Gold collapsing. Bitcoin UP.

[tabnloz]

US in Deflation

http://money.cnn.com/2015/02/26/news/economy/inflation-january-negative/

[NotLambchop]

US in Deflation

http://money.cnn.com/2015/02/26/news/economy/inflation-january-negative/

We'll print more money out of thin air, like we always do.  Thanks for reminding us tho, problem solved

Your friend,

  ~Big Gubermint~

[tabnloz]

Share buybacks & no trickle down

"finance is no longer an instrument for getting money into productive businesses, but for getting money out of them."

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/25/why-companies-are-rewarding-shareholders-instead-of-investing-in-the-real-economy/

[hdbuck]

mehehe: https://jpmchase.taleo.net/careersection/2/jobdetail.ftl?lang=en&job=1530736&src=JB-13027

"You care about disruption and have opinions on the future of banking, the payments system, and how to improve upon our existing financial infrastructure. You have an opinion on bitcoin and other cryptocurrencies."

[rocks]

Opinion: Stock-market crash of 2016: The countdown begins

Dow will drop 50% as market replays 2008, 2000 and 1929

http://www.marketwatch.com/story/stock-market-crash-of-2016-the-countdown-begins-2015-02-25?mod=MW_story_recommended_default


Any thoughts?

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging.  They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient).   This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

Indeed. The '08-'09 crisis showed an impressive drop that hasn't recovered: http://research.stlouisfed.org/fred2/series/MULT

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

Volatility has exploded since the late 90's, first a massive stock bubble, then massive crash, then a massive housing bubble, then an even bigger crash, now a more massive debt and central bank bubble. The fact that the swings are becoming larger and more pronounced shows they are losing the ability to manage all this leverage, which is exactly what you need to do when the banking sector is leveraged more than 10x.

After the last crash, this small group of people openly stated "never again". Meaning they were going to lean on the side of accommodation more than ever before to make absolute sure we're protected against the downside. The reason is the last crash unexpectedly started to run out of their control and demonstrated that their ability to predict and forecast is becoming less and less accurate, which in turn forces them to hedge more and more on the upside.

The problem with this is it means they acknowledged that because they don't understand or can control the system well enough, it is now necessary to hedge on the upside to make up for this lack of understanding and control.

What this also means is both the next blow up and then crash down will be even more pronounced and even further beyond their control. Your only hedge against this is to get as much as possible out of the banking system and anything it touches.

[cypherdoc]

Opinion: Stock-market crash of 2016: The countdown begins

Dow will drop 50% as market replays 2008, 2000 and 1929

http://www.marketwatch.com/story/stock-market-crash-of-2016-the-countdown-begins-2015-02-25?mod=MW_story_recommended_default


Any thoughts?

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging.  They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient).   This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

Indeed. The '08-'09 crisis showed an impressive drop that hasn't recovered: http://research.stlouisfed.org/fred2/series/MULT

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

Volatility has exploded since the late 90's, first a massive stock bubble, then massive crash, then a massive housing bubble, then an even bigger crash, now a more massive debt and central bank bubble. The fact that the swings are becoming larger and more pronounced shows they are losing the ability to manage all this leverage, which is exactly what you need to do when the banking sector is leveraged more than 10x.

After the last crash, this small group of people openly stated "never again". Meaning they were going to lean on the side of accommodation more than ever before to make absolute sure we're protected against the downside. The reason is the last crash unexpectedly started to run out of their control and demonstrated that their ability to predict and forecast is becoming less and less accurate, which in turn forces them to hedge more and more on the upside.

The problem with this is it means they acknowledged that because they don't understand or can control the system well enough, it is now necessary to hedge on the upside to make up for this lack of understanding and control.

What this also means is both the next blow up and then crash down will be even more pronounced and even further beyond their control. Your only hedge against this is to get as much as possible out of the banking system and anything it touches.

it's still crystal clear in my mind back in 2008 how Tim Geithner said over and over that "we" needed to use massive force to prevent a meltdown.  naturally, as head of the NY Fed at the time, this meant massive money printing to hand over to the banks in the form of bailouts.  now, he has the audacity to say that the economy is weak b/c he wasn't allowed to use enough massive force.  as if the banks didn't make enough as it is from what they did.  and as if the wealth disparity that resulted wasn't enough from what he did.  Bernanke was being lead around by the ear by Geithner and Paulson at the time.  don't let Geithner re-write history as he desperately is trying to do.

