Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

[bart]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

That's funny, but... is that directed at my conversation with vinoveri, or bart's conversation with FRED?

Persoanlly, I think that WDCRob is part of the inner circle of the Illuminati and that he posted that piece to throw us all off the trail... :eek: :rolleyes: ;)

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

I don't mean to be obtuse, but if you expect USD currency inflation -- probably dramatic (I think EJ was predicting 100% over the next 5 years?), perhaps even Weimar-like if the predictions of the Jim Sinclairs of the world come to pass -- then why wouldn't you want to hold debt? Why pay down a mortgage fixed at 5.25%, for example, with relatively strong dollars now, when you can pay it down over time with dollars increasingly diminished in value?

If the USG is going to inflate its way out of debt then might as well let it inflating my debts as well.

[GRG55]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

Factually incorrect.

1. We never insinuated that oil was not due to decline in price from $147, nor gold from $1013 for that matter, only that these were not "bubbles" by our definition. This is critical to understand. If we included these in our definitions of bubbles, along with tech stocks in 1999 and houses 2002 to 2006, then subsequent price actions in oil and gold raise the obvious question: if oil is a bubble at $40 in 2006, and gold at $1013 in 2008, what is oil at $45 in 2008 after the oil "bubble" has popped and gold at $850 after the gold "bubble" has "popped"?

2. We believe that both oil and gold prices are, long term, more a function of dollar supply and demand than commodity supply and demand. Thus the price will likely behave in ways that are completely uncharacteristic of bubbles. Bubbles are characterized by a rapid rise, a collapse to a mean, and overshoot followed by an extended period of suppressed price. Oil remains at prices that were called a "bubble" in 2006 yet the talk now is of deflation as demand collapses. Gold at $850 during a "deflation" makes no sense at all of gold was a "bubble" at $1013. We maintain a consistent set of definitions and concepts here and do not change them as the wind blows.

3. The Fed has not engineered an economic collapse.

Those that insist that the price action of oil is "proof" of some sort of sophisticated, organized, ETN-conspiracy financial manipulation seem to completely overlook identical price behaviour in uranium equities, corn, zinc, nickel, wheat, solar cell manufacturers, natural gas and a host of other things, each of which became the object of desire for the cheap money, leveraged set for a brief, shining moment. I simply do not see why oil is somehow so special for these folks. The cheap money era is over [unless you are the US Government and "unwitting creditors" are still giving you their savings for zero return], and every asset class is being reset. And they will all be reset at least once more, relative to one another, as the reflation takes hold.

[bart]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

Where's Finster with his list of fallacies?

"Prove to me that the Apollo 11 moon landing was not fake. You cannot, therefor it was fake!"

Negative Proof fallacy: that, because a premise cannot be proven false, the premise must be true; or that, because a premise cannot be proven true, the premise must be false.

Nice try. You have to prove to me that the Fed had intent.

In other words, thanks for proving that you have no proof that there was no intent beforehand. Otherwise, you would have presented it instead of going off into the logical fallacy area.

I could provide proof that there was quite significant intent, just like you could provide some on the other side. For me to start listing that very dark and voluminous proof at this time, even on its own thread, would not be wise at this time - and not just because the times and attitudes are dark. Plus, none of it on either side is even close to totally conclusive in any way, shape, or form either.

The iTulip theory of jocks and geeks does not include any allowance for "evil" though, and I submit that at the very least it is quite incomplete for that reason, albeit workable.

[santafe2]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

What the Fed had in mind in 1980 that had to be sold to the public was tough medicine: high interest rates and three grueling years of recession. The government had to make the case that the pain was worth it.

Sold! Let’s turn off the printing presses and kill the bad inflation! Thanks, Dr. Friedman, for selling a central tenet of the FIRE Economy – low inflation -- to the masses. (No hate mail from the Friedman fans out there, please. I'm a fan, too.

I was taken by the symmetry of the Japanese experience and ours as depicted by the economic diving board of inflation control. I think I've understood this at an intellectual level for a long while but it's taken the last few months events for me to understand it at a more visceral level.

