Guest Post: Snake Oil Economics

Tyler Durden's picture

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mynhair's picture

Ok, nice.  Now let's vote on the Steaming Pile.

Don't forget your EURUSD purchase.

snowball777's picture

the frozen snapshot of reality provided by the earnings report of a vast, complex conglomerate, whose many, diverse, far-flung departments file incomplete reports, each compiled with differing degrees of diligence and rigour, and whose none-too scrupulous CFO has the ability greatly to recast the raw numbers within the wide latitude accorded him by the regulatory regime under which he operates.

So the GDP is akin to forward-looking statements from any business in the FIRE sector?

DormRoom's picture

As far as I know, Keynes, advocated fiscal stimulus, and not monetary stimulus,  to support Aggregate Demand.  Moreover, there was global fiscal stimulus packages 2 years ago.  And it usually takes 16-18 month for fiscal stimulus to make its way throughout the economy, which coincides nicely with the bull run, and the end of the bull run. Now that the global fiscal stimulus is depleted we are witnessing the global economy stalling.


So your analysis suffers because it assumes monetary stimulus to have the same effectiveness as fiscal stimulus, which Keynes himself, never argues.




Baptiste Say's picture

Maybe you should actually read or learn about Keynes (i.e. the truth, not the romanticised crap your college professors teach you about him) before you claim to now what he advocated.


If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.


The above is straight from Keynes' 'General Theory' chapter 10 section vi. Keynes did advocate monetary stimulus,


Then again as Murray Rothbard explains below, Keynes wasn't exactly known for principle or courage but rather for adapting his views to be palatable to the power elite of the time so perhaps at other times he denounced monetary stimulus:

Maynard Keynes's approach in economics was not unlike his attitude in philosophy and life in general. "I am afraid of 'principle,'" he told a Parliamentary committee in 1930 (Moggridge 1969: p. 90). Principles would only restrict his ability to seize the opportunity of the moment and would hamper his will to power. Hence, he was eager to desert his earlier beliefs and change his mind on a dime, depending on the situation.


snowball777's picture

You're apparently much better at copying and pasting than you are at basic reading comprehension.

Yen Cross's picture

Snowball +1  )  how about  ) Meticulous thought?  I love your Brain..   Yensky on Parabolics!

gwiss's picture

You're a knob.  You're missing his whole point, one would suspect on purpose.  You attempt to steer the topic back to the specifics of the labels written on your imaginary dials because you desperately need to hold on to your imaginary reality, which is that the economy is some machine that we created that we can steer.




You don't steer ecologies.  You leave them the fuck alone.  The more you fuck with them, the more screwed up they get.  And right now, ours is more screwed up than a soup sandwich.  And it's screwed up precisely because we have invented this psuedoscientific, scientistic personification of the economy in which we take an incredibly complicated, intricate, convoluted and complex system full of independently variable feedback loops and try to paste a simplistic one dimensional outcome measure over the top of it and then lean back and smile with satisfaction, thinking that we are steering the bitch while we are actually only measuring our own interference with the system.  No one is steering the Goddamn economy.  Hurry up and get your dumb monkey brain around that concept so that you can finally realize that you need to quit fucking the system up for the rest of us.

DormRoom's picture

As far as I know, Keynes, advocated fiscal stimulus, and not monetary stimulus,  to support Aggregate Demand.  Moreover, there was global fiscal stimulus packages 2 years ago.  And it usually takes 16-18 month for fiscal stimulus to make its way throughout the economy, which coincides nicely with the bull run, and the end of the bull run. Now that the global fiscal stimulus is depleted we are witnessing the global economy stalling.


So your analysis suffers because it assumes monetary stimulus to have the same effectiveness as fiscal stimulus, which Keynes himself, never argues.




ZackLo's picture

In the current environment today isn't fiscal stimulus the same as monetary stimulus? Because it's apparent that the government borrows the stimulus still pillaging the future fanning the flames of the fractional reserve oven (inflation) that we live in...Now if we were under a gold standard, no fractional reserve banking and the Government Could be trusted to save in good times and spend in weathered times keynes might get someones ear in this day and age....But I see nothing of the sort....So pick up henry hazzlitt's failure of the new economics...It's free on the website with the link in the left corner....You will understand how much of a contradictory piece of clap trap the general theory was if you read it....he picks it apart LINE BY LINE...investment does not equal have to have savings before you can invest in a real know not where everyone deposits there money into the banker fraud pool....

mynhair's picture

Dims need to cough up 10 votes.

