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ECB Reflections on THE Exit Strategery
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To: inflationistas hyperventilating about hyperinflation
From: Austrians & Socionomists versed in historical precedent, with actual methodology and an analytic-leg to stand on
Before delving into Lorenzo Bini Smaghi's noteworthy speech, chock full of ECB insight, please permit a wee bit of deflationist rant 'Through the Looking-Glass' of social mood as per:
[1] the management of inflation expectations;
[2] the implications within central bank (CB) exit strategery; and
[3] 'what Alice is likely to find' in Mr. Market's immediate future.
Inflation ? Let me know when and where you find it in the US, ok ?
3/13 month M2, staggered M3, hell recreate your own M5 ... you simply cannot counter with a valid argument that does not shortly resort to:
'yeah, but. it's coming. somewhere. you'll see. just you wait. in a flash. soon.'
What is so difficult to see / understand about how targeted inflationary pressures can be used as simple (Gulliver) ropes to hold back the brunt of crushing deflation while obfuscating underlying 'realities' of econometric measurement ... everywhere ?
I suppose it is the all-encompassing belief in the power of the shiny, yellow metal (gold) that you can't eat and which has zero intrinsic value outside of that which is imbued upon it ... by what ~ how you / we feel about its prospects.
Next up: those who have conniptions about "how / why" Uncle Ben Shalom (Bernanke) is a moron.
Really now ??
Look: Tiny Tim (Geithner) is decent enough, no Hanky Panky from the Farm at 85 Broad, but certainly decent enough; and Greenspan was a true hustler's hustler (suggest examining Al's statements of the past few years a wee bit closer); but Bernake ... ohhh, sweet Uncle Ben was born & bred for this very role.
Bernanke's entire modern career has been spent fostering a rock-solid avatar of Textron-ity; he gave himself his own nickname! Ben has everyone so thoroughly confused / misdirected as to his Intermediate intention (and the underlying motif within official policy direction) as per the $USD & QE 2.0 tightening that he has done his job; and masterfully so. Such is his job; the BoE's Mervyn King explicitly outlined such obfuscatory CB playbook strategery almost a decade ago.
Wanna get fundamental ?
Look 2 Q's out / 4 meetings forward and try to write the FOMC minutes ... what do you see ?
Ahhh, multivariate quantification and numerical metrics are needed; not just emotionally-laden adjectives echoed by every Joe da Plumber and Sarah Pale Eyes.
Fed policy is a battleship that takes time to turn, especially since the Fed doesn't actually steer the ship ... they just talk about alleged "reasons" (like the "news"), while keeping the public fixated on the back door as they walk right out the front with Manet's and Monet's in tow, under the innocuous cover of broad daylight ~ like the professional thieves that they are.
ARTINFO 12.7.09
Italian Police Discover Disgraced Parmalat Founder’s Secret Art Trove
ROME - As recently as last week, Parmalat founder Calisto Tanzi denied owning any valuable art in interviews with investigators attempting to recover billions lost by investors after the company collapsed in the midst of a massive fraud scandal in 2003. But now, investigators say that they have uncovered a secret collection of 19 prized paintings that could be valued at as much as €100 million ($147 million).
As a result of telephone wiretaps, investigators say they have evidence that Tanzi was in secret negotiations to sell many of the works, which include pieces by Picasso, Monet, Manet, and Degas, to an unnamed Russian millionaire. Using that information, Italian police uncovered the works over the past few days stashed away in the basements and attics of three apartments in Parma, Italy, belonging to friends of Tanzi.
Telegraph 12.5.09
Italian police seize £90m art stash from Parmalat founder
Italian police seized a stash of art masterpieces worth more than £90 million from Calisto Tanzi, the disgraced founder of the Parmalat business empire which collapsed owing millions to small investors.
Among the 19 masterpieces were paintings by some of the world's most famous artists, including Van Gogh, Picasso, Monet, Cezanne, Modigliani, Manet and Degas.
They allegedly belonged to the multi-millionaire businessman Calisto Tanzi, the founder of the Parmalat dairy empire, which collapsed in 2003 with billions of pounds of debt....
Italian courts have ruled that Tanzi bore the brunt of responsibility for the corporate catastrophe, in which many investors lost their life savings. He has been convicted of market-rigging.
Italian tax police found the artworks stashed in the basements and attics of three apartments in Parma, in northern Italy.
Mr Tanzi had reportedly told Guardia di Finanza police and tax investigators as recently as Monday, during a lengthy questioning, that he owned no such assets.
They included a portrait of a ballerina by Degas, The Cliffs at Pourville by Monet, still lifes by Gauguin and Van Gogh, a 1944 Picasso, a water colour by Cezanne and a pastel by Pizarro....
If confirmed to be owned by Mr Tanzi, the art works could go some way to satisfying creditors' demands in the wake of Europe's biggest bankruptcy.
Among the hardest hit victims of the collapse, which shocked Italy's business establishment, were the thousands of ordinary Italians who were convinced that buying bonds in the company was a safe investment.
The crisis erupted in December 2003, when Parmalat said a bank account holding four billion euros (£3.6 billion) held by a Cayman Islands unit did not exist, forcing management to seek bankruptcy protection and triggering a criminal fraud probe.
The food giant collapsed shortly afterwards with a 14 billion euro hole in its accounts.
Parmalat emerged from bankruptcy in 2005, after being stripped of its loss-making foreign units, and has refocused on its core dairy business.
Mr Tanzi and other former executives were charged with market rigging, false accounting and misleading Italy's stock market regulator.
Gee wiz, how could U.S. "regulators" ever have anticipated the tenor of AIG's dealings with Gen Re, Berkshire and Prudential ? Packaged in the middle of the night like Art Modell's bounce up outta Cleveland, few in the MSM made note of the tidy timing of the DoJ press release; sent in virtual lockstep with 'updated' enforcement rules of utter and complete subjectivity. But then again, what can you really expect from a Fourth Estate which, so smitten with Gurgle (GOOG) and the Cult of Cupertino (AAPL), fails to note that the Monroe Doctrine: Redux has been actively employed.
So: what is the practical intent of the Fed / Treasury hydra's fire-hose of liquidity provided ?
Their provided liquidity, which is effectively a series of targeted credits for financial intermediaries and not paper for circulation, is by implicit design 'inflationary' so as to explicitly obfuscate the underlying specter of all-encompassing deflation. As such, it has nothing to do with either core inflation or inflationary pressures throughout the system writ large.
