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I've Been Mished
I recently discovered that famed financial commentator, Mike “Mish”
Shedlock published a piece in which he quoted an article I published and
proceeded to tear my views (at least what he claims my views were) to pieces.
The actual article I wrote that Mish refers to is:
http://www.zerohedge.com/article/time-prepare-hyper-inflation-it-explodes
The first line of the piece notes that it’s a continuation of several
other pieces I’d written before. Mish doesn’t bother referring to them
anywhere. He simply starts off by quoting the following:
The similarities between the US today and Weimar
pre-hyperinflation are striking. As in Weimar, US fiscal authorities are
not taking any steps to rein in their loose money policies. Similarly,
the US Fed, like Germany’s financial elites believes that currency
depreciation is a good thing.
Thus we have a rather frightening set-up for hyperinflation in
the US: the largest emerging market players are moving away from using
the US Dollar at the same time that US monetary authorities are engaging
in disastrous policies similar to those employed by the men who brought
hyperinflation to Weimar Germany.
I firmly believe the US will see serious (‘70s style inflation)
if not hyperinflation within the next 2-3 years. It could come sooner
depending on how the Fed’s policies play out.
The purpose of these paragraphs was to say that the financial elite
in the US are maintaining similar views to their counterparts in Weimar
Germany. I DO NOT say the US is just like Weimar (though I say I
believe we will experience similar hyperinflation at some point). I DO
say that the financial elites in both countries engaged in similar
practices. That’s a key difference.
Mish however, takes my quote to mean that Weimar and the US are
identical in every way. He then lists four key differences between the
two. His differences are:
1) Germany lost World War I
2) The Treaty of Versailles imposed repayment conditions on Germany that could not be met
3) To enforce the treaty, France occupied parts of Germany
4) Germany printed money so fast people burnt stacks of money for heat
On the surface these do indeed look like major differences (the US didn’t lose WWI, ISN’T forced by the Treaty of Versailles to make debt payments, isn’t being occupied by France, and has yet to print enough money that people burn bills for fuel).
However, these are only differences if one takes everything literally.
The US, like Weimar, is a massively indebted nation. And the US, like
Weimar, is being forced to continue to issue debt and repay it (though
in the US’s case it’s Wall Street and their lackeys in Washington
pushing for this). Like Weimar, the US CANNOT repay its current debt
obligations. And we’re also being taken down this road against our will
(this time by Congress which ignores the fact most Americans don’t want
us to issue more debt, similar to Weimar’s financial elite who continued
down their path of loose money policies).
And finally the US Federal Reserve is printing money… like Weimar. Is
it the exact same amount? No. Are people burning bills for fuel? No.
But did I claim that the US was doing this? NO.
Again, the primary differences Mish lists between Weimar and the US
are only differences if you take everything from a literal standpoint.
And I wish to reiterate that Mish didn’t correctly get the primary
points I was making in the sections he quotes. Of course that didn’t
stop him from saying it was all “nonsense.”
Mish then takes issue with my suggestion that a common currency in Asia could potentially be a viable alternative to the US Dollar as the reserve currency of the world.
Mish quotes the following from my article:
Indeed, it was just revealed that ASEAN+3 countries (Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,
Singapore, Thailand, Vietnam, China, Japan, and South Korea) are
researching the prospect of a “common currency” similar to the Euro.
The significance of this development cannot be overstated.
Once again, Mish ignores other parts of the article in which I state
that common currencies in general are flawed. He also ignores the fact
that I never actually say a common currency from Asia is guaranteed. I
DO say the following:
What I mean is that should a common currency be
introduced in Asia, it would probably work for about 10-15 years. By
then we’re well into the 2020s if not the 2030s at which point it is
quite possible China will indeed be in a place to provide a world
reserve currency on its own.
I wish to stress that even if Asia doesn’t implement a common
currency and the US Dollar remains the world’s reserve currency (I put
the odds of this at 20%), we are still facing a debt default in the US
which will result in the US Dollar dropping dramatically in value and
ushering in serious if not hyper-inflation.
The inclusion of “should” clearly illustrates that I am NOT saying a
common currency is guaranteed in Asia but instead could be a potential
option IF the respective Governments pursue it. Mish misses that point.
But again, it didn’t stop him from calling my piece “nonsense.”