Hedgetard55's picture

I find it astonishing and quite revealing that the Dems and the lamestream media would demonize the Tea Party by calling them terrorists, led by Uncle Joe Stalin, I mean Biden. It's the first step towards rounding them up and jailing them for having different ideas/solutions, i.e. police state tactics.

Dr. Engali's picture

The true terrorists are our "elected/selected" officials.

BigJim's picture

It's hyperbolic and inflammatory, but ultimately dilutes the meaning of 'terrorist', which is a good thing, because at the moment, people think there's a big difference between 'terrorists' and elected governments.

gwar5's picture



The debt ceiling in 2006 was $8.2 Trillion. We're now doubling it to >$16.4 Trillion in just 5 years.

If government spending creates jobs, where are they?  Romer's Keynesian multiplier effect doesn't work anymore because it is overwhelmed by massive debt. She's gone. The debt is still here. We was robbed.

mynhair's picture

Got EURUSD G?  Is now the best of the worst.

TSA Thug's picture

So many unqualified thoughts about MAX(debt) on the hedge.

We have plenty of room for adding additional debt to the paradigm. PLENTY!

Your debt-2-GDP fatal fantasies will limit YOUR success and no one else. Keep that in mind.

TSA Thug's picture

Reply without substance. Your style is not unique but we are friends, no?

The Cash Flow is King's picture

Such an interesting time as an investor when it could be argued that never before has there been such uncertainty in the marketplace as goverment intervention has played such a unquanitfiable roll in the S&P 500 and in real estate.  Compound this with the uncertainty of when the market is going to accept that this type of fiscal stimulus does not have a positive effect on the broad economy.  It seems as if the US is going to enter a 10 year period of deleverage and because of the dramatic increase in the monetary supply, eventually stagflation will take a toll on the middle class. 

mynhair's picture




zorba THE GREEK's picture

I believe the growing number of businesses reporting planned lay-offs, now totaling over 45,000, is

a far better indicator of the economy than some backward looking indicator like the GDP or the retail sales

figure for last month. It doesn't take an economist to see how upcoming massive state and municipal

lay-offs, due to budget shortages, is going to negatively affect the economy.  I don't need to refer to a

graph or chart to see a down trend in business activity when all around me are empty stores and

warehouses. By now everyone should know that numbers coming out of Washington have been tweaked

and twisted to reflect a more positive image on the current administration. 


problemfixr's picture

The grammar on this piece was killing me.  I couldn’t even continue reading it.  What a bummer…

BigJim's picture

The grammar's fine. He's a little wordy for some people, though.

Cdad's picture

Moreover, the most highly paid, highly vocal SELL side pundits who have been indoctrinated to rely on such a methodologically-suspect, empirically-unreliable aggregate of aggregates to help guide investment decision-making (oh, alright then: to generate commissions for their employers) are now scrambling pitifully to explain why they were wrong (yet again) 



Mr. Corrigan,

Please, tell us how you really feel about criminal syndicate Wall Street analysts.  LOL!

Over at the BlowHorn [CNBC], nary a criminal syndicate Wall Street banker ever thinks he is wrong...even as the stock he just recommended the previous day, and based on some loosely sewn together tatters of thought, plunges after reporting "unexpected" things.  Instead, he simply moves on to his next bit of gathering notions as if the world was still waiting with baited breath.

I give the example of John Najarian, an options junky extreme constantly involved in his revelations of insight based on "unusual activity" in things.  This is the same man who once said, "If I could buy one stock right now and put it away, I'd take Energy Conversion Devices."  He said the same of Akami not two months ago, as well, and yet he never really faces up to his tattered shreds afterwards.

How about Cramer...who explicitly put people into Conoco Phillips as the stock was opening up $10 on news that it was breaking up...only to say nothing now down almost that entire days.  Perhaps, best of all was Joe Teranova's call, telling people to buy JC Penny on a day when it was up 18% due to the addition of a former Apple big wig.  Of course, that 18% is now a red number in the book of the fool who listens to fellows such as these.

Tatters.  That word could describe the entire criminal syndicate Wall Street banking industry.  There is nothing left of rigor there, or morality, or even common courtesy.  It has become the abysmal and parasitic creature, serving only itself in the nanoseconds it takes to cobble together its notions and dump them upon its customers with the speed of algorithms.

Nice work, sir.


