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Money On The Sidelines... 1930 Versus 2009
There is a saying, that everything new is just well-forgotten old. The same apparently is especially applicable to propaganda that seeks to part fools with their money. Today's brownie point question is: was the statement below just uttered by Larry Kudlow, or did it appear first more than 79 years ago?
There's a large amount of money on sidelines waiting for
investment opportunities; this should be felt in market when “cheerful
sentiment is more firmly intrenched.” Economists point out that banks
and insurance companies “never before had so much money lying idle.”
If you answered "the latter" you were correct. It first appeared on August 28, 1930 to be precise (and who knows how many times prior, usually showing up just as America was set for yet another major recession).
The same question, although less brownie points if you get it right for this one:
Fed. Reserve seen continuing easy credit policy pursued since
start of year. Some concern that increased reserve credit “will flow
into speculative channels,” but this doesn't seem to have happened much
yet.
Correct - 1930.
Alas, CNBC's propaganda is merely a rehash of the script that every major economy follows just as it falls into unprecedented 10 year depression.
h/t Paolo
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i like it when economists and talking heads assume that a second half recovery will happen b/c money is going to come out of money markets
someone tell Larry that Goldilocks was shot
Kudlow is a fed schlep
The obvious is always a surprise to those who don't look or don't wish to look. We are all subject to confirmation bias, that tendency to seek out and consume information that supports our view and ignore information that is contrary to our view.
such a good point.... my current problem is that i refuse to believe bullish doundbytes and I am getting poorer as a result
I read this blog everyday. http://newsfrom1930.blogspot.com/
Amazing how similar everything is today to 1930...
This is absolutely brilliant. Great find.
8/29/1930:
Central Trust of Illinois says business now “marking time,” but sentiment improving and seasonal upturn is assured. Says current gold exports not a concern unless much higher, in fact may be stimulative to foreign economies. Market sentiment in July emphasized bad news and ignored the positive, but has recently become more favorable. Decrease in rail freight not a cause for concern, but due to drastic drawdown of inventories.
Priceless.
+100
LAst year, gold was tossed with everything else as the race to the dollar grew. If Goldman or JP know gold is getting trashed in near future, they can easily benefit from a flight to quality and then a beheading.
<remaining content removed by Sacrilege>
Me too.
I can't wait to hear the reasons and excuses Kuldow the permabull gives when the market starts its next leg down
Kudlow is AC~DC and believes it's a bull market when taking it both ways.
I can wait. It is obvious. They will blame us. They will demonize anybody that saw this coming from a mile away. It is much easier to pretend we caused the crash than to accept the truth that the run up was a scam that they participated willingly in.
lol I wonder
One of my all time favourite quotes:
"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
http://www.gold-eagle.com/editorials_01/seymour062001.html
Tons of quotes that apply just as much today as they did then.
There is even more examples of historical propaganda:
http://www.gold-eagle.com/editorials_01/seymour062001pv.html
Enjoy!
I think we're way beyond side line money coming in. I think it's called leveraged money at this point.
I pretty sure Americans have way more debt than they did in the 1930s. Any extra money laying around will be used to pay off debts, it will not be invested in the market. Repo man coming for your car.
I think we are at point 9 on the gold-eagle chart listed above.
I think we are at point 9 on the above
http://www.gold-eagle.com/editorials_01/seymour062001.html
link.
*Fewer* brownie points, right? Not less?
Former Yugoslavija had also billions on the sideline waiting for investment opportunities...more banking credit losses ahead. Pump, pump Banana Ben...
"new normal" whats that? output gaps, deflation, inflation, -> lower growth, lower returns. QE is not working..CPi, PPI, capecity high, unimployment high..oh boy..try to invest
History does not repeat itself, but it does rhyme.
Mark Twain
The quote of all time appears in William Goldman's book "Tales from the Screen Trade"
In Hollywood many think they have the golden touch. That is they know just what script, director, and so on will be made into block buster hit.
It was Goldman's quote that in the end "Nobody really knows"
Same thing about the markets, many pretenders, many predictors, even more prognosticators but in the end "nobody really knows"
Heh...
Roger Corman made 100 pictures and never lost a dime (I admit that none were blockbusters, and all were crap. But regardless...).
And there were a few economists that saw this coming... http://www.nytimes.com/2007/09/23/weekinreview/23bajaj.html?_r=1
It's not that nobody knew, it's just that DAMN FEW knew.
Every time I hear that whiny prick Kudlow's voice on CNBS, I immediately change the channel to Bloomberg.
Totally agree. But every time that Sham-Wow guy comes on Bloomberg, I'm forced to switch back.
future cashflow= is when paper money flushes down the toilet...pump pump Banana Ben
Money on the sidelines - something that simply not exists, because it can't exist in reality, only in brainwash propaganda.
For every buyer there is a seller, so the amount of money does not change. "Money on the sidelines" is a well maintained myth by the mainwash media.
"Money on the sidelines - something that simply not exists, because it can't exist in reality, only in brainwash propaganda.
For every buyer there is a seller, so the amount of money does not change."
Hi,
It appears you are unaware that Central Banks all over the world are expanding the money supply. QE, monetizing debt... ringing any bells?
Money on the sidelines != monetizing debt. That is simply monetary inflation.
