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Guest Post: Human Action Under Ultra-Low Interest Rates

Tyler Durden's picture
Submitted by Tyler Durden on 09/02/2012 22:37 -0400



 

Submitted by Martin Sibileau of A View From The Trenches,

Today, we want to examine the origins of the idea that ultra-low rates of interest can exist, how this idea came about, why it was flawed and how it leads to an informal economic system.

 

Over the past months (and particularly in the last weeks), we have increasingly read negative comments on the ongoing zero-interest rate policy (ZIRP) and in some instances, negative-interest rate policy (NIRP). We find these comments were anecdotal. Not superfluous but anecdotal. They touch on the influence of ZIRP on savings, on the profitability of banks, on fiscal policies, on debt, etc. Perhaps, the anecdotal format is explained by an inclination towards induction rather than deduction and perhaps our discomfort with this is driven by our familiarity with the Austrian method.

Today, we want to examine the origins of the idea that ultra-low rates of interest can exist, how this idea came about, why it was flawed and how it leads to an informal economic system. It was a fallacy based on misunderstanding of the rate of interest and human action.

Origins of the idea that ultra-low rates of interest can exist

From our very limited knowledge in the history of economic thought, we are inclined to believe that the topic of zero interest rates was first introduced by John M. Keynes, when he contemplated the possibility of the existence of a liquidity trap (chapter 13), in his so-called “General Theory of Employment, Interest and Money”. Keynes did not see this as the result of explicit policy but as an aberration of market participants, driven by their animal spirits, which define their liquidity preferences.

Keynes’ concepts were popularized in visual format by Sir John Hicks , when he came up with the famous IS-LM model. In the graph below, following this model, we can see that the equilibrium rate of interest is negative. The “S” line is an indifference curve for the aggregate supply of loanable funds. In the axes, we see a benchmark rate of interest (r, vertical ax) and income (horizontal). The “I” line is the indifference curve for investment demand. As the rate of interest falls or income rises, the demand for investment goods increases. If the rate of interest falls too, the aggregate supply of loanable funds decreases.

The chart also shows that there is an income level that would get us to a desired level of employment (Yp). Logically, it would seem that either a higher level of investment or a lower level of savings is required, to “bridge the income gap”.

In our view, the whole approach of thinking in terms of indifference curves is ridiculous. Nobody is ever indifferent. Everybody is always making a decision. Having said that, let’s remember that Keynes challenged the notion that both investments and savings were sensitive to the rate of interest. For Keynes, investment demand was mainly a function of income and secondarily

of the rate of interest. In the same fashion, savings were also driven by income. To Keynesians, savings are by-product of consumption, that part of the income we did not consume at the end of a period:

Investment = f (Y)

Savings = Income – Consumption, but as consumption is a function of income: Savings = Y – C (Y)

 

Why the idea was flawed

It should now be clear that there is an inconsistency in simultaneously believing that investment demand and savings are mainly driven by income but that it is necessary to lower the interest rate to boost investment, as the Fed does…and the Fed is Keynesian! Keynes also thought that fiscal policy was necessary to boost investment demand, so that the intersection between the I curve and the S curve takes place at a positive rate of interest. By the same token, Keynes must have not considered increasing savings to bridge the gap (i.e. an increase in the supply of loanable funds), because that would have meant a reduction in income! In his own words (from Chapter 13):

"and whilst an increase in the volume of investment may be expected, ceteris paribus, to increase employment, this may not happen if the propensity to consume is falling off…(= savings increase)"

According to Professor Jesús Huerta de Soto, Keynes lacked a theory of capital, which cornered him into an horrible circularity:

On one hand, Keynes thought that the rate of interest was determined by the liquidity preference of the public (as in the chart above, because the liquidity preference determines the supply of loanable funds). In his own words:

"…whilst an increase in the quantity of money may be expected, ceteris paribus, to reduce the rate of interest, this will not happen if the liquidity-preferences of the public are increasing more than the quantity of money…"

On the other hand, Prof. Huerta de Soto rightly notes, if you asked Keynes what determines the liquidity preference of the public…he will answer: The rate of interest does! We  think (we are not PhDs in Economics or historians of economic thought)  the evidence of what Prof. Huerta de Soto points is found on Chapter 15:

“…In normal circumstances the amount of money required to satisfy the transactions-motive and the precautionary-motive is mainly a resultant of the general activity of the economic system and of the level of money-income(…); whereas experience indicates that the aggregate demand for money to satisfy the speculative-motive usually shows a continuous response to gradual changes in the rate of interest, i.e. there is a continuous curve relating changes in the demand for money to satisfy the speculative motive and changes in the rate of interest (…).. Indeed, if this were not so, “open market operations” would be impracticable…”

In summary, Keynes thought that the liquidity preference of the public determined the rate of interest, and that the rate of interest was determined by the liquidity preference of the public (i.e. the aggregate demand for money to satisfy the speculative-motive). Keynes oversaw that the rate of interest is nothing else but an inter-temporal rate of exchange, between present and future consumption.

 

Misunderstanding of the rate of interest and human action

This inter-temporal exchange rate is very relevant and we dare to say, instinctive. The fact that we understand it at its most basic level, which is the awareness of our mortality, is precisely what made us evolve into human beings. When time has a price, when the inter-temporal rate of exchange is relevant, when the rate of interest is positive and important, men tend to be more desperate than otherwise and they create, they take risks, they look for more efficient ways to produce what they need, they become more productive…they grow!

This basic instinct is so strong that even if a central bank determines that the rate of interest should be zero, humans, aware of their life cycle, will refrain from consuming today in exchange for consuming more tomorrow. Before you disagree with us on this, think about the following: The curve “S” above is for loanable funds, not for savings! If the interest earned from these funds is not “enough”, that will not prevent people from saving. People will just not invest their savings in loanable funds, in securitizable assets (which is in line with Hernando De Soto’s works on informal economies) . They will save in non-financial assets and if the public markets, manipulated by central banks don’t acknowledge that inter-temporal exchange rate, the public assets will be privatized.

Thus, we should not be surprised if, under zero-interest-rate policies in the developed world, we witness a growing trend in corporate leverage, with vertical integration, share buybacks and private equity funds taking public companies private. It would be only natural. We warned of this back on May 7th.

Another way of examining this is the following: The zero interest rate indicates that time is free. And as anything that is free is wasted, time will also be wasted. Therefore, the equity of a firm, which is the equivalent of a call option on the assets of a firm, will become very cheap in terms of the debt of the company, as the debt does not grow with time because no interest is due on it (this only holds true, if the company is profitable, as a friend pointed to us). Arbitraging for this distortion in relative value, lifts the price of stocks, and to make this process sustainable in time, central banks need to keep throwing liquidity to the system, until they no longer can….

Now, if savings leave the matrix “system”, we will see in the long run an important de-leveraging, as the credit multiplier becomes less and less powerful. With more assets outside the system, the pricing mechanism becomes less efficient, since there are fewer signals to market participants. Capital markets disappear, specialization decreases, economies of scale are threatened. With more assets outside the system, productivity plunges and with it, unemployment skyrockets in rigid (unionized) labour markets (characteristic of developed economies). As developed economies, with high stock of capital, rely on economies of scale, this fundamental transformation has enormous damaging potential.

The flight from the system brings more financial repression as a logic reaction. In those nations with established coercive savings plans pension plans , politicians set their eyes on these virgin pools of capital, to force a bid to their liabilities (i.e. sovereign debt). This process eventually spirals, since the financial repression aimed to prevent market participants from protecting their inter-temporal exchange decisions, grows exponentially and brings about precisely the opposite outcome: A complete defence of savings, now fully thrown into an informal economy.

At this point, something has to be said about wealth transfer, because not every market participant is able to re-allocate his/her  investments and re-direct his/her savings from the system to the informal world. Those who cannot save enough, those employed in firms and trapped in pension plans, will see their assets evaporate. If the harm is too significant, it may even be a cause for them to leave their condition as employees and become self-employed. This is the landmark of underdeveloped economies: A huge mass of self-employed, undercapitalized citizens in an informal system. The informality prevents them from accessing credit, which enhances their undercapitalization.

Finally, we ask that you note one last thing: As productivity, employment and production decrease, even a steady and low rate of inflation has the potential to morph into hyperinflation. It’s only a matter of time, and it occurs once the capital markets (including the futures markets) vanish, when the only reason to demand currency is for transactional purposes, when the demand of currency to settle debts is only marginal.

 
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Sun, 09/02/2012 - 22:39 | 2756976 Ahmeexnal
Ahmeexnal's picture

Silver spiking on soon to be released news.

Sun, 09/02/2012 - 22:44 | 2756983 euphoria
euphoria's picture

What news would that be oh wise one?

Sun, 09/02/2012 - 22:48 | 2756985 old naughty
old naughty's picture

Paging Neo.

Mon, 09/03/2012 - 03:00 | 2757160 AldousHuxley
AldousHuxley's picture

human action under ultra-low interest rates.......morons reproducing more morons to buy more chinese junk, while smart people who save are penalized so their smart children can't afford to go to college

 

eugenics may be unethical, but dysgenics is just crazy.

 

http://www.youtube.com/watch?v=icmRCixQrx8

Mon, 09/03/2012 - 03:19 | 2757171 AnAnonymous
AnAnonymous's picture

Made me laugh. Typical US citizen middle class comment.

Where is that technology that could enable 'Americans' into the infinite growth they speak so much?

IQ can not save the day. Here, smartness only means decreasing the number of morons.

The 'smart' solution 'American' smarts come with is taking from the dumb to redistribute to themselves.

Trouble is that, when one follows the 'American' narrative, this is what 'Americans' have been doing since 1776,July, 4th.

The unPC reality is that dumb people who can not figure out a way to consume a resource or consume faster and faster, are no or much smaller weight on the overall consumption of the resources.

'Americans' have put the world on the path of depletion of resources. Including the smart ones.

But it is typical US citizen middle class to want to use a lower class as a stepping stone and to whine when an upper class takes the same approach to themselves.

Because a middle class is all about being average: it is about being smart but not too smart.

IQ wise, most people here who are your typical US citizen middle class, are morons to Ben Bernanke.

Does not prevent 'Americans' here not to include Bernanke in their considerations of smart people vs morons.

Mon, 09/03/2012 - 03:44 | 2757180 akak
akak's picture

ZZZZZZZZZZZZZZZZ .......

Mon, 09/03/2012 - 06:18 | 2757278 AldousHuxley
AldousHuxley's picture

subsidize moronic behavior --->>> you get more morons.

 

lower, upper, middle....doesn't matter. morons in all classes.

 

less morons = more productivity = better society

more morons = smart people get tired of subsizing them and then leave

 

In China, poor are not morons....they have to be smart to survive. In USA, morons are living off of credit their ancestors have built up.

Mon, 09/03/2012 - 08:43 | 2757385 AnAnonymous
AnAnonymous's picture

less morons = more productivity = better society

more morons = smart people get tired of subsizing them and then leave
___________________________

'Americans' run a business of extorting the weak, farming the poor.

