The Economy Thread

Off Topic Politics and World Issues
21

[quote]LIFTICVSMAXIMVS wrote:

[quote]countingbeans wrote:
One thing that seems to be consistent with everyone is the general sense of panic seems to either have faded or they hide it better. A 250 point drop in the DOW doesn’t send people into a total tail spin anymore.[/quote]

The panic was made by the financial sector so they would get bailed out.

Don’t look for any more panicking until their trough runs dry.[/quote]

Completely disagree.

This wasn’t some conspiracy. It was very real, and many many people who weren’t part of the financial sector panicked.

22

Y’all need to realise that the Fed saved the god-damn U.S economy post-GFC. There was absolutely no liquidity in the market after Lehman Bros. and Wall Street started having a myocardial infraction. Wholesale market were drier than the Sahara desert. The Fed’s first rounds of QE did a lot from a technical stand point in that they lowered rates even further (essentially 0) but also from a confidence stand point. Believe it all not investors actually like it when Bernanke goes up there and says he’s going to do something.

Operation Twist last year was a success. I just heard they’ve also done a bit more this year as well. What they’re doing is basically flattening the yield curve to lower the cost of capital so firms can start investing again. You won’t hear that from Rick Santelli or any other miseducated ‘expert’ on TV.

I’m not going to spend time explaining monetary policy or fiscal policy but just emphasize that leverage is essential in growth. Strong credit markets fuel economic growth.

On a final note, the economy is only shit compared to the period 2001-2007 where it was deceivingly good because of mispriced credit. Ironically, easy money was what brought down Wall Street (because they couldn’t properly price it) but cheap money is what will get the U.S out of its funk. Argue about fiscal policy all you want (and I personally think the government should lower its deficit) but have knowledge before you start evaluating the Fed and monetary policy.

23

The World economy is at this point inherently unstable and unsustainable. Globalization was pushed as a way to raise the standards of living for the entire world, and to cover up any economic shortfalls that some countries would inevitably experience. The big push for globalization occurred in the late 1980’s to early 1990’s. In reality the exact opposite happened. Standards of living have fallen dramatically in the western world and any small country that fails will make the rest of the world’s economies vulnerable to collapse. The few have gotten extremely rich and powerful while the many have gotten poorer.

I have tried to understand the current world economic calamity as best as I can. The solutions being pushed by western governments and in particular the U.S. and Britain is a continuation of the same ruinous policies that got us here in the first place. This is generally known as the Washington Consensus. It’s tenants are deregulation, deindustrialization, hot money, and the absolute supremacy of finance capital being able to route out, asset strip and destroy any viable resource. The current situation is untenable and likely to break apart any moment.

Many people have their own opinions on how to fix this mess but I think that these 3 ideas would go a very long way to solving the current world economic depression.

  1. Shred, delete, destroy all derivatives on any bank’s balance sheet. These exotic financial instruments are inherently dangerous and destructive. These include your credit default swaps, collateralized debt obligations and structured investment vehicles. They are a con man’s game and have no place in this world or any other. They represent nothing of any value and in the wrong hands can be just as destructive as any weapon. The world economy has about 2 quadrillion of toxic, bankrupt derivatives sitting on various banks balance sheets. These will never be paid off and any money being thrown at them will go into a black hole. Derivatives were banned outright from 1932-1982 and then simply deregulated completely in 1999 with “Financial Modernization Act”.

  2. Banks cannot loan out any money that they do not have. Be done with fractional reserve banking period. If you do not have the money, you do not loan it out. This also would be a good time to reinstate Glass-Steagall. Reinstate the separation between commercial banks and investment banks(gambling casinos).

  3. The federal government will not be allowed to borrow money. This in effect would force the government to nationalize the Federal Reserve. Article I, Section 8 of the Constitution says “Congress shall have sole power to coin and create money”. Not Goldman Sachs, not JP Morgan, not BoA. If the Fed were nationalized you could start issuing traunches of credit for real production and real jobs. The government wouldn’t need to borrow money and no money would go to zombie bankers and hedge fund operators.