I watched Friedman explaining the simple miracle he saw in the Japanese experience as they overcame the inflation devil in the mid 70s. I was of course viewing it in the light of history - hindsight - but I felt myself watching in horror without the ability to tell a failed technocrat that he would become to many of us the symbol of everything that's gone wrong with our world economy over the last 30 plus years.

I found myself yelling at a digital image: Don't you see the massive twin asset inflation coming only 10 years from now! People buying a square foot of Tokyo real estate because that is all they can afford? A stock market spinning upward to 40,000? Milton, you're one of the most respected economists in the world, how can you not see this!?

Of course, he didn't see it, didn't really care about it. Like most technocrats and too many so called intellectuals, he cared about his models and his reputation. He cared about tweaking the model in real time with real people. He and his proteges would go on to create fake economies in many countries and tweak them so they could get the big one just right.

That tweaking is just beginning to work out really well for the US. Maybe not as well as it did for the Chileans or the Iraqis but well enough. What's scary to me is that Obama has these Chicago School proteges in his group of advisers. Nothing good will come from this unless one is hoping for one last huge bubble they can ride straight up to cleanse themselves of their personal debt. The rest of humanity, be damned.

[DemonD]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

jt, what's that quote about never attributing to intent that can be attributed to stupidity?

The new mortgage would have one very significant difference: It would be a full recourse loan. That is, if the borrower fell behind in the payments, the government could use any means necessary to get repaid. That means not only foreclosing on the house (as under current mortgages) but also collecting any remaining unpaid sums after the house was foreclosed on by garnishing the wages, bank accounts, and other assets of the borrower. Think of it as the IRS providing the loan on the same collection terms as it does on taxes, or perhaps using the powers the government now has to collect on student loans.

The result? Decades of household cash flow diverted to paying down mortgage debt taken on at inflated real estate prices.

The new bankruptcy laws passed in 2005 make credit card debt in the US is for all practical purposes full recourse.

So far it's FIRE Economy 2, Production/Consumption Economy 0.

And isn't this also deflationary?

Again, I'm not debating for deflation. I'm trying to reconcile some very significant facts about Japan that are strikingly similar to US policy. Trillions in different stimulus packages seem to be a huge checkmark in the "it's more like Japan" type thing. And I can't but help it when I see long term charts of the Nikkei, where it was, and where it is now, and they still can't reflate the yen.

Maybe if I have the time I will try to collate my own visual evidence and let the itulip community have at it.

[FRED]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

No. because we are arguing supposition. And yes I believe my supposition my aptly provides a motive and method and opportunity than your supposition.

Fred, you would argue that if it's is not PROVABLE it doesn't exist. They would deny a whole lot of things that are observable but not provable and is extremely limiting of one's world view. And sometimes (as I seem to recall in certain PM or two about the nature of the Iraq war) what is observable but not provable, can later become FACT through the course of 3rd party disclosure.

Since this has already happened once during the course of our discussions, it is possible that it could happen again. Not saying IS, am saying possible, but not provable. Evidence may arise later to confirm or deny the supposition, but outright dismissal in the present due to a lack of conclusive evidence, seems to me at least, as lacking the intellectual curiosity that is required for a true deconstruction of a policy agenda.

Again, there are two times I have seen this happen here in the Itulip psyche.

The first case was the outright flat DISMISSAL that financial games had anything to do with the blockbuster oil price. And the second was the tidbit mentioned earlier with regard to the true motives of the Iraq war.

(Both positions were latter factually vindicated I might add)

To dismiss a plausible theory as "rubbish" due to a lack of timely intelligence would seem a gross disservice to the community at large. Esp. since on two occasions, these "rubbish" theories have indeed been proven to be factually correct.

Factually incorrect.