Smart 'Americans' are to be met in the extorters, farmers family.

In other words, the morons are the assets of the so called smart people.

They do not subsidize morons, they subsidize themselves.

Higher productivity in 'American' economics always lead to more consumption. 'Americans', excluding the rest of the world, have already generated an overconsumption trouble.

And "smart" 'Americans' might come with one solution:diminishing the number of people who are not consuming...

Mon, 09/03/2012 - 09:08 | 2757426 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous explains the difference:

They do not subsidize morons, they subsidize themselves.

Ah, ah, but Chinese citizenism does subsidize morons. This explains your presence here.

Mon, 09/03/2012 - 09:17 | 2757451 nmewn
nmewn's picture

No doubt.

I've been chasing our brave and courageous Chinese citizen from one thread to the next trying to get a comment from him on the wonderful Chinese government owned CNOOC aquiring Canadian oil company Nexen. Apparently the plan is to suck (ahem, deplete) oil & gas from the Gulf of Mexico.

It seems Chi-Com citizenism is eternal...run rabbit run ;-)

Mon, 09/03/2012 - 15:56 | 2758452 AnAnonymous
AnAnonymous's picture

First time I read that request and the answer is:
'Americanism' is spreading in China.

Mon, 09/03/2012 - 11:48 | 2757752 AnAnonymous
AnAnonymous's picture

Ah, ah, but Chinese citizenism does subsidize morons. This explains your presence here.
_____________________

Incredible! I have succeeded where 'Americans' have been failing. I managed to overcome the environment.

I am subsidized by a fantasy that does not exist!

Wait, that is another fantasy by 'Americans' who have nothing to do but run from facing 'Americanism'

Mon, 09/03/2012 - 12:09 | 2757818 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous exclaimed:

Incredible! I have succeeded where 'Americans' have been failing.

Yes, Chim Chim, you are indeed incredible, literally, as in lacking credibility.

Mon, 09/03/2012 - 12:14 | 2757833 AnAnonymous
AnAnonymous's picture

Once again, 'Americanism' does not need my being credible or not.

When people are free falling, an observer does not need to be credible. It changes nothing to the fact that people are free falling...

Comments or not, 'Americanism' keeps being.

Mon, 09/03/2012 - 12:35 | 2757881 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous conceded:

Once again, 'Americanism' does not need my being credible or not.

Clearly your paid propagandistic trolling job does not rely upon your credibility.

But hey, Peoples Liberation Ministry of Truth has a reputation built upon things other than truth.

Mon, 09/03/2012 - 15:58 | 2758459 AnAnonymous
AnAnonymous's picture

Paid propagandistic trolling job? Up to what extent US citizens are ready to go in order to flee?

Mon, 09/03/2012 - 13:42 | 2757994 Imminent Crucible
Imminent Crucible's picture

Confucius say, If you think Chinese citizenism not moronic, I have three words for you: "State Owned Enterprises".

As soon as I saw that chart, my Indifference Curve went parabolic and I went to the refrig looking for a double IPA.  Still, the article was brilliant. Just these two statements made it worth the time:

"When time has a price, when the inter-temporal rate of exchange is relevant, when the rate of interest is positive and important, men tend to be more desperate than otherwise and they create, they take risks, they look for more efficient ways to produce what they need, they become more productive…they grow!"

And conversely, when time is worth nothing because the government pays your bills, people become unproductive and turn into jellyfish leeches.

"The zero interest rate indicates that time is free."

And since "the future's uncertain and the end is always near" the Fed is perpetrating a destructive lie that will destroy (or disappear) all capital and replace it with credit, accelerating the final collapse of the currency.

Mon, 09/03/2012 - 13:59 | 2758078 akak
akak's picture

 

Once again, 'Americanism' does not need my being credible or not.

One might suppose that that is a good thing, then, as your tiresome, monotonous, ragingly hypocritical, incessant, and incessantly bigoted trolling in this forum has made you completely non-credible --- as the inevitable multiple-digit down-arrows attached to each of your gibberish posts will demonstrate.

However, as this "Americanism" of yours exists only in your own twisted and chauvinistic Chinese mind, credibility is quite irrelevant to your ongoing campaign of hate against each and every American.

Mon, 09/03/2012 - 16:00 | 2758468 AnAnonymous
AnAnonymous's picture

But what credibility? I am out of the requirement of credibility.

People reporting about gravity do not need to be credible for gravity to be.

Alas, that is a difficult point to be admitted by US citizens as US citizens would want that agreement with a point only makes it a fact.

US citizens would want gravity to be if only they agree with gravity being.

Does not work this way though...

Mon, 09/03/2012 - 16:09 | 2758493 akak
akak's picture

Shut the fuck up already, you retarded and bigoted troll.

Mon, 09/03/2012 - 17:21 | 2758686 Imminent Crucible
Imminent Crucible's picture

You said the f-word! I'm tellin Mom. And when she hears what you called the laundry lady, you're gonna catch it!

Mon, 09/03/2012 - 16:22 | 2758528 TheFourthStooge-ing
TheFourthStooge-ing's picture

The literally incredible paid propagandistic Chinese citizenism troll AnAnonymous said:

But what credibility? I am out of the requirement of credibility.

Made me laugh. Any association you've ever had with credibility has been momentary and tangential.

People reporting about gravity do not need to be credible for gravity to be.

Made me laugh again, even moreso. Comparing yourself to people reporting about gravity is not credible. Comparing yourself to people reporting about ghost porcupines that inhabit the offshoots of Jupiter is credible, in that what you report is fantasy from a burning brain.

Mon, 09/03/2012 - 17:06 | 2758658 AnAnonymous
AnAnonymous's picture

And I would be credible as that?

'Americans' or the art of saying one thing and its opposite in the same breath...

Mon, 09/03/2012 - 17:18 | 2758685 TheFourthStooge-ing
TheFourthStooge-ing's picture

Chinese citizenism AnAnonymousity or the art of crapping on the roadside and saying something just as smelly in the same breath.

Mon, 09/03/2012 - 03:46 | 2757181 dark pools of soros
dark pools of soros's picture

Smart = IQ * Knowledge

Most people are smart since they stay close to what they know and hate new things. That way they don't expose their avg IQ

Mon, 09/03/2012 - 09:13 | 2757433 TrulyStupid
TrulyStupid's picture

It isn't a matter of intelligence, it is a matter of ethics.

Can a person with a high IQ (as determined by those who coined the term, seeking to gain personal and cultural moral advantage over those whose IQ is deemed to be "lower") still be a moral idiot?

Does a high IQ insulate oneself from the karma of self serving unethical (deemed to be "smart") actions? 

Mon, 09/03/2012 - 05:36 | 2757268 mick_richfield
mick_richfield's picture

 

Note to the employers of AnAnonymous:

This guy is not working out.

He's becoming an embarrassment.

In your next attempt, please note that a facility with English grammar and sentence structure is not nearly good enough. 

Trolling Zero Hedge requires significantly above-average intelligence, insight, and humor.

Mon, 09/03/2012 - 08:45 | 2757387 AnAnonymous
AnAnonymous's picture

Actually, a closer point to reality is that 'Americans' are trolling this site, as they have been trolling the world with 'Americanism'

But hey, US citizenism is as US citizen do.

Mon, 09/03/2012 - 08:55 | 2757406 Poor Grogman
Poor Grogman's picture

Annoying mouse wind-bag-ism causing much hilarity..
Except in Tibet where jokes against chinese citizenism are forbidden.
But hey, Tibetan citizen dies as Chinese citizen says...

Mon, 09/03/2012 - 09:02 | 2757418 AnAnonymous
AnAnonymous's picture

'Americans' are such efficient in mass killings they have time with discussing others' poor achievements...

One could have thought that being busy killing Iraqis, Afghans, Somalis, Lybians, Syrians, Sikhs, and more, 'Americans' would have less time to chitchat...

But no, feed them more, 'Americans' are never too busy when it comes to killing people...

Mon, 09/03/2012 - 09:39 | 2757496 Poor Grogman
Poor Grogman's picture

Mass state sponsored killing is always horrific and should always be condemned.

Meanwhile.. Annoying mouse ramblings alway prompt me to highlight the forgotten people of Tibet.

You can think of it as YOUR contribution to humanity...

Mon, 09/03/2012 - 11:52 | 2757764 AnAnonymous
AnAnonymous's picture

Tibetans are forgotten? With the free press? Cant not happen.

The free press, that 'American' organization sheds light on what happens elsewhere.

If you want to look at forgotten victims, look at victimes done by 'Americans', the free press reported on them in one liner, at 12 pm, when very few people watch.

'Americans' cover their own tracks...

Mass state killings are horrific but wait... According to 'Americans', the State is that hallmark of civilized people, that allows them to crush stateless societies...

US citizenism at work...

Mon, 09/03/2012 - 12:07 | 2757809 AurorusBorealus
AurorusBorealus's picture

That America has seduced most of the world into participating in a fraudulent financial system, I do not debate.  However, please do bear in mind, that the Soviet Union killed 10s of millions of people in the name of "Marxist-Leninism."  The Chinese and Laotian governments also killed 10s of millions of people, or a 100 million, in the name of a political-economic system.  Germany exterminated millions of people, for no real good reason at all.  There is plenty of evil in the world to go around in the world. (Odd that I find myself defending America, but fair is fair.)

Mon, 09/03/2012 - 08:51 | 2757390 Zero Govt
Zero Govt's picture

AnAnonymous - "Americans have put the world on the path of depletion of resources"

First off the industrial revolution kicked off in Europe first. America jumped on the bandwagon knowing a good thing when it saw it and with the extra freedom from suffocating authority exploded in creativity and productivity

Second how do you "deplete" a resource?

Iron is unemployed in the ground. Man mines it, smelts it and it runs around the surface of the Earth as a car or table set of cutlery. The iron is still on the Earth, it has not been depleted, it has been utilised from its 'do-fuck-all-all-day' existence in the ground to being of use

and when it's life cycle is finished the car or cutlery is dumped back in the ground depressed at no longer having a party with the rest of life above ground

so you cannot deplete a resource, it still exists

the exception being consumables such as oil, gas and coal which are by-products of our molten Earth against the cooler crust which are produced in such vast quantities (shame not to use such natural abundance) we'll never run out in a million years 

Mon, 09/03/2012 - 08:53 | 2757397 nmewn
nmewn's picture
CNOOC Limited and Nexen Enter into Definitive Agreement

Announced on July 23, 2012 the proposed US$15.1-billion acquisition of Nexen by CNOOC Limited presents important opportunities for both companies and their shareholders.

The transaction, expected to close in the fourth quarter of 2012, will see Calgary established as one of CNOOC’s international headquarters which will manage Nexen’s global operations and CNOOC’s existing operations for North and Central America

http://www.nexeninc.com/en/AboutUs/CNOOCAcquisition.aspx

Mon, 09/03/2012 - 09:00 | 2757412 AnAnonymous
AnAnonymous's picture

How you deplete a resource? By consuming it.