A key fact oft-ignored by Gold Bugs is that ya buy Au when there is actual inflation, not just inflationary expectations from always incorrect John Q. Public. Long-term secular bull notwithstanding, gold is currently caught between a credit crisis / currency crisis on the left and a Godzilla-esque deflationary depression on the right. The hard right edge (the next bar on any chart) is enamored with uber DE-flation, while most individuals remain enamored with a shiny, yellow metal that they can't eat ... though it is fungible ~ a fact lost on pension / endowment fund BOD's doggy-paddling in the quicksand of commercial real estate.
Moreover, every single incessant utterance of "dollar be dead" simply serves to underscore its speaker's / writer's failure to understand not only the concept of the inflation-adjusted Real Dow but also (and much more importantly) how central banks, FX cross rates, Domestic Repos, CB Swap Lines, Uncle Ben, Tiny Tim and the very concept of endogenously regulated collective social mood are each inherently intertwined.
The Real Dow (DJIA / Gold) is down c. 80% in the past decade, which is the largest "real" crash since the London Stock Exchange (LSE) crashed 98% between 1720 - 1722 on arithmetic scale. Inflation is in a secular bull that took the hell off in '99 / '01. That said, the outlook for the immediate and Intermediate term (6 - 16 months) is nothing but extreme DEflationary depression.
Now, while everyone hyperventilates about hyper-inflation like John Williams, those of us with [1] historical knowledge, which predates the scroll on their Yahoo Finance "charts", and [2] an actual understanding of causality / social mood, are left scratching our heads about how supremely misplaced folks' attention is right now. But what else is new!
Wake up and smell the tulips people !
Official Fed policy is a battleship that cannot be turned on a dime. Well, it can be turned on a dime, but it 'ought' not do so; hence the lonely pedestal that Volcker's draw of the straw placed upon him. It takes time to 'steer the ship', especially when it has NO steering wheel and its captain (who simply navigates the waters around him) has convinced each and every passenger on deck the he, and only he, has:
(1) any idea how to effectively steer the ship;
(2) a steering wheel that allows him to gently guide its course; and
(3) a Na'vi navigation system that tells him when / where the next tsunami of social mood will originate.
In reality (depending upon which side of The Matrix that are capital markets you hail from), the Fed has very, very little sway over free, yes, free market rates that the public determines in aggregate. The Fed's Plunge Protection Team (PPT) (and related legion of investment bank / primary broker-dealer minions) does help massage / exacerbate existing trends but it cannot alter the course of social mood or how it (always) leads price action across Primary degree market direction.
Yes: even the President's Working Group on Markets ~ the Plunge Protection Team (the absolute tip of the government's "protective" spear) is but a slave to social mood and its endogenously (internally, from within) regulated, patterned rhythms. That said: both the Fed-Treasury Hydra and its PPT Field Commanders have effected exceptionally aggressive tactics, which are wholly un-original. Such is the underlying motif within Bini Smagh's speech below and the reason for this highlight; it speaks to current CB playbook strategery.
But who the hell am I to say what the underlying motif of overarching central bank policy is? What did Brian P. Sack, Executive Vice President, have to say about managing expectations a few weeks ago at the 'National Association for Business Economics Policy Conference' in Arlington, VA. Why Brian Sack? Because when minds like Tyler Durden of Zero Hedge believe that:
" Brian is the de-facto head of the Fed's "markets group" operation located on the 9th Floor of Liberty 33. If there is indeed a Plunge Protection Team, Brian is likely the PM who runs it. "
.... it is probably a good idea to examine Mr. Sack's insights about how "The Fed will be embarking on a tightening cycle like no other in its history." Italics / underline added for visual ease.
" Market Conditions: At Risk on Exit?
Finally, let me turn to conditions in financial markets and discuss
whether there may be vulnerabilities related to the Fed's exit from the
current monetary policy stance. I think there are two potential areas
of concern.The first potential concern is that the exit strategy could simply
cause confusion among market participants, prompting volatility in
asset prices. As noted earlier, this tightening cycle, when it arrives,
will be more complicated than past cycles, as there will be more
decision points facing policymakers. With more decision points come
more opportunities for the markets to be confused by our actions. The
recent changes to the discount rate and the Treasury's Supplementary
Financing Program balances highlight this concern, as the amount of
attention that those actions received was outsized relative to their
significance for the economy or for the path of short-term interest
rates.The burden is on the Fed to mitigate this risk by communicating clearly
about its policy intentions and the purpose of any operational moves it
might take. In this regard, the forward-looking policy language that
the FOMC is currently using in its statement is important. I would
argue that this language contains much more direct and valuable
information about the likely path of the short-term interest rate
target than does any decision about draining reserves. Indeed, it will
be difficult for market participants to make precise inferences about
the timing of increases in the target interest rate from the patterns
of reserve draining alone, in part because the FOMC has not specified
the path of reserves it intends to achieve before raising interest
rates.The second potential concern that some may have is whether the markets
have adequately priced in the exit strategy. However, a few
considerations should limit this concern. Most important, the current
configuration of yields and asset prices incorporates expectations that
short-term interest rates will begin to rise around the end of this
year. Thus, the markets seem prepared for the risks toward tighter
policy. Moreover, looking out to longer maturities, the shape of the
Treasury yield curve appears to incorporate not only expectations of
policy tightening, but a decent-sized term premium on longer-term
securities. Indeed, the term premium is well above the levels observed
over most of the past several years, even though inflation is likely to
be low and upside inflation risks are limited. This should help to
diminish the chances of a sizable upward shift in yields....
Conclusion
In conclusion, the exit from the various liquidity facilities that the
Federal Reserve implemented has been very successful, as the up-front
design of those facilities reduced the need to actively manage the end
of those programs. However, the exit from the current stance of
monetary policy is quite different, in that it will have to be actively
managed to ensure a smooth exit..... Overall, an approach along these lines should help to ensure a smooth
exit from the current accommodative stance of monetary policy.
Moreover, if the Fed's intentions are well communicated to the
financial market participants, they too should be fully prepared and in
the best possible shape for navigating this exit. "
And while everyone and their mother continue to rather cheaply cite the Weimar Republic, Zimbabwe and the video game Populous to topically relate to one another through collectively shared emotions, which are extremely palpable ... these folks fail to understand that such intense bouts of deflationary recession / depression (we are currently mired within a full-blown DEflationary depression of Grand Supercycle degree ~ c. 300 years) are not only recurringly 'commonplace' but also that such faux-inflationary incantations / uber-deflationary iterations have been ameliorated the exact same ways for well over 400 years, which is being rather conservative without citing the unparalleled research of Armstrong, Kindleberger, Prechter and Rogoff.
