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Michael Pento Gets In Touch With His Feelings, Tells The Truth About The Fed
Someone get in touch with a medal for Michael for daring to say what every CNBC producer hates more than anything, the truth.
Yet the market celebrates 7 more years of ceaseless asset bubble creation, debt monetization, and dollar destruction.
At least Hamptons real estate will be back to its bubble levels soon enough, as the US middle class completely disappears over the next 10 years.
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But... But... Isn't the Feds independence essential as an institution to safeguard the worlds reserve currency from political meddling?
Facts need to be amplified by every possible means and I applaud Michael for doing this and to ZH for posting it.
http://www.thenation.com/doc/20090803/greider/1
The jolly fellow keeps saying Fed has given us great growth. Of course won't mention meltdown scares every few years. Arsonist is the hero as long as he extinguishes all the fires he starts until he can't... Someday we will have Iceland-style lawsuits.
our whole economy sells on 'innovating' - new ipods and websites? What an innovation!
How To Change Everything:
http://www.youtube.com/watch?v=uQGYr9bnktw
Hey, that was cool. I guess we are all vagrants in the Zero Hedge Tribe!
yup, that's what I was thinking.
hey thanks for the link, that was good stuff
Great video and thanks to the ZH heretics. I realized the other day that instead of going to about 15 different websites I now only go to a few with ZH being the best. The articles are great but it`s the abilityh to read what others think of the post without the Republican/Democrat arguments. Most financial sites are just kinda dictatorships with the host speaking and readers reading. ZH promotes thought and discussion and seems pretty straight.
The "producers" at CNBS clearly allowed Pento to rant about the need for returning to a gold standard because he obviously looks and sounds like a nut-job in doing so.
Mission accomplished.
Now back to the gaming tables with those fiat FRN's borrowed at 0.25%.
That's way you rarely see Peter Schiff or Ron paul.
Mike Pento's body language was rather strident, but the laughing clown from WFC on the right looked like a carnival barker blowing off complaints about his crooked game.
Have to love the Wells Fargo rep laughing dismissivily yet offeirng no rebuttal of the facts other than the economy is to complicated - says it all
How did that ever get on Cheerleader TV?
When Obama introduced Bernanke this morning he said "And we will continue to maintain a strong and independent Federal Reserve."
Wonder what that will mean if HR1207 ever gets to the floor, or better yet, his desk.
When China pulls the rug out from under us within 10 years, we will get rid of the Fed. China needs its consumer society to grow to the level at which it can replace us ... so our "leaders" will ignorantly play along until we are fully enslaved. In the meantime, we the public, will flounder through life fat, dumb and happy.
years and cost millions of lives. No, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid
good articles; good articles 4 slow news day ..http://www..
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Given Wells Fargo's loan portfolio, it's no surprise that guest #2 (with the WF logo behind him) likes inflation.
Wayyyyy to much common sense going on at CNBC this morning.
Good job Michael!
I love the Bernanke news at the bottom of the screen. "The 2nd coming of Alan Greenspan" (per Michael) is nominated for a 2nd term just as this bubble is getting ready to pop.
Let me see, we praise Berananke for another week. The equity markets start drifting down. By Oct/Nov they are cascading down. Bernanke's appointment can not be confirmed until January, 2010. By then, I'm thinking...ummmm... Bernanke is not look'n so good and the WH will need another body to throw under the bus.
Don't think he is going to make it a 2nd time around.
Just a thought.
Unbelievable times -- a push for a massive healthcare bill while running record deficits. The US has got to be the biggest Ponzi scheme of all time at this point. No one could possibly believe this debt will ever be repaid.
Mark pretty much owned Michael - who was very loose with the facts. For example he stated Greenspan 'favored the gold standard' - but he neglected to mention that this was in the late 50's when Greenspan was a masters student. He reversed his position as a Ph.D and again when he joined the Fed. Secondly, the housing bubble had little to do with the Fed. If you look at the divergence of housing prices and inflation in the 90's it coincides with the revision to the CRA - which forced banks to make 'liar loans' and FNMA's/FHLMC's changing of their strategy from customer service to market share - and who agreed to buy all the trash mortgage lenders could produce and stamp the US's govt's AAA rating on it and sell it to the markets.
We've been on the gold standard before - it failed, and would fail again for the same reasons. Even the inflation argument is bogus. It ignores productivity gains - largely from the easier access to capital, which is no longer restricted to the rich as it is under a gold standard. Back in 1911 a suit did cost about $100 - and the average worker had to work 6 months for that suit (at 50 cents to $1 a day wages.)
Today, the same custom suit costs $1500. So yes that's inflation. What is different is that the average worker now works a week or two for that same suit - that's productivity. That is why we've had the greatest era of prosperity the world has ever seen and why we have more leisure time than our grandparents - who didn't have more when compared to their grandparents - both under the gold std.
It's not that difficult, for those with eyes to see.
Do you work for a financial institution? Just asking.
I worked as a consultant to Fortune 500 companies for 8 years (mostly on non-qaul plans), portfolio manager and then derivatives trader for a regional bank. Went back to school, got my Ph.D and I now teach finance.
God help us all...you TEACH???!!!!
I'm telling you this with the best possible intention as a former colleague( although not in finance ); i really feel sorry for the kids you teach finance; i really do.
Lol.. don't. My student's (chair their thesis) are in rather high demand, the last few years they've gotten salaries in six figures. My current ones include two international, one who's already recieved one offer in Europe.
They do quite well.
No amount of money can fix the kind of stupid they're fed by you.
exactly
2nd
Don't be stubborn.
Buying things using debt currencies like the USD (and all other modern currencies) most definitely increases productivity. Don't believe me? What's the first thing you do when you are in debt? Answer: You work to pay it off. Debt encourages you to work. With a debt-based currency, society, in aggregate, is forever in debt. And society will forever work to pay it off because it's mathematically impossible for us to pay off the debt.
Gold-backed currency would have you earn the gold first, and then make your purchase. It reverses the order of things. Since you have to work and save in order to buy anything at all, you end up working less and buying less. Productivity goes down. We become less efficient from a production/time point of view (which isn't necessarily a bad thing if you are concerned about the earth).