The rest of Mish’s piece consists of the same literal interpretation
of everything I say. In the end, while trying to discredit my ideas
while presenting himself as vastly more astute than me (to readers who
likely didn’t even bother reading my article or the ones preceding it),
all he really does is indicate that:
1) He doesn’t actually bother to understand what an author is saying before attacking his or her views
2) He has no issue calling others’ work nonsense without bothering
to speak with the author or read additional material the author has put
out
Regarding the latter point, I actual have spoken to Mish several
times on the phone in the last few years. The most recent call was in
July 2009. At that time I called to discuss the inflation/ deflation
debate with him. Our debate consisted of Mish yelling for 15 minutes
straight about how inflation didn’t exist and that anyone who believed
it did was an idiot. I had to ask him to stop yelling several times so I
could actually say something.
This is why Mish’s piece wasn’t totally a surprise for me. I’d
already experienced his “no room for contrary views,” take on economics
personally. And it’s not surprising that a man whose notion of a
friendly discussion involves screaming over others would publish an
article attacking someone else’s ideas without bothering to even figure
out what the person is really trying to say.
By the way, the time when Mish told me inflation didn’t exist and
that I had to be insane to claim it was a reality was July 2009… when
Gold was at $900 per ounce, Oil was at $70 per barrel, Wheat was under
$600, and Copper was under $2.50.
However, I’m not going to personally attack Mish’s views or his writing because there are FOUR key differences between us:
1) I believe that writing a piece attacking someone’s ideas offers little if any value to readers or investors
2) I don’t actually read him much so I’m not familiar with his
views... so even if I wanted to attack him, I wouldn't feel comfortable
doing so
3) Before attacking the ideas of someone who I’ve actually spoken
to over the phone (several times), I would first write him a personal
email asking him to clarify his points so I had a better grasp of what
he was saying
4) I don’t consider views that are contrary to my own as “nonsense.”
Obviously none of these hindered Mish.
Graham Summers
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I do hope that treasuries, and housing -just coming off a bubble- are not the only things you are looking at.
And the CPI not the only thing you take as a gauge of inflation.
But, .....but.... the $US still is 74 c at kitco. Hasn't changed for days!
Mish is brighter than the average investment columnist blogging on the internets, but he is neither infallible or omniscent. He, as we all are, is merely human. I sometimes enjoy reading his stuff, but his kneejerk reactionary element is so blatantly obvious. Watch him foam at the mouth if anybody mentions unions in a positive light.
The man has some emotional problems that tend to make his analysis prone to blind spots. He has shone a light on many issues that others sweep under the rug. I trust him more than the corporate media, but that is like damning with faint praise indeed.
The future is a moving target, but trends can be noted and extrapolated.
Poverty levels are increasing in this nation, and nothing is being done to contravene this tragedy. Food stamps are now used by one in seven Americans, unemployment is at record levels for this century, with likely one in 5 workers unemployed or working part time. Mortgage defaults continue, as do foreclosures.
All these trends point to a very wobbly socio-economic system that is prone to fall even farther out of balance with slight impetus. Hyperinflation is certainly a possibility, along with deflation and currency devaluation, my crystal ball is a cloudy as the next man's. The one thing I can say with certainty is there is no recovery awaiting us in the near to mid term, ie the next 5-7 years.
The real question is not hyper inflation or deflation, but rather when do the riots start here? We are no more immune than Greece, or Ireland or even Egypt. We are tumbling into the 3rd world, there is no justice, no law, no change, only the overarching greed of the oligarchy destabilizing a crumbling nation.
Soon it won't be about how to make a buck,or how to preserve a buck, it will be how to survive until the chaos recedes.
We should get Leo K and Mish to cowrite an article on union pensions. Man... that would be front row entertainment!
"The real question is not hyper inflation or deflation, but rather when do the riots start here?"
Ans: Unless you're under the age of about 20, and even then, probably not in your lifetime.
The Russians turned things around in 20 years. Inasmuch as this will be a global collapse, with less trade and international aid to pull each country up, my guess is we rebound in 40 years. You heard it first here. I made the call. My book rushes to press in 2051.
I am surprised, TD, that anyone could get under your skin. Zero Hedge is ground zero, because you dare to question the MSM and the party line. Your status is very high, so you will naturally attract enemies, groupies, and fliip floppers.
I like Mish's work, but he seems a little too tied to fundamentals, and we all know that fundamentals can be ignored longer than the central banks can remain solvent. Maybe Mish ran afoul of all the sewage that goes through our brains. Sometimes we go off on a tangent that proves false. I won't appologize for that, that is the only thing that keeps me free and thinking for myself.
