On The Failure Of Inflation Targeting, The Hubris Of Central Planning, The "Lost Pilot" Effect, And Economist Idiocy

Tyler Durden's picture

As an ever greater portion of the world succumbs to authoritarian control (whether it is of military disposition, or as we first showed, a small room of economists defining the monetary fate of the future as central banks now hold nearly a third of world GDP within their balance sheets) we can't help but be amazed as the population simply sits idly by on the sidelines as the modern financial system repeats every single mistake of the past century, only this time with stakes so high not even Mars could bail out the world. Unfortunately, with the world having operated under patently false economic models spread by hacks whose only credibility is being endorsed by the same system that created these models over the past century, the only temporary solution to all financial problem is to "try harder." Sadly, the final outcome is well known - a global systematic reset, in which the foundation of all modern democracies - the myth of the welfare state (which at last check, was about $200 trillion underfunded on an NPV basis globally and is thus the most insolvent of all going concern entities in existence) is vaporized (there's that word again) leading to global conflict, misery and war. Sadly that is the price we will end up paying for over a century of flawed economic models, of "borrowing from the future", of ever more encroaching central planning, and of an economic paradigm so flawed that as Bill Buckler puts it, "Keynes’ response to those who questioned the “longer-term” consequences of his advocacy of credit-creation as a basis for money was - “In the long run, we are all dead”. It is difficult to overemphasise the venal arrogance of this remark or the destructiveness of its legacy." Alas, the last thing the central planning "fools" (more on that shortly) will admit is their erroneous hubris, which in the years to come will claims millions of lives. In the meantime, we can merely comfort ourselves with ever more insightful analyses into the heart of the broken system under which we all labor, such as this one by SocGen's Dylan Grice, whose latest letter on Popular Delusions is a call for "honest fools" - "Frequently, when we make mistakes we try to correct them not by changing the flawed thinking which led to the mistake in the first place, but by reapplying the same flawed thinking with even more determination. Behavioural psychologists call it the “lost pilot” effect, after the lost pilot who tried to reassure his passenger: “I have no idea where we’re going, but we’re making good time!” Policy makers on both sides of the Atlantic are treating today’s malaise with the same flaky thinking which created it in the first place. How can that work?" Simple answer: it can't.

Grice explains why "Trying harder" is the only recourse of a status quo gripped in a confirmation bias so tense that even merely glancing outside the window at the Marriner Eccles building could be sufficient grounds for the whole house of cards to come tumbling down:

[This week I want to think about] the incorrect application of faulty models. In essence, that's all those studies on confirmation bias are really about. Subjects applied a faulty model - a mental algorithm saying "accept only supporting evidence" - which resulted in a biased assessment of the evidence. "Trying harder" didn't work because the problem was the faulty model, not the lack of effort, and applying that faulty model with more determination just caused an even bigger error. Psychologists have a name for this. They call it the "lost pilot effect" after the lost pilot trying to reassure his passengers by saying "I have no idea where we're going, but we're making good time!"

 

Flawed thinking got us into this mess. But rather than change that flawed thinking, our policy makers are applying it with even more rigour: we have more debt for insolvent borrowers, more financial engineering, more complicated banking regulations, more blaming speculators for everything, more monetary experimentation by central banks. Our policy makers have absolutely no idea what they're doing, but they're giving it a go!

"Lost pilot effect" exhibit A - Inflation Targeting, which failed miserably in the past, and will fail miserably again.

The latest from the Fed provides a wonderful example. Undeterred by the latest calamitous failure of CPI targeting regimes (a brief history of which will be presented below), it has announced an explicit 2% inflation target. But why? Would an explicit target have made any difference to the last crisis? Will it prevent the next one? And where did this 2% come from? We don't know. But we suspect that past uninformed capital market tinkering has failed to control the uncontrollable, and we're pretty sure these ones will too.