[rocks]

Opinion: Stock-market crash of 2016: The countdown begins

Dow will drop 50% as market replays 2008, 2000 and 1929

http://www.marketwatch.com/story/stock-market-crash-of-2016-the-countdown-begins-2015-02-25?mod=MW_story_recommended_default


Any thoughts?

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging.  They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient).   This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

Indeed. The '08-'09 crisis showed an impressive drop that hasn't recovered: http://research.stlouisfed.org/fred2/series/MULT

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

Volatility has exploded since the late 90's, first a massive stock bubble, then massive crash, then a massive housing bubble, then an even bigger crash, now a more massive debt and central bank bubble. The fact that the swings are becoming larger and more pronounced shows they are losing the ability to manage all this leverage, which is exactly what you need to do when the banking sector is leveraged more than 10x.

After the last crash, this small group of people openly stated "never again". Meaning they were going to lean on the side of accommodation more than ever before to make absolute sure we're protected against the downside. The reason is the last crash unexpectedly started to run out of their control and demonstrated that their ability to predict and forecast is becoming less and less accurate, which in turn forces them to hedge more and more on the upside.

The problem with this is it means they acknowledged that because they don't understand or can control the system well enough, it is now necessary to hedge on the upside to make up for this lack of understanding and control.

What this also means is both the next blow up and then crash down will be even more pronounced and even further beyond their control. Your only hedge against this is to get as much as possible out of the banking system and anything it touches.

it's still crystal clear in my mind back in 2008 how Tim Geithner said over and over that "we" needed to use massive force to prevent a meltdown.  naturally, as head of the NY Fed at the time, this meant massive money printing to hand over to the banks in the form of bailouts.  now, he has the audacity to say that the economy is weak b/c he wasn't allowed to use enough massive force.  as if the banks didn't make enough as it is from what they did.  and as if the wealth disparity that resulted wasn't enough from what he did.  Bernanke was being lead around by the ear by Geithner and Paulson at the time.  don't let Geithner re-write history as he desperately is trying to do.

It's never ever enough. People today bash Hoover for not doing enough, but the reality is he took the most accommodative approach of any President in US History at the time, with larger deficits, printing, etc. This really was the moment the US's Laissez-faire (meaning a policy of letting things take their own course) economy died. The fact that his successor quadrupled down on this accommodation doesn't change the fact that Hoover was the helicopter Ben of his time.

It is always never enough and they will keep expanding accommodation until the public takes away their primary tool by re-valueing government money to zero.

[Erdogan]

Laissez-faire should be renamed to laissez-fleur

[sidhujag]

John Nash (arguable the father of Bitcoin) says that USD and EUR were the two ideal money candidates right now because of the inflation targeting mechanism but that instead of inflation targeting a CPI measurement should be the basis of money supply shifts, for one it is claimed to be not hackable (true?) and secondly easy to determine and predict in the macro economic sense. However I don't think that the indicators are what they say they are like inflation indicators and GDP numbers being fudged so to can these other ones... a number is needed which truly is based on consensus and that may be the cost of mining, and economic indications based on how cheap/expensive relative to a basket of things would be a good stable indicator and provide bitcoin as the perfect candidate for an ideal currency. (thinking out loud from reading ideal money paper a few days ago)...

Thus the USD (and other's) money supply would expand contract based on this number derived from consensus... you wouldn't have to shock the system by putting into place a whole new currency (another doctrine that Nash alluded that was a big hurdle to overcome when managing change), and bitcoin would be used as the backbone. Over time, since USD would be based on a consensus measurement of the bitcoin network in effect it will become bitcoin, as will other fiat currencies... fiat will slowly become a worthless token and we can ease the change while still allowing for real growth (no shock). That is, purchasing power will be shifted in a thoughtful way.