It is my personal opinion that both systems can work. It's the details like money supply / distribution, interest rates, and who collects the interest, that will determine how well or poorly each system will work.
Given the high probability, upon reflection at least, that your post is sarcastic, I won't write my initial reaction to it.
I am not sure about your probability estimate, but i will do the same.
well said.
he teaches finance, here he's talking economics. two different things, so be nice...
who gives a shit about your students six figure salaries...your thesis and the majority of the bankers and their so called intelligence have raped this country since 1913...the US is 100 trillion in the hole and counting and you have the gall to call it the greatest period of prosperity in history all built on the most ridiculous ponzi scheme the world has ever seen .....we live in a world that should not exist because of fiat currencies and the lack of true supply demand economics...excessive debt is what created the illusion of wealth for the vast majority just ask the 1950's middle class with one working parent vs the 21st working parentS (yes 2) just to meet your so called standard of living.....the fact that you teach this garbage is sickening.....you will learn......... doctor
You are the King of the world and Captain of the Titanic.... But how do you really feel about knowing it all?
Ohhh, six figures. Impressive.
I think an entry level marketing manager at P&G makes six figures these days.
Thanks to the Fed, of course.
I guessed as much from your comments, :-o
Ah, a bank derivatives trader. Well, there is a bell ringing now at the Temple (the Federal Reserve.) It's time for you to bow and say your prayers to the High Priest of monetary policy.
Meanwhile, here in the real world we're preparing for a sort of second Maccabean Revolt for you and your ilk.
The trading desk had nothing to do with the Fed or the commercial bank activities. We were a seperate function...
I've never worked for the Fed. They have requested some of my research. Sorry.
Sure, sure. So how come the ONLY stories you comment on are ones attacking the Fed?
Maybe because you are a paid lobbyist for the Fed?
>> They have requested some of my research.
Proof positive that you're somehow connected to this incestuous group of thieves.
She works for the Fed.
judge: please stop spoiling all of our fun with facts -
The average worker NETS 1500$ a week or 2? Could you post the link to where you get your stats. A few years ago an average worker may have been able to put 1500$ on the card with not too much worry. But you are saying that, today, the average worker, after alotting for; a house payment, a car payment, house ins., car ins, credit card payment, student loan payment, (suplemental) health ins, electric bill, gas bill, internet bill, garbage bill, food bill, the average worker still has 1500$ disposable income per week or 2? That seems a pretty bold statement.
was talking gross wages for the avg 1911 worker and today...
Of course, in 1911 there wasn't electricity for many, garbage bills, car payments etc...
We have more of everything today. That is the productivity gain.
It's a debt gain, unless you have money to pay for it. Home equity goes down, down, down. What are you not learning from the collapse of the housing bubble?
We have more of everything, except of course time. And the question is, has this more of everything actually improved our quality of life? Of course on the superficial plane the answer is yes. But there is an inflection point of shit we don't need, and money we don't have. And if we have reached said inflection point, is it not the right time to reassess the situation.
You used the term, "access to capitol", that's a fancy banker way of saying credit right? Because we know the stigmata that has latched itself to the term credit, so we wouldn't want to say that. I mean how absurd would it sound to say that we define progress as; Further indebtment of the public by charging them to convince them to buy shit they don't need with money they dont have.
"But what about your microwave, surely this is progress you are willing to make sacrifices for", yeah a microwave, you mean the thing that allows me to eat food like substances very hot, almost like they were actually cooked, rather than having a good healthy home cooked meal, because I don't have time to cook due to the fact that I have to rush out the door to make it on time to be at the job I have so I can make money to pay banks to convince me to buy shit I don't need with money I don't have.
My point, if this is progress by your definition judge, I would choose the tribes of non-progress thank you very much. Your opinion is duly noted, but found wanting.
cheers...
My defination... no, it's common, but if you compare your life to your grandparents - they, on average, were poor, uneducated, agarian workers who struggled to have enough food to eat and wore handmedown clothes.
There is no real basis to think we aren't more prosperous - by any defination, than our grand and great-grandparents - using any objective standard. And yes, some of it is due to larger 'credit' but there was 'credit' available then. My father's family were tenant farmers, who were extended 'credit' to live in a broken down shack or old barn while my Grandfather and the 6 sons worked the fields from sunrise to sunset. Often during the year all they had to eat was potatoes/corn with little meat.
We have no idea how much better we live than our predecessors.
As I said, your definition of progress, that being; where we are now is fundamentally better, then where we were then. You want to quantify your answers based on material possessions, yes food is one that is fundamental, but as a matter of fact we know that obesity is greater epidemic threat, than swine flu. So the question remains does excess, by definition, equal better.
Second, there are some who do not quantify life as quantity or quality of possessions, but rather quality and quantity of relationships, something the modern world of big business denies many humans, even as it assumes the rights of the very humans it would deny, as it furthers its endeavours of convincing us what we really want is more shit.
This is by no means a call for the return of cave man days, but rather a demand, that we take a step back and evalute the direction we heading, and ask ourselves, is this the direction we want to go. Xanex, and time cards, CDS, Corrupt CFOs', workin' for a dollar, taken home a dime. Is this really what I, as an individual, define as progress?
If not, then why am I furthering it's cause?
Judge; here you go READ something valuable ... http://www.scribd.com/doc/19069578/ANDREAU-Jan-Banking-and-Business-in-the-Roman-World-1999
They were closer to the truth and had gratitude for what they had. For one thing, they would have survived where you and your students are woefully unprepared for the result of your successful understandings ...and getting more so daily as you count your six figures...they lived in truth, you will die in a lie.
So inflation was responsible for sewing machines and people who created mass production and refined production processes? That's the most backward argument ever. You're arguing that because the prices of food and clothing increased, wages increased... these would move up in tandem anyways, what's really happening though is that the more we inflate our way out of this is the more that we sink the future of our nation. I won't argue that Pento looked like an idiot in his argument and that's the way it goes, until we finally formulate an advance in economic theory we aren't going to be rid of the Fed and this crisis. But we're close to finally being able to do so... those who say the Fed is harmless is naive. Those who say the Fed should be abolished but cannot produce a better alternative is a dreamer who is too lazy to do the work to find a better way.