 

In fact, if such tinkering has in the past been the primary causes of crises, then why won't this latest attempt - the 2% inflation target - be the cause of the next one? There are certainly precedents. Targeting stable "prices" isn't a new idea. The first experiment was actually conducted in the US in the 1920s, apparently successfully. Indeed, so stable were consumer prices that the authorities assumed there was no inflationary threat. And, this brilliant new idea, that stable consumer prices were both a necessary and sufficient condition for economic stability, proved so appealing that the NY Fed adopted it as a policy objective. On January 11th 1925, then-governor Benjamin Strong wrote to a friend:

 

That it was my belief, and I thought it was shared by all others in the Federal Reserve System, that our whole policy in the future, as in the past, would be directed towards the stability of prices so far as it was possible for us to influence prices.”

 

During the 1927 Stabilization hearings before the Committee on Banking and Currency on a Bill to amend the Federal Reserve Act to provide for the "stabilization of the price level for commodities in general", the governor was asked if the Fed could stabilize prices more than it had done in the past. Strong replied “I personally think that the administration of the Federal Reserve System since the reaction of 1921 has been just as nearly directed as reasonable human wisdom could direct it toward that very object.”

 

Like a driver focused on the speedometer rather than the speed, oblivious to the risk that the speedometer might be faulty, they kept their foot on the gas until they crashed. So focused were they on the stability of the CPI (first chart below), and so convinced that it was the be all and end all of inflation, they missed what was going on in the credit markets (second chart below).

Oddly enough, nobody discussed "inflation targeting" as one of the potential causes leading to the Great Depression. Why? Simple. Because it would confirm that the status quo's very basic definition of inflation is fatally wrong; it also means that the entire premise of "economy" is a joke as it is impossible to rely on any of the most "sacred" indicators in existence, and all the so-called economists are literally pilots, flying blind. Grice on just this possibility:

We know that episode didn't end too well. Yet to this day, on the long list of explanations for what put the "Great" into the 1930s Great Depression, the prior credit bubble which was allowed to develop - and was possibly even caused by the monetary authorities'  undue attention to an arbitrary variable (consumer prices) - and the false sense of security the stability of that variable created, is barely a footnote. Amid the mountains of literature on the "lessons from the 1930s" there doesn't seem to be much on the danger posed to an economy of allowing a committee of economists to tamper with the natural functioning of the market for capital by letting them decide what interest rates should be.

Why would there be? It would be a confirmation by the same status quo it is based on a completely flawed premise. Yet the blind reliance on CPI did not prevent the Japanese bubble of the late '80s, when the Nikkey quadrupled in 5 years, yet Y/Y CPI was under 3% the entire time. Same thing with the Nasdaq bubble:

We've experienced the same thing with the tech bubble of the late 90s and the real estate bubble we're still recovering from (see charts below). On each occasion, the monetary authorities were blinded to the runaway inflation in the markets for equities (first chart below) and real estate (second chart below) by stable CPI inflation.

Inflation targeting, it seems, has a history of fostering asset bubbles because the notion that a stable CPI equates to a robust economy contains numerous false premises.

And here we reach the two main errata in all of modern economics.

The first is that inflation is measurable. Einstein once had the words “not everything which can be measured counts, and not everything which counts can be measured” on the desk in his office at Princeton. And although the world might be simpler if it wasn't so, I believe "inflation" happens to be one of the things which counts but can't be measured. The fact is that once money is created you don't know where it ends up. Maybe it will end up in the consumer goods market, maybe it won't. Or maybe it will be multiplied via the financial system into new credit which will inflate asset prices instead. Even then, we don't know which assets.

 

But suppose we did know where money would end up, how would you weight the assets together into one index? Should stock prices be included in the CPI? If so, what should the weight be? And if you're going to add stocks, why not add corporate bonds too? And what should their weight be? And if you're going to add bonds, why not add house prices, etc., etc.? Isn't it obvious that the rich concept of - inflation - is unobservable? So who said that proxying it with a narrow sub-category - consumer prices - was a good idea?

Why Ben Bernanke of course, that's who.

