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An "Austrian View" Approach To Equity Prices

Tyler Durden's picture


Take all you know about the formation of equity prices... and throw it out of the window, at least according to the following paper out of (fittingly Austrian) Erste Group, which applies Austrian theory to stock "valuation", by looking at a world in which the only determining factor for "fair value" is credit money creation. Indeed, the 2011 market, in which cross-asset correlations broke all records, and in which fundamentals were cremated once and for all, showed that the only thing that matters is who prints first, and more importantly, who frontruns said printing (it also means that most hedge fund analysts will soon be redundant). Here is Erste with a slightly less jaded view: "We come to the conclusion that it makes sense for equity investors to track monetary and, especially, debt developments closely. We believe that the changing dynamics of monetary as well as debt aggregates are often a good leading indicator for equity markets. Historic data shows that accelerating money and credit growth drives equity prices, while decelerating growth in the money and credit supply generally puts pressure on equity prices...Financial history shows that equity markets are ‘addicted’ to new money and credit creation. To keep rallies going, the equity markets need ever more fuel (faster rate of change in the money and credit supply). As soon as the rate of change is negative (decelerating money and credit supply) markets tend to become sluggish and lose momentum, even though in absolute terms the money and credit supply is still rising." And while this is not telling Zero Hedge regulars something they didn't know already, with the fiscal pathway of creating new money blocked in a (mock) austere world, the only other way to generate M1-X is by printing. Summary - much more currency debasement and devaluation ahead, only this time with a $100 base in WTI. Which most certainly means that very soon the world will need to find an extended source of cheap energy (read oil). And everyone knows what that will be...

Summary from Erste:

At the heart of this product lies the analysis of the development of historic money and credit statistics. It is called the ‘Austrian View’ because studying the theories of the Austrian School of economics (especially Ludwig von Mises’ book: ‘The Theory of Money and Credit’; which, by the way, will celebrate the 100th anniversary of its first publication in 2012) has inspired us to examine the relation between money/credit developments and equity prices. We have come to the conclusion that, indeed, there seems to be a connection between the two. However, it is necessary to have the right angle of vision when poring over the money and credit statistics, because otherwise they are pretty useless.


We have to admit that it has become very difficult to determine what money and credit actually is. Money supply aggregates like M0, M1, M2, M3, sometimes even M4, are being published. To complicate things further, central banks publish credit statistics as well. Finally, money and credit are just two sides of the same coin in today’s monetary order. Someone’s savings account (contained in the calculation of M1) is at the same  time the credit financing someone else’s project (contained in credit outstanding). We therefore believe that one should denote currency (apart from cash in your pocket) in savings and other bank accounts as claim, not as money. We believe that M1 and M2 are good short-term leading indicators for equities. In this publication we also track the development of debt as a supplemental indicator.


Apart from the question of which aggregates to track it is important to understand that the rate of change in the money supply is of interest. In order to drive a rally, the rate of change in the money supply has to increase. As soon as the rate of change is slowing down, equity markets tend to get sluggish and weaken. There is, however, a certain time lag effect involved. We decided to use the US stock market cycle 2001 - 2007 as a case study in order to demonstrate how the analysis of monetary forces can improve an investor’s decision-making process. The appendix  of this publication will track several monetary aggregates for the main currency areas.


The punch line is that this framework advises investors to establish long positions in equities (or overweight cyclical or financial stocks) as long as the credit supply is loose and accelerating; as soon as the credit supply becomes tight and decelerates, investors should gradually sell their positions or switch into more defensive sectors. [ZH: incidentally this is what we suggested back in May when recommending the QE unwind trade, which has returned about 10% over the S&P, or about in the top 95%-ile]


In this context, we would like to mention, that in December 2010 an interesting paper was published by Jordà, Schularick and Taylor, titled ‘Financial Crises, Credit Booms and External Imbalances: 140 years of lessons’. They have studied the experiences of 14 developed countries over 140 years and exploited a long-duration dataset in a number of different ways (application of new statistical tools to describe the temporal and spatial patterns). Their final conclusion confirms our interest in money and credit statistics, because the overall result is that credit growth emerges as the single best predictor of financial instability.


The overall framework has to be understood as an additional tool within the toolbox at the investor’s disposal. It is not the Holy Grail or something like that, but we believe that it can provide equity investors with an informative basis in times when fundamental analysis does not seem to be of any use.

Full note (pdf)



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Fri, 12/23/2011 - 17:44 | 2008326 DaveyJones
DaveyJones's picture

Happy Holidays everyone. Leave with this CNBC / Onion Headline:

The good news is that Wall Street experts think stock prices will rise more than 10 percent next year. The bad news is that they expected big gains in 2011.

Fri, 12/23/2011 - 17:46 | 2008332 russki standart
russki standart's picture

More BS from money managers who get paid even as clients get fleeced. I could only see this scenario manifesting if the dollars drops 10% and/or trillions are 'printed'

Fri, 12/23/2011 - 17:55 | 2008347 Cheesy Bastard
Cheesy Bastard's picture

How to avoid a Fema camp:  I pledge allegience to the fag of the United States of America, and to the banana republic for which he stands, one nation under arrest, indefensible, with liberals and "just us" for all.  Merry Christmas

Fri, 12/23/2011 - 18:20 | 2008381 MillionDollarBonus_
MillionDollarBonus_'s picture


The Austrian school makes a fatally flawed assumption about equity prices. Namely that they should be determined by the subjective preferences of market participants. There is in fact a far better and more objective means of price discovery - create a central body to set equity prices according to the mathematical models of professional economists.

The optimality of the price of equities can be modelled by the following equation:

              U(price) = SUM( w1x1 + ... + wnxn )


              wi = intelligence of market participant i

               xi = proportional influence of market participant i on price

Letting Wmax = MAX( w1,...,wn ),we find that:

              Max{U(price)} = SUM( w1x1 + ... + wnxn ) | wi = Wmax for all i

                                            = Wmax * SUM ( x1 + ... + xn)

                                            = Wmax

Therefore, for maximum prosperity only the most intelligent professionals should be setting prices.


Fri, 12/23/2011 - 18:54 | 2008447 WonderDawg
WonderDawg's picture

That. Is. Awesome.

The only problem is, I don't see the component of human nature in the equation. If market particpants A-Z decide they don't want to pay the price that the "most intelligent professionals" have set, then what?

Fri, 12/23/2011 - 19:27 | 2008503 MillionDollarBonus_
MillionDollarBonus_'s picture

They will simply have to pay this price, since it will be mandated by law. But in any case, a failure to agree with the optimal price is a clear demonstration of ignorance, and the resulting social ostracism should be enough to enforce compliance. 

Fri, 12/23/2011 - 19:36 | 2008517 Snidley Whipsnae
Snidley Whipsnae's picture

MDB... "But in any case, a failure to agree with the optimal price is a clear demonstration of ignorance, and the resulting social ostracism should be enough to enforce compliance."


If 'social ostracism' is the only necessity for compliance, why does the US have more people in jail than any other country on earth?

One would think that shame of wrong doing would stop all crime... especially crimes against humanity which bankers/pols commit daily.


