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Tuesday, December 17, 2019

What is good for the fake economy

Is good for the Fake Americans, but no one else in the USA.
According to official US government economic data, the US economy has been growing for 10.5 years since June of 2009. The reason that the US government can produce this false conclusion is that costs that are subtractions from GDP are not included in the measure. Instead, many costs are counted not as subtractions from growth but as additions to growth. For example, the penalty interest on a person’s credit card balance that results when a person falls behind his payments is counted as an increase in “financial services” and as an increase in Gross Domestic Product. The economic world is stood on its head.

It is aggregate demand that drives the economy. Payments made on a rise in interest rates on credit card balances from 19% to a 29% penalty rate reduce consumers’ ability to contribute to aggregate demand by purchasing goods and the services of doctors, lawyers, plumbers, electricians, and carpenters. Contrary to logic, the fee is magically counted in the “financial services” category as a contributor to GDP growth. The extortion of a fee that reduces aggregate demand lowers GDP, but builds paper wealth in the financial services sector.

GDP growth is also artificially inflated by counting as GDP abstract concepts that do not produce income streams. For example, for homeowners the US Department of Commerce estimates the rental values of owner-occupied housing, that is, the amount owners would be paying if they rented instead of owned their homes, and counts this imputed rent as GDP.

These and other absurdities have caused economist Michael Hudson to conclude correctly that the “financial reality of how the U.S. economy works is no longer captured in GDP statistics.”
You may recall that I pointed out this sort of thing repeatedly back in 2008 and 2009. We have been living in the Great Depression 2.0 ever since, even though the massive financialization of the economy has managed to disguise that being exposed in the statistics.

This is why I no longer pay any attention to the statistics or comment upon them. CPI is fictitious, GDP is fictitious, and Z.1. has been rendered useless. It would be about as meaningful as commenting on the fictional economics of the post-imperial Star Wars universe.

The reason that the fake growth has to continue indefinitely is because once the paper gains are correctly written off and accounted for as losses, the whole structure begins to collapse.

Labels:

163 Comments:

Blogger peacefulposter December 17, 2019 8:12 AM  

Usury increases GDP? Interesting.

Blogger Servant December 17, 2019 8:19 AM  

I knew this economy was a farce but imputing rent for home ownership in a consumption based economy doesn't even measure stuff they care about.

My dad thinks the economy has never been better. Can't wait for the barter system myself

Blogger D E K December 17, 2019 8:32 AM  

A darkstream about fake economy and maybe Vox has some original thoughts about the zero interest rate policy and negative rates. Would appreciate such a darkstream.

Blogger David Ray Milton December 17, 2019 8:36 AM  

Still trying to learn more about macro economics, but it seems like the most powerful indication of a strong economy comes back to the buying power for the common man’s “basket of goods.”

Trump keeps mentioning the record highs of the stock exchanges. Great. That doesn’t seem to change the fact that Joe Zoomer is staring at an average home price of $199k. This is all pretty dire when compared to Joe Boomer’s average home price of $60k adjusted for inflation.

Side note, in the book I’m reading I’m learning that Adam Smith seemed to be the brain child of unregulated labor mobility. Libertarianism equals death. Something about the love of money being the root of all evil.

Blogger Stilicho December 17, 2019 8:44 AM  

It's the equivalent of using a map of Middle Earth to navigate across the Midwest.

With that said, what would a reasonable map consist of, if only to track gross trends? Per capita income or average wages adjusted for inflation? EPR as well? However, I am not aware of a reasonable way to track actual production. The indirect consumption/spending model of GDP is flawed in many ways as repeatedly pointed out around here.

Blogger John Regan December 17, 2019 8:46 AM  

The ultimate financial problem seems to be the monetary system.

Blogger RobertDWood December 17, 2019 8:48 AM  

There remains no good solution to the laundromat is gdp yet washing clothes at home is not conundrum in gdp.

Then consider the prescription drugs is gdp vs black market that is not. The index is impotent by design.

Blogger maniacprovost December 17, 2019 8:58 AM  

Counting the ongoing value of home ownership makes sense. Counting fictitious digital currency that moves from one account to another does not.

Whether any good purpose is served by counting the correct things is yet to be determined.

Blogger Doug Cranmer December 17, 2019 8:58 AM  

It's related tangentially.

I was at at a set of talks at UBC related to ML. NIPS was in the city this week.

Got into a discussion with a grad student from Iran. You can imagine his politics. The basic thing from him is that he was happy to see Canadian and American technology be undermined by China. It was "parity" in his words.

I told him about the 100'000's of thousands of jobs lost in this continent. Walk down to downtown Eastside and see the consequences.

Piece of shit is happy to come here to take all of our advantages and be an absolute traitor in return.

Not a single student around had anything to say. Not a single one was a Canadian. Yeah, boogaloo is going to be ugly.

Blogger Johnny December 17, 2019 9:12 AM  

If you can believe rumor mill stuff, Richard Nixon tried to get them to misstate some of the economic data, and Lyndon Johnson got it done. Perhaps it has been ongoing.

The numbers are real, they come from sources, but the data gets contrived so as to produce a systematic bias. Probably the biggest distortion to GDP arises from the misstatement of inflation. As it relates to growth, if the claim is that we have one percent inflation and the actual rate is three percent, that will turn up as the growth rate that is two percent higher than would otherwise be.

Blogger MagisterLudi December 17, 2019 9:14 AM  

the penalty interest on a person’s credit card balance that results when a person falls behind his payments is counted as an increase in “financial services” and as an increase in Gross Domestic Product

"I may be drowning in debt, but at least I'm helping grow the economy" said noone ever

Blogger flyingtiger December 17, 2019 9:18 AM  

I remember in '09 that many banks and other places were having problems because everybody was paying their bills on time. That made sense because in a tight economy you cut down on expenses. The simplest expense to reduce is fines for late payments. I never thought it was part of a business plan. I thought at the time if I were an anarchist and wanted to destroy the economy, I would just pay my bills on time.

Blogger Brett baker December 17, 2019 9:18 AM  

Read the entire Wealth of Nations, not the condensed versions.

Blogger Brett baker December 17, 2019 9:19 AM  

Rental value of owner-occupied housing is a decent chunk of farm income.

Blogger bodenlose Schweinerei December 17, 2019 9:25 AM  

Focusing on GDP as measure of economic health is retarded, but not as retarded as believing the levitated_by-trillions-in-free-money stock market, with its perfectly legal frontrunning and the Plunge Protection Team, means anything at all (except when it finally eats the big shit sandwich, of course).

Things are so freakin' awesome the Fed is adding $500 billion in the next 30 days to rescue the repo market, so BTFD, babies!

Blogger Caffeineforge December 17, 2019 9:27 AM  

Your "Return of the Great Depression" book was my introduction to you vox. It's madness how far things have gone since then.

Blogger Critias December 17, 2019 9:37 AM  

5. Stilicho
"It's the equivalent of using a map of Middle Earth to navigate across the Midwest."


*Arrives in California* "Osgiliath has fallen!!"

---

How on earth did any of this ever happen, how did we get here?

Blogger tuberman December 17, 2019 9:38 AM  

It's hard to say how far back the Fake statistics go, but certainly some go back to FDR putting academics in control of USA's trade, and this sped up in the 1960's, and became completely out of control during Bush 41's term.

4. David Ray Milton

Most Economists are so bent you can learn nothing from them, with a couple of remarkable exceptions.

Trump knows all of this, but the Fake statistics and central bank control have always been the DS's ace in the hole. There needed to be new trade agreements with countries created, outside Bankster control. In fact, Central Banks like the Fed all over the world need to be destroyed or completely modified away from the parasites. Until these Central Banks are put in their place, and a real economy of manufacturing, excavation, small businesses, and industrialization is thoroughly brought back, the Fake stats will stay.

The Deep State cannot criticize the Fake stats working in Trump's favor, because they created them.

Follow x22's financial reports to get most of the inside stuff on this. Sundance is also good in this area.

Blogger pyrrhus December 17, 2019 9:42 AM  

But the biggest reason that GDP is a lie is the absurdly low GDP deflator, which for most of recent times has been half, or less, of the actual inflation in prices...

Blogger CM December 17, 2019 9:50 AM  

Focusing on GDP as measure of economic health is retarded,

If it actually measured production, it would be useful, if not complete.

But what is now is a sham.

Blogger GM December 17, 2019 9:52 AM  

I understand that the economy is actually shit, because I can see the stagnating standard of living in my working class family with my own eyes. But what I don't understand is whether a clean-up of the financial nonsense necessitates the collapse of the real economy. I recognize that this is not necessarily what Vox wrote in this post; when he writes "whole structure" he could mean the "whole financial structure," but I'm still not clear on how to think about this for myself, so if someone can help me out I would appreciate it.

Here's my question:

Stagnating real living standards aside, right now we're making a bunch of stuff, and moving it around, and consuming it. On top of that layer of real productivity there is a system of ownership claims and financial contracts, and people are gaming that layer to skim off the real economy. So if we ever cleaned up the nominal layer of the economy, those people would have negative claims on the real economy. And so we put them in jail, or worse.

But we would still have the same real productive capacity, and therefore the ability to support our current living standards, right? Is it logically possible to clear out the errors and restructure the nominal layer without damaging the real economy? Or am I conceptualizing this incorrectly?

I understand that practically speaking the parasites will not be detached from the host without clinging desperately enough to rip off some real flesh. But is my understanding of nominal vs. real also wrong?

Blogger OneWingedShark December 17, 2019 10:02 AM  

David Ray Milton wrote:Trump keeps mentioning the record highs of the stock exchanges. Great. That doesn’t seem to change the fact that Joe Zoomer is staring at an average home price of $199k. This is all pretty dire when compared to Joe Boomer’s average home price of $60k adjusted for inflation.
Honestly Trump's hounding on "economy" and "stock prices" comes off to me as… trying to mis-/re-direct attention. I didn't vote for him to "have the best economy ever", I voted for him (a) to at least "punch back", and he's done *really* well against the MSM here, not so much on the political field though; (b) "drain the swamp", which I'll admit I'm more than a little impatient on; and (c) "build the wall", or rather secure the border — I wouldn't give a crap if instead of a physical wall we had the army mowing down border-crossers with machinegun fire, because in the end a "wall" means nothing without the will and ability to enforce the border it denotes/symbolizes.

To me, this "best economy ever" speech sure sounds like he has no intention of enacting "drain the swamp" for the simple reason that draining the swamp means destroying the fraud that this "best economy" is built on. I mean consider JUST the impact of RICOing Google/Apple/Facebook/Amazon/Microsoft for their rampant H1B fraud… what would happen to the economy JUST from that? And consider Project Veritas's "Google Insider" reveal of an actual editorial process, and how simply acknowledging their status as a publisher and not a platform would impact the economy, albeit with second- and third-order effects.

John Regan wrote:The ultimate financial problem seems to be the monetary system.
There's a Constitutional Amendment that addresses this issue here.

MagisterLudi wrote:the penalty interest on a person’s credit card balance that results when a person falls behind his payments is counted as an increase in “financial services” and as an increase in Gross Domestic Product
"I may be drowning in debt, but at least I'm helping grow the economy" said noone ever

This. — All you need to do is talk to your average joe-on-the-street to see that the economy isn't that great. And if you want to believe that our economy is actually bad, just look at STEM job postings (especially in IT) and try to reconcile the "STEM shortage" with the massive 3/5/710+ years of experience entry-level job postings. (Imagine you're a recent grad as you look over the postings.)

Critias wrote:How on earth did any of this ever happen, how did we get here?
TL;DR — The same as "too big to fail", people love money and power over truth and justice.

