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Jeff Snider Explains Why "Unexpected" Is Back, Right On Schedule

Tyler Durden's picture





 

Submitted by Jeff Snider, President & CIO, Atlantic Capital Management

"Unexpected" Is Back, Right On Schedule

Before even taking into account the aftermath of the “unexpected” NFP result, it has been amazing to see over these past few months the number of experts, especially those that reside solely within the “science” of economics, proclaiming a successful engineering of the long sought-after recovery.  That this has been the third such claim in as many years is lost in the noise of confusing “headwinds” that are somehow beyond the control of those that now control most everything within the financial arena.  Stock speculators are beneficial components to the healthy financial transmission mechanism into the real economy (even when all they are supposed to do is provide liquidity 20,000 times per second), but anybody that dares speculate in the far more vital energy sector (or any real commodity) is the pure incarnation of evil.  That these two apparently disconnected speculative classes are really one and the same shows just how obtuse (not always intentionally) economists and the pandering classes really are.

The evil energy speculators go part and parcel with the angelic stock speculators since they are only different sides of the same coin.  Yet mainstream conventional economics continues to miss or ignore this.  But this demonstrable ignorance is really a curiosity in that in every other case economics makes absolutely no distinction whatsoever amongst various types of activities.  The “evolution” (devolution, in my opinion) of economics, especially as it has moved further and further away from qualitative analysis, favors simple quantity calculations.  Lost in that transformation is the real process of real economic recovery, and modern economics will always be befuddled in this search process so long as it ignores differentiation in more important arenas.

I don’t think there is much doubt that Keynes and his intellectual contemporaries solidified the focus on quantity.  The very notion of aggregate demand is essentially a statement that any and all economic activity is a perfect substitute for any and all other economic activity, regardless of “how”, “when” or, more importantly, “why” it was derived.  Quantity is all that matters in aggregate demand.

Every mainstream economic strain follows this basic canon.  As much as monetarism and Keynesianism proclaim and try to be at odds, often positioning themselves as the only two paths for economic and monetary policies, they are really just close ideological cousins.  Keynesians seek to “create” real economy activity through the public sector, largely financed by debt.  Monetarists seek to do the same exact thing, only through the private sector.  But at their philosophical roots, both of these strains adhere to that pernicious notion of quantity as a perfect (or near perfect) substitute.

The monetarism that now lies at the heart of central banking and the soft central planning that has taken over the margins of the global real economy, depends on one formulation to achieve its substitute, quantity-based ends.  Working primarily through the private sector, rather than the public sector where ends can be forcibly accomplished relatively easily through political processes, central banks cannot explicitly force the public to engage in activity.  Of course, central banks operate on the premise that they know better how to “manage” the economic affairs of society (beginning with the application of the self-righteous, so-called fallacy of composition which bears no resemblance to actual logic [http://www.zerohedge.com/news/central-planning-update-theory-and-practic...]), so it follows for monetarists that there are times when economic actors should not be “allowed” to set their own course.  Aggregate demand is detached from the traditional notion of economics as the aggregation of individual self-actualization, so the “greater good” sometimes demands economic or financial self-immolation.

That means monetary policy has to cajole and coerce (these are not words that describe something that is “free”) the “correct” actions out of economic actors, regardless of their own tendencies and preferences.  The “bunker mentality” that comes with every downturn in the business cycle (regardless of where the business cycle might actually originate) has to be defeated with monetary measures that make “safety” expensive.  It matters very little how much of that bunker mentality is actually beneficial on the individual level, aggregate demand must be filled by something, and a population that cuts back on spending to save or pay down debt is following the “wrong” path.  Therefore, every means or financial vehicle that promotes this antithetical process has to be financially countered by monetary measures.

Monetarily, destroying savings and dampening the desire to save is easily accomplished through ZIRP and a negative real rate of interest.  Those evil oil speculators were not so evil in the early days of QE 2.0 when the Fed was trying to stoke inflationary “expectations” to try to generate “modest” negative real interest rates.  In addition to making savings unappealing, ZIRP also, in the minds of central bankers/planners, increases borrowing activity (the trope that low interest rates are stimulative is still widely circulated and believed despite now years of empirical evidence to the contrary).  Finally, there is the “wealth effect” of rising asset prices through the enhanced speculation that I mentioned in the beginning.  Each of these measures is undertaken with the expressed understanding that they will “stimulate the economy”.

But each and every one of those monetary means to the quantitative ends are financial economy measures.  There is no direct pipeline into the real economy.  Philosophically, these central measures are dependent on the idea that financial risk-taking leads to real economy risk-taking.  It is an unquestioned pillar of modern economics and monetary science that encouraging “risky” behavior in the financial economy encourages and promotes “risky” behavior in the real economy.  Again, risk in the financial economy is believed to be a perfect (or near perfect) substitute for real economy risk.  By getting people to act on these financial impulses, getting money to flow in the financial economy, it is believed that this will eventually lead to real economy activity.