Fri, 12/23/2011 - 19:41 | 2008522 Kali
Kali's picture

It's a shame, but there is no shame anymore.

Fri, 12/23/2011 - 20:38 | 2008570 AldousHuxley
AldousHuxley's picture

austrian view may be correct, but in an austrian world austrians would be dirt poor without government subsidies and world competition.


ron paul knows better that his entry into politics came from money and reputation of being a doctor and not a butcher or a car mechanic. But in a real world without government subsidy to doctors (50% of labor costs) and AMA lobbying to keep the profession supply less than demand, doctors wages and reputation would not warrant ron paul to run for elite political position.


Remember Doctors don't create cures, they just distribute them to you.

Also austrian and free market is brutal and cut throat. Do westerners really want to compete with BILLION Indian and Chinese youths?

Fri, 12/23/2011 - 21:13 | 2008601 lasvegaspersona
lasvegaspersona's picture

Only 17% of American physicians are AMA members. It is now a left wing insurance company selling health and life policies and behaving more like AARP than a union for doctors. 

They have lost their way and now only a few academics or power hungry (or should I say a few who enjoy being pictured with politicians at social gatherings) doctors belong. Most who want helpful political input go with Docs4patientcare. The AMA has been useless for 40 years...make that dangerous.

Fri, 12/23/2011 - 21:56 | 2008648 Hohum
Hohum's picture

Be that as it may, government out of health care completely would lead to a plunge in doctors' wages.  How could it be otherwise?

Fri, 12/23/2011 - 22:29 | 2008685 Michael
Michael's picture

The Ron Paul grassroots crew's creativity never ceases to amaze me. Check this out;

Pauled the Iowa Mall and Best Buy today! Submitted by storm on Fri, 12/23/2011 - 22:23.

Was at the largest mall in Iowa today. Went into the Apple store and turned the computers into Ron Paul. Opened to and changed the home pages loaded Ron Paul YouTube video. Also changed the backgrounds to the Top Tier Military donations picture. Here's the kicker, some of the computers already had the home page set to :) we are winning! I just went over to Best Buy and did the same thing. Now I am Pauling the parking lots with Super Brochures..Go get em!

Sat, 12/24/2011 - 00:24 | 2008808 Oh regional Indian
Oh regional Indian's picture

I think I have a new expanded form of QE.

Quite Elevating! Question is what happens when they QE (Quit Elevating)?

I think we are seeing a with-drawal of liquidity around the edges.

India is jittery, because it knows all that dollar slosh can be GONE in a heartbeat and in fact IS currently looking to go home. WHen it does, the whoosh and thud in India and other QE dependent markets (most of th edeveloping world) will be awful.



Sat, 12/24/2011 - 01:09 | 2008867 Harlequin001
Harlequin001's picture

My family and I would like to wish everyone on these pages all the very best for Christmas and the New Year, may the coming year bring you health, wealth and happiness, and that extends to our Muslin, Jewish, Hindu, Buddhist friends and every other creed, race and faith.

Have a good one...


Sat, 12/24/2011 - 01:24 | 2008876 navy62802
navy62802's picture

Hahaha! That's brilliant. The best part of this story is where some of the computers had already been "Pauled." It's like there's a secret underground network that exists without you knowing about it.

Sat, 12/24/2011 - 02:13 | 2008899 ActionFive
ActionFive's picture

Why not just report them to the terror/watch programs- now they are guilty.

Fri, 12/23/2011 - 21:54 | 2008643 Hohum
Hohum's picture

A pure free market is brutal and will hurt most.  But who said that isn't fair ;)? 

Fri, 12/23/2011 - 22:30 | 2008687 blunderdog
blunderdog's picture

Remember Doctors don't create cures, they just distribute them to you.

Some do.  There's huge variation between different specializations in terms of what they can get away with.  Surgeons probably have the greatest leeway.  If they can get someone with a severe medical issue to sign the right forms, surgeons can try cutting off just about anything as "treatment."

You're right about pharma and biotech development, though.

Fri, 12/23/2011 - 23:43 | 2008771 TrulyBelieving
TrulyBelieving's picture

Competition is very good.  Let others be encumbered with a controlled market and let us have a free market, we'll outcompete every time.

Fri, 12/23/2011 - 23:49 | 2008780 GMadScientist
GMadScientist's picture

China disagrees for 245 billion reasons (in 2010).



Sat, 12/24/2011 - 01:14 | 2008871 TrulyBelieving
TrulyBelieving's picture

China disagrees because they see using slave labor as a way to gain the system. Crony capitalism disagrees because they see stealing and control as a way to gain the system. Now why is it you disagree?

Sat, 12/24/2011 - 11:02 | 2009097 AldousHuxley
AldousHuxley's picture

slave labor due to low labor standards.


America learned long time ago about what happens when you lock in women workers in a garment factory so that one owner can increase profit by 5%.


Chinese are new to capitalism and materialism. They will accept horrid labor conditions as long as they can buy stuff but in due time will realize that sacrifices made are not worth the materialistic way of life.


Americans will soon become Europeans...after spending all public tax dollars in fueling elite's ambition for global dominance in world wars, labor will demand more. The Iraq vet guy at the pizza shop will stop beliving that capitalism will make him happy.


Hope was all American middle class had after Reagan, Clinton x 2, Bush x 3, and Obama crushed that hope with horrifying realism that America after all is a corrupt oligarchy no different than Russia or China.

Fri, 12/23/2011 - 23:46 | 2008776 GMadScientist
GMadScientist's picture

Remember, these are the folks that want "free" markets...but fences to keep out the illegals.

Sat, 12/24/2011 - 00:46 | 2008830 TrulyBelieving
TrulyBelieving's picture

There is but one reason to be against a free market , and that would be the desire to gain the system. Just so you'll know, border protection is a Constitutional responsibility of the Federal Govt.

Wed, 12/28/2011 - 14:28 | 2016737 Stax Edwards
Stax Edwards's picture

game the system

Fri, 12/23/2011 - 23:57 | 2008787 A Nanny Moose
A Nanny Moose's picture

Digging below the surface of this is innovation, and it's natural nemisis, mercantilism. This begs the question whether government is even necessary, since they are the engine of mercantilism, and stifle innovation through regulation.

In the end, what do they (china/India) have, that I really need?

Sat, 12/24/2011 - 04:23 | 2008951 delacroix
delacroix's picture

so who creates the cures? jonas salk wasn't a doctor? how about linus pauling?

Sat, 12/24/2011 - 06:23 | 2008983 ffart
ffart's picture

Is this guy a bot or just drunk.


Also austrian and free market is brutal and cut throat. Do westerners really want to compete with BILLION Indian and Chinese youths?

What choice do people have? Rapidly growing population vs declining energy source, and NO will to come up with alternatives since the government heavily subsides the least efficient ones. Maybe we could print our way to Keynesian prosperity because if the last 10 years have shown there's NO downside to that. What a fucking rube, must be from europe.

Sat, 12/24/2011 - 10:46 | 2009081 Mulletpower
Mulletpower's picture you think price contol by the government in medicine is to subsidize doctors.  You are incorrect sir.  Try again..