Money on the sidelines usually is in reference to the market value of money market funds, in which case the original poster's comments are exactly correct.
Correct, but it creates inflation on the long term. There is more nominal money, but it is worth less.
The old myth is, that after a stock crash there is more money on the sidelines, than before the crash. But's only the myth, not the reality.
double post
As to the: One of my all time favourite quotes:
"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
I have been told that the word was "contained" not "over"
Here are a few more gems:
Why doesn't CNBC just hire David Lereah already.
This market has no idea what is about to happen. That's why you need to hedge your portfolio. Read this: http://etfdailynews.com/blog/?p=5719
Spare us the pitches.
Ivanka Trump explained it best on CNBC. She said that she has heard about all of the money on the sidelines but she has not seen any it.
CNBC actually invited her on the air again.
40% or 60% of the world's wealth evaporated last year, I forget the exact number.
What exactly is on the sidelines? Fumes?
If it evaporated, it wasn't wealth. It was fumes to start out.
A mirage...
That's a lie. You have to figure it out.
Person A buys stock for 20 dollars.
It goes up to 30 dollars person B buys stock.
10 dollars of wealth transfered from person B to person A.
Market crashes it went down to 10 dollars.
Person C buys it for 10 dollars. 20 dollars of wealth transfers from person B to person C.
You think ok 20 dollars of wealth is removed from the system right? What about the 10 dollars from person a to person b. Is that gone? No. So in this extreme example only 10 is removed. If you cut the analysis to just 2 people you can clearly see wealth seemingly destroyed. But if you track it all the way back through several people the destruction becomes less and less apparent. In fact all you have to do is track that stock all the way back to who owned it at 10 to completely remove any concept of wealth destruction. Crashes remove very very little real wealth or money. They just move a bunch of wealth around. Now crashes can take stocks back 30 years in price and you can actually have some real wealth destruction because of inflation over that time period.
If you were the last one to buy in when the music stops it destroys you. But the money didn't dissapear it was trasferred to the seller. Both are correct then.
There are two separate things at play. One is the "wealth effect". If you think your portfolio is worth a bazillion, you may spend as if you have a bazillion. When the entire market falls, lots of portfolios have less "value", holders feel less rich, and tend to spend less.
The real money destruction comes in the form of repudiated debt, whether that is margin debt one has on one's portfolio, a home equity line one is no longer going to pay, a bankrupt firm unable to service its debt, etc. The creditor is stuck with a hole. QE is the attempt to create new money to fill in the holes. Total wealth destruction worldwide in the last two years is on the order of $40 trillion, but much of that is paragraph one type of wealth loss. Total credit losses, which is the hole QE hopes to fill in, might be as high as $6 trillion.
Economies slow down because of both types of wealth loss, which compounds the debt destruction problem. As the hole becomes larger, i.e., faster than QE and other forms of money creation can fill in the holes, there is deflation.
I know, too simplistic.
Chalkin Money Flow (CMF) indicator shows where the money is going - either buying or selling:
http://debtsofanation.blogspot.com/2009/09/debts-of-spenders-chalkin-mon...
Money on the sidelines?
Just think of all the stocks also on the sidelines ready to be sold!
Ruh roh!
Money on the side lines is a complete propaganda BS. However, almost everyone is extremely bearish, and a lot of stocks still have plenty of room to go. Inefficiencies are still huge. The consensus is that this rally is ~50% off the bottom and all kinds of "seasonals" point down. I really am getting comments that this rally is fraud from retail investors I know. Is this the proverbial wall of worry we are to climb? So which propaganda is going to work out? Is it possible markets will just consolidate, so both sides are wrong?
Last week I encountered a very interesting approach regarding one position I have. Media and analysts indirectly scream that that position is absolutely worthless, while at the same time I got a "friendly" piece of information that this position will appreaciate tremendously in the next few weeks, and then I should consider selling out. So basically on the retail level, brute force was used. On a more sofisticated level, this "tip" scared the hell out of me, because whoever pointed that info at me, used a completely opposite scare tactics for professionals. What they told me, is effectively, that I shouldn't sell, because they will be doing the selling. Now, I have strong conviction about this particular position, so I sat pat. Guess what happened the morning of the "tip"? Gap up and crapping out until yesterday on a daily basis. I know that liquidity in this position is absent, and the selling and rumor mongering is designed to create sellers to pick up meaningful size on the trade. But what's interesting, is that there are 2 sets of scare tactics used for different crowds, and they are designed to achieve the same goal. So in the end, I became even more convinced that I'm right in holding this particular position. The sell off occures on an extremely low volume with nasty painting of the tape.
Now you tell me which group of retards is right? Kudlow or Roubini? They both are retards, but they have opposite views. Or maybe the hoopla on CNBC about scary September? I mean the consensus is bearish by a very wide margin, and consensus is wrong, especially when it's so uniform. Yet Kudlow type is absolutely disgusting, yet he repeats the same mantra all the time anyway, so it's a non information....
If money in the form of credit is extended and defaulted upon, and the collateral insufficient to recover the balance due, the money is evaporated. Now, one might argue that the borrowed cash was in fact spent somehow, and has therefore moved elsewhere in the sytem, but that assumes an open, ever expanding system where the money can escape. In a closed, contracting system, the money at some point evaporates for good.