WARNING: what I'm about to write is entirely off-topic.

What I find amusing about reponses to my general "please don't talk about things you don't understand" statement, which I admit I throw around quite a bit, is that I don't mean to be insulting at all - I'm pretty much just stating facts and making inferences that I see. I also don't say it unless whoever I'm responding isn't overstepping his area of expertise in an arrogant manner. But apparently, to some people arrogant enough to believe they know things they don't, it's insulting to be told otherwise. One may dispute the degree to which it's true, for instance, ALawPoker may understand economics well enough to calculate the net present value of future cashflows. But he keeps referring to things that he doesn't understand, despite being explained why his understanding may be flawed (how many times do I have to explain how international accounting is done, for instance?) He also doesn't bother looking up basic facts (manufacturing capacity, Japan versus US, for instance).

What I find interesting, however, is those who understand the points I'm making (from a logical standpoint) don't react this way, because it's fairly clear to them what I'm saying. The person I corrected the most on 2+2 may be David Sklansky (he likes to talk about things I have a lot of knowledge in, for whatever reason) and he's always responded politely and/or raised interesting issues. The problem, as with ALawPoker, is that some people lack the capability to understand the criticism but they must find some way to comprehend it in their terms, so they look for and find the emotional content that's not there. Once this happens, the discourse is done, since all rational thought process gets turned off when emotions get involved. Now it's about, how do I find what's wrong with this guy. Good luck!

And Barron, you're absolutely right that's it doesn't help for me to talk straight to ALawPoker, since some stranger telling him he doesn't know what he's talking about, especially for an exceedingly arrogant person, will only lead him down the path I described in the previous paragraph. I've gone through a lot of training in those things (I volunteer as a counselor of sorts in my spare time and the first step towards getting people to understand things your way is by validating, but not accepting, their way of thining) and if convincing him of his errors were part of my agenda, I would approach it differently. But this forum doesn't exist solely for his benefit - it's not really anyone else's business to try to coddle him into understanding things, especially when he likely has absolutely nothing positive to contribute (again, ALawPoker may find a way to spin this but this is just the way I see it). Going through that process would be more often than not confusing for newbies, who may have trouble distinguishing between hypotheticals and facts. I also don't have that sort of patience here - I'm not paid to understand his point of view and don't really care how he came to his erroneous understanding. Besides, Barron, you're polite to a fault when it comes to total newbs here and I remember ALawPoker had issues with how you were saying things.

This is maybe the most ironic post I've ever read on 2+2. You must have the self-awareness of a penguin if you actually believe what you're writing.

PB,

Please go back and re-read some of the things you've posted to me, and ask yourself who it *really* is that's the problem. Usually when you have one guy admitting he has a lot to learn and asking for the conversation to stay on point, and you have another guy asserting he is more knowledgeable and insulting the first person while refusing to address what's being asked of him, it is the second guy that's the problem.


You say this as if being polite to people should be some sort of major concession.

I'm breaking my rule of not replying to you mostly because of this line here. Now your slander is involving 3rd parties. I like Barron. What I maybe had an "issue with" was that I was not interested in debating doom and gloom in that thread, and he kept mentioning my name and attributing arguments to me that I didn't necessarily hold.

This is the second time you've accused me of being rude or having some sort of issue with Barron, when really I have no idea what you're talking about. Barron has always been polite (I've even gone out of my way multiple times to tell him that I appreciate his posts and that I learn from him). In fact, I disagree with most people here, but you are the only one who I think is out of line. Jimbo, for example, was saying a lot of the same things you were saying in that other thread. But then he took the time to actually focus on the issue, and we had a level-headed discussion. So you can try to paint this picture of me being a kook who thinks everyone is out of line -- but it's simply not the case. I think this forum is pretty good, but posters like *you* are a cancer to it. Please don't project your conduct on to me.

DRAMA BOMB!

Not everything trades as liquidly as you'd imagine. Besides, I've never said I'm bullish on the dollar or anything like that.


Given what I've explained so far, what do you think is the true trade deficit? And what's its significance?


I wish that you understood stuff better because then we'd have another valuable poster. Instead we've got you. I have no attachment to anything I'm saying here. I say as I see it and if that changes, I'd say differently.