Build a better mouse trap and the world will beat a path to your doorstep.
But don't tell me that the mousetraps we have won't break your finger in a second if you stop paying attention.
You confuse inflation with access to capital, and they are probably linked. BUT, under a gold standard, access to capital was severely restricted due to the lack of money supply and the expense of storing gold. This is how the 'banking trust' came to pass and how bankers got so much power. Now bankers are so diffused, none can corner much less control their own markets or that of the nation. You don't see rich and all powerful banking families anymore.
The productivity was unleased by entreprenurs having access to capital that they could afford - which they didn't under gold. Is also why many more people own their own houses now - under a gold std, the average joe couldn't afford capital.
It is the access to cheap capital that makes the dreams possible for more people - that translates into a higher standard of living on average.
Completely ridiculous argument. Entrepreners didn't have access to capital until we went off the gold standard? We built this country on the gold standard, which we were on until Nixon shut the window.
This country thrived under a gold standard for 200 years and is collapsing under fiat currency, in less than 50 years.
Your bubble finance system has failed every time in history. You have been judged and found wanting.
don't argue with Gold Bugs. It's like arguing with Scientologists.
It didn't thrive during that period - that claim is complete nonsense as is the claim the US was on the gold standard the whole time - they weren't and in addition, there was a bimetallic standard for a time.
The Great Depression started under the gold standard. The 1800s was beset with continual monetary shocks worse than anything any of have ever lived through.
Your argument and the logic behind it are both ridiculous.
Access to capital was not "restricted" under a gold standard. Throughout the time the US was on the gold standard Capital formation was extremely robust thanks to SAVINGS. SAVINGS was made possible by the fact that the nation as a whole was a PRODUCER and NET EXPORTER.
Of course once you have wasted several decades OVERCONSUMING and producing next-to-nothing of value for export (other than military hardware) that is a different matter altogether. In the absence of robust domestic capital formation, BORROWING huge sums at artificially low rates of interest becomes a matter of sheer survival. BORROWING on this scale of course could never be possible on a gold standard. Hence the need for fiat money and a Federal Reserve to manage the ongoing INFLATION that is absolutely essential to this process.
Amen brother.
Dreams are possible?..living off the garbage heap you produce as you live in your higher standard..you will be the begging those that knew what your forebears knew.
JESUS F***NG CHRIST; NO ONE CARES FOR YOUR GARBAGE
i know they pay you to write bullshit on at least 50 boards; but please go away; every post you write is so blatantly false its mind boggling.
that's about your 5th or 6th consecutive post where you have nothing but insults. If you can't argue the facts, as you obviously can't, then don't waste the bandwith with the insults. We already know you hate me and are a idiot.
I'm comfortable with that.
when i see a child why should i treat him like an adult ? hm ? history of money and history of economics is so much against you that i wont even bother and try to explain it to you. go study monetary policy of the Roman Empire and then come back to me; your Ph.D is practically worthless. Also, it would be good for you to learn something about the difference of abstract and non-abstract values and their behaviour in context of systemic stability.And try to learn something about functions of money and the behaviour of FIAT currencies and asset-backed currencies in the context of those functions.
CB, they pump monetarist bilge at B schools worldwide, as a means of strengthening and continuing the system of government-controlled-money. This paradigm is the ONLY reason we have not yet had a currency crisis.
SW i know, but you can not be indoctrinated like that when you have a Ph.D. i mean; its one thing to memorize information and follow prevalent ideological paradigm, but to be critical in you thinking and actually learning something is something completely else. The degree of dogma is astounding here.
*Slap* x
why bother even attempting cogent discourse with such fools? this site has become nothing more than a Yahoo message board. next thing, every other post will be "TIMBERRRR", "THERE SHE BLOWS", "BACK UP THE TRUCK", etc. etc.
So what you are saying is that the rich gave us fiat currency to spread the wealth around How naive. The reasons we have had massive productivity are no foreign competition (after WII), then cheap energy, then importing cheap labor, and finally cheap money. These are mostly spent.
Governments like inflation so they can constantly point to all the things they are doing for people. On the gold standard, they actually had t tell people no.
Didn't watch the video but like this post, economic royalists tend to demur nowadays ... a couple thoughts.
Subprime cracked cause the poor always crack first .. they were the canary, the coal mine was income inequality and debt/leverage run amuck.
There was a hunt for the last remaining borrower on the face of the earth, and underwriting went for a ride <Moody's tweaking that model to make it work when the simulation software kept on showing it would blow up sir!> ... at the same time I offer acknowledgement there was pressure by regulators due to community reinvestment.
Gold standard was abandoned historically because it worked.
Oh and productivity? Here's a nugget:
Bill King
U.S. productivity rises at fastest pace in six years ...so what. Over the past decade productivity gains have NOT been accompanied by higher real wages and living standards – a first in US history. Long-time readers know our crusade to debunk the ‘Great US Productivity’ miracle, which rests on faulty, if not fraudulent US economic data that understates inflation, which overstates production(GDP). Years ago (Sept. 2003 IWRC), Sen. Robert Bennett (R-UT), a former banker, told CNBC that when Easy Al saw that productivity numbers were not showing bigger gains, the worst Fed CEO in history went to the BLS and told them ‘this cannot be true!’ Bennett added, ‘and do you know what, when the BLS reworked the numbers they found huge productivity gains.’
We literally jumped out of our chair when the naive senator unintentionally suggested that Easy Al had the BLS cook the books so Al could keep pumping credit and paper over declining US living standards due to the massive transfer of wealth abroad.
We elaborated on Bennett’s unintended expose in our ensuing missive. A day or two later we got a call from a West Coast Democratic Senator’s chief of financial affairs.
