Milton Friedman: Explosion of monetary base NOT inflationary.

[ThePythonicCow]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

your studied effort to ignore the facts presented here... easily verified with a simple google search... smells trollish.

I enjoy your posts more metal when they stand on their own merit, and less when they mostly just judge the worth of the posts of others by how carefully such posts hue to or parrot the iTulip position. I have a Google search on the word "sycophant" in another of my Firefox tabs right now, but failed to come up with a cute way to weave that word into the previous sentence -- sorry .

[skyson]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

your studied effort to ignore the facts presented here... easily verified with a simple google search... smells trollish.

haha, i don't think i am being trollish at all. i simply want to point out that your cherry picking of the outstanding calls of gold investment, but never mention the fact that with a 15% fund allocation, that tripling does not give a stellar performance boost to the other 85% of the treasuries investment, not to mention the severely devaluation of $US during the same time frame.

what is the true purchasing power of the said portfolio?

yet, you assert that the best trader could not beat your(or itulip's) strategy. i am not so sure who is more trollish...

hey, i am not here for argument. i have plenty of other things to do. i am a busy man indeed....hahaha

[skyson]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

Metal:

others might be more diplomatic, but i will be direct.

i observe you are probably the most active users on this board, but that does not give you authority over other members. consistently, you have barked at and scared away quite a few members whose opinions deviated from the orthodox itulip position. do we want to have a discussion group with a conforming mentality or one with diverse and stimulate thinking in matters important to our financial health?

as i said before, a guard dog is not needed here...:p

[LargoWinch]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

as i said before, a guard dog is not needed here...:p

skyson, please note the metalman is not a "guard dog", but iTulip's "bull dog". Close but no cigar. ;)


Now to your point: 85% cash until early this year (when the allocation changed) may be puzzling in insight, especially considering Ka-Poom.

However, I believe that iTulip's position was always to preserve the overall portfolio purchasing power while minimizing fees, volatility and risks.

Based on the above objective, iTulip's record is so good that it is jaw-dropping. I wish I discovered this oasis much earlier.

Just to give you two incredible examples see: Time, at last, to short the market and Time at last to short commercial real estate


We are now entering the next phase "investment in a POOM world". More importantly members who listen carefully are in very good financial shape thanks to iTulip's hard work and research. This is all in spite of the great crash of 2008.

Needless to say that this has everyone at the edge of their seats and that smart chaps - well aware of iTulip's track record - cannot even imagine navigating the ongoing financial turmoil without an iTulip membership...

[ThePythonicCow]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

However, I believe that iTulip's position was always to preserve the overall portfolio purchasing power while minimizing fees, volatility and risks.

I didn't read skyson as commenting on the worth of iTulip calls, but rather as rebutting what seemed to be claim that (even granted perfect hindsight, apparently) no better call could have been made.

[LargoWinch]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

I didn't read skyson as commenting on the worth of iTulip calls, but rather as rebutting what seemed to be claim that (even granted perfect hindsight, apparently) no better call could have been made.

ohhhh... thanks for correcting me PC: that was one Largo "happy on the trigger" then!

PS: Can someone grant me perfect hindsight so that I can rule the world?

[jiimbergin]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

Aha! You just revealed the location of Nirvana - it's in Dixie!

Only a true son of the beluv-ed South would recunize thuh Civil Wawah for whut it truly wuz.

(And by the way, I agree with everything you just wrote about Fiat Currencies - and your conclusions as well.);)

I second that

[skyson]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

skyson, please note the metalman is not a "guard dog", but iTulip's "bull dog". Close but no cigar. ;)


Now to your point: 85% cash until early this year (when the allocation changed) may be puzzling in insight, especially considering Ka-Poom.

However, I believe that iTulip's position was always to preserve the overall portfolio purchasing power while minimizing fees, volatility and risks.

Based on the above objective, iTulip's record is so good that it is jaw-dropping. I wish I discovered this oasis much earlier.

Just to give you two incredible examples see: Time, at last, to short the market and Time at last to short commercial real estate


We are now entering the next phase "investment in a POOM world". More importantly members who listen carefully are in very good financial shape thanks to iTulip's hard work and research. This is all in spite of the great crash of 2008.