The second is the premise that consumer prices themselves should be as 'stable' as possible. But is that correct? Isn't the natural tendency of our species to do more with less, to lower the cost of a given good or service, to "increase productivity"? In other words, isn't "deflation" a part of the human condition? Jeff Bezos, the CEO of Amazon famously said there were two types of company in the world, those that work to charge more and those that like to charge less. His company, he said, would belong to the second group.

 

Shouldn't someone warn him of the folly of pursuing deflation? Of the untold havoc he's set to unleash by trying to undercut Apples iPad? And how about those guys at Walmart? Surely they deserve a stern ticking off oblivious, it seems, to the downright irresponsibility of their "Everyday Low Prices" strategy? Maybe all the clever economists and Ivy League Nobel Prize winners should make going to Arkansas to explain to the Waltons that they're playing with fire a matter of urgency?

Some more on the self-deception of hubris:

Or maybe the clever economists aren't so clever. Maybe they have it all wrong. Maybe deflation is most painful when there is an excess of debt, and so maybe they shouldn't be encouraging excessive debt accumulation in the first place, by distorting the interest rate market in the pursuit of aims whose consequences they don't fully understand?

 

This brings us to a third false premise, that there is some "optimal" rate of consumer price inflation. Judging by the targets of most central banks which have them, that rate is around 2%. But why is it 2%? Why not 3%, or 4%, or 6.78384%? What's so magical about 2%? Where did that number come from?

Grice on exposing faux experts (virtually all of them) using the methodology of one Richard Feynman:

One of my favourite people of the 20th century is Richard Feynman, the Nobel Prize winning physicist who, among other things, pioneered the study of quantum electrodynamics. In a fantastic documentary about him for BBC's Horizon show called "The Pleasure of Finding Things Out" he said something I found moving and profound. He was talking about the "experts" he saw on TV and how although he didn't have any expertise in the area they claimed to have expertise in, he felt quite sure that they didn't know what they were talking about. He said this:

 

"There are myths and pseudo-science all over the place. I might be quite wrong, maybe they do know all this ... but I don't think I'm wrong, you see I have the advantage of having found out how difficult it is to really know something. How careful you have to be about checking the experiments, how easy it is to make mistakes and fool yourself. I know what it means to know something. And therefore, I see how they get their information and I can't believe that they know it. They haven't done the work necessary, they haven't done the checks necessary, they haven't taken the care necessary. I have a great suspicion that they don't know and that they're intimidating people."

 

So if I apply Feynman's test and ask myself how hard most economists worked for their knowledge, I can't help thinking they haven't worked hard for it at all. I don't think they've worked hard to know what inflation is, or whether it can or should be targeted. I think they've just assumed it, and anyone can do that. As Feynman warned, they've fallen into the trap of fooling themselves. They've assumed that inflation can be proxied by the CPI because it's easier to do that, they've assumed that 2% is somehow the right rate for it, and they've assumed they're capable of setting interest rates at the 'appropriate' level.

And the biggest blasphemy of all: everything economists have been taught, and have taught, was wrong from the very beginning.

But what if those assumptions are wrong? What if, for example, the 'natural' rate of consumer price inflation was 0% and so by trying to keep it at the unnaturally high rate of 2% they've had to artificially goose up the rest of the economy by setting interest rates at an inappropriately low level? And what if, like force-feeding steroids to a horse because you assume it should be running faster, in doing so you kill it, distorting the credit system so grotesquely as to crash the rest of the economy?

 

They've assumed that wouldn't be a problem, and they assumed that if there was one they'd be able to fix it (Ben Bernanke supposedly promised Milton Friedman that there would never be another great depression because the "lessons" had been learned from the 1930s). But, assuming you know how the animal behaves isn't the correct way to go about attaining knowledge about how the animal actually behaves. So they don't attain knowledge about how the animal behaves. So the animal keeps mauling them.

 

But they keep doing it. Now a 2% CPI inflation target is going to make all the difference. And I find it a very strange thing. I just don't understand why they're so sure they know all this stuff despite all the evidence to the contrary. I feel like McCarthy in One Flew Over the Cuckoo’s Nest: “That’s right Mr. Martini, there is an Easter Bunny.”