Sat, 12/24/2011 - 10:49 | 2009082 Mulletpower
Mulletpower's picture

dp - troll

Sat, 12/24/2011 - 14:01 | 2009292 NumberNone
NumberNone's picture

Austrian's what do they know about economics?  All I hear from them is 'G'day Mate' and 'Throw another shrimp on the barbi'.  

Fri, 12/23/2011 - 21:37 | 2008621 scatterbrains
scatterbrains's picture

The reason so many more are in jail in this country is because we pour more tax payer funds into ensuring that only our bosses should profit from the drug trade.  "The War on Drugs"  really means "maintain control of the flow"  

 Sorry don't mean to offend your sensibilities.




Fri, 12/23/2011 - 22:04 | 2008659 WonderDawg
WonderDawg's picture

If "The War on Drugs" wasn't so profitable, it would be over by now.

Fri, 12/23/2011 - 22:38 | 2008696 Xkwisetly Paneful
Xkwisetly Paneful's picture

If "The War on Poverty" wasn't so profitable, it would be over by now.

Fri, 12/23/2011 - 19:59 | 2008542 Dugald
Dugald's picture

Fit this man with a tracer tag....he bears watching!!

Fri, 12/23/2011 - 20:20 | 2008558 nmewn
nmewn's picture

"They will simply have to pay this price, since it will be mandated by law. But in any case, a failure to agree with the optimal price is a clear demonstration of ignorance, and the resulting social ostracism should be enough to enforce compliance."

You're almost as good as the original MDB.

Isn't everything you just said human action?

You present yourself as a blue blooded, ringlelted dandy with psychopathic tendencies seeking to insure his own lifstyle at the expense of others. You now realize you're going to have to sell those overvalued equity positions among yourselves don't you? 

One wonders at what prices...don't look

I will go out on a limb here (not really) and say the prices will be considerably lower when I come back around & pick through the ashes for those rings of yours.

But thanks for the laughs & your brand of Christmas cheer anyways ;-)

Fri, 12/23/2011 - 23:08 | 2008735 Piranhanoia
Piranhanoia's picture

They shall pay the discount rate master. Retail does not exist.


Fri, 12/23/2011 - 22:25 | 2008454 economics1996
economics1996's picture

Sounds like LEONID VITALIYEVICH KANTOROVICH was reincarnated in MDB.

Fri, 12/23/2011 - 18:57 | 2008455 tom
tom's picture

Thank you professor Million for your brilliant contribution. I'm sure we can implement this plan as soon as we get funding through the appropriations committees.

It's also interesting to observe that at least six ZHers are completely incapable of recognizing even the most obvious possible sarcasm. I suggest we need more experiments in this potentially very fruitful field.

Fri, 12/23/2011 - 19:01 | 2008462 economics1996
economics1996's picture

Sorry if it was sarcasm.  My bad.

Fri, 12/23/2011 - 22:07 | 2008662 Bicycle Repairman
Bicycle Repairman's picture

Not all was lost. I learned a bit about Leonid.

Fri, 12/23/2011 - 23:51 | 2008781 youLilQuantFuker
youLilQuantFuker's picture

Do you have an appetite for discrete analysis?

Here's a video about linear threshold predicates and approximation resistance.

Fri, 12/23/2011 - 20:48 | 2008584 youLilQuantFuker
youLilQuantFuker's picture

"at least six ZHers are completely incapable of recognizing even the most obvious possible sarcasm"

I'm sure they we're in shock from MDB_'s butchery of linear optimization.

Fri, 12/23/2011 - 19:05 | 2008469 ihedgemyhedges
ihedgemyhedges's picture

You're crazy dude.  From my life experiences, Austrians are far more often right about things than wrong and they have a great outlook on life.  In fact, I'm working on my 4th Foster's right now................

Fri, 12/23/2011 - 19:45 | 2008524 Paul Kemp
Paul Kemp's picture

Did you just mix up Austria and Australia or was that just one sarcasm corner i didn't take?

Fri, 12/23/2011 - 20:03 | 2008546 Dugald
Dugald's picture

You drink Foster's cooo errrr! now that really is poor taste!

Fri, 12/23/2011 - 20:40 | 2008574 AldousHuxley
AldousHuxley's picture

Fosters is Australian.....Arnold Schwarznegger is Austrian.

Fri, 12/23/2011 - 21:08 | 2008596 el Gallinazo
el Gallinazo's picture

Cut him a break.  He's on his fourth and they can come in really big cans.  The Sperminator is from California.  Hitler was from Austria.

Fri, 12/23/2011 - 21:50 | 2008635 Crisismode
Crisismode's picture

Hitler was from Australia

You idiot.

He was a whelp of an Abo and a marmoset

Fri, 12/23/2011 - 21:50 | 2008636 Crisismode
Crisismode's picture

Hitler was from Australia

You idiot.

He was a whelp of an Abo and a marmoset

Sat, 12/24/2011 - 05:47 | 2008971 Praetor
Praetor's picture

No sane person in Australia drank Fosters....they have recently been purchased by a British brewer.

Sat, 12/24/2011 - 08:20 | 2009008 StychoKiller
StychoKiller's picture

Tooth Sheaf Stout -- FTW!

Sat, 12/24/2011 - 09:50 | 2009051 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

I'm from the UK and even Im a Coopers Pale ale guy!

Sat, 12/24/2011 - 07:27 | 2008997 spankfish
spankfish's picture

+1 for oil cans!

Fri, 12/23/2011 - 22:20 | 2008673 YesWeKahn
YesWeKahn's picture

you are kidding right?


Bernanke's formula is p2 < 1.

Fri, 12/23/2011 - 22:41 | 2008699 Burr's 2nd Shot
Burr&#039;s 2nd Shot's picture

MDB, you do a valuable service here, acting as the anti-Emmanuel Goldstein for the ZH Two Minute Hate.  Putting this into some type of formula is a stroke of genius. As an obviously inferior being, I am not sure if my input is valuable enough for you to consider, but I think that you could enhance wi through selective breeding of the market participant.  If I am not mistaken, this will also have a positive correlation on xi.

Sat, 12/24/2011 - 07:17 | 2008995 MillionDollarBonus_
MillionDollarBonus_'s picture

Quite right. I have already suggested something akin to this. Refer to my comment a few months ago:

“3. Employ a system for seeking out and selecting the potential economic leaders at a young age. This would involve setting up economics academies for teaching the most advanced Keynesian theories and pioneering ever more efficient capital-allocation models

Sat, 12/24/2011 - 07:30 | 2008999 spankfish
spankfish's picture

They are called Finance Academies... they already exists in Maryland.  No joke.

Fri, 12/23/2011 - 23:12 | 2008737 Future Jim
Future Jim's picture

You're killin me
Gotta let me breathe

Fri, 12/23/2011 - 23:36 | 2008763 dougngen
dougngen's picture

you sir are an Idiot or a establishment shill.. you think for one second that your ridiculous formulas can overpower common sense? You are part of a dying system. I hope you are paid well to act like such a fool.

Sat, 12/24/2011 - 00:51 | 2008843 RockyRacoon
RockyRacoon's picture

You are one in six.  Now let's see if the other five show up.