1. We never insinuated that oil was not due to decline in price from $147, nor gold from $1013 for that matter, only that these were not "bubbles" by our definition. This is critical to understand. If we included these in our definitions of bubbles, along with tech stocks in 1999 and houses 2002 to 2006, then subsequent price actions in oil and gold raise the obvious question: if oil is a bubble at $40 in 2006, and gold at $1013 in 2008, what is oil at $45 in 2008 after the oil "bubble" has popped and gold at $850 after the gold "bubble" has "popped"?

2. We believe that both oil and gold prices are, long term, more a function of dollar supply and demand than commodity supply and demand. Thus the price will likely behave in ways that are completely uncharacteristic of bubbles. Bubbles are characterized by a rapid rise, a collapse to a mean, and overshoot followed by an extended period of suppressed price. Oil remains at prices that were called a "bubble" in 2006 yet the talk now is of deflation as demand collapses. Gold at $850 during a "deflation" makes no sense at all of gold was a "bubble" at $1013. We maintain a consistent set of definitions and concepts here and do not change them as the wind blows.

3. The Fed has not engineered an economic collapse.

[pianodoctor]

Can someone kindly help an econo-dummy understand the following quote from EJ's article of subject?: "inflation, accomplished, as usual, via currency depreciation, but this time executed by unwitting US creditors selling dollar denominated assets versus deflating the dollar against gold."

I'm not quite grasping what kind of "US creditor" (our foreign creditors? Creditors within the US like mortgage, credit card companies?) What kind of assets will they be selling? And if they are selling things and getting dollars in return, why is that inflationary?

What does "unwitting" imply? Is someone manipulating the unwitting party intentionally to cause inflation? How?

I understand most of what EJ writes most of the time (and I consider that a testimony to his writing quality, considering how unschooled I am in economics), but I'm not quite 'getting' this one.

[jtabeb]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

Where's Finster with his list of fallacies?

"Prove to me that the Apollo 11 moon landing was not fake. You cannot, therefor it was fake!"

Negative Proof fallacy: that, because a premise cannot be proven false, the premise must be true; or that, because a premise cannot be proven true, the premise must be false.

Nice try. You have to prove to me that the Fed had intent.

No. because we are arguing supposition. And yes I believe my supposition my aptly provides a motive and method and opportunity than your supposition.

Fred, you would argue that if it's is not PROVABLE it doesn't exist. They would deny a whole lot of things that are observable but not provable and is extremely limiting of one's world view. And sometimes (as I seem to recall in certain PM or two about the nature of the Iraq war) what is observable but not provable, can later become FACT through the course of 3rd party disclosure.

Since this has already happened once during the course of our discussions, it is possible that it could happen again. Not saying IS, am saying possible, but not provable. Evidence may arise later to confirm or deny the supposition, but outright dismissal in the present due to a lack of conclusive evidence, seems to me at least, as lacking the intellectual curiosity that is required for a true deconstruction of a policy agenda.

Again, there are two times I have seen this happen here in the Itulip psyche.

The first case was the outright flat DISMISSAL that financial games had anything to do with the blockbuster oil price. And the second was the tidbit mentioned earlier with regard to the true motives of the Iraq war.

(Both positions were latter factually vindicated I might add)

To dismiss a plausible theory as "rubbish" due to a lack of timely intelligence would seem a gross disservice to the community at large. Esp. since on two occasions, these "rubbish" theories have indeed been proven to be factually correct.

[GRG55]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Fed cuts dollar, Fire sales and F.I.R.E. sales, Duh-flation, and the Bezzle is shrinking... again

US consumer swan song means cheap now, cheaper later, then expensive -- it’s all about supply;...

...The holiday retailer strategy: those left with the least inventory after Christmas live to fight another day. Then the first half of 2009 goes like this.

1. After Christmas sale 20% to 50% off
2. Liquidation sale 50% to 80% off
3. 30% to 40% of retailers go out of business

Advice to readers: take advantage of the early 2009 Great American Fire Sale and go out and buy all the generators, chain saws, washing machines, fine linens, and other durable goods you’re going to need for the next few years because by the end of 2009 most of the inventory may be sold through, many retailers will be shut down, and replenishment of stocks of the survivors will likely be meager; our models say that the goods import supply will decline more precipitously than the supply of money available to pay for them. That spells severe stagflation...