Finally, we get to the bottom line: economists, and all those others who are "in charge" really are just a bunch of idiots, or, as Grice puts it far more politely, fools.

Mr. Feynman said something else which I like. He said:

 

“Ordinary fools are all right; you can talk to them, and try to help them out. But pompous fools - guys who are fools and are covering it all over and impressing people as to how wonderful they are with all this hocus pocus – that I cannot stand! An ordinary fool isn't a faker; an honest fool is all right. But a dishonest fool is terrible!”

 

I think he's right. Dishonest fools are terrible. It's a shame they're in charge.

Yet we keep on giving them Ivy League tenure, and voting them into power...

It's is probably a bigger shame that the general public continues to refuse to call them out for their endless barrage of lies. Because the time has come to unmask the emperor as not only being naked, but being full of, well, shit.

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moroots's picture

You are every commenter in the New York Times.

Again, the arrogance is ever-present: you assume that no schools, roads, Hummers, or oil and gas would be produced if not for the benevolence of government.

Or, alternatively, you suggest that because the government has provided some of these things, that a) the cost was worth it, and b) this benevolent legacy entitles them to avoid accountability for ripping of the taxpayer.

Altogether you also ignore the division between State and local governments, which have more legitimacy to perform those tasks you mention, and the Federal government, which through it's centuries of malevolence and power consolidation has usurped these roles from States and towns.  It's the Federal interference that is causing the decresae in the quality of these kinds of public assets and also the stiffling of individual community's rights to decide for themselves the role of their government.

GernB's picture

It is astonishing the frequency with which those who want to take the fruits of others labor claim the ones they are stealing from are the selfish ones.

akak's picture

+1,000,000,000,000,000,000,000,000,000,000,000

 

Or, in other words, + (the federal debt in five years).

Jefferson's picture

The idea that the systematic destruction of the global financial and economic system is merely the unfortunate outcome of a group of bumbling fools is hopelessly naieve. The controlled demolition we are witnessing at all levels of society including the financial, political, religious, cultural and education systems is disgusting yet malevolently brilliant. 

Waffen's picture

Agreed. If they were just Bumblers they would get some things right by chance. Then all one need look is at what some of the elite said. George soros told us in 2008 that china would replace us and that we must have a managed decline of the dollar. This is exactly what we are seeing. This is no result of fools but rather a result of a plan.

This is a planned event and we will know this is true when after this disaster the solution offered will be global government, when what we need is more localization.

Jefferson's picture

It was not my intention to doubt that, the Doctrines of the Illuminati, and principles of Jacobinism had not spread in the United States. On the contrary, no one is more truly satisfied of this fact than I am.

George Washington
Mount Vernon, October 24, 1798

http://etext.virginia.edu/etcbin/toccer-new2?id=WasFi36.xml&images=image...

VelvetHog's picture

"Agreed. If they were just Bumblers they would get some things right by chance."

 

I would argue that from "their" point of view they have gotten almost everything perfectly right.  Bumblers?

AnAnonymous's picture

The controlled demolition we are witnessing at all levels of society including the financial, political, religious, cultural and education systems is disgusting yet malevolently brilliant.

//////////////////////////////////////////////////

No. Brilliant? How?

What is going on is the natural course of US citizenism.

US citizens have no option here, they will keep acting the line of US citizenism, and US citizenism drives them where it is now and where it will be tomorrow.

They are on a train, one track.

Nothing brilliant in that. Nothing engineered. Simply US citizenism following its own course.

AnAnonymous's picture

The negro in the oval office shows every day one man cannot change US citizenism from within.

Paul would achieve nothing.

The story that somehow an elite would be raping the base in the US of A is hollow.

The elite in US citizenims governs with the consent of the the governed.

The elite and the base in US citizenism work hand in hand.

Pushing a top who has totally different road map from the base yields nothing because in the end, power in US citizenism derives from the consent of the governed.

akak's picture

It is the eternal nature of Chinese citizenism to shit on the side of the road, with utterly no shame.

