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Sean Corrigan On The Inflationary Diabolus Ex Machina, And Bernanke As The Modern Incarnation Of Shiva, the Shatterer of Worlds

Tyler Durden's picture


From Sean Corrigan of Diapason Securities

Under Two Flags 

However firmly we hold to the view that the hypertrophic, state-coddled, fractionally-based financial markets in which we must operate are not exactly the embodiment of dispassionate rationalism in their workings, it is nonetheless true that, over time, commodity prices can be shown to trace out a path not wholly divorced from that followed by the real-world processes which utilise them—especially industrial production and the internationally-dispersed network of outputs best reflected by global trade flows.

In making a claim for the influence of what might be broadly termed 'fundamentals', this is not to assert the patently indefensible proposition that commodities — much like stocks, bonds, houses, classic cars, vintage wines, or antique furniture—are not also subject to alternating waves of avarice and abhorrence—the 'temperamentals', if you will—which may occasionally swamp the underlying pull of such mundanities as supply, demand, and inventory.

In fact, given our global system of unanchored (and frequently unhinged) money and credit, even this ostensible distinction between price movements supposedly soundly based on metal in the warehouse, or barrels at the refinery and those caused by the wilder, speculative herding founded on chart patterns, lever¬aged groupthink or blind computer algorithms is much less definitive than it appears.

If hot money and overabundant finance can sometimes be shown not to be pouring directly into purchases of cotton or copper or crude oil as mere gaming counters in the global casino, these evil twins will, nonetheless, be feverishly driving economic activity into channels of commodity-consuming activity which, both in their form and scale would not otherwise be taking place.

This logically implies that the commodity 'fundamentals' - as well as the equity, the currency, and the bond 'fundamentals' - still rest, albeit at one remove on this occasion, upon the very same malign effects of monetary laxity, budgetary overstretch, and misdirected enthusiasm as before.

That said, we cannot stand on the sidelines in a huff of purism. Since we must always be aware that the field of battle is not the pristine sandbox of the officer training school, but rather a dead ground-riven labyrinth of swamps, ravines, and gullies, this implies that if we are to contend at all, we must trade, invest, and practice our entrepreneurship amid the far from perfect conditions we have been given, sticking to our principles but being pragmatic enough to tailor them to the circumstances which confront us.

So, let us not here debate the merits or the long-term sustainability of what we might here term the 'Globalised Asia' model, let us just accept that it is, for better or for ill, the dominant feature of our world.

Whether their leaders' coy mercantilism or the cynical machinery of exploitation which funnels their vast pools of captive savings into the blind service of the great, native industrial combines will ultimately squander the admirable energy and technical prowess of these most assiduous of peoples, only time will tell but, until the wax melts on the wings of these oriental Icaruses, theirs has irrefutably become the main voice in the fundamental pricing of commodities.

Indeed—to the extent that we trust an aggregate of aggregates to paint an accurate picture of the world— not only are growth rates of industrial output and 2- way trade volumes rising faster in Asia than in the Euro-American West, but, having fallen less far in the Bust and having recovered better in the meanwhile, their absolute magnitude also appears to be greater.

Thus, if we can argue that commodities tend to follow global developments in these two key metrics, we must also take cognisance of the fact that, at the margin, these latter are being dominated by events taking place on the eastern edge of the Pacific, not the Western, In fact, for those more traditional asset managers who have come to favour emerging market equities over the more traditional kind (a switch which has paid an annual 13.5% total return premium over the last decade), this is hardly the most stunning of news since the ratio between the two groups of stocks has been a facsimile of the output and trade ratios between the two regions over this same period, though whether this is an  accurate guide to the creation of genuine shareholder value or simply an artefact of market perceptions is a question upon which it is not our purpose here to comment.

Furthermore, this has brought about a pronounced shift in the relative pricing of raw inputs and finished manufactures, reversing the previous two decade decline of the former vis-à-vis the latter into a steep, sustained rise in the ratio between them.

If we consider that much capital investment and technological know-how has been transferred to the Asian export hubs in the past ten years, there to be mixed with cheaper labour, arguably underpriced currencies (especially after the mid-90s devaluation in China and the Asian Contagion which shortly succeeded it), and a range of overt and covert financial and fiscal—as well as material—subsidies and couple this with the fact that such centres have been the nuclei upon which a much more wide-ranging local development of industry and infrastructure has crystallised, then the re¬ordering becomes fairly self-explanatory.

A glut of cheap, finished goods on Western markets (still their biggest exhaustive consumers if no longer, alas, the Lords Paramount of their creation) has therefore had as its counterpoint a greater degree of scarcity of the commodities which both go into their fabrication and upon which the incomes generated along the way have been later spent.

While this situation persists, it implies that commodities should continue to enjoy robust demand and advantageous pricing power, amid a struggle to maintain an adequate supply—fully incentivised though this may be—and with a level of inventory cover which becomes rapidly depleted when the engine is firing upon most (if not all) of its cylinders.

In the case of industrial metals, the trends in demand are clear and if stock:use ratios are still markedly cyclical (as well as subject to the vicissitudes of the individual metal), the general pattern toward lower and lower cover is also fairly apparent. As the example of steel also shows—not only the world's second most traded commodity after oil, but also one of the least subject to signal pollution from financial markets—the effect on price is also evident.

In energy, matters are even less equivocal. Here, Asian usage is fast approaching 40% of the world total and its share is growing at such a pace that, if nothing inter¬rupts the trend between now and then, the region will account for a majority of global uptake as early as 2020.

Put another way, over the ten years to 2009, BP estimates that world energy use increased by roughly a quarter. Asia-Pacific accounted for four-fifths of that increment, with China alone responsible for three-quarters of the region's contribution.
For all those in the West about to ruin both their finances and the view from their windows by littering the landscape with banks of appallingly inefficient windmills and uneconomical solar farms, in pursuit of the hysterical Gaian cult of carbophobia, it should be a chastening realisation that almost half the total rise in demand was satisfied by burning coal-85% of that addition emanating from China—a surge which took the fuel's share to a 40-year high of 29% of total use, largely at the expense of oil.

Given the inevitable, post-Fukushima backlash against nuclear energy (a revulsion, again, felt most keenly among those countries fortunate enough to have largely forgotten what it is like to be without a reliable supply of electricity), the call on hydrocarbons can only be the greater and, should China become serious about cleaning up its own environment (a desire richer nations progressively have the luxury to accommodate), it would seem that natural gas— conventionally-sourced, coal-bed, shale, or liquefied— might be called upon to advance its contribution from the vicinity of 23%, at which point it has been stuck for over a decade past.

Of course, what is true for energy is also these days partly true for agriculture, not just because Asian populations are both growing and moving up the protein chain away from a bland, but relatively efficient diet heavily dependent on staple crops, but because the combined effect of governmental mandates to burn what could otherwise serve as food and fodder in fuel thirsty vehicles have reached the point where nigh on 40% of the US corn crop is misused in this manner, an amount fully 2 1/2 times the country's exports (which themselves make up around 55% of the global total) and approximately equal to all shipments from the two next biggest sellers, Argentina and Brazil, combined. With yields per acre for wheat, barley, and oats showing signs of stagnation this past 10-15 years, across several key growing regions, and with rice yields in China growing at far less than half their previous trend rate, the easy pickings from the Green Revolution may already have been harvested, meaning that, barring a sea change in attitudes to both GMO technology and bio fuel boondoggles, the so-called 'war for acres' looks set to remain intense.

As a consequence, here, too, does pressure on stock:use ratios seem bound to persist, reducing the cushion we all need to protect us from the capricious buffeting of meteorology and man-made malfeasance, a feature which not only tends to keep prices elevated, but also makes them far more subject to sudden spikes and the optionality of sharp backwardations.

What we have already argued for emerging market stock markets and their co-movement with commodities has also become increasingly relevant to developed world stock markets, too, as surges of growth optimism—or, more crudely, waves of 'Risk On' activity push commodity prices higher in concert with equities. This has been true in spades ever since the collapse of AIG/LEH when r-squared between the two has amounted to no less than 0.93.

