1970s again?

[mikew]

some quotes from karl denninger on another forum

Ok, Value, so you don't know, you weren't there. You're too young. I lived through it. It sucked. Badly. Very, very badly. The middle class got buttfucked for a long time; housing stagnated, incomes stagnated, inflation skyrocketed. Real purchasing power was utterly destroyed. Guess what - you're wrong about how this will turn out. You know how I know you're wrong? Look at the 10. Up 1.29% today on rates, and rising. Fed Cuts rates, real rates go up. Exactly the opposite of what The Fed intended and what you predicted would happen. This is why I say that Equities ride "The Short Bus" - because they do. Be very careful going long here. It is not about The Fed - it is about The Economy, and Bernanke just fucked us hard. Now in addition to a recession we are going to get both higher rates AND inflation.

Yeah ok. Yal, if the 10 doesn't drop by 50 bips then the "cut" is not really a cut - it magically turned into an increase. You're projecting again. Trade what the market does, not what you want it to do. What the market is doing is telling you that The Fed actually INCREASED real interest rates yesterday. Why? Because The Bond Market gets it - inflation is coming back with a roar, not a wimper, and thus The Bond Market is demanding more return for its money. This is why cutting Fed Funds was a mistake - it will not do what people said it would and will have the opposite impact to what people expected. You'll see. I'm not going to argue with the market. You can if you want but you will simply wind up broke.

"Permashort"? You're an idiot. From 2003 until this spring I hadn't held a single short position in my portfolio. I was entirely in LONG positions. You don't remember the 70s because you're too young. You're an arrogant bastard - that which you didn't personally live through "never happened". You're why 2000 happened and the tech wreck - "there is no business cycle; it has been repealed." Horseshit. The business cycle runs in roughly 7 year periods. Guess what - it did, and in 2000 we found out. Now its 2007, and we're going to find out AGAIN. Cutting rates into a commodity bull market is the dumbest single thing you can do as an economic policy maker. It ALWAYS results in insane inflation and crazy spikes in interest rates. ALWAYS. The last time it impoverished huge numbers of people, resulted in a punishing recession, insane unemployment, double-digit inflation and 18% interest rates. You weren't on this planet when it happened. I was, I lived through it, I know what happened and I know why it happened. Bernanke just did the same thing, and it will have the same result.

thoughts?

[mikew]

Re: 1970s again?

guess i will link to his blog too
http://market-ticker.denninger.net/

[c1ue]

Re: 1970s again?

Mike,

That cutting rates won't help the economy, and that we're at high inflation (and increasing) is pretty much the consensus here already.

The primary debate seems to be whether it will be gold, infrastructure, uranium, or something else (or combination) which will benefit from the next (actually now) credit inflation.

As for me personally, I do not compare today with the '70s for the following reasons:

1) '70s US economy was not in good shape w/ regards to efficiency and oil dependence, but current account deficit/trade balances were just fine. Today it is not the case.
2) '70s US economy was basically surfing on the previous 25 years of good living from rebuilding post WWII Europe. Today's economy is building squat except airplanes, medicine, houses and financial pyramids.
3) '70s US economy was coming off an effective gold standard (Bretton Woods), today we're perched on the tip of a giant credit inflation pyramid.

So the nifty 50 may come back, or may not - I'm not putting my money on it.

[bart]

Re: 1970s again?

Just one thought for now:

[Jim Nickerson]

Re: 1970s again?

Just one thought for now:

So how could there have been Ka-Pooms back in the 70's and 80's when EJ had not even expressed the Theory?

Is the "thought" you are expressing that a Ka can occur with there being a lateral consolidation in commodities as in the first instance versus an actual decrease in their prices as in the second instance? And further is that perhaps what we have already been through the Ka for this time frame?

A chart showing gold and CRB for last couple of years would be interesting.

[Jim Nickerson]

Re: 1970s again?

Just one thought for now:

So how could there have been Ka-Pooms back in the 70's and 80's when EJ had not even expressed the Theory?