There are few more things I could write but these 3 ideas would make the biggest impact and start America on the path towards a real economic recovery.

24

[quote]Gettnitdone wrote:
Y’all need to realise that the Fed saved the god-damn U.S economy post-GFC. There was absolutely no liquidity in the market after Lehman Bros. and Wall Street started having a myocardial infraction. Wholesale market were drier than the Sahara desert. The Fed’s first rounds of QE did a lot from a technical stand point in that they lowered rates even further (essentially 0) but also from a confidence stand point. Believe it all not investors actually like it when Bernanke goes up there and says he’s going to do something.

Operation Twist last year was a success. I just heard they’ve also done a bit more this year as well. What they’re doing is basically flattening the yield curve to lower the cost of capital so firms can start investing again. You won’t hear that from Rick Santelli or any other miseducated ‘expert’ on TV.

I’m not going to spend time explaining monetary policy or fiscal policy but just emphasize that leverage is essential in growth. Strong credit markets fuel economic growth.

On a final note, the economy is only shit compared to the period 2001-2007 where it was deceivingly good because of mispriced credit. Ironically, easy money was what brought down Wall Street (because they couldn’t properly price it) but cheap money is what will get the U.S out of its funk. Argue about fiscal policy all you want (and I personally think the government should lower its deficit) but have knowledge before you start evaluating the Fed and monetary policy.

[/quote]

Not sure who you are saying has no knowledge, but…

This post has a whole lot of classroom in it and seems to lack some real life perspective.

There is a time and place for everything. More leverage =/= more economic strength. Tell me, what are you doing right now that is going to earn you more than the 3% you are paying in interest? (Assuming you meet the requirements to qualify for 3%. Just because the Fed Rate is 0, doesn’t mean any old business can get cheap credit.) And lets talk net returns here, net of tax, fees and inflation.

Is debt a good thing and does it help make for good strong economic situation? Yes. Is there such thing as too much debt? Fuck yes, read a newspaper from Sept '08 - Oct '09.

All QE has done is bring the stock markets back to normal levels, which they would have anyway. There are still around 10% of consumers out there that can’t consume because they are unemployed. No such thing as a jobless recovery. (Although I’ve read somewhere i can’t find right now, college educated unemployment is only like 4-5% which is a perfectly fine level.)

Please explain how you measuring Operation Twist as a success.

25

[quote]Charlemagne wrote:
Standards of living have fallen dramatically in the western world [/quote]

Based on what time period and what measure?

In other words: from what evidence are you drawing that conclusion?

26

[quote]countingbeans wrote:

[quote]Gettnitdone wrote:
Y’all need to realise that the Fed saved the god-damn U.S economy post-GFC. There was absolutely no liquidity in the market after Lehman Bros. and Wall Street started having a myocardial infraction. Wholesale market were drier than the Sahara desert. The Fed’s first rounds of QE did a lot from a technical stand point in that they lowered rates even further (essentially 0) but also from a confidence stand point. Believe it all not investors actually like it when Bernanke goes up there and says he’s going to do something.

Operation Twist last year was a success. I just heard they’ve also done a bit more this year as well. What they’re doing is basically flattening the yield curve to lower the cost of capital so firms can start investing again. You won’t hear that from Rick Santelli or any other miseducated ‘expert’ on TV.

I’m not going to spend time explaining monetary policy or fiscal policy but just emphasize that leverage is essential in growth. Strong credit markets fuel economic growth.

On a final note, the economy is only shit compared to the period 2001-2007 where it was deceivingly good because of mispriced credit. Ironically, easy money was what brought down Wall Street (because they couldn’t properly price it) but cheap money is what will get the U.S out of its funk. Argue about fiscal policy all you want (and I personally think the government should lower its deficit) but have knowledge before you start evaluating the Fed and monetary policy.

[/quote]

Not sure who you are saying has no knowledge, but…

This post has a whole lot of classroom in it and seems to lack some real life perspective.