Productivity is defined by the BLS as ‘output per hour of all persons in the nonfarm business sector.’The BLS reports that hours worked plunged at a 7.6 percent rate in the second quarter and unit labor costs declined 5.8 percent, the biggest decline since the second quarter of 2000. By understating inflation and overstating GDP/output, productivity soars when hours worked plunges
Gold standard worked? We had regular depressions, widespread poverty and very little upward mobility.
That changed under the Fed. Now is it a perfect system or has it performed poorly at times - certainly, as has any human institution.
But can the patient be cured without killing it is the question. And there is no, NO, argument that productivity has improved greatly over the past 75 years. Just in measuring leisure time if nothing else have we gained greatly. I think the standard of living improvements are obvious.
Otherwise, I agree with the substance of your comments, if perhaps for slilghtly different reasons.
I'm all for prudent regulation without that Marx(not Groucho) was prescient.
But whether you claim savings glut or reckless consumers ... no doubt the many inequalities of the global system has caused great instability.
With gold the money aint for nothin' and the chicks aren't free.
We might just see that we follow a path more common to the a period prior to regulation we recently repealed.
Yes I would agree that productivity has greatly increased in the last 75 years point suggested was that part of our current situation is due to embellishment of statistics and the change in productivity only refers to time period stated.
It's important to remember that an individual like Judge with a career in finance/academia essentially lives in a bubble.
Years of working in a banking hierarchy essentially force feeds the bank's view of the world to the individual. Ditto for mainstream universities.
Views that clash with the orthodoxy are silenced and suppressed. Daniel Pipes referred to American universities as "islands of repression" in a sea of freedom.
This guy is completely oblivious to any negative that comes from excessive debt/money creation. Countless countries have been devastated by central bank inflation, but none of it registers.
Look closely, you can observe that he is not making rational arguments. He is repeating a dogma created long before he was born. Arguing with him is like arguing with a Jehova's Witness.
I'm an MD, who left my MBA program last year when it was clear the financial world was going to collapse. None of my professors could see what I could see so clearly. I also agree that a certain dogma is taught as true and they aren't happy if you are able to look outside this dogma. the industry which reaps rewards from the blind accemtance of thid dogma aint hiring anyone who doesn't preach it. That is why you have independent folks like faber and schiff. they aint going to get hired at places where they will say thing they do not want to hear.
In fact the same blind following exists in medicine.I'm not sure a gold standard is the answer, but interest rates except for emergencies should be above inflation.
The idea that the Fed is independent is BS. it is a consortium of private banks that act in their own interest. I think the facts speak for themselves regarding the fed. the outcome proves themselves to be more dangerous at this time than the benefits they supposedly bring. I have no problem with independent central banks, but the need to be as independent from private banking interests as congress. The NY fed is a joke. it is an arm of goldman sachs but pretneds to have the countries best interest in mind. People have awaken to the fact that the institution is in fact a big lie. That isn't going to go away anytime soon. Unfortunately the answer is in fact social unrest. If you owned everything would you get rid of the mechanisms of your power. No you institutionalize them and make them a part of the culture. The sad fact is that the American people are at war with their own government, they just haven't realized it. Unfortunately by the time they do the war may already be lost. I consider the reappointment of bernake to be about the same as Pearl Harbor. The public has lost a major battle and recovery aint going to be easy.
Yes you bloggers we are at war, so please send your letters to congress and the white house.
How much are you being paid to defend the Fed on message boards?
Someone gets it. Track the "Judge's" comments - she only comments on stories attacking the Fed. Curious, no?
Don't worry. There are many more of us than there are of them. These drones are unable to think for themselves the way a normal person living in the real world can; they only know how to recite from their texts and slander their opponents.
it was sold and repackaged as such
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Senator Paul Sarbanes: "... is it your intention that the report of this hearing should be that Greenspan recommends a return to the gold standard?"
Greenspan: "I've been recommending that for years, there's nothing new about that. It would probably mean there is only one vote in the FOMC [Federal Open Market Committee] for that, but it is mine."
- Senate Committee Hearing, September 1997
Huh... 1997? Seems a bit later than the late 1950's. In fact, I believe it might have even taken place subsequent to the receipt of his doctoral degree. Interesting, no?
Oh, and the prosperity brought on by the accumulation of debt in pursuit of a terminal debt load (which we have ALMOST achieved to date, that is, the point at which each additional dollar of debt has little to no - or even a negative - impact on GDP growth) is certain to outshine that experienced under a fixed monetary regime. The austerity of the debt unwind - or alternatively, currency collapse - is unparalleled.
Oh, and to assert that loose monetary policy has no impact on asset bubbles seems intellectually disengenuous at best. In addition, your inflationary example is skewed by global wage arbitrage. Examination of the matter within a closed system yields entirely different results. Also, the gold standard did not fail (as in collapse, as so many fiat currencies have,) although it was replaced by a cadre of bankers and their purchased politicians.
It's not that difficult, for those with eyes to read. Seeing's only the first step.
I was also under the impression that Greenspan had stopped advocating a Gold Standard long before becoming Fed Chairman.
Thanks for providing that 1997 exchange between Sarbanes and Easy Al.
Michael actually mentioned the fact that Greenspan reversed his position when he became a corrupt poilitician.
The housing bubble had everything to do with the fed. without the greenspan put in the early 2000's we would not have said bubble.
You also assume that capital is the same as money, which is also false. Another thing...inflation has outpaced wage inflation which is one of the reasons for our current 'disbalance' Your suit example is pure baloney. In order to buy a house an average person must work more years now than at any time prior.
The only thing monetary inflation accomplishes is the constant disbalance between the rich, who already own capital denominated in dollars, so it is good for them if prices go up, and the poor who get paid in dollars and for whom rising prices are bad. It is all just a giant disbalancing act.
Money should be a product of the real world, not the other way around, as you seem to think.
Again, michael's history is wrong. Greenspan changed positions in the 60's, before he joined the Fed....