Oil is straightforward to see so lets get some easy fun with iron.

Consumption allocates resources and therefore once consumed, they are gone.

Mined iron ore is different from iron bike. Iron bike is consumed iron ore. The iron ore as a resource is gone.

Once all recoverable iron ore is consumed, there is no more iron ore as a resource left. It is a closed system with no possible additional inputs.

And the rest on oil, gas and coal explains a lot... Indeed, and Earth crust is also in such quantities that it can sustain the process millions of years...

Mon, 09/03/2012 - 09:59 | 2757546 Poor Grogman
Poor Grogman's picture

Tibetan citizen did not consume much at all but was forced to accept mercantilism and socialism instead of spiritualism by Chinese citizen.

Annoying mouse needs to beware of eye logs instead of seeking eye splinters....

Mon, 09/03/2012 - 10:08 | 2757549 Zero Govt
Zero Govt's picture

Anonymous  -  i canot teach you fucking common sense, but i'll try this one more time.

If iron is taken out of the earth and is in use as a car it is NOT "consumed". The iron is still on the earth, scurrying around the surface in good use rather than buried doing fuck all in the ground.

There is still the same amount of iron on the earth, wether it be above ground or beloew ground. When the car is past its best it is then buried back in the ground from whence it came. No iron was lost anywhere, the earth still has the exact same amount of iron before it was dug up as after the car was dumped, be it above or below ground

No resouce depletion. It is impossible to 'disappear' a resource, from water to minerals. Goddit?

Mon, 09/03/2012 - 10:08 | 2757575 Poor Grogman
Poor Grogman's picture

Good try but annoying mouse is paid NOT to understand...

Mon, 09/03/2012 - 10:25 | 2757615 Zero Govt
Zero Govt's picture

Poor G -  i don't think anon is "paid" not to understand, i think he's been "educated" not to understand (think)

as a veteran of blogging against the belief-system (beats thinking for yourself) zombies on climate change people have been educated to be thicker than a short plank, given concepts which railroad their thinking along tracks rather than as life should be, all mounted on quad-bikes roaming all over the place thinking and udeveloping your own knowledge

State education (puke) and the MSM have alot to answer for 

Mon, 09/03/2012 - 12:04 | 2757798 AnAnonymous
AnAnonymous's picture

i don't think anon is "paid" not to understand, i think he's been "educated" not to understand (think)

____________________________

It is better to tell that the 'American' tricks to try to conceal the most obvious facts are so worn out they no longer work.

That is the trouble for 'Americans': it is no longer 1777 and people, no matter if they are educated, how intelligent they are, no longer believe in the 'American' tricks...

Conservation of matter can not be exhibited to avoid facing the depletion of resources 'Americans' have pushed the world into...

Mon, 09/03/2012 - 12:06 | 2757781 AnAnonymous
AnAnonymous's picture

So lets see if we can get this right.

 One iron mine, people working at mining.

 The extracted iron is consumed to enable people into work, that is manufacturing bikes.

The scheme goes on until the mine goes depleted.

 No more iron ore is extracted from the mine.

What is the solution to keep up the consumption that was enabled, the work activity of turning iron ore into bikes?

 Melting the already manufactured bikes in order to get iron and thus re manufacture bikes? The iron ore resource went depleted and thus the activity going with it. It went depleted through the consumption of it.

Mon, 09/03/2012 - 14:37 | 2758204 Zero Govt
Zero Govt's picture

Yes the Iron Mine is depleted once all economically extractible iron is oiut the door. But the iron is now in circulation, as bikes in your example, cycling on the surface of the globe being useful rather than buried in rock doing fuk all.

So mother Earth has not lost anything, all the iron is still there on Earth.

Yes the Mine shutters, that's a life cycle which everything in the Universe has. That's not neccessarily the end of the jobs as most mining companies have a number of mnes and a constant cycle of exploration, extraction, closing a mne here and opening another there. 

Your question how do we keep up consumption for the iron and bike industry is one for the industry and their skill set to accomplish. That's what i like about capitalism, the market does all the work for you, you just have to choose what you like... no worries 

 

Mon, 09/03/2012 - 16:05 | 2758479 AnAnonymous
AnAnonymous's picture

The iron is not in circulation: the iron has been allocated to make the bikes.

No answer as expected. Because the point is: depletion of iron.

Conservation of matter do not work when it comes to consumption.

Oil itself follows conservation of matter. But the oil depletion thing is straightforward.

It is the same for any resource.

'Americans' have put the world on the path of depletion of resources.

Mon, 09/03/2012 - 16:13 | 2758504 akak
akak's picture

 

'Americans' have put the world on the path of depletion of resources.

Yes, China is not gobbling-up world resources at an unprecedented rate, no, not in any way.

All those exploding urban areas of the last 20 years, and all those empty ghost cities in particular, must just all be in my imagination.

Mon, 09/03/2012 - 17:08 | 2758661 AnAnonymous
AnAnonymous's picture

The last 20 years? Djeee, you should have given 3,000 years.

This is an 'American' world. 'Americans' dictate the rules...

Mon, 09/03/2012 - 17:17 | 2758682 akak
akak's picture

Fuck you and your meaningless and bigoted jibberish already.

Mon, 09/03/2012 - 17:24 | 2758701 AnAnonymous
AnAnonymous's picture

Time to riot, 'America', time to riot.

Oh, wait, you are an 'American' It is easier to call names on the Internet rather than acting on the current US situation.

Mon, 09/03/2012 - 17:23 | 2758699 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous gibbered and drooled:

The last 20 years? Djeee, you should have given 3,000 years.

Either time span would include the history of Chinese citizenism slavery. Of course, in either case, the retarded chimp AnAnonymous will blame it on US citizenism.

This is an 'American' world. 'Americans' dictate the rules...

That's it, Chim Chim, according to your eternal nature of pooping and flinging.

Mon, 09/03/2012 - 17:25 | 2758706 AnAnonymous
AnAnonymous's picture

And it would also include the Chinese emancipation act too.

Another freedom act in the face of US citizens...

Mon, 09/03/2012 - 17:38 | 2758738 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous, lying for the government, said:

And it would also include the Chinese emancipation act too.

Which one? Slavery has been reestablished in China many times. Oh, that's right, Chinese citizenism emancipation only applies to humans, not the "half-man, half-thing" slaves they keep.

Another freedom act in the face of US citizens...

It's certainly not a freedom act in the face of Chinese citizens, especially the enslaved ones:

http://chinaview.wordpress.com/2007/06/17/modern-slavery-in-china-status...

Mon, 09/03/2012 - 19:31 | 2758938 monad
monad's picture

So there it is. What our little commie ESL partner really wants is a handout so he can go express his genomes at www.chinesekisses.com.

What about PRC emancipation of women? A little late, don't you think? As a closed immigrant population the Chinese on Chinese cruelty was notoriously the most vicious in the Americas, and the longest lasting. Especially toward women.

 

Mon, 09/03/2012 - 14:57 | 2758264 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous, playing silly word games, said:

So lets see if we can get this right.

If you're part of the mix, I sincerely doubt it.

The extracted iron is consumed to enable people into work, that is manufacturing bikes.

Not exactly. The extracted iron ore is sent to a steel mill, where it is transformed into steel. The steel is a useful resource; the iron ore, in its natural state, is not. Iron ore is mined because raw, unoxidized iron is not a resource which can be mined from the earth's crust.

The scheme goes on until the mine goes depleted.

 No more iron ore is extracted from the mine.

Yes, rather straightforward. Let's see how you algebraically twist it into coconuttery.

What is the solution to keep up the consumption that was enabled, the work activity of turning iron ore into bikes?

You've skipped a step, Chim Chim. The iron ore was turned into steel, a more useful form of iron.

Melting the already manufactured bikes in order to get iron and thus re manufacture bikes?

Your little Chinese citizenism vignette is beginning to unravel. Scrap iron and steel is an important resource for steel mills. It requires substantially less energy to recycle scrap than it does to process raw ore.

The iron ore resource went depleted and thus the activity going with it. It went depleted through the consumption of it.

So the ore is gone. So what? The iron itself wasn't consumed. It still exists, as it always has. If your rantings have a point, feel free to make it.

Mon, 09/03/2012 - 16:13 | 2758505 AnAnonymous
AnAnonymous's picture

The point was made clear: depletion of resources.

Transformation of resources in whatever is not the point.

What does it mean: the iron itself was not consumed?

Of course, the iron itself was consumed.

It was consumed, among other things, to make bicycles.

As if a resource has to be destroyed to be consumed...

Are 'Americans' real when they think people are going to believe that crap of things?

And as usual, with 'Americans', sidetracking, pseudo knowledge, to avoid answering to points:

so once the iron is fully extracted and allocated to make bicycles, what is the plan?

Because melting of bikes in order to recover the iron might be less demanding that extracting ore energy wise but it still comes additionnally and not substractively to the already manufactured bikes so...

Mon, 09/03/2012 - 16:33 | 2758564 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous babbled:

What does it mean: the iron itself was not consumed?

Of course, the iron itself was consumed.

It was consumed, among other things, to make bicycles.

As if a resource has to be destroyed to be consumed...

Here is example, in terms for better the understanding of your feeble mind.

AnAnonymous craps on the roadside. Some of the crap he mixes with straw to make Chinese citizenism strawsmen. Some of the crap he rolls into balls, like a Chinese citizenism dung beetle. Some of the crap he simply craps on top of.

In all cases, the AnAnonymous roadside crap is not consumed. It is still crap, stinking up the roadside.

Mon, 09/03/2012 - 17:09 | 2758665 AnAnonymous
AnAnonymous's picture

Fleeing much... All it takes is an answer to the little question.

But hey, it is hard to provide...

Mon, 09/03/2012 - 09:37 | 2757491 Omen IV
Omen IV's picture

Not true - of all the analogies - iron is not one of them - probably north of 75% of metal is constantly recycled from the shores of bangladesh as old ships come ashore and are broken up to cans collected on the streets of NYC by homeless

if every resource had the utility of iron we all would be better off

Mon, 09/03/2012 - 12:00 | 2757786 AnAnonymous
AnAnonymous's picture

Nah.

Recycling can not make up for the depletion of resources.

A little example just above tells how.

Consumption is consumption. And the day around the world, the iron mines go depleted, the iron ore resource goes depleted.