Cdad's picture

Thanks for the 1000 nods, Blackhole.  Rock on, dude...and spread the word that it is not safe.

PulauHantu29's picture

...and here is Mr El again from PIMCO:

"Regarding overwhelming government debt burdens, the outspoken El-Erian wrote in an article posted on Reuters: "Other than some short bursts, Europe and America are unable to sustain the sort of economic recovery that would make a meaningful dent in their debt dynamics…If they are unable to grow out of their debt problems, countries...can default, and let restructuring lower our debt burdens, albeit in a rather disorderly fashion; or we can implement austerity, spending less in order to generate cash to pay off our debt."

The "Q" is, "Will Japan continue to buy our 30 year bonds after today?

BlackholeDivestment's picture

The title of this article caught my attention, ''Snake Oil Economics'', fantastic.

It fits perfectly with the ''prophetic'' false offer and 2011 ''MARK down-the rabbit (black) hole we go''



                                ''Enter The 2012 Dragon MYTH'' <<< call of the Great Wal Mart of China 

...and the ''Snake'' <<<(lol) ...set to come upon this generation. 

The employed (and deployed) whore(s) has forsaken all, for another bite <<<too funny) of the strong delusion (under water sign), ... which represents the ''Economics'' touted by the corrupt (occult) elite and leaders of the nations.

The point ''well defined'' (lol) within the article,  ...the rule of thumb and the nature of the new world order crowd riding the global market beast, is that ''Oil'' waxes into entendre gore ...and defines the Greece'd PIIGS etc... possessed by the mark of debt and all in possession by the ''Saved by Zero'' FIXX/attempt to hide the hole put in labor's gas tank, as labor is overcome by the ill-liquidity (inside the City of Babylon) offering of hopium to the entire global mass of people captured by the new (loss) tax burden now required by the number of the self devouring beast.

...for it is a human number.   There is no rate of return to sell ''by the numbers'', do to the want of addicts and the power of temptation which has now sealed the seller's door and the buyer's black hole. What has been sewn by the thread is the Eye of the Needle.

To enter this market is evil, you must divest all the bullshit and get the beast to kneel. 

What does it all mean Alf? Is there really a question at this point? 

 '' ...if you drink from the BTFD Cup of Fornication etc... inside the 666 Citi sucker MC House of Card Sharks, ...and let the hopium run, you shall not die?

...if you eat the children, the image of the beast, which is your own aborted image, you will not die?

...seriously, all the gains inside the ''Snake Oil Economics'' are false, like the numb-bbbers

                                            ...and this means war

                                         upon the whole market beast

                                          MARKED AND SEALED TO DIE

                                                ''Snake Oil Economics''



tony bonn's picture

gdp is the most obnoxious ignorant playdough poop to ever fall out of an econoquack's ass.

Yen Cross's picture

 Who worked my Bloomberg terminal? My   rtt FEED IS  LIMP AS WELL.

  Effin poachers!

Tarjan's picture

Sorry, but this article ‘tis all so much ponderously excessive drivel.


BigJim's picture

I bet Frank would have understood it.

Maybe you need a new avatar?

natty's picture

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Withdrawn Sanction's picture

 An amphetamine junkie getting his next fix by spending the contents of the old woman’s purse he just snatched generates more instant GDP than an engineer sitting quietly at his desk, trying to puzzle out a radical new way to create more useful output with less input

Well, not exactly.  The meth-crazed purse snatcher makes no contribution to GDP plus or minus, strictly speaking.  The value granny loses, is offset by the value he "gains."  There is no net value added (the basis of national income and product acctg).  His actions are technically termed transfers and in this he acts a lot like government.   Both are non-productive undertakings and for similar reasons.

The article does make a good if belabored point:  that aggregates do not interact.  The overall unemployment rate, for example, is simply a tally of millions of individual hire/fire decisions.  So any economist or politician who claims to want to change national unemployment rates by, say, changing median wages or jiggering the inflation rate (ahem, Phillips, Im looking in your direction), is a fool or a liar.


BigJim's picture

An amphetamine junkie getting his next fix by spending the contents of the old woman’s purse he just snatched generates more instant GDP....

I think the key word here is 'instant'.

ToNYC's picture


The amphetamine junkie stealing the old woman's purse is better known as Congress. The product is energy arbitrage of life's savings interest income to corporate welfare. Only voters who bleed are entitled to representation.


chinawholesaler's picture

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