At the same time—continuing a pattern which has held ever since the twin Russian/LTCM panic of autumn 1998 first sold the great asset market put/moral hazard call to the world's largest financial players and their swarms of leveraged pilot fish—bond yields (for example, those on 10-year US 1-Notes) have tended to follow equity markets (e.g., the S&P500) up and down, as can be seen in the diagram opposite.

Now, it may not seem that significant, but what we have here is a veritable revolution for, over a much broader sweep of modern financial history, bond yields have tended to move contrary to equities (and, hence, bond prices in concert with them) while commodities— 'real' assets, if you will—have tended to move in opposition to this financial Tweedledum and Tweedledee.

Intuitively, what this implies is that investors have long been happy to assume that 'growth' —for so long as inflationary pressures are not intruding too insistently—means greater wealth, a more abundant capital stock, hence lower nominal discount rates and so lower capitalization rates and, ergo, higher financial asset prices.

But, as Hayek once said, if labour competes with capital in the productive structure, then commodities compete with both (though, strictly, what he meant by this was end-consumer goods). Let commodity prices rise too sharply in this era, therefore, and the whole virtuous circle would be unwound, whether because of a voluntary repricing of future earnings streams to take account of their shrinking real value or because of actual or anticipated tightening of liquidity, either as the result of a likely drain of metallic or foreign exchange reserves, or thanks to central bank action taken to fore¬stall these and/or cool the economy down.

However, after the so-called 'Great Moderation' of the 1990s and early 2000's when many pundits, gurus, and soi-disant futurologists were happy to declare not just the 'end of history' but the 'death of inflation', this paradigm was slowly abandoned.

The exquisite technical prowess of our pecuniary masters at the central banks had seemingly allowed them to fine-tune the vast, unknowably complex, organic interaction of the free market, while—in a kind of perversely back-to-front re-interpretation of the phenomena we have already discussed—the outsourcing of so much effort to the emerging markets meant that commodity prices had largely lost their bogey-man status since their rise was merely the obverse of the subdued trend in the far more closely-scrutinised price of manufactured goods being delivered in all their 560 million TEU-a-year profusion to the ports and railheads of grateful, Occidental installment buyers.

Thus, commodities were increasingly not seen as harbingers of inflation (strictly, as we shall discuss, the tangible vectors of what is only ever a strictly monetary pestilence), since inflation had been utterly vanquished, but as co-participants with equities in the growth of this Brave New Era of effortless prosperity founded on ever-increasing debt levels among the chronically underproductive. As for the ostensibly 'risk-free' bonds, well, who really needed them when there were so many gains to be made moving out the credit spectrum into not just the blues and purples, but the far ultra-violet and even beyond?

Such instruments were no longer part of a proper in-vestment portfolio—they were merely a convenient parking space whenever the market hit a speed bump—for, in a world where central bankers were deliberately turning themselves into easily-predictable, 25 bps-a-time up and 250bps-a-time down facilitators of 'the search for yield', only 'men without chests' could hew to the merits of a relatively certain, (if secularly-depressed) stream of income on boring, old AAA governments when there was so much more fun to be had using incalculably arcane (and often decidedly deceitful) derivative structures to fund incontinent welfare dispensers, greater-fool housing bubbles, value-destroying LBO merchants, and asset-stripping private-equity vultures.

If only things were truly that simple for, as people are only now dimly beginning to rediscover, the Credit Cycle IS the Business Cycle and the Business Cycle is nothing if not an Inflation Cycle.

Here be Dragons

If easy money starts by stimulating growth, it also starts the insidious process of distorting prices in such a manner as to mislead both entrepreneurs and those who invest in them, bringing about a capital misallocation which is no less widespread for all that each specific cycle tends to see the worst excesses concentrated in its own, individual sector.

As we never cease to underline, it is NOW that we lose our money and squander our wealth, by making mistakes here, during the Boom: we merely recognise these errors— and, ideally, realise them and rectify them— during the travails of the Bust.

By attempting to subvert this cleansing process through the inflation of a new bubble of false asset pricing on the ruins of the old—a development the Fed has explicitly been trying to engineer—is not to break the cycle, but to intensify it, as each intervention becomes more radical, less well thought-out, more plagued with unwonted side-effects, and more rapidly self-defeating than the last; the whole bringing about an increasingly costly and accelerating hysteresis of 'Stop-Go' capital destruction.

Thus, if the Ghost of 1933 got us into this mess— i.e., the mainstream's fervent adherence to a largely mythical narrative of the Great Depression, centred on Roosevelt as Messiah— the Spectre of 1937— an alarmist rendering of the dire consequences of a 'premature' interruption of gross market interference—has guaranteed that the Fed will only make matters worse.

But where can an inflation arise when we have unsold homes, partly-idled assembly lines, and large numbers of men and women still without work? Are we not confronted with an 'output gap'? And does the persistence of such underemployed resources not testify to the fact that monetary policy is ultimately ineffective — that we face a 'liquidity trap' — and that its implementation has been too timid, rather than too intemperate?

No, no, and thrice no! For the lack of a bidder for such capital assets and human resources (at least, the lack of a bidder willing to pay the price acceptable to their owners, or to pay one sufficient to discharge the obligations incurred during their acquisition or production) is the starkest possible testimony to the mass miscalculation induced by easy money during the Boom.

If we all borrowed money to construct a profusion of neo-gothic follies, borrowed more in the course of buying and selling such monuments of inutility back and forth to one another, and borrowed yet more to be able to spend some of the resultant illusory and thoroughly notional gains on the trappings of an affluent lifestyle, it is little wonder that—once the madness passes— these edifices sell for little more than the cost of materials salvageable from their otherwise useless bulk.

To argue now that, should we flood the land with newly-printed money, this will restore these monumental vanities to their previous price, before it has first driven up all the prices of things people actually still want to buy, is to practice self-delusion on the grandest scale.

Somewhat more subtle, but equally decisive, is the fact that the happenstance of stonemasons and scaffolders being out of work in the Bust (and angle-grinders and construction cranes being found everywhere in profusion) does nothing to alleviate the scarcity of dairy herdsman or car mechanics, each of whom may find a much greater monetary demand for their highly-specific efforts as a result of the policy of inflation, even as the skills and equipment of their less fortunate neighbours go largely unwanted.

Egalitarian socialists and aggregate-loving macroeconomists may both deny this, but the capital stock is not homogeneous—and so is not costlessly interchangeable. Neither are innate human abilities, nor their overlaid training and experience, a matter of indifference to people's hopes of securing work. Inflation may therefore swirl straight past such glaring, post-Boom 'output gaps' as attract so much intervention, while furiously funnelling into a spate where entrepreneurs have not adequately prepared to meet such a cash-engorged upwelling of expressed demand.

Finally, the idea that to destroy the allocative ability of markets for capital means by suppressing interest rates, subsidising asset prices, and condoning false accounting is in some way a panacea (because it will delude people into making the very same misapprehension of their means as was the initial cause of their woes, while allowing the marooned owners of overindebted property to offset their very real legacy of losses with new, fictional gains) is also to risk burning down the entire house lest the embers in the grate of an unoccupied room flicker and go out, untended.

Burning Down the House

So where has the inflation come from? From the usual place, of course— central and commercial bank creation of demand deposits though one difference since the Crash has been the degree to which this has been accomplished not as a counterpart to lending to a booming private sector, but by financing (monetizing) the vast Keynesian deficits which are piling a Pelion of corporate welfare upon the Ossa of the Provider State, in terms of debt levels.

To be clear, central banks do not always lead the expansion, but they (and the other regulatory authorities) must always accede to it, if only by refusing to set binding reserve and capital requirements upon the commercial banks who are then responsible.