Secondly, the housing bubble occured/began waay before the 2000's liquidity pump. The divergence in housing prices and inflation began in about 95 or 96. Secondly, the liquidity was a direct result of 9/11 - which almost crashed the economy. It was due to the fed that we weren't bombed back to third world status, and yes, the low mortage rates were a part of it - and the Fed probably kept rates too low for too long, encouraging the housing crisis further, but without the liar loans, and the CRA, it wouldn't have begun in the first place. Blaming the Fed for keeping the economy alive, but feeding it too much is somewhat nonsensical.
Blame them but blame them accurately. Then you can make better judgements.
Ohh right, the Fed saves the day again, if it weren't for that band of super heroes, the Earth as we know it would be gone, I'm guessing they are going to stop a metor next, or close the gates to xibalba in 2012?
C'mon man, if you are a professor of finance, why are you here? Just bored, and thought it would be fun to go match wits with the next big thing? No really be honest man...
just unreal...you actually think that 9/11 was the reason for the lowering of interest rates and not the tech bubble bursting? Really?
Unbelievable that someone who can discuss there issues in a relatively competent manner can be that stupid.
"The divergence in housing prices and inflation began in about 95 or 96."
In the Bay Area (where I live), housing prices have been doubling each decade since at least the 1960s. Wages have grown much more slowly. So housing costs have greatly outstripped wage inflation for decades, not since the mid-1990s. (And it also occurred both while we were on the gold standard and after we went off it.)
Your post is pure drivel. The gold standard never failed; it was abandoned so we could live beyond our means. How's that working out?
A suit didn't cost $100 in 1911. Where I live the average household income is about 45k, and both adults work. Can you do the math to figure out how long it takes to buy that suit at $1500 on one income?
Leisure time? You must be joking. Now both parents have to work, leaving their children to be raised in a Maxtix-like creche. People own nothing; cars, houses, everything is rented from the banks by worker serfs. 11% of the population is on food stamps because of all the leisure time they have because they are either unemployed or earning miminum wage (not enough to buy food or a suit).
I'm bored with refuting your silly, sourceless post.
+ 100000000 million dude
You can't refute anything when you don't even have the most basic facts correct. The $100 for a custom suit is correct and has been used in innumerable gold bug examples.
As far as current wages, argue with the SS admin who does annual wage surveys - here's one: http://www.ssa.gov/OACT/COLA/awidevelop.html
you'll see in 2007 the average wage was about 40,000 - divided by 52 is 780 a week or 1600 for two weeks - duh. The math isn't that complicated.
And both parents DON'T have to work - they choose to so they can have more 'stuff'. That's not due to anything the Fed has done....
Learn to add and multiply, and google, then get back to me.
Both parents don't have to work? So your contention is that a family of 3 or 4 can live on 40k? And how much 'stuff' will they buy on that princely sum?
The answer is that both do have to work, of course. Not only that, they have to borrow for a house, car, and anything else outside food and an apartment in a bad neighborhood. That's why they are tapped out, you see. Broke. Indebted. Foreclosed. Bankrupt.
What a wonderful innovation fiat currency is.
That was an excellent description of the casino/gulag/insane assylum that is the USSA.
Yeah, so it's not actually a week or two, the correct phrase would have been two weeks. Cmon judge, accuracy, it counts for something, don't give us fucking round abouts when you have the exact adress.
1600 every two weeks, and how many of those people have children... are caring for a mother, a father, a brother, a sister, an aunt, an uncle, a niece, a nephew. How many people is that 1600 every two weeks divided by?
How much did it just cost you and your children to wake up this morning in interest on the national debt.
If I selectively choose the math rules I follow I can make 0 = 2, but that doens't mean it's correct.
"average wage was about 40,000 - divided by 52 is 780 a week or 1600 for two weeks - duh."
So, you are an academic and yet you are now trying to squeeze your square argument that 'someone could buy a $1500 suit in a week or 2' through the round hole of using someones entire gross pre-tax income?
Actually, a man's suit cost about $20 back in the early 20th century.
No one but the super-rich would have spent $100 on a suit.
That's roughly about $5000 in today's money. A men's suit has cost roughly 1 ounce of gold for thousands of years.
Back in 1911 a suit did cost about $100 - and the average worker had to work 6 months for that suit (at 50 cents to $1 a day wages.)
Today, the same custom suit costs $1500.
actually you can not be more wrong about this; labor is not a point of reference when it comes to the value of money; non-abstract instruments are; actually in 1911 and in 2008 the suit costs the same when compared to silver and gold; also pretty much every other thing costs the same when compared to a non-abstract instrument. We can argue about gold standard but we can not argue about one thing; every central bank should be a governmental entity ( 100% owned by the government ) and should create the monetary policy independently. Banks are nothing more than a middle man who charges you money to give you money which is yours. also if you want to go into more specific details; the ratio of one months pay to the value in reference to purchasing power DECLINED about 40% since 1970s. Having 5x quantity of $ is not worth much when the aggregated amount of all the $ in circulation has gone up some 20 X.
Gold is currently 900 bucks an ounce. It hasn't kept up. Historically, gold is a lousy investment and getting worse.
The Fed is a gov't agency. There is no private control. If you think so, go try to buy some Fed stock or get your banker to up his payout or merge the fed with another company...
The goal of the structure of the fed was indpendence. If there is a way to further insulate it from the politicans/whoever, then it would have my vote, but I don't see and haven't seen anything better.
Good post btw... at least it's on the issues. I can respect that. Gotta run.
Gold is currently 900 bucks an ounce. It hasn't kept up. Historically, gold is a lousy investment and getting worse
????????????????
http://www.sharelynx.com/chartsfixed/115yeardowgoldratio.gif
http://www.sharelynx.com/chartsfixed/1RawPriceMaterials.gif
http://www.goldprice.org/gold-price-history.html
Go try to buy some stock in Rothschild bank. Must be a government agency too?
hahahahahahaha
The Fed operates for the benefit of its "member institutions", ie; the banks. Fact of life.
The only thing that is independent for the Fed is its responsibility to the whole of the society it garners its fractional banking slices from.
Gold isn't an investment.
It's money whose value can't be stolen by governments.