Mon, 09/03/2012 - 15:07 | 2758277 Zero Govt
Zero Govt's picture

well technically you could recycle almost 100% of the iron mined and in use but no resource industry can be arsed ...if the greens amnd other eco-loons would like to run a profitable (productive) operation and compete in the market (without Govt subsidy) we're all ears 

what if every iron mine had run out? Well apart from there being billions of tons in earths crust and i can't imagine it the usual response of an industry is as the iron ore prices go through the roof some smart arse would engineer an uber-smat way of extracting the trillions of tons of iron from Earths molten magma

"Consumption is consumption"

Consumption is merely transfering a resource from one area to another, almost always a better place. You are a holding pen for 3 teaspoons of carbon and 8 gallons of water

water is finite but we'll never run out

mans productivity means we use ever less to achieve ever more. So as man progresses (industrialises) we actually use less of Earths resources. This is why although resources are finite mans productivity is infinite and we'll never run out of anything 

when will all the iron ore and oil fields run out? Never. The Earth is collosal, we're but a pimple and an efficient one 

Mon, 09/03/2012 - 16:20 | 2758523 AnAnonymous
AnAnonymous's picture

In your answer, you say:
-not possible to run out of iron ore, too much of it.
From that get go, it is different from your upstart claim, that iron could not go depleted because of the conservation of matter.

Now you state that iron cannot deplete because it is so abundant it is not possible to consume it all.

That defuses the requirement of recycling.

In the little example of depletion due to consumption, there is no recycling.

You can add recycling if you wish.

It will only add more consumption to the business (so shifting the incoming depletion in iron ore toward other sectors (all the resources required to recycle iron)) and it wont change what happens when the mine collapses.

But infinitive growth, here we go.

Mon, 09/03/2012 - 16:23 | 2758534 akak
akak's picture

No no no!

All you need to do is blame global warming, world hunger and the heartbreak of psoriasis on "US Citizenism iron ore blobbing-up, whose nature is eternal".

You're dropping the citizenism ball, AnAnnoyingMouse.

Mon, 09/03/2012 - 16:38 | 2758577 TheFourthStooge-ing
TheFourthStooge-ing's picture

akak said:

You're dropping the citizenism ball, AnAnnoyingMouse.

Ah ah, but that is because he devotes part of his day to being a Chinese citizenism dung beetle. He drops the citizenism ball so that he can roll the "production" of his consumption into roadside poo balls.

Mon, 09/03/2012 - 15:04 | 2758278 TheFourthStooge-ing
TheFourthStooge-ing's picture

Defiant in his ignorance, AnAnonymous said:

Recycling can not make up for the depletion of resources.

A little example just above tells how.

Nope. Wrong again. Your little example fell flat on its face, right into the smelly piles that adorn the Chinese citizenism roadside.

Mon, 09/03/2012 - 16:14 | 2758511 AnAnonymous
AnAnonymous's picture

How does it fall flat?

The little answer to the question is still expected.

The only answer so far is that free markets, capitalism will provide.

If that means falling flat...

Mon, 09/03/2012 - 16:20 | 2758524 akak
akak's picture

Your every anti-American retarded diatribe (and it is informative that that is ALL that you ever post in this forum) falls as flat as do Chinese Citizenism turds on Chinese roadsides, whose sewage-strewn nature is eternal.

Mon, 09/03/2012 - 17:10 | 2758666 AnAnonymous
AnAnonymous's picture

Can an 'American' face the reality of 'Americanism'?

Mon, 09/03/2012 - 17:14 | 2758674 TheFourthStooge-ing
TheFourthStooge-ing's picture

Not when 'Americanism' is the admitted fantasy of paid propagandistic troll AnAnonymous.

But hey, lies, denial, and hypocritizenism are as AnAnonymous does.

Mon, 09/03/2012 - 17:19 | 2758688 AnAnonymous
AnAnonymous's picture

Admitted fantasy? How could that be?

The only admission that can be for 'Americanism' is to admission of existence.

Admitting that 'Americanism' does not exist wont change the fact that 'Americanism' does exist.

Mon, 09/03/2012 - 17:16 | 2758679 akak
akak's picture

Can a bigoted Chinese Citizenism troll face the reality of his owning glaring hypocrisy, his simplistic and repulsive bigotry, and his blind hatred for an entire nation of people?

Mon, 09/03/2012 - 17:21 | 2758692 AnAnonymous
AnAnonymous's picture

'Americans' are a nation of people? Woooo, not so fast. Indeed, 'Americans' would like to blob up to form one nation but it is not the case right now.

'Americans' are nations of people.

Mon, 09/03/2012 - 17:30 | 2758722 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous, opiated and flying high:

Woooo, not so fast. Indeed, 'Americans' would like to blob up to form one nation but it is not the case right now.

More Ben Franklinated time traveling flying rickshawism? Where have you flown to now to rewrite history again? Back to before 1776,July,4th? Don't forget to stop at Easter Island to poop on the side of their trails.

Mon, 09/03/2012 - 17:40 | 2758739 akak
akak's picture

Indeed, the consumptionizationizing of pre-contact Easter Island algebraic coconuts is high on the priority list of AnAnnoyingMouse in his quest to help his ChiCom masters blob-up every natural resource of that poor island (and eventually the world), only to then ex-post-facto blame it all on "US Citizenism".

Make me a giraffe!

Mon, 09/03/2012 - 17:32 | 2758725 akak
akak's picture

 

'Americans' are nations of people.

Welcome to the world of infinitely flexible sophistry, courtesy of AnAnnoyingMouse, where words and concepts are defined and re-defined on the fly as necessary to keep up with his campaign of bigotry and insanitation.

Mon, 09/03/2012 - 07:36 | 2757313 I am Jobe
I am Jobe's picture

Do you expect anything different in inbred USSA. Just askin?

Sun, 09/02/2012 - 22:54 | 2756988 Ahmeexnal
Ahmeexnal's picture

https://www.youtube.com/watch?v=e5L7GyZeazM

Sun, 09/02/2012 - 23:21 | 2757020 SteveGennisonBa...
SteveGennisonBallWasher's picture

nice worthless link, get a life and go away

Mon, 09/03/2012 - 00:20 | 2757081 Michael
Michael's picture

Remember this? This is my desktop image.

This is where the G in the Freemasonry Square & Compass symbol originated, and stands for Green Dragon Tavern Lodge where the Boston Tea Party was planned.

http://freemasonry.bcy.ca/history/1773_GreenDragonTavern_Boston.jpg

http://freemasonry.bcy.ca/history/boston_tea_party.html

 

Mon, 09/03/2012 - 01:06 | 2757107 Michael
Michael's picture

Top story on Huffington Post; http://i.imgur.com/sj4X7.jpg

U.S. Companies Conduct Fire Drills In Case Greece Exits Euro

http://www.huffingtonpost.com/

http://www.nytimes.com/2012/09/03/business/economy/us-companies-prepare-in-case-greece-exits-euro.html?_r=1

http://www.huffingtonpost.com/2012/09/02/us-companies-conduct-fire_n_1851159.html#comments

Mon, 09/03/2012 - 02:27 | 2757145 Michael
Michael's picture

Highly recommended, if you can bring yourself to watching it. You have to click the rest of the videos in this series.

North Korean film exposes Western propaganda - Part 1 of 10

http://www.youtube.com/watch?feature=player_embedded&v=Dw-p84oWW84# 

Mon, 09/03/2012 - 02:56 | 2757157 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

Michael, you post some good stuff. 

Re: North Korea - Check this out.

http://www.vice.com/the-vice-guide-to-travel/vice-guide-to-north-korea-1...

also check this one.

http://www.vice.com/the-vice-guide-to-travel/the-vice-guide-to-liberia-1

Propaganda, Spin..etc..all governments (and individuals) use it.

This also has some amazing candid raw satellite footage.

http://video.google.com/videoplay?docid=-7344181953466797353

Veritas Te Librum

 

Mon, 09/03/2012 - 03:22 | 2757161 Michael
Michael's picture

Thanks. Just taking people reading my comments by the scruff of the neck to try to wake them up.

PROPAGANDA | FULL ENGLISH VERSION (2012)

http://www.youtube.com/watch?v=6NMr2VrhmFI&feature=plcp

It's a shame!

Because we as USA Constitutional Americans abiding by it, could have paved a much better destiny for ourselves if we were allowed to do so, than the one prescribed for us by our owners.

Mon, 09/03/2012 - 03:38 | 2757177 AldousHuxley
AldousHuxley's picture

sheeple buy their own TV.

don't own a TV.

don't watch TV.

problem solved.

at least they are not forcing brainwashing by having you hang picture of sarah palin in your living room...

 

get a library card and get unlimited liberal arts education for FREE.

 

http://www.youtube.com/watch?v=YjzoqW58H44

 

too bad Rupert Murdoch sabatoged the release of film Idiocracy a cautionary tale about low-intelligence dysgenics, because the company did not want to offend its viewers.

Mon, 09/03/2012 - 04:35 | 2757215 Michael
Michael's picture

Note: Copy this text and spread it around before ZH handlers delete it.

It's sort of like the secret society secrets that are not. Israel has more like 300 nukes according to President Jimmy Carter, but 30 would do it. There are no secrets because of the internet, but those who believe there are would like you to believe so, so that they can think to themselves they have an edge on you.

PS
It's not countries starting shit, it's individual human people with superiority complexes.

PSS
I really don't give a shit about human interest stories and peoples personal problems. Go sell your pity party some place else, we're all stocked up here.
I should copyright this statement and sell it to a movie script writer.

I'm thankful the country of Israel was created. It forces the A-Jews to live amongst each other and try to get along with each other the way they are.

Yes we know the A-Jews now own almost everything and control the world, congratulations to them.
See also; Defamation http://www.youtube.com/watch?v=TOUlJLrQ3sQ

It's just a character flaw the Byzantine Empire had pegged.
"Jews" will become irrelevant, so I don't bother myself thinking about this flaw in humanity anymore. I just revel in the fact that they are over-represented on Wall Street and in the current financial structure, and most people working in the financial industry will be unemployed Jews as their monetary system comes crashing down on them. They should have diversified their skill set.

I'm laughing at the superior intelect.
http://i.imgur.com/sj4X7.jpg

The Dead Stream Media will no longer Prescribe their Version of Reality to the Sheeple Anymore!

Got That?

The Jewtub MSM TV and their twisted other media are going to tell you what to think about the Clint Eastwood speech, and not discuss any of the topics and actual words he used in that speech.
All the words in Clint Eastwood's speech were truth. Tell me which words and phrases were lies?
The Jewtube MSM TV and their minions just want more military industrial complex taxpayer money spending.

We call it Jewtube TV because there are all these Ashkenazi Jews on it because of nepotism.
I'm getting sick of looking at all those Ashkenazi Jews on MSM TV all day.

That's why I just thank The Creator every day for the complete and total worldwide economic collapse that is a 100% mathematical certainty. It's the only thing that will solve most of the USA's problems.

Mon, 09/03/2012 - 05:48 | 2757273 falak pema
falak pema's picture

that guy Ashkenazy played a good piano! 

Vladimir of Gorki park!

 Vladimir Ashkenazy - Wikipedia, the free encyclopedia

Would the world wide collapse destroy his  piano skills? 

I mean all things 100% certain have consequences which are 100% certain also. So tell me...

