and you choose to converse with us lab rats for your amusement or what?

That's funny because almost all of your rhetoric relies on a fundamental misunderstanding of how deficits and usury work.

$250,000 per year for a family is NOT rich, only a poor man would say otherwise.


Maybe, because they are going to make 20% less than they did in 2007.

Flies are so short sighted.

Cap gains, div tax, new itemized deduction limits, lifting cap on social security tax, taxing health benefits...

The cost of doing business and the cost of your government is going up.

People making $250k+ will see their tax payments per dollar earned increase under Obama.

Your point is somewhat valid, however if I had any friends working as an analyst for the treasury I would make fun of them quite religiously. I hope you realize they make terrible money and are typically second rate at best.

Well then I have a question.

If these guys have such a profound understanding of economic theory how did the 2008 crisis ever occur? We were told, by the no less than the Sec. Treasury, barring an immediate ~trillion dollar blank check, the US financial system would collapse. iirc the powers that be went so far as to say corporations would not make payroll and people would not be able to cash their checks but for the bailout. How does this ever happen with such an enlightened systemic risk regulator? I mean were are talking about rudimentary banking function being put in jeopardy.

As a corollary, the Chairman of the FED himself declared there was in fact no housing bubble whilst the country was in the midst of what is arguably the largest bubble in recorded history. I mean if he is missing something so fundamental, are people really that crazy to question some if his higher order thinking?

Oooh i know, THE HUNT FOR RED OCTOBER!!!!!!

savman- What the hell are you asking? Zygote and pvn being wrong doesn't imply that the United States government is omniscient, which is I think what you're trying to get at as a wicked "gotcha."

Not what I am getting at.

PB is basically saying in dealing with enormously complex matters lay people would do well to defer to trained experts. I am generally sympathetic to this view. What I am saying is when the experts, by their own admission, are oblivious to systemic threats which threaten elementary functions of the system in their charge then maybe a review of some of ones fundamental beliefs is in order.

Put another way, the Chairman of the Fed should, before anything else, make sure nothing threatens day to day banking activities. That we were supposedly a few days away from an inability to do something as simple as cash a check calls into question the expertise of those in charge imo.edit

I would like to point out that any amount of yearly income isn't rich.

Rich = wealth, ie the accumulation of income.

However, having a high yearly income does make becoming wealthy much easier, but to maintain the lifestyle you are "used to" it has no net positive effect.

savman- The appropriate government policy, what will happen in the future, etc. are all matters of intense academic debate among economists. They'd all claim, at this point, that they saw the bubble coming and if people had listened to them things would be better.

But that's not what's being discussed. You're seizing on the last sentence, but that wasn't his point.

Every person who has taken a mid-level undergraduate finance or economics course knows what "money supply" means and how it expands, they know how the Treasury works, etc. Zygote and pvn don't. They don't even want to know, though, because they think they already understand. They DO understand and they simply disagree with the "Keynesians" who are indoctrinated or bribed or something by the Fed, or maybe just not as smart, or whatever.

Any economics professor, of any discipline, who reads what Zygote has written in this thread would facepalm so hard they'd leave a mark. He's more or less invented his own version of reality, complete with his own personal field of economics.

Can Bernanke Sense a Bubble?

i take this mostly as a compliment. unfortunately anyone who discusses economics has more or less invented his own version. i believe mine to be discovered though so the facts and essence of the matters dictate the direction of my theory.

if you'd like to argue the mertis be my guest. if youd rather like to talk about how much you dont like me, everyone will just think you have a crush on me. the choice is yours.

I hope you meant treasury/government desks at IBs - not sure how jobs at the actual Treasury, which I did not mention at all and don't know much about, are like at all (by "Fed" I mean Federal Reserve), either way I wrote:

Well, by the standards of other fixed income desks, they don't do all that well but a lot of those other jobs are gone. It's a boring ass job, but somebody's gotta do it and if you do it well, you'd be rich by almost anyone's definition in this thread.