Blogger Crew December 17, 2019 10:08 AM  

I am starting to think that the reason certain people are pushing so hard for gun control is that they know what is coming.

Blogger peacefulposter December 17, 2019 10:10 AM  

I was at at a set of talks at UBC

The University of a Billion Chinese?

Blogger James Dixon December 17, 2019 10:18 AM  

> My dad thinks the economy has never been better.

Well, it hasn't been better in 20 years. So to an extent, he's right.

> I thought at the time if I were an anarchist and wanted to destroy the economy, I would just pay my bills on time.

Or get a credit card with a cash back bonus, pay everything with it, and then pay it off every month.

> Honestly Trump's hounding on "economy" and "stock prices" comes off to me as… trying to mis-/re-direct attention.

Trump actually has brought jobs and wage increases back for working class Americans. It's nothing spectacular, but things are improving in rural America and the rust belt. Those are the people who put him in office, and they need to hear it on occasion.

Blogger jkmack December 17, 2019 10:20 AM  

Remember back in the old days when 200 or300 billion would run the country for a year? Now they are injecting 500 billion in one quarter to keep the repo rate from rising and locking up liquidity.

The real crime of it is that they may actually kick the can down the road far enough that the boomers all die off before the reckoning happens.

Blogger Shane Bradman December 17, 2019 10:20 AM  

We run into a paradox. If aggregate demand drives the economy, but aggregate demand cannot be calculated according to Steve Keen, what is driving the economy? We're not so stupid that we'll pull the Invisible Hand out of our asses and say "It just works". The core understanding of what drives the economy is fundamentally wrong.
Conventional economic wisdom is dead in Australia. Monetary policy is no longer effective and we've been getting poorer for at least 20 years. Wage growth below inflation is the new norm according to our Reserve Bank. I would put Steve Keen in charge of this economy in a nanosecond.

Blogger Dan in Georgia December 17, 2019 10:24 AM  

D E K—
A multi-part Voxivetsity may be necessary for that. Dense material there.

Blogger Dan in Georgia December 17, 2019 10:31 AM  

I’m just hoping the collapse happens after Nov 3 2020. Seems like TGE is setting the table for its aftermath. Maybe he can mitigate the chaos somewhat. Sound money and an end to usury would be a good result from the disruption.

Blogger Dan in Georgia December 17, 2019 10:38 AM  

TGE May be the first President in a century who actually understands what the economy really is. There’s no one else out there that I can see who, if they do understand it, also want to reform it.

Blogger Ominous Cowherd December 17, 2019 10:44 AM  

maniacprovost wrote:Whether any good purpose is served by counting the correct things is yet to be determined.
There is what we can measure and there is what matters. There isn't much overlap.
GDP is a grand example of calling it important because we can measure it. It's also a grand example of grabblers telling lies to conceal their grabbling.
GM wrote:But what I don't understand is whether a clean-up of the financial nonsense necessitates the collapse of the real economy.
When the financial system disintegrates, the real economy will remain. The farms, the factories, the trains and trucks, the mines and smelters, the oil wells and refineries will all still be there, and they will be as productive as ever.

When the financial system implodes, we will have to figure out a way to keep score, a way for the miner to get his diesel and parts from the refinery and the factory, a way for the factory to get its ore smelted and delivered, and so on. In other words, we will need a medium of exchange. It could be gold bars, or bricks of .22s, or whatever folks settle on as a common currency. The U.S. Treasury could issue Treasury Notes, spend them into existence to keep the goobermint going, and cause a fast recovery from whatever. That's not going to make grabs for the grabblers, so expect Principled Cuckservatives and Libertards to write essays on Why Treasury Notes Are Very, Very BAD.

Blogger Ominous Cowherd December 17, 2019 10:47 AM  

OneWingedShark wrote:To me, this "best economy ever" speech sure sounds like he has no intention of enacting "drain the swamp" for the simple reason that draining the swamp means destroying the fraud that this "best economy" is built on. I mean consider JUST the impact of RICOing Google/Apple/Facebook/Amazon/Microsoft for their rampant H1B fraud… what would happen to the economy JUST from that?
Definancializing the economy means the H1B invaders go home, it means that the parasites stop draining our blood and lowering our standard of living in favor of their own. It means great riches for us in the long term, but it also means short term pain for long term gain. Definancializing is a long term plan, not something you start four years before your next election.

Blogger tuberman December 17, 2019 10:59 AM  

25. James Dixon

You're correct. This economy is somewhat better overall, and a lot better for some common people in some areas. The stock market has to be kept up for now because 401Ks and such. It's about the 2020 election. The Economy is vastly better than if HRC was elected, not to mention a million other negatives that didn't happen.

When the USMCA is passed and the UK Brexit happens, followed by USA/UK trade deal things will improve another couple of notches. As a bonus the EU will be on the cliffs edge.

Blogger tuberman December 17, 2019 11:05 AM  

29. Dan in Georgia

If you follow and believe X22's Financial Reports, it will occur on the heals of 2020 election, and will be structured to do minimum harm. My guess about 6-12 months after the election major changes will happen. The Petro dollar will go away.

Blogger Ron Winkleheimer December 17, 2019 11:10 AM  

I did a quick search via bing, there seems to be quite a bit of commentary on the "economics of the post-imperial Star Wars universe."

We live in a very strange world.

Blogger urthshu December 17, 2019 11:33 AM  

"The equivalent of using a map of Middle Earth to navigate across the Midwest."

One does not simply walk into Chicago

Blogger Damelon Brinn December 17, 2019 11:35 AM  

I was reading an article the other day from around the year 2000, and it referenced the "Great Recession." I was confused for a second, and then remembered: Oh right, the media jumped on the Clintons' "worst economy in 50 years" narrative and convinced everyone there was a massive recession in 1991-2. I'm sure the economy wasn't great then, but it looks pretty good from here.

Blogger MJ December 17, 2019 11:38 AM  

I was hoping you would cover this article. It's good to see more and more people speaking out about the debt reliant, over financialized con game. "A debt based economy must have forgiveness or collapse." Time for a jubilee!

Blogger Tars Tarkas December 17, 2019 11:51 AM  

I saw a video on this topic about 10 years ago by a guy named Chris Martenson, who is one of those peak oil guys. At the time, home-owners rent and free savings/checking accounts accounted for over a trillion dollars (IIRC) of a then 10 trillion dollar economy.

It's about a 20 part series that covers a lot of the shenanigans in the numbers produced by the BLM.
The growth in oil production in America since that time is nothing short of amazing and a reversal of a 40 year trend. Whether it turns out to be a blip is yet to be seen. But it does demonstrate that extrapolating trends into the future when something changes has almost always led to failed predictions.
The youngest Boomers are 54 and the oldest are 74. Not sure what will happen as these Boomers try to sell off their assets as they age or die. Gen X is way smaller and Millennials are much poorer. I guess we'll see if these predictions are right or wrong.
I don't recommend the guy. He turned into a grifter. But I still think the crash course, which is what he called it, is worth a look.
https://www.youtube.com/watch?v=I0WuQ5-t3xM

Blogger OneWingedShark December 17, 2019 11:57 AM  

Ominous Cowherd wrote:Definancializing the economy means the H1B invaders go home, it means that the parasites stop draining our blood and lowering our standard of living in favor of their own. It means great riches for us in the long term, but it also means short term pain for long term gain. Definancializing is a long term plan, not something you start four years before your next election.
Ah, so given four-year election-cycles "never" is the right time to start "definancializing".
No, I'm tired of "because politics!" and "because economy!" as reasons for e.g. no prosecution for the Clintons, not letting the airlines/banks/auto-manufactures die out because of their bad decisions or bad luck, not prosecuting the "too big to fail" companies & banks for their crimes (see Wells Fargo's identity-theft ring as an example), or government agents.

No, instead I want people in power/authority who will Do Justly, love mercy, and walk humbly with God… I want leaders who are about Truth and Justice, not about lies and politics.

tuberman wrote:When the USMCA is passed and the UK Brexit happens, followed by USA/UK trade deal things will improve another couple of notches. As a bonus the EU will be on the cliffs edge.
USMCA seems like a bad deal. See here and it's true purpose is subversion of sovereignty. It's a "NAFTA+TPP" sort of "EU for the Americas".

Blogger Jose Miguel December 17, 2019 12:06 PM  

@9

Doug, how is an Iranian reveling in the economic destruction of a people whom have meddled and warred against his own people for 70 years a traitor? If he started looking out for the benefit of the Anglo-Saxon world while said world is still against his own people that would make him a traitor.

Blogger Nate December 17, 2019 12:12 PM  

owen vs nick.... kurgan vs jay... I cant begin to say how much I dont care about this bullshit internet soap opera. but obviously a lot of people do. my advice? ignore it all and keep on doing the work.

Blogger Crush Limbraw December 17, 2019 12:23 PM  

Charles Hugh Smith has been covering this for years - https://charleshughsmith.blogspot.com/2019/12/a-market-that-needs-1-trillion-in-panic.html?m=0 - this is from Sunday.
Anyone whose eyes are open can see it on a daily basis - us deplorables are being squeezed financially while we hear about the 'greatest economy ever'!
My only question is which happens first - DaDeepState pulls the plug on Wall Street trying to sink DaTrumpster or Trump drains DaSwamp via what's yet to come on the crime circuit.
Either way - DaStorm is coming - black pill, red pill - I frankly don't give a rat's which - wishin'n'hopin' never solved anything.
Prepare DaRemnant!

Blogger GM December 17, 2019 12:25 PM  

Ominous Cowherd wrote:The U.S. Treasury could issue Treasury Notes, spend them into existence to keep the goobermint going, and cause a fast recovery from whatever. That's not going to make grabs for the grabblers, so expect Principled Cuckservatives and Libertards to write essays on Why Treasury Notes Are Very, Very BAD.

Thanks. That makes sense. The financial flows that disappear when the dislocation between nominal and real gets rectified can be plugged to keep the real economy going. Ideally the civil authorities would have enough of a global grasp of the shadow left by the parasites that they plug the holes reasonably well. Intellectual capture by the parasites makes that unlikely.

Blogger NRx December 17, 2019 12:36 PM  

We've been living in a semi-depression ever since 9/11 but you are denying that there has been real economic improvement under Trump which there has been.

The worst thing economically is that real estate is still massively massively overpriced, Dubya the idiot should have let everyone involved with the real estate fiasco be wiped out so real estate prices could adjust to levels affordable to responsible people instead of bailing people out.

Blogger furor kek tonicus ( according to the 13th Amendment, Slavery is neither Cruel nor Unusual: MSAGA ) December 17, 2019 12:50 PM  

35. Ron Winkleheimer December 17, 2019 11:10 AM
We live in a very strange world.



the project to translate the Bible into Klingon has been going on for years.

can you imagine the look on the grabblers faces if we went back to the Constitutional function of the Treasury department ( bi-metal currency standard ) and funding the Federal government via Tariffs?

if you're going to have central bank, the Federal Bank should actually be, you know, owned by the Federal government, akin to the North Dakota state bank.

Blogger Rough Carrigan December 17, 2019 12:51 PM  

The Chapwood Index measures the cost of 500 commonly purchased items in the top 50 metropolitan areas around the U.S. I live in Massachusetts. The actual rate of inflation observed in metro Boston for the past 4 years?

10.7%, 11.5%, 11.1% and 9.9%. This is nowhere near the BLS and Fed pretend inflation rate of less than 2%.

And the rule of 72 says that if the number of years and % rate multiply to 72 you double the base item. So 7 years of just over 10% inflation means a doubling of price.

This is how you skin suckers without their even realizing it.