Is the "thought" you are expressing that a Ka can occur with there being a lateral consolidation in commodities as in the first instance versus an actual decrease in their prices as in the second instance? And further is that perhaps what we have already been through the Ka for this time frame?

A chart showing gold and CRB for last couple of years would be interesting.

[bart]

Re: 1970s again?

So how could there have been Ka-Pooms back in the 70's and 80's when EJ had not even expressed the Theory?

It was an earlier version - KaKa Poo? ;)

Is the "thought" you are expressing that a Ka can occur with there being a lateral consolidation in commodities as in the first instance versus an actual decrease in their prices as in the second instance? And further is that perhaps what we have already been through the Ka for this time frame?

Pretty much - yes. Keep in mind that there is no inflation correction in that chart, and something that's level during inflation is actually going down.

Most of the Ka stage is still ahead of us (best guesstimate) but we have seen some already, especially when full inflation corrections are factored in.

A chart showing gold and CRB for last couple of years would be interesting.

This is the closest I have on hand.

[EJ]

Re: 1970s again?

It was an earlier version - KaKa Poo? ;)






Pretty much - yes. Keep in mind that there is no inflation correction in that chart, and something that's level during inflation is actually going down.

Most of the Ka stage is still ahead of us (best guesstimate) but we have seen some already, especially when full inflation corrections are factored in.




This is the closest I have on hand.

Bart,
We have recently grown to hundreds of subscribers and thousands of registered community members. The volume of questions and emails I get has reached the point where I cannot answer them all. As much as I enjoy participating on these forums, it's not fair to subscribers if I can't get to their questions on the Select forums. So, starting now I need to restrict my responses to subscriber questions over on the Select forums, starting with these comments on your, as usual, very interesting charts and notes, here.
Eric

[bart]

Re: 1970s again?

Bart,
We have recently grown to hundreds of subscribers and thousands of registered community members. The volume of questions and emails I get has reached the point where I cannot answer them all. As much as I enjoy participating on these forums, it's not fair to subscribers if I can't get to their questions on the Select forums. So, starting now I need to restrict my responses to subscriber questions over on the Select forums, starting with these comments on your, as usual, very interesting charts and notes, here.
Eric

First, congrats again on the continuing growth and success of iTulip. Your broad understanding and ability to clearly communicate is no small part of it.

I do very much understand on demands on your time. It's part of the reason I keep relatively quiet about my own site - the load of emails and the task keeping the site current just keeps growing. Thank goodness for macros and automation.


Anyhow, your response is much appreciated and as always your comments greatly aid perspective and understanding.
The start and end points that I drew of the various ka and poom cycles in the '70s were not intended to be cast in stone, but rather a broad illustration and opinion as I believe you know... and I want to be sure that it is understood as just that - an opinion of mine and not of the ka-poom master.


No response to this necessary or expected... aka, Party On!

[FRED]

Re: 1970s again?

First, congrats again on the continuing growth and success of iTulip. Your broad understanding and ability to clearly communicate is no small part of it.

I do very much understand on demands on your time. It's part of the reason I keep relatively quiet about my own site - the load of emails and the task keeping the site current just keeps growing. Thank goodness for macros and automation.


Anyhow, your response is much appreciated and as always your comments greatly aid perspective and understanding.
The start and end points that I drew of the various ka and poom cycles in the '70s were not intended to be cast in stone, but rather a broad illustration and opinion as I believe you know... and I want to be sure that it is understood as just that - an opinion of mine and not of the ka-poom master.


No response to this necessary or expected... aka, Party On!

It's all good! Don't forget to check out the comments here.

[rabot10]

Re: 1970s again?

Bart,
We have recently grown to hundreds of subscribers and thousands of registered community members. The volume of questions and emails I get has reached the point where I cannot answer them all. As much as I enjoy participating on these forums, it's not fair to subscribers if I can't get to their questions on the Select forums. So, starting now I need to restrict my responses to subscriber questions over on the Select forums, starting with these comments on your, as usual, very interesting charts and notes, here.
Eric

EJ,

Don’t lose sight of where U came from OK, we loved U before U became a household name. lol
Rick