Bond Markets Have Rejected Bernanke's Put

[Toto deVeer]

the ponzi scheme is in people's minds. The trauma everyone is feeling arises from the fact that these expectations are being crushed by reality and that no-one is acting to restore the mirage. Think ron paul can save us? I think not.

Aside from the metaphysics of money, where Ron Paul can have influence is to try to move the true liability for debts back to where they belong; between debtors and creditors, and not the state.

The transfer of private debt to the public purse is the issue. Whether the FED back doors this or Congress front doors it the result is the same. It's time for push back. This is where I hope that Paul will exert pressure.

[scepticus]

The transfer of private debt to the public purse is the issue.

The day deposit insurance was dreamed up this had to be the outcome.

The people who started this ball rolling are long dead.

The thing about insurance, is that one day, you have to pay up.

[Toto deVeer]

The Fed sets a target rate. It buys/sells funds from the system (e.g. lowers rates by buying treasuries and increasing the money supply) to keep the effective funds rate as close to this target as possible. When this becomes too costly (i.e. because the market has moved on) it moves the target rate in line. It follows market rates – the effective rate, as well as other credit/debt market rates.

And will Paul be in the position to demand transparency? Opening up ML1 & 2 and POMO operations, for example?

[scepticus]

The Fed sets a target rate. It buys/sells funds from the system (e.g. lowers rates by buying treasuries and increasing the money supply) to keep the effective funds rate as close to this target as possible. When this becomes too costly (i.e. because the market has moved on) it moves the target rate in line. It follows market rates – the effective rate, as well as other credit/debt market rates.

He's right. Which is why rates have pointed down for 40 years, because arbitrageurs plague the fed every step they make which makes the business of maintaining a consistent rate in a fiat economy impossibly expensive.

[libspero]

nope, because he thinks there was an alternative. that something could have been different.

plus his timing was appalling.

plus he believes in hyperinflation, which is crap.

With respect.. you are essentially suggesting the US will push hyper inflation onto the rest of the world and their response should be to lower interest rates to ZIRP!

We can speculate about the effectiveness of alternative strategies, and also whether hyperinflation exists or not.

I don't think you can criticise his timing though.

From 2005(?) onwards.. recommends Gold / Mining stocks / Foreign equities

2007/2008 shorts the financials.

Continues to recommend Gold / Mining / Foreign equities

His strategy may be boring.. but so far (until he's proved wrong) I've not seen a better one!

[Injin]

its not a ponzi scheme, it is the reaction of a complex homeostatic system comprised of billions of humans acting to restore balance. The deletion of fictional debt is the most rational system response at this time.

the ponzi scheme is the notion you can have 7%, or even 3%, real yield ad infinitum being returned to every mom and pop investor and have everyone retire at 60 while keeping 6 billion people employed.

the ponzi scheme is in people's minds. The trauma everyone is feeling arises from the fact that these expectations are being crushed by reality and that no-one is acting to restore the mirage. Think ron paul can save us? I think not.

of course the reality is that we can't go back and instead we have to go forwards until we're leveled out.

nope, we are not using future prosperity here. That is a mind-****** cultural delusion, pardon my french.

what we are deleting is the imaginary future income stream people though was coming to them as a result of fictional financial assets. Injin sees this, and so do I.

WTF is a financial asset when its at home?

And really, WTF is fixed income asset? Now that is a great example of a ponzi scheme that exists only in peoples minds.

Oh my god.

Agreement.

brb, having a lie down.

[Number79]

nope, because he thinks there was an alternative. that something could have been different.

plus his timing was appalling.

plus he believes in hyperinflation, which is crap.

and iirc he was way out on a $ collapse

[scepticus]

With respect.. you are essentially suggesting the US will push hyper inflation onto the rest of the world and their response should be to lower interest rates to ZIRP!

We can speculate about the effectiveness of alternative strategies, and also whether hyperinflation exists or not.

I don't think you can criticise his timing though.

From 2005(?) onwards.. recommends Gold / Mining stocks / Foreign equities

2007/2008 shorts the financials.

Continues to recommend Gold / Mining / Foreign equities

His strategy may be boring.. but so far (until he's proved wrong) I've not seen a better one!

OK , lets not have a schiff investment argument. Its always a distraction.

I stand by my point that he is full of it because he suggests that a 180 degree policy change is a viable option.

Its only a viable option if he wants a second US civil war.

how would you suggest he returns the USA to a situation of tolerable employment levels and decent yields on savings?

and the right response by the emerging nations and surplus nations at this stage is to run deficits, after all, china is effectively below zirp due to its policies. As is germany.

if they run deficits then they could avoid zirp until they run out of debtors.

[Toto deVeer]

The day deposit insurance was dreamed up this had to be the outcome.

The people who started this ball rolling are long dead.

The thing about insurance, is that one day, you have to pay up.

This is one issue that is related to retail banking, that will eventually resolve. My primary concern is about AIG, CITI, BoA, GS. Let them fall like dominoes. Failure in capitalism is a healthy process. Send them through resolution. The debts must be wiped clean, and should not be transferred to the state.