To a certain extent, that idea is correct.  Financial economy activity can and does create activity in the real economy; there are real effects of monetary engineering.  But not all activity is the same, and there is no perfect substitution of generic real economy activity.  It really should not be such a surprise that activity founded on financial risk is not a good substitute for organic growth.  And that is where this entire philosophical construction falls apart.

In reality, promotion of risk-taking in the financial economy actually cannibalizes risk-taking in the real economy.  There is no doubt that financial economy risk-taking leads to activity in the real economy, thus satisfying the quantification needs of aggregate demand, but it is the wrong kind of activity.  A healthy economy is based on activity that is both sustainable and efficient.  Real economy activity based on engineered financial economy risk-taking is neither (especially when the process of price discovery and systemic price of financial risk are heavily manipulated).

For example, the real economy needs a steady supply of entrepreneurs willing to take on the real risk of starting, owning and operating a productive business.  But entrepreneurs are humans that respond to incentives in the same way as everyone else (not mathematical formulations that conform to “logical” interpretations).  During periods where heavy applications of monetary largesse are providing asset inflation, therefore “stimulating” the “wealth effect”, we see entrepreneurialism skewed toward that asset inflation rather than any other real imbalances or opportunities in the real economy.  People chase returns, whether they are presented in the real economy or the financial economy.  During the housing bubble, how many people started small businesses or speculated to take advantage of real estate prices?  Marginal economic activity in the last decade was centered on real estate and construction.  People became real estate speculators (even the portion of the labor force that shifted toward real estate because that was where the money was being made, to the point that such labor not only oriented its skill in that direction, it also moved physically to the locations that provided the most money) rather than real economy innovators.  Instead of starting businesses in the real economy as monetary practitioners intended, economic actors concentrated on the financial economy that was producing what was mistakenly perceived to be the best financial returns. 

It was not just entrepreneurs either.  Marginally, economic participants derived more and more purchasing power from financial means rather than real economic means.  Whether that meant “cashing in” equity in growing real estate prices or just accumulating consumer debt because of the psychology of asset inflation, none of that marginal activity was based on the real economy.  In fact, this bend toward consumption fueled by debt actually skewed the real economy away from efficiently allocating scarce real resources into sustainable, long-term productive endeavors (such the millions of houses and condos that never should have been built, the production capacity that was created to serve that construction effort, and even the parallel production capacity that was created to serve the level of consumption the financial economy enlargement alone provided, i.e., the productive capacity devoted to consumer electronics such as big screen TV’s), including and especially labor resources.

We saw the same exact process in the dot-com bubble era as well.  Instead of starting productive small businesses that were sustainable, marginally a significant segment of the workforce shifted its productive attention toward speculative activities such as daytrading (how many people quit productive jobs to focus on stock trading, preceding the class of real estate flippers that would follow?).  Even business itself was shifted unproductively toward the easy money of asset inflation.  Rather than the marginal creation of businesses that could become sustainable and add real productive value (and thus real wealth) to the real economy, entrepreneurs and others focused on creating or expanding businesses dedicated to some segment of the tech or internet sector whether it was needed or not (whether they actually had a real business plan or not) because that was where all the money was flowing, where the easy financial gains of artificially engineered financial risk-taking were skewing the entire system. 

Throughout this entire experimentation period of monetarism (essentially the past forty years, but really since 1989) the nature of business itself has changed in response to these intentional monetary expeditions into financial risk.  We have seen the rise of the age of unrelenting stock repurchases, where companies buy back shares, using scarce cash resources, to further engineer asset inflation.  Building upon the base of the central bank’s efforts to create a wealth effect, these companies respond to these central incentives and invest their funds first in financial projects (including M&A) rather than real economy capital expenditures.  It started out at the margins, especially in the 1980’s during the junk bond bubble, but since 2003 it has become an all-consuming focus.  Businesses, regardless of their internal situations, will divert resources to stock repurchases, even resorting to borrowing money to fund them.  Stock price over productive value is the name of 21st century business, and the real economy suffers for it.

Rather than leading to a self-sustaining recovery process where financial economy risk-taking leads to beneficial real economy processes, the enlarging financial economy, with its “easy” money returns, draws more and more resources into each bubble, away from where those resources would be far more useful and sustaining.  Financial engineering just does not compliment the real economy as intended.  In reality, asset bubbles are far more like vortices than bubbles.  They draw in more and more formerly useful material and leave destruction in their wake, and a system that can afford less and less the imbalances that these vortices inevitably lead to.