On some level, this is true. You have to be smart though. If something like cellular automata, control theory, evolutionary biology or game theory comes completely naturally to you, and there obviously are people for whom this is true, the basics of economics may very well come naturally to you. But there are two problems - 1) you're almost certainly not one of those people and 2) understanding economics doesn't allow you to make correct predictions by relying on statistics that you don't understand. When you say things like we're spending more than we're making or some other nonsense, you need to understand what that really means. A nation does not have a single bank account that it can reconcile. Everything is an estimate and not every estimate is unbiased.


Your inability to comprehend anything constructive may have something to do with seeing nothing that is constructive.


I don't think you're a troll.


You're reading a tone that's not there. Read my reply again. Pretty much everything there is factual, including the statement that it's been explained to you before, which is also true. That when it was explained to you first, you were also too caught up reading into the tone to actually learn anything from it, doesn't change the fact.


I'm not caught up in anything. I agree that there is a chance for the dollar to collapse. The chance exists for many other currencies as well. And I don't need to defend anything - I've listed facts and explanations that thoroughly debunk your claims.

And FWIW, I've lived through a currency collapse, unlike most here who are speculating about such things. A minor currency collapse (say 20-30% depreciation from the spot) may be beneficial for the economy in the long run.


I did but it's like explaining information theory to a 3rd grader (not a smart one). He still can't understand why you can't compress information like he can fold paper.


You're the only person focusing on the emotions here, most likely because you're a sensitive soul (which isn't a bad thing btw). But get over it.

Again, my response is totally off-topic.

Occasionally prefacing things with disclaimers about your knowledge doesn't change the nature of your claims.


Took me about 5 seconds to find this gem (you wrote this in reply to Barron)


So I'm gonna guess you guys hugged it out?


I feel honored.


What's funny is that I'm focusing on the issue and the facts and you keep reading into the tone in order to make it personal. This is almost entertaining. It's like you really care deeply about what some guy on the internet thinks about your intellect.

andrew,

overall what you say makes perfect sense, however i think you have detached a bit from reality. i'm not going to parse through every post you've made but at times i think you know that the above has not been the case.

for instance, i don't think you have come from the "learning" place you describe above as much as you believe you have. instead, you have at times come from the "teaching" place and that is the attitude that isn't warranted imo and can be "frustrating" (in you analogy, the newbie poker playing telling you how things would work).

so while economics may be intuitive, like poker, there are far more interactive variables and i wouldn't say it is all that "easy" to learn as you do. i'm constantly learning and i have been for years and years. sometimes variables contradict each other and it is not immediately logically apparant which way the causation link works if it is determinable at all.

another thing i think you do that may cause some indignation is ascribe a bias to others but don't fully weigh your own. you certainly do have one and i think it gets in the way of your learning a bit just as any bias held by anybody does. for instance, you believe the dollar will collapse and i think if you weren't so stuck on that belief, things i say as evidence countering that would come far easier to you.

it may be that you're not aware of how it comes accross which is fine, but i hope this helps.

Barron

So what? So you think I make strong claims, OK. It doesn't change the fact that the rational response is to simply address the claims.

Just because you have some sort of insecurity where you feel the need to aggressively attack people when you find yourself more knowledgeable, it doesn't add any rationality to your habit. So you're trying to defend a losing hand, and there's not much more to it.

I feel like I'm being dragged down to your level by even having this conversation. It's very obvious that you are prone to attack people, and it's also obvious that it contributes nothing to the discourse.

Don't blame me for calling it to your attention.

You should work on that. No one will take you seriously as you wish when you put this attitude forward.

Even the government reports a trade deficit. I assumed that if anything, the government measure would tend to dampen the deficit.

I realize there is not "one" objective measure to these things (thanks again for distorting my view into something so ridiculous), but I didn't realize that whether or not there was a trade deficit was actually a debate here -- I thought the only debate was how much of a problem it is.

Ya, kind of like how chemo therapy is good for a cancer patient. It doesn't mean getting cancer was a good thing.

PB,

which currency collapse did you live through?

where were you living at the time?

were you trading through it?

sounds interesting

Barron

This one time I slapped this guy all day because he wasn't understanding the algebra concept I was trying to relate to him. And guess what? Rather than focus on math, he kept focusing on ME and how I was interacting with him.

When have I had a "teaching" tone? Can you show me an example so I know what you're referring to? Tone can be hard to detect. I mostly just focus on ideas and assume people are interested in the honest and open exchange of ideas unless they give me reason to think otherwise.

I see where this can be annoying. If you haven't figured it out, I consider myself an anarchist. I see the state as violence, and see anyone who advocates it (or even is not appalled by it) as terribly biased to let themselves think and live such a lie.