'For those who have Charles P. Kindleberger's "Manias, Panics,
and Crashes: A History of Financial Crises" somewhere inside of a
cobweb-laden cardboard box in their attic, please see pages 249 - 274
(updated Fifth Edition) within Chapter 12: The International Lender
of Last Resort.
And for those who had a life during college here are a few papers
from Scribd, which quote the gist of 'it' ...
The Dutch Monetary Environment During Tulip Mania
This Time is Different: 800 yrs of Financial Folly
Crises in the Global Economy From Tulips to Today:
Contagion and ConsequencesEconomic and Financial Crises and Transformations
in Sixteenth-Century Europe.
See if you can dig up what Uncle Al's "lost" 'thesis' was about. I'll save you the trouble: it's centered on today, what we face right now; well, June 2006, to be precise. It is a rigorous analysis (copied and pasted from the work of many others) that details how to "employ" inflationary tactics and explicitly covert inter-market stabilization efforts across specifically timed interval periods, at specifically quantifiable 'points' within collective social mood during a deflationary depression (of Supercycle or Grand Supercycle degree).
C'mon, you really, really think the Maestro was that dumb ?
Uncle Ben too ? Seriously ?
You think "we're becoming Japan", without thinking about Japan as our test run ??
One has nothing to do with the other and the fact remains that ... while the Fed holds dramatic sway over the influence of market participants' opinions ... it has very, very little control (not influence, but control) over actual market direction. The Fed, just like every single one of us, is almost entirely dependant upon the direction, development and tenor of collective social mood.
Don't take my word for it ... just read Uncle Al's comments / speeches of the past 5 years, which explicitly quote Socionomic Theory damn near verbatim. It really is too bad that Greenspan and Mandelbrot never worked together; if so, those two serial plagiarists might've been able to re-master a Vanilla Ice-remix of Edward de Vere's greatest works as well.
' Let me not to the marriage of plagiarist minds admit source attribution '
Tortuously fractal rant over! Wha'd Bini Smaghi of the ECB have to say already ?
Speech by Lorenzo Bini Smaghi, Member of the Executive Board of the ECB
Sveriges Riksbank, Stockholm, 21 January 2010
A lot of attention has been devoted in recent policy discussions to the exit strategy from the expansionary monetary and fiscal policy stance adopted since the outbreak of the crisis, and to the interaction between the two. Designing an optimal exit strategy should, in theory, not be too difficult. In an ideal world, fiscal stimuli should be withdrawn before monetary policy is tightened in order to ensure that public debt remains sustainable and that monetary policy is not overburdened.
We know however that first-best solutions are often hard to implement, because they are based on unrealistic assumptions relating in particular to the rationality of expectations and the ability of policy-makers to rapidly make decisions and to change them if needed. Furthermore, policy-makers have to take account of the prevailing uncertainty and of the impact of their decisions on agents’ expectations. For instance, fiscal policy is normally decided once a year, through an elaborate budget process, but is not implemented until the following year. This process introduces significant rigidities into the decision-making and makes it somewhat less likely that fiscal policy can exit before monetary policy, which is typically a much more flexible instrument.
Today I would like to focus my remarks on the exit from the accommodative stance of monetary policy. I will not consider the phasing-out of the non-standard measures that central banks have adopted over the last few months.
The discussions so far have centred mainly on the timing of the exit decision, which should neither be premature nor tardy. There are counter-effects in both scenarios. If the decision to exit is made too early, the economic recovery may be put at risk, as higher interest rates will produce a tightening effect on consumption and investment decisions at the very time when the pick-up in the economy is still fragile. Furthermore, it might further restrict credit conditions while the banking system is still restructuring its balance sheet. If, on the other hand, the decision is taken too late, monetary conditions will remain too lax for too long, sowing the seeds of the next crisis. In addition, the later the tightening, the sharper it needs to be, thus producing valuation changes that may reduce banks’ profitability and undermine their ability to support the economic recovery.
Given the difficulty of the timing, the discussion has turned to the second-best option. In other words, which of the two risks – being too early or being too late – would pose the biggest problems for the economy? Several authors, including international organisations, have suggested that the policy authorities should err on the side of being late. They argue that an early tightening is difficult to reverse and tends to hit the economy early in its recovery, and may give rise to a double-dip recession. On the other hand, a late tightening allows more time to bring things back to normal. In addition, the stronger the economy is likely to be, the more resistant it will be to the shock produced by the tightening of monetary conditions.
Overall, history shows that policy authorities have largely erred on the side of being too late than of being too early. Indeed, late exits have been quite numerous; they were either the result of deliberate policy decisions to boost the economy, which was probably the case in the 1970s and early 1980s, or of forecast errors made in over-estimating deflationary risks and under-predicting the subsequent recovery, which might be the case of the decade just ended. [1]
The monetary and fiscal policy tightening that took place in the United States in 1936, which led to the 1937-38 recession, is regarded as a text-book example of too early an exit, of a mistake not to be repeated. There are not many other examples of early exits. The slight increase in interest rates by the Bank of Japan in 2000 has been considered by some as an early exit, but recent analysis has downplayed it. [2]
To sum up, experience suggests that what matters most in any exit strategy is that markets are well prepared, so that when the decision is ultimately made they are not taken by surprise and suffer negative repercussions. Communicating an exit strategy is, in the end, not that different from communicating monetary policy in normal times. Given the state of uncertainty about the recovery, market participants have to base their expectations, and their trading decisions, on projected economic fundamentals rather than trying to read between the lines of policy announcements.
In this context, it is worth mentioning the 1994 episode, when the Fed’s 25-basis-point increase in its funds rate caused turmoil in the bond market. Even with the benefit of hindsight, that decision can be regarded as neither tardy nor brutal. The problem was that it took markets by surprise and led to a major reassessment of the yield curve, with substantial valuation losses on long-term positions.