Mon, 09/03/2012 - 14:21 | 2758167 Michael
Michael's picture

No. You're only 2% of US and world population. And without your monetary system your done. Go play your piano up your ass.

Tue, 09/04/2012 - 05:44 | 2759557 falak pema
falak pema's picture

for the records I aint an A-jew, doesn't make me a piano player hater, whatever his origin. 

You only play one tune in your racist diatribe. Don't confuse politics, religion and race.

Mon, 09/03/2012 - 05:58 | 2757276 Ghordius
Ghordius's picture

Michael, I'm the last in the loop about proper "netiquette" - for example I find "straw men" engaging, but find that you utterly ignore any comment to your postings. It's a bad sign, IMHO. A mind can easily develop a kind of "fever" if it strays on this path.

Mon, 09/03/2012 - 08:56 | 2757403 Disenchanted
Disenchanted's picture

 

 

I don't know how much American "news" or political opinion TV you've been exposed to Ghordius, but IMO Michael is right on the money about US "Jewtube MSM TV." Many of them are 'well connected' too. For instance on MSNBC in the weekday afternoons you can watch Andrea Mitchell present opinions and 'news'. Mitchell sounds pretty Gentile and white bread doesn't it. Do you know who she is...and how her opinions might be slanted? Or how about Wolf Blitzer on CNN in the afternoon/evenings, do you know what one of his former gigs was?

 

I very rarely even bother turning it on anymore, as I know what I can expect to see/hear. Not only that it's very bad for my blood pressure.

Mon, 09/03/2012 - 14:15 | 2758147 Michael
Michael's picture

Ghordius, I usually don't respond to ad hominem attacks unless there is some subject matter in it I can respond or to a comment like yours that is intelligent.

And I do look for responses the next day to respond to like yours.

And the response are few and far between so I wait a while sometimes.

Tue, 09/04/2012 - 03:52 | 2759515 Ghordius
Ghordius's picture

+1 I usually ignore the ad-hom parts and count them as a "point" in my favour.

Mon, 09/03/2012 - 04:13 | 2757214 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

Have you ever seen this?

http://avalon.law.yale.edu/18th_century/bank-tj.asp

Let's have a look at this one too;

http://www.presidency.ucsb.edu/ws/index.php?pid=27108

 in the Constitution, it says

"The Privledge of the Writ of Habeus Corpus"

What other privledges (writs) do we have available?

What other immunities?

Do you know where they come from? 

If there are laws like gravity, are there also laws that govern interaction between men?

Read the grievances in the Declaration of Independence closely.

Especially the part about 'arbitrary government'.

You will find truth in strange places and it becomes self evident once you percieve it.

Watch this preacher all the way through. Don't let his corny jokes at the beginning put you off.

http://www.youtube.com/watch?v=szBTl3S24MY

Veritas Te Librum

 

Wed, 09/05/2012 - 05:14 | 2763659 sadmamapatriot
sadmamapatriot's picture

I enjoyed watching the video and was interested as I had never seen a formal presentation of creation science before. Did anyone else actually watch it? I do not normally see Christian evangelism on Zero Hedge. I expected you to get junked by the pagans here.

Mon, 09/03/2012 - 07:51 | 2757323 i-dog
i-dog's picture

 

This also has some amazing candid raw satellite footage.

http://video.google.com/videoplay?docid=-7344181953466797353

That was freaking excellent! Thanks for posting, Revert.

Mon, 09/03/2012 - 11:36 | 2757728 Mark Wilson
Mark Wilson's picture

Those vice guide to travel videos are pretty neat. Thanks for posting.

Mon, 09/03/2012 - 09:30 | 2757476 masterinchancery
masterinchancery's picture

You mean WHEN Greece exits the euro.

Mon, 09/03/2012 - 07:54 | 2757328 A82EBA
A82EBA's picture

very cool, thanks!

Sun, 09/02/2012 - 23:04 | 2756995 DoChenRollingBearing
DoChenRollingBearing's picture

@ euphoria

I see no news nor spike, up 8 cents (kitco.com, 11:02 PM ET).

Mon, 09/03/2012 - 05:41 | 2757271 mick_richfield
mick_richfield's picture

It's quiet.

.

.

.

Too quiet!

Sun, 09/02/2012 - 23:30 | 2757029 vast-dom
vast-dom's picture

clearly that chart was hatched well before little inconsequential unconventional thingymajingies like NIRP and QE...

BTW Indifference slope is genius! They forgot the T curve for Tears as in Unicorn Tears which at the intersection of I turn into pure monetary magic!

Mon, 09/03/2012 - 04:49 | 2757251 trebuchet
trebuchet's picture

with the Ben having clearly indicated a higher priority for unemployment, a quick look at some monetary policy-unemployment links/ideas:

 

F.A.Hayek: That so long as a state of general unemployment prevails, in the sense that unused resources of all kinds exist, monetary expansion can only be beneficial, few people will deny. But such a state of general unemployment is something rather exceptional, and it is by no means evident that a policy which will be beneficial in such a state will also always and necessarily be so in the kind of intermediate position in which an economic system finds itself most of the time, when significant unemployment is confined to certain industries, occupations or localities.

Blanchard (2003): while money is eventually neutral, and the Fisher hypothesis holds in the long run,

it takes a long time to get there. (This was indeed Milton Friedman's view). But if we accept the fact that monetary policy can a®ect the real interest rate for a decade and perhaps more, then, we must accept, as a matter of

logic, that it can a®ect activity, be it output or unemployment, for a roughly equal time

For those interested in where the "debate/central bank language" could be heading:  here is the link to Blanchards remarks http://economics.mit.edu/files/731

The two quick take-aways: 

1. avoiding long term structural unemployment is via monetary policy is linked to increasing capital accumulation/formation by lowering long term real interest rates. 

   -Earlier article on ZH about how the market is "punishing" companies with high capital/revenue ratios with low PEs suggest these might benefit  in the "Bad is good" world......   

2. no one (monetarists/neo keynesians) have a clear idea how to avoid the liquidity trap and we are still in a delveraging cycle. lots of talking heads saying how "real assets" such as gold will do well in such an environment

 

 

 

 

 

Sun, 09/02/2012 - 23:42 | 2757046 Michael
Michael's picture

That's just great. Time is no longer money. At least I get to waste all the time I want now.

Mon, 09/03/2012 - 08:07 | 2757346 IrritableBowels
IrritableBowels's picture

I thought you already did. ;)

Mon, 09/03/2012 - 00:59 | 2757104 Silver Bug
Silver Bug's picture

Who needs humans in the market when you have robots! /end sarcasm.

 

http://ericsprott.blogspot.ca/

Sun, 09/02/2012 - 22:43 | 2756981 vinayjha
vinayjha's picture

Keep low interest is not problem but when interest rises in 2014 will be huge problem. 

http://www.freefdawatchlist.com/2012/09/earning-watch-for-sept-4th-7th-b...

Sun, 09/02/2012 - 23:01 | 2756992 Squid Vicious
Squid Vicious's picture

this stuff is way too complicated, just don't fight the fed, the trend is your friend, listen to Bob Doll, Cramer and Gartman (if you can afford his insanely prescient daily newsletter...) there, fixed it ... investing is easy!!

Mon, 09/03/2012 - 03:09 | 2757167 bunnyswanson
bunnyswanson's picture

http://theintelhub.com/2012/09/02/audit-of-the-federal-reserve-reveals-16-trillion-in-secret-bailouts/

 

...the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

What was revealed in the audit was startling:

$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland.

From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

Sun, 09/02/2012 - 23:06 | 2756996 I am on to you
I am on to you's picture

Nullius in verba!!

Take that to the bank!

Sun, 09/02/2012 - 23:09 | 2757000 Sutton
Sutton's picture

Ben's policies will end in Holocaust(more goyim )this time.  I just don't want some respectful hearing where he stammers "No one  saw it coming."

 

Sun, 09/02/2012 - 23:10 | 2757001 singsing
singsing's picture

The zero interest rate indicates that time is free.

Not only time is free but it also renders your labor meaningless.  Your earnings now solely represent a vehicle for consumption.  Savings are no longer an option as financial institutions and central banks attach absolutely no value to the fruit of your labour.  You can not compete with the printer in chief.  Incentives are dead and only consumption remains.

Mon, 09/03/2012 - 00:09 | 2757049 BlackholeDivestment
BlackholeDivestment's picture

...singsing goes the Muppets

Ding Ding rings the dinner bell

the market whore is selling

the Beast she is ah riding 

 ...straight to hell. 

 

Oh, I know what corruption inspires. Really bad blues tunes. or comedy. 

Yeah man, I agree with yuh SingSing, Beary much. Lol. Them green shoots taste like bamboo Allah mode. Feels like labor pains when yer taking a dump at the bottom of the black hole ...labor dug trying to sustain a break even return at zero interest. Lol. http://bible.cc/john/9-4.htm Man it's dark out. 

http://www.youtube.com/watch?v=dzO08KFQbOc

Sun, 09/02/2012 - 23:18 | 2757011 SteveGennisonBa...
SteveGennisonBallWasher's picture

Neo, the matrix is real.  And you live in it. Bitchez.

Sun, 09/02/2012 - 23:51 | 2757058 q99x2
q99x2's picture

This is the funniest article I've read in a long time. Two thumbs up!

(Your ass)

It has good parts though.

Mon, 09/03/2012 - 00:27 | 2757079 dolph9
dolph9's picture

The real interest rate to pay attention to is the price of oil.

High oil prices are equivalent to high interest rates, acting as a break on economic activity - encouraging saving (hoarding dollars) as a means to pay for the oil, and discouraging lending, borrowing, and consuming (anything other than oil).  Low oil prices are equivalent to low interest rates.

Bernanke can't affect this partly because of his role (he's only a central banker) but he probably knows what's going on.  Regardless, the vast majority of the ruling classes in top economic and political circles in America have never had a real job in their lives, so even if the link is acknowledged, it would never be addressed.

The only way to overcome this is to encourage the stewardship of oil rather than the waste of it.  Sort of like "cash for clunkers" on steroids.  People need to be paid to walk around, stay local, and do some job that doesn't involve a 45 minute commute.

Oil consumption should also be taxed more heavily.  I know people here don't want to hear that.  But it's true.    Income and payroll taxes should be slashed and replaced with oil consumption taxes.

But, none of this will ever happen, because Americans are stupid creatures who think driving across the state or country to attend a meaningless college football game is fun and a good use of one's leisure time.  

So prepare for collapse.

Mon, 09/03/2012 - 02:01 | 2757133 jimmyjames
jimmyjames's picture

 Income and payroll taxes should be slashed and replaced with oil consumption taxes.

*************

So-shifting the tax from one area and moving it to another will supposedly accomplish something?

