered arbitrage, was checked. It may be asked, however, whether the overvaluation of the forward krone and the depreciation of the spot krone were really the result of deliberate policy, or whether they resulted merely from the higher bank rates in London or Berlin, and from speculative forward buying of kronen, stimulated by the fact that the spot krone was at gold export point. Federn staked his whole reputation on his assertion in his various articles that official policy was the cause. On the other hand, his formidable antagonist, Mises, was equally emphatic in denying that any special devices had been applied to the Austro-Hungarian bank, in 1907 or at any other time, for the purpose of discouraging an outflow of funds. Federn goes into minute details in describing how the policy was carried out, showing how the Austo-Hungarian bank discriminated between the demand for foreign currencies for commercial purposes and for the purpose of interest arbitrage, by refusing to sell spot currencies while selling freely for forward delivery, on the assumption that in the then existing circumstances those who bought Forward Exchange could not possibly use the funds for interest arbitrage. Being in close contact with the market as the leading financial Editor of his day he was in an excellent position to ascertain the facts, and his facts were never called into question by anyone apart from Mises.
Although Mises had a well-deserved international reputation as a theoretical economist, he had no first-hand contact with the markets, nor even, it seems, an adequate knowledge of its essential technical details. He appeared to confuse long bills with Forward Exchange, which, for an Austrian economist specialising in monetary questions, was surprising even for pre-1914 days. The only evidence he quoted in support of his argument was a statement by Dr. von Bilinski, then governor of the Austro-Hungarian bank, according to whom official policy at times of pressure due to international causes was to send gold freely to foreign markets in order to 'prevent there a further increase of interest rates which would otherwise lead to an artificial efflux of gold from the Monarchy, and consequently to an increase of interest rates'. On the basis of this statement Mises claimed that the Austria-Hungary had pursued, in fact if not in law, a policy identical with that of gold standard countries, and that she had not sought to avoid parting with gold when higher interest rates abroad caused a pressure on the krone.
This assertion was contradicted four years later by Bilinski himself. He had meanwhile become Finance Minister, and, having ceased to be a Central Banker, presumably no longer felt the same need for paying lip-service to monetary orthodoxy. In a speech before the Austrian parliament on December 1, 1910, and in a subsequent speech, he opposed the adoption of the full gold standard on the ground that under the existing system the Austro-Hungarian bank had possessed a very effective weapon at its disposal in defending the exchange, in that it could differentiate between those demanding Foreign Exchange for commercial purposes and those who wanted it for arbitrage or speculation.

Too long and technical? Sooo sorry.