"More leisure time than our grandparents". Dude, what the f*ck are you smoking?
We now have BOTH halves of a couple, both parents in a family, that MUST work, and are ALMOST ALWAYS REQUIRED to go into debt, to float a family's boat these days!
Back before Alan and Ben f*cked up our currency, a man working a full-time job could make enough to pay his mortgage, save some for retirement and vacations, put his kids through school, have his wife stay home and take care of the kids, and overall enjoy his life. His family enjoyed much leisure time.
Keep smoking that shit.
Speaking of that, I remember when I was a kid, my dad was the only one that worked. Yet we lived a decent life, parents had nice cars, dad had a new Harley. Dad had a huge HO train layout in the basement. Dad paid for all medical bills out of pocket. Everything was fine and Mom was home all day to raise us three kids properly.
Fast forward to now. I am eight months unemployed. Wife works for good pay. We have two old beater Fords, 1998 both of them with numerous problems we cannot afford to fix. Our daughter and her kid live with us. If it were not for the fact our two cars are long paid for, we would be up shits creek without a paddle. If it were not for the fact we refuse to have a credit card, we would be in the same creek.
We are only doing good right now because we lived within our means for the last decade.
Another thing, about this $1600 every two weeks. Is this before or after taxes and everything else that gets deducted from a check? Because that $1600 every two weeks quickly gets eaten up by deductions before you ever see it. This is why it now takes two incomes to make-a go-of-it. To make up for all the taxes and other deductions that shrink your pay to nothing. My wife makes around $1600 every two weeks, she brings home a bit over $1000.
And that is going to get much worse in the near future as we all have to start paying for the "stimulus" bills. Don't you just envy your childrens future?
All I can say is you must be old or else your dad must have made significantly more than the average wage earner (or you lived somewhere where costs were quite low). I'm in my 50s and both parents needed to (and did) work in almost every family I knew when I was growing up. Most of the adults made about average wages (or slightly higher) for the USA workforce at the time so it's not like they were poor (or rich). And I grew up in a part of the country where costs were slightly less than average compared to across the USA (so the women didn't need to work because of higher than average costs, they needed to work to pay for average costs).
However, unlike today (or even the 1980s), most women worked part-time. Since the 1980s, almost everyone I know (male and female) works at least 60 hours a week (often much closer to 100). To me, that's the difference between working since the 1980s and working in the 1960s or early 1970s.
My grandparents, on the other hand, were farmers. My grandfathers and grandmothers (and parents, aunts, and uncles) worked very long hours during planting and harvesting seasons. But they had a lot of free time during the winter. The only people I know these days with that much aggregate free time during the year are retired.
"Back in 1911 a suit did cost about $100"
Where did you get that figure? What was the suit type? Highly arbitrary item choice. Would the average worker really be buying such a suit and wouldn't it be better to compare the price of a 1911 Sear's catalog suit with a modern catalog suit?
More leisure time? Did your great grandmother have a job outside the home? It was common place for a family to survive with only one earner even among the working class filth. -Without government aid!
In 1911, a $100 suit would be for the Czar of Russia, perhaps. The average suit for a working class stiff would be $15-20 range.
oops...their goes your theory.
The Fed keeps interest rates artificially low, which allows for greater misallocation of resources and prevents people from saving and investing. A project that would be a poor investment in a free market for interest rates looks like a good investment, when it actually isn’t. If people actually had to save money and invest or borrow from someone who saved interest rates would be higher, there would be fewer bubbles, and bubbles would affect fewer people.
Are you actually saying that the Fed caused productivity gains? Productivity gains were caused because people invent new technologies. Engineers, not Financial Engineers invent things, real engineers would still exist if there were not Fed. There would still be venture capital would fund research to improve technology if the Fed didn’t exist. In fact, there would be more venture capital because people would save more, buy less useless crap and have more to invest.
If there were no Fed, the ridiculous, unsustainable consumer culture we now live under wouldn’t exist and we would be better off for it. People would buy a home an pay it off, whereas under the Fed they borrow against it so they can buy a flat screen TV or buy a boat—and end up under water. Savers would be rewarded rather than screwed.
Back in the "Dark Ages", with governments on the gold standard, a peasant could work less than half a year and feed, clothe, and house his family. Nowadays, with governments on the Fed-debt-money standard, the same peasant has to work 51 weeks a year.
I'll agree with you about the gold standard but that CRA argument is completely bogus. Barry Ritzholz had debunked it over and over again on his blog The Big Picture.
The housing bubble was helped along by a toxic combination of cheap credit, short-sighted greed (whether flipping or bonuses) along with the securitized AAA rated crap you mention. But no, banks weren't 'forced' to make stupid loans for 19 houses in Vegas to anyone who could fog a mirror.
"It's not that difficult, for those with eyes to see."
So you are saying, "it is obvious to us elitists that we should not go back to the gold standard."
Hmm, thats interesting. So not going back to a gold standard has nothing to do with maintaining the status quo, and continuing to concentrate wealth into fewer and fewer hands?
This guy is for sure part of some 'fraternities'.
Hey Judge,
Why don't you put your money where your mouth is:
http://www.ritholtz.com/blog/2009/06/100000-cra-challenge/
Any standard of living improvements we have seen are due entirely to technology / productivity gains. According to your logic, it is impossible for our predecessors to have developed the wheel, first forged tools out of iron, etc., without central banking. Amazing we got out of the caves.
And access to capital only available to the rich under the gold standard? Have you seen any statistics on the growing wealth gap in this country? You don't suppose our fiat currency has anything to do with that, do you?
"For example he stated Greenspan 'favored the gold standard' - but he neglected to mention that this was in the late 50's when Greenspan was a masters student. He reversed his position as a Ph.D and again when he joined the Fed. " WRONG.
1996-06-20
http://www.c-spanarchives.org/congress/?q=node/77531&id=6877236
"Last year, 1 year ago, not 20 years ago, last year, Senator Sarbanes says:
All right. Now, my next question is, is it your intention that the report of this hearing should be that Greenspan recommends a return to the gold standard?
