No "QE2" till 2011?

[Mega]

Thats what Zerohedge are saying.
Mike

[flow5]

Re: No "QE2" till 2011?

Contrary to economic theory and Nobel Laureate Milton Friedman, monetary lags are not "long & variable". The lags for monetary flows (MVt), i.e., the proxies for (1) real-growth, and for (2) inflation indices, are historically (for the last 97 years), always, fixed in length. However the lag for nominal gdp (the FED's target?), varies widely.

It’s a scientific fact that economic forecasts are mathematically infallible. Nominal (gDp) will cascade in the 4th qtr (down in every month - Oct, Nov, & Dec), without added, fiscal/monetary intervention/stimulus. It is a sure bet that Congress will fail to act. We will never reach "escape velocity" (even if the FED uses countervailing stimulus).

this is a lousy metric (a surrogate-- because the FED discontinued the G.6 release). but it's better than anything the FED uses. it is inconsistent & non-conforming, but, we still definitely, & unquestionably, know the future:

2010 jan ,,,,,,, 0.54 ,,,,,,, 0.22 top
2010 feb ,,,,,,, 0.5 ,,,,,,, 0.09
2010 mar ,,,,,,, 0.56 ,,,,,,, 0.07
2010 apr ,,,,,,, 0.55 ,,,,,,, 0.13 top
2010 may ,,,,,,, 0.48 ,,,,,,, 0.05 bottom
2010 jun ,,,,,,, 0.47 ,,,,,,, 0.04
2010 jul ,,,,,,, 0.5 ,,,,,,, 0.07
2010 aug ,,,,,,, 0.48 ,,,,,,, 0.07 Top
2010 sep ,,,,,,, 0.5 ,,,,,,, 0.03
2010 oct ,,,,,,, 0.37 ,,,,,,, 0.02
2010 nov ,,,,,,, 0.29 ,,,,,,, -0.02
2010 dec ,,,,,,, 0.22 ,,,,,,, 0.02
2011 jan ,,,,,,, 0.03 ,,,,,,, 0.01 bottom
2011 feb ,,,,,,, 0.11 ,,,,,,, -0.03
2011 mar ,,,,,,, 0.19 ,,,,,,, -0.02
2011 apr ,,,,,,, 0.11 ,,,,,,, 0.01

As the #'s indicate, the proxy for inflation falls (-47) in four months. This is skewed to the downside (exaggerated), but the change is huge. The economy will crash, stocks will crash, bonds will top out, and another selling & buying opportunity of a life time will present itself.

So the FED will initiate QE2 initally undershooting, then overshooting.

[flow5]

Re: No "QE2" till 2011?

The crash won't start until Sept. month-end.

[flow5]

Re: No "QE2" till 2011?

The equities markets will likely turn after the seasonals, i.e., Labor Day.

[ThePythonicCow]

Re: No "QE2" till 2011?

2010 jan ,,,,,,, 0.54 ,,,,,,, 0.22 top
2010 feb ,,,,,,, 0.5 ,,,,,,, 0.09

Where did that table of numbers come from and what do the numbers mean?

[flow5]

Re: No "QE2" till 2011?

It's the HOLY GRAIL. I summarize it this way:

First, there is no ambiguity in forecasts: In contradistinction to Bernanke (and using his terminology), forecasts are mathematically "precise” :[

(1) “Money” is the measure of liquidity; the yardstick by which the liquidity of all other assets is measured.
(2) Income velocity is a contrived figure (fabricated); it’s the transactions velocity (bank debits - Vt) that’s important (i.e., financial transactions are not random);

(3) Nominal GDP is the product of monetary flows (M*Vt) (or aggregate monetary demand), i.e., our means-of-payment money (M), times its transactions rate of turnover (Vt).

(4) The rates-of-change (roc’s) used by economists are specious (always at an annualized rate; which never coincides with an economic lag). The Fed’s technical staff, et al., has learned their catechisms;

(5) Friedman became famous using only half the equation (the means-of-payment money supply), leaving his believers with the labor of Sisyphus.

(6) Contrary to economic theory, & Nobel laureate, Dr. Milton Friedman, monetary lags are not “long and variable”. The lags for monetary flows (MVt), i.e. the proxies for (1) real-growth, and for (2) inflation indices, are historically (for the last 97 years), always, fixed in length.However, the FED's target, nominal gdp?, varies widely.

(7) Roc’s in (MVt) are always measured with the same length of time as the specific economic lag (as its influence approaches its maximum impact (not date range); as demonstrated by the clustering on a scatter plot diagram).

(9) Consequently, since the lags for (1) monetary flows (MVt), by using simple algebra, economic prognostications are infallible (for less than one year).

(10) This is the “Holy Grail” & it is inviolate & sacrosanct: See 1931 Committee on Bank Reserves Proposal (by the Board’s Division of Research and Statistics), published Feb, 5, 1938, declassified after 45 years on March 23, 1983.

(11) The BEA uses quarterly accounting periods for real GDP and the deflator. The accounting periods for GDP should correspond to the specific economic lag, not quarterly.