As for Mish's issue:
1) Can he explain to me the difference between losing one big war or be slowly bled to death by 3 "small" wars?
2) ZH is pretty much a mirror image of the Socratic method. We lay out an idea and tear it apart. Anyone who enters the debat at any one point can find people discussing any number of wigged out theories, but it is the stew of all the ideas that gets at the truth. I am hoping that Mish understands this.
I like your description of ZH as the 'Socratic method', even if you did mistake Graham Summers for Tyler Durden...
I've actually never seen anyone get under Durden's skin; probably would be easier if there were only one 'Tyler'. Tyler has multiple faces, which is a propos of the whole Fight Club theme when you think about it. And yes, he *does* need me to defend him! How else could I call myself a proud ZH Groupie?!
If I wasn't a ZH Groupie, then what ever would I do with all my short schoolgirl skirts...
Mish can get under anybodies skin, and up their noses, he is one of those people.
He is a smart guy and has some interesting ideas, I think he works hard and is certainly sincere, but he is also one of the most intricately puckered assholes to ever send me an e-mail. Just a flaming egocentric fat bastard, the kind with fat bastard sauce and all.
Ben is making everyone look stupid. Mish is just one of the first
There hasn't been (price)deflation for at least two years. Mish is definitely wrong for all that period. The plunging home prices have been countered by rising prices of almost everything else. Thanks to the Fed of course.
Being MISHED is an honor, indicating sucess. Much like a software producer being bought by Microjunk and then disassembled. Enjoy, someday when my humble blog gets MISHED I will be proud.
http://oahutrading.blogspot.com/
Mish is a windbag lackey of the Banker-Gangsters. The likelihood that he's ever done a day of real work in his life is hovering right around 0%.
First of all, I would not refer to him as "famed". Mish is a bag of hot air that parrots other people's rhetoric.
Keep your articles coming.
I absolutely agree. He has made a name for himself in the blog world without an original thought. I used to read his writing but very quickly saw he has developed his following off of others thoughts. Not a bad thing if you gather information for others to digest, but he wants to say it's his original thinking. Not even close. Read a couple of his writings and you'll see right through him.
You have framed the Windy City Wetter in the perfect way. The only analysis method he is capable of is vitrolic name calling. Never any real analysis. Never. And unable to engage in real debate, requiring an understanding of the opposing views.
Mish is a deflationist. He thinks the world is going to hell in a handbasket, pure and simple. This view is statistic-based & number dependent: it brooks no contemplation of human behaviour being "illogical" or of the thoughts and actions of players being able to change results. This is an expensive view that ignores the huge amounts of money to be made in the meantime...
To these people, inflation is defined VERY strictly. Mish is constantly going into great detail to define "inflation" and uses credit availability, MZM, M1, M2, Austrian TMS, etc., to make the case.
There is no room in this worldview for "investor behaviour" being unpredictable or individualistic. Or for a continuing loss of confidence in a currency, over YEARS. To policywonks and number-crunchers, investors move in herds; they trade monolithicly and predictably, only with immediate self-interest in mind.
To diehard deflationists, the existence of simultaneous leveraged or credit-dependent asset price deflation AND price inflation in demand-insensitive essentials is impossible to fathom or, as Bernanke supposes, is "transitory".
One of his fellow deflationist-roaders has been the Australian Steve Keen. That's right - the guy who has predicted housing deflation for many years to no avail...anyone who had followed his advice & sold years ago lost a bundle.
Point is: don't ask them for "timing" and DON'T use anything they say as a basis for investment. Steve Keen and Mish WILL end up being right...SOMETIME...in a galaxy far, far away...
Remember, everyone, Mish is merely one of the bog Irish who has been affected all his life by the "potato blight".
None of ZH's readers can remember his ever having written a logical word. Suppuku is the only honourable course left to him.
Wait a cotton picking second-wasn't he "right" in the fall of 2008? (He had been blogging about a huge credit/debt deflation for over a year prior to that time) And don't all the readers of this board wish they had been 100% in cash and USTs at the time (even better than being long Au and Ag)? I know I wish I had been paying better attention! His consistent liberatarian, small government views, no foreign intervention views are very admirable. There has been a huge contraction of private debt/credit over the last few years. Only the huge public credit/debt expansion has been able to temporarily dampen it. And even that wouldn't work without mark to fastasy accounting gimmicks for the banks.
Mish is an Obam butt boy.