Mr. Greenspan. I've been recommending that for years. There's nothing new about that.
Senator Sarbanes. Okay. So, you'd like that. You want to reaffirm that position.
Mr. Greenspan. I have always held that system of price stability, which would come from any form of credible type of non-inflationary environment, would be very beneficial to financial system.
Senator Sarbanes. And you think we should go on to the gold standard.
Mr. Greenspan. I, personally, would prefer it. That would probably mean that there is one vote in FOMC for that, but it is mine.
Again, Mr. Greenspan would like to go back on the gold standard. I would like to see how many people would stand here on the Senate floor and defend this and say we ought to go back to the gold standard. Maybe a few. But that is where Mr. Greenspan is coming from."
Erin interjects with an important thought:
"we need prices to go up a little so that we can feel better"
I am so glad I walked from CNBS
Someone may want to point out the rolling asset bubbles (tulip mania), panic of 1907, and that they were much more frequent when we were on the gold standard.
the other criticisms are fair though.
Yeah, the difference is that nobody needs to eat, drive, or live in a Dutch tulip. Nice try.
LOL, epic WIN +10
You mean the tulip mania of 1630s and panic of 1907, the events that are nearly 300 years apart happened more frequently than the tech bubble of 2000 and housing bubble of 2005?
There have always been bubbles, and if you look to their source, you will always find excessive credit issuance.
If bubbles are defined as malinvestments, no period matches the past three decades for their frequency and scope.
The modern world was built under a gold standard: walk through any of the great cities of the western world, and the grandeur you see is mostly a result of a very brief period of economic freedom and sound money. London, Paris, NYC, San Fran, St. Petersburg, Milan, Zurich - they were all built with capital saved as gold.
Tesla, Edison, Faraday, Ford and the Wright brothers were funded with gold savings.
In terms of productive investment vs. bubbles, the investment record of the 19th century through the 1920s is far better than that since the late 20th.
'no period matches the past three decades for their frequency and scope.'
Yes, actually your recent run from 1982 to 2000 was a bit larger in price gain than 1896-1929..and of course in less than half the time. However the 8 year bull in the 20s that ended on September 3, 1929 increased price by a factor of 6 while your 8 year run from 1992 to 2000 increased prices less than 4 times.'
W.D. Gann resurrected himself for an interview recently:
The culmination of the bull market in September 1929 was really the result of a long trend business cycle which began in August, 1896 and continued for 33 years, with each campaign in the market making higher prices, which showed that the long-term trend was up. The Bryn Silver Panic August 1896 low of the Dow-Jones Averages at 29 was the end of a panicky decline that marked the beginning of the McKinley boom which lasted several years'
'The lows in this uptrend were:April 1897 at 40 and one half; October&November of 1903 at 42 and one half; Nov 1907 and June 1913 which both saw 53; December 1914 touched 53 and a half; and then December 1917 and 1920 which both bottomed at 66.'
'The August 1921 low of 64 was still a good sign of support in this uptrend, for it did not violate previous lows by 3 points, roughly 5%, thus indicating that a bull market would follow. From this August low followed the greatest bull market in the history of the United States, culminating at 386 in September 1929.'
Greater than 1992-2000?
'Yes, actually your recent run from 1982 to 2000 was a bit larger in price gain than 1896-1929..and of course in less than half the time. However the 8 year bull in the 20s that ended on September 3, 1929 increased price by a factor of 6 while your 8 year run from 1992 to 2000 increased prices less than 4 times.On September 3, 1929 when the final top was reached the Industrial Averages made 386 which was approximately 13 times higher in price than the Bryn Silver Panic Low.' '
'After the greatest bull market in history, the greatest bear market in history must follow... my philosophy is that one must look back in order to determine how long the bear campaign might run. Going back over all the records, we find that the greatest bear market had lasted not more than 43 months and the smallest had been as short as 12 months. Some of them had culminated around 27 months,30 months,34 months and in extreme declines,anywhere from 36 to 43 months.
Price increases are not the only way to judge the extent of a bubble. Valuations and the extent of malinvestments are better.
The 2000 and 2007 tops were much frothier than the '29 top if you consider fundamentals: much higher P/E, P/B, P/Y, etc. Earnings, what little there were, were based on consumer credit and the financial bubble itself (consumer stocks, banks and brokers composing such a high % of the indexes by the 2000s).
In the earlier bull markets, the upswings were used to actually build things of lasting value, not malls and cul de sacs in the desert.
What made the '30s so bad was not the bubble that preceded it, but the government restraint on capital and enterprise once it began.
You left out the Panic of 1873 (not that it would improve the quality of your silly argument).
Interesting fact about the 1870s is that, according to Murray Rothbard's history of money and banking, it was the period of highest real compound growth in the entire history of the US, 6.8%. Not a bad record for a decade with a deflationary "depression". The 1873 event was a relatively minor banking panic brought about by excessive credit largely to government-subsidized railroads.
http://books.google.ch/books?id=jA9UAZ2fKeoC&pg=PA154&lpg=PA154&dq=rothb...
We need more Michael Pentos. Thanks ZH !!
Equivalent to if men could display balls like women do cleavage !!!
the world would be saved......
IDIOT box talking about HFT. Watch for a laugh.
Why doesn't anyone talk about the fact that our economic system assumes (no absolutely requires) constant and continuous growth in a finite world.
Cognitive Dissonance; we could open a topic in the forum about that; i have done some serious work on that matter and i also find that matter interesting. I know many posters here would contribute to the discussion, and it would be good to go trough that matter.
Chunky is a bald faced liar. Pure and simple. It's time we start calling these con artists out. Trying to rationalize a monetary discussion with someone of his ilk is impossible and simply confuses the general public on a subject that needs to be illuminated. It's go time. Put them on the defense...at all times.
Do you think Mark Haines could be much more obvious with his bias?
The whole point about a flexible money supply is BS anyway. Look at the growth we had from the early 1800s through the 1920s. The greatest economic expansion the world has ever seen took place when almost every nation was on the gold standard.