What-i wonder-

Mon, 09/03/2012 - 03:14 | 2757082 slewie the pi-rat
slewie the pi-rat's picture

blahblahblah

unless i missed something, this bullshit fails to note that this has all happened before (but vote for...)

remember last summer?  2011?  and the articles tyler put up explaining what was COMING after QEII? 

operationTwist! before it started, too!  (don't forget to vote for...)

i don't remember all the dates and prez's and tSecretaries and FED chairpersons, but i remember the articles:  this is coming:  the FED will sell short & buy long and the rates will go so low they will hafta reach up to tie their freaking shoes (don't forget!  vote for...)

and that is exactly what happened!  a year ago, too!  so thanks so much for the "news" about what it means; we covered that 3-4 semesters ago (but this is to remind you how AWFUL everything is, so vote for...)

and yup!  nobody knew how it might turn out this time (still don't rilly, so vote for...)

the checks would be in the mail but the economy still completely sucked, as did employment, btw;  which i think was why the FED went for it in the first place wasn't it tyler?  with the diminishing returns of LSAP, this was the next "arrow" in the FED quiver (but the FED us evil, so vote for...)

would it cause runaway inflation?  a "liquidity trap"?   a huge bear market without better "earnings""  would the "collapse of the EU bring down the US too"? careening deflation?  (and now that rPaul is as irrelevant [as always], we must...)

now, the checks are in the mail and the 'system is stable at least so far';  i don't know what will happen next, but i sure do hope zeroHedge stops the non-stop articles about how crazy this is (so vote for...)

we KNOW!  and we know how to make up our own minds so ask not for whom maBell polls, it polls for yew!

vote however ya wish, ok?  go for it!  individual decision-time!

no matter how many fuking times zH asks:  what is the FED doing?  the answer will still be:  it's job!  the one the politcally-elected TOLD it to do

under dodd/frank there can be no more ambiguity about this aspect, this particular answer:  this is what the politicians want, and NEED but the republicunts will never say the truth about how we got here, b/c they can't;  any styooopid lie is better than facing what is true about them;  and now we shall see if the democrappers are any better;  maybe a little or not, depending on one's perspective and willingness to suspend reality;  but why?  one party is as styooopid as the other and neither will shoot straight or they would all be in prison, probably

write 10,000 more crappy articles;  put them up here and pretend they are relevant;  mebbe to someone in an ivory tower, but they are not important for understanding the FED today;  the economy went ka-bloooie!  now we are doing this...  10,000 more explaining it is awful ain't gonna change it;  we still blew it the fuk up;  and now, we are doing this, still.  no, we wouldn't be doing it if we hadn't blown the economy ka-bloooie;  it would be too risky and "repressive";  but this is not as "repressive" as if the checks were not in the mail.  so there!

THAT"S the point!  and that's about the only point!  that alone "explains" pretty much everything, doesn't it?  and 10,000 more articles are not gonna INVALIDATE that point;  this is keeping the checks in the mail and if they weren't, that might give the republicunts a better chance on the "election".  but...  they ARE!

and no "party operatives" are gonna change that b/c as i've been trying to say:  it seems to me that it is a matter of national security at this point~~the stability; perhaps the top security minds have decided not to let "wall street" run america for a few months here;  aww....  poor wall street!  FUK wall street!  all together now:  FUK YOU wall street!  FUK you, you can't do it b/c we can stop you now!  Hahahaha!  tough shit you fuking asswipes! (try it, it is fun to say!  and vote for....)  L0L!!!

the wolves are in sheep's clothing, but they are still wolves, and they want to tear the sheep-pen down, but...  they can't!  and FUK you wall street BiCheZ!  you can eat shit!  just like last year MY ASS!  (L0L!!!  now, it is guaranteed to be WORSE!  but hey, i'm only a fringe vermin)

so accept it and move on?  sounds like a plan to me!  all these pols wanna be banksters now!  they don't wanna tell you and slewie what their plans are for legislation which will PASS and HELP the BUDGET;  they think propaganda will be better.  again

or is this just what the "rich" do when they feel a little election loss and a TAX coming at them?  jeeeez!  no articles about that...

if you wish to change horses in the middle of THIS stream, vote for mittens;

if you do not, vote for prez0

if you think this is a reason to change horses you are entitled to your opinion:  vote for mittens

personally, i'm not buying it

in case ya hadn't noticed...

but yes, as tyler himself has said:  mittens is the candidate of wall street

well!  isn't that special, huh?  Hahahaha!  FUK you, wall street!  Eat fuking shit! (try saying it!  and vote for... )

damn!  this is FUN!

Mon, 09/03/2012 - 22:49 | 2759289 ZeroSpread
ZeroSpread's picture

Slewie, you had a really great labor day it seems! 

Mon, 09/03/2012 - 00:27 | 2757086 honestann
honestann's picture

You want to see the economy boom?  Just have Bernanke make the following announcement:

We have held interest rates low for long enough.  As of January 1, 2014 interest rates will rise to 12%.

People (and corporations) would borrow with both hands, feet and anything else they could borrow with... and spend, spend, spend, invest, invest, invest.

At the moment, with zero interest rate being extended ever further, everyone can wait, wait, wait to borrow and spend... AND THEY WILL.

As usual, the morons have everything backasswards. 

Mon, 09/03/2012 - 00:41 | 2757092 TulsaTime
TulsaTime's picture

You said that right honestann, they got it ass backwards.  Total loss of focus in pursuit of the 'fix it' moment.  Last time it gave us the house bubble, this time the debt bubble.  There is no next time, because slagged economies don't have no stinkin borrowers.

Mon, 09/03/2012 - 04:46 | 2757163 slewie the pi-rat
slewie the pi-rat's picture

hey, h_ann!

yes, slewie questions this stuff being so "simple" and so clear, especially when you may be wrong about the "data"

also, a i question the validity of your statement that people and corporates aren't borrowing and spending;  true:> the peeps still seem to be "deleveraging" and you seem to think they should be going deeper into hock here, but i don't see why;  maybe if they could "get" 12% they would "borrow";  hard to tell from here.  impossible, really.  just not in the cards. no matter how many sermons we get about what "should" be, we still have what IS

however, corporations ARE borrowing and in record and near-record amounts too.  perhaps you should do some research of your "position", and also you, T_Time

please try to understand, ok?

lotta debt and mortgages (REIT financings) getting "rolled over" and the rates ore so low, "new money" is getting "borrowed into existence", too

i've written about it quite lengthily already and i won't repeat the whole PROOF here;  you may have missed it;  last week, however, borrowings were quite low (hurricane + R convention?);  i do watch things and i try not to give slewienomics a bad name here;  however, tyler recently put up a piece about more consumer debt;  probably back-to-school stuff;  but it WAS up;  of course it wasn't up the right amount, and in the right way, and so on and so forth and scooby fuking doo

economic "theory" is VERY divisive stuff isn't it?  economic REALity is just what's happening;  we should be all seeing the same thing here, or very close.   the system appears to be somewhat stable, especially compared to not too long ago

and the checks are in the mail

and you and i and T_Time haven't got a bit ofJuice in saying what happens with anything except ourselves, do we?  i'm over 65 years old and i've never set interest rates and never will;  nor have i ever fantasized about it

we can try to understand what the FED is doing;  and act individually;  i hope people here don't continue being ignorant of what the FED IS trying to do and DOing b/c they are being "schooled in economics" so they want to tell the centralBanksters what to do, how, and when, too!  why?  the FED already has set its course

why doesn't mittens just say:  if you elect me i PROMISE to raise the interest rates to 12% by 1.1.14.  he could sign a PLEDGE.  in blood!  and SWEAR that it would make the economy BOOM too!

so then, everything would be perfect again!   maybe annCoulter would come out and play too...

you mean the PRIME rate, right?  or some other rate?  libor maybe?  11thDistrictCoF?   pittsburgh-plus?  the assumed rate on 6-month petrodollars?  certainly not credit card debt, or we'd already be there.  15-year jumbo rate?  10-year note?  1 year bill?  30-year bond?  car loan from GM?  corporate bonds?  junk bonds?  AgCredit?  commercialPaper?  money-market funds?  savings accounts?  but if have bad credit?  maybe ZIRP for them?  anything for moDebt b/c that means BOOM! 

too bad rPaul didn't think of this!  what a moron!

will prez0 read this and know what to do to make BOOM?

what IS the matter with these boyz?

see ya!

Tue, 09/04/2012 - 20:33 | 2762737 honestann
honestann's picture

You misunderstand!  I absolutely HATE debt.  I'd much prefer a world in which debt does not exist, and certainly at least no fractional-reserve based debt.  I was not advocating what I stated, I was pointing out that if the fed wants people and corporations to borrow and spend (to supposedly get the economy going), saying "this is your LAST chance at cheap money" would bring everyone willing to borrow out of the woodwork and get them to borrow and spend.

That is NOT the kind of world I advocate.  I've never borrowed a penny, never will, and advise others not to borrow either.  And interest rates should be whatever each pair of individuals agree upon privately when one lends [his physical gold] to another.

Sorry I wasn't clear.  You totally misunderstood the thrust of my point.  I was saying ON THEIR OWN TERMS they're actions have the opposite effect they claim to want.

Of course the TRUTH is, the federal reserve MUST hold interest rates near zero until the dollar vaporizes in a flash of hyperinflation.  They CANNOT raise the interest rate because the federal government is so close to the point where the entire scam becomes impossible (as the portion of tax revenue consumed by debt-payments increases).  So the TRUTH is, ZIRP will last exactly as long as the dollar lasts... because it must.

PS:  I don't mean they'll never raise the rate by 0.25% or so, I mean they'll never raise it significantly.

Mon, 09/03/2012 - 04:52 | 2757232 Haager
Haager's picture

Besides the idea that lending money to gain a profit doesn't fit a christian or muslim believe, I think you are partly right. But: an announcement to increase the rate that high and that early won't have the desired effect. Mortgages anyone? People won't lend money, they will save the hell out of any cent to prevent a desaster on January 2014 or earlier. And companies, as far as I remember, also usually don't think in the short-term when they consider investments and lendings, so their first "investments" will be to close any open positions.

It would work to say: Interest rates will be low as long as the growth rate doesn't reach a given nominal gdp growth target. That would imply growth to increase before lenders can think of an increased interest rate, and it would give people and companies some comfort to plan accordingly. However, it is an absulute necessarity to provide clean numbers, not that fake-numbers we actually get.