Everyone has bias to some degree. Our brains function around stereotype and bias. I'm constantly working to minimize my own.

Where we disagree, of course, is whether or not a likely dollar collapse is "biased" or accurate.

Is it possible though that you are maybe wrong? Is it not possible that my "clinging" to the dollar collapse could indeed be that the doom and gloom camp is correct?

It may not come across as such, because at the end of the day I am right now still convinced that a collapse is inevitable at this point, but I really do take the things you and others say to heart. And even if I respond in defense of something different, it doesn't mean I haven't considered what you said or that I'm not making an honest effort to avoid bias.

But I should work on not accusing others of having it. That is indeed a needless attack.


I appreciate your bringing these things up. Perhaps now you can post to PB about his habits, and why the things he does might not be conducive to level-headed discussion.

I lived in Asia during the Asian financial crisis - this was positively horrible because our family's position at the time was such that our assets/income were denominated in local currency but a substantial portion of our liabilities were dollar-denominated. And that sucks when the currency loses 60% of its value in a few days with rumors that it will lose even more. I wasn't exactly in a position to trade though I advocated buying equities when they fell to a ridiculous level. What's funny is that I kept explaining some form of the efficient market hypothesis to my parents without knowing what it was called just a few months prior but when fear completely dominated everything, I knew prices couldn't be right. People weren't willing to think about competitiveness a few years out because they saw every company as a bankrupcy risk. That was a good introduction to economics and finance - you always learn more from extreme cases.

I will say that for most normal people, the economic disruption was overstated. People still went to work, people still went to school and most people who hadn't been starving before were still not starving. Obviously it sucked for people who were badly positioned, but but the crisis flushed out a lot of extreme inefficiencies and outright frauds in banking and corporate governance. Part of the reason why I find it humorous when people bash American corporations and the US economy while talking about the trade deficit is that the reason why we have the trade deficit we do is precisely that the US corporations are well-managed for the benefit of shareholders, relatively to others. As much as people complain about American corporations, it's really sick when you look at European and Asian counterparts from a shareholder's perspective.

like i said i'm not parsing through the posts you've made. i'm relaying the way it has come accross to me and i doubt i'm the only one.

ok. everyone is allowed their opinion. i fit in that "not overly appalled by it" catagory if you couldn't tell lol.

this is where i think you've missed my point. i wasn't saying whether the bias was accurate or not. i'm saying your possession of it has prevented the internalization of useful concepts. or at least slowed it down. you seem to take in information that confirms the bias and it takes you 3 times as long to get a concept that would provide contrary evidence to it.

in terms of the accuracy of a dollar collapse, from all the analysis i've done and historical currency research i've done, i would not lay even money on a dollar collapse, depending on the definition. while PB may be apparantly "out of line" in some instances (b/c he doesn't care how anything comes accross), much of what he says does tend to be correct. he has, from what i can tell, a very strong financial mind.

now, mind you, i'm not saying i guarantee i'm correct, i'm just saying that the collapse of the dollar is far from likely and i've provided tons of posts on teh topic. economics is more complex than i think your understanding of it gives it credit for and it doesn't work like a single bank account for a country like the US.

and as i said above, i think the bias you possess leads you to process anti-dollar collapse evidence slower than confirmatory evidence.

of COURSE i could be wrong. but your clinging to an opinion isn't a factor in my analysis. i've just weighed the evidence and come to the conclusions i have. i've provided many posts on the topic and any response to them i typically respond w/ an analysis. throuhgout that process and my own personal data driven (not opinionated website driven) analyses have led me to the conclusion that:

a) the US currency is about done depreciating vs. many developed world currencies except australia

b) the US currency will continue to depreciate vs. the emerging markets

c) the US will enter a deep recession in the coming short term fueled by a number of factors, as will some of the developed world (countries like germany i think will make out pretty well in relative terms). UK, Spain, Italy, Japan are likely to suffer as well w/ the UK currency likely to depreciate far more vs. its trading partners than the dollar will in trade weighted terms from here.

d) much of the world has not decoupled from the US, though china has to a large degree.

e) oil will not fall as it has in previous recessions due to high demand from growing developing countries

f) commodities will likely continue to rise in dollar terms

g) US equities will fall (i think this is the first time in a while the equity futures market is backwardated, though much less so today than a few days ago). i think the futures market is still overpriced. consumption will slow, credit will tighten, margins will decrease as costs rise.

i can go on listing my opinions but i don't think they matter for this conversation.