In the UK, the price of a postage stamp didn't change for 100 years, while the middle class exploded.
A point that is often missed is that most of our recent inflation was due to credit growth, not just an increase in the money supply. Credit can grow excessively under any system, gold or paper -- but with a central bank, socialized deposit insurance, and the moral hazard they create, the banks will create excess credit and blow bubbles.
That is the key: the moral hazard of the Fed, not simply its paper money.
Take away moral hazard, and failure is punished while prudence is rewarded. Resources stay in the hands of the producers. Its booms and busts were key to the success of the 19th century: creative destruction = progress and greater, more equitable wealth. Robber barons, my ass -- the middle class was the greatest benefactor of the gold standard, and it has been the biggest victim of the fiat money central banking system.
+1,000,000,000 buddy.
I am awestruck.
Bingo.
Fiat currencies are NOT instituted for the good of the people.
They are instituted to make theft from them easier.
The Fed is not trying to "save the economy", it's simply trying to keep the con going, because that's how they make their money.
moking the green shoots to reach new highs...awesome.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
You cannot put a price on avoiding deflation, which would occur if the market were allowed a price discovery marking process on novel, innovative, and ingenious financial products. I don't understand why everyone acts as if these gems are fragile, and require substantial price support from the Fed. Ridiculous.
I say ramping-up the national debt to $11 trillion as back-end support is warranted, and probably insufficient.
$30 trillion, I say! Leadership, morals, and a consequence-free environment.
Come on Gents. Read some history. The bubbles under the Gold Standard era were caused by Governments and printing money for warfare. War of 1812, Civil War.
Tulip - See bank of Amsterdam.
I believe you are 100% correct. No nation fights a war on the gold standard. And America has been at war now for almost 100 years.
wow. thank you ! i'm a real MICHAEL PENTO fan, but, missed this on CNBC. I've been boycotting CNBC !!
I used to watch CNBC. The fat guy was an economist for Wachovia. Enough said.
What the hell does an economy with innovaton have to do with doing away with the Fed. Vintar is OTL.
Asset Bubbles during Gold Standard. See War and money printing.
Tulip. See bank of Amsterdam.
Mississipi. See John Law.
South Sea Company. Copycat of John Law.
Notice that these scarce examples are stretched out over many centuries, and are very much localized phenomena.
In contrast, Deutsche Bank is forecasting that 48% of U.S. mortgages will be underwater by 2011. I'll take inflated tulip prices to that *any* day of the week.
This guy obviously had an extra helping of Kool Aid to kick off the morning.
John Law introduced paper money to get rid of the limitations of the gold standard...
One must be delusional to assert that productivity gains can only occur on a fiat currency standard. What utter and complete bull crap in addition too... a marvelous example of revisionist history. Little wonder why the whole financial system is today is built on accounting fraud and the fear that we dare not "look inside the bag" else the whole thing comes tumbling down. Those defending the past 50 years are supportive of not looking inside the bag.
Pento! I love that guy! Tells it like it is. I've met him in person before also, really nice guy actually. It looks like he has his own blogspot up now too fyi.
http://www.greenfaucet.com/blogs/pentonomics
Banks weren't forced to make liar loans. Go check who the investment banks were working with and in some cases even bought out. All of that had zero to do with the CRA.
If your against the Fed then withdraw your support of the organizations that empower it. Take your money out of all the too big to fail banks and insurance companies and put it into the smaller financial companies in your own town. If you haven't done that then you're not serious about it.
It will all become moot eventually. We don't have energy reserves for everyone in the world to grow 3% year from now on. The developed world by itself can't either unless we intend to wipe out 3/5ths of the world's population.
One great advantage of the gold standard was it preserved the purchasing power of savings. In the 19th century, there was essentially no inflation. A dollar saved in 1820 that was passed on to a grandchild in 1850 had more or less the same purchasing power. Fast forward to today in the era of fiat currency and constant credit/money inflation. Even if you have some extra money left over at the end of the month, where do you put it? In 1820, you could just put it in the bank even if it earned no interest. Where can you put money today where you know the purchasing power of it will be maintained?
G-O-L-D.
wells fargo guy: "innovation & growth in our modern economy"
What he's really saying is "corruption & bubbles in our modern economy"
Friends, this guy was a Director and Senior Economist at Wachovia bank, you know, the Wachovia that was declared "systematically important" on the eve of its bankruptcy last year.
This guy should be at the unemployment office. Instead he's still earning a healthy salary as a professional brainwasher, and we're paying for it!
If anyone can't see the conflict of interest here, I have a bridge in Brooklyn to sell you.
This guy should be at the unemployment office. Instead he's still earning a healthy salary as a professional brainwasher, and we're paying for it!
Right on.
It has been a long time since I got to watch a good knife fight while having lunch. Thanks guys and girl, I feel a lot better about today.
Bernanke said he would not be the Fed chairman presiding the second depression. So, he panicked after the collapse of Lehman and went creative and bold. Notwithstanding of what he did with all those trillion dollars, he failed to put one single dollar income into the pockets of consumers and corporations.
What will happen after the certain disaster of all important chrismas sales? What else can Bernanke invent in playing with his balance sheet without burning himself in the process?
My conclusion: Bernanke will be the Fed Chairman presiding over the greatest depression which eventually leads into the riot and revolution that was never seen before. I see bad moon risinnnnnnnnngg. don't go out.....
Banks weren't forced to make liar loans. Go check who the investment banks were working with and in some cases even bought out. All of that had zero to do with the CRA.
If your against the Fed then withdraw your support of the organizations that empower it. Take your money out of all the too big to fail banks and insurance companies and put it into the smaller financial companies in your own town. If you haven't done that then you're not serious about it.
It will all become moot eventually. We don't have energy reserves for everyone in the world to grow 3% year from now on. The developed world by itself can't either unless we intend to wipe out 3/5ths of the world's population.
the fact is that the fed is the banking arm of Washington's economic warfare policy. It's too far to go back now. It's just amazing that it took the rest of the world so long to figure out the ponzi exploitation that the US Government has done for the past 30 years