[cypherdoc]

nice ramp

[smooth]

"finance is no longer an instrument for getting money into productive businesses, but for getting money out of them." [washpost]

What a stupid comment. The idea is that companies are supposed to suck up money like a black hole and never pay back to the shareholders?

[cypherdoc]

this is gonna be really interesting esp given tonites Bitcoin breakout:

[sidhujag]

this is gonna be really interesting esp given tonites Bitcoin breakout:

Prob test 8400 before going back up

[ErisDiscordia]

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

any systems related to human society have always been to complex to handle efficiently by a small group of people. The delusion that they can do so efficiently is a dangerous one and lies at the root of pretty much every problem human society is facing today. The basic problem has to do with information not being able to flow without distortions in a centralized system and executive power not lying where there is the biggest abundance of relevant information (with the individuals directly involved with a given situation)

[cypherdoc]

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

any systems related to human society have always been to complex to handle efficiently by a small group of people. The delusion that they can do so efficiently is a dangerous one and lies at the root of pretty much every problem human society is facing today. The basic problem has to do with information not being able to flow without distortions in a centralized system and executive power not lying about where there is the biggest abundance of relevant information (with the individuals directly involved with a given situation)

[solex]

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

any systems related to human society have always been to complex to handle efficiently by a small group of people. The delusion that they can do so efficiently is a dangerous one and lies at the root of pretty much every problem human society is facing today. The basic problem has to do with information not being able to flow without distortions in a centralized system and executive power not lying where there is the biggest abundance of relevant information (with the individuals directly involved with a given situation)

Indeed. Mises "calculation problem".

I think the delay between the onset of serious central planning meddling, and systemic collapse, is simply due to the sheer size of an economic system and the inertia which is latent. So Zimbabwe will collapse faster than Venezuela which collapses faster than Japan, assuming a similar progression of centralized control.

[tabnloz]

"finance is no longer an instrument for getting money into productive businesses, but for getting money out of them." [washpost]

What a stupid comment. The idea is that companies are supposed to suck up money like a black hole and never pay back to the shareholders?

Yes, in isolation.

And I take your point, but in context, the article is trying to highlight that companies are taking advantage of cheap credit to fund share buy backs (and raise share price) ahead of re-investing in company.

[cypherdoc]

Next ramp on deck

[ErisDiscordia]

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

any systems related to human society have always been to complex to handle efficiently by a small group of people. The delusion that they can do so efficiently is a dangerous one and lies at the root of pretty much every problem human society is facing today. The basic problem has to do with information not being able to flow without distortions in a centralized system and executive power not lying where there is the biggest abundance of relevant information (with the individuals directly involved with a given situation)

Indeed. Mises "calculation problem".

I think the delay between the onset of serious central planning meddling, and systemic collapse, is simply due to the sheer size of an economic system and the inertia which is latent. So Zimbabwe will collapse faster than Venezuela which collapses faster than Japan, assuming a similar progression of centralized control.

The main problem with information flows in centralized systems is a chronic lack of feedback. In human systems there is even incentive for the conscious distortion of information - you won't tell your boss any sort of information you think might get you fired. Thus even when decisions are made in good-will (which is often doubtful, seeing how corrupting an influence the power at the top of centralized systems is), they are based on wildly inaccurate information. Now armed with false assumptions the individual(s) in power make decisions, which would have unforeseen consequences even if they have had absolutely accurate information because the system they are operating on is so complex. It is like removing an appendix with a chainsaw - you can't possibly now in advance what else you'll mess up. The instrument (in our case the human mind) is just too crude for the level of complexity it is dealing with. This is nothing new, but it warrants restating.

To make matters worse, the unforeseen consequences can take a long time in showing up - years or even decades in the case of systems as complex as national economies - just like you said. These then get misinterpreted, too and a clusterfuck of gigantic proportions is usually the ongoing result from all of this. Centralization? Just say NO, kids.

[Torque]

"finance is no longer an instrument for getting money into productive businesses, but for getting money out of them." [washpost]

What a stupid comment. The idea is that companies are supposed to suck up money like a black hole and never pay back to the shareholders blue collar employees that actually do all the fkn work, but don't own enough shares of the stock to either get rich or retire on it like the executives will?

FTFY