Blogger Rough Carrigan December 17, 2019 12:52 PM  

I meant to include the Chapwood Index address for others to use.

http://www.chapwoodindex.com/

Blogger Jack Amok December 17, 2019 1:02 PM  

With that said, what would a reasonable map consist of, if only to track gross trends?

It has to be something around median hours worked per household to pay for housing, food, taxes, health care and energy.

Median so the super-rich don't skew it. Per household to account for forcing wives into the workforce. Hours worked to take funny money out of the equation.

Not perfect, but better than GDP.

Blogger Stilicho December 17, 2019 1:03 PM  

@41 Jose is correct-that Persian isn't a traitor, he's an enemy.

Blogger PH December 17, 2019 1:03 PM  

A good explanation available for free on the internet is What Has Govt Done To Our Money by Rothbard.

Blogger TMLutas December 17, 2019 2:02 PM  

It's always wise to dig down to the original source. The linked author leads readers astray by taking a small positive in the original report, that more people would be able to handle a modest $400 unexpected expense responsibly than was reported for last year, and turns it into a negative by just reporting the number that can't do manage to do that task.

Here's the original relevant text, "If faced with an unexpected expense of $400,
61 percent of adults say they would cover it with cash, savings, or a credit card paid off at the next statement—a modest improvement from the prior year. "

Is there a pony in the pile of manure that is being shoveled at me by Michael Hudson and referred to approvingly by Paul Craig Roberts? I don't care to waste time sorting it out at the moment. The article's trash and if the underlying point is valid, that point should be supported by a reference that doesn't play this sort of trick.

Blogger Tars Tarkas December 17, 2019 2:03 PM  

Jose Miguel wrote:Doug, how is an Iranian reveling in the economic destruction of a people whom have meddled and warred against his own people for 70 years a traitor? If he started looking out for the benefit of the Anglo-Saxon world while said world is still against his own people that would make him a traitor.

It just demonstrates why he shouldn't be here in the first place. I love the Persian people. I have nothing but respect for them as long as they remain in Persia and not in our countries.
It is not Anglos making war on his people. It is almost entirely Jews doing this.

Blogger Azure Amaranthine December 17, 2019 2:16 PM  

"The reason that the US government can produce this false conclusion is that costs that are subtractions from GDP are not included in the measure. Instead, many costs are counted not as subtractions from growth but as additions to growth."

Said this years ago. GDP is intentional bullshit.

"For example, for homeowners the US Department of Commerce estimates the rental values of owner-occupied housing, that is, the amount owners would be paying if they rented instead of owned their homes, and counts this imputed rent as GDP."

WTF.

Blogger Rattlesnake_Kid December 17, 2019 2:23 PM  

peacefulposter wrote:Usury increases GDP? Interesting.

To learn how rules over you, see how the health of the economy is determined.

Thanks to the commentators, the comment section here on VP is actually a worthwhile read because of you.

Blogger furor kek tonicus ( according to the 13th Amendment, Slavery is neither Cruel nor Unusual: MSAGA ) December 17, 2019 2:34 PM  

1. peacefulposter December 17, 2019 8:12 AM
Usury increases GDP? Interesting.



of course.

as Vox has explained, economists teach that usury has no Net Negative effect on the economy due to each Debt on one balance sheet being a Credit on some other balance sheet.

because economists don't believe in Time or Entropy.

rather convenient for the Bankstas, isn't it?

Blogger Azure Amaranthine December 17, 2019 2:43 PM  

"Whether any good purpose is served by counting the correct things is yet to be determined."

Aggregate quality of life or average standard of living.

"But the biggest reason that GDP is a lie is the absurdly low GDP deflator, which for most of recent times has been half, or less, of the actual inflation in prices..."

Man you're generous. I'd say somewhere between a third and a quarter.

"But what I don't understand is whether a clean-up of the financial nonsense necessitates the collapse of the real economy."

It necessitates faith in the fake financial system going to zero. If at some point this process accelerates into a crash, then yes. Even if it's a gradual shift to barter, black market, and other media of exchange, the real economy is already suffering a lot today, let alone by the time it's over.

" So if we ever cleaned up the nominal layer of the economy, those people would have negative claims on the real economy. And so we put them in jail, or worse."

Turn them into bond laborers, slaves, until they work off their debt or die. Even straight execution would be better than putting them in prison which would raise their debt even higher unless we revive chain gangs and/or necessitate prison labor earn above cost of keeping them alive.

Last option, exile them. We don't care where they go but it can't be here. Walk the plank if they have no other options.

"But we would still have the same real productive capacity, and therefore the ability to support our current living standards, right?"

No, because the same thieves and vampires that have been at it all along will yank out all the stops, steal all the property, and drain every last drop of blood when it's time for them to flee for greener pastures. Expect them to ally immediately with whatever political entity can guarantee "their property" in exchange for a cut.

" It means great riches for us in the long term, but it also means short term pain for long term gain."

Yes. So goes ever the tale of defying the devil.

"Ah, so given four-year election-cycles "never" is the right time to start "definancializing".
No, I'm tired of "because politics!" and "because economy!""


All hail the Emperor.

"The Chapwood Index measures the cost of 500 commonly purchased items"

Much better, but likely still being offset by overly cheap foreign product?

"The article's trash and if the underlying point is valid, that point should be supported by a reference that doesn't play this sort of trick."

"Things got better but they still suck thiiiiis much" isn't a trick.

"It is not Anglos making war on his people. It is almost entirely Jews doing this."

This, but any Anglo roped into the war is just as culpable. You have to shoot through the human shields....

Blogger Dyspeptic December 17, 2019 2:55 PM  

"GDP is fictitious"

GDP has always been a fictitious measure of economic activity. It has never measured the totality of national income accounting because it only measures the value of final stage consumption. By definition it does not accurately measure business to business economic transactions and does a very poor job of imputing supply side economic activity.

Also it makes no distinction between government spending and private sector spending though they are qualitatively different. For a more accurate picture Gross Output figures need to be included. Of course GO stats can be manipulated too.

GDP is the single most important statistic in the Keynesian economic model. If it is that worthless what does that say about Keynesianism?

Blogger Rattlesnake_Kid December 17, 2019 3:38 PM  

Azure Amaranthine wrote:Last option, exile them. We don't care where they go but it can't be here. Walk the plank if they have no other options.

Exile sounds great to me, but it didn't seem to do a shred of good for Russia, who were also quite fond of exiling. Everyone they exiled just came back with a vengeance. Katorga, on the other hand . . .

Blogger cheddarman December 17, 2019 3:39 PM  

I call it Grifter Math

Blogger map December 17, 2019 3:54 PM  

Tars Tarkas wrote:It's about a 20 part series that covers a lot of the shenanigans in the numbers produced by the BLM.

The growth in oil production in America since that time is nothing short of amazing and a reversal of a 40 year trend. Whether it turns out to be a blip is yet to be seen.


The peak oil guys are wrong because they fail to understand two things: 1) all the oil ever drilled everywhere since oil was discovered could fill Lake Mead; 2) America is the only country where property rights confer mineral rights. Both of these elements are important to understand. We've barely scratched the surface of how much oil there really is because governments around the world control all of the mineral rights. Only in the United States did a property system emerge where the little guy found it profitable to drill and mine. This formed the basis of the wealth of the United States.

Blogger map December 17, 2019 4:08 PM  

GM wrote:Stagnating real living standards aside, right now we're making a bunch of stuff, and moving it around, and consuming it. On top of that layer of real productivity there is a system of ownership claims and financial contracts, and people are gaming that layer to skim off the real economy. So if we ever cleaned up the nominal layer of the economy, those people would have negative claims on the real economy. And so we put them in jail, or worse.

The problem with the economy is that we went off the gold standard. The result is that we have an unstable currency. With unstable currencies, even good business decisions get be undone quite easily, through conditions of inflation or deflation. The result of currency risk is underutilized capital as resources are shifted to "financialization" to hedge against that risk.

Three things happened when Nixon got us off the gold standard: 1) Gold was legalized for Americans to own; 2) Futures contracts were created for financial products. Before then, futures only existed for commodities; 3) Options were invented. Options are insurance products on sharp stock movements, which themselves are influenced by currency instability.

The result of bad public policy like fiat currency is an increase in risk that results in bad capitalism: capitalism where capital (productive assets) gets progressively underutilized.

This is where we are today. The irony is, good socialism beats bad capitalism every time. It is why the bad capitalism of the Wiemar Republic was replaced by the good socialism of Hitler's Germany. The Nazis solved the problem of underutilized capital.

Blogger map December 17, 2019 4:13 PM  

OneWingedShark wrote:To me, this "best economy ever" speech sure sounds like he has no intention of enacting "drain the swamp" for the simple reason that draining the swamp means destroying the fraud that this "best economy" is built on. I mean consider JUST the impact of RICOing Google/Apple/Facebook/Amazon/Microsoft for their rampant H1B fraud… w

The economy is a necessary condition for Trump to be successful, but not a sufficient one. Trump is a supply side economics thinker and his policies are built on supply side principles. The stock market is an extremely rational calculator of what is going on in the world so paying attention to it is necessary. He is also trying to re-orient the economy to production, but that is a time-consuming and wrenching change.

Blogger brbrophy December 17, 2019 4:15 PM  

Get rid of GDP. Start using potential population ratio

Blogger swiftfoxmark2 December 17, 2019 4:29 PM  

We're already in economic collapse. It's just in slow-mode right now. It may ramp up in the future, it may not. Because the numbers are fudged, we may never know how bad things are.

Of course the economy picked up following President Trump's election. He massively deregulated the government, which any simpleton would realize will reduce the costs of production across the board. But will he kill the banks?

I doubt it but if the Swamp is drained enough, he may no other choice.

Blogger Snidely Whiplash December 17, 2019 4:52 PM  

Azure Amaranthine wrote:and counts this imputed rent as GDP."

WTF.

They count it as paying yourself the rent, which is an economic transfer, and hence should be included, even if no money transfers.
Even better, taking a loan is counted twice. Borrowing to finance a car generates more value to the planners than paying up front. Even just borrowing money and not doing anything with it has a bigger impact on GDP than buying the car.

Blogger Raker_T December 17, 2019 5:04 PM  

"This, but any Anglo roped into the war is just as culpable. You have to shoot through the human shields."
You got style. With analogies, of course.
About this economic stuff, am I right in thinking that part of what's counted in the GDP is government salaries? So-o-o-o, a productive worker is taxed to pay for bureaucracy, but this isn't an actual loss, because government wages are actually paid for by the nation debt, which is a form of asset not liability?
It used to be just a shell game, now it's digital-virtual shell game. Some of them philosopher dudes used to argue whether anything really -is- because everything's always changing. We're in somebody's weird dream, that's all. We're gonna wake up soon. Maybe.

Blogger map December 17, 2019 5:35 PM  

NRx wrote:The worst thing economically is that real estate is still massively massively overpriced, Dubya the idiot should have let everyone involved with the real estate fiasco be wiped out so real estate prices could adjust to levels affordable to responsible people instead of bailing people out.

There was no problem with real estate. The fed just took it upon itself to crash the market.

Blogger map December 17, 2019 5:37 PM  

Rough Carrigan wrote:The Chapwood Index measures the cost of 500 commonly purchased items in the top 50 metropolitan areas around the U.S. I live in Massachusetts. The actual rate of inflation observed in metro Boston for the past 4 years?

10.7%, 11.5%, 11.1% and 9.9%. This is nowhere near the BLS and Fed pretend inflation rate of less than 2%.


You measure inflation with gold. If gold was $350/oz in 2008 and it was $2000/oz in 2013, then calculate the compound average growth rate of that will give you annualized inflation.