Sat, 12/24/2011 - 05:20 | 2008959 bpom
bpom's picture

Your units don't match.  That is, you are saying that price in dollars equals intelligence times influence?  That is no more true than an increasing rate of change in the money supply is the primary market driver while simply an increasing change in the money supply is not effective.

Sat, 12/24/2011 - 07:18 | 2008996 MillionDollarBonus_
MillionDollarBonus_'s picture

Actually I said “U(price)”, which is the utility/value of the price. I suggest you look up utility theory. I am inferring that more intelligent individuals have more valuable preferences than less intelligent individuals. That is the basis for this equation.

Sat, 12/24/2011 - 12:28 | 2009183 Funghi
Funghi's picture

MDB, gotta love how you always say it with a straight face. Always entertaining.

Fri, 12/23/2011 - 22:13 | 2008667 Tompooz
Tompooz's picture


Prepare for special FEMA camps for Austrians and their supporters.

Fri, 12/23/2011 - 18:59 | 2008461 economics1996
economics1996's picture

For the ZHrs here is a blog I did showing the real GDP taking out governent, which is bull shit, and leaving the productive sectors.

As you can see when the BS is stripped away we are in a world of shit.


Fri, 12/23/2011 - 20:28 | 2008563 economics1996
economics1996's picture

So here is the GDP for the last 40 years in 2005 dollars (adjusted for inflation) with and without government.

Date…………GDP (billions)….GDP (- fed gov.) …Federal Consumption%…Labor Force %

1971-01-01…… 4409.5……….. 3549.6………………………. 19.5…………………….. 56.6
1972-01-01…… 4643.8……….. 3733.6………………………. 19.6…………………….. 57.0
1973-01-01…… 4912.8……….. 3994.1………………………. 18.7…………………….. 57.8
1974-01-01…… 4885.7……….. 3972.0………………………. 18.7…………………….. 57.8
1975-01-01…… 4875.4……….. 3836.9………………………. 21.3…………………….. 56.1
1976-01-01…… 5136.9……….. 4037.6………………………. 21.4…………………….. 56.8
1977-01-01…… 5373.1……….. 4255.4………………………. 20.8…………………….. 57.9
1978-01-01…… 5672.8……….. 4498.5………………………. 20.7…………………….. 59.3
1979-01-01…… 5850.1……….. 4674.2………………………. 20.1…………………….. 59.9
1980-01-01…… 5834.0……….. 4568.0………………………. 21.7…………………….. 59.2
1981-01-01…… 5982.1……….. 4654.1………………………. 22.2…………………….. 59.0
1982-01-01…… 5865.9……….. 4510.9………………………. 23.1…………………….. 57.8
1983-01-01…… 6130.9……….. 4690.1………………………. 23.5…………………….. 57.9
1984-01-01…… 6571.5……….. 5112.6………………………. 22.2…………………….. 59.5
1985-01-01…… 6843.4……….. 5283.1………………………. 22.8…………………….. 60.1
1986-01-01…… 7080.5……….. 5487.4………………………. 22.5…………………….. 60.7
1987-01-01…… 7307.0……….. 5728.7………………………. 21.6…………………….. 61.5
1988-01-01…… 7607.4……….. 5987.0………………………. 21.3…………………….. 62.3
1989-01-01…… 7879.2……….. 6208.8………………………. 21.2…………………….. 62.9
1990-01-01…… 8027.1……….. 6269.2………………………. 21.9…………………….. 62.8
1991-01-01…… 8008.3……….. 6222.4………………………. 22.3…………………….. 61.7
1992-01-01…… 8280.0……….. 6450.1………………………. 22.1…………………….. 61.4
1993-01-01…… 8516.2……….. 6693.7………………………. 21.4…………………….. 61.7
1994-01-01…… 8863.1……….. 7001.8………………………. 21.0…………………….. 62.5
1995-01-01…… 9086.0……….. 7214.3………………………. 20.6…………………….. 62.9
1996-01-01…… 9425.8……….. 7521.8………………………. 20.2…………………….. 63.2
1997-01-01…… 9845.9……….. 7925.9………………………. 19.5…………………….. 63.8
1998-01-01…… 10274.7…….. 8312.2………………………. 19.1…………………….. 64.1
1999-01-01…… 10770.7…….. 8778.1………………………. 18.5…………………….. 64.3
2000-01-01…… 11216.4…….. 9175.0………………………. 18.2…………………….. 64.4
2001-01-01…… 11337.5…….. 9274.1………………………. 18.2…………………….. 63.7
2002-01-01…… 11543.1…….. 9338.4………………………. 19.1…………………….. 62.7
2003-01-01…… 11836.4…….. 9504.6………………………. 19.7…………………….. 62.3
2004-01-01…… 12246.9…….. 9846.5………………………. 19.6…………………….. 62.3
2005-01-01…… 12623.0…….. 10111.0…………………….. 19.9…………………….. 62.7
2006-01-01…… 12958.5…….. 10353.8…………………….. 20.1…………………….. 63.1
2007-01-01…… 13206.4…….. 10617.9…………………….. 19.6…………………….. 63.0
2008-01-01…… 13161.9…….. 10437.4…………………….. 20.7…………………….. 62.2
2009-01-01…… 12703.1…….. 9527.3………………………. 25.0…………………….. 59.3
2010-01-01…… 13088.0…….. 9973.1………………………. 23.8…………………….. 58.5
2011 (est)…….. 13249.9…….. 9897.7………………………. 25.3…………………….. 58.2

As can be seen the productive sector of the economy peaked out in 2007 and is currently down 6.8% from the 2007 level. Trillions of dollars wasted to accomplish nothing more than allow politicians, Wall Street, and the Federal Reserve outbid the rest of Americans for the remaining real resources of production. Printing money, giving it to your friends, outbidding the peasants for goods and services, then telling the peasants that there is no recession, only positive economic growth.

The real growth for 2011 will be negative 0.8% in real terms when government spending is removed. I hope this removes any doubt that the ministry of information is feeding the peasants hopium and dopium.

Fri, 12/23/2011 - 22:34 | 2008661 nmewn
nmewn's picture

"So here is the GDP for the last 40 years..."

And as always, as stated by the "inventor" of the GDP metric "the welfare of a nation can scarcely be inferred from a measure of income",

Kuznets, if I recall correctly, said this to a Senator.

Who promptly misunderstood what he was saying or disregarded it entirely for politcal expediency. So we are left, down through history, with a measure which means almost nothing, when fully one third of "GDP" is derived from government spending.

Which of course, the ability of government to spend, must come from taxation or come from printing something of value from thin air.

I'm reminded of the age old question, what happens when everything everyone has ever been taught, is a lie?

Merry Christmas ;-)

Fri, 12/23/2011 - 23:57 | 2008786 GMadScientist
GMadScientist's picture

So by which measure should a nation's welfare be judged?

I'll open with...

...the ratio of children with lives better than their parents (by whatever definition they choose) to the population as a whole.

Call it a proxy for "class mobility" which is harder to pin down objectively.

Sat, 12/24/2011 - 01:05 | 2008862 nmewn
nmewn's picture

Thats a good question.