Glad to see other people get it.
Mish has never figured out that knowing the name of something is not the same as knowing something
Richard Feynman on this subject: http://www.youtube.com/watch?v=05WS0WN7zMQ
Just because one divides infinite reality into binary, deflation v. inflation, according to some strict definitions, doesn't mean that actually reflects reality. Some people actually have the ability to think outside these simplistic symbol systems, in abstracts, more closely modeling reality. Who would have thunk.
"The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum—even encourage the more critical and dissident views. That gives people the sense that there’s free thinking going on, while all the time the presuppositions of the system are being reinforced by the limits put on the range of the debate." Noam Chomsky
Mish and Denninger make excellent analysts; but are clueless when it comes to macro-thinking, because they've never been shown that there's an infinite number of maps for the terrain.
True, some bloggers are decent looking for details, but miss the big picture.
I wouldn't pay anymore attention to mish, douchninger, as anything feenix capital has to say, one of ZH's weak contributors.
Everyone trying to forecast with bullshit stats. The banksters are trying to save a ponzi system and will kill it, once they have no use for it.
The dollar is deflating, prices for food and energy are inflating. The depression is on, bitches.
I couldn't disagree with your comment more. The most articulate and thoughtful deflationist in North America is Nicole Foss, writing under the name Stoneleigh on The Automatic Earth. She puts tremendous emphasis on herd behavior and the concept that the mood of the populace is a huge factor. You should read some of her articles about this listed on the web site. I mentioned North America because the best academic deflationist in the world is Prof. Steve Keen of Australia.
Many+ I really like Foss, but for some reason Auto Earth will no longer load on my computer, part of the page loads, the banner and the left sidebar, but nothing else. I tried writing to them, no answer. I really miss that website. She ripped Gonzalo Lira a new one a couple months back in debate, he of the uber hyperinflation camp. Or so I am told, I can't load the damned thing to hear for myself, maybe someone has (or will hint hint) post it on youtube.
I will have to check out this Steve Keen of yours, I am surprised to see there is anyone considered a deflationista that I have not heard of. For those of you unfamiliar with Lira he is a dyed in the wool hyperinflation man and also like Mish a bit gruff, wildly catholic, Mel Gibson catholic, but worth having a look at his writing. http://gonzalolira.blogspot.com/
+1
I agree with your post, especially the part about Foss being a leading deflationist who doesn't speak in jargon and more importantly states her conclusions up front.
I have been searching for a transcript or copy of that debate between Lira and Foss without luck myself.
I purchased one of Steve Keen's books and as he himself warned its dry dry dry. Still glad I bought the it but his writing is often technical and rather uninteresting.
You can find both Keen and Foss interviewed by Max beat a dead horse Kaiser over on the tube.
But what's an "academic deflationist" without charts, stats and government numbers and strait-jacket strict definitions? NOT MUCH. And nothing you can trade on...
But some things you could trade against...
All this talk of deflationists and no one brings up grandaddy Pretcher, "At the Crest" and "Conquering the Crash" since 1994.
...and don't forget, gold is still going to 200. 200 somethings, I don't know what.
you lower yourself by even responding, check his comscore
a link on a lowly comment on a ZH contributor article can generate hundreds of hits (excluding obvious spammers )
there is a line up of bloggers who want attention and what better way than to trash ZH or its contributors - hint TD quite wisely ignores them - good that you didn't link to his site - next time try using a pseudonym when referring to him
A couple of notes for Mish:
1) Everyone lost WW1. Even France. Especially France, because France's heavy-handed treatment of Germany (much deplored by England's Lord D'Abernon) was what predisposed the ruined and humiliated Germans to put Hitler in charge of teaching the Surrender Monkeys a lesson.
2) The Treaty of Medicare/Medicaid and the Social Security Compact laid unpayable terms on the defeated U.S. taxpayer.
3) To enforce the treaty, the Fed occupied Congress.
4) The Treasury doesn't print money very fast anymore. It mostly digitizes it, so people will not be burning bundles of Fed credit in their furnaces to keep warm. They will just freeze to death, or follow me to Mexico.
Other than that, Mish, whatever.
Can't beleive I actually saw MASH on TV last night, maybe first time in a decade. Lets call him MASH.
I think you meant "Mush".
I am not trying to be anyone's friend here, but ZH does read Mish (see Global Economic Analysis to your left).
Gold going higher!!
http://deadcatbouncing.blogspot.com/