Just as it is your eternal nature as a Chinese citizen to shit on every thread in this forum.

Such is the nature of dishonest, destructive, running dog Chinese citizenism.

rsnoble's picture

Here's a good article that goes into some depth about what the bastard elites are up to:

http://www.thedailybell.com/3578/Staff-Report-David-Icke-on

Randall Cabot's picture

Icke is right about the real world machinations but he loses most people with that vibrational and supernatural reptilian stuff.

Kipper und Wipperzeit's picture

I think it's metaphor, but last I checked, dude avidly insists it's real.

Cathartes Aura's picture

sometimes people need a polarised viewpoint to ween themselves off "belief" systems - although I'm not well versed in Icke's storyline, perhaps he attracts people who are coming off the "good/god" vs. "bad/devil" way of thinking - you know, the "devil" is usually illustrated as some form of "animal" - goat, snake, etc. mish mash - so it's not such a leap for minds accustomed to "devils" to see "reptilians" as evil-doers. . .

once one grows out of the need to "demonise" then the actual plot is more interesting than what the "villain" appears to be.

of course, Icke's got his "brand" to think of - and how many folks use his name to describe "the reptilians"?  win.

Zola's picture

The problem is when they print and make the CPI flat when it should be declining , they are actually robbing the people of the world who would be benefitting from lower prices ( in the 1920s lower price brought because of productivity gains and economic growth). In a way it is really hard to make people understand what could have been instead of what is...

Rodolfito's picture

An important insight, well said. .. 'what could have been instead of what is..'. When thought of in this way, the 'what is' is shown in its true colours.

Saro's picture

Came here to post exactly this, so upvote for you.  Inflation is completely unmeasurable, and attempts to do so by simply cataloguing prices is dishonest.

GeneMarchbanks's picture

This whole comparison-to-physics thing needs to stop before the analogies get to be so absurd that only a schizo can decipher. Jesus, if we ever needed a simple Kantian 'honest road' application it is now. Physics was an attempt to create a structure of the world without consciousness and it peaked some time after the whole Copenhagen interpretation and died with the EPR paradox.

Economics is a social science that deals with people, nations distribution of goods and many general concepts that cannot be calculated. I know Grice, like others, wants to lend credence to his articles by alluding to perceived intellectual giants but it does no good. It ends up only deepening the confusion and makes for intellectual masturbation. Meaningless drivel.

At some point you realize that a fiat monetary system, as the name suggests, works on faith which means any 'calculation' or 'projection' is not only wishful thinking but downright ludicrous. Faith is dwindling big time, the issue is with an experiment gone bad and complete meltdown in the ethics department. Grice has no answers...

Tyler Durden's picture

Speaking of meaningless drivel, how do Feynman's observations on the definition of knowledge, on epistemology, or on self professed expertise have anything to do with EPR?

ViewfromUndertheBridge's picture

Oh the irony...Feynman on knowing and your misquoting (ie, out of context and thereby reversing his meaning) of Keynes' most famous utterance.

Tyler Durden's picture

that's odd - and we thought the most famous utterance was “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

disabledvet's picture

and it's modern application: "why do it secretly when you can do it in broad daylight?" Obviously there's been a big "kerfuffle" over the Fed's new policy of being open about it's projections and thinking...i happen to think it's pure brilliance since it costs them nothing do so...and binds them even less. If The Bernank can..."create certainty"...by espousing predictions and then lo and behold have all the rest of us see it be true...that is the very definition of creating confidence...and as such "others will follow him." (as of course they have: Britain has been QE'ing for some time, Europe is simply doing it by another name). Of course no one will believe in recovery until growth returns con gusto and employment and incomes pick up to a level that at least rivals what happened in the 1980's. And we have a long way to go for that...something the Fed Chairman has acknowledged i might add...and stated as a policy goal too....Sorry! I'd like to complain. I used to be The Berank's biggest critics--but at some point you have to look at his view of the data versus yours and mine and realize "he's factually spot on." I know i've been completely wrong on my haughty and arrogant view towards what interest rates would do. if i had been working on Wall Street at the time clearly i would now be out of a job. the question therefor is brutally simple now: "can growth be achieved?" the fact that interest rates spreads have been compressed is NOT the fault of the Fed...that's the fault of the Banksters and their unwillingness to lend to anybody (by and large) other than the Government. Once could argue post Fukushima and "Crisis Euro" that our government..."winning"...for lack of a better term...is generating enough animal spirits to return growth to the US economy. We shall see. I still see "debt bombs" all over the place waiting to go off.