A lot smarter people than I have pondered the question and I did notice you picked up on the central issue posed to a government official...the welfare of.

I would say yours is as good as any, but it ultimately relates to many things.

For the young i-shit is what they know. now Is this better or worse that someone can track you at every hour of the day? It wasn't always this way, it evolved. So can it be said that having the ability to have i-shit is better or worse? I think its a valid question. What was traded and what was lost?

There can also be no doubt that we don't have mass starvation here. But what of those who are on lifes edge and will stay there forever because it is so easy to be a serf to the printing machine. Is this moral and ethical to them...for them? That they can't ever hope to be free of it?

All interesting questions that I have very few answers for because they reside in every individual. I can't speak for them, only me.

Thu, 12/29/2011 - 16:49 | 2020303 BigJim
BigJim's picture

...the ratio of children with lives better than their parents (by whatever definition they choose) to the population as a whole.

Call it a proxy for "class mobility" which is harder to pin down objectively.

'Class mobility' is zero sum. In the social mobility stakes, for every winner there's a loser.

Fri, 12/23/2011 - 23:10 | 2008738 Piranhanoia
Piranhanoia's picture

It is Friday, please, no digital crap.

Fri, 12/23/2011 - 18:18 | 2008395 Hohum
Hohum's picture


If S & P rises 185 points next week, they'll be spot on!

Fri, 12/23/2011 - 19:03 | 2008467 TheSilverJournal
TheSilverJournal's picture

Here's another good CNBC / Onion Headline:

"US Government Spiraled Deeper in to Debt This Fiscal Year"

Is CNBC just figuring this out? Actually, CNBC probably still thinks the debt of the US is no problem at all, even as it crosses 100% debt / GDP.

Fri, 12/23/2011 - 17:48 | 2008338 CrashisOptimistic
CrashisOptimistic's picture


only this time with a $100 base in WTI. Which most certainly means that very soon the world will need to find an extended source of cheap energy (read oil). And everyone knows what that will be...



Yep.  We all know what that will be and the miraculous nirvana that will result from the new extended source, that everyone knows will be used.  We have been preparing for the new stuff for decades.  It's very exciting.


Fri, 12/23/2011 - 18:21 | 2008398 KK Tipton
KK Tipton's picture

Oh yes, *very* exciting. I've seen it firsthand.

It's a game changer. Incredibly innovative.

It will change the way cities are designed.

Fri, 12/23/2011 - 18:21 | 2008401 cossack55
cossack55's picture

Does Hopium come in 55 gallon drums?  Hmmmmm......

Sat, 12/24/2011 - 16:50 | 2009477 WmMcK
WmMcK's picture

No, but slurpees do (and in slightly smaller sizes, too)

Fri, 12/23/2011 - 19:21 | 2008498 Arvo Particleboard
Arvo Particleboard's picture

Soylent green?

Fri, 12/23/2011 - 22:53 | 2008717 CPL
CPL's picture

That's the byproduct of the new and abudant energy source from bipedal ambidextrous meat robots given central programmed authority to deliver services. 


When these devices wear out, then they become Solyent green.

Sat, 12/24/2011 - 00:20 | 2008803's picture

Nuclear. Although Fukushima is a fly in the ointment.

Fri, 12/23/2011 - 19:40 | 2008520 Snidley Whipsnae
Snidley Whipsnae's picture

CO... Bill Bonner has a very good short read on this topic today...

Fri, 12/23/2011 - 21:11 | 2008600 Axenolith
Axenolith's picture

$100 base WTI is still as cheap as it's ever been inflation adjusted.  Gasoline (and it's source, oil)  is not under any unusual pressures with respect to supply and demand until the inflation corrected price of gas falls below ~$0.18 or rises above ~$0.32/gallon as priced in pre-1965 silver denominated US coinage for over approximately a 6-12 month period.


When that happens, I might perk up a bit over "peak oil" hysteria, but until then, [YAWN]...

Fri, 12/23/2011 - 21:59 | 2008653 Hohum
Hohum's picture


Are you on crack?  Do you realize oil was about $10 barrel in 1999.  You are just wrong here.

Fri, 12/23/2011 - 22:55 | 2008720 CPL
CPL's picture

You know how much money has been printed between now and then?


Nobody appearently knows.

Sat, 12/24/2011 - 01:17 | 2008873 LowProfile
LowProfile's picture

Well, that's why it's called a SHADOW banking system, you big silly!

Sat, 12/24/2011 - 02:38 | 2008906 CrashisOptimistic
CrashisOptimistic's picture

This is not what Occam's Razor would say.

Why contort yourself into using a default presumption of infinite oil flow and changing the denomination of the yardstick?  Why is this the straightforward answer, in comparison to the very simple and straightforward acknowlegement that the Earth's interior volume is not infinite and therefore what comes out of the interior cannot be infinite?



Sat, 12/24/2011 - 09:19 | 2009039 spinone
spinone's picture

But unlimited cheap energy is our birthright!  The American Way of Life is non-negotiable!

Fri, 12/23/2011 - 17:48 | 2008339 emsolý
emsolý's picture

And everyone knows what that will be...

...Chinese solar stocks?

Fri, 12/23/2011 - 21:56 | 2008649 Milestones
Milestones's picture

Leo's back???        Milestones

Fri, 12/23/2011 - 23:02 | 2008727 CPL
CPL's picture

You have to understand Chinese solar isn't priced in the same dollar hegemony.

Fri, 12/23/2011 - 17:51 | 2008349 evolutionx
evolutionx's picture


A deluge of an unprecedented magnitude is both inevitable and imminent. The consequences of the economic and political mismanagement will have a devastating impact on the world for a very long time. And the consequences will touch most corners of the world in so many different areas; economic, financial, social, political and geopolitical.


Yes, it is amazing the castles in the air that can be built with paper money and deceitful manipulation of all economic data.  And Madame Bernanke de Pompadour will do anything to keep King Louis XV Obama happy, including flooding markets with unlimited amounts of printed money. They both know that, in their holy alliance, they are committing a cardinal sin. But clinging to power is more important than the good of the country.  An economic and social disaster is imminent for the US and a major part of the world and Bernanke de Pompadour and Louis XV Obama are praying that it won’t happen during their reign: “Après nous le déluge”.



Fri, 12/23/2011 - 18:01 | 2008364 centerline
centerline's picture

Ahhh, the mathematics of parabolic curves.  Approaching the asymptote from the left hand side via inevitable printing.

Sat, 12/24/2011 - 00:36 | 2008817 HoofHearted
HoofHearted's picture

Maybe you mean hyperbolic....

Fri, 12/23/2011 - 18:05 | 2008372 fonzanoon
fonzanoon's picture

"We believe that monetary authorities in the major currency areas have taken the right measures in order to give equities the necessary support in 2012. Due to the fact that the markets will have to digest weak and disappointing data for quite some time, we do not believe that a stock market rally is imminent.The USD Index displays the ongoing strength of the USD vs. other global currencies. This is another indication that risk appetite is not yet rising, and leads us to believe that equity markets in our core region will remain sluggish in the short term"

From the austrians themselves.....looks like the large cap US dividend payers are the wave of the future.