These experiences confirm that not only is the timing of the exit crucial, but also its communication to market participants. Indeed, the impact of any withdrawal of monetary stimulus on financial market participants depends on whether they have fully anticipated it. If they have, then the decision tends to have less impact on the yield curve, and thus on the valuation of banks’ assets and on the rate that banks charge to their customers, especially on fixed rate loans. As confirmed by a growing body of literature, the main mistake relating to the 1936-37 decisions was that they were badly communicated to economic agents. [3]
To sum up, a key element of the exit strategy is that the policy authorities must guide expectations. How can they do this?
Let me first of all consider how it should not be done.
First, it may be better for central banks not to become embroiled in the debate on whether exiting too early or too late is better or worse, and especially not to give signals that the latter is less risky. Such an approach could encourage market participants to become less risk-averse and to expect the period of low interest rates to be extended beyond what is necessary. This would induce them to take on further risks, in particular in terms of maturity mismatches – borrowing short-term to buy long-term bonds – which might be profitable in the short term but could lead to substantial capital losses when the exit takes place.
Second, any commitment to prolonged periods of low interest rates is risky. If the aim is to lower long-term rates, it may also encourage market participants to take substantial long positions in the fixed income market. As a result, the risk of major losses arising at the time of the exit increases considerably, as the 1994 experience shows. This may induce the central bank to further delay the exit to avoid penalising banks. This seems to be the experience of 2002-2004. As a result, interest rates may remain below the desired level for too long, fuelling a possible bubble.
Third, central banks need to be very careful in using information extracted from market data when conducting monetary policy. The anchoring of inflation expectations is a very important benchmark for assessing whether the stance of monetary policy has become too expansionary and whether there are risks of falling behind the curve. However, the pre-crisis period and the crisis itself have shown that expectations are not always formed in a rational way and might themselves be influenced by the behaviour of the monetary authorities. Quite often markets participants form their expectations by looking at central banks’ behaviour, on the assumption that the latter have better and more information about underlying inflationary pressures. Under these circumstances, market-based inflation forecasts tend to be biased and may react in a perverse way following a tightening of monetary policy. In particular, inflation expectations may be revised up, rather than down, after an interest rate increase, especially at the beginning of a tightening cycle. If the monetary authorities’ assumption that inflation expectations are well anchored proves to be wrong, the whole yield curve might move upwards and the decision to increase the rate of interest may result in a much sharper tightening than expected. [4]
Another problem with inflation expectations concerns their measurement, especially in periods of financial turbulence, when the liquidity of the underlying instruments can affect their signalling content. A further distortion may arise when the central bank is itself a major buyer and holder of indexed-linked assets, which may distort prices and thus the information content. Measurement problems arise also with other components of the analytical framework, such as the output gap. Experience shows that measurement of the output gap varies over time. For instance, when measured ex post, with the data available until 2008, the US output gap over the period 2002-2004 turned out to be very small, even non-existent, while ex ante it was estimated at around 2% of GDP. [5]
So what should a central bank do to implement and communicate an appropriate exit strategy? Let me make a few comments on this.
To ensure that the exit strategy does not come as a complete surprise, it has to be well communicated. Over recent months, central banks have devoted a lot of time to explaining their exit strategies, both in terms of content and conditions. At the ECB we have made it clear that, as in the past, any decision – even one concerning the exit – will be linked to the underlying economic conditions and in particular to the re-emergence of inflationary pressures. Market participants should thus form their expectations on future interest rates on the basis of projected economic developments rather than on specific unconditional commitments.
In order to promote understanding of how monetary policy needs to adapt to changing economic conditions, and eventually exit from its very accommodative stance, central banks would do well to explain how the stance itself is affected not only by the level of the interest rate they control, but also by the underlying economic developments, such as projected growth and inflation. In this respect, it is interesting to note that over the last six months, while economic activity and inflation have picked up, interest rates, both in nominal and real terms, have continued to fall. Spreads on different types of bond, except those of some governments, have continued to come down. The slope of the yield curve has slightly increased, in particular in the US (see Annex).
Finally, an exit is more easily communicated, and understood, by market participants if it is gradual. Any interest rate adjustment – even a slight one – entails some form of discontinuity, which may affect the whole yield curve. A credible gradual exit, if well communicated, minimises shocks to interest rate expectations. However, a gradual exit strategy is more likely to be credible if it is implemented in a timely way. If it gives the appearance of being late, the first step by the central bank is likely to cause a substantial revision of interest rate expectations and thus of the yield curve, strengthening the impact of the tightening.
In fact, examining closely the 1936 episode in the US, it might not even be considered as an early exit. The very restrictive monetary and fiscal policies that were adopted at that time might deserve to be categorised as a case of ‘brutal’ exit, the effects of which could in fact have occurred at any time, exit or no exit. Between mid-1936 and early 1937 reserve requirements for banks were doubled in a series of three steps. The general government budget contracted by almost 4% of GDP. These measures appear to have been disproportionate, even with an economy that had started to recover, with inflation picking up and credit aggregates accelerating. The severe negative effects of these measures do not mean that no measure should have been taken at all. They should simply not have been so abrupt and not have taken economic agents by surprise. In other words, the 1936 episode might be considered as an example of a badly calibrated and badly communicated exit, rather than a wrongly timed exit.
Annex
![ECB -1- Economic growth reached its t[r]ough in 2009 Q1 and now<br />
displays a slow recovery](https://www.fibozachi.com/images/stories/TechniciansCorner/misc/ecb%20-1-%20economic%20growth%20reached%20its%20trough%20in%202009%20q1%20and%20now%20displays%20a%20slow%20recovery.jpg)
[1] Ben Bernanke, “Monetary Policy and the Housing Bubble”, speech at the Annual Meeting of the American Economic Association, Atlanta, Georgia, 3 January 2010.
[2] Daniel Leigh, “Monetary Policy and the Lost: Decade: Lessons from Japan, IMF Working paper, October 2009.
[3] G. Eggertsson and B. Pugsley, “The mistake of 1937: a General Equilibrium Analysis”, CFS Working paper, November 2006.
[4] L. Bini Smaghi, “An Ocean Apart: Comparing Transatlantic Responses to the Financial Crisis”, Rome, September 2009.
[5] L. Bini Smaghi, “Monetary Policy and Asset Prices”, Freiburg, October 2009.