Blogger Snidely Whiplash December 17, 2019 5:49 PM  

NRx wrote:Dubya the idiot should have let everyone involved with the real estate fiasco be wiped out so real estate prices could adjust to levels affordable to responsible people instead of bailing people out.
That would have involved Boomers not being able to get reverse mortgages, so they could spend their grandchildren's inheritance on the sly. Nobody wants that.

map wrote:You measure inflation with gold.
Simple, but meaningless. That might have worked before gold became both a speculative investment and a lever for the manipulation of the economy.

Blogger map December 17, 2019 5:58 PM  

Snidely Whiplash wrote:map wrote:You measure inflation with gold.

Simple, but meaningless. That might have worked before gold became both a speculative investment and a lever for the manipulation of the economy.


Gold is a constant. It's value does not change. What changes is the value of the underlying currency, or, what changes is the demand for liquidity. Rising gold prices indicate either excessive money printing, a shrinking economy, or some combo of both. Falling gold prices indicate either a growing economy, tightening liquidity, or some combo of both.

Blogger map December 17, 2019 6:00 PM  

bodenlose Schweinerei wrote:Things are so freakin' awesome the Fed is adding $500 billion in the next 30 days to rescue the repo market, so BTFD, babies!

The Fed is not doing QE. The Basel III reserve requirements were changed from 7% to 10%, so the Fed is increasing liquidity to the banks so the new reserve requirements can be met. The market is not being propped up with this liquidity injection.

Blogger Azure Amaranthine December 17, 2019 6:19 PM  

"They count it as paying yourself the rent, which is an economic transfer, and hence should be included, even if no money transfers."

That makes no sense unless you assume that the individual in question is property of the state.

Blogger Azure Amaranthine December 17, 2019 6:22 PM  

"About this economic stuff, am I right in thinking that part of what's counted in the GDP is government salaries?"

Salaries, taxes, and expenditures are all "product". Let's get right down to brass tacks, debt is "product" in GDP. It makes sense once you realize all of our money is nothing more than leveraged debt, and the point of the whole system is to suck the blood out of the nation and into the mouths of the elite vampires.

Blogger Snidely Whiplash December 17, 2019 6:24 PM  

map wrote:Gold is a constant. It's value does not change
Gold is a constant. The market for gold is not. Gold prices is endlessly manipulated by both governments and financiers. The market is particularly vulnerable to manipulation by the gold houses.
This idea that gold is immune to price manipulation and speculative bubbles is one of the more popular delusions on the Right. It might make your view of economics much simpler, but it's fundamentally wrong and can seriously burn your ass if you bet too heavily on it.
It's not quite bitcoin, but it's the same syndrome.

Blogger Azure Amaranthine December 17, 2019 6:30 PM  

"Gold is a constant. It's value does not change."

Not true. Its value changes based on the amount of it in circulation over the period the people circulating it use to adjust their trading habits. If someone find a huge vein, opens a mine, and puts that into circulation, the value compared to other commodities goes down. If (((someone))) stockpiles an incredible amount of it for a long while, they might then be able to liquidate much of it before people can respond effectively to the change in its value, then when people start to overreact to the sudden flood and devalue it even more than it should be, they snap much or all of it back up.

Big money is all about jerking around the little rubes.

Blogger Azure Amaranthine December 17, 2019 6:31 PM  

"The market is not being propped up with this liquidity injection."

It is a liquidity injection. Therefore it is propping up. Whether or not it is the sole thing holding it above your arbitrarily chosen baseline is irrelevant. The end.

Blogger Statix December 17, 2019 6:43 PM  

Gold may be susceptible to manipulation, but 99% it will never drop to zero. Unlike some forms of currency...

Blogger tuberman December 17, 2019 6:44 PM  

75. Snidely Whiplash

Yep, the Gold Bugs go too far, but probably okay to put a small part of investments into gold.

Blogger Statix December 17, 2019 6:56 PM  

Mass immigration from India, China, & Mexico. Driving down both wages for low-skill labor and taking jobs away from tech workers.

Mass immigration leading to overpopulation & insane housing costs, meaning the average American will never own a home, or have a family.

Millions of foreigners coming in every year, an unending stream that cannot be stopped. Destroying any concept of democratic elections, and rendering this country unrecognizeable, and ultimately uninhabitable.

The whole system is absurd in its unsustainability. A total collapse of this house of cards is necessary for the American Nation to rebuild itself in its image.

Blogger Shane Bradman December 17, 2019 7:02 PM  

Good is also a useful component in computers are other current technologies. That affects the demand of gold. The futures market is where all the regards get tricked to put their money. Shiller wrote a book called Narrative Economics which tries to reconcile the reality that popular narratives influence economic functions. The belief in gold as a safe investment is an example of a narrative that is affecting the economic function of gold.

Blogger Up from the pond December 17, 2019 7:07 PM  

D E K wrote:A darkstream about fake economy and maybe Vox has some original thoughts about the zero interest rate policy and negative rates. Would appreciate such a darkstream.

There are only 27 hours in a Dark Lord's day.

Blogger Doug Cranmer December 17, 2019 7:09 PM  

Jose Miguel wrote:Doug, how is an Iranian reveling in the economic destruction of a people whom have meddled and warred against his own people for 70 years a traitor?

Go fuck your self.

You try getting a job here in Vancouver as a taxi driver when you're not Muslim. Try getting a job as a barber if you're not Iranian. Try getting a job in technology if your not Indian, or Chinese, or fucking a Arab from the same village the shit heads come from. Fuck, the Russians only hire other Russians.

You piece of shit. They hire each other and then you have to watch them steal from the company and you watch it go down wondering if the C levels know about it all and let it happen because they're in on the scam.

Go fuck yourself.

Blogger Snidely Whiplash December 17, 2019 7:10 PM  

Gold is just a commodity. It's a little different in that it has little industrial use, so the supply doesn't get consumed, merely transformed from bullion to jewelry to coins to bullion. But in the end it's just another commodity, and the market is just as crooked and unreal as any other commodity.

Blogger map December 17, 2019 7:10 PM  

Azure Amaranthine wrote:"Gold is a constant. It's value does not change."

Not true. Its value changes based on the amount of it in circulation over the period the people circulating it use to adjust their trading habits. If someone find a huge vein, opens a mine, and puts that into circulation, the value compared to other commodities goes down.


Not true. Gold is a sufficiently rare metal that you do not get huge inflationary spirals. This is not the same as the problem with silver and the Comstock Lode.

Key indicators for the economy:

1) A proper upward-sloping yield curve.
2) Oil-Gold ratio going down.
3) In general, gold that moves sideways and oil prices that go up.

Blogger map December 17, 2019 7:11 PM  

Azure Amaranthine wrote:"The market is not being propped up with this liquidity injection."

It is a liquidity injection. Therefore it is propping up. Whether or not it is the sole thing holding it above your arbitrarily chosen baseline is irrelevant. The end.


With any gold standard, liquidity injection will always happen if the dollar-price of gold drops below its fixed amount. That is how the federal reserve is supposed to work.

Blogger map December 17, 2019 7:12 PM  

Statix wrote:Gold may be susceptible to manipulation, but 99% it will never drop to zero. Unlike some forms of currency...

Gold is impossible to manipulate. You would notice it if the gold futures contract ever inverted. It never has.

Blogger Snidely Whiplash December 17, 2019 7:13 PM  

@Doug Cranmer
You have summed up my feelings on H1b imports and other legal immigration very succinctly. Thanks.

Blogger map December 17, 2019 7:18 PM  

Shane Bradman wrote:The futures market is where all the regards get tricked to put their money.

The futures market is merely a hedging instrument.

Shane Bradman wrote:Shiller wrote a book called Narrative Economics which tries to reconcile the reality that popular narratives influence economic functions.

The study of economics used to be called "political economy." The separation of this field into two distinct fields, "political science" and "economics", is why so many of them get things wrong. If you focus on the economics, but ignore politics, then you will make huge errors. If you ignore economics, and focus on politics, then you will also make huge errors. What Shiller calls "Narrative Economics" is simply the recognition that politics shapes the economic landscape...and vice versa.

Gold is a global indicator that incorporates both political and economic concerns. It is not a "hedge" or an "investment." It is money.

Blogger Snidely Whiplash December 17, 2019 7:38 PM  

map wrote:Gold is impossible to manipulate. You would notice it if the gold futures contract ever inverted. It never has.
Wow, you really are retarded, you know that?
I'll state it explicitly, the US government has been holding the price of gold down in order to prevent a run from dollars. They have been doing this since 2002.
The fact that your goldbug narrative contradicts both theory and observable reality makes it really remarkable that a person of even moderate intelligence could believe it.
Gold is not money. Gold is not special. Gold is a commodity metal, and the price is just as subject to manipulation as any other commodity.

Blogger Daniel December 17, 2019 8:20 PM  

I run the numbers you are off with your lake thing by a thousand

Blogger Daniel December 17, 2019 8:22 PM  

Nop. I took the latin "billion" in my math. You are actually right. I was wrong.
Dude, That's mind blowing

Blogger map December 17, 2019 8:28 PM  

Snidely Whiplash wrote:Wow, you really are retarded, you know that?

I'll state it explicitly, the US government has been holding the price of gold down in order to prevent a run from dollars. They have been doing this since 2002.


The only way it can do that is by continually selling off gold reserves...until it ends up with nothing...in which case, the government then loses the ability to hold down the price of gold.

The other solution would be to tighten up the money supply so excess liquidity does not go into gold. But if they do that, then the arrest the reason for the run on the dollar in the first place.

Blogger GP December 17, 2019 8:36 PM  

My question is who is responsible for allowing these foreigners into our country? How do we put a stop to it?

Blogger Shane Bradman December 17, 2019 9:07 PM  

Gold is very easy to manipulate because there exists a derivatives market. Gold as a product is harder to affect, but the futures market is easy as it gets for the financial elite. "Hedging" using derivatives is a lie. It may appear to work in the short term, but in the long term it is leading to financial ruin from illegitimate forms of trading. Derivatives should be banned in every civilised country because they are financial weapons.

Blogger sammibandit December 17, 2019 9:07 PM  

@Snidley

And all of them are perverts.

Blogger Jack Amok December 17, 2019 9:11 PM  

Gold is not money. Gold is not special. Gold is a commodity metal, and the price is just as subject to manipulation as any other commodity.

Five seconds looking at a chart of gold prices on APMEX.com ought to be enough to convince anyone with a brain that gold fluctuates wildly in value. It'll hold it's value better than a paper dollar in any sort of crisis, but it's not a way to measure the economy.

Blogger John Regan December 17, 2019 9:24 PM  

The point is that promises to pay must be redeemable in something. Circulating money generally consists of promises to pay. No one should be able to say "My promise to pay IS payment", not even the government, or the central bank. But that's the system we have now, the government/central bank has that power.

Gold is as good a monetary redemption vehicle as we know of. That's the value of it. It meets certain criteria that are required for a redemption medium: natural scarcity, portability, etc.

Gold's "value" in terms of a country's monetary unit of account can't fluctuate once it is fixed by law, except by changing the law. That doesn't mean its quantity might not fluctuate and purchasing power with respect to other products and services might go up or down for both gold and the monetary denomination wedded to it. That's not "manipulation", at least not in the usual sense.

This is a really big subject. A lot of metaphysics and epistemology involved.

Blogger Snidely Whiplash December 17, 2019 9:30 PM  

The only way it can do that is by continually selling off gold reserves...until it ends up with nothing...in which case, the government then loses the ability to hold down the price of gold.
Provided it has to actually ship the gold it sells.

Blogger Rough Carrigan December 17, 2019 10:53 PM  

I didn't think there was anyone who could be categorized as a goldbug who didn't also accept that the price of gold is ridiculously manipulated through the futures market.