There is a time and place for everything. More leverage =/= more economic strength. Tell me, what are you doing right now that is going to earn you more than the 3% you are paying in interest? (Assuming you meet the requirements to qualify for 3%. Just because the Fed Rate is 0, doesn’t mean any old business can get cheap credit.) And lets talk net returns here, net of tax, fees and inflation.

Is debt a good thing and does it help make for good strong economic situation? Yes. Is there such thing as too much debt? Fuck yes, read a newspaper from Sept '08 - Oct '09.

All QE has done is bring the stock markets back to normal levels, which they would have anyway. There are still around 10% of consumers out there that can’t consume because they are unemployed. No such thing as a jobless recovery. (Although I’ve read somewhere i can’t find right now, college educated unemployment is only like 4-5% which is a perfectly fine level.)

Please explain how you measuring Operation Twist as a success. [/quote]

The knowledge comment wasn’t meant to be taken personally just referring to the complexities around monetary policy decisions. It’s easy to critise policy (and this probably extends to other fields of authoratative decision making) when you don’t know the goals of the policy, how it works and when you look at it from a very short-term lense (even for short-term policy).

I’m typing this from my phone so I can’t reference any news articles or academic research but operation twist was a success in that it lowered long-term treasury rates, which the market rallied around subsequently in anticipation of influence on channeled economic outputs. Now, measuring operations twist on economic output is hard and you’d have to refer to quantitative type research to see how people are modelling the impact but there is no doubt operation twist created a better environment to try and stimulate investment. And frankly I don’t see why people are up in arms around it considering it is not like your ordinary qe because the Fed’s balance sheet doesn’t expand. They’re funding long positions in long term treasuries with sales from short term bonds.

27

[quote]Gettnitdone wrote:

[quote]countingbeans wrote:

[quote]Gettnitdone wrote:
Y’all need to realise that the Fed saved the god-damn U.S economy post-GFC. There was absolutely no liquidity in the market after Lehman Bros. and Wall Street started having a myocardial infraction. Wholesale market were drier than the Sahara desert. The Fed’s first rounds of QE did a lot from a technical stand point in that they lowered rates even further (essentially 0) but also from a confidence stand point. Believe it all not investors actually like it when Bernanke goes up there and says he’s going to do something.

Operation Twist last year was a success. I just heard they’ve also done a bit more this year as well. What they’re doing is basically flattening the yield curve to lower the cost of capital so firms can start investing again. You won’t hear that from Rick Santelli or any other miseducated ‘expert’ on TV.

I’m not going to spend time explaining monetary policy or fiscal policy but just emphasize that leverage is essential in growth. Strong credit markets fuel economic growth.

On a final note, the economy is only shit compared to the period 2001-2007 where it was deceivingly good because of mispriced credit. Ironically, easy money was what brought down Wall Street (because they couldn’t properly price it) but cheap money is what will get the U.S out of its funk. Argue about fiscal policy all you want (and I personally think the government should lower its deficit) but have knowledge before you start evaluating the Fed and monetary policy.

[/quote]

Not sure who you are saying has no knowledge, but…

This post has a whole lot of classroom in it and seems to lack some real life perspective.

There is a time and place for everything. More leverage =/= more economic strength. Tell me, what are you doing right now that is going to earn you more than the 3% you are paying in interest? (Assuming you meet the requirements to qualify for 3%. Just because the Fed Rate is 0, doesn’t mean any old business can get cheap credit.) And lets talk net returns here, net of tax, fees and inflation.

Is debt a good thing and does it help make for good strong economic situation? Yes. Is there such thing as too much debt? Fuck yes, read a newspaper from Sept '08 - Oct '09.

All QE has done is bring the stock markets back to normal levels, which they would have anyway. There are still around 10% of consumers out there that can’t consume because they are unemployed. No such thing as a jobless recovery. (Although I’ve read somewhere i can’t find right now, college educated unemployment is only like 4-5% which is a perfectly fine level.)