I wrote on this in another thread:

NFL coaches, as a group, win only about 50% of the games, which is really not that great. So if someone wants to understand proper football strategy, he shouldn't pay any attention to anything NFL coaches or other experts say, despite not even understanding most of the rules and having never played, coached at any competitive level and only having watched casually?

Just as NFL coaches are structurally unable to do better than 50% as a group, market participants (this includes policy makers) as a group are structurally unable to predict the future better than the market itself.

But theirs is somewhat closely related to actual reality. Yours is based on your personal reality, which isn't merely different from actual reality, but is simply incoherent on its own. Many times in this thread already, I *assumed* many "facts" of your personal reality to be true, but your theory still doesn't make any sense!

dont make sense to you. your responses show a clear misunderstanding so you couldnt have even evaluated what im saying. since when were you the ultimate arbitrator anyway?

if you want to see a theory that is based on someones personal reality and even if you assume its own premises it still doesnt make sense then i suggest you check this out.

What? So the primary dealer isn't a big bad beneficiary after all and is just an intermediary?

Wait how can you have bought the treasury at too high a price, since the money you're getting is the fresh new money that hasn't gone around to affect the prices yet? Are you saying that prices could've adjusted before you could spend the fresh new money?

Also, on some level, didn't everyone buy the treasury at too high a price since fed's intervention was omnipresent? Or are you talking about specifics of timing? So are you back to my contention that people who bet correctly make money or are you back to only net seller of treasuries are winners, in which case, government's the only actor left!

How do you know what the limits are? Maybe the natural state is so far below these limits that during the bubble or whatever, the economy can grow to anticipate all kinds of greatness in the future, and the Fed has to follow with M0 growth later. Either way, I think we've established that prices can adjust ahead of M0 growth.

i can't tell if you're being facetious in your responses.

PLEASE answer me this question. do you agree with the general statement that newly created money benefits the creator and the early receivers at the expense of those whose incomes rise slower than their expenses (as their expenses are bid up from the new monetary demand).

in the case we just discussed, the dealer and me would be beneficiaries of the inflation.

*warning: oversimplified example. i hope the point still come across.

if there is a 100 dollars in the economy and 10 (A-J) different things to buy. this money can only shuffle around those ten things. in total the sum prices of those ten things cannot be above 100 dollars. if someone creates 50 new dollars and is expected to spend it on item A, those who still have money can sell items B-J, or take from savings and divert the funds in to A. they have some power but are limited. They cannot change the price structure to eventually account for the whole 150, but they can try change the distribution of funds already available and anchor it towards where they speculate future demands will go. the price structure can also change from the supply side but well stick to the demand side for now.


huh? i've always agreed that speculators can make money if they speculate correctly.

and no not everyone bought the treasury at too high a price. they buy at too high a price only if they are bad speculators. No matter what price they do buy it at, the fed intervention helps them fetch a price they couldnt have otherwise achieved.

i never said prices cant adjust ahead of m0 growth. this is what i mean about you already assuming im wrong before you understand me.

Lol good one

I like it. That market is one smart bastard.

how anti-keynsian of you. doesnt this imply a monetarist approach? what benefit can policy makers have over a fixed algorithm if the market will always have the optimal predictions?

This isn't even a coherent question. It's like do people with a blue personality live longer than people with a red personality. You've invented concepts in your head that have no analogues in the real world.

I will give you that inflation doesn't affect all sectors equally. But this has nothing to do with money and it's hard to figure out who benefits. In my quoted response to savman, there's a post (on Marginal Revolution) that explains why in one particular instance, the market wrongly inflated one set of prices before others. But even then, benefits don't accrue in any sort of systematic fashion.


But you're just some guy with treasury. Anyone could be you! All it takes to be a beneficiary of inflation is buy up treasuries and sell? And how does the dealer benefit again? He makes the same money whether he's arranging trades between you and the govy or you and the insurance company.


Total capitalization of all public companies is on the order of 40-60 trillion dollars and there isn't anywhere near as much M0 in this world - probably under 10 trillion even at the very, very most. This doesn't include private businesses, real estate, goods and services we consume, labor, natural resources, etc.

