Load up the Heleocopter, Ben is back!

[Raz]

Re: Load up the Heleocopter, Ben is back!

My contention is that we are in a Depression. Meaning a period of many years with very tough economic times.

The reason isn't the credit bubble bursting. It's the government's reaction to that. Exactly why Japan has had two decades of very poor growth.

The government's "jobs" program steals jobs. The bailouts steals from wage earners and savers. What this country needs is DEFLATION and what it will get is INFLATION.

There is a well known delay between the money supply and what it does, and prices and what they do.

We are going to experience price increases in food, energy and other "real" things people need, while wages fall in terms of real buying power due to global competition and the lack of a real recovery in the USA.

This is baked in the cake because of the vast increase in the money supply we have ALREADY experienced.

So any "deflation" by the Fed right now is not relevant to the next 18 or 24 months anyway.

And we are starting to experience the next downleg in the Depression.

You've obviously been reading my thoughts.() Thanks for putting them on paper.

I also believe we're in a Depression, or a Balance Sheet Recession in some areas of Washingtonspeak. It's not your Daddy's Recession which was an Inventory Recession intentionally caused by Fed tightening. This one is a result of several factors, one of which is MISH's term "Peak Credit".

He's actually right about some things.

[Raz]

Re: Load up the Heleocopter, Ben is back!

Wilco.



Cool, works for me although I'd add a few more like CONfidence.





Good reminder, thanks - I just added it to my confidence/sentiment page, my current "catch-all".

bart and WildspitzE : thanks for your thoughts. The discussion you two had is very informative.
I learn a lot on this website - above and beyond what I learn from EJ.

[bart]

Re: Load up the Heleocopter, Ben is back!

yes bart charliebrown is LOL too.

I feel like an action hero. the bomb has detonated and somehow I can out run the fire ball. I'm almost all the way out of the market now, got singed but made 10-15% on most of my postions. I was up 25% but did not pull the trigger fast enough. I thought I heard the sound of a "chopper" I will wait for some
stability before buying back in, and my postion is not going to be nearly as large going forward.

Let's hear it for a twofer - a nice profit, and an education in the wild & woolly trading game.

bart and WildspitzE : thanks for your thoughts. The discussion you two had is very informative.
I learn a lot on this website - above and beyond what I learn from EJ.

Different strokes for different folks, and much more importantly - on EJ's iTulip, the sum truly is greater than the total of its parts.

[WildspitzE]

Re: Load up the Heleocopter, Ben is back!

bart and WildspitzE : thanks for your thoughts. The discussion you two had is very informative.
I learn a lot on this website - above and beyond what I learn from EJ.

No thanks needed Raz, your input, along with the research reports that you share, is as enlightening to some of us. It's what makes this place.

[WildspitzE]

Re: Load up the Heleocopter, Ben is back!

Cool, works for me although I'd add a few more like CONfidence.

While I wait for the updated AMB and M1 & MULT numbers (to see if there was a "change of heart"), I decided to read Bernie's testimony. The testimony leads me to further believe that their latest foray into tightening land was a trial balloon... the results of the trial balloon: he doesn't believe that the economy can support itself w/out fiat support (probably coupled with what's going on with the PIIGS). It's also an election year. My expectation is that they'll reverse course to continue being "accommodative" ... how much and how fast is what I need to monitor.

From here (but click on the official release):
http://www.itulip.com/forums/showthread.php?t=14366

"...Although at present the U.S. economy continues to require the support of highly accommodative monetary policies, at some point the Federal Reserve will need to tighten financial conditions by raising short-term interest rates and reducing the quantity of bank reserves outstanding. ...."

He reiterates this (quote above) in the conclusion I think. There you go, now we just need to be sure that we observe what he is doing (and not what he says he's doing).


Also: thought that these two in conjunction were funny:

"...In addition, the Federal Reserve is in the process of normalizing the terms of regular discount window loans. We have reduced the maximum maturity of discount window loans to 28 days, from 90 days, and we will consider whether further reductions in the maximum loan maturity are warranted. Also, before long, we expect to consider a modest increase in the spread between the discount rate and the target federal funds rate. ..."

"As a result of the very large volume of reserves in the banking system, the level of activity and liquidity in the federal funds market has declined considerably, raising the possibility that the federal funds rate could for a time become a less reliable indicator than usual of conditions in short-term money markets. ..."

So... the Fed Funds is meaningless at the moment, but at some point in the future it will be relevant again and then we'll do something.