Fri, 12/23/2011 - 18:23 | 2008377 ebworthen
ebworthen's picture

Light up that Keynesian pipe of hopium

Print more fresh currency tobacco please.

Spread it around so all are dopium,

Central banker dealers will ease.


"You'll feel better with another hit"

Chime the econometric pushers.

"This won't hurt a bit"

Whip the taxation mushers.


Zero interest, Trillions in debt.

Don't worry kids, we'll fix this yet.

Don't do this at home, no bailouts for you,

Just get ye to work, and we'll turn the screw.

Fri, 12/23/2011 - 19:28 | 2008507 richinar
richinar's picture

Just give ME some of it this time!


Fri, 12/23/2011 - 18:14 | 2008382 San Diego Gold Bug
San Diego Gold Bug's picture

TD,  Keep up the great work!  Saw this on TFmetals....classic video that give you a shout out and big thanks!

Sat, 12/24/2011 - 01:42 | 2008886 OldPhart
OldPhart's picture

That is AWESOME!!

One of the commenters called it "Hard Core Silver Porn".  IT IS!!


Fri, 12/23/2011 - 18:16 | 2008389 SHEEPFUKKER

I think Arnold Schwarzenegger graduated from the Austrian School of Economics. 

Fri, 12/23/2011 - 18:33 | 2008418 falak pema
falak pema's picture

 was it just iron pumping? 

Fri, 12/23/2011 - 18:37 | 2008427 Yamaha
Yamaha's picture

No - just fists.......Left - Right.........

Sat, 12/24/2011 - 01:15 | 2008872 Caggge
Caggge's picture

I thought Arnold was pumping his maid??

Fri, 12/23/2011 - 18:29 | 2008412 falak pema
falak pema's picture

Anybody who tries to put the economy in an equation is like a man who says : I know how to balance evil and good perfectly so that good is always one step ahead of evil and will thus never fail. Its the inevitable path to progress, the magical formula...  

Its a value system, this many faced, many religion magical formula, that feeds humanity's hopes since day 1. It requires constant grooming and hard work. There is no CDS that guarantees you a positive return on the human  effort curve. We live and learn, often by falling, then picking ourselves up. Our generation and the next are no exceptions. But at no point in time was it a self perpetuating machine that we could program like artificial intelligence. We ain't there yet, if we ever will be, we won't be humans any more if we get there one day; as our human appetite for greed grows faster than our virtuous curve. Always.

Now we know why philosophy, ethics, and spirituality are our building blocks of last resort....Prost, as its xmas!

Fri, 12/23/2011 - 18:43 | 2008435 bob_dabolina
bob_dabolina's picture

The cheaper form of energy to replace the internal combustion engine when oil hits $200 will be by putting pin wheels on cars. All would be required is a little push to start and the vehicle will have a range of 1/20th of a mile before requiring another "jump start". The liberals will push this agenda led by Al Gore, Barrack Obama and Georege Clooney.

Fri, 12/23/2011 - 22:17 | 2008671 dolph9
dolph9's picture

Because surely there's tons of cheap oil to be found out there, if only we deregulated and lowered taxes on the rich, and elected people like Sarah Palin and Newt Gingrich so it can be "Morning in America" again.

-sarcasm off

Fri, 12/23/2011 - 22:44 | 2008704 Xkwisetly Paneful
Xkwisetly Paneful's picture

Whoa! the key to prosperity is higher taxes and more regulations. The no show and corrupt component of the various forms of government hasn't been self evident enough in the recent past- let's create more.

-sarcasm off


and oh btw the latest run of propaganda about who creates jobs is hilarious.

in a non neo marxist economy the leading edge creates the new jobs and that is not fueled by consumption, it is fueled by speculation.  But it sure is fun to pretend otherwise.

Sat, 12/24/2011 - 00:16 | 2008797 GMadScientist
GMadScientist's picture

People just "create jobs" (with no one to sell to) because they have speculative bonus cash leftover?! 

How magnanimously retarded.

60-80% of net new jobs come from small businesses...that wouldn't be affected by most proposed tax increases anyway, but thanks for going with the "you're hurting job creators" routine while adamantly defending the biggest outsourcing multinationals in the world from <gasp> actually paying a dime in taxes.

Jobs are created by there being more work to do (widgets to make, houses to build, software to write) because more people have more money to spend (demand!). If you think that freeing up more money for people who aren't anywhere near spending at the margin of their top 1% incomes would be stimulative, you're braindead.

Sat, 12/24/2011 - 00:32 | 2008815's picture
Ignorance, Stupidity or Connivance?

by Walter E. Williams

"When Congress imposed a 10 percent luxury tax on yachts, private airplanes and expensive automobiles, Sen. Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share of taxes. What actually happened is laid out in a Heartland Institute blog post by Edmund Contoski titled "Economically illiterate Obama, re: Corporate Jets" (7/12/2011).

Within eight months after the change in the law took effect, Viking Yachts, the largest U.S. yacht manufacturer, laid off 1,140 of its 1,400 employees and closed one of its two manufacturing plants. Before it was all over, Viking Yachts was down to 68 employees. In the first year, one-third of U.S. yacht-building companies stopped production, and according to a report by the congressional Joint Economic Committee, the industry lost 7,600 jobs. When it was over, 25,000 workers had lost their jobs building yachts, and 75,000 more jobs were lost in companies that supplied yacht parts and material. Ocean Yachts trimmed its workforce from 350 to 50. Egg Harbor Yachts went from 200 employees to five and later filed for bankruptcy. The U.S., which had been a net exporter of yachts, became a net importer as U.S. companies closed. Jobs shifted to companies in Europe and the Bahamas. The U.S. Treasury collected zero revenue from the sales driven overseas.

Back then, Congress told us that the luxury tax on boats, aircraft and jewelry would raise $31 million in revenue a year. Instead, the tax destroyed 330 jobs in jewelry manufacturing and 1,470 in the aircraft industry, in addition to the thousands destroyed in the yacht industry. Those job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. The net effect of the luxury tax was a loss of $7.6 million in fiscal 1991, which means Congress' projection was off by $38.6 million. The Joint Economic Committee concluded that the value of jobs lost in just the first six months of the luxury tax was $159.6 million.

Congress repealed the luxury tax in 1993 after realizing it was a job killer and raised little net revenue. Why did congressional dreams of greater revenues turn into a nightmare? Kennedy, Mitchell and their congressional colleagues simply assumed that the rich would act the same after the imposition of the luxury tax as they did before and that the only difference would be more money in the government's coffers. Like most politicians then and now, they had what economists call a zero-elasticity vision of the world, a fancy way of saying they believed that people do not respond to price changes. People always respond to price changes. The only debatable issue is how much and over what period."

Sat, 12/24/2011 - 08:39 | 2009018 StychoKiller
StychoKiller's picture

Even if no other countries made yachts, there STILL would have been less yachts manufactured (and job losses), as those that desired a yacht simply spent their FRNs elsewhere, where there was less onerous taxation.  Clowngress NEVER seems to learn this lesson!