Needless to say that this has everyone at the edge of their seats and that smart chaps - well aware of iTulip's track record - cannot even imagine navigating the ongoing financial turmoil without an iTulip membership...

yes, as PTC pointed out, i was not debating the value of itulip wisdom. however, i am growing increasingly uneasy about the 30/70 fund allocation. in my view, this strategy falls at the most conservative end of investment spectrum in the current explosive environment, and the risk/award ratio is intolerable to me.

it all comes down to the value of $US of your funds, be it stock, mutual fund, or other paper investments. how much is one $US worth now? one roll of toilet paper, or even less?

no, not even that! as one astute blogger pointed out, the value of the $US is zero. since the US dollar delinked from the gold backing after 1970, its intrinsic value is literally and practically zero. people around the world(including US citizens) value the US dollar not by its intrinsic value, but their confidence on the US government's ability to keep its promise of paying them real things on those IOUs(paper dollar). yes, that is exactly what the US dollar is, a promise backed by "the full faith of US government".

yet sadly, after much study, i conclude that the US financial system and economic growth in the last 30 years are simply a giant Ponzi scheme, and this scheme is reaching the end. there is simply no way out. we are reaching a paradigm shift, a stage of global re-alignment.

lets take a good hard look at the value of the $US(or other shaky fiat currency like Pound), the valuation basis of your paper investments:

what will turn its current status of zero value and some confidence, into the certain future of zero value and zero confidence?

we have well passed the point of analyzing the current events in economic and financial terms. we will need to FEEL the movement by human psychology -- the herd instinct.

people could lose confidence in a snap second, seemingly with a tiny trigger in our subconsciousness, and hence the stampede.

should that happen, which no one would be able to predict the timing, even powerful predators like the "Lion King" would fade into oblivion under those thunderous feet...

so i promptly converted half of my funds into physical PMs just before this most recent price run up, and will buy periodically in the near future, no matter price high or low. for me, arguments of deflation/inflation no longer matter.

it is all the game of CONFIDENCE, NOW.

[ThePythonicCow]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

no, not even that! as one astute blogger pointed out, the value of the $US is zero. ...

The lack of a gold (or other physical such) basis for a currency does not make the value of that zero. If you really think it does, then I'll gladly treat you to a fine dinner in exchange for all your worthless dollars.

There are other bases for the value of currency. Always the essential basis is that those selling other stuff (goods, services, labor, ...) for currency expect that currency to retain its exchange value until the holder anticipates trying to purchase some other stuff with it. The fiat money of a stable and trusted government that is responsibly managing the supply of money in circulation is commonly accepted to have value, just as is gold backed currency.

yet sadly, after much study, i conclude that the US financial system and economic growth in the last 30 years are simply a giant Ponzi scheme, and this scheme is reaching the end.

Well, rather clearly, the United States is becoming less and less a stable, trusted and responsible government.

However Ponzi schemes run by sufficiently powerful entities don't spontaneously self destruct. Someone or something destroys them. The timing of such acts is difficult for me to anticipate ahead of time. The U.S. government and its associated private enterprises has been the most powerful institution in human history. It may well not go quietly into the night.

My call remains as it was a few days ago in some other post here. We'll struggle sideways into early 2010, then dollar spikes up, stocks and other dollar denominated assets crash, and gold hesitates. Gold will hesitate because it is torn between being yet another falling asset in a dollar bear market rally, and being dollar disaster insurance.

I have increased my gold holdings recently, but I have not maxed out yet like jtabeb. If gold happens to move lower near term, I'll get a little more.

I have increased my gold mining ($XAU-like) holdings, but expect to dump them about in mid December 2009.

[goadam1]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

If goadam1 is 98 years old, yes then this is a good chance of this call becoming correct...

The BOOM and BUST cycles are getting shorter and shorter...:p

You are right. After the last deleveraging of this size (you may have read about it in history books) we made new laws to prevent such wild speculation. Even in my lame public school education in the 70's we learned the role of buying on margin creating the great depression.

There have been zero legal changes to prevent another wild bubble. Plus, here in New York I have heard quite an earful from finance guys on how we I am a fool for saying fire assets should reflect a value in the productive economy. I never thought, after a large crisis and with a new President, that reinflating fire assets rather than real investment in a productive economy would have been the priority.

[Chomsky]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

I never thought, after a large crisis and with a new President, that reinflating fire assets rather than real investment in a productive economy would have been the priority.

No?

I thought they'd try and try to reflate the FIRE economy as much as possible, mostly thanks to reading EJ. There is no US Empire without FIRE. It's not going away (or even just back into its corner) without a nasty fight.