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Inflation, today, Costco:
Marinated Salmon, 1 yr ago $12, today $14+
Also up:
Dog biscuits increase: $1 - $2
Laundry detergent: Up $2 - $3
Walmart: Over 7 years, basic caned green beans up
from low of $0.32 to now $0.90.
quick Bloomberg video ~ Bernanke Own Words on Fed Monetary Policy, Exit Strategy
Its all relative; seen from a Silver perspective we have had up to 300% price inflation over the last decade, up to 500% seen from a Golden perspective. Thats 40 to 50% a year relative to granny's $ hidden in the mattress.
i get so tired of the "peak oil" bullshit.there is no shortage of oil, it can be made in a lab; but the hidden hand can refuse to pump/refine/manufacture.
"The great French chemist Marcellin Berthelot particularly scorned the hypothesis of a biological origin for petroleum. Berthelot first carried out experiments involving, among others, a series of what are now referred to as Kolbe reactions and demonstrated the generation of petroleum by dissolving steel in strong acid. He produced the suite of n-alkanes and made it plain that such were generated in total absence of any “biological” molecule or process. Berthelot’s investigations were later extended and refined by other scientists, including Biasson and Sokolov, all of whom observed similar phenomena and likewise concluded that petroleum was unconnected to biological matter."
http://www.gasresources.net/Introduction.htm
they must have had dinosaurs on saturn to make all that oil up there eh?
http://www.nasa.gov/mission_pages/cassini/media/cassini-20080213.html
that shiny little diamond y'all spent a fortune on is rare as hell too.
http://www.theatlantic.com/past/issues/82feb/8202diamond1.htm
ever wonder why hemp is illegal?
http://thecannabischronicle.com/henryford.html
lol that dinosaur is a nice touch.
the whole energy crisis extortion racket is a crock.
"Hence before the very birth of EE, the model and subject were already deliberately mutilated and crippled to prevent free energy from the vacuum systems -- i.e., such systems as now have been rigorously developed and demonstrated by Klimov et al. and validated by both the Los Alamos National Laboratory and the National Recoverable Energy Laboratory. The work of Klimov et al. is rigorously published in leading physics and nanocrystalline journals, and it is now accepted in both fields -- and INDEPENDENTLY verified by those two great national labs."
http://www.cheniere.org/correspondence/030110.htm
theres plenty of oil, but the cheap easy stuff, is definitely in decline trichotil, keep the links coming, they are appreciated.
but is abiogenic oil commercially profitable, even assuming it's true? the oil industry scientists and most academic geologists disagree. i'll bet you're a lot closer with the sparklies and the ganja though.
Inflation does not march in lock-step.
It can run wild in tulips and ignore potatoes.
Government interference in free markets distorts the area and timing of inflation.
We have had a hyper-inflationary episode in housing.
That bubble has burst. And housing is perishable. After it sits empty a very short time it is unrecoverable from damage and theft.
We have experienced a hyperinflationary period in health care. Obama care may cure that (and destroy that market too) soon.
Inflation in neccesities continue. Government meddling in agriculture may produce a hyperinflationary episode in food soon if they do not make corrections.
on Sun, 03/28/2010 - 08:18
#278629
Inflation does not march in lock-step.
It can run wild in tulips and ignore potatoes.
Government interference in free markets distorts the area and timing of inflation.
We have had a hyper-inflationary episode in housing.
***********************************
Yes--housing was hyper-inflated and all the CDO's and other debt instrument wizard paper that were levered up-based on house prices as collateral-was the hyper-inflation-of credit money--
As can be seen from the table, monetary-inflation and price-inflation have a constant relationship, for whatever reasons.
Tulips, and recent housing bubbles were credit-driven asset bubbles.
Health care and education are 98% labor and since the value of labor is constant, health care and education are the first to reveal price-inflation.
May I suggest the:
The Golden Constant: The English and American Experience 1560-2007http://www.amazon.com/Golden-Constant-American-Experience-1560-2007/dp/1...
Here we see another "Looking Glass" where the world has been turned upside down. Everything that was "reasonably" constant is highly variable, and everything that was variable is surprising constant. Comprehension of the golden constant lets one appreciate:
The price of oil, in gold, has not changed for tha last 70 years. (http://pix.cs.olemiss.edu/oilInGoldDollars.gif and http://pix.cs.olemiss.edu/oilGoldPrice.jpg
That tangebiles are constant in value, notwithstanding credit-driven asset bubbles.
That the value of labor is constant.
Year - M3 money supply in $trillions1959 $00.299 % Increase Doubling Interval
1960 $00.315 05.35% % Cumulative
1961 $00.341 08.25% 013.61%
1962 $00.371 08.80% 022.40%
1963 $00.406 09.43% 031.84%
1964 $00.422 03.94% 035.78%
1965 $00.482 14.22% 050.00%
1966 $00.505 04.77% 054.77%
1967 $00.558 10.50% 065.26%
1968 $00.607 08.78% 074.04% 9 Year Doubling
1969 $00.616 01.48% 075.53% 1980 BLS Inflation Measure
1970 $00.677 09.90% 085.43% 05.84%
1971 $00.776 14.62% 100.05% 04.29%
1972 $00.886 14.18% 114.23% 03.27%
1973 $00.985 11.17% 125.40% 06.18%
1974 $01.069 08.53% 133.93% 11.05%
1975 $01.170 09.45% 143.38% 09.14% 7 Year Doubling
1976 $01.310 11.97% 155.34% 05.74%
1977 $01.470 12.21% 167.56% 06.50%
1978 $01.645 11.90% 179.46% 07.63%
1979 $01.809 09.97% 189.43% 11.25%
1980 $01.996 10.34% 199.77% 13.55%
1981 $02.255 12.98% 212.74% 10.33%
1982 $02.461 09.14% 221.88% 06.13% 7 Year Doubling
1983 $02.697 09.59% 231.47% 03.83%
1984 $02.991 10.90% 242.37% 05.30%
1985 $03.208 07.26% 249.63% 04.58%
1986 $03.499 09.07% 258.70% 02.92%
1987 $03.687 05.37% 264.07% 04.99%
1988 $03.929 06.56% 270.63% 05.94%
1989 $04.077 03.77% 274.40% 06.71%
1990 $04.155 01.91% 276.31% 07.69%
1991 $04.210 01.32% 277.64% 06.53%
1992 $04.223 00.31% 277.95% 05.33%
1993 $04.286 01.49% 279.44% 05.42%
1994 $04.370 01.96% 281.40% 05.98%
1995 $04.636 06.09% 287.48% 06.52%
1996 $04.986 07.55% 295.03% 07.74% 14 Year Doubling
1997 $05.461 09.53% 304.56% 08.03%
1998 $06.052 10.82% 315.38% 07.79%
1999 $06.552 08.26% 323.64% 08.47%
2000 $07.117 08.62% 332.27% 09.74%
2001 $08.035 12.90% 345.17% 09.12%
2002 $08.568 06.63% 351.80% 07.85%
2003 $08.872 03.55% 355.35% 08.55% 7 Year Doubling
2004 $09.433 06.32% 361.67% 09.09%
2005 $10.154 07.64% 369.31% 10.05%
2006 $11.206 10.36% 379.68% 10.18%
2007 $12.917 15.27% 394.94% 10.51%
2008 $14.395 11.44% 406.39% 09.26%
Sorry, I was not finished and clicked the wrong button.
