Generational Dynamics Forum - New Site

aedens wrote:Vin your argument is gaining traction I feel. ‘But this week they were buying items for the gold. They know that if they put their money into gold instead of the bank, no one — not even Angela Merkel and the EU — can take it from them.’

I agree that is the clear end point, and it will come sooner rather than later - in this cycle, in other words.

vincecate wrote:But no matter who was Fed Chairman, no matter how good they were, I don't think they could really had done much to get the politicians to balance the budget or even cut spending significantly. In particular since all government economist are Keynsian and think more government spending stimulates the economy. It would not be possible for an economist to rise to the top of the Fed if they did not think that.

Bernanke's choice was to stand tough and not do the QE2 or QE3, as Fed policy. It seems obvious that he knew doing QE2 and QE3 would end badly, worse than if he had not done it. If he had not, things would have fallen apart sooner, and he would have taken the blame, but that much he could have done and I don't think the world would have fallen into a dark age. That's essentially what Volcker did when he refused to cave in. He ran Fed policy like a hawk because he knew it was the right thing to do.

Higgenbotham wrote: Bernanke's choice was to stand tough and not do the QE2 or QE3, as Fed policy. It seems obvious that he knew doing QE2 and QE3 would end badly, worse than if he had not done it. If he had not, things would have fallen apart sooner, and he would have taken the blame, but that much he could have done and I don't think the world would have fallen into a dark age. That's essentially what Volcker did when he refused to cave in. He ran Fed policy like a hawk because he knew it was the right thing to do.

Volcker was dealt a hand where there was a winning move. Bernanke's hand does not have a winning move. He can lose soon or later. He chose later. If the chaos happens after he is out then he may not get all of the blame.

The difference is that now the government debt is over 80% of the GNP and the deficit is around 40% of spending. Also, the debt is far shorter term today than when Volker was making his move. If you have lots of 30 year bonds then letting short term interest rates go up is not so painful to the government as when a large fraction of the debt has to be rolled over every year. If the central bank did a Volker now the government could not handle the high interest rates. Bernanke would have been replaced, or the laws changed, or something. There really was no way Bernanke could win.

View to fragments from tyrants and reality. Good distillment view to sociopath bottom to top. His view is
people must decide for organic growth and the air of simple realism and we know who screws that up every time.
http://cluborlov.blogspot.be/2013/03/th ... tates.html

With the Yen and peso problem he seen productivity on Volkners watch could soak up the damage. He got lucky IMO

Orlov gives no quarter to prophets of doom and gloom, finding plenty of room for optimism, if only we focus our efforts
on personal and cultural transformation instead of trying to perpetuate an impossible status quo.

The fresh water economist "who know when to leave the natives alone" knew this as in chile and some other Soviet failings many forgot already.

Higgenbotham wrote:

aedens wrote:Vin your argument is gaining traction I feel. ‘But this week they were buying items for the gold. They know that if they put their money into gold instead of the bank, no one — not even Angela Merkel and the EU — can take it from them.’

I agree that is the clear end point, and it will come sooner rather than later - in this cycle, in other words.

Argentina had a bank holiday, then converted everyone's US dollar account to local currency in such a way that they were all ripped off.

And even if the bank is not ripping you off, the government is every time they print more money. Even if your money is secure in a safe in your armed compound they can steal value from your paper money by just printing more. But if you have gold there is no sneaky way to rip you off. If they try to take it you could try to shoot someone. Gold has been money for 5,000 years. The average paper currency dies in about 30 years. The US dollar will die some day. Gold never will.

vincecate wrote:Volcker was dealt a hand where there was a winning move. Bernanke's hand does not have a winning move. He can lose soon or later. He chose later. If the chaos happens after he is out then he may not get all of the blame.

In 1980 the financial system nearly fell apart, and many people have confirmed that. The recession into 1982 was severe, with 12% official unemployment (obviously much higher in real terms) and Volcker got the blame for it, but it was a different sort of blame, and I think that's where Volcker did have a winning hand, sort of. Those were different times and the populace was more able to accept tough medicine because they were survivors of tough times, which this populace is not at all.

Bernanke had two losing choices - a Great Depression sooner or a financial apocalypse later. Apparently, he knew that it wasn't a case of a Great Depression sooner or the same Great Depression later. And when faced with the failure of Congress, he didn't have the moral toughness to make the less painful long run choice, as Volcker did, even though he knew he was courting long run disaster. That's the part I can't fathom.

Higgenbotham wrote: Bernanke had two losing choices - a Great Depression sooner or a financial apocalypse later. Apparently, he knew that it wasn't a case of a Great Depression sooner or the same Great Depression later. And when faced with the failure of Congress, he didn't have the moral toughness to make the less painful long run choice, as Volcker did, even though he knew he was courting long run disaster. That's the part I can't fathom.

It looks to me like great investors see things more like Austrians and don't put much stock in Keynsianism. But government economists are sellected to believe that the government can fix things by printing money. Bernanke may actually have thought he could win by printing money.

vincecate wrote:Bernanke may actually have thought he could win by printing money.

My best guess is that his thought process was like that of a trader who blows up a bank. First, Bernanke was right all his life, which is a necessary ingredient. He was the smartest kid in Dillon. He got a 1600 on his SAT. He became a tenured professor at 31. He rescued the financial system in 2008 and 2009, displaying technical brilliance. I think what happens with that kind of string of success is a greater challenge can then come up where a miscalculation is made. I believe that greater challenge was when the economy started to slip in 2010 and the decision was made to do QE2. He didn't want to see another Great Depression because he had a vested interest, having said he could prevent one. Nobody questioned QE2 because it was Bernanke. Then when things fell apart in 2011, he doubled up, hoping he might win, as many traders do who blow up banks. After all, it wasn't his money. Same reason Obama can double up. It's a lot easier to do it with taxpayer money or bank money (which is now taxpayer money anyway).

Great traders have usually taken a few beatings before they become great traders and it's those beatings that are the valuable lessons. Part of that learning process is the inclination to question any theory that promises something for nothing or a free lunch because there isn't one, and to cut your losses when you are wrong, which Bernanke did not do.

We coveyed countless time he needed the thesis from 1983 unfurled and proved and reading it from Fishers point of the multiplier effect and basic
analogys so it is just what it is. A slush fund from the taxpayers abused to the CRA funds they seen and hatched so the LSE fabians to march on savers with repressionary and rentier euthanasian funding.

WALTER ZIMMERMAN: Every Indicator I Follow Shows The Market Is Going To Tank, And There Will Be A New Financial Crisis
Feb. 28, 2013, 4:30 PM

http://www.businessinsider.com/walter-z ... 013-2?op=1

Same here, but guess what. The S&P has gone from 1515 to 1555 since this article was published, and about the same since I started pounding the table for a high near February 8.