Blogger Ominous Cowherd December 17, 2019 11:09 PM  

Jack Amok wrote:Five seconds looking at a chart of gold prices on APMEX.com ought to be enough to convince anyone with a brain that gold fluctuates wildly in value.
You are assuming the value of a dollar is constant. That's silly.

Blogger map December 18, 2019 12:08 AM  

Daniel wrote:Nop. I took the latin "billion" in my math. You are actually right. I was wrong.

Dude, That's mind blowing


I scoured far and wide to dispute that stat and I could not find it.

Blogger map December 18, 2019 12:15 AM  

Shane Bradman wrote:Gold is very easy to manipulate because there exists a derivatives market. Gold as a product is harder to affect, but the futures market is easy as it gets for the financial elite. "Hedging" using derivatives is a lie. It may appear to work in the short term, but in the long term it is leading to financial ruin from illegitimate forms of trading. Derivatives should be banned in every civilised country because they are financial weapons.

First, futures are not easy to manipulate. They are very volatile and extremely risky, because they are extremely leveraged securities. Central banks, for example, easily manipulate the credit markets, because yield curves kink or invert. The gold futures market, however, has never inverted. You have never seen a gold futures contract in the front month being priced higher than a back month contract. It's never happened.

Gold is a very good indicator of economic events.

Second, futures work well to hedge commodities. farmers use them. It's why soybean farmers are still in business even though they have had price declines since 2013.

Third, you need derivatives. Because we are not on a gold standard, there is no other way to guard against, especially, Federal Reserve risk. These are not financial weapons. They were created to manage the transition away from a gold standard. Go back to a gold standard, and these derivatives become unnecessary.

Blogger map December 18, 2019 12:16 AM  

Snidely Whiplash wrote:The only way it can do that is by continually selling off gold reserves...until it ends up with nothing...in which case, the government then loses the ability to hold down the price of gold.

Provided it has to actually ship the gold it sells.


Well, they have to ship it. There is a counter-party involved.

Blogger map December 18, 2019 12:17 AM  

Rough Carrigan wrote:I didn't think there was anyone who could be categorized as a goldbug who didn't also accept that the price of gold is ridiculously manipulated through the futures market.

it's not. Compared to the Treasury yield curve? No.

Blogger map December 18, 2019 12:18 AM  

Ominous Cowherd wrote:Jack Amok wrote:Five seconds looking at a chart of gold prices on APMEX.com ought to be enough to convince anyone with a brain that gold fluctuates wildly in value.

You are assuming the value of a dollar is constant. That's silly.


Gold is the constant. What is changing is the value of the underlying currency.

Blogger JamesB.BKK December 18, 2019 4:03 AM  

Mark Skousen disputes the premise that consumption drives economies and created a new measure - Gross Output or GO which measures production that is now published quarterly by the BEA. He has more to say otherwise and elsewhere about asset price levitation, credit hijinks, book cooking, and funny money. http://mskousen.com/category/gross-output/

Blogger JamesB.BKK December 18, 2019 4:21 AM  

Gold wildly skyrocketing vs. Ven. Bolivar. What does the brain-supplied person observe?https://www.goldbroker.com/charts/gold-price/ves

Blogger JamesB.BKK December 18, 2019 4:36 AM  

The repo market is a debt market. Increasing a bank's debt does not increase its capital reserves. The Fed is intervening because it does not like the rates quoted for this paper. Why not?

Blogger Ominous Cowherd December 18, 2019 8:16 AM  

map wrote:Gold is the constant. What is changing is the value of the underlying currency.
In the short term, everything fluctuates relative to everything else. Over centuries or millennia, gold is pretty much constant.

Thinking dollars are constant, probably because they are the unit of account? Really silly.

Blogger Azure Amaranthine December 18, 2019 9:39 AM  

"Not true. Gold is a sufficiently rare metal that you do not get huge inflationary spirals."

Naive. It's the other way around. The more rare something is the easier it is to create significant fluctuations in its flow.

"With any gold standard, liquidity injection will always happen if the dollar-price of gold drops below its fixed amount. That is how the federal reserve is supposed to work."

"Because it's doing what they say it's supposed to be doing it can't be doing what it's obviously doing that they say it's not doing."

"Well, they have to ship it. There is a counter-party involved."

Never heard of an I.O.U before? Never heard about foreign countries sailing fleets across the oceans to claim their reserves because they didn't trust the currency or were trying to short it? This type of thing is closer the the normal state of affairs than the abnormal.

Blogger Azure Amaranthine December 18, 2019 9:42 AM  

"Gold is the constant."

I'm sure Nebuchadnezzar thought the same thing, about his statue. Gold may generally be more constant as compared to a particular something else, but that does not mean that it is objectively constant. Gold is not any sort of constant.

Blogger Tars Tarkas December 18, 2019 10:25 AM  

map wrote:Tars Tarkas wrote:It's about a 20 part series that covers a lot of the shenanigans in the numbers produced by the BLM.

The growth in oil production in America since that time is nothing short of amazing and a reversal of a 40 year trend. Whether it turns out to be a blip is yet to be seen.


The peak oil guys are wrong because they fail to understand two things: 1) all the oil ever drilled everywhere since oil was discovered could fill Lake Mead; 2) America is the only country where property rights confer mineral rights. Both of these elements are important to understand. We've barely scratched the surface of how much oil there really is because governments around the world control all of the mineral rights. Only in the United States did a property system emerge where the little guy found it profitable to drill and mine.


They're not wrong, they're just early. It's also hard to know what is going to impose the limit. It might not be the ground, it might be economics.

Any two barrels of oil might not be equal. One might return a 100:1 (EROI) while another returns 5:1. Those are 2 different worlds. One thing they do get wrong is that a net-negative barrel of oil is just as useful to us as net positive barrel. Oil is more useful than coal for flying airplanes. The oil America is producing right now is much lower EROI than what was being produced in the 60s.

About 1/2 of the oil ever produced was produced in the last 20 years.

Blogger Jack Amok December 18, 2019 10:54 AM  

In the short term, everything fluctuates relative to everything else. Over centuries or millennia, gold is pretty much constant.

Thinking dollars are constant, probably because they are the unit of account? Really silly.


Dubmass, we aren't discussing investments, we're discussing measuring the economy. Short term, the dollar is far, far, far more constant than gold. Gold is useless for telling us if the economy has grown, shrunk, or gone sideways in the last twenty years.

Blogger TMLutas December 18, 2019 11:27 AM  

Re: the scarcity of commodity metals

We are entering into an age where extraterrestrial mining is starting to take practical steps out of science fiction and into business plans of legitimate companies. Look at what happened to Spain as its new world colonies came on line and devalued silver and gold because of the unusual amount of new supply coming into the market. If you don't recognize this as a medium term risk to any money backed by a metal, you're not being serious.

People used to laugh about the idea of reusable rockets, famously the Russian Space Agency is an example of unwise mockery about the future. Make your plans consistent with the innovation that is coming down the pipeline. I'd suggest that multiple currencies are in our future.

Blogger Ominous Cowherd December 18, 2019 11:58 AM  

OneWingedShark wrote:Ah, so given four-year election-cycles "never" is the right time to start "definancializing".
Yes, that's a problem all right. A leader would have to either do it after his last election, or after the last election.

Or a leader could take the grabblers' bribes and never start. That's what every leader has done since the '30s. This could be another glorious first for the Trump administration.

Blogger Ominous Cowherd December 18, 2019 12:02 PM  

Jack Amok wrote:Short term, the dollar is far, far, far more constant than gold.
I think you're confusing ``unit of account'' with ``stability''.

If you saw the price of dollars quoted in bushels of wheat, you would be saying that wheat is a constant.

Blogger Jack Amok December 18, 2019 12:26 PM  

Please MSM, give us pretty blonde Norwegian teenager, at least!

And just to make something perfectly clear since reading comprehension is poor on this topic - I don't even think the dollar is a useful tool for measuring the economy (I suggested hours of work), so trying to use gold to measure it is entirely useless.

Blogger Jack Amok December 18, 2019 1:51 PM  

I think you're confusing ``unit of account'' with ``stability''.

If you saw the price of dollars quoted in bushels of wheat, you would be saying that wheat is a constant.


You're skating pretty close to the "so you're saying" line. Stop, pull your head out of your ass, and read for comprehension before continuing.

The subject is indeed a unit of account, or even more accurately, a unit of measurement. The goal is to provide an answer to Stilicho's question "what would a reasonable map consist of, if only to track gross trends?"

That question was raised in the context of fake statistics the government has proffered about the economy since 2008/9.

So explain how gold can be used to evaluate the performance of the US economy in the last 10 years.

Blogger Azure Amaranthine December 18, 2019 4:52 PM  

"I don't even think the dollar is a useful tool for measuring the economy (I suggested hours of work)"

That's a really bad idea. You're trying to measure value, productivity, or at least average quality of life. Hours of work doesn't come close to equivocating any of those and is a strong perverse incentive to salaried jobs.

I'm not event talking about more educated jobs here. I'm talking about people who will reliably "work" for hours and accomplish little or nothing. This can be because of malice, incompetence, stupidity, or ignorance, it really doesn't matter.

Even precious metals are far from perfect, but they're a lot better than what we have now, and hours of labor is possibly worse than what we have now.

Blogger map December 18, 2019 6:43 PM  

JamesB.BKK wrote:Mark Skousen disputes the premise that consumption drives economies and created a new measure - Gross Output or GO which measures production that is now published quarterly by the BEA. He has more to say otherwise and elsewhere about asset price levitation, credit hijinks, book cooking, and funny money. http://mskousen.com/category/gross-output/

If you are a fan of Mark Skousen, then you should understand how gold and supply-side economics works and you should understand my position.

Blogger map December 18, 2019 6:48 PM  

JamesB.BKK wrote:Gold wildly skyrocketing vs. Ven. Bolivar. What does the brain-supplied person observe?https://www.goldbroker.com/charts/gold-price/ves

What you see in Venezuela is massive currency inflation by the Venezuelan government.

http://fx.sauder.ubc.ca/cgi/fxplot?b=XAU&c=VEF&rd=*&fd=1&fm=1&fy=2000&ld=31&lm=12&ly=2019&y=monthly&q=volume&f=svg&a=lin&m=0&x=

Blogger map December 18, 2019 6:52 PM  

JamesB.BKK wrote:The repo market is a debt market. Increasing a bank's debt does not increase its capital reserves. The Fed is intervening because it does not like the rates quoted for this paper. Why not?

Yes, the Fed is adding liquidity to the banks to help the banks meet the new reserve requirements. This means that the Fed swaps out interest-bearing bonds in reserve accounts and adds cash. But...because the cash is there to meet reserve requirements, it cannot be lent out...which means it is not providing liquidity to the overall market. This is why the gold price has not increases despite all of this "liquidity injecting."

Blogger map December 18, 2019 6:53 PM  

Azure Amaranthine wrote:Naive. It's the other way around. The more rare something is the easier it is to create significant fluctuations in its flow.

Its not just the flow. Its the flow of gold relative to the stock of gold. The flow of gold, it's production and distribution, his very little effect on the stock. This is why it is difficult to manipulate.

Blogger map December 18, 2019 6:55 PM  

Azure Amaranthine wrote:"Well, they have to ship it. There is a counter-party involved."

Never heard of an I.O.U before? Never heard about foreign countries sailing fleets across the oceans to claim their reserves because they didn't trust the currency or were trying to short it? This type of thing is closer the the normal state of affairs than the abnormal.


Yes...in 1965 France and Spain asked for all of there gold back and the Federal Reserve loaded French gold onto a French battleship. These actions were one of the reason Nixon got us off the gold standard.