Fri, 12/23/2011 - 18:52 | 2008446 Catullus
Catullus's picture

A true Austrian analysis would probably state for equities that Fed money printing found it's way into stocks and bonds, but will eventually will lead into consumer goods and services during profit-taking periods. During the periods of inflation, money first flows into capital goods and then consumer goods.  These sell-offs you're seeing for the later half of the year are a sign of money flowing out of this capital goods asset classes and into others.  For instance, farmland prices in the Midwest hit their highest ever. A recovery in housing sales (despite the fubbing of the data) is another.

The Austrian analysis I've seen suggests that we're in for real price inflation heading into 2012.  This may or may not be supportive of equities depending on where in the supply chain the entity falls.  Higher prices are not good for everyone everywhere at all times. 

As for this company, if they're looking to take money aggregates and come up with some sort of mathematical model to predict outcomes, they need to perhaps pick up Mises' "Epistemological Problems of Economics" to understand where they're going wrong.

Fri, 12/23/2011 - 18:55 | 2008449 besnook
besnook's picture

i actually helped, uh,ahem, guided my daughter through a paper that posited that the boomer generation coming of financial age coupled with the widespread access to the internet in the ninetys was the fuel behind the stock market bubble,  evidenced by the lack of any real valuation metrics. in other words, more money meant more volume which means higher price. conversely, as babby boomers retire, less money means less volume which means lower stock prices. of course, hft algos and the coming glut of fiat will change that thesis nominally speaking.

Fri, 12/23/2011 - 22:07 | 2008655 ucsbcanuck
ucsbcanuck's picture

Disclaimer: Before anyone starts I'm not being bitter or anything, or supporting OWS, or trying to explain income disparities between minorities, just calling it as I saw it. 

I have a similar feeling as besnook - the Great Bull Market from 1982 - 2000 was driven by increased participation in the stock market leading to ever higher prices, leading to more consumption and debt, leading to increased participation in the stock market until there were no new greater fools. Maybe some of it was driven by fundamentals e.g. improved productivity in the 90s, but a lot of it seems like good ol' herd mentality. 

I think this was why a lot of nascent trends were missed e.g. declining real wages, increasing executive compensation, declining retirement benefits, outsourcing of jobs etc - the stock market was doing so well and so many grew their wealth exponentially during this period that no one stopped to ask questions. Also, because globalization hadn't really taken off - there was huge jobs growth and many minorities were able to participate in this growth.

Then along came the first crash + 9/11 and Greenspan dropped interest rates. The housing market took off, the feelgood factor began to grow again and the stock market started recovering. However, the 2002 - 2007 boom was the jobless boom - the people of the BRICs reaped the benefits in terms of economic growth, as did those who were asset rich. Many minorities were not asset rich, and combined with the lackluster jobs growth, they missed out. Those who were asset rich or were in the FIRE sector did get wealthier. This boom was almost exclusively debt fuelled - people borrowed against their growing assets to fuel speculation and consumption. This led to the greatest bubble in human history.

Then along came the second crash. Goodbye middle class 401k, middle class house price, middle class jobs. Hello middle class anger, disenchantment with the stock market and our economic system etc. Never mind that many were happy to go along for the ride while things were good. 

Those that retired in the late 90s after riding the stock wave and made the smart move of going into gold, cash and bonds at the right time have to be the luckiest people the US and Canada have ever seen, followed by those who bugged out in 2006 - 2007, downsized their properties, and went into gold, cash and bonds. They got a chance to participate in the greatest period of economic prosperity the world has ever seen and got off the gravy train before it fell off the cliff.

Fri, 12/23/2011 - 19:06 | 2008472 PulauHantu29
PulauHantu29's picture

Chart of the Day: Massive Deficit Government Spending in 2011 from Business Insider:


Bullish news for Oil holders and Goldbugs.

Fri, 12/23/2011 - 19:09 | 2008477 fonzanoon
fonzanoon's picture

When is it time for the crack up boom?

Sat, 12/24/2011 - 00:40 | 2008824's picture

I don't know when it will begin but you'll know it's near its end when you see Freud's aunt carting around a huge pile of surplus bedpans.

Fri, 12/23/2011 - 19:09 | 2008478 Silverballs
Silverballs's picture

EROI is really the only thing that really matters in the end so keep stacking phyzz and make yourself immuned from corruption, special interests, and central planning I don't need a phd in economics and a fancy equation to understand that

Fri, 12/23/2011 - 21:02 | 2008590 proLiberty
proLiberty's picture

The only apect of the money supply that matters is when newly created money is used to bid for wages, services and goods.  If the Fed creates a gazillion FRNs but puts them in a warehouse, they appear in the money supply numbers, but won't changes wages and prices.  What the Fed has mainly done is create money and swapped with the banks for their low quality loans.  The banks in turn placed the money on deposit with the Fed.  The net effect of this action will be the same as if the Fed just left the junk at the bank and had lowered the reserve requirements.  This is all such a facade and fraud in a vain attempt to create wealth from air-backed money.

Fri, 12/23/2011 - 21:07 | 2008591 RobotTrader
RobotTrader's picture

Bears must be pulling their hair out


Worst news flow ever, the last two years, and the SPY has barely corrected off its 3-yr. highs.

Never seen a tape so strong, that after a 20% correction that lasts for one day, it springs right back.

With consumer stocks leading the entire time.

"As If It Never Happened"

Fri, 12/23/2011 - 21:46 | 2008630 WonderDawg
WonderDawg's picture

I almost feel bad for you, dude. By March we probably won't see you around anymore. Merry Christmas, it might be the last one you have for a while.

Sat, 12/24/2011 - 00:17 | 2008799 GMadScientist
GMadScientist's picture

How far from 2007, genius?

Sat, 12/24/2011 - 05:08 | 2008962 luna_man
luna_man's picture



What's that you say?...Still A "BEAR" here!  Even, if you"re long, YOU, ain't getten rich!...Like me, YOU, anticipate the FALL...I'm patient!

Let's see if you're SMUG in the new year?...Ahy!

Fri, 12/23/2011 - 21:10 | 2008599 WmMcK
WmMcK's picture

She wore a short skirt and a tight sweater and her figure described a set of parabolas that could cause cardiac arrest in a yak, bitchez.

Fri, 12/23/2011 - 21:52 | 2008640 Youri Carma
Youri Carma's picture

Ya’ll – Happy X-maz!

X-maz Enron style – Let It Snow

Down & Out Santa

Santa Burp!

Fri, 12/23/2011 - 21:53 | 2008641 title examiner
title examiner's picture

And the old southern lawyer told me--on numerous occassions:  "There ain't no fucking such a thang as a coincidence."

IN THIS CASE, people have been taught to misunderstand what money IS on a very fundamental level.  This leads them to every stupid conclusion but the right ones.  MONEY is DEBT.  Money is not an ASSET.  The key term is future value.  Where is the bank vault?  The bank vault is the vault at the local courthouse where they keep the deeds and the mortgages to the REAL estate. (The UCC filings count for something, too.)  They ain't got no stinking Gold in some vault.  They've got courthouses full of paper and they've TRIED to evade filing requirements on assignments of the mortgages--that's why they wheel and deal with MERS. 