I'm sure I heard the birds ZIRPing outside this afternoon. If it wasn't for the Christmas carols I'd have sworn it was spring...

[that reminds me...has FRED checked the FED altimeter and VSI lately; maybe that was a ground proximity warning I heard?]

Supplement to the advice above. There are more bargains out there than appears on surface. Retailers will negotiate, especially on bigger ticket and higher end items, if you are an informed shopper, and actually ready to make a deal [not kicking tires]. My wife has been shopping aggressively for the appliances and selected fittings for the bunker. Sometimes she negotiates so hard it's embarrassing and I slink off into a corner of the store and pretend not to be with her . But it works. She's been able to get some top level stuff she never expected to afford, at prices she never expected to see. And our regional economy here has barely started to turn down [house prices just starting to decline, layoffs minimal so far, etc.].

I always insist on taking delivery immediately no matter what. As the bunker is still under construction I have rented storage space and am stockpiling everything we buy under my own lock and key. All the retailers tell me they will store our stuff in their warehouse for free until we need it, but I don't trust they'll still be there in many cases. Today on the local news there's a report of a high end furniture store that has closed and not delivered to customers who prepaid...even those customers that bought stuff at their two day "Going Out Of Business Sale" and didn't take immediate delivery. Ooops. Apparently a creditor managed to get a court injunction blocking distribution of any assets.

Be careful out there...:cool:

[ASH]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

Associated Press Association
12-2-08 11 minutes ago

A well placed anonymous source has revealed that most conspiracy theories are the work of conspiracists...

That's funny, but... is that directed at my conversation with vinoveri, or bart's conversation with FRED?

[WDCRob]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

Associated Press Association
12-2-08 11 minutes ago

A well placed anonymous source has revealed that most conspiracy theories are the work of conspiracists. The highly informed insider went on to state that while it was impossible to prove his or her theory, it was also impossible to disprove it as well, at least to his or her satisfaction.

"Most people believe that 9/11 was the work of Muslim terrorists, that Barack Obama is indeed a citizen of the United States and that aliens from the planet Zorg did not build the Pyramids," said the little known but well respected authority figure. "But," he or she went on, "conspiracists seem to know more than everyone else and, finally, the truth can be told. They are behind the alternate theories to our established beliefs."

"Conspiracists," they continued, "are involved in the largest conspiracy this planet has ever seen. They are behind every single significant conspiracy theory that has ever been proposed since the dawn of mankind and possibly more than that." A new conspiracy theory, who was really behind the Mumbai attacks, was set to be unveiled as we went to press.

While the highly secretive source could not produce any actual evidence to document his or her claims, he or she did say that more would be revealed later. Also, they did provide APA with an internet site that backed up the claims. APA could not find any conspiracists who would confirm the story, though one did question whether we were an actual news source.

[vinoveri]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

If you think that it can't possibly work like that, then you probably grasp it.

On a minor historical note, obviously Japan didn't crash the yen by its program of quantitative easing. Clearly this is a sin that is judged by degree and circumstance.

I was afraid of that,... thanks.

The $ being the reserve currency, and the US a debtor nation could mean the punishment if any is different than the purgatory that JP has been experiencing economically.

[FRED]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

Ditto, and I's sure SYMBOLS would agree as well.

Where's Finster with his list of fallacies?

"Prove to me that the Apollo 11 moon landing was not fake. You cannot, therefor it was fake!"

Negative Proof fallacy: that, because a premise cannot be proven false, the premise must be true; or that, because a premise cannot be proven true, the premise must be false.

Nice try. You have to prove to me that the Fed had intent.

[jtabeb]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

I submit that you can not prove that there was not an intent to have a failure of a significant degree.

Ditto, and I's sure SYMBOLS would agree as well.