I mean, seriously? You're not going to live this down. You know, a couple of years ago, I had some vague hope that you would eventually understand something, but I don't know if it's emotional baggage, too much weed, or some other serious problem but it doesn't seem like you're making any progress at all. Your complete refusal to accept any sort of authority isn't going to help. I mean, the rest of the ACist crowd isn't doing so hot, but in your case, it's way better to worship Rothbard than to worship yourself.


So you could be a beneficiary of new money by buying and selling treasuries repeatedly? I mean you many sometimes get a negative point for being a bad speculator, but you keep benefiting from all that intervention! Of course, the flip side is, whatever price they sell it at, the fed intervention made them pay a price they wouldn't have otherwise had to!

PVN, etc - you sure you want this guy on your side? I mean, you had almost a reasonable case and your defense lawyer is throwing it away with supernatural explanations!


Then how do early spenders of the money benefit? They are buying in a market that already has adjusted prices?


I don't care much about policy either way but the market doesn't have optimal predictions (again, that people in the aggregate can't do better than market doesn't mean individual policy makers can't; and that market knows doesn't mean market responds appropriately) and monetarists and keynesians don't differ in fixed versus non-fixed algorithm. The differences between monetarists and Keynesians are only apparent when monetary stimulus fails to maintain price stability and in that case there's not much fundamental economic difference between the Fed buying assets (QE) and government buying assets (Keynesian stimulus) only political. They are all arguing the same thing, relative to you.

It's much better to think of policy makers as market participants with an incentive structure of their own. It's incoherent to assign them some sort of agency, without doing the same for other market participants.

WTF? I can't believe someone would spout drivel like this to make a point about something in this forum. Hey NFL teams as a group win only about 50% of their games too LOL.

Also have you seen most NFL coach's clock management? A 12-year-old Madden player could do a better job than those idiots.

the neutrality of money or its denial are well recognized concepts. apparently you are the one in the dark.

well depending on the selling price, sure he may make the same money either way. you have no point.

your line of question shows no basis in what ive been saying so i might as well be talking to a brick well.

its entirely irrelevant to the point i made. your trying to conflate the use of the word "prices". try liquidate 60 trillion and see how far you get. how can the demand for something be greater than the means of demand?

capitalizations are calculated via last price, but that is not the same as the sense im discussion prices. just because someone would purchase one unit at certain price, doesnt mean much larger units will fetch those prices. you cant aggregate prices like that in a meaningful sense because people will have to make choices in their spending with finite means push come to shove.

i just sold a share of myself for a dollar to a friend. im also listing a googleplex shares, i guess my market cap is a googleplex * 1. who gives a ****? this changes nothing about what i was saying. unless your trying to prove that the value of something is greater than the thing giving it value. good luck. the market capitalization of all the companies is 1 googleplex ounces of gold lets say, what does this tell you when there are not nearly a small fraction of that much gold out there?

so sad your ability to understand people and make prediction sucks.

okay ive really started to be convinced you are ******ed.

you clearly cannot seperate the issues of speculation and inflation and relative prices. you clearly are not listening to me. unless you come up with a new line of reasoning, im lost in how to help you. i normally argue even when i believe the opponent to be mostly not worth it because it helps me understand my self better, but this argument's benefits have been exhausted at this point. unless ofcourse you want to re-read everything, properly understand what im saying, and make a new response in the context of an understanding of what im saying. im sure youll say its not and its that what im saying is not understandable but if you really believe you've given it your best effort, then we'll have to leave it be.

im gonna further write out an example of how this works to hopefully put everything in context, but have a ride arriving in a minute so will post it in a bit.

overall though you should just look up cantillon effects like i told you before or read the original work from cantillon i posted. this stuff is pretty well accepted and not original to me.

This is basically why I stopped reading this thread. I don't have a team. Yet a there are posters who would rather lump a bunch of people into an undefined collective and then try to beat one person with weaknesses they thought they saw in some other member of the collective.