A futures contract requires the delivery of a product as soon as the contract expires, unless it is closed out early.

Blogger map December 18, 2019 6:58 PM  

Azure Amaranthine wrote:"Gold is the constant."

I'm sure Nebuchadnezzar thought the same thing, about his statue. Gold may generally be more constant as compared to a particular something else, but that does not mean that it is objectively constant. Gold is not any sort of constant.


Look up Roy Jastram's, The Gold Constant. It is a long time-series data set on the stability of the gold standard of England going back several hundred years.

Blogger map December 18, 2019 7:02 PM  

Jack Amok wrote:Dubmass, we aren't discussing investments, we're discussing measuring the economy. Short term, the dollar is far, far, far more constant than gold. Gold is useless for telling us if the economy has grown, shrunk, or gone sideways in the last twenty years.

Gold is a measure of the demand for liquidity. Gold prices rising means people would rather hold gold than the underlying currency, either because there is too much money in circulation, a shrinking economy, or both. Gold prices falling means people would rather hold the underlying currency than gold, either because the economy is growing, there is too little money in circulation, or both.

When you have a stable gold price and, say, an increase in oil prices, this means that the oil price is increasing because of a demand for energy, not because of inflation. This means that the economy is doing well.

Blogger map December 18, 2019 7:09 PM  

I don't know what everyone is debating here. We had a gold standard in the united states from the inception of the Federal Reserve, through Bretton-Woods, until 1973. It worked remarkably well an was removed only because the USA was cheating on the Bretton Woods system to pay for the War on Poverty and the War in Vietnam.

Blogger Azure Amaranthine December 18, 2019 7:32 PM  

"But...because the cash is there to meet reserve requirements, it cannot be lent out...which means it is not providing liquidity to the overall market."

Have you no analysis ability at all? The entire point of raising reserve requirements is that no new loans can be made until the outlay is recouped. Producing more money is a way to cheat that retraction order and keep the cash flowing. It may be in reserve NOW, but do you think reserve requirements have never lowered before?

Once it's in the system it's in the system. It IS providing liquidity to the market in order to keep liquidity from decreasing as it naturally ought. This is the definition of "propped up".

"Its not just the flow. Its the flow of gold relative to the stock of gold. The flow of gold, it's production and distribution, his very little effect on the stock. This is why it is difficult to manipulate."

No, there's no necessary connection. The average five year old child can understand this easily. You have a large amount of acquired-stupid you need to unlearn.

Markets are based on what is understood to be occurring over a period of time. For instance, during wartime rubber might become extremely expensive or even be rationed, since the military needs it for their vehicle tires and treads, and perhaps the supply lines of it are cut as well.

With Gold, if it is being consumed in a way or at a rate that is difficult to retrieve or supply, the value of "free" gold in circulation decreases. This can also happen if someone saves and stockpiles it over a long period of time, keeping the mobile supply of it down and the price of it up.

Your argument is that there is a large amount of gold in the market, so changes in its production and consumption don't matter much. Your argument overlooks the potential for there to be large stockpiles of gold in various places over long periods of time. Your argument is irrelevant in that any fluctuation IS a fluctuation and is manipulable, no matter how large or small.

"A futures contract requires the delivery of a product as soon as the contract expires"

This is worse than pulling teeth. How long do you think those contracts can be for? You're trying to treat them as if they expire instantly. They don't. Shit happens. Some can't ever be filled after certain shit happens. The entire point of bringing up futures and IOUs and contracts is that the gold is not delivered at the point that any of those things has any significance.

Blogger Azure Amaranthine December 18, 2019 7:32 PM  

This comment has been removed by the author.

Blogger Azure Amaranthine December 18, 2019 7:57 PM  

"the value of "free" gold in circulation decreases"

My mistake: "increases"*

Blogger Azure Amaranthine December 18, 2019 8:06 PM  

"I don't know what everyone is debating here."

"You measure inflation with gold." ~You.

TL;DR: The desired information is how financial manipulations are affecting the quality of life acquired via trade of the average person of the chosen state or states.

Gold is manipulable and thus, while possibly a workable standard, not an objective standard. Q.E.D.

Blogger Jack Amok December 18, 2019 9:56 PM  

That's a really bad idea. You're trying to measure value, productivity, or at least average quality of life. Hours of work doesn't come close to equivocating any of those and is a strong perverse incentive to salaried jobs.

I hope you didn't think I meant more hours worked = better economy. It's the opposite. Also, it's hours worked for the median household. The magic there is, it doesn't matter if the work was productive or not, only that the median household felt compelled to do the work.

In a healthy economy, the average husband is going to be able to provide for his family on his salary alone, and his wife won't feel compelled to go out and seek work, meaningful or not. OTOH, if the economy is weak enough that his pay isn't enough, then she'll go out and work. Again, doesn't matter if either is doing useful work, the fact that they are working more hours implies a less-healthy economy.

"Health" is a holistic measure of both productivity and distribution - inefficiencies in either will drive up the working hours of the median household.

Blogger Jack Amok December 18, 2019 10:17 PM  

Gold is a measure of the demand for liquidity. Gold prices rising means people would rather hold gold than the underlying currency,

So which is it? Is gold a measure of liquidity demand, or a measure of confidence in the currency? If gold goes up, is it because faith in the currency has gone down, or desire for liquidity has gone up? By your formulation, you can't tell, ergo, gold isn't a measure of anything.

In reality, today, gold is just another investment option. If the price of gold is going up, it just means people think it's undervalued compared to stocks or real estate.

When you have a stable gold price and, say, an increase in oil prices, this means...

This means nothing, because you don't have a stable gold price. Gold fluctuates more wildly than the dollar, almost 3x the fluctuation of the USD vs EUR. Interestingly, since 2009, it's moved broadly in lockstep with the price of crude oil. And soy beans for that matter. Sugar too. Pork bellies are pretty close.

It's just another commodity.

Blogger Ominous Cowherd December 18, 2019 11:09 PM  

Jack Amok wrote:The subject is indeed a unit of account, or even more accurately, a unit of measurement. The goal is to provide an answer to Stilicho's question "what would a reasonable map consist of, if only to track gross trends?"

Agreed, the dollar is always worth a dollar, which is all you are saying. The numeraire good appears stable, because it is the unit of account. Make something else the numeraire good, and it will appear stable while the old numeraire appears to fluctuate. We saw that with gold and the dollar in the last century.

The answer to Stillicho's question is that there is no stable measure. If there was a solid way to handle this, economists would use it. There isn't. Hence, chain weighted indexes and so on.

Blogger Jack Amok December 19, 2019 12:20 AM  

The answer to Stillicho's question is that there is no stable measure.

Yes there is. The amount of time the average head of household needs to devote to keeping his family's material world together. No, it's not perfect, but it's as close as there is, and worthwhile. Hours worked for the everyman. It's a great measure of how productive society is times how equitable it distributes goods.

Blogger map December 19, 2019 1:28 AM  

Jack Amok wrote:Gold is a measure of the demand for liquidity. Gold prices rising means people would rather hold gold than the underlying currency,

So which is it? Is gold a measure of liquidity demand, or a measure of confidence in the currency? If gold goes up, is it because faith in the currency has gone down, or desire for liquidity has gone up? By your formulation, you can't tell, ergo, gold isn't a measure of anything.


It's both a measure of liquidity demand and a measure of confidence in both the currency and the economy overall. A key phrase Iforgot is...at the margin. A massive liquidity injection into the economy is not in an of itself useless. The money is circulated and is put to use. There comes a point, however, where, at the margin, the liquidity becomes excessive, so the dollar price of gold starts to creep higher as this excessive liquidity migrates out of the economy and into gold...effectively to protect whatever currency is had. Yes, a point of excessive liquidity can trigger a crisis of confidence in the currency, such as during a hyperinflation. Then, the price of gold goes parabolic.

Jack Amok wrote:In reality, today, gold is just another investment option. If the price of gold is going up, it just means people think it's undervalued compared to stocks or real estate.

I would never treat gold as an investment. Gold is an indicator of geo-political events, things that are very hard to predict (can you predict what Trump will tweet?). I would never attempt to use it as a hedge, but I would use it to monitor the markets health.

Jack Amok wrote:This means nothing, because you don't have a stable gold price. Gold fluctuates more wildly than the dollar, almost 3x the fluctuation of the USD vs EUR. Interestingly, since 2009, it's moved broadly in lockstep with the price of crude oil. And soy beans for that matter. Sugar too. Pork bellies are pretty close.

What I mean is, observing the price of gold moving sideways. The more it moves sideways and the narrower the range, the better.

Commodities actually follow gold. Remember, gold is a leading measure of inflation and commodities are very sensitive to inflation. When the dollar price of gold falls, inflation is going down and commodity prices will go down with it.

Blogger JamesB.BKK December 19, 2019 1:37 AM  

The time-price measure is hours worked by the avg person to acquire a given avg good - over time. More is bad - costs increasing. Fewer is good. George Gilder and Bill Bonner had an interesting recent written debate concerning it turned out F-150s, though it was discovered in a curious turn during the exchanges that one - the 1970 version - was purely hypothetical and in fact an F-100.

Gold in physical readily discernible form is decent insurance against collapse but in much bulk expensive to store and insure and in case of collapse vulnerable to theft by bandits or loss by stash forgetfulness.

Blogger map December 19, 2019 2:05 AM  

Azure Amaranthine wrote:Once it's in the system it's in the system. It IS providing liquidity to the market in order to keep liquidity from decreasing as it naturally ought. This is the definition of "propped up".

Then this would be a condition of excessive liquidity that, at the margin, would lead to an increase in the gold price once that excess is reached.

Look, you're not getting how the Fed works. The Fed controls only one interest rate directly: The federal funds rate, which is the interest on overnight money needed to meet reserve requirements. When the Fed wants to target the rate at, say, 1.75%, it announces that it will provide all the liquidity any bank will want at this rate to meet its overnight reserve requirements. Banks with too little reserves can either borrow from the Fed, or, they can come to some accommodation with banks that have excessive reserves to lend at a rate lower than the Fed. If the result of the trading leads to an effective rate of, say, 1.6%, the fed has the option of either leaving it there, or, removing the excess liquidity in the system by taking cash out of the market and replacing it with bonds. The next day reserve process will yield another effective rate that can then be compared to the target rate.

This is how the Fed controls the Federal funds rate and how it maintains the reserve system. The reserve requirement was 7%, but was raised to 10%, which means there will be a severe drop in the number of banks that have excessive reserves. So, the Fed has to step in to provide those reserves, because there simply is not enough cash circulating in the system to meet those reserve requirements. The reason is obvious: banks do not want to hold cash. Cash does not earn interest. Moreover, because of the irrationality of holding excessive reserves, the Fed assumes that you are laundering money and it triggers an audit of the bank. Likewise, too little reserves means that you have bad loans, which also triggers an audit. The mad scramble to meet overnight reserve requirements happens because the member banks want to avoid audits.

The amount of liquidity that is added to the economy is small when manipulating the federal funds rate. The QE program in 2008 was a massive buyout of bank mortgages because the Fed caused the mortgage market to crash. So they did the same process of adding liquidity by removing bonds and adding cash for mortgages that they do for the federal funds rate, when simply lowering the rate did not work. They put mortgages on their books instead of treasuries to initiate this liquidity injection.

Blogger Ominous Cowherd December 19, 2019 12:04 PM  

Jack Amok wrote:The amount of time the average head of household needs to devote to keeping his family's material world together. No, it's not perfect, but it's as close as there is, and worthwhile. Hours worked for the everyman. It's a great measure of how productive society is times how equitable it distributes goods.
That's the only measure that lets us compare the ancient world to the present. I agree its the best we can do.