cranky-old-geezer's picture

 

 

  • Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
    • Chapter VI, pg.235-236

So there it is.  Keynes was opposed to the kind of rampant currency printing we see today.

No, what Bernanke has done since '08 cannot be justified under Keynesianism.  

It's rampant uncontrolled currency printing, the very thing Lenin said would loot the citizens of all their wealth.

It's the same thing the Founders said.

It's the same thing many here have said, including me.  Bank bailouts and government borrowing needs are mere cover stories for looting the people, silently, secretly.

 

GeneMarchbanks's picture

Feynman was a physicist first and anything he wrote on epistemology should be considered an outgrowth from that. He supposedly was interested in biology. No social observations are to be found amongst his writing at least in an economic context.

Grice could easily use Popper, Hume or even Kant if he wishes to refer his deep understanding to an epistemologist but chooses Feynman to somehow pretend we are... what? he's working on an atom bomb? My point remains. He'll continue complaining about the perpetual ponzi while staying nice and cozy in the banking class at SocGen.

So do you want to talk about the 'God particle' or what? When do these fine hyper-specialists come out and simply admit there are things that cannot be grasped by the mind instead writing nonsense? That's where the EPR paradox comes in.

 

Blindweb's picture

Feynman knows the basic fact of being an intelligent person.  The map is not the terrain.  The map can never be the terrain.  You don't need to know about a EPR paradox or Heisenburg to know the limits of physics or science.  Lao Tzu figured this stuff out thousands of years ago. 

Popper, Hume or even Kant...Discover your true nature as it exists and then maybe I'll take you seriously as a philosopher.  At least Descarte got that far.  (He conscously knew Cogito ergo sum was an assumption)

 

 

 

GeneMarchbanks's picture

I mentioned philosophers that deal with social science and epistemology specifically. Grice is reaching into the realm of physics as an example that is beyond the category of econo-politics. Aligning yourself next to  other (accepted) scientists to lend credence to your ideas is the work of intellectual midgets and bums. Every monkey likes to quote Einstein but it means nothing. Feynman contributed to the A-bomb, hardly something to aspire to as a physicist or person. Science is an affair of bureaucrats and it's time to simply say so and move on.

Zen is metaphysics not physics and Lao Tzu hasn't anything to do this and neither does Descartes.

Finally, a good reading of not only classical mechanics and its theory is important in understanding what can and cannot be said about the physical world around us, so it is necessary to have a grasp on a subject. The nonsense of modern garbage such as Schrodinger's Cat and 'God particle' is fantasy stuff not science. Makes for great half-hour PBS specials and that's about it.

 

trav7777's picture

uh, yes you DO.

ANYONE can babble bullshit and like a stuck clock be right sometimes.  Either you know physics and math or you do not.

I'm still wondering wtf the relevance of EPR is to this topic at hand.  EPR is empirically resolved

Blindweb's picture

Feynman, 'The name of a thing is not the thing named'  This is the really insightful quote from that show.  Knowing that gives you real insight into knowledge.  No matter how far you look into something you can never know it.  As far as I can tell, all of you, including Dice,  missed it. 

Caviar Emptor's picture

It's at root just a battle over the whole metrosexual thing. 