Please explain how you measuring Operation Twist as a success. [/quote]

The knowledge comment wasn’t meant to be taken personally just referring to the complexities around monetary policy decisions. It’s easy to critise policy (and this probably extends to other fields of authoratative decision making) when you don’t know the goals of the policy, how it works and when you look at it from a very short-term lense (even for short-term policy).

I’m typing this from my phone so I can’t reference any news articles or academic research but operation twist was a success in that it lowered long-term treasury rates, which the market rallied around subsequently in anticipation of influence on channeled economic outputs. Now, measuring operations twist on economic output is hard and you’d have to refer to quantitative type research to see how people are modelling the impact but there is no doubt operation twist created a better environment to try and stimulate investment. And frankly I don’t see why people are up in arms around it considering it is not like your ordinary qe because the Fed’s balance sheet doesn’t expand. They’re funding long positions in long term treasuries with sales from short term bonds. [/quote]

Fair enough.

I would have to speculate that people are reacting negatively because QE should be causing inflation if not hyper inflation. It isn’t happening. So it either means that economic theory is all fucked up, or we are going to get hit with it later, lol.

I don’t know. I feel like stocks have stabilized, and if the US can add jobs and Euro-Zone can stop crashing every country, things could get better after November.

28

[quote]countingbeans wrote:
http://finance.yahoo.com/news/fed-helps-borrowers-savers-clobbered-040135030.html

I found this very interesting.

The current policy should be causing hyper-inflation, and the lack of investment income on low risk savings shouldn’t be able to keep up.

Take out energy, and well… It isn’t too bad, but that is only the last 7 months.

If you take the data back to fall 2009 winter 2009, where are we? Up 4% or so from December 2008 to December 2011, unless I’m reading this wrong.

ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

So, in short, the government is still pushing leverage. For those unaware, too much leverage is why the economic colapse happened, and why we are stagnating.

Borrowing puts the earnings in the banking sector, and takes them away from the borrowing sector when there isn’t any “safe” investments that will earn more than you pay in interest. Now that the market is back up to pre-2008 levels, the returns will normalize, and short term gains are subject to higher tax rates and not a safe bet…

So, what the hell do you borrow for if you have the cash? And if you don’t have the cash, you better be damn sure you are going to get returns, which aren’t plentyful right now…

Stagnation man, stagnation.[/quote]

Actually, it is deflation.

29

[quote]sufiandy wrote:

[quote]Sweet Revenge wrote:
LIFTI’s got the right idea. Best advise I ever got (and eventually decided to follow)was ‘always live below your means’. You’ll get a pile of money in no time.

A really good red-blooded republican can be prosperous regardless of what the flippin’ economy is doing.[/quote]

I know way too many people who are dumb with their money regardless of income level.[/quote]

This does not bother me.

What does bother me it that there are way to many people who are dumb with MY money in government.

30

[quote]JEATON wrote:

[quote]sufiandy wrote:

[quote]Sweet Revenge wrote:
LIFTI’s got the right idea. Best advise I ever got (and eventually decided to follow)was ‘always live below your means’. You’ll get a pile of money in no time.

A really good red-blooded republican can be prosperous regardless of what the flippin’ economy is doing.[/quote]

I know way too many people who are dumb with their money regardless of income level.[/quote]

This does not bother me.

What does bother me it that there are way to many people who are dumb with MY money in government. [/quote]

Yes it does not quite bother me either as dumb people make it easier for me to come out ahead, but the disadvantage to that is things like government.

31

[quote]JEATON wrote:

Actually, it is deflation. [/quote]

I’m trying not to break out in tears here man, enough horror stories out of you. :wink:

32

[quote]countingbeans wrote:

[quote]JEATON wrote:

Actually, it is deflation. [/quote]

I’m trying not to break out in tears here man, enough horror stories out of you. ;)[/quote]

Am I to understand that you disagree?

After all, you do seem to notice that with all the cheap money, liquidity, etc. that the expected inflation/hyperinflation has not occurred.

