iTulip is back?

[jpatter666]

According to EJ it is.

https://twitter.com/ejanszen/status/1067561652781047808

[vt]

Re: iTulip is back?

Hmmm. Active Asset Price Inflation? Could it mean this?

https://voxeu.org/article/signalling...ices-inflation

And what about this gem from 1999?

https://www.economist.com/special-re...-price-trouble

[jk]

Re: iTulip is back?

i assume active asset price inflation = what the boj and [somewhat differently] the snb have been doing - directly buying etf's and equities. if so, this still goes back to bernanke's famous "making sure 'it' [deflation] doesn't happen here," in which he writes about the ability of the fed to indirectly buy any kind of asset in spite of the supposed limits on asset classes it may acquire. the mechanism is to offer banks favorable financing and repo on other classes of assets. i'm not sure this can work, though, if the banks were to hedge their exposure. anyone have any insight into this?

bernanke:Therefore a second policy option, complementary to operating in the markets for Treasury and agency debt, would be for the Fed to offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds,commercial paper, bank loans, and mortgages) deemed eligible as collateral.14 For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral. Pursued aggressively, such a program could significantly reduce liquidity and term premiums on the assets used as collateral. Reductions in these premiums would lower the cost of capital both to banks and the nonbank private sector, over and above the beneficial effect already conferred by lower
interest rates on government securities.15

[thriftyandboringinohio]

Re: iTulip is back?

Thanks jpatter666.

Here's another article to add to vt's list, this one by a federal reserve governor.

https://www.federalreserve.gov/newse...n20060316a.htm

...The second strategy, by comparison, is more activist and attempts to damp speculative activity directly. It was described at length in "Asset Price Bubbles and Monetary Policy," an article published by the ECB last year. I quote from the article: "This approach amounts to a cautious policy of 'leaning against the wind' of an incipient bubble. The central bank would adopt a somewhat tighter policy stance in the face of an inflating asset market than it would otherwise allow if confronted with a similar macroeconomic outlook under more normal market conditions. . . . It would thus possibly tolerate a certain deviation from its price stability objective in the shorter term in exchange for enhanced prospects of preserving price and economic stability in the future."2 I am labeling this second approach extra action, as it calls for steps that would not be taken in ordinary circumstances...

If this is the concept EJ is referring to we might see the Fed stick with increasing rates even if employment rolls over and even if CPI is below target, should the Fed believe the prices of stocks and real estate are in bubble territory. I suppose I should go read that ECB paper...

[jk]

Re: iTulip is back?

Thanks jpatter666.

Here's another article to add to vt's list, this one by a federal reserve governor.

https://www.federalreserve.gov/newse...n20060316a.htm




If this is the concept EJ is referring to we might see the Fed stick with increasing rates even if employment rolls over and even if CPI is below target, should the Fed believe the prices of stocks and real estate are in bubble territory. I suppose I should go read that ECB paper...

i actually think ej's talking about the opposite - i.e. preventing the implosion of asset prices. avoid the "ka" and hope instead to skip to a somewhat moderated "poom."

[thriftyandboringinohio]

Re: iTulip is back?

i actually think ej's talking about the opposite - i.e. preventing the implosion of asset prices. avoid the "ka" and hope instead to skip to a somewhat moderated "poom."

That's a fascinating thought jk. Would the Fed intentionally support and nourish an asset bubble to avoid the pop?

[touchring]

Re: iTulip is back?

Time to buy gold?

[dcarrigg]

Re: iTulip is back?

That's a fascinating thought jk. Would the Fed intentionally support and nourish an asset bubble to avoid the pop?

I have another related question, which is simply, "How many members of the fed believe in asset bubbles?"

My sense is, especially among the econ community, there are a lot of true believers who think markets are everywhere and at all times efficient, and the problem is not in us but in our stars--that is, the bubbles are not bubbles, they are perfectly efficient market outcomes, like all market outcomes, we simply see them as bubbles because we lack the tools to divine the will of the market correctly, and had we prevented the bubble in the first place, we would have gone against the will of the market, and things would be even worse.