Cognitive Dissonance's picture

As a self confessed metrosexual (keep your hands off my hair spray buddy) all I can say is that I resemble that. :>)

falak pema's picture

what pleases metrosexuals about that label is that it has sexual attached to love of metropolis. Sex and the city...New Yorkers can feel comfortable with it, but  the guys from Montana probably want to scratch their cojones when they hear that term, or ride their horses into OK Corral and gun down all metrofools in well heeled boots. What a crazy world this is; half Taliban, half Justin Timberlake. Lets hope they open Kabul Kitchen soon once the Montanan cowboys leave, with George C and Brad P as managers and the Kardashian sisters as sexy servers. It'll do more for metrosexual harmony with Talibans than growing poppy for the MIC. 

Caviar Emptor's picture

What a crazy world this is; half Taliban, half Justin Timberlake.

Lol. That's the conflict in a nutshell. And it cuts across cultures, national borders etc..

You can say Red vs Blue, you can say Saskatchewan vs Vancouver it's all a reflection of the same. A battle epic for the soul of today's man. Everything else just follows. Who will the man of tomorrow be? If you ask yourself that question in Yemen, the answer might jsut as easily be Justin Timberlake as Prince al Walid bin Talal. The dichotomy is the same in Russia as it is in China with their own versions

trav7777's picture

metrosexual men want to be women.

The largess of real men has allowed this urge to propagate.  In more savage times, the metro men had much lower offspring survival rates

RichardP's picture

As a self confessed metrosexual ...

Didn't you say you live in the woods?  How can you be a metrosexual if you don't live in a metropolitan area? ;-)

TruthInSunshine's picture

GeneMarchBanks said:

"This whole comparison-to-physics thing needs to stop before the analogies get to be so absurd that only a schizo can decipher."

 

If The Bernank would call me back, maybe I could convince him of the futility of pushing on a string, though.

 

Bernanke seems real thick, despite his really high SAT score and Ivy League pedigree, because he keeps insisting (at least as judged by his statements and actions) that monetary policy (and ostensibly the bizarre kind of monetary policy he's unleashed on the world) can:

a)  Create sustainable, high wage jobs;

b)  Save financial institutions that are too numerous in number and obsolete in their business models from damnation (via the robbing taxpayers, savers and stealing what ordinarily would be private sector consumption to prop up zombies model);

c)  Increase sustained, aggregrate demand for goods & services.

 

But then again, maybe it's wrong of me to assume it's possible that The Bernank is actually trying to pull off options a) and b) above [and I must say that the longer The Bernank runs Operation Squeeze Play, the less his odds are of pulling off even option c), as well].

trav7777's picture

I have had issues with other people who studied economics but who are otherwise highly intelligent.

TruthInSunshine's picture

The Bernank's supporters (and supporters of fractional reserve banking, generally) will show up in droves in the comments section any minute now, in order to express their opinion that Bernanke & central economic, monetary & fiscal planning is an overwhelming success, and that if one excludes 1913 through 2008, that the timeframe of 2009 through present, as indicated exclusively by the move in U.S. equity indexes (a reflation of nominal index averages to 1999 levels, and only at a cost of some 5.3 trillion USD in money printing, and another 12 trillion USD in backstopping - implicitly or expressly - TBTF financial entities), strongly supports their opinion.

 

In other news, and in a shout out to Barry 'Green Shoots' Ritholtz, because some may understand how I am like a pit bull on matters I believe are propaganda, and it's either an asset of my personality or its bane, but here's a late discovery I found regarding the BLS U3 NFP Report on Friday (prepare yourselves accordingly - we're dealing with a BLS economist in the following):

 

"There was not a big increase in discouraged workers," economist Betsey Stevenson (Betsey Stevenson, the chief economist at the Department of Labor, who works directly under the Secretary of Labor*) commented on Twitter. "What happened was Census found a bunch of old people we had assumed died." [The Wall Street Journal, 2/3/12]

http://blogs.wsj.com/economics/2012/02/03/whats-behind-the-unemployment-...

Okay, so Betsey Stevenson (Betsey Stevenson, the chief economist at the Department of Labor, who works directly under the Secretary of Labor*), is essentially saying a predominant majority of the people the 2010 Census 'discovered' were "old people [they] had [previously] assumed died."