Conversely—and this is a point which seems to have escaped most of the 'pushing on a string crowd'—they can easily compensate for any lack of vigour by those same commercial banks during the Bust by creating base money through the act of drawing cheques upon themselves in order to purchase whatever assets they please. This is particularly simple when those 'assets' are issued in abundance by a Treasury doling out monies in a measure wildly beyond the sum of its tax receipts.

Where the common herd has gone badly wrong (again) is in forgetting the truth that Leland Yeager long ago encapsulated, viz., money does not have to be borrowed into existence, since it can be spent into existence right up to the point where the malign effects of all that unbacked spending lead people to distrust it sufficiently to refuse to accept it as a medium of exchange, a final repudiation which sounds the death knell for what has by now become a hyperinflation.

In fact, a glance at what the central banks and their favoured coterie of TBTF clients have been up to these past 2 1/2 years shows that - yes, Mr. Chairman - the blame rests squarely with them and with them alone.

The classic case in point: The efforts of the FRB to repeat the follies of FDR while keeping
the world safe for TBTF banking. Balance sheet expansion—first by an alphabet soup of ad
hoc measures to bail out banks, then buying MBS and Agencies to bailing out the GSEs,
then buying USTs to bail out Washington (and, via its BAB programme, the Muni market)—has
seen MONEY supply rise and credit spreads compress, followed by an increase in business
revenues and gains in the price of equities and commodities while depressing the foreign
exchange value of the dollar.

Easy money at home thus all too readily becomes easy money abroad, whether via the willing, private acceptance of FX risk in the 'carry trade' or via the public move to absorb trade surpluses by issuing the home currency against export (as well as FDI and portfolio) receipts. If you really wanted to be perverse about it, you could even think of this as somehow comprising a 'saving glut', or in one infamous, pre-Crash reductio ad absurdum, a 'global asset shortage'.

One often overlooked reason why inflation proves to be so damaging is the change in prices it brings about (an effect which today is confused with its cause) is never the same for all goods and services. Thus, inflation is not simply a matter of all boats being gently lifted, allowing a painless continuation of government aggrandisement, smoothly bilking the savers who are the bane of the Underconsumptionist world view, fattening up stock brokers and investment managers rich on the fatty flesh of beta, and keeping the workforce contentedly at their lathes and laptops as the soothing breeze of money illusion lulls the Lumpenproletariat into temporarily abandoning the historical preordination of the class struggle.

Rather, the higher any generalized index of prices rises in a given period, the more variable do its components become. Prices— relative prices— become more erratic in their behaviour leading to wide and often unhedgeable disparities between input costs and realized selling prices. Plotting the spread around the overall index of changes in 72 sub-components of the Personal Consumption Deflator offers an insight into just how violent this arbitrary election of economic winners and losers under inflation can become.

Indeed, this contention was borne out last month by a Duke University-CFO Magazine poll of American executives in which they posed the topical question of what would be the projected outcome if US CPI were to accelerate from its current level to a 'surprise' 4% (in truth, not such a diabolus ex machina given that, over the past ten months, the measure has already been running at that pace on an annualised basis and has even quickened further, to an equivalent of 6%, over the last four). The answer should be a sobering one: profits would be cut in half.

As price rises grow larger and come faster, margins become more uncertain and, as the empirical record shows in our chart of prices paid and received in the Philadelphia Fed survey, less attainable on average. As entrepreneurial judgment becomes more and more sorely tested, as our other charts show, both real free cash flow and real returns to capital also shrink (it may come as a chastening truth to learn that, over the last six decades, the aggregate, median, real return to the universe of US non-financial corporations which appear in the Flow of Funds data is, in any case, not significantly different from zero).

At the same time, the degraded informational content of money (a crucial property of the medium of which the mechanical macromancers have absolutely no concept) — not just between goods, but across the choice-filled time which stretches between present and future goods—begins the savage process of reducing investment horizons, raising societal time preference and with it the discount rate. The upshot of this is that the multiple attached to those less uncertain earnings also starts to contract and, as any equity analyst will tell you, multiple expansion is what drives the greater part of stock market returns in good times and bad.

Granted, inflation may at first boost nominal revenues, some of which increment will be converted into higher nominal - and sometimes even real - earnings. Granted, too, that it may initially price people back to work in those industries temporarily favoured by its whimsy - most notably those in exporting or import-competing branches, on the not always certain assumption that the currency translates the growing domestic surfeit of money into an internationally-perceived one, too.

However, inflation also greatly hampers economic coordination (by which we mean the bottom-up, wealth-creating, spontaneous kind, not stultifying, top-down, state dirigisme) and confounds entrepreneurial calculation: it is nothing less than an engine of immiseration.

Inflationists are typically ignorant of the fact that the complex, multi-stage, labour-divided, task-specific, dynamic whole which is a modern economy intimately relies on much more spending than is captured in the flawed totem of GDP. They are further unaware that much of that spending is highly discretionary—that the bulk of it, in fact, represents gross capital formation via saving— if we define saving as making an outlay not to consume what is acquired finally and exhaustively today, but with the aim of giving rise to a greater income tomorrow, most routinely done by adding value in the course of a productive/entrepreneurial process.

It may be so much a part of the routine of economic life as to seem unexceptionable, but every time a businessman devotes some part of his cash revenues (usually the great majority, in fact) to merely continuing the cycle of production which he oversees and not only to expanding it or changing it, he— every bit as much as the figurative widow prudently putting aside her hard-spared mite— is making a highly individual, non-predestinate, inherently revocable choice to forgo the personal enjoyment of that revenue now in the hope that his immediate sacrifice will bring him greater deferred rewards in the days to come.

Let anything interfere with either his ability or his incentive to do that and the consequences are not only profound but, given the intricacy of the networks of decision-making and mutual interdependence which link the material interests of parties who, on the whole, are entirely ignorant of each others' existence, their ramifications can spread far and wide—and in a nonlinear fashion—to boot.

The key feature of this dense, reticular system of mutually-beneficial interaction is that it in no way relies upon any centralised control function—indeed, for all the weasel words of the rag-bag of anti-market intellectuals, from Krugman and Kaletsky to Stiglitz and Soros, every time the attempt has been made to impose one, the result has been to unleash at least three of the four horsemen of the Apocalypse upon the unfortunate victims of the Planners.

But what is essential is that the results of one individual's actions are faithfully transmitted to all the others who in some way overlap with his expressed combination of means chosen in the attempt to realise his own unique and subjectively-ordered menu of ends, for then they can adapt to the change in a fitting, lowest-cost manner. For this we need nothing more or less than an effective price system so that each man's 'votes' can be fairly counted and the material goods being offered can best be matched up to the bids being made for them. That pivotal property, in turn, is critically bound up with maintaining— insofar as is possible— the integrity and stability of the medium which transmits the prices, i.e., the money in which they are denominated.

To the extent that, in their primitive adherence to the toilet-flush hydraulics of their facile, consumer-demand model of the economy, the Bernankes of this world adulterate that money and deliberately contribute to its inconstancy, they—more than Robert Oppenheimer, even—are the modern-day Shivas, the Shatterers of Worlds before whom we should tremble.

Changing of the Guard

From a practical perspective, what we have argued above is that while commodities have traditionally moved in antiphase to financial assets—i.e., opposite to both bonds and stocks which have themselves largely moved in step with one another— the last decade or so has seen a switch to the rough coherence of commodities and equities and their joint opposition to bonds, either as part of a 'growth' enthusiasm or as a mark of a more general appetite for 'risk' in an environment of artificially low interest rates.

If we are correct in the assumption that the abandonment of today's horribly misguided economic dogma and the deep-rooted nature of the rickety collectivism, whose triumph over rugged individualism it has served to finance, will not come this side of a complete economic and social breakdown, then it seems likely that, as the spiral of growing indebtedness and state- dependence leads to a progressive productive enfeeblement, commodities will eventually come to function once more as the mercury in that thermometer by which we will check the progress of the pernicious monetary malaria we are now in imminent danger of contracting.