Mon, 09/03/2012 - 05:24 | 2757265 slewie the pi-rat
slewie the pi-rat's picture

just relax and let the FED be the FED for a few months without freaking out 20 X per week because everything is just AWFUL,  ain't it?  maybe the system is stabilizing and maybe things are slowly coming around

it seems strange to me that this idea is never considered on zH except by one person.  just chill.  let the FED be the FED

maybe the FED isn't doing quite as poorly as everyone else seems to think

un-possible?  not to slewie, but i'm wrong all the time

but im not wrong that i'm not in charge of FED policy no matter how "clean" you consider the "numbers" to be

maybe they'll try whatever the pols think they should?  isn't that what is already happening?  why should it change?

the details may change, but the FED acting under the political direction of the Congress under dodd/frank will not change

the congress wants systemic stability and low-cost Treasury funding;  they talk to the FED regularly and vote for legislation and budgets;  not 'good' ones to some people but the ACTUAL ones no matter who ya are!

so if you want to help and think you have a good idea, just cut out the comment and send it to your congressperson and then follow up, too

did they like your idea?  will they work to get it accepted in DC?  why not? 

or write to your Regional FED like Rep. Issa did.  he got an answer

tell them what is absoltely necessary and if they have heard from h_ann and T_Time, that those people are mistaken and your rates (whatever they are) would be better for mortgages

of course

Mon, 09/03/2012 - 06:27 | 2757279 Ghordius
Ghordius's picture

slewie, jackpot! I've got my hands full in venting my incomprehension of how some european details are understood here, but yes,

- the FED lives under sufferance of Congress

- there is no central bank that is completely independent from it's country

- the FED sets the pace for the whole world, thanks to the reserve status

- what Congress really wants, the FED has to deliver - or at least try

- once ZIRP was engaged, the last real palliative / leeway room was spent. now it's recover or bust - and no-one can really predict with 100% surety if this won't just mean a long period of medium to high inflation instead of a spectacular Hollywoodian "reset" of some kind

meanwhile I'm stacking because this is the form of saving that looks best, IMHO

Mon, 09/03/2012 - 07:57 | 2757335 slewie the pi-rat
slewie the pi-rat's picture

keep stacking comrade BiCh!

and thnz

i don't think the EU is quite as doomed as people are led to believe, either :> if it cost 500Bil to "fix" it but the costs are 3Tril to "break" it, they will kick the can

they will do this 20X and it will still make sense, each time

this is what is meant by DISJOINTED incrementalism = muddling thru, ghord_0 and where so much disagreement and misunderstanding come in as on zH and trying to understand together

the short-term and the longer-term solutions are not "completely" compatible we can see with certainty, i would hope, just from our experiences together here

that is what the "problem" we are freaking out is about, imo

but we must buy some time short-term and it looks like a real pisser if the "system" slows down too

but it is still "accounting" and maybe it is the best thing to have a real shit-fest hit the fan-fest with all this can-kicking hoping to buy time and things get worse while we do it

of course if you are greek, the 'accounting' is a bit more painful than if you are US or FR;  spain might see this differently from germany, at least so far

and people are (so far) accepting this on both sides of the pond;  it is somewhat bullish b/c the system isn't completely self-destructing is what i've been seeing [and saying, too]

tyler can't believe it!  bad news isn't bad enough to kill the little buzz of still being alive and eating and having a beer;  rather than getting eaten by a bear!  the schroedingerKatnip-eater says both!  NOW! 

we need to keep the checks in the mail but we are completely doomed for doing it!

doomed if ya do;  doomed if ya don't!  and keep the chains!  L0L!!!

Mon, 09/03/2012 - 08:42 | 2757373 falak pema
falak pema's picture

Ghordius, on a past thread I mentioned that one of the  original sins of the ECB/Euro construct was that it had been conceived as a monetary entity to regulate interest rates/MS/Inflation in 12 going to 17 nations, without having access to ensuring cohesion of individual nation fiscal and budgetary harmonisation. Thus the construct was on an uneven keel from day 1. You disagreed on this point.

But here you recognise that the FED cannot define its monetary interest/MS policy in a vacuum as it is subservient to those who vote federal fiscal policy of USA. Thus TPTB in USA can ensure that fiscal and monetary policies stay in step, IF THEY WANTED TO...

Not so even today in Euro zone. Care to comment on that?

That is what this 13th hour jaw boning is all about in Eurozone, now that the horse has bolted from the barn! 

Eurobonds! 999! Not until we haff fiscal union. Jamais, comment ça? We are nation states...blah, blah blah! 

Tower of Babel and Brussels sprouts! 

Tue, 09/04/2012 - 03:45 | 2759512 Ghordius
Ghordius's picture

I disagreed on that point because my take is that the size of a CurrencyZone is important. The DollarZone is so huge that when Bernanke sets the rates to ultralow, you have a different, stronger impact on the whole world as when a the small YenZone does it. It forces all the others further down. Particularly thanks to the "hot money" effect that our Asian Tigers know so well.

The construct is not "faulty" per se. This kind of phenomenon would happen in a gold environment, too, where Fiscal Policy would be On It's Own from day one (the short argument).

The question is more: can it withstand a currency war?

---------

P.S.: watch how the "Banking Union" discussion will unfold! There we have another conflict between the City of London and Frankfurt.

Mon, 09/03/2012 - 08:47 | 2757389 AnAnonymous
AnAnonymous's picture

People (and corporations) would borrow with both hands, feet and anything else they could borrow with... and spend, spend, spend, invest, invest, invest.

________________________

Woooo... If true, it would mean that 'Americans' have reached the point they must try to stop themselves from consuming.

Meaning that the situation is much worse than expected...

Mon, 09/03/2012 - 02:13 | 2757089 boiltherich
boiltherich's picture

Interest is the "rent" or price we charge for others to use our money, always with a contract that the interest is paid and the principal returned. Interest is also the rent/price we pay to lenders who extend credit to us for whatever we plan to use that loan for, always with a contract that we repay both the principal and interest.

If you drop the rent on our money to zero or less than zero where we in effect hand over our life savings and pay the borrower a net sum for taking it then what does common sense tell you will be the reaction? This is akin to me owning 10 houses or a 100 unit apartment complex and paying people to come sign a lease, as long as they live there not only do they not pay me but I pay them. That is NIRP. And ZIRP is always NIRP because ZIRP is only ZIRP when they properly measure and report inflation.

The simple reaction is "I have to find a better investment for my money." It is so simple nobody believes it. If one cannot for whatever reason find a better return on the money they will do the next best thing, spend it. Because what is the point of working 2,200 or more hours per year and taking risks to invest when you know every second the clock ticks by you lose some of that to nameless and faceless government or corporate bureaucrats who administer the theft of your money on behalf of the 1%? I honestly believe that is what really drove the housing/consumer bubble of the late 1990's and especially the BushCo years.

If you and Benny B, or Adam Smith, or Mittens, want to discuss aggregate motives (invisible hands) for saving, investing, or borrowing to increase productive capacity in which one can earn a living for yourself and others then you have to understand that in a no win situation where you are equally screwed no matter which fork in the road you take, then some, or many people are going to go off across country on a hedonistic safari looking for life rather than security.

All investment, be it your cash, your work, your kids and family, everything one does in life is a risk:reward proposition. No reward = no risk. That is why the lottery works, very large possible rewards albeit with very small odds of winning, but at almost no risk. I will bet a buck that I win hundreds of millions of dollars,. With the value of a buck near zero the risk is near zero, but the possible returns no matter the odds are tremendous, more than hundreds of people combined can earn from work in their whole lives, and if the odds are a tad steep at 175,223,510 to one they are still better than achieving that same income via honest work. Many times better in fact no matter your IQ or ethics. In fact if you are guy you have a better chance of having been born with a 14" penis as thick as my arm than to become "rich" via labors and education and ethics. Of the billions of people on the planet a few have done it. Some will inherit advantages and tell you that they leveraged that into billions through hard work and brains, but only if they are running campaigns for the Oval Office.

Mon, 09/03/2012 - 02:29 | 2757147 Dr. Sandi
Dr. Sandi's picture

I have already quit. But the system keeps grinding on, somehow, without me.

Mon, 09/03/2012 - 03:06 | 2757165 AnAnonymous
AnAnonymous's picture

If you drop the rent on our money to zero or less than zero where we in effect hand over our life savings and pay the borrower a net sum for taking it then what does common sense tell you will be the reaction?

________________________________

Made me laugh. Ah, 'Americans', everything is good to obscurate their ways.

The proposition of renting money (or even resources) is better in 'American' economics because it leads to more consumption.

It is funny how 'Americans' are so easily oblivious of their own words. That money is debt.

A proposition of renting resources is more likely to decide the renter if it comes with an interest on it.

Instead of offering to pay back what is loaned, the offering is to pay back what is loaned plus some extra.

For each ten units of resources that are borrowed, the repayment will come as ten units plus one unit more.

So the renter is destined to receive eleven units instead of ten. Infinite growth.

So consumption is made much more easier as people with resources are disarmed in many ways: they have to sell because the deal is a good deal.
One should consider: with the 'American' deal, one yields resources for the sake of getting the interest paid on them. One starts with ten units and finish with 11. The one is the enabler of the deal. Instead of starting with ten and finishing with ten.
Once again, hidden below, the 'American' meme of infinite growth: the more you consume, the more you will get to consume in the future.

It spurs consumption.

And this is what 'Americans' want: to consume the most the fastest possible. So a promise of repayment with an interest works best.

Indeed, 'Americans' are so used to paying only the interest on the debt that they no longer factor in the principal.

As a consequence, it also probably blurs the concept of risk.

Risk is balancing between uncertainty and stake.

Once recalled, it dismisses the gibberish...

Mon, 09/03/2012 - 02:45 | 2757151 AnAnonymous
AnAnonymous's picture

'Americans' are so used to servicing the debt only that paying back the principal is moved out of their thoughtful 'American' considerations.

It is now only about interest, no longer about interest plus principal.

'American' economics have made the principal disappear.

'American' Keynes to introduce the idea of zero interest rate? Maybe to people who forgot about the principal.

Time is free with zero interest rate? Woooo... yeah, for 'Americans' who are so into rolling up debts and only servicing.

For other people, it is still worth the principal.

Mon, 09/03/2012 - 03:58 | 2757191 slewie the pi-rat
slewie the pi-rat's picture

have you ever heard of a callable loan?  if it doesn't get called, it rolls

your points are not in-valid, A2, they are irrelevant

just take care of yer own debt, ok?  borrow and lend at whatever rate you want, who cares?  amortize the principal or not.  big fuking deal?

yes, we "shoulda" not blown the world economy up.  but we did!  maybe you helped, i dunno.  slewie probably did.  not sure how tho.  making a small living and using cash?  not rolling houses, not playing leveraged market games.  not me.  it didn't fit my short-term or long-term plans.  which i'm not sure i have.  i'm just thankful to have a bike that works at this point

what are yours, A2?  your plans, for your "economic life"?  stop exporting?  stop investing?  cash?  which fiat?  horses?  pigs?  fix cars?  rent shoes in the bowling alley?  sell newspapers in the morning and hot dogs for lunch?  ice in the summer and coal in the winter?  dabble in risky bonds and swaps to defend them?  options?  AAPL?  you prob'ly own 20,000 shares of APPL and just do this for exercise, doncha?  you must have better abs than tyler!

we should m2m and pay our debts and not bail out criminals and annuitize everything at 8.25% say our prayers every night too...  and eat better and not smoke and maybe stop beating our wives and girlfrieds pretty soon, too;  or our husbands and boyfriends;  stop gambling, whoring, lying, stealing, borrowing money for education, and driving our corvettes sideways unto death shit-faced, too

and noMo granite countertops!  see!  even you don't understand the utter depravity of true american nanny decadence;  oak toilet seats are so passe'

we are worthless, hopeless and clueless.  we thrive on guilt!  the worse we fuk up a life like yours, the better we feel about ourselves!  and as i've said before:  fuk you if ya don't like it, BiCh!  L0L!!!