Blogger Azure Amaranthine December 19, 2019 3:47 PM  

" It's the opposite. Also, it's hours worked for the median household."

Yeah, that's a lot better, have to think about it longer though.

"Look, you're not getting how the Fed works."

You're looking at the mechanics of it and managing to completely miss WHY it works the way it works. Like a person who thinks that whatever is legal is good and illegal bad, you have no grasp of the relationship between objective truth and the subjective standard of the current human system.

"the fed has the option of either leaving it there, or, removing the excess liquidity in the system by taking cash out of the market and replacing it with bonds."

It isn't being removed, it's transforming. It's still in the system, just in a different form.

"The reserve requirement was 7%, but was raised to 10%, which means there will be a severe drop in the number of banks that have excessive reserves. So, the Fed has to step in to provide those reserves, because there simply is not enough cash circulating in the system to meet those reserve requirements."

This is obviously bullshit. "There's not enough cash in the system to meet those reserve requirements"? Who do you think you're kidding? What's really being said is that the lenders cannot instantly recall enough money to meet those reserves. Instead of going on austerity until parity is met, or going to jail for fraud as would be the reasonable and responsible result for any normal person, they're just given a free jack-up so that everything flows smoothly, because people in general start to smell the con when things stop flowing smoothly.

"The reason is obvious: banks do not want to hold cash. Cash does not earn interest. Moreover, because of the irrationality of holding excessive reserves, the Fed assumes that you are laundering money and it triggers an audit of the bank."

This tells me that you DO get it, at least through a glass darkly. What you're seeing is the ability of finance to easily move money and make loans. This is not the entirety of the economy and is, in a healthy system, ultimately the sole responsibility of the individual lender.

Look, as you yourself are pointing out, the lender is massively incentivized to loan to the limit of his current ability, period. There is no real, cohesive consideration for if the loan can ultimately be recouped, because the point of this part of the system isn't to be responsible human beings, it's to grabble as hard as possible in order to feed the rest of the insider system.

If the grabbling is too vigorous for the actual people being grabbled to sustain, things start to default and the lender needs to be bailed out, which actually happens for the big fish in the scheme. If the lender is supposed to be reigned in, to appear more responsible for the time being, the results of responsibility are faked at any cost, beg borrow or steal.

"The mad scramble to meet overnight reserve requirements happens because the member banks want to avoid audits."

Wants to avoid punishment by the higher system for doing what the higher system forces it to do.

"The amount of liquidity that is added to the economy is small when manipulating the federal funds rate."

It's a lever. A little bit goes a long way when it's on the backend of one or more force multiplication mechanisms. Say the required reserve is 5%. If 1$ of liquidity is produced to meet the required reserve, 20$ of grabble-net loan-liquidity stay in the market sucking up lucre.

"The QE program in 2008 was a massive buyout of bank mortgages because the Fed caused the mortgage market to crash."

Was a leniency granted by the "Reserve" to its thralls at the cost of the common man. Publicize/privatize. Can't work the slaves too hard or they'll start to drop. Slavemasters, grab a passing freeman and make him work to support the theft of his life.

Blogger Azure Amaranthine December 19, 2019 4:00 PM  

It's a giant vacuum. The nozzle has to hold its shape, so if the forces applied are too great for it, the suction is lowered so that the nozzle can retain its functionality in service to the rest of the system.

In this case, the suction is lowered by supplying pressure from outside of the apparent system through a conditional port behind the nozzle. The machine doesn't ever turn down the suction if it can help it, because then people see that degree of freedom and start to wonder if it can't be turned down even more, "Mr. Machine, why do you have to suck so hard?"

Because it wants to.

The point of fabricating more currency to meet reserves is to avoid retracting the grabble-net of loans. Sanity would require that no more loans be made until the reserve has been recouped via the repayment of loans, or that the future reserve requirement be broadcast well in advance so that it can be met, rather than the system instantly punishing for what the system required be done a moment before.

Like the legalist, you look at the mechanics of the system itself, and completely fail to grasp its relationship to everything else, and why it's doing what it's doing, and whether it ought to be.

Blogger map December 19, 2019 5:22 PM  

Azure Amaranthine wrote:"Look, you're not getting how the Fed works."

You're looking at the mechanics of it and managing to completely miss WHY it works the way it works. Like a person who thinks that whatever is legal is good and illegal bad, you have no grasp of the relationship between objective truth and the subjective standard of the current human system.


The purpose of the Fed was to maintain the gold standard. When the gold standard disappeared, the Fed had nothing to do. So, it tried different things. It tried Friedman's monetarism and blew up the economy and Carter's presidency. It tried exchange rate management, and had that blown up by Alan Greenspan. Finally, it settled on controlling the fed funds rate and, indirectly, the prime rate. It's been a mess ever since.

What I am not against is the Fed using its open market activities to maintain the gold standard...like it did from its inception.

Blogger map December 19, 2019 5:23 PM  

Azure Amaranthine wrote:It isn't being removed, it's transforming. It's still in the system, just in a different form.

Yes, it is the form of an unlended cash position.

Azure Amaranthine wrote:This is obviously bullshit. "There's not enough cash in the system to meet those reserve requirements"? Who do you think you're kidding? What's really being said is that the lenders cannot instantly recall enough money to meet those reserves. Instead of going on austerity until parity is met, or going to jail for fraud as would be the reasonable and responsible result for any normal person, they're just given a free jack-up so that everything flows smoothly, because people in general start to smell the con when things stop flowing smoothly.

So let me see if I understand you...you want the Fed to engineer a regulatory condition that no one can meet...unless loans are called earlier and people are driven into bankruptcy? Are you insane?

Blogger map December 19, 2019 5:23 PM  

Azure Amaranthine wrote:This tells me that you DO get it, at least through a glass darkly. What you're seeing is the ability of finance to easily move money and make loans. This is not the entirety of the economy and is, in a healthy system, ultimately the sole responsibility of the individual lender.

No, the idea is to provide the liquidity demanded by the economy while avoiding inflationary and deflationary errors. A gold standard allowed that. The current system does not. The open market activities of the Fed used to maintain the gold standard and it worked. Liquidity was provided while avoiding deflationary and inflationary errors.

Azure Amaranthine wrote:There is no real, cohesive consideration for if the loan can ultimately be recouped, because the point of this part of the system isn't to be responsible human beings, it's to grabble as hard as possible in order to feed the rest of the insider system.

Of course there are considerations when lending. You really need to stop being an austerity junkie.

Azure Amaranthine wrote:Was a leniency granted by the "Reserve" to its thralls at the cost of the common man. Publicize/privatize. Can't work the slaves too hard or they'll start to drop. Slavemasters, grab a passing freeman and make him work to support the theft of his life.

The Federal Reserve is stuffed with Keynesians. These guys follow the Philips Curve, which shows an inverse relationship between inflation and unemployment. As unemployment goes down, inflation goes up. To fight inflation, you create unemployment. In fact, every measure by which the average person gauges progress...higher wages, higher housing prices, having a job, getting a raise...is deemed inflationary by the Fed and needs to be cured with unemployment. So, the Fed raised the Federal funds rate from 1% to 5.25%, which raised the prime rate to 8.25%, which raised the ARM to above 11%. This caused the housing market to crash.

The Fed did the same thing to the NASDAQ in the early oughts.

Blogger map December 19, 2019 5:24 PM  

Azure Amaranthine wrote:The point of fabricating more currency to meet reserves is to avoid retracting the grabble-net of loans. Sanity would require that no more loans be made until the reserve has been recouped via the repayment of loans, or that the future reserve requirement be broadcast well in advance so that it can be met, rather than the system instantly punishing for what the system required be done a moment before.

Like the legalist, you look at the mechanics of the system itself, and completely fail to grasp its relationship to everything else, and why it's doing what it's doing, and whether it ought to be.


The problem is that you are an austerity junkie. This is a very deep flaw across political parties.

Blogger Azure Amaranthine December 19, 2019 6:09 PM  

"The purpose of the Fed was to maintain the gold standard."

You're already wrong. I wouldn't be surprised if that's what the fedres itself would tell you, but it's never been true.

"So let me see if I understand you...you want the Fed to engineer a regulatory condition that no one can meet...unless loans are called earlier and people are driven into bankruptcy? Are you insane?"

No, I expect the fedres and lenders to behave like normal responsible human beings. Since you're caught up in the sophistication, I'll break it down.

#1: Reserve requirements shouldn't exist. If a lender cannot fulfill all of its contracts, it should be punished like any normal person would.

#2: Lenders should not be incentivized to loan to the limits of their reserve by the threat of audits. They should not be required to support other lenders who default, nor contribute to distributed insurances for that case, as they are now required. These make responsible behavior impossible, and is intentionally so because responsible behavior limits suction potential.

#2a: Even if we permit reserve requirements, which allow lending of more "money" than is actually held by the lender, the requirements should not change.

#2a1: If the requirements change the system should be set up so that lenders are not immediately punished for failing to meet higher requirements. They should simply be required not to lend any more until they meet the new requirements. You know, like sane, normal people who aren't trying to entrap someone?

There are four fucking levels of failure here. This is not hard.

"No, the idea is to provide the liquidity demanded by the economy while avoiding inflationary and deflationary errors."

We're talking about the current system, for which the fedres was ALWAYS intended. It was passed under other pretenses, but if you look at the proposers and their histories, the story is very clear.

"Of course there are considerations when lending. You really need to stop being an austerity junkie."

Sez you who is unable to even try to look at the bigger picture. "Real, cohesive consideration". You said yourself that they are audited if they don't lend to the limit. So, which is it, jackass?

"This caused the housing market to crash."

And the thralls cum participants to be bailed out.

"The problem is that you are an austerity junkie."

The problem is that you are invested in the current fucked up way of doing things. Not being able to behave with reckless abandon is austerity? You are a part of the cancer killing our economics.

Blogger Jack Amok December 20, 2019 1:50 AM  

A goldbug is calling someone else an austerity junkie. It is the crazy years.

Blogger JamesB.BKK December 20, 2019 2:38 AM  

There are four fucking levels of failure here.

More like two levels with a couple of sub levels.

Blogger JamesB.BKK December 20, 2019 2:41 AM  

Part of what's wrong is calling debt and currency units "money." They are claims against money. A little theft occurs each time either is conjured out of thin air.

Blogger map December 21, 2019 12:19 AM  

Azure Amaranthine wrote:"Of course there are considerations when lending. You really need to stop being an austerity junkie."

Sez you who is unable to even try to look at the bigger picture. "Real, cohesive consideration". You said yourself that they are audited if they don't lend to the limit. So, which is it, jackass?


The lender does not just have to keep lending to anyone out there. It can lend to the member banks within the system at or below the federal fund rate. For example, if I have a 10% reserve, and I need to meet the 7% requirement, then I can lend to other banks with a reserve of less than 7%. Remember, if the FFR is currently 1.75%, that's not an annual rate. That is overnight rate. If I lend $1,000 to another member bank, then they owe me $1,017.50 the next day. So, I don;t have to seek whatever loans out there just to meet my reserve. I can, at the margin, get this exorbitant rate, for a small percentage of my funds. Likewise, if I want to not pay that rate, then I make sure that I can receive good quality loans to mee my reserves so I don;t have to borrow at this rate. This part of the system functions without a problem. This is, basically, the open market activities that the Fed used to apply to the gold standard.

The problem is that we do not have the Bretton Woods system anymore so the Fed, basically, has nothing to do. It is gloming on to various other indicators and various other economic theories that do not work and that cause enormous damage.