(12) Monetary policy objectives should not be in terms of any particular rate or range of growth of any monetary aggregate. Rather, policy should be formulated in terms of desired roc’s in monetary flows (MVt) relative to roc’s in real GDP.

(13) Combining real-output with inflation to obtain roc’s in nominal GDP, can then be used as a proxy figure for roc’s in all transactions. Roc’s in real GDP have to be used, of course, as a policy standard.

(14) Because of monopoly elements, and other structural defects, which raise costs, and prices, unnecessarily, and inhibit downward price flexibility in our markets, it is probably advisable to follow a monetary policy which will permit the roc in monetary flows to exceed the roc in real GDP by c. 2 – 3 percentage points.

(15) I.e., monetary policy is not a cure-all, there are structural elements in our economy that preclude a zero rate of inflation. In other words, some inflation is inevitable given our present market structure and the commitment of the federal government to hold unemployment rates at tolerable levels.

(16) Some people prefer the “devil theory” of inflation: “It’s all Peak Oil's fault", ”Peak Debt's fault", or the result of the “Stockpiling of Strategic Raw Materials/Industrial Metals” & Soaring Agriculture Produce, etc. These approaches ignore the fact that the evidence of inflation is represented by "actual" prices in the marketplace.

(17) The "administered" prices of the world's monopolies, and or, the world’s oligarchies: would not be the "asked" prices, were they not “validated” by (MVt), i.e., “validated” by the world's Central Banks.

[ThePythonicCow]

Re: No "QE2" till 2011?

It's the HOLY GRAIL. I summarize it this way:

huh?

[Adeptus]

Re: No "QE2" till 2011?

The crash won't start until Sept. month-end.

I'm subscribing to this thread primarily because I understood almost nothing of what you said (and hence I very likely have a lot to learn), except for your 1 liner predictions which I intend to verify, and if true, make an effort to learn what you've been saying since about April 2010.

I just have 2 questions at this point, are these your original ideas, and have they been infallible since at least April 2010? I ask because the following makes me cringe a little: "It’s a scientific fact that economic forecasts are mathematically infallible".

Thanks for sharing,
Adeptus

[ThePythonicCow]

Re: No "QE2" till 2011?

2010 jan ,,,,,,, 0.54 ,,,,,,, 0.22 top

Where did that table of numbers come from and what do the numbers mean?

You have not answered my query. Or if you think you have, your reply was utterly incomprehensible to me, so much so that I could not even tell to what you were replying.

Let's make this simpler. What is the specific meaning of the "0.54" and of the "0.22", in the first line of your table? Perhaps they are the diameter of Sarah Palin's waist and thigh, in fathoms, as of January 2010?

[sishya]

Re: No "QE2" till 2011?

The crash won't start until Sept. month-end.

Hmmm...I am under the impression that things will turn only after mid-term election.
your inflation proxy going down - translating to equity market crash starting sep 2010 ??

I was thinking that the reluctant introduction of QE2 after Republican control of congress will lead
to equity and dollar crash starting Jan 2011. time to re-assess. if you have more details please provide.

[GRG55]

Re: No "QE2" till 2011?

Hmmm...I am under the impression that things will turn only after mid-term election.
your inflation proxy going down - translating to equity market crash starting sep 2010 ??

I was thinking that the reluctant introduction of QE2 after Republican control of congress will lead
to equity and dollar crash starting Jan 2011. time to re-assess. if you have more details please provide.

Hell, there's just as much chance the market takes off upward after the mid-terms.

As soon as the mid-terms are over the race will be on for 2012. The Dems will be throwing everything they can into getting Obama, and themselves, re-elected. Never, ever underestimate the desire of politicians to get re-elected. Before this is over we could well see unimaginable new highs in the levels of stimulus coming from the government and the Fed. With the rest of the world showering the US Treasury with unlimited money at all time low interest rates it's pretty damn difficult for this observer to imagine there will be any spenidng discipline coming from D.C.

Also, how do you see a concurrent dollar and equity crash? Generally in the present sort of circumstances they are inversely correlated.

[GRG55]

Re: No "QE2" till 2011?

...Let's make this simpler. What is the specific meaning of the "0.54" and of the "0.22", in the first line of your table? Perhaps they are the diameter of Sarah Palin's waist and thigh, in fathoms, as of January 2010?

Cow: Sarah Palin is unfathomable.

And I know that you know that!

[ThePythonicCow]

Re: No "QE2" till 2011?

Cow: Sarah Palin is unfathomable.

And I know that you know that!

Gosh darn, GRG55. I was enjoying my fantasy of measuring Ms. Palin's waist and thigh .

[GRG55]

Re: No "QE2" till 2011?

Gosh darn, GRG55. I was enjoying my fantasy of measuring Ms. Palin's waist and thigh .

I wouldn't want to refudiate your fantasy Cow, but keep it up and North Texas will probably soon be declared a "no fly" zone...

[Adeptus]

Re: No "QE2" till 2011?

From a sourceless 1 liner, to a mind bending mini-treatise on economic forcasting, to Sarah Palin fat jokes ironically posted by a cow.... I just hope this thread hasn't degenerated so far as to discourage flow5 from elaborating on his seemingly erudite commentary.

Adeptus