[thriftyandboringinohio]

Re: iTulip is back?

I have another related question, which is simply, "How many members of the fed believe in asset bubbles?"

My sense is, especially among the econ community, there are a lot of true believers who think markets are everywhere and at all times efficient, and the problem is not in us but in our stars--that is, the bubbles are not bubbles, they are perfectly efficient market outcomes, like all market outcomes, we simply see them as bubbles because we lack the tools to divine the will of the market correctly, and had we prevented the bubble in the first place, we would have gone against the will of the market, and things would be even worse.

I just skimmed through the ECB paper and the author says that many economists think as you describe - asset bubbles are impossible by definition.
.
.
.

[dcarrigg]

Re: iTulip is back?

That's what I'm always on about when I speak of market worship.

https://youtu.be/YRWRRBX3TB0

[jpatter666]

Re: iTulip is back?

So Part I is now up.

At the end, to get Part II there is a VirZoom investment hook. Oddly, you can get a year iTulip subscription by investing in VirZoom for $250 or via the website for $375.

I'm not an investor in VirZoom (TruTouch alas...) but this struck me as somewhat odd. I'll leave it for any VirZoom investors to comment on.

Personally, I don't think I'll subscribe for now. I want to wait and see if EJ is really diving back into the game or if this was a one-off. When EJ is good, he's very, very good. But when his attention is divided -- IMO it's a toss up. Worth reading, but not the no-brainer it was back in the old days.

(I notice they've brought the VirZoom investment amounts to be in sync with the iTulip subscription numbers)

[FRED]

Re: iTulip is back?

http://www.itulip.com/forums/showthr...112#post313112

[thriftyandboringinohio]

Re: iTulip is back?

i actually think ej's talking about the opposite - i.e. preventing the implosion of asset prices. avoid the "ka" and hope instead to skip to a somewhat moderated "poom."

Yes sir, I only just now got through EJs new writing.
The Fed appears to be keeping the bubbles from popping using LSAP.
Go figure.

[santafe2]

Re: iTulip is back?

I have another related question, which is simply, "How many members of the fed believe in asset bubbles?"

My sense is, especially among the econ community, there are a lot of true believers who think markets are everywhere and at all times efficient....

Alan Greenspan: "I didn't know."

Excellent. His idiot progeny are at the helm. I'm sure nothing will go wrong.

[dcarrigg]

Re: iTulip is back?

Alan Greenspan: "I didn't know."

Excellent. His idiot progeny are at the helm. I'm sure nothing will go wrong.

I take personal umbrage to what he and his did to my young mind. Not just the early high school Rand assignments. I didn't get what they were at the time. But the writing was uninspiring enough I didn't become some acolyte. But I more or less did start falling for the efficient market dogma and self esteem and their market concepts of human value and self worth. It's truly mind-warping stuff, especially for boys. After you internalize it, it takes some time or education to realize that there's a reason your dog don't leave you for a stronger, richer, or prettier fella on the walking route. Probably the same reason that your father or wife don't abandon you either. Some never pick up on the fact their minds have been poisoned and head down a lonely destructive path. I had learned about the old Dutch Tulip bubble and been complaining to folks about how homes had become totally unaffordable when I found this place. I didn't discover Minsky until some time later, although he just put a theory to a phenomenon known since at least the advent of stock markets themselves, but which neoclassical dogma could give no schrift to without violating the sanctity of markets. It's still a place with a variety of views mixed in. EJ himself has a tendency to quote some dusty old far right Austrian nobleman, then in the next sentence throw out a concept that would make him spin in his grave. There's a certain agnostic pragmatism to it that I still find attractive. There's something...quite American about it. In a way the market dogma that lots of American economists have succumb to never really felt American. I suppose it's the drive to make returns without being anybody's fool. Kind of sharpens the senses, if you're not crooked. Janet Yellen got it. But even in getting it, she had to couch it behind stating that a lot of people don't believe in it, and even many of those who do think the fed should do nothing about it. We can't even agree that what we see with our own two eyes is real, and even half who can think there's nothing we ought to do about it. Dark times.