Back in 2008, banks did not suddenly forget how to write mortgages. Insurance companies did not suddenly forget how to write insurance contracts. CDS's were not some unregulated product. They were being cleared by the Federal Reserve. In fact, they were stacking up on Timothy Geithner's desk waiting for approval. The Fed simply took it upon itself to crash the entire economy, because they followed a false Keynsians ideology. They did the same thing with the Nasdaq and thought the housing market would have the same mild result.

Well, it didn't.

Azure Amaranthine wrote:"This caused the housing market to crash."

And the thralls cum participants to be bailed out.


If the Fed causes the problem, then it should fix. Yes, the Fed should not be buying mortgages. It should also not be crashing the economy. Yet, here we are.

Azure Amaranthine wrote:#1: Reserve requirements shouldn't exist. If a lender cannot fulfill all of its contracts, it should be punished like any normal person would.

#2: Lenders should not be incentivized to loan to the limits of their reserve by the threat of audits. They should not be required to support other lenders who default, nor contribute to distributed insurances for that case, as they are now required. These make responsible behavior impossible, and is intentionally so because responsible behavior limits suction potential.


Then you do not kknow the history of the reserve system and why it came to be. in short: 1) The Comstock Lode; 2) The removal of the bi-metallic standard to a full gold standard; 3) a massive deflationary crisis; 4) Economic instability for 26 years; 5) The famous 1896 election with William Jennings Bryan; 6) a re-issuing of silver coins.

Blogger JamesB.BKK December 21, 2019 3:57 AM  

Bretton Woods was made in 44. The Fed was made decades earlier. What's the connection?

Blogger Azure Amaranthine December 21, 2019 4:53 PM  

"The lender does not just have to keep lending to anyone out there."

The fact that it HAS to lend to someone necessarily drives its standards down unless its standards were already lower.

"This part of the system functions without a problem."

Right up until you follow who profits and who's screwed. It's completely irrelevant that they can choose who they want to lend to or borrow from, the problem is that the system is set up so they HAVE to lend or borrow in the first place.

You are now describing, rather than the vacuum nozzle, how the vacuum hose is kept clear of obstructions.

"Back in 2008, banks did not suddenly forget how to write mortgages. Insurance companies did not suddenly forget how to write insurance contracts. CDS's were not some unregulated product. They were being cleared by the Federal Reserve."

Never said they did. It was forced gradually over time, then the fedres decided it was time to fluctuate the system in order to capture more of it. Entrapment. Stick your neck out a little further this year. A little further this decade, you're safe, but we insist. Aha, chopping time.

"because they followed a false Keynsians ideology."

No, they projected it as an excuse and obfuscation. The result was as intended.

"If the Fed causes the problem, then it should fix."

The fedres didn't fix. It was in a position to force others to pay for its intentional actions, and did so. That "fix" didn't come out of the fedres' hide, it came out of the pocket of everyone holding a dollar via inflation, and/or specifically persons operating in USA jurisdiction via taxation.

"Then you do not kknow the history of the reserve system and why it came to be."

Couldn't be more wrong. I expect more of the same "this is just how it works" reasoning, in keeping with the rest of what you've shown, and ignorance of that it has been desired to work that way all along. What has happened is just the stratification of fulfilling the desire, the revealed ritual needful to fulfilling the chosen worship.

I don't know why, I don't know how, but you're invested with this system to some extent. The result is clear in your affected reasoning.

Blogger John Regan December 22, 2019 9:03 AM  

I'm following the discussion here. One problem is a misunderstanding of what the gold standard is. It's defining the monetary unit of account (the dollar) in gold terms by law. Once that's done the dollar gold price does not fluctuate, although other things do. At least not unless the law is changed, as when FDR decreed that the dollar gold price of $35 per ounce would thereafter be $42 per ounce.

It's really about redeemability. The dollar must be redeemable in something, otherwise you have effectively conferred the money conjuring power on the government through the central bank and the "banking system".

In broader terms it's about the government having to observe natural law in financial matters, or put another way not being a law unto itself, which of course ultimately will not be confined strictly to financial matters.

Blogger JamesB.BKK December 22, 2019 6:43 PM  

Fixing the gold price in dollar terms was an artifice, which enabled the theft /devaluation//default under Roosevelt mentioned and those subsequent. The US "dollar" was a quantity based on purity, changed later for all the best needs and exigencies, and shared values, up to the creaking construct of today. Talk about your unredeemables. Quote:

SEC. 9. And be it further enacted, That there shall be from time to time struck and coined at the said mint, coins of gold, silver, and copper, of the following denomination, values and descriptions, viz. Eagles—each to be of the value of ten dollars or units, and to contain two hundred and forty-seven grains and four eighths of a grain of pure, or two hundred and seventy grains of standard gold. Half Eagles—each to be of the value of five dollars, and to contain one hundred and twenty-three grains and six eighths of a grain of pure, or one hundred and thirty-five grains of standard gold. Quarter Eagles—each to be of the value of two dollars and a half dollar, and to contain sixty-one grains and seven eighths of a grain of pure, or sixty-seven grains and four eighths of a grain of standard gold. Dollars or Units—each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenths parts of a grain of pure, or four hundred and sixteen grains of standard silver. Half Dollars—each to be of half the value of the dollar or unit, and to contain one hundred and eighty-five grains and ten sixteenth parts of a grain of pure, or two hundred and eight grains of standard silver. Quarter Dollars—each to be of one fourth the value of the dollar or unit, and to contain ninety-two grains and thirteen sixteenth parts of a grain of pure, or one hundred and four grains of standard silver. Dismes—each to be of the value of one tenth of a dollar or unit, and to contain thirty-seven grains and two sixteenth parts of a grain of pure, or forty-one grains and three fifths parts of a grain of standard silver. Half Dismes—each to be of the value of one twentieth of a dollar, and to contain eighteen grains and nine sixteenths parts of a grain of pure, or twenty grains and four fifths parts of a grain of standard silver. Cents—each to be of the value of one hundredth part of a dollar, and to contain eleven penny-weights of copper. Half Cents—each to be of the value of half a cent, and to contain five penny-weights and a half a penny-weight of copper.

Blogger Azure Amaranthine December 22, 2019 7:05 PM  

We're aware, John. However it's not as simple as legal definition. It has to be redeemable first, which can't realistically happen while we still use the dollar unless someone were to magically show up with the massive resources to back it.

Even if that were to happen, it would still be manipulable, just not in the same ways to the same extents. This is as basic as the ability for people to come into physical contact with gold and alter its location or ownership, consume or mine and refine it.

Blogger map December 23, 2019 5:14 AM  

JamesB.BKK wrote:Bretton Woods was made in 44. The Fed was made decades earlier. What's the connection?

The Fed set the gold price at $20.67/oz from its inception until 1933, when the gold price was set at $35/oz. The Bretton Woods system was when the Fed would fix the dollar price of gold to $35/oz and the rest of the world would fix their currencies to the dollar.

The Bretton Woods arrangement was simply a pass through structure for the US Fed.

Blogger John Regan December 23, 2019 10:10 AM  

@156:

Actually - and I know this seems absurd but it's the truth - no massive resources are required. The government simply takes the gold the system has and calculates how much is required to back all the dollars out there. Conveniently, both the quantity of gold and the number of dollars outstanding are known to a high degree of certainty at all times. I suppose the problem is that this will probably translate into tens of thousands of dollars per ounce.

I tried to think a lot of this through some years back when I drafted what I then called a jubilee amendment.

It's not an easy subject.

Blogger Azure Amaranthine December 23, 2019 3:07 PM  

"The government simply takes the gold the system has and calculates how much is required to back all the dollars out there."

The system doesn't have any gold at all, not an ounce, there's the kicker. What gold? You're assuming that there is gold already held by the USA gov't that somehow... belongs to no one? There isn't. What you're calling "gold the system has" doesn't exist unless it is stolen from someone.

Bad money drives out good in much the same way cheap products drive out quality ones. There's no redeeming the monetary system we have, because it's completely baseless already. The soul's long gone, nothing to redeem. No, the way out of this is that the dollar becomes permanently worth more as paper, and people use other currencies or mediums of trade.

Blogger map December 23, 2019 5:39 PM  

John Regan wrote:The government simply takes the gold the system has and calculates how much is required to back all the dollars out there. Conveniently, both the quantity of gold and the number of dollars outstanding are known to a high degree of certainty at all times.

You do not need huge amounts of gold on hand to create a gold standard.

Azure Amaranthine wrote:The system doesn't have any gold at all, not an ounce, there's the kicker. What gold? You're assuming that there is gold already held by the USA gov't that somehow... belongs to no one? There isn't. What you're calling "gold the system has" doesn't exist unless it is stolen from someone.

Again, you do not need need a lot of gold on hand to have a gold standard, although it helps.

The president could declare a gold standard tomorrow, if he wanted to.

Right now, you would set the gold standard to the price of about the 30 year moving average. If the current gold price is about the 30YMA, then you cut taxes and regulations to spur the economy, which would start lowering the gold price, until you hit the right level. Then, you declare the gold standard at the new price. You also have the added benefit of a higher economic growth rate.

Blogger Azure Amaranthine December 23, 2019 10:36 PM  

"Again, you do not need need a lot of gold on hand to have a gold standard,"

There is literally no gold "in the system". This is not hard. The system is debt supported by faith and well wishes. Every last particle of the gold that exists is in entirely unrelated systems, and no, they can't just be merged.

You can have a gold standard without a lot of gold, but you can't translate the amount of faith tied up in our monetary system into any amount of gold less than extremely large amount. All that would happen is the instant collapse of the dollar unto abandonment. Abandonment of the dollar is what has to happen anyway.

" I suppose the problem is that this will probably translate into tens of thousands of dollars per ounce."

Try infinite dollars per ounce.

You guys are engaged in sunken cost fallacy among other things. The dollar must die. Let it die, don't shovel more resources and people into the grave to accompany it.

Let's be clear, "redeemable for X gold" or silver, or whatever is already a step away from any sort of metal standard. That's a certificate system. These things don't just walk backward. Walking them back is about as possible as you rewinding your age by a few decades.

Creating a certificate system has effectively nothing to do with ease of transport of money. It's a movement of faith from physical material into faith in whatever institution is backing those certificates. We fallen humans are not ultimately faithful. Our creations wither and die as inevitably as we do. Whatever institution is supporting will wither, and debase, deceive, be adulterated and die of age and corruption. Experience shows us that human institutions hold up even less well than stone and the less easily corroded metals. This is even without taking into account malfeasance by the certifier.

Certificate systems exist in the first place not for ease of payment with funds that exist, but because they permit abuse. It is easy to provide certificates without being able to back them. So very easy. A tiny allowance and there it is. Of course at first honor and integrity demand that those commitments be met, but eventually the same drives that tell people, "can't you just issue the certificate and make sure it's good by the time it is called for?" lead into resentment and rationalizations that you should not be held hostage to that commitment. That ressentiment eventually wins, because you're either headed upward or downward, and making promises you can't keep yet is already the downward tack.

Now, I have nothing more to say to either of you. You can continue to strike your heads against a wall of stupidity should you wish to do so. Prediction: The Dollar will die. It will not go back onto any sort of gold standard for the reason that it cannot do so. Perhaps coins or currencies will be issued under the name "dollar" again at some point, but the current dollar will never, ever be redeemed to even a gold certificate system. It will be generally abandoned and die and be well forgotten, and many of its retainers will be buried with it as befits their loyal and foolish service.

Blogger JamesB.BKK December 24, 2019 2:40 AM  

So ... I guess real bills and time deposits matching bank loan tenors are not worthy of discussion too?

Blogger brbrophy May 18, 2020 12:26 PM  

Vox, what do you think of the PCE Deflator. Is it credible?

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