i do think that i have reasoned hypothesis that are strongly backed by well thought out data analysis. i do not believe that your hypotheses are equally well tested or assessed though i could be wrong here (i.e. i don't know what research you've done other than intuitive thinking or reading other people's thoughts on websites). i believe that a dollar collapse driven by runaway inflation and a rush to cash driven by debt deflation are both extreme events and closer to the tails of the distribution fo future events than many other more likely outcomes like a deep US recession followed by a recovery etc.

similarly, making an honest effort may not be enough in this case. take the discussion about other countries purchasing US assets above in the case of a dollar fall. you immediately backed into the "US assets won't be attractive" stance confirming your thoughts for a dollar freefall vs. internalizing the concept and realizing what is meant by an economic floor (b/c attractiveness is determined by the ratio of price to value).

agreed.

PB will not alter his behavior imo. i don't think he is "out of line" in a moderation sense either.

Barron

Barronius,

This is so important:

Think about this. What this says is that you're not necessarily looking for truth.

OK fair enough. But I don't see where I've been out of line in a "moderation sense" either, heh. I took your criticisms as just friendly constructive criticism; not as necessarily coming from you as a mod. So I just thought you could offer the same for him.

But I agree it is probably fruitless and that this stuff has run its course by now anyways.

yeai guess i misspoke. i wanted to move away from the conversation about bias and the rest of my post vastly contradicts that statement of mine you quoted (i.e. i dealt a great deal w/ assessing the claim).

if you define your bias as "dollar will collapse" then i meant the exact opposite of what i said lol. indeed i was preciesely stating that " i beleive the bias is wrong."

what i wanted to say with that statement was "i dont want to assess YOUR opinion on whether you should hold the bias." i only care about the data and evidence at hand.

Barron

And you'd be wrong. Every government tries to make it look as bad as possible in order to use it as leverage during trade negotiations. And I feel I've explained why in this case things may be overstated. Here's another data point - if you look at the facts, you'd note that foreign firms operating in the US are far less profitable than the US firms operating overseas. There are two explanations and both are likely to be true: 1) US corporations are managed better and 2) Income is always shielded away from the US for tax accounting reasons because of extremely unfavorable tax treatments of corporate income in the US. It's gotten so bad that even if you don't have any reason to have a foreign subsidiary and do your business entirely here, it pays to have a foreign subsidiary in order to shield your income.

Basically, you need to think more in terms of normalized net international investment position, but again the problem is in accounting. Liquid foreign assets are generally accounted for at market prices, but there's a heck of a lot of foreign assets that the US corporations and individuals have acquired that cannot be marked that way (and have appreciated significantly). It's instructive that net investment income has only recently shifted to negative (and I don't know if it's staying that way), despite a fairly large negative net investment position.

I hold substantial gold still. Pretty happy.

i know but i got the feeling the feud may be pushing that "ill toned" point where ahnuld or myself might need to step in. remember, BFI has a far stricter tone policy than any other forum. i felt that you may have been expecting moderation action or something...

agreed.

now where are your thoughts regarding your misunderstood fundamental economic concept above

Barron

11497
12361

so a 7.5% gain, assuming constant dollars.

after 7 years adjusted for inflation (cpi which understates inflation, so basically we're using least possible inflation) it is ?

http://www.moneychimp.com/calculator...calculator.htm

at 3% interest compounded annually for 7 years, I get future value of 11,497 at 14,139.86.

so based on this, stocks in the dow have LOST MONEY, adjusted for inflation.

btw, the breakeven point, using the link above, is 1.05% inflation. so less inflation than that, and the dow has made money in real dollars.

andrew,

whenever you get a chance...

Barron

what is this supposed to prove? if the dow would always perform better than a government bond, no one would buy the government bond.

in terms of real wealth, if you had a dow index from 2000-2007 inclusive, you would have LESS WEALTH at the end than at the beginning.

if you can't figure out what I'm talking about you shouldn't be investing.

maybe a bit harsh.

what I mean is that

dow 11,497 in jan1 2000

is equivalent to

dow 14,139.86 in jan1 2007

if inflation rate was 3%, because dollar is constantly depreciating.

duh, should have used 8 years not 7 years in my calcs.

14,564.06 after 8 years.

current dow is 11,497

so if inflation was 3%, dow has lost 3067 or 21% of its value in the past 8 years.

thats -21%.

if you investing in dow index in 2000 (and inflation was 3%) then your ROI for the past 8 years was

-21%.