33

[quote]JEATON wrote:

[quote]countingbeans wrote:

[quote]JEATON wrote:

Actually, it is deflation. [/quote]

I’m trying not to break out in tears here man, enough horror stories out of you. ;)[/quote]

Am I to understand that you disagree?

After all, you do seem to notice that with all the cheap money, liquidity, etc. that the expected inflation/hyperinflation has not occurred.[/quote]

I do, however, recognize that deflation is far more frightening than inflation or hyperinflation, if that is what you meant.

34

[quote]JEATON wrote:

[quote]JEATON wrote:

[quote]countingbeans wrote:

[quote]JEATON wrote:

Actually, it is deflation. [/quote]

I’m trying not to break out in tears here man, enough horror stories out of you. ;)[/quote]

Am I to understand that you disagree?

After all, you do seem to notice that with all the cheap money, liquidity, etc. that the expected inflation/hyperinflation has not occurred.[/quote]

I do, however, recognize that deflation is far more frightening than inflation or hyperinflation, if that is what you meant. [/quote]

Yeah, that is what I was getting at.

To be honest, I feel like that is what they have been fighting this entire time, and calling it other shit to distract us.

35

The goal of Progressivism is destruction. Only then will the starving masses be ready for a 21st century version of Hitler.

Debt was created as a time bomb, planted into the heart of America. Scum like Obama are merely the outward symptoms of a dying society as debt explodes.

36

[quote]countingbeans wrote:
This wasn’t some conspiracy. It was very real, and many many people who weren’t part of the financial sector panicked. [/quote]

Of course it’s a conspiracy. Bankers conspired with the government to get bailed out when they learned they were insolvent.

Not sure why you are worried whether it is a conspiracy or not.

The fact of the matter is the overlords are impoverishing us with their spending and dept.

37

[quote]Gettnitdone wrote:
Y’all need to realise that the Fed saved the god-damn U.S economy post-GFC. There was absolutely no liquidity in the market after Lehman Bros. and Wall Street started having a myocardial infraction. Wholesale market were drier than the Sahara desert. The Fed’s first rounds of QE did a lot from a technical stand point in that they lowered rates even further (essentially 0) but also from a confidence stand point. Believe it all not investors actually like it when Bernanke goes up there and says he’s going to do something.

Operation Twist last year was a success. I just heard they’ve also done a bit more this year as well. What they’re doing is basically flattening the yield curve to lower the cost of capital so firms can start investing again. You won’t hear that from Rick Santelli or any other miseducated ‘expert’ on TV.

I’m not going to spend time explaining monetary policy or fiscal policy but just emphasize that leverage is essential in growth. Strong credit markets fuel economic growth.

On a final note, the economy is only shit compared to the period 2001-2007 where it was deceivingly good because of mispriced credit. Ironically, easy money was what brought down Wall Street (because they couldn’t properly price it) but cheap money is what will get the U.S out of its funk. Argue about fiscal policy all you want (and I personally think the government should lower its deficit) but have knowledge before you start evaluating the Fed and monetary policy.

[/quote]

Investors like when bernanke says hes going to do something because the markets respond to that liquidity or mention of it. The gains are illusory and people can capitalize on it while value remains stagnant.

The Fed also created a huge problem with letting one bank fail and then rescuing others. This creates uncertainty which no market likes. Furthermore, I now believe the too big to fail rescue scenario is decided arbitrarily by the Treasury Secretary. Sounds very nepotistic to me, and a creator of future uncertainty.

The lender of last resort should be conditional useage if and only if a bank has held a proper amount of reserves (of which they have been allowed to hold far less than they should).

People DO have varying views of Monetary policy, but the political handcuffs on the Fed also influence it. The dual mandate is bullshit fairly opposed. I think they would be alot better off for growth sticking to inflation targeting only.

Inflation WILL come back to bite us in the ass.

