Tuesday, January 22, 2019

Conversations with Mr S.

Sometime last week I told Mr S. that I was starting to feel anxious about the economy. He's like - yeah. Who knows what this Brexit thing is going to do.

Me - Screw Europe! We haven't gotten any financial data in weeks. And it's starting to freak me out.

Him - Do we really believe that data anyway? It will be interesting to see how the market reacts when there is no government manipulation.

Which just made me just look and him and smile. Because he is sorta right. No one believes the numbers.

Then last night I was like - You are right, we don't believe that data - but I would like to at least how much I don't trust the data. We are four reports behind. And I would just like to know the range so I can decide what I want to believe or not.


  1. Have an evening's entertainment then ...

    Adam Curtis's "Hypernormalization" documentary from 2016.

    Although your attention span will need to be much longer than three minutes, this will be a bit of fun if you stream it from your Roku or from your bulbous Chromecast streaming thangy.

    So what's it about?

    It's almost exactly what you're talking about with a lot of relevant perspective.

    If Q-ball's still around, this sort of thing is right up his alley, so to speak.

    There's also an interview from Curtis on BBC that sums up some of the points for people who haven't watched the video (yet): Adam Curtis interview about "Hypernormalization".

    And for a little extra fun, we are all now Richard Nixon ...

  2. Thanks for the short version. The longer version seems like a weekend thing. I don't know what to make of it yet, but it's an interesting theory. I am always curious about how people feel we wound up here. The older I get - I just feel like people don't really want to solve problems. They just want to fight about solving problems. But people are like cats. Tough to herd.

    I think I will watch that stuff though. I got through 30 mins of the long version and it's weird to see all those same players.

  3. Let me help you.



    What's it mean?

    The Fed Chairman has destroyed the yield curve. There is now NOW incentive to sell anything with a maturity date of less than 30 years and while he was successful at raising short term interest rates he utterly failed at raising long term interests for government securities.

    During zerp everything with a maturity rate less than or equal to 6 months had an interest rate of 0% or close to it. The spread between 30 day notes and 30 year bonds is now less than 0.7%. Which is insane. Short term money is now insanely expensive while long term money is insanely cheap.

    Long term rates such as mortgages have begun to fall again, although that is mainly due to the softening housing market.

    I would expect short term borrowing costs to stay where they are or go up. Banks will become more illiquid due to higher overnight borrowing costs.

    It has more to due with the value of the dollar and demand for government securities than anything to do with the private debt market.

    What is clear is that the Fed chairman does not understand international currency markets and their impact upon demand for government securities. It appears he did not see the rising dollar coming.

    his REAL goal is to raise the treasury rate.
    Everything else they said was so much bullshit because there was zero justificatiin in their mandate for raising interest rates.

    If US was in vacuum, what it would have done is destroying the ability to borrow any loans short of 25+ years without financially destroying yourself while ensuring that the 30+ options would seem incredible but deteriorate down to WW1 era German Mark before the halfway mark.

    Liquidity crunch, "dis"incentives to invest and so on.

    However, US isn't in a vacuum and since everyone else who can "hear the lightning and see the thunder*" is running to dollar (and you need to include the crypto-currencies in this too as there isn't any other outlet for those to exchange into, yet), ensuring that there will be a glut of liquid currency even with the your FED burning the stuff in job lots.

    It's a VampireSquid riding on the your President's shoulder's wettest dreams and fantasies turned up to 13.

    *phrasing intentional

    copied and pasted from Baen's Bar

  4. I'm digesting that. So - are short term rates so high due to a lot of demand - or something else. If everyone wants short erm money I can see why they would raise the rates to slow that down. but I don't know at all if that is how this works. Bonds are a definite soft spot in my brain. I stick with what I know. Tech and real estate. Mostly. It seems like you can't survive without knowing the wider package these days. So I guess I should learn.

  5. Short term rates and long term rates are due to ineptitude and fractional banking.


  6. “He became convinced that ordinary commercial financing could be done for a service charge plus an insurance fee amounting to much less that the current rates of interest charged by banks, whose rates were based on supply and demand, treating money as a commodity rather than as a sovereign state's means of exchange.”

    “Every citizen is free to perform any act which does not hamper the equal freedom of another. No law shall forbid the performance of any act, which does not damage the physical or economic welfare of any other person.”

    both are from Robert Anson Heinlein
    His first book that was written in 1939

  7. Capital of Texas RefugeeTuesday, January 29, 2019 1:11:00 PM

    "... [the Fed Chairman's] REAL goal is to raise the treasury rate ..."

    Well, yes, that's obvious, and it's the real goal of any Fed Chairman.

    That's because the Reserve System is essentially a consortium of regional banks, and for those banks to be able to legislate via economics the "fortunes" of America, they need a way to drive money as a vehicle of debt rather than a vehicle of credit.

    If money were a vehicle of credit, then the Reserve System would eventually evaporate since all of the wealth would be distributed back to the individual citizen stakeholders of America.

    Instead, money serving as debt makes sure that the power remains concentrated, and that financial power remains concentrated within a few large institutions.

    So for the Fed Chairman to do anything but what he's doing?

    That'd be absolutely insane -- there's no way he's going to cause his own job to disappear, because that's a fundamental violation of the primary principle of government.

    Which is: government is a product in which the solutions for the shortcomings of government involve yet more government.

    And that's why I'm an anarcho-capitalist ... :-) *bows to the audience*

    As for Heinlein, the man looked at the independence of Ghana in his not-too-distant past, saw the rise of the American civil rights movement, and got so scared of the future that he crapped out "Farnham's Freehold" ... so I'm not exactly what you'd call a fan.

  8. Texas,
    The civil rights movement was hijacked by the soviets.
    For the last ten years liberals have used "Identity" to strip choice from people and use the "Pro Choice" motto whilst doing it.
    Two faced bastards.

    Heinlein has always been a Libertarian of the school where TANSTAAFL means something.
    As for Farnham's Freehold it wasn't racist. He was showing how ANYONE can be intolerant.
    He was telling people, "Think, THEN act."
    You might want to go reread Farnham's Freehold. You probably read it long ago.
    You are a different person now. You might see it differently rather than by your opinions about something you read long ago.
    I respectfully request you to do so.

  9. As for being an ANARCHO-Capitalist.
    Anarchy is not a good thing.
    Without substance and a civil contract you and me...we'd still be living in caves shivering in the cold and hoping to live to your mid twenties before dying.


    You see, I just do this stuff to trigger people.