[skyson]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

The lack of a gold (or other physical such) basis for a currency does not make the value of that zero. If you really think it does, then I'll gladly treat you to a fine dinner in exchange for all your worthless dollars.

There are other bases for the value of currency. Always the essential basis is that those selling other stuff (goods, services, labor, ...) for currency expect that currency to retain its exchange value until the holder anticipates trying to purchase some other stuff with it. The fiat money of a stable and trusted government that is responsibly managing the supply of money in circulation is commonly accepted to have value, just as is gold backed currency.


Well, rather clearly, the United States is becoming less and less a stable, trusted and responsible government.

However Ponzi schemes run by sufficiently powerful entities don't spontaneously self destruct. Someone or something destroys them. The timing of such acts is difficult for me to anticipate ahead of time. The U.S. government and its associated private enterprises has been the most powerful institution in human history. It may well not go quietly into the night.

My call remains as it was a few days ago in some other post here. We'll struggle sideways into early 2010, then dollar spikes up, stocks and other dollar denominated assets crash, and gold hesitates. Gold will hesitate because it is torn between being yet another falling asset in a dollar bear market rally, and being dollar disaster insurance.

I have increased my gold holdings recently, but I have not maxed out yet like jtabeb. If gold happens to move lower near term, I'll get a little more.

I have increased my gold mining ($XAU-like) holdings, but expect to dump them about in mid December 2009.

Sound money has three functions: 1. medium of exchange. 2.unit of account. 3. store of wealth.

How does the US dollar fair?

Can it accurately price a product on the market? With a $US one could buy two rolls of toilet paper last year. Now it could purchase one roll of toilet paper. How many toilet paper it could buy next year? Are we producing better toilet paper every year, so it worths more every year? Or is the valuation function of the US dollar deterioating every year? How can the US dollar be an accurate accounting unit of products if its valuation fluctuate so widely(mainly going down)? I guess, it fails terribly in the function of being the unit of account.

How about the store of wealth? Do I need to elaborate the details about the US dollar losing 97% of its purchasing power in the last 30 years and the prospect of losing another 97% of the remainder in the next few years? Does anyone with a sane mind still consider US dollar as the prefer method of storing one's wealth?

It is clear to me the US dollar is only performing as the function of medium of exchange, in international trade and inside the US. Its "perceived value" is only retained because of its wide spread usage by people.

That is why I say $US has "zero value and some confidence".

Has everyone seen the Julian Robertson video, in which he says if any one of the three US biggest creditors(China, Japan, Saudi Arabia) stop buying (let alone selling) US bonds, intentionally or unintentionally, the bond market will collapse over night, and the US will go into bankcrupcy in an instant? In this scenario, your dollar and any other paper investment will become WORTHLESS over night. What is your risk/reward ratio by holding you $US denominated investments at this historical moment?

How about the change of heart of private investors in their confidence in the $US? Did I hear the approaching sound of "the stampede"?

TPC, I don't mind to give you all my "worthless" $US. But I will have to charge you for the usage of them, like the US government does.

Yes, we are at the very juncture of world financial history, an unprecedented economic environment: the quadrillion dollar paper derivatives hundreds of times the size of world GDP, the insolvence of the county with the biggest share of world economy, the unresponsible government issuing world reserve currency, the criminal financial oligarchs and the over-indulgent western consumer, the unpayable public and private debt, the trillions and trillions of paper money world wide central banks pumping into their economies, the world wide asset bubbles amid the worse recession or depression, and....

Past economic experience and theories are not applicable, and nothing left guiding the people in this chaotic time. On top of this, governments are changing the rules at will, which only means the few insiders will be the ones benefits from the outcome. The rest of us, the people will suffer immesely.

Are we approaching a reset? Yes. When will it happen? I don't know.
Hereby, I will make a financial and political statement here: I will buy gold - the only weapon for us the people to perserve our little wealth against the ever more powerful ruling elites.

Like Jim Rickards says:"When you own gold, you are fighting every central bank in the world", and you are shorting the quadrillions and quadrillions of paper market.

The best part is: unlike shorting stocks or treasuries that quite a few of your guys tempted to do, I will not face any substantial loss even I am wrong at the timing, the expected outcome, or whatever. But if you are right, then the reward is unimaginable...