38

[quote]Charlemagne wrote:
The World economy is at this point inherently unstable and unsustainable. Globalization was pushed as a way to raise the standards of living for the entire world, and to cover up any economic shortfalls that some countries would inevitably experience. The big push for globalization occurred in the late 1980’s to early 1990’s. In reality the exact opposite happened. Standards of living have fallen dramatically in the western world and any small country that fails will make the rest of the world’s economies vulnerable to collapse. The few have gotten extremely rich and powerful while the many have gotten poorer.

I have tried to understand the current world economic calamity as best as I can. The solutions being pushed by western governments and in particular the U.S. and Britain is a continuation of the same ruinous policies that got us here in the first place. This is generally known as the Washington Consensus. It’s tenants are deregulation, deindustrialization, hot money, and the absolute supremacy of finance capital being able to route out, asset strip and destroy any viable resource. The current situation is untenable and likely to break apart any moment.

Many people have their own opinions on how to fix this mess but I think that these 3 ideas would go a very long way to solving the current world economic depression.

  1. Shred, delete, destroy all derivatives on any bank’s balance sheet. These exotic financial instruments are inherently dangerous and destructive. These include your credit default swaps, collateralized debt obligations and structured investment vehicles. They are a con man’s game and have no place in this world or any other. They represent nothing of any value and in the wrong hands can be just as destructive as any weapon. The world economy has about 2 quadrillion of toxic, bankrupt derivatives sitting on various banks balance sheets. These will never be paid off and any money being thrown at them will go into a black hole. Derivatives were banned outright from 1932-1982 and then simply deregulated completely in 1999 with “Financial Modernization Act”.

  2. Banks cannot loan out any money that they do not have. Be done with fractional reserve banking period. If you do not have the money, you do not loan it out. This also would be a good time to reinstate Glass-Steagall. Reinstate the separation between commercial banks and investment banks(gambling casinos).

  3. The federal government will not be allowed to borrow money. This in effect would force the government to nationalize the Federal Reserve. Article I, Section 8 of the Constitution says “Congress shall have sole power to coin and create money”. Not Goldman Sachs, not JP Morgan, not BoA. If the Fed were nationalized you could start issuing traunches of credit for real production and real jobs. The government wouldn’t need to borrow money and no money would go to zombie bankers and hedge fund operators.

There are few more things I could write but these 3 ideas would make the biggest impact and start America on the path towards a real economic recovery.[/quote]

No, they would not.

I think 1) should be revised to write down and take losses on the derivitives, and no you cannot nor should you ban them. They are a useful and ever present financial product. Yes, they have gotten complex in recent years but that is in response TO regulation, not DE regulation.

Alot of it stems to the affordable housing push and shoddy underwriting that followed it, with guaranteed buyouts of the packaged securities by government corporations. So banks profit, taxpayers lose. That is why derivatives supposedly fucked up the economy, a human error.

In 2) you are making 2 separate points. While I personally agree with you about frac-reserve banking, sorry, its a pipe dream. A good counter balance to this is the incentive for banks to hold more in reserves. Something like 20% of liabilities. Re instating Glass Steagal would just cause more off balance sheet risks. Get rid of too big to fail, and increase reserve requirements and this is mitigated to a degree.

  1. is just off completely. While the federal reserve is “independent” in name, its pretty much already nationalized by politic. So that is moot. Furthermore, the government already does print and coin money, its called the Treasury. The government will always need to borrow money. Its a question of how much and from whom, and to what ends. Post Bretton Woods they sure stopped adhering to balancing budgets or at least close to it, and the end of that arrangement made it much easier to finance deficits as well. Since politics is all about taking someone elses money and promising the world for votes, you can see how we got the mess we are in.

And Globalization caused a decline in living standards? Please…

because you went from backyard ball to the high school team means you are no longer the star quarterback.

39

[quote]countingbeans wrote:

[quote]Gettnitdone wrote:

[quote]countingbeans wrote:

[quote]Gettnitdone wrote:
Y’all need to realise that the Fed saved the god-damn U.S economy post-GFC. There was absolutely no liquidity in the market after Lehman Bros. and Wall Street started having a myocardial infraction. Wholesale market were drier than the Sahara desert. The Fed’s first rounds of QE did a lot from a technical stand point in that they lowered rates even further (essentially 0) but also from a confidence stand point. Believe it all not investors actually like it when Bernanke goes up there and says he’s going to do something.