The point is that monetary-inflation has been doubling about once every seven years and price-inflation has been running about nine percent for the last decade. Reason enough for holding gold as a secure and safe store of wealth.
Most goldbugs hold gold not for price-inflation, but in the event of a currency collapse, which increases in probability with each passing year.
And as icing on the cake, goldbugs will benefit when government intervention in gold market stops. Worst case, it will stop with a currency collapse.
Oh, and one more thing. Jastram's Golden Constant (above) shows that gold hold's its value more "efficiently" during times of price-deflation rather than the commonly held belief that it holds its value during time of price-inflation.
good (and often overlooked) point. however shouldn't the analysis (i haven't done it) include more than seventy years (1940-2010) so as to include the salient years 1930-1940?
Or as M. Armstrong alledges - gold is not a hedge against inflation, its a hedge against loss of confidence in government.
A key fact oft-ignored by Gold Bugs is that ya buy Au when there is actual inflation, not just inflationary expectations from always incorrect John Q. Public. Long-term secular bull notwithstanding, gold is currently caught between a credit crisis / currency crisis on the left and a Godzilla-esque deflationary depression on the right. The hard right edge (the next bar on any chart) is enamored with uber DE-flation, while most individuals remain enamored with a shiny, yellow metal that they can't eat ... though it is fungible ~ a fact lost on pension / endowment fund BOD's doggy-paddling in the quicksand of commercial real estate.
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I give up trying to read it-because-i don't need anymore convincing that we are and have been in deflation since this shitshow started--
The slam on gold bugs was actually the real reason i stopped reading because he's got it assbackwards--
You "sell" gold in inflation--you "buy" gold for deflation and here's the worst part of it--
he missed the fact--that we've already hyper-inflated--
We are now-in the "always" inevitable deflation that follows--
Gold tells the story very clearly--
1980-2001--we had inflation all the way-Gold did shit--a 20 year bear market--
2001--Gold broke out and never looked back-
What caused gold to ratchet up?
Perhaps a "bit' too much credit money?
Perhaps Gold could see the same thing as the long bond seen?
Credit risk? We have the Quadrillion or so/in derivatives-that we have no idea of the market value-of course some of it is good-some say maybe 50-70% is good--
So-even a third is 300 trillion worth of debt-
The credit money supply was levered up to "how many times world GDP?
We hyper-inflated and most don't even realize it--
Now we know we're in deflation and gold is still hanging in--
Could it be that gold does well in deflation?
it did in the 30's--that was deflation--prices deflated against cash/gold all the way through--
I think gold will go down when equitys crash and the dollar goes on a tear--
This sell down will be the hyper-inflationists exiting--
They really piled in from about 930 up--they bought for the wrong reason--they'll sell for the wrong reason--
i think we'll correct back to that area-in a sharp equitys sell off--
Then--just like in the 30's--like the homestake mining story--gold miners will stop going down and start going the other direction as money starts seeking a diversity of saftey--
Gold will catch a bid and just like 2005 will start competing as a currency-with the dollar and eventually decouple--gold continuing north--the dollar not so much--
No idea what price-but-at some point-Central banks are gong to be forced into the gold market--as currencys start unwinding--
GBP/Yen/CAD/EUR who knows which will start it?
it doesn't matter which one--once the disease starts spreading in the majors--watch em buy-see the short commercials squeezed--watch the price spike--
I drool-talking about this--
I don't see gold getting that far below India's official bid @ $1045. You also discount the information that is slowly disseminating about the true nature of derivative gold. Even if GLD collapses to your levels, expect the delivery premium to increase markedly as COMEX delivers nothing.
on Sun, 03/28/2010 - 06:52
#278601
I don't see gold getting that far below India's official bid @ $1045. You also discount the information that is slowly disseminating about the true nature of derivative gold. Even if GLD collapses to your levels, expect the delivery premium to increase markedly as COMEX delivers nothing.
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i'm not discounting anything--only saying-that gold could sell off in an equitys crash(if there is one)
india buying at a certain price doesn't hold some locking mechanisim on gold-
GLD--heard rumours since that thing started-
Will short it at times though--
If someone "ill" lights off a nuke tomorrow--all this means nothing anyway--
just calling it as-I-see it--don't mean nothing--
But the author of this thread-is clearly wrong about some things--
That's all--
I hear you, but if US equities take the dirt nap I expect folks to diversify a little beyond bonds this time. The reason I mentioned India is that certain CBs stand ready to accumulate regardless of what Wall St is experiencing.
Even deflation without savings or a job looks like hyperinflation to the unemployed. Be that as it may (reality), it feels too early to have the hyperinflation (currency) event. They will still attempt to fund the Treasury Bond auctions, and that means taking down the stock market one more time, perhaps not as dramatically. Also, Europe's problems are still needing to fully mature before the final currency hammer can hit the USA. Perhaps two or three years from now (hyperinflation all of a sudden)???
Hyper-inflation and Hyper-deflation are the same thing.
Either the numerator goes to zero, or the denominator. Same difference. Financial assets can no longer be supported and the economy collapses.
The "this is obviously not Weimar or Zimbabwe but quite the opposite" deflation crowd is missing a critical and obvious point of fact. The vaporization of income and money supply means a diminished and decreasing bid under USTs. If spending can't come down a rate FASTER than the decline of taxable income, the currency collapses. its as simple as that.
"Hyper-inflation" is currency collapse. Either they renege on their obligations (default) or they're forced to monetize. You can trick yourself into believing that "we will not monetize" - but not for long. There's no way of hiding the fact that cash flow is drying up. That's what the D crowd is pointing out. What they're missing is the inevitable impact of this upon UST auctions. Western governments WILL not default. At least not in real terms.