It's HILARIOUS in a sad way. And it's convenient, too, if their goal were to use statistics to minimize the reported rate of U3 ("Nawww, never, Ritholtz would doubt claim...never, ever...").

You see, it's a "bunch of old people" that they discovered, who are presumably too old to be counted for purposes of measuring the unemployment rate anyways.

That group of 'newly discovered people' did not include many "working aged, but unemployed people." No. /sarc

So it's all good.

LULZ.

 

*U.S. Department of Labor: Biography of Chief Economist Betsey Stevenson

drbill's picture

Keynes was no idiot. I often wonder if he knew that his General Theory was nothing more than "permission" for governments/central bankers to print money. Either way, if Keynes didn't exist, it would have been necessary to "invent" him. What better way to justify your actions than by having an "expert" back you up?

TruthInSunshine's picture

drbill said:

 

Keynes was no idiot. I often wonder if he knew that his General Theory was nothing more than "permission" for governments/central bankers to print money. Either way, if Keynes didn't exist, it would have been necessary to "invent" him. What better way to justify your actions than by having an "expert" back you up?

I agree that Keynes was no idiot (he was brilliant, although he'd be the first to admit that arithmetic & utilizing methods to quantify 'things' were not his strong points - which modern economics depends so heavily upon), but that his ideas have been so bastardized by those invoking his name that he'd sue them for slander/libel if he were to awake from the grave tomorrow; and here's a mere sample of a profound truth he laid bare by J Keynes:

 

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”

 

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

 

J.M. Keynes on inflation in The Economic Consequences of the Peace (p. 235-6)

ViewfromUndertheBridge's picture

Thank you. Keynes' quote "Ïn the long run we are all dead" was in fact a rebuttal of the view that inflation would dissipate in the long run...but so few have actually read Keynes that it is always misquoted, sorry to see this particular Tyler doing it too.

Sandmann's picture

He was commenting on The Pigou Effect known later as The Real Balance Effect discussed by Harry G Johnson. There are some people like Alan Greenspan who think the Economy is self-correcting and that all will come right in the end. Keynes merely observed that this might take two or three generations.

Now it is clear that people commenting on these threads are quite prepared to live in crashed out zones like Flint, Michigan or Detroit, Michigan for 60 or 100 years as natures forces work their way through the system, but not everyone is so patient and might turn to Father Coughlin or Huey Long instead - or even Josef Stalin who had quite a following in the USA in the 1930s and lots of Americans going to the USSR for work.

Keynes was simply observing that Italy was Fascist, Germany had Nazism, Russia had Communism, Hungary had Fascism as did Poland and Spain.......and it was a question of whether Britain went Fascist too......he thought there was a way to avoid that, but fortunately the country found it could only implement his ideas by going to war for 6 years and bankrupting the country leaving the USSR as the most powerful country in Europe instead of Germany.

The reason the US had a good life between 1945 and 1973 was NOT Keynes - it was "Guns and Butter" - Cold War weapons programs which made Texas and California prosperous and sent lots of GI's kids to College. It made the Good Life possible until someonde decided to spend money in Vietnam and Harlem and Watts without raising taxes to pay for it. Blaming Keynes is easy when blaming Kennedy and johnson would be more appropriate - they did not tax enough !

 

AnAnonymous's picture

Now it is clear that people commenting on these threads are quite prepared to live in crashed out zones like Flint, Michigan or Detroit, Michigan for 60 or 100 years as natures forces work their way through the system,

///////////////////////////////////////////////////////

Made me laugh. Such cheap propaganda.

Smithian economics leads to transfer between zone B and zone A.

So if your dream land, when A trades uranium from B in exchange for the uranium waste from A to B, the system will self correct as natural forces take over?

Made me laugh. US citizenism leads to incredibly cheap propaganda.

Sandmann's picture

You should rename yourself  Incoherent rather than AnAnonymous. Your posting is incomprehensible

AnAnonymous's picture

I have learned long ago to leave incoherence to US citizens.

World masters at it.