Operation Twist last year was a success. I just heard they’ve also done a bit more this year as well. What they’re doing is basically flattening the yield curve to lower the cost of capital so firms can start investing again. You won’t hear that from Rick Santelli or any other miseducated ‘expert’ on TV.

I’m not going to spend time explaining monetary policy or fiscal policy but just emphasize that leverage is essential in growth. Strong credit markets fuel economic growth.

On a final note, the economy is only shit compared to the period 2001-2007 where it was deceivingly good because of mispriced credit. Ironically, easy money was what brought down Wall Street (because they couldn’t properly price it) but cheap money is what will get the U.S out of its funk. Argue about fiscal policy all you want (and I personally think the government should lower its deficit) but have knowledge before you start evaluating the Fed and monetary policy.

[/quote]

Not sure who you are saying has no knowledge, but…

This post has a whole lot of classroom in it and seems to lack some real life perspective.

There is a time and place for everything. More leverage =/= more economic strength. Tell me, what are you doing right now that is going to earn you more than the 3% you are paying in interest? (Assuming you meet the requirements to qualify for 3%. Just because the Fed Rate is 0, doesn’t mean any old business can get cheap credit.) And lets talk net returns here, net of tax, fees and inflation.

Is debt a good thing and does it help make for good strong economic situation? Yes. Is there such thing as too much debt? Fuck yes, read a newspaper from Sept '08 - Oct '09.

All QE has done is bring the stock markets back to normal levels, which they would have anyway. There are still around 10% of consumers out there that can’t consume because they are unemployed. No such thing as a jobless recovery. (Although I’ve read somewhere i can’t find right now, college educated unemployment is only like 4-5% which is a perfectly fine level.)

Please explain how you measuring Operation Twist as a success. [/quote]

The knowledge comment wasn’t meant to be taken personally just referring to the complexities around monetary policy decisions. It’s easy to critise policy (and this probably extends to other fields of authoratative decision making) when you don’t know the goals of the policy, how it works and when you look at it from a very short-term lense (even for short-term policy).

I’m typing this from my phone so I can’t reference any news articles or academic research but operation twist was a success in that it lowered long-term treasury rates, which the market rallied around subsequently in anticipation of influence on channeled economic outputs. Now, measuring operations twist on economic output is hard and you’d have to refer to quantitative type research to see how people are modelling the impact but there is no doubt operation twist created a better environment to try and stimulate investment. And frankly I don’t see why people are up in arms around it considering it is not like your ordinary qe because the Fed’s balance sheet doesn’t expand. They’re funding long positions in long term treasuries with sales from short term bonds. [/quote]

Fair enough.

I would have to speculate that people are reacting negatively because QE should be causing inflation if not hyper inflation. It isn’t happening. So it either means that economic theory is all fucked up, or we are going to get hit with it later, lol.

I don’t know. I feel like stocks have stabilized, and if the US can add jobs and Euro-Zone can stop crashing every country, things could get better after November. [/quote]

The real money creation happens in private banks and so far they are scared shitless to lend out any money.

If they start again that might happen.

Or Bernanke hits the brakes, hard.

Either way, it does not look good.

40

[quote]JEATON wrote:

[quote]JEATON wrote:

[quote]countingbeans wrote:

[quote]JEATON wrote:

Actually, it is deflation. [/quote]

I’m trying not to break out in tears here man, enough horror stories out of you. ;)[/quote]

Am I to understand that you disagree?

After all, you do seem to notice that with all the cheap money, liquidity, etc. that the expected inflation/hyperinflation has not occurred.[/quote]

I do, however, recognize that deflation is far more frightening than inflation or hyperinflation, if that is what you meant. [/quote]

Not really.

Massive inflation, massive deflation, the end result looks just about the same.