When did we ever dictate that debts should never be extinguished? Extinguishing debt is a fundamental basis of capitalism.

Edited November 4, 2010 by Toto deVeer

[scepticus]

Oh my god.

Agreement.

brb, having a lie down.

don't get too excited. I'm still in favour of sensible taxes, fractional reserve banking and fiat money.

[scepticus]

Again I'm referring to today's perceptions of future income stream.

in which case there is no danger to future prosperity say 10 years down the line, just prosperity/imagined prosperity today ?

[Kazuya]

Other things are soaring as well ....

$1376

[Injin]

don't get too excited. I'm still in favour of sensible taxes, fractional reserve banking and fiat money.

That's okay, when you realise you can't have sensible taxes, FRB doesn't work and fiat money will always crash the economy you'll change your mind.

But you actually have a mind to change, so it's all good.

[scepticus]

This is one issue that is related to retail banking, that will eventually resolve. My primary concern is about AIG, CITI, BoA, GS. Let them fall like dominoes.

could do, but because they are all tied together like climbers on a rockface they'd take the rest of the system of promises down with them.

and because there is no funds to pay out the insurance promises with, what you suggest can't happen without wiping out everyone's savings.

[scepticus]

But you actually have a mind to change, so it's all good.

I do indeed, but do you, thats what we all want to know?

And in any case, I have not changed my mind.

I have never been averse to a bit of honest cathartic inflation out in the open.

What I am averse to (as you are also) is the rigid memes in peoples minds that have been put there by others, which as we both know is the major cause of the problems.

Only difference between us is, what memes we think will or should replace the current infection.

[Toto deVeer]

could do, but because they are all tied together like climbers on a rockface they'd take the rest of the system of promises down with them.

and because there is no funds to pay out the insurance promises with, what you suggest can't happen without wiping out everyone's savings.

Let it all come down then. We start again, with a clean slate. Quickly.

This is infinitely better than a slow grinding redistribution of wealth from everyone to the few at the top.

Edited November 4, 2010 by Toto deVeer

[scepticus]

Let it all come down then. We start again, with a clean slate. Quickly.

can't be done. you'd have to rebuild civilisation from the bottom up. We're not playing lego here.

In any case, we'd just arrive back at the same point in 70 years.

nope, might as well suck it in and pick up the next volume of the trilogy.

This is infinitely better than a slow grinding redistribution of wealth from everyone the the few at the top.

IMO the coming era is going to distribute the opposite way to the last 300 years, although the inevitable power laws will make it a bit patchy. Frankly I'd rather test that idea than repeat the last few centuries of usury and war.

[Injin]

I do indeed, but do you, thats what we all want to know?

I always change my mind when i am wrong.

And in any case, I have not changed my mind.

I have never been averse to a bit of honest cathartic inflation out in the open.

What I am averse to (as you are also) is the rigid memes in peoples minds that have been put there by others, which as we both know is the major cause of the problems.

Only difference between us is, what memes we think will or should replace the current infection.

Well it'd be best if people stopped using them entirely and went straight for sense impressions to think with (and latterly converted to communicate) but hey ho, that's a bit specialised for now I think.

As for replacement of memes, that's a tough one. The FRB banking model happens due to a hardwired limitation on conscious attention, it's the same thing which makes magic tricks work and forms the basis for hypnosis. (Which is sortof where I came in to this whole thing myself, way back.)

[Toto deVeer]

can't be done. you'd have to rebuild civilisation from the bottom up. We're not playing lego here.

A few companies being resolved does not mean the end of civilization. It would likely mean the preservation of civilization.

In any case, we'd just arrive back at the same point in 70 years.

Perhaps. But that is infinitely preferable to what is facing us, our children and our grandchildren.

nope, might as well suck it in and pick up the next volume of the trilogy.

The dark ages and a life of grinding perpetual servitude? No thanks.

IMO the coming era is going to distribute the opposite way to the last 300 years, although the inevitable power laws will make it a bit patchy. Frankly I'd rather test that idea than repeat the last few centuries of usury and war.

I doubt that war will ever be abolished. Unless we're all in chains, which is a possibility should we continue on this path.

[Mr. Spin esq.]

The Gold bugs are jumping in without realising what damage the bond markets can do to Bernake's attempt to inflate away debt. All he has done is invite a vicious backlash that will force IR higher.

Anyone on here actualy buying gold at these prices?

Bonds are more interesting because they actually move everything else. FOREX moves on bond prices and FOREX is a very big mover.

What you are not realising is there is no fix to this problem. We are at the start of inflation event that will DESTROY all form of government script. There is no way out - none.

A total collapse of the US dollar (and all other fiat bits of paper and computer digits) is what is going to happen.

Forex is for fools and bonds are for boneheads.

[okaycuckoo]

The drooling crazies have pushed the boat out on more QE at the exact point when the US perception of endemic corruption and endemic fraud from top to bottom has been crystallised through fraudclosure. Nobody knows who owns what anymore.

That sucker is going DOWN!!

Yes, I believe GWB was correct when it mattered. Wise man.

I cannot connect with the lack of justice in this system. Economists obsess about incentives, but that makes no sense to me. I fold.