Just as the medical disease is characterised by alternating bouts of fever and chills, interspersed with periods of deceptive remission, so too will be the dire economic reality we can envisage becoming our lot. Though commodities will be anything but a one- way bet in such a world—particularly during the painful transition away from the current regime in which they have been acting as quasi-equities — they are, however, likely to re-assume the part of antithesis to paper assets and hence to perform the dual-role of being both heralds of, and partial protectors from, the increasingly abrupt inflationary outbursts which seem set to define the next few cycles of Boom and Bust.

In this possibility lies perhaps the principal rationale for continued investment in them in the years to come.


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Sun, 05/08/2011 - 00:37 | 1252350 strannick
strannick's picture

Bernanke's either Krinsa the Destroyer of Worlds, or Elmer Fudd, the blinky eyed professor with a miscalibrated abacus and an economics textbook from the 1940s and a Wall Street slickster patting him on the back, assuring him everythings A-ok.

Sun, 05/08/2011 - 01:46 | 1252433 LowProfile
LowProfile's picture

Hmmm...  Could be both.

"Time I awm, the destwoyer of wowlds, and Oi have come hwew to destwoy aw peopow.  ...Hahahhahahaaa..!"

Yeah, that works.

Sun, 05/08/2011 - 11:15 | 1252851 Muir
Muir's picture


Sun, 05/08/2011 - 02:14 | 1252453 e_goldstein
e_goldstein's picture

More like Marvin the Martian.

Sun, 05/08/2011 - 03:02 | 1252486 StychoKiller
StychoKiller's picture

My vote is on the near-sighted Mr. Magoo!

Sun, 05/08/2011 - 04:59 | 1252563 Michael
Michael's picture

OT or not, Sue me.

New Video I uploaded and added my interpretation to using Led Zeppelin music;

Osama Bin Laden or Not, On to Kashmir 

Sun, 05/08/2011 - 09:42 | 1252746 Manthong
Manthong's picture

 Thank you ZH.

Although Shiva will be a fitting allegory, when the history is written Shiva will have morphed from Sweeney.

Sweeney Todd.

There's a hole in the world like a great black pit
and the vermin of the world inhabit it
and its morals aren't worth what a pig could spit..

At the top of the hole sit the privileged few
Making mock of the vermin in the lonely zoo
turning beauty to filth and greed...

There's a hole in the world like a great black pit
and it's filled with people who are filled with shit!
And the vermin of the world inhabit it!


Sun, 05/08/2011 - 15:39 | 1253525 augie
augie's picture

I think you mean Kali

Sun, 05/08/2011 - 02:42 | 1252474 silverisgold
silverisgold's picture

Shiva - the Destroyer/tranformer of Worlds

Sun, 05/08/2011 - 02:41 | 1252476 silverisgold
silverisgold's picture

silly wabbitt

Sun, 05/08/2011 - 10:43 | 1252812 Bob
Bob's picture

Bernanke's either Krinsa the Destroyer of Worlds, or Elmer Fudd, the blinky eyed professor with a miscalibrated abacus and an economics textbook from the 1940s and a Wall Street slickster patting him on the back, assuring him everythings A-ok.

Strannick, I've been wavering on that very issue and when I got up this morning for some reason had come to see him exactly in the terms you describe Elmer Fudd . . . before reading this article.  Strange coincidences.  See him stutter and flinch under even lame congressional questioning and his insecurity is palpable.  He knows he's in over his head--way, way far over his head--whenever he leaves his echo chamber.  He's the perfectly vain Little Man for the job . . . and does it primarily for the pats on the head he gets from his financier handlers. 

Sun, 05/08/2011 - 00:35 | 1252359 Doña K
Doña K's picture

Which means keep buying physical gold in equal time intervals but don't go more than 30% of your assets.

Sun, 05/08/2011 - 02:47 | 1252479 topcallingtroll
topcallingtroll's picture

We are all very tired of your gunslinger idiot, but we like hamy. Dona K has become boring. More hamy please. I propose you try another crazy pyro or anarchist. Gold 36000 didnt catch on, although now i think of it you must have been talmud kid too.

Sun, 05/08/2011 - 05:17 | 1252569 css1971
css1971's picture

I think it is Tyler. Either that or RoboTTrader is Tyler.

Remember, Tyler was Jack's dissociated personality.

Sun, 05/08/2011 - 11:08 | 1252843 Muir
Muir's picture

I said that!

Robo is one of Tyler's alter egos.

What better way to help destroy the system than to make money on LULU?


+0.96 (1.02%) May 6 - Close

Sun, 05/08/2011 - 15:52 | 1253536 akak
akak's picture

I think it is Tyler. Either that or RoboTTrader is Tyler.

I have increasingly been coming to suspect that "RobotTrader" is just an alter-ego of Tyler myself.  The gratuitous, antagonistic taunts and mindless pumping of equity-fads-of-the-moment are becoming just too over the top to be the honest if clueless postings of anyone real.  The cowardly and consistantly unengaging manner in which he drops his trollish shitbombs and then flees without ever being willing to defend or support those shallow, flippant, anti-consensus posts is highly suspicious as well, and utterly unlike any other troll in this forum.

Mon, 05/09/2011 - 01:18 | 1254698 ebworthen
ebworthen's picture

RoboTrader just sounds like a cynic to me.

No shortage of cynics in the world.

Besides, who cares?  Enjoy his perspective as it illuminates part of the orange on the table.

Sun, 05/08/2011 - 12:50 | 1253056 Oracle of Kypseli
Oracle of Kypseli's picture

@ topcallingtroll.

At least she has come up with some thoughtful commentary and some humor.

 Instead of your hominen attacks, why don't you express your own plan and thoughts. 

Sun, 05/08/2011 - 14:00 | 1253229 Re-Discovery
Re-Discovery's picture

ad hominem = logical fallacy

ad hominem attack = logically falacious attack; e.g. in an argument, attack doesn't follow from subject matter of discussion

Please, if your going to use big words or latin ones, please look up first.

Sun, 05/08/2011 - 14:36 | 1253329 dogbreath
dogbreath's picture

and what is not ad hominem about Topcallingtroll's response professor

Sun, 05/08/2011 - 15:56 | 1253550 akak
akak's picture

ad hominem = logical fallacy

ad hominem attack = logically falacious attack; e.g. in an argument, attack doesn't follow from subject matter of discussion

Incorrect.  The kind of logical fallacy to which you are referring, in which a statement or disagreement does not logically follow from what precedes it, is actually a non sequitur --- literally, "does not follow".

An ad hominen ("at the man") attack is one in which the person themself, rather than their argument, is attacked.

Sun, 05/08/2011 - 22:01 | 1254375 Oracle of Kypseli
Oracle of Kypseli's picture

@ Re-discovery

Okay: "ad hominem"

So then you are doing the same. You are correcting and criticizing my grammar, but you are not offering any counterargument on my comments.


Mon, 05/09/2011 - 01:26 | 1254701 ebworthen
ebworthen's picture


ad hominy attacks = throwing grits you didn't make yourself during a disagreement; buttered, peppered, salted, wasted.


Sun, 05/08/2011 - 00:33 | 1252360 vxpatel
vxpatel's picture

Who better to destroy the mess than those who created it?

Sun, 05/08/2011 - 00:35 | 1252363 zen0
zen0's picture

Shiva is the destroyer, or if one pleases, the transformer of worlds, not Krishna.


An edit is in order here, if credibility is to be upheld.

Sun, 05/08/2011 - 00:44 | 1252376 Arkadaba
Arkadaba's picture

Actually Krishna might be ZH. Been a while since I looked/read any of this. Krishna is the boy who goes into the woods (my interpretation)

Sun, 05/08/2011 - 08:34 | 1252671 augie
augie's picture


thank you.

Sun, 05/08/2011 - 10:44 | 1252813 DosZap
DosZap's picture

No, Abaddon is the Destroyer of souls,which make up the world.

"Abaddon" is a fitting name for him.