And, who cares about the discount rate? I don't think that any bank is borrowing from it at the moment... so if they raise the irrelevant discount rate now, perhaps it will scare the inflationists while we still pump out fiat? :rolleyes:

[WildspitzE]

Re: Load up the Heleocopter, Ben is back!

While I wait for the updated AMB and M1 & MULT numbers (to see if there was a "change of heart"), I decided to read Bernie's testimony.

I've attached a copy of the graph that we were discussing above (the old one).

The following link will take you to the latest release, to compare. Key is to also look at the bottom section.

http://research.stlouisfed.org/publi...usfd/page3.pdf

Looks like they're back on the wagon. Let's see what happens in a couple of weeks, but for now it looks like they're back on the accomodative track.

[icm63]

Re: Load up the Heleocopter, Ben is back!

Bart...

Where you been dude...

[WildspitzE]

Re: Load up the Heleocopter, Ben is back!

Wilco.

Good reminder, thanks - I just added it to my confidence/sentiment page, my current "catch-all".

How often is that one updated (the US + China)? Can't wait to see how that graph looks after this:

http://www.bloomberg.com/apps/news?p...x0mAHiAs&pos=1

[bart]

Re: Load up the Heleocopter, Ben is back!

While I wait for the updated AMB and M1 & MULT numbers (to see if there was a "change of heart"), I decided to read Bernie's testimony. The testimony leads me to further believe that their latest foray into tightening land was a trial balloon... the results of the trial balloon: he doesn't believe that the economy can support itself w/out fiat support (probably coupled with what's going on with the PIIGS). It's also an election year. My expectation is that they'll reverse course to continue being "accommodative" ... how much and how fast is what I need to monitor.

From here (but click on the official release):
http://www.itulip.com/forums/showthread.php?t=14366

"...Although at present the U.S. economy continues to require the support of highly accommodative monetary policies, at some point the Federal Reserve will need to tighten financial conditions by raising short-term interest rates and reducing the quantity of bank reserves outstanding. ...."

He reiterates this (quote above) in the conclusion I think. There you go, now we just need to be sure that we observe what he is doing (and not what he says he's doing).


Also: thought that these two in conjunction were funny:

"...In addition, the Federal Reserve is in the process of normalizing the terms of regular discount window loans. We have reduced the maximum maturity of discount window loans to 28 days, from 90 days, and we will consider whether further reductions in the maximum loan maturity are warranted. Also, before long, we expect to consider a modest increase in the spread between the discount rate and the target federal funds rate. ..."

"As a result of the very large volume of reserves in the banking system, the level of activity and liquidity in the federal funds market has declined considerably, raising the possibility that the federal funds rate could for a time become a less reliable indicator than usual of conditions in short-term money markets. ..."

So... the Fed Funds is meaningless at the moment, but at some point in the future it will be relevant again and then we'll do something.

And, who cares about the discount rate? I don't think that any bank is borrowing from it at the moment... so if they raise the irrelevant discount rate now, perhaps it will scare the inflationists while we still pump out fiat? :rolleyes:

Not much difference this week on velocity:






But I sure do question the bit about "highly accommodative monetary policies" - I'm just plain not seeing it in the last few months, and trial balloon is as good a way to describe what's going on as any.

One of the biggest dangers though is what EJ noted quite some time ago and with which I strongly agree, and that you partially noted with watching what Bernanke etc. are actually doing - the increasing amount of fiddling of the numbers, combined with true non public and hidden activities.
One example are lines on the Fed's weekly H.4.1 - adding up "Other Federal Reserve Assets" and "Treasury currency outstanding" from last week gets a total of about $140 billion... and that provides lots of room for "special moments".


Here's the current picture on discount window borrowing - its mostly been about flat to mild down trend for the last year, change rate wise, and ranging between $20 $ $40 billion per week:

[bart]

Re: Load up the Heleocopter, Ben is back!

Bart...

Where you been dude...

Trying my damndest to "abuse" my daughter in far away Beijing more than she abuses her geezer father... and failing miserably... :eek: ;)

[bart]

Re: Load up the Heleocopter, Ben is back!

How often is that one updated (the US + China)? Can't wait to see how that graph looks after this:

http://www.bloomberg.com/apps/news?p...x0mAHiAs&pos=1

Its updated monthly, since China only reports money supply & credit monthly. I just did update it with new numbers last week, but they're from December so it'll be another two months before we see the reserve changes reflected... but there's little doubt in my mind that the down trend will continue, even with a possible yuan revaluation.