If the D (deflation) crowd is to be proved right, we will need to soon see radical reductions in the size and scope of Government throughout the United States and Europe. I mean 80% spending reductions across the board - including transfer payments - and radical tax relief. NOT GOING TO HAPPEN.
Madcow,
Thanks for the very interesting comment.
You state that,"If spending can't come down a rate FASTER than the decline of taxable income, the currency collapses. its as simple as that."
I can imagine, without much difficulty, a business with one employee that would have a terrible time reducing spending faster than revenues. Reducing spending in larger organizations would make the problem that much more difficult. Time and perception seem to be complicating factors here. There is a finite amount of time that something can bleed before it dies. Some things,however, can bleed profusely for long periods of time before they die. George Orwell's Shooting an Elephant comes to mind,
"I sent back for my small rifle and poured shot after shot into his heart and down his throat. They seemed to make no impression. The tortured gasps continued as steadily as the ticking of a clock."
Sure, the elephant eventually died as our currency surely will someday but that day may be 50-100 years from now.
Perception is more easily managed than time, though both are interrelated. With most American Consumer-Cattle (formally known as Citizens)watching 8 hours of t.v. a day they can be persuaded of, or distracted from, just about anything.
I don't disagree with anything that you said btw, you just got me thinking...
Nate Martin had a great post that Jesse and KD both acknowledged. In it he showed how Professor Fekete's "Marginal Productivity of Debt" thesis had come to pass, and we were now detracting from GDP on a per dollar basis of added debt. Then he slapped up a couple parabolic curves courtesy of the St. Louis Fed. Bottom line: either math wins, or bullshit, voodoo, Luciferian mind humping carries the day "for 50-100 years".
http://economicedge.blogspot.com/2010/03/most-important-chart-of-century...
that "most important chart of the century" should cover (at least) a century. if it did it would be far more ambiguous, with the huge increase in debt in the 30's and 40's coinciding with and followed by significant increases in gdp.
however considering what most of the debt in the last thirty years was spent on (wars, standing armies, tax cuts for the rich, transfers to the banksters, much during the economic expansion!), imo the implications of that chart are more right than wrong.
Lost me at; "Ya can't eat gold". What kind of bullshit statement is that? Followed by "Oh, yeah, but it is fungible". Fucking non-sensical, disjointed, rambling shit. Fucking flip-flop.
Chopshop is a perfect pseudonym, all over the place in bits and pieces.
But your charts are real purrty.
>>A key fact oft-ignored by Gold Bugs is that ya buy Au when there is actual inflation, not just inflationary expectations from always incorrect John Q. Public
A key fact ignored by dumbshit ivory towerists is that John Q Public is obliviously hawking his gold - revisit the names of those who are buying.
actually in deflationary cycles "you" buy gold well ahead of inflation. gold and its miners did spectacularly well 1930 to 1935 when there was not inflation but deflation (as commonly understood; this site has a variety of definitions). of course in the u.s. fdr tried to confiscate gold (but not the stock of its miners). when inflation started in earnest during and after the second world war the show was over and the play was (non p.m.) commodities and their stocks. the inflationary '70's were different with gold coinciding with inflation (miners moved before both).
The things that have too many new dollars chasing them are inflating in price, the things which even those new dollars won't touch are falling - we are getting both at the same time for different asset classes - and I don't give a rat's ass if the things I don't want are falling in price - let the deflationists have all that crap.
Inflation ? Let me know when and where you find it in the US, ok ?
Uh... oil, lumber, copper, gold, silver, lead, food - that tiny tomato that costs a fucking buck keeps getting smaller every month. What a moronic thing to say - I stopped there - what more could you possibly have to add that is worth my time.
And I'll take the 'zero intrinsic value' of gold over the less than zero intrinsic value of green paper any day.
osb at home depot up over $1.20 in 6 months. my favorite coffee creamer, up $1.00 in same time. gas up 50 cents a gallon. home value down 10% wages stagnant. this is moving in one direction FAIL
Precisely; the things you need daily are rising in price. The things you possess, like homes, are still declining. Now add in stagnant wages & higher taxes. A veritable witch's brew of stagflation.
"spot on" chop. (or do you prefer mr. shop?)
The folks who shop at the grocery store and pump their own gas see inflation.
Since the "masters of the universe" are not bothered by such mundane tasks, they may well be the last to see it.
Inflation 'expectations' alone have potentially hazardous implications wrt private/public debt financing costs... and thus the ability to keep this dog and ponzi economy show going.
The Fed can never admit the existance of inflation. In our current situation it's the kiss of death.
i will use 'dog and ponzi show'.
Excellent article! Very indepth.
Man, I couldn't keep reading because your use of "ya" instead of "you" and the manic jumping prose. Do you even understand that hyperinflation is a currency event---NOT an economic event? You don't slowly build up to hyperinflation slowly. It happens after a collapse in confidence in the government--whether they are stealing art treasures or not! (Where TF did that come from--another manic interlude). Study hyperinflations. Won't waste the rest of my time reading this, unless someone lucid replies to my comment, explaining the error of my way.
hyperinflation is a political event.
nikku, I agree; you're spot on. You understand the currency issues surrounding hyper-inflations. Confidence by the market will determine if the ECB/FED policies succeed or fail.
Chopshop, please organize your thoughts when writing, form a conclusion from what you've expressed, & please avoid the grammatical errors & rambling ruminations. You may be right, but you've completely lost the reader in the maze of twisted ideas presented. Thank you.
Unconventionality > Conventionality.
This article seems like incoherent rambling. I purchase stuff. This year, my car tags went from $43 to $86. There are basically no red meats for sale under $3.00 per pound. Speaking of $3.00, that's what gas is now. Bread has gone up, milk has gone up, tater logs at Walmart have gone from $1 to $2 per pound. My electric bill has increased. Fast food prices at Chik-fil-a have gone up. My dentist is raising the price of crowns because gold & palladium have gone up. The only thing that hasn't gone up is the value of my home and my wages. Inflation IS occurring right now in the USA, it's just a matter of whether you want to see it or not.
well put.