Sun, 05/08/2011 - 00:42 | 1252370 gmj
gmj's picture

Wow, this article is a literary tour de force.  Seriously.  I didn't know people could still write like this.

Sun, 05/08/2011 - 03:01 | 1252487 StychoKiller
StychoKiller's picture

Yeah, but substituting "neo-gothic follies" for housing is a bit much.

Sun, 05/08/2011 - 04:50 | 1252556 jeff montanye
jeff montanye's picture

no, it's perfect (you do know what "follies" were, literally, right?).  he does love his two dollar words and mythological allusions though (and i think he said less uncertain earnings contract the p/e ratio but meant more uncertain...).

Sun, 05/08/2011 - 09:36 | 1252736 SuperRay
SuperRay's picture

That is the ugliest monstrosity since Levittown!

Sun, 05/08/2011 - 11:01 | 1252834 Bam_Man
Bam_Man's picture

Levitt houses were 600-800 square feet and could be purchased for 2-3 times a (single earner) household's annual income. That was the beauty of them.

Sun, 05/08/2011 - 12:40 | 1253031 takinthehighway
takinthehighway's picture

Ahh, the bliss of suburban living...

Sun, 05/08/2011 - 12:57 | 1253073 riley martini
riley martini's picture

 Like Luis R. market summary on Wall Street Week.

 I think he said trying to reinflate the housing and equity bubble through low rates and price support is causing commodity inflation.

Mon, 05/09/2011 - 01:33 | 1254715 ebworthen
ebworthen's picture

omg - It's a 1975 Ford Pinto with rims, leather seats, headers, and gold tone trim (and a smiling lemon air freshener hanging from the rear view mirror).

Only thing worse would be a pimped Cadillac Cimarron.

Sun, 05/08/2011 - 07:00 | 1252600 Bendromeda Strain
Bendromeda Strain's picture

 I didn't know people could still write like this.

Behold the power of the sober Irishman...

Sun, 05/08/2011 - 10:47 | 1252803 Re-Discovery
Re-Discovery's picture

I suppose the Fed re-tort would be "when the time comes we will rein in the balance sheet." 

And the political response will be "when the time comes, we will rein in the spending." 

And the households' response will be "when the time comes, we will begin saving rather than spending."

And the bank's response will be "when the time comes, we will reduce our leverage."

However, the problem is that when the time comes they will all have to do it at the same time.  This is the great insight of the officers in the sandbox and "neo-gothic follies" analogies above. 

If anyone wants to understand what the reaction will be when the real bullets start flying or when all follies stop getting bids, look back at 2008.  Really look at the panic.  The histrionics of our leaders.  The sheepish selfish behaviour of our financial dons.  And understand.  Truly understand as the writer eloquently frames where your long-term investment needs to be and who will -- and should -- benefit from the next -- or better said, final --collapse.

Sun, 05/08/2011 - 13:34 | 1253158 RockyRacoon
RockyRacoon's picture

Thanks for your views.  It appears that leadership, at all levels, is lacking in the U. S.

I mean that we have no clearly competent people who can take a front position and clear a path when times get bad.  Your reference to 2008 is adequate to illustrate that.   An every-man-for-himself social view waxes and wanes but is very high right now.   Pressure, both economic and social, brings out the real agendas.   As is said, adversity doesn't build character, it reveals it.

Sun, 05/08/2011 - 07:36 | 1252623 duncecap rack
duncecap rack's picture

Sometimes I felt like that. At other times I felt the complex sentence structure interfered with the transmission of the ideas.

Sun, 05/08/2011 - 10:42 | 1252780 Calmyourself
Calmyourself's picture

Bingo, this guys is enamored of his own writing. Much preening and gazing into the mirror occurred during its gestation and delivery. The ideas are there and I appreciate them but could do without the overly complex structure.

Sun, 05/08/2011 - 11:06 | 1252840 nevadan
nevadan's picture

Exactly.  Everything that was said could have been done in half the space.

Sun, 05/08/2011 - 13:36 | 1253170 RockyRacoon
RockyRacoon's picture

You fellas are obviously not used to reading anything written before 1975.

Suggestion: Try a little light reading by Rider Haggard to get yourselves into the mood.

It was a pleasure to read something that was not Tweet-ized, Facebooked, or texting-like.  (I cringe at my own word coinage.)

Sun, 05/08/2011 - 14:38 | 1253328 malek
malek's picture


Sun, 05/08/2011 - 14:46 | 1253355 dogbreath
dogbreath's picture


Sun, 05/08/2011 - 18:08 | 1253872 Calmyourself
Calmyourself's picture

Thanks for the recommendation however, I do not come to Zerohedge to read the agonized musings of a financial Chekhov. The ideas as I stated were a silk purse the prose presenting them a sows ear.

Sun, 05/08/2011 - 18:15 | 1253899 RockyRacoon
RockyRacoon's picture

The only agony was on your part in trying to comprehend the piece without having a dictionary and a Roget's at your fingertips.

Sun, 05/08/2011 - 22:15 | 1254408 Calmyourself
Calmyourself's picture

ha, yep you got me. Back to Marvel comics I guess..

Mon, 05/09/2011 - 01:41 | 1254720 ebworthen
ebworthen's picture

Calmyourself - and some believe Roquefort and Cabernet to be nothing but fungus.

Mon, 05/09/2011 - 02:18 | 1254739 geekgrrl
geekgrrl's picture

That was my exact thought: wow, you don't see people writing like this anymore. I agree; it was a pleasure to read.

Sun, 05/08/2011 - 15:57 | 1253565 akak
akak's picture

U kneed 2 B less LaZ.

Sun, 05/08/2011 - 18:59 | 1253987 Bendromeda Strain
Bendromeda Strain's picture


Mon, 05/09/2011 - 01:43 | 1254726 ebworthen
ebworthen's picture

Yes, and then it would have been sterile.

Sun, 05/08/2011 - 08:09 | 1252647 Snidley Whipsnae
Snidley Whipsnae's picture

If you peruse the classified ads in your local newspaper you will find that, for the most part, 'people cannot still write like this'. In fact many of the ads are incoherent without liberal interpretation.

Sun, 05/08/2011 - 10:49 | 1252816 DosZap
DosZap's picture

Ad's?.............Hell the Jounalists cannot write like that.

98% of what is force fed the sheeple is in Progressive form.


Sun, 05/08/2011 - 09:03 | 1252700 Sean7k
Sean7k's picture

Unfortunately, it is written more for himself than those whom can benefit from this analysis. It is the same problem with Mises, too many words and constructs only act to confuse the reader. 

While there are those trained to understand it, as an Austrian economist it is no mystery, for the normal reader it is a painful exercise in finding the truths. The writer does a disservice to his audience. 

The points made here are spot on the money. The conclusions are just as meaningful, but he could have provided a simpler version of his supporting arguments and then gave us the same conclusions: savings and idle capital will be better protected if they are denominated in gold, silver, etc. If you are going to play with fiat, recognize that the game is complex. The economy will not be homogenous, it will contain areas of growth and loss. Further, as this money creation mechanism overheats, there will serious consequences and the value of your fiat will be compromised. 

Finally, regardless of central bank shenanigans, production of goods and services (Asia, Brazil, etc.) will continue to create real wealth. The currency that wealth is denominated in will increase in value. 

Consumption through credit creation will consume wealth and diminish the value of the currency that participates. 

For all those traders that hope to profit through the misallocations of capital and regulatory graft that accompany them: your proximity to the center of power will determine your ultimate success. 

Sun, 05/08/2011 - 09:58 | 1252759 SamuelMaverick
SamuelMaverick's picture

Sean 7k, thank you for the abbreviated version of this post.  I hate when people take 10 pages to say something that can be explained in 4 paragraphs.  Reminds me of college when I could take 4 weeks of class notes and condense them into 1 page.  Yours, Maverick

Sun, 05/08/2011 - 12:26 | 1252985 Hedgetard55
Hedgetard55's picture

Agree, the article makes simple points nearly incomprehensible. Essentially it says there is no free lunch, you can't get something for nothing and money does not grow on trees - but printing money will make it appear, for a while, that these truths are false.