Truly a sure bet in this world wide financial casino...;);)

[goodrich4bk]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

How about the store of wealth? Do I need to elaborate the details about the US dollar losing 97% of its purchasing power in the last 30 years and the prospect of losing another 97% of the remainder in the next few years? Does anyone with a sane mind still consider US dollar as the prefer method of storing one's wealth?


True (except that the 97% loss is from 1913, not 1979), but dollars, unlike gold, usually have sufficient value to borrowers that they are willing to pay me additional dollars over time (i.e., interest) to compensate for the expected purchasing power decline. So even though dollars may have lost 75% of their value over the past 30 years, I could have bought a 30 year bond in 1979 (yielding about 10%) and today I would have four times as many dollars. Thus, my $10,000 in 1979 is now $40,000, but worth only $10,000 in 1979 dollars. I'm dead even and haven't lost anything other than the ability to trade those dollars for goods, services or other investments for the past 30 years.

In short, the important difference between fiat and gold is not that fiat is "inherently" worthless. Rather, the difference is that confidence in the former can be more easily shaken due to the fact that it is "inherently" worthless. As long as confidence is not shaken, there is no reason why fiat cannot hold its value as much as gold.

In the long run, confidence is a belief that the rate of interest on the dollar will always be positive, i.e., high enough to compensate for any inflation AND to compensate the lender for deferring his own consumption while the dollar is loaned.

Today, the keeper of dollar confidence, the Federal Reserve, is fixing interest rates below the inflation rate most investors are convinced will occur in the near future. People who believe the Fed is wrong, or who believe that the Fed will be unable to withdraw its QE when needed, are buying gold because gold has a longer history of confidence than any fiat currency ever printed. That is its primary value in today's unprecedented financial environment.

[ThePythonicCow]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

That is why I say $US has "zero value and some confidence".

"Declining toward zero" is not the same as "zero."

But I am only accusing you of the misdemeanor of hyperbole, not a higher crime of great error .

We are in considerable agreement.

Putting aside my silly quibbling over the meaning of "zero", I would tend to differ with you on two points:

1. To me, it is not a certainty that there is a major collapse of the American economy (major being worse even than the Great Depression of the 1930's) anytime soon (in the next decade or two, say.) Such a collapse is a definite possibility, but other far more mild disruptions are possible as well. I spend some effort preparing for such a collapse, but I do not put all my eggs in that basket.
2. To say gold is the only or best option is to still be boxed into the corner of asking what is the safest or best or most profitable investment to preserve monetary wealth. I am spending more time, effort and money accumulating those things that will help me feed, cloth, shelter and secure myself and those I am responsible for in the event of a substantial collapse of society. If 20 years from now I am dirt poor, but me and my dependents are safe, sound, free to move about, in decent health and adequately fed, then I will chalk that up as a success. Heck, my standards are low. If I am still sufficiently alive to grasp the chalk piece, I'll likely chalk that up as a success .

[skyson]

Re: Milton Friedman: Explosion of monetary base NOT inflationary.

"Declining toward zero" is not the same as "zero."

But I am only accusing you of the misdemeanor of hyperbole, not a higher crime of great error .

We are in considerable agreement.

Putting aside my silly quibbling over the meaning of "zero", I would tend to differ with you on two points:

1. To me, it is not a certainty that there is a major collapse of the American economy (major being worse even than the Great Depression of the 1930's) anytime soon (in the next decade or two, say.) Such a collapse is a definite possibility, but other far more mild disruptions are possible as well. I spend some effort preparing for such a collapse, but I do not put all my eggs in that basket.
2. To say gold is the only or best option is to still be boxed into the corner of asking what is the safest or best or most profitable investment to preserve monetary wealth. I am spending more time, effort and money accumulating those things that will help me feed, cloth, shelter and secure myself and those I am responsible for in the event of a substantial collapse of society. If 20 years from now I am dirt poor, but me and my dependents are safe, sound, free to move about, in decent health and adequately fed, then I will chalk that up as a success. Heck, my standards are low. If I am still sufficiently alive to grasp the chalk piece, I'll likely chalk that up as a success .

of course, different people have different approach. but i hate to diversify for the sake of diversification.

did the investment guru Mr. Buffet mention before that if you have limited capital, you need to concentrate on the few investments that you are convinced you will be right?

spreading your capital too thin does not help with the growth of your portfolio. i am totally CONVINCED that if one wants to gamble, this is truly the kind of "once a life time" moment to put down the chips!:eek:

AND your accusation of me being complicit with the Wall Street gamblers, I DO APPRECIATE!