Why they do that--why did they need MERS?  Because there is an exception in the bankruptcy law.  When a bank collapses and their whole portfolio is encumbered by some unrecorded agreement....MERS slides the portfolio to the winner of that hand.  All in and all that stuff.  Sure, it is about slicing and dicing too....

The all important credit rating and the computation of it comes into play.  The fact that people who pay their balances off every month--DEAD BEATS?  When sizing up a slave for purchase, the slave traders poked and prodded them....and looked at their teeth.  What's the difference?  Feudal is Feudal.  The names of things have been changed, the level of responsbility due from the would be masters has been set to zero--that's the only substantial change.

These thieving folks don't and can't get off of page ONE of Das Kapital....where is says MCM....CMC.  These aren't roman numerals.  Debt and Capital don't mix well. Why the hell would I give you capital for debt?  For that matter, why the hell would a bank be due any interest payment on money created out of thin air that doesn't exist?  There ain't no such a fuckin thang...

The Austrians talk like they own all the Gold mines.  Gold isn't some panacea--and gold has been oversold by orders of magnitude.  As with naked short selling, there will be a failure to deliver.  And even if you do have gold in your pocket, HOW exactly are you going to exchange it for something to EAT?  I smell a zero sum game at the end of the Austrian rainbow, because title always vests and somebody is always going to end up owning the gold mines.  It is a giant debasing hole.  Think about what happened when Spain started finding so many tons of gold in the new world.  Can't happen again?  That ground is about as shaky as a credit score in a depression.

Why argue against currency debasement while having several 800 pound gorillas intent on debasement, built into your argument?  It does not follow.  Some dude could take a shovel to a ten thousand acre tract that had nothing but gold under it and the Austrian school's Financial system? 

Shade, es ist kaput.



Fri, 12/23/2011 - 22:40 | 2008700 blunderdog
blunderdog's picture

I think there's a misconception.  The real metal bugs aren't Austrians.  The Austrian economist's first axiom is that the only value *anything* has is what man ascribes to it.

The hardcore metal bugs consider gold to be fundamentally different from rocks or tulips or cocaine.

It's not.  It just has a longer history.

Fri, 12/23/2011 - 23:36 | 2008764 Gamma735
Gamma735's picture

It is all just paper and rocks.  Grant it gold and silver are shiny rocks, but rocks none the less.  Now a lead rock in the shape of a bullet and some gun powder. That is worth more than paper and rocks.

Fri, 12/23/2011 - 23:01 | 2008726 Gamma735
Gamma735's picture

I smell gasoline.  The US dollar is burning.

Fri, 12/23/2011 - 23:19 | 2008746 steveo
steveo's picture

I still think this is the best Christmas Gift I have ever received (even if I had to buy it). 

 Celestron C8 SGT XLT

All I ask for Christmas is a few kliks, to defray a fraction of the cost of this beast, and I will be posted pictures once I get my hands back on this...I sent it to my brother who is a telescope affectionado until March.

A fantastically good telescope, able to hook up to a camera, and also able to hookup to a computer and be controlled by the computer ...."go to Orion Nebula" and it takes you right there.    It has its own GPS so it has a pretty good idea where it is in the world, then you just point it at any three bright sky objects, and it then knows automatically where everything is Exactly.    Pick any 3 bright objects and you don't even have to tell it what those objects are.

Now that is cool!

These are actual pictures.  

Stop by and get klik count to 1000, please, and thanks.

Sat, 12/24/2011 - 00:45 | 2008836's picture

Can it be programmed to find cheerleaders?

Fri, 12/23/2011 - 23:25 | 2008752 High Plains Drifter
High Plains Drifter's picture


ah the good ole days.   my mouth waters looking at all of that detroit metal ............damn..........

Fri, 12/23/2011 - 23:48 | 2008779 props2009
props2009's picture

C3X performance for Month of Dec till 24rd. 1900 pips with 87% success ratio. This is the 4 consecutive month of returns well above every hedge fund out there.

Sat, 12/24/2011 - 02:02 | 2008894 non_anon
non_anon's picture

I love Mises to pieces

Sat, 12/24/2011 - 02:04 | 2008895 GamesMaster
GamesMaster's picture

Off topic, but i'm starting to think these people might actually be shrewd investors looking for alternatives to stocks and bonds.....$180 shop price, Ebay price $605. Or maybe they're just in training for the imminent food stampedes. US violence over Nike's new shoes.....

Sat, 12/24/2011 - 04:16 | 2008947 blindman
Sat, 12/24/2011 - 04:22 | 2008949 blindman
blindman's picture
John Prine Silent Night, All Day Long
James Taylor - Have Yourself A Merry Little Christmas

Sat, 12/24/2011 - 04:33 | 2008955 blindman
blindman's picture

since everyone is sleeping
John Prine - Christmas in Prison - 9/14/11 HD 6

Sat, 12/24/2011 - 05:12 | 2008964 blindman
blindman's picture
John Prine - Killing the Blues - 9/12/11 HD

Sat, 12/24/2011 - 06:27 | 2008984 Tao 4 the Show
Tao 4 the Show's picture

OT, but an interesting development:

Italian banks preparing for return to the Lira. Of course, the news comes out during the Christmas weekend.

Sat, 12/24/2011 - 06:28 | 2008985 blindman
blindman's picture

just sayin' that effen cucumber add is way fucking
annoying, are they trying to crash their name brand or what?
decorum my friend, decorum. someone in marketing design
needs to be unemployed.

Sat, 12/24/2011 - 06:28 | 2008986 Tao 4 the Show
Tao 4 the Show's picture

Here's the Google translate:

at least two world-class banks "have taken steps" to return to effect transactions in the euro area legacy currencies including the lira, drachma and escudo. He writes the Wall Street Journal citing informed sources. The banks in question have already contacted Swift, the Belgian company that manages systems for international financial transactions, to have the necessary technology and codes
Saturday, December 24, 2011 - 09:55:26

At least two world-class banks "have taken steps" to return to effect transactions in the euro area legacy currencies including the lira, drachma and escudo. He writes the Wall Street Journal citing informed sources. The banks in question have already contacted Swift, the Belgian company that manages systems for international financial transactions, to have the technology and the necessary codes, officials said. A spokesman for Swift told the financial daily that the company is ready to do whatever is necessary to ensure the smooth conduct of business, but that "there is no need to comment on issues specifically related to the euro area". According to the Wall Street Journal, the banks are studying all aspects of the possible impact that would have the output of one or more countries from the euro zone.

Sat, 12/24/2011 - 08:59 | 2009028 Irish66
Irish66's picture

Thanks.  This is exactly on track for what I believe

Sat, 12/24/2011 - 11:12 | 2009106 jack stephan
jack stephan's picture

Damn moneywrench trolls on here still got it easier than me. I got the teardrop pee wee connection greeting me at my door playing dumb and harmless.  That isnt good.  But I hold scalding hot coffee in my hand, looks like I have to play Jack tiptoes.


Good morning td and zh.

Sat, 12/24/2011 - 13:34 | 2009249 Snakeeyes
Snakeeyes's picture

Not to be a Scrooge on Christmas, but add the debt to these lousy employment charts. Keynes proved to be a total failure and ...

Jobless Claims and General Employment Trends – The Bigger Picture

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