Sun, 05/08/2011 - 13:40 | 1253184 RockyRacoon
RockyRacoon's picture

Nuance and style are not commonly found in writing these days.  Pitiful.  Whether one enjoyed the piece or not depends upon the reader's background and education.   The facts presented in a more concise, less ornate fashion would have invited a more strident criticism of said facts.  I see more complaints about style than I do about content.

Sun, 05/08/2011 - 18:07 | 1253880 Calmyourself
Calmyourself's picture

Is it unacceptable to enjoy the ideas presented but be unimpressed with the presentation.

Sun, 05/08/2011 - 12:08 | 1252945 Mountainview
Mountainview's picture

It's Sean Corrigan style, between Shakespire and Mises. To the matter. This vendor financed system (China is the nr.1 vendor) will work as long as the vendor accepts to be paid in the buyer's money. If China turns to Renmibi convertibility and asks the US to carry the Forex risk for it's debt it will get critical. In the meantime all the nice correlations issued by S.C. will remain in place.

Chinese reserve diversification and subsidy for domestic demand will lead to a rising commo trend and falling purchasing value of the USD.

Sun, 05/08/2011 - 15:32 | 1253494 Mec-sick-o
Mec-sick-o's picture

You missed his ultimate warning:  Commodity hiking prices will ultimately lead to deleveraging and that is the current situation.  Credit contraction or crash is very near.

Sun, 05/08/2011 - 18:22 | 1253908 nohweh
nohweh's picture

thanks for the traslation Sean7k. I gave up after the first couple of paras. I am an under educated Aussie who appreciates demystification and lucidity.

Sun, 05/08/2011 - 18:20 | 1253909 nohweh
nohweh's picture

thanks for the translation Sean7k. I gave up after the first couple of paras. I am an under educated Aussie who appreciates demystification and lucidity.

Sun, 05/08/2011 - 09:11 | 1252713 Ying-Yang
Ying-Yang's picture

"Here am I: at one stroke incestuous, adulteress, sodomite, and all that in a girl who only lost her maidenhead today! What progress, my friends... with what rapidity I advance along the thorny road of vice!"

Marquis De Sade

Sun, 05/08/2011 - 11:34 | 1252880 schizo321437
schizo321437's picture

Hah! Pearls of wisdom. Damn that`s good scorn.

Sun, 05/08/2011 - 10:06 | 1252767 T-NUTZ
T-NUTZ's picture

"Thus, inflation is not simply a matter of all boats being gently lifted, allowing a painless continuation of government aggrandisement, smoothly bilking the savers who are the bane of the Underconsumptionist world view, fattening up stock brokers and investment managers rich on the fatty flesh of beta, and keeping the workforce contentedly at their lathes and laptops as the soothing breeze of money illusion lulls the Lumpenproletariat into temporarily abandoning the historical preordination of the class struggle."


makes my mouth water a bit

Sun, 05/08/2011 - 10:30 | 1252802 rufusbird
rufusbird's picture

Somebody had better hide this stuff so Ben B. can't read it. If the Ben catches on to this style we will never  understand any of his answers to questions again...

Sun, 05/08/2011 - 12:10 | 1252947 Mountainview
Mountainview's picture

I already puzzled now by his "Greenspanish" opacity.

Sun, 05/08/2011 - 16:03 | 1253576 akak
akak's picture

If you can't dazzle them with brilliance, baffle them with bullshit.

If you can't even baffle them with bullshit, destroy their minds with the insidious prions of Keynesianism.


Sun, 05/08/2011 - 18:10 | 1253887 Calmyourself
Calmyourself's picture

" insidious prions" descriptive and devastating, evoking a creepy crawly fear of a Mad Cow tiptoeing up behind you...

Sun, 05/08/2011 - 22:33 | 1254438 Mad Cow
Mad Cow's picture


Mon, 05/09/2011 - 00:22 | 1254641 Calmyourself
Calmyourself's picture

Ha, well played.

Sun, 05/08/2011 - 11:08 | 1252842 4shzl
4shzl's picture

Otiose grandiloquence = tour de farce.

Sun, 05/08/2011 - 11:13 | 1252848 Muir
Muir's picture


Absolute bullshit article.

A lot of scare words intermingled with jargon and typical Ayn Rand convoluted more bullshit.




Sun, 05/08/2011 - 13:47 | 1253188 RockyRacoon
RockyRacoon's picture

See what I mean?   Literary critics abound -- but little factual analysis.

Sun, 05/08/2011 - 00:42 | 1252371 tom a taxpayer
tom a taxpayer's picture

"the combined effect of governmental mandates to burn what could otherwise serve as food and fodder in fuel thirsty vehicles have reached the point where nigh on 40% of the US corn crop is misused in this manner..."

That hit me like a ton of bricks...40% of US corn crop used to make fuel!!!!

Sun, 05/08/2011 - 00:52 | 1252382 cosmictrainwreck
cosmictrainwreck's picture

another .gov "solution" for the "energy crisis" FUCKTARDS. Light-years beyond imbiciles....and ya know what? like everythng else in the fuckin'seething cauldron of insanity: UNSTOPPABLE

Sun, 05/08/2011 - 01:04 | 1252405 I am Jobe
I am Jobe's picture

"The EPA Wants To Regulate Dust! I'm Not Making This Up!" Congressman Ted Poe

Sun, 05/08/2011 - 02:01 | 1252443 seek
seek's picture

Wants to? Try is regulating dust. Here in sunny Arizona they force outlying towns to pave little-used dirt roads (such as the one to my house, that serves a whopping 4 families) in the name of dust control. In a freaking desert made of dust, when the #1 source of dust inside the city has already been determined to be the cars themselves, not the roads they drive on.

More misallocated capital and forced borrowing on the towns that can't afford it, lest the county get hit with EPA fines they also can't afford.



Sun, 05/08/2011 - 05:09 | 1252550 i-dog
i-dog's picture

Hmmmm, I wonder what they're up to:

  • burning potential food as vehicle fuel
  • forcing more borrowing to pave roads to nowhere
  • burdening the young with cheap student loans (while destroying jobs through outsourcing, regulations and taxes)
  • burdening the poor with cheap car loans (on a depreciating 'asset')
  • burdening the middle class with cheap housing loans (on a depreciating 'asset')
  • fleecing private investors through money supply inflation, HFTs and massive naked shorts
  • ramping up internal security in the wake of the OBL farce

Almost makes you think that they're not really trying to get us out of the mess they've created, don't it?

Sun, 05/08/2011 - 08:19 | 1252651 Snidley Whipsnae
Snidley Whipsnae's picture

Excellent observations idog... In addition I especially liked this paragraph...

"Where the common herd has gone badly wrong (again) is in forgetting the truth that Leland Yeager long ago encapsulated, viz., money does not have to be borrowed into existence, since it can be spent into existence right up to the point where the malign effects of all that unbacked spending lead people to distrust it sufficiently to refuse to accept it as a medium of exchange, a final repudiation which sounds the death knell for what has by now become a hyperinflation."

Sun, 05/08/2011 - 11:33 | 1252876 nevadan
nevadan's picture

"Spending money into existence" seems to me a distinction without a difference since government spending is done against the purchase of Treasuries which is just borrowing against the future.  How can an increase in debt, no matter how it is accounted for,  be anything other than borrowed into existence?  Issuing credit from the banking system  and the multiplier effect of fractional reserves or the Fed buying Treasuries changes who holds the debt, but it is still debt based on borrowing and results in the creation of money  out of nothing does it not?

Sun, 05/08/2011 - 14:43 | 1253341 malek
malek's picture

If nobody cares anymore if the debt can ever be paid back or even just the interest continued to be paid, you cannot call it "borrowing" anymore.