Mon, 09/03/2012 - 08:53 | 2757402 AnAnonymous
AnAnonymous's picture

just take care of yer own debt, ok? borrow and lend at whatever rate you want, who cares? amortize the principal or not. big fuking deal?

______________________

This an 'American' world. Nobody has this luxury.

The world is global and 'Americans' have saturated the world with their debt.

It means that all the resources in the world are going to be sucked in in order to try to sustain the 'American' scheme.

Minding your own business is no longer an option because 'Americans' have poured so much of their 'American' shit around the world, everyone is swimming into 'American' shit, no matter their own shit...

Mon, 09/03/2012 - 16:31 | 2758554 Intoxicologist
Intoxicologist's picture

Awwww, sounds like someone had a big shit sandwich to eat today. 

Mon, 09/03/2012 - 16:51 | 2758613 akak
akak's picture

And left an even bigger one on the ZeroHedge roadside ...

Mon, 09/03/2012 - 03:10 | 2757169 AnAnonymous
AnAnonymous's picture

Now, one can easily understand why 'Americans' would want a story on the interest rate: it would decrease consumption.

High rates of consumption are very nice when you consume others'resources, they warrant 'Americans' will consume more of the resources than the others.

But when the balance is about to be tipped, it also means that others are now in a position to consume more of 'American' resources.

'American' morality is the simplest possible: when 'Americans' do something that is good to themselves, then that something is good for all humanity.
When others do something that is bad to 'Americans' then that something is bad for all humanity.

Mon, 09/03/2012 - 04:16 | 2757235 slewie the pi-rat
slewie the pi-rat's picture

some americans may not have wanted this 'story', A2!

now STFU and roll a doob or something!  sheeeesh!

Mon, 09/03/2012 - 08:50 | 2757393 AnAnonymous
AnAnonymous's picture

'Americans' did not want 'Americanism'... djeee, never thought of applying for a punter career?

Mon, 09/03/2012 - 04:29 | 2757240 valuecreator888
valuecreator888's picture

newsflash:   WE Are All Americans Now.

Mon, 09/03/2012 - 06:11 | 2757277 falak pema
falak pema's picture

I find this demonstration confusing. Just goes to show my knowledge of economic theory is very limited.

In the real investment world, when the interest rates were high they normally HAMPERED investment in capital projects; as the IRR of the project had to match the "money in the bank interest rate" and beat it on a risk vs return basis. That was classical economic thinking on corporate investment.

So all projects we planned in the corporate world of THOSE days had to have a discounted cash flow better than putting corporate/shareholder money in the bank. This "I" graphic says the contrary, whence my confusion! 

As for the S curve and money lending increasing as "rentier" income increases with low interest rates, thanks to higher corporate profit margins, they should normally feed the corporate investment pump in my logic and NOT sit in low interest bank accounts.

Our funny money fiat FED pump seems to have put the corporate world upside down on its head and this graphic tries to theorise madness into real logic.

Inductive logic based on a bad premise is nonsense. Hercule Poirot taught us that. Go back to deduction, like Sherlock! 

Mon, 09/03/2012 - 14:45 | 2758228 monad
monad's picture

Thats Amerika©, a subsidiary of the Norman Church, Inc. 

Mon, 09/03/2012 - 05:18 | 2757262 tok1
tok1's picture

when you have the head of the FED claiming he created 2 mill jobs (after 8 mill were lost due to him leaving rates too low for too long)  and a president who thinks that he as well is the main creator of the economy (his roads and bridges) you know your on the wrong path.. Get rid of Obama and Bernanake..  In the end you get what you need.. Romney's a spealist in restructuring.. If he replaces Bernanke. with a more practial operator . and has a real crack at resturcturing the banks US can be back on track in 1-2years.. The key maybe the zombi.. undercapatilized banks need to go (ie shares wiped out deposits/loans seperated) and new entity established. Until this happens growth will be slow. Romney prob has the know how to do it Obama / Bernanke are life time buracrates they have no ideas just play the system

 

Mon, 09/03/2012 - 06:57 | 2757282 slewie the pi-rat
slewie the pi-rat's picture

well then vote for mittens if you think "he" will just replace the FED chair with a better one and fix the banking system, via "resrtructuring" and everything gets better must faster under more neoCon "business"-oriented rather than just "bureaucracy" -oriented

can you give us a bit more about the bank "restructuring" plan you and mittens envision together?  FDIC isn't doing a good enuf job, apparently...  can you point out, specifically, where you think they woulda done better with mittens in power?

you must be very pleased with  how well he did for his one term in massachusetts.   why didn't he seek re-election there in 2006?  looks to slewie like he wasn't gonna win in a million years after thePeople got to know him;  he didn't run b/c he could not win a second term, imo

2008 he lost to mcCain;  now he's ready to run the country.  he's on the ballot;  rPaul is gonna retire as planned

i wondered who you were:  8 months; 2 pages of posts

here you are on the FED (8.09)

The FED wants everyone to pile into bonds.. QE is about making sure the Govt can fund the huge issunce and low levels.. why do people keep pretending its about risk assets.. They just follow cause the rates push people to alternatives. The Fed will stop buying when the defict is balanced and issuance is reduced so supply demand is more in line..  Thats the focus the rest is noise..

and on picking Ryan (8.11) [i just punched up two randomly]

Romney's choice shows why he is clearly better manager than
Obama . Obama chose Biden not because he brought any policy
knowledge to the table but to sure up the white male vote .

Romney chose Ryan because the deficit is the most dangerous
issue the US faces and Ryan is the Repblican expert
on budget reform .ie he could have chosen a less qualified
Mexican / African american or other minority but he went
with the best person for the job so it's positive sign .

There a chance Romney hs the business skill to put
the right people in place to end the spend / print cycle
that had failed .

If Obama is elected the US will be in trouble he is a populist
with no idea's but offering free gifts that never arrive .

again, you vote for whom you choose;  i applaud any choice YOU care to make for yourself and if you like him, keep telling us why like this, too

are you sure the failure was in the spend/print cycle?  do you have a link?  i've never heard of that one before

it is interesting that 4 years after 2008 and thousands of pages of new banking legislation and re-design of both the regulatory and "restructuring" laws that rather than give prez0 a few more years to see how this legislation might play out---the path that we are already going down, together, btw, you seem to want to just throw mittens in, let HIM address this stuff b/c he has "experience" and THEN in another few years things will get better;  not by continuing with what we ARE doing now! 

must change horses here and not allow the dems to move forward for another 4-year cycle b/c you can't imagine things stabilizing further and improving economically without mittens taking over right soon

kinda strange to me...  why the hell couldn't he beat mcCain two years ago?  too close to his term in Mass?  he sure cleaned up when mcCain lost tho!  by the time this election cycle started, it was already "in the bag" for mittens, wasn't it?  he, son of a maichigan goobernator, had the party machine under his control before the primaries started, didn't he?  this was no contest at all!  just show up and win!

even so, he seems quite underwhelming, but at least he hasn't peaked too early!  maybe if you keep up the good work, you can convince other to vorte for mittens and win

my first comment, i thought this was a partisan political piece masquerading as "FED information" b/c , well things just are NOT right, are they?

no matter if we disagree about the politics or candidates, it  seems we agree about the purpose of putting this article up on zH...

...(so don't forget to vote for... ) 

you can see where people didn't LIKE that i wrote that.  did you junk me for saying the truth and then goto the:  'vote for',  too? 

i hope so!  i'd hate to be wrong about you!

Mon, 09/03/2012 - 06:53 | 2757288 Ricky Bobby
Ricky Bobby's picture

An earlier comment calling out Anonymous' handlers for not providing intelligent troll services proves that the Chinese can still learn a lot about propaganda. Look how sophisticated the trolls of the RNC are, pretty good try tok1. I loathe the democrats but have a special heartfelt revulsion for the RNC and their Chipped Tabula Rasa. Hey RNC – Fuck You!

Mon, 09/03/2012 - 12:11 | 2757821 AnAnonymous
AnAnonymous's picture

In terms of propaganda and fantasy, everyone has to learn from 'Americans'.

They are masters at it and their failure to innovate and therefore to renew the strength of propaganda might indicate that propaganda has reached its end.

People believing 'American' propaganda no longer believe it because it is credible propaganda but because they have an interest into believing it.

The lie is no longer credible but 'Americans' have to claim believing it as they derive their welfare from the lie.

Mon, 09/03/2012 - 07:12 | 2757301 saycheeeese
saycheeeese's picture

Not to sure about the arguments presented since you have countries which have enjoyed very low interest rates already for many years (before the crisis). The use of money has some strong roots in the culture of the people which differs from one country tonthe others. In some... People have a traditional will to save more, save to spend later and others... Spend and then save, some investing is like gambling etc.. So... The use of money is a big human laboratory with different outcome.
NOW.... The crisis has brought a different perception about money to many people around the world and in my view it is the first time in our modern history of finance that people from different cultural background are questionning the essence of money since a breach of trust has happend since a minority is being favoured by the present policiies. Where will this lead us?

Mon, 09/03/2012 - 07:35 | 2757312 dcb
dcb's picture

there is no unemployment in an income satisfaction cureve and everyone has the ability to work to their desured income. It's so falwed I laughed at my professors in economics. but, we have unemploye3mnt, and decreasing incomes. it may be a wy to force labor into serfdom, but it's a really stupd concept.

Mon, 09/03/2012 - 07:37 | 2757314 eddiebe
eddiebe's picture

Slewie, it's hard for me to believe that you think it matters who becomes president as in Rep. vs. Dem. Do you really?

Mon, 09/03/2012 - 07:53 | 2757330 Sandmann
Sandmann's picture

Take your pick  - Harvard Law School vs. Harvard Business School - says it all really

Mon, 09/03/2012 - 07:53 | 2757327 Sandmann
Sandmann's picture

It is simply a Price Control on Rates of Time Preference. It is an extension of the LIBOR-RIGGING designed to shift economic resources to favoured activities by distorting the pricing of intertemporal allocation. If the Marxist sees the social superstructure as being built upon an economic substructure, it is clear that the LBO Class is now in full control of the society and is turning the population into Forced Limited Partners bearing all losses and watching the General Partners walk off with any gains.

It is Modern Feudalism and it has its High Priests in the form of Banker-Economists and its Functionaries in the form of Politician-Bagmen. It is just remarkable that the Serfs have not recognised the Expropriation of Wealth and Democratic Accountability and considered how much of a bloodbath will be unleashed when the system needs thorough purging.

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