This article seems like incoherent rambling. I purchase stuff. This year, my car tags went from $43 to $86. There are basically no red meats for sale under $3.00 per pound. Speaking of $3.00, that's what gas is now. Bread has gone up, milk has gone up, tater logs at Walmart have gone from $1 to $2 per pound. My electric bill has increased. Fast food prices at Chik-fil-a have gone up. My dentist is raising the price of crowns because gold & palladium have gone up. The only thing that hasn't gone up is the value of my home and my wages. Inflation IS occurring right now in the USA, it's just a matter of whether you want to see it or not.
saturday slang style aside (sorry, I'm fatally fractal), the catalyst for hyperinflation is confidence, not currency, which is an instrument within the kingdom of confidence. hyperinflation occurs after depressionary inflection points, after credit has been completely destroyed. such an evolutionary evisceration has yet to transpire.
while some cyclical trends continue on across the commodity complex (softs, cereals, skimmed milk powder) Western Civilization is firmly trapped within the grip of over-arching deflation. cigarettes, milk n (don't quit on me again now) cereals are but a segment of the system writ large. banking and finance in aggregate account for an ungodly proportion therein and targeted credits to financial intermediaries, which are then leveraged umpteen times over do not represent "money" growth! (if condition 1 true, <call on 'alphabet soup' program>)
credit growth has exploded but credit growth = inflation isn’t a Boolean function; I would argue that the rate-of-change therein has resoundingly peaked and inflected but that is for another day.
while most are fixated on the credit side of the equation, the velocity of "money" has contracted violently. the consumer is not spending, he / she is retrenching to hibernate unlike we've seen since GD. from such lairs of 'basement-fathers' is where hyperinflation breeds because of: 1) consumer confidence conditions; 2) waves of default and continuing credit contraction; 3) unemployment, bankruptcy, socio-cultural shifts which beget socio-economic & financial "change".
the composition and velocity of financial assets is also changing before our very eyes. where’s the volume in US equities continues to be asked while foreign bourses announce record derivative volumes, expanding hours and new product offerings on a daily basis. will speak more to this in the near future.
we all need to go bust before hyperinflation can (and will) occur. we all need to default. we all need to shun spending. we all need to seek safety and shelter before our current deflationary depression will abate. then, and only then, can hyperinflation occur after credit has been universally eviscerated and the system shattered.
in reality, hearts n minds declare victors, not how much targeted airspace is saturated with silver- barium oxide to promote signal conductivity. the same principle has been applied to financial markets (from alphabet soup programs to SLP & HFT’s outgrowth) in order to massage the confidence of mkt participants.
you cock a sawn-off shotty like Hanky Panky and blast a fire-hose like Uncle Ben Shalom. but soon enough you’re out of ammo and water. the fed has only so much ammo and water. Mothra can keep Godzilla from reaching shore for only so long and our current iteration of deflationary depression is of the Godzilla-variety.
Hyperinflation can (and I think will) occur, but not before deflationary depression and system-wide conflagration. And while I don’t think the Mayan Calendar is going to doom us, I do think that Marty Armstrong’s public-private pendulum of confidence will be changing poles. I firmly believe that the next few years will bring about the conditions necessary for hyperinflation. I hope to be proven wrong.
First, this above post is fine. The article was hard to read. I understand style is oh so very easy to collect.
Second, I think BS Bernanke is pretty damn confident in his theory of endless debt/money.
Lastly, we already went into a deflation spiral, one that has not ended (ie housing).
You want velocity? Well wait until the Hollywood Futures Index gets everybody's Mojo Risin' once again. Deflation in crap items (TVs, Cars, Houses), inflation in (gold, silver, oil), hyperinflation in currentseas. My 2 cents.
IMO the two will not be sequential, but superimposed. thats what the strategy looks like to me
Chopshop, we shall see soon enough. The central bankers (CB'rs) really are shooting their ammunition in the dark as they ignore the bigger picture around them. They live, in effect, in their own bubble, as they don't see the real economy & world outside themselves. Not a good thing to fix a huge problem & debt overhang. Folks were forever changed after living thru the depression; some are changing their habits in this one also. What reaction did the CB,rs really expect? All is well, go shopping & keep going deeper in debt. Debt is wealth.
The cycle is changing on long term interest rates: http://i43.tinypic.com/2h6yagl.jpg
This adds to the CB'rs problems in the days ahead. They face stagflation the worst possible scenario for them combined with sovereign defaults as their ammo is gone. Armstrong has the ability to grasp the complexities of the various cycles going on to bring them into a workable model for forecasting & to express them simply to the public. He's been remarkably right compared to the retarded CB'rs, yet his talents are wasted as he languishes in prison. Very sad...
agree that armstrong's persecution seems wildly excessive but shouldn't the chart of long bond yields be through today rather than august 2008? an updated chart would show a recent bottom in yields around 2.6% mid december 2008 with a rebound to 4.75% now, a more ambiguous configuration for future yields, especially on a log scale.
chopshop: aren't the early '30's regarded as deflationary? and didn't gold go from 22 to 35 with miners considerably outperforming that? and with treasury yields increasing? and stocks down 80% nominal? one might think an analysis that includes references to the seventeenth and eighteenth centuries' financial events would also include appropriate consideration of the immediately prior deflationary depression. central bankers may be optimistic worrying that they not repeat 1937-38. we may not yet be past april 1930.
What a longwinded way of saying that the the government is liquidating. Particularly ridiculous is that the government is promoting an inflationist gambit in order to hide an underlying deflation. That just shows this person does not understand liquidation.
Chalk up any "inflation" to cartels and captive markets. In fact, much better to understand the intricate sociopathology of liquidation, which nobody at this site wants to understand because, basically, if they were in charge they would do the same things.
People who write on this site are just cases of sour grapes: they're basically just saying, "Gee I wish I was in charge."
They want power. If they had it, they would liquidate just like Bernanke is liquidating. Why? Because Zerohedgies have the same petit bourgeois/psychotic/police state mentality as Bernanke.
What you read on this site is the mirror image of Bernanke. The author should look in that mirror.
"intricate sociopathology of liquidation" Is this a long way of saying....
Here is the Grand Plan. We don't want house prices to recover. No. We want housing prices to flush down the proverbial toilet because waiting in the septic tank are the banksters who have stockpiles of dollars. So when housing hits rock bottom the Banksters clean up the sh*t off the bottom of the tank, mark it up to the top of the tank and then - miraculously all of a sudden - Americans again qualify for mortgages.
The banks start lending again so they take profits on the underlying assets, generate gobs and gobs of fees, generate fresh new mortages, create a new family of derivatives and watch America slowly drain into the leach field.
THAT "intricate sociopathology of liquidation" David?
Funny, but I think I will disagree.