Then it's being spent into existence.

Sun, 05/08/2011 - 22:43 | 1254458 Mad Cow
Mad Cow's picture

Could it simply be usury that's the problem?

Mon, 05/09/2011 - 03:51 | 1254728 ebworthen
ebworthen's picture

Taxation is usury.

Zero interest on savings with a devalued currency is usury.

Usury of the soul is building a dream then systematically crushing the future realization of that dream while simultaneously maintaining the tapestry about the dream.

Sun, 05/08/2011 - 08:55 | 1252693 Ima anal sphincter
Ima anal sphincter's picture

Great comment i-dog, but unfortunately, you've only scratched the surface of what these assholes have done. This is the purposeful "wholesale" destruction of this country. My back is "against a wall" - no other place to go but forward.

Sun, 05/08/2011 - 12:13 | 1252953 Mountainview
Mountainview's picture

It's definetly all of it...

Sun, 05/08/2011 - 13:52 | 1253204 Rusty Shorts
Rusty Shorts's picture

idog, good stuff.


All this progress is marvelous... now if only it would stop!
      -- Allan Lamport

The avoidance of taxes is the only intellectual pursuit that still carries any reward.
      -- John Maynard Keynes

We have first raised a dust and then complain we cannot see.
      -- Bishop Berkeley

Slowly, we're bringing the risks of online banking to projectile weaponry.
      -- Anatole Shaw

We share half of our genome with the banana, a fact more evident in some of my acquaintances than others.
      -- Sir Robert May

A money lender. He serves you in the present tense; he lends you in the conditional mood; keeps you in the subjunctive; and ruins you in the future.
      -- Joseph Addison

We tend to idealize tolerance, then wonder why we find ourselves infested with losers and nut cases.
      -- Patrick Hayden

Food is rotting in warehouses, being burned and dumped into the sea. It is the money system destroying food to maintain prices.
      -- William Aberhart

Sun, 05/08/2011 - 13:16 | 1253117 linrom
linrom's picture

Do you remember the "Farm Aid"?

Sun, 05/08/2011 - 14:07 | 1253245 Rusty Shorts
Rusty Shorts's picture

I was there, didn't do much good though.

Sun, 05/08/2011 - 23:20 | 1253252 Rusty Shorts
Rusty Shorts's picture


Sun, 05/08/2011 - 02:33 | 1252465 topcallingtroll
topcallingtroll's picture

I may object to forced use of an inefficient fuel, but those pious corn types (PCT) who worry about the little brown people (LBP) are begging the question as to who has the right to determine use of said corn derived products.

The corn belongs to its owners. The owners may do with it as they wish.

Personally i find it offensive that people think they should force corn owners to sell their corn only for uses approved by the Rightous Corn Society (RCS) based on the Corn Central Planning Commission (CCPC) regulations.

I often become so offended when PCT from the RCS open their mouths about the LBP and propose a taking of property by the CCPC that I make it a point to run my air conditioning wide open while driving with open windows in the hopes that they STFU once and for all.

Sun, 05/08/2011 - 03:28 | 1252509 bonin006
bonin006's picture

I also object to the government stealing my money to bribe people to burn corn

Sun, 05/08/2011 - 03:59 | 1252526 topcallingtroll
topcallingtroll's picture I dont know what to think.
This was a lot simpler until you had to complicate
it with facts.

Sun, 05/08/2011 - 10:56 | 1252827 Bob
Bob's picture


Sun, 05/08/2011 - 09:08 | 1252707 Sean7k
Sean7k's picture


How does someone fail to recognize that subsidies engender public control of private property? 

Sun, 05/08/2011 - 11:04 | 1252837 Jumbie
Jumbie's picture

Oddly (or not) corn has almost always been the most cost-efficient method of heating a home, less than wood, natural gas, etc., even before subsidies.

The first diesels ran on coal dust, and corn dust would seve equally well. If labs would study and reduce particulates of dust combustion

it would serve America best. I was also amused that Argonne labs also just discovered the 1939 hybrid engine tech featured on the lower right of the page...

Back in the 60s our WI farm was paid to not grow corn. Now all are paid to grow more, and consequently fund the sole source of ADM's profits.

Now that futures are more accessible to common farmers it would be more sound to defund subsidies and allow farmers to plant as they see fit, buying futures to hedge (a more difficult task for small farmers of the 60s, leading to the rise of agri-corps via the ratchet mechanism of small failures).

The only objection I have to the author is his total ignorance of negative externalities of energy production - as if they are of no economic consequence. China is already paying dearly for its burgeoning coal production and use by setting costs of clean water, food and health upwards in a parabolic trend. Gas and oil fracking are rendering water tables actually combustible (like new, underground, Cuyahogas). The effects of acid rain on fish and crop yeilds is continuing. Ignoring them is like ignoring taxes; something fw here would be likely to do...


Sun, 05/08/2011 - 14:06 | 1253237 Rusty Shorts
Rusty Shorts's picture

General Motors built several Coal powered cars back in the 70's.

Sun, 05/08/2011 - 04:42 | 1252555 Sathington Willougby
Sathington Willougby's picture

Leaving us corn holed by sheep.

Sun, 05/08/2011 - 07:24 | 1252617 floridasandy
floridasandy's picture

i object to being forced to get worse gas mileage because the government says that i have to.

Sun, 05/08/2011 - 10:56 | 1252830 DosZap
DosZap's picture


That hit me like a ton of bricks...40% of US corn crop used to make fuel!!!!


Where ya been?,the farmers make more money,while the world starves, and the ethanol is destroying our vehicles.

Heck of a deal.

Population control, and boosts the economy from an automotive repair standpoint.

New rules have the gasoline going to 15% Ethanol, from 10%,which if used in any vehicle older than 2002, or the close tolerance engine high end New cars, will trash the engine post haste.

And the owners eat the Bill.

A class action lawsuit is in order here.

Sun, 05/08/2011 - 11:38 | 1252888 nevadan
nevadan's picture

Farmers are responding to market distortions created by the government.

Sun, 05/08/2011 - 14:00 | 1253224 zaknick
zaknick's picture

Said the "drug ttrafficker" to the "judge"

Sun, 05/08/2011 - 12:53 | 1253063 takinthehighway
takinthehighway's picture about a new stimulus program wherein anyone whose primary vehicle is older than 2002 would receive a new Government Motors vehicle in exchange...less pollution and more jobs...we could call it...get ready...


"Corn For Clunkers"!

Sun, 05/08/2011 - 00:46 | 1252375 LowProfile
LowProfile's picture

Haven't read prose that weighty since...  Hell, haven't read prose that weighty before.

Sun, 05/08/2011 - 03:50 | 1252471 Arkadaba
Arkadaba's picture

You need to read - try your local library.

I love my local library - glad there is a place for kids to go after school and old folks in the morning. Also saves me at least a hundred a month given my reading habits.

Edit: I would pay a monthly or yearly stipend


Sun, 05/08/2011 - 09:24 | 1252725 Wyndtunnel
Wyndtunnel's picture

Would that be your PUBLIC library? 

Sun, 05/08/2011 - 11:13 | 1252849 DosZap
DosZap's picture

Where do you find the time to read so much?

Turn off the puter?.

Sun, 05/08/2011 - 09:07 | 1252710 Sean7k
Sean7k's picture

Try Thomas Pynchon, but you will need a dictionary and a lot of patience.

Sun, 05/08/2011 - 11:22 | 1252862 Milestones
Milestones's picture

"Gravity's Rainbow" was my second shot of Pynchon; the first "The Crying of Lot 49" was the teaser. If you want another great read try Lawrence Durrell's "Alexandria Quartet" written in the late 50's early 60's. He pulled off what Proust tried to do with "Rememberances of things Past"; that is look at the novel thru the eyes of 4 of the different characters as to how things REALLY happened. Dictionary is also necessary. His "Black Book" is also great.      Milestones

Sun, 05/08/2011 - 09:17 | 1252719 Ying-Yang
Ying-Yang's picture

A girl's legs are her best friends, but the best of friends must part.
Redd Foxx

Sun, 05/08/2011 - 00:56 | 1252383 dark pools of soros
dark pools of soros's picture

badly OT for such a great work..but WTF with the bin Laden videos???

 and some commentary here... wow fuckin so false



Sun, 05/08/2011 - 00:56 | 1252390 Jim in MN
Jim in MN's picture

Smells like an inside job aimed at discrediting the Administration.

Sun, 05/08/2011 - 08:21 | 1252655 Snidley Whipsnae
Snidley Whipsnae's picture

Do you believe that this administration, or any other, needs help discrediting itself?

Sun, 05/08/2011 - 10:17 | 1252788 Calmyourself
Calmyourself's picture

Sun, 05/08/2011 - 01:54 | 1252412 palmereldritch
palmereldritch's picture

So that's what the basement of the Pentagon looks like...I almost bought it until I saw the jars of urine in the background and the kleenex boxes on his feet.

EDIT: Add link to Infowars analysis

Sun, 05/08/2011 - 00:53 | 1252386 M.B. Drapier
M.B. Drapier's picture

the 'temperamentals', if you will

Nice work. I hope this one catches on.

Sun, 05/08/2011 - 00:56 | 1252389 Tyler Durden
Tyler Durden's picture

Or as Norville Barnes calls them: "the more timid elements"

Sun, 05/08/2011 - 08:24 | 1252656 Snidley Whipsnae
Snidley Whipsnae's picture

Cudos for this one TD.

Sun, 05/08/2011 - 00:55 | 1252388 Jim in MN
Jim in MN's picture

Nice.  Thank you.  Here is an edited and enhanced version:

  1. Stupidly low interest rates beget overconsumption. 
  2. Pig-headed efforts to avoid paying for it beget financial chaos. 
  3. Corruption without jail begets social destruction. 


  • Tilt to hard assets
  • Consume less and save more 
  • Pray
  • Found or join Constitutionally-oriented centrist party
  • Exit imperial bases


Sun, 05/08/2011 - 04:54 | 1252560 purplefrog
purplefrog's picture

Thank you, Jim in MN.  I, too, admired the prose, but soon wore out. 

I appreciate your summary.  His observation on the random nature of inflation across various commodities helps me to see beyond daily price fluctuations and focus on the fundamentals.

Sun, 05/08/2011 - 09:20 | 1252722 Ying-Yang
Ying-Yang's picture

To find out a girl's faults, praise her to her girl friends.
Benjamin Franklin

Sun, 05/08/2011 - 15:07 | 1253412 dogbreath
dogbreath's picture

keep them coming

Sun, 05/08/2011 - 07:52 | 1252636 Bringin It
Bringin It's picture

I appreciate the summary. 

Why were rates too low too long during the reign of the maestro and his successor?

Sun, 05/08/2011 - 09:34 | 1252735 Wyndtunnel
Wyndtunnel's picture

"As for the ostensibly 'risk-free' bonds, well, who really needed them when there were so many gains to be made moving out the credit spectrum into not just the blues and purples, but the far ultra-violet and even beyond?"

That's roughly the spectrum of his prose.



Sun, 05/08/2011 - 00:56 | 1252391 reddweb
reddweb's picture

shiva's intentions are holy, i am afraid same cant be said of bernanke.

Sun, 05/08/2011 - 05:13 | 1252567 purplefrog
purplefrog's picture

Yes, Shiva is just as much a part of redemption as Krishna.

Sun, 05/08/2011 - 01:00 | 1252395 russwinter
russwinter's picture

Inflation Causing Boom, Then Bust

Sun, 05/08/2011 - 05:09 | 1252566 purplefrog
purplefrog's picture

Good article.  Thanks.  Hyperinflation is not inflation.  It is collapse.

Sun, 05/08/2011 - 00:58 | 1252397 I am Jobe
I am Jobe's picture

The greenshit crap is really getting on my fucking nerves. Nuf already and they are bought into this crap. Listen Datacenters consume more and we are fucking building more DC's than ever before which are energy fucking hogs. Where is Van Jones, must be sucking on Al Gores dick.

Sun, 05/08/2011 - 02:42 | 1252475 topcallingtroll
topcallingtroll's picture

He is still in an undisclosed location trying to figure out a way to spin the article where he proudly proclaimed he was a communist.

Bummer to be quoted accurately.

Yes it still matters.

Sun, 05/08/2011 - 01:03 | 1252403 Milton Waddams
Milton Waddams's picture

Grunching both OP and comments:  my guess is it concludes that "commodity speculators" are the new "bond vigilantes"; that driving the price of goods traded in the "real economy" higher is the only check to the transmission mechanism of easy money monetary policy through the manipulation of "market rates".

Sun, 05/08/2011 - 08:26 | 1252664 Snidley Whipsnae
Snidley Whipsnae's picture

"Grunching both OP and comments:  my guess is it concludes that "commodity speculators" are the new "bond vigilantes"; that driving the price of goods traded in the "real economy" higher is the only check to the transmission mechanism of easy money monetary policy through the manipulation of "market rates".

Correct, and the move by govs to 'paperize' commodities in an attempt to control their prices. In addition the paper commodities can be 'yo-yoed' to create profits for the insiders.

Let's get physical!

Sun, 05/08/2011 - 01:08 | 1252406 palmereldritch
palmereldritch's picture
The Bhagavad Gita says this is no Gadda-Da-Vida


Sun, 05/08/2011 - 02:46 | 1252478 Arkadaba
Arkadaba's picture

I was being nice earlier but you do know the BG comes from the Hindu tradition? Right?

Sun, 05/08/2011 - 15:08 | 1253383 palmereldritch
palmereldritch's picture

It was wordplay, that's all...BG sounds like....In-Gadda-Da-Vida was meant to be In the Garden of Eden but during the recording (sound check actually) the lead singer of Iron Butterfly was so wasted and the studio acoustics so bad that the name got mangled but it stuck.

10,000 suns, shatter of worlds, Garden of Eden...I guess that's the mythological religious spectrum of comment I was shooting for :)

Sun, 05/08/2011 - 11:36 | 1252881 DosZap
DosZap's picture


 Is that like Ina Goda Da Vida?

Sun, 05/08/2011 - 15:01 | 1253393 palmereldritch
palmereldritch's picture

Yeah, not to be confused with Intravenus de Milo ;)

Sun, 05/08/2011 - 01:36 | 1252424 Rogue Economist
Rogue Economist's picture

Was the objective here to inform or fill up space on the disk?


Sun, 05/08/2011 - 14:16 | 1253266 RockyRacoon
RockyRacoon's picture

Apparently it was to write at a level above your comprehension.

Mon, 05/09/2011 - 02:44 | 1254753 geekgrrl
geekgrrl's picture

Hahaha. I think it's safe to assume you've never read The Wealth of Nations.

Sun, 05/08/2011 - 01:40 | 1252427 I am Jobe
I am Jobe's picture

I use Dell Tape Backup due the data sets. Would not recommend Networked Storage.

Sun, 05/08/2011 - 11:39 | 1252890 DosZap
DosZap's picture

I am Jobe,

Agreed ,esp if you want to stay out of jail.

Everyone here has committed a crime knowingly or not.

And will be held accountable, when all the Chess pieces fall into place.

Sun, 05/08/2011 - 01:39 | 1252431 Burnbright
Burnbright's picture

Long winded. Can you please make your point in fewer words. Like reading a novel by someone trying to be artistic, you lose all meaning in what is being said by trying to be eloquent. 

Sun, 05/08/2011 - 08:43 | 1252681 Vlad Tepid
Vlad Tepid's picture

Umm...he WAS eloquent. This is the way most people wrote in the English language until recently.  You can go back to watching micro-clips on CNBC if you want.  I'll stick to this.  Geez, I'd hate to hear what you'd have to say about "The Wealth of Nations."

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