For the purposes of central banks dedicated to aggregate demand, however, the fact that economic actors are engaging in any economic activity is counted as a success.  When quantity is all that matters, these distinctions are unnecessary complications.  Anyone with a modicum of common sense can differentiate economic activity and see that economic quantity that is increasingly based on artificial financial risk and its attendant asset inflation will always be wholly dependent on those characteristics, and thus fully susceptible to reverse.  And reverse is always the end result since, at some point, this mistaken monetary course will always be convinced of its own success once generic activity rises to some level of quantification.  At that point the prime monetary forces are removed, crashing the entire artificially constructed and distorted economic system.  We have even seen this play out after each unique episode of monetary expansion ends just in this recovery/reflation period.

There are enough unambiguous historical examples that provide ample evidence to discard this entire theory of quantification, but ideology prevents unbiased readings of the evidence.  This kind of monetary activity toward quantification can be called reflation since it is almost always heavily applied in the aftermath of some downturn in generic activity (there is very little effort in describing the full processes of said downturn other than generic deference to a purportedly natural business cycle; I suppose that makes these kinds of massive mistakes easier to hide when it is camouflaged within something that conventional wisdom holds to be the natural course of economic events).  The housing bubble/vortex itself was nothing more than reflation out of the dot-com bust.  Once the monetary “stimulus” was turned off in 2005 & 2006 (not just in the US, Japan ended its experimentation with quantitative easing) because central authorities believed they had achieved the correct quantity of activity (mathematically described by the “output gap”), the whole thing came crashing down because the financial economy had cannibalized so much of the real economy disaster was inevitable.  The greater the imbalance of financial economy over real economy (and the imbalance over speculative, financial risk-taking over investment, real economy productive capacity), the less able the entire system is to absorb the very real price of undifferentiated aggregate demand.  Taking a longer view, 2007 was not all that much different than 1937, including the fact that some lessons are never learned.

In the end analysis, monetarism has the entire process backwards.  The demand for money and credit should be as a result of success in the real economy, not the method for creating activity there.  Consumption itself should be an offshoot of economic success, not the goal of generic activity.  Indeed, the entire financial economy has become displaced from its proper role as real economy compliment.  Intermediation is supposed to be a tool where the real pool of savings is matched to the most productive and sustainable uses for scarce resources, enhancing the real economy through increasing the productivity of money.  The modern financial economy, and the 21st century definition of intermediation, is to create any and all activity in any and all places (see Greece).  This is the opposite of productivity and efficiency.

Yet it is no surprise that central banks and their financial economy, bank-first system continues in the face of so many continuous failures.  The alternative is to return and revert to a complimentary, secondary (or even tertiary) role in the economic system.  The bureaucracy and ideology of the financial economy, especially since it has taken on this primacy, is not really set up for returning economic power to the organic processes of true capitalism, so an ideology has been created to justify this bank-centric schematic (“if the banks fail, the economy fails”).  As long as generic activity and aggregate demand rule the philosophical mainstream roost, intellectually crowding out all other real capitalist, decentralized and free-market alternatives, the case will be made to manage the “greater good” and supersede even the most basic individual actions.  That there exists this fundamental flaw (among many others) of quantification of generic activity, and thus the impossibility of long-term prosperity, is lost in the obfuscation of ideological self-preservation.  So “unexpected” will once again return to the headlines of nearly every economic news item, like clockwork, after each and every independent reflation effort.

 


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Fri, 04/06/2012 - 19:50 | Link to Comment ACP
ACP's picture

Better than unexpected!

Fri, 04/06/2012 - 19:58 | Link to Comment Bunga Bunga
Bunga Bunga's picture

Unbetter than expected!

Fri, 04/06/2012 - 20:07 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Hoocoodanode?!?

Fri, 04/06/2012 - 20:53 | Link to Comment comrade pravda
comrade pravda's picture

This is an article that Ben Shitter Bernanke can understand, but I very much doubt that the assholes in Oil Bomber's administration will understand, so I will reduce it to a single sentence (making the big presumption that they read).

When you get free (and risk-free if you are in the vampire squid class) profits from speculating, you don't bother to do anything else.

P.S. Ben Shitter (a tool who shits Benjamins to imply the status quo is working) is a smart guy who is being used by smarter guys (Wall St) to line their pockets at the expense of the rest of the country.

Fri, 04/06/2012 - 21:19 | Link to Comment Straying from t...
Straying from the flock's picture

The game is at it's end.  A dime a day will END the charade.  We cannot fix what is broken by doing the same thing over and over.  It has not worked yet, why do we think it will work the next time?  I have stopped looking for someone to print us out of this mess.  Take the matter into your own hands.

Fri, 04/06/2012 - 23:16 | Link to Comment RoadKill
RoadKill's picture

Ohh my god!!! You PM bugs really are dillusional.

That video is PROOF of how idiotic hoarding silver is!!! And you attempt to use it to argue silver is under valued.

If you owned Rome a few hundred years ago and sold it for a ton silver you would only have $1mm today.

We dont need gold or silver in todays quantity in anywhere close to the amounts it exists in. If the fiat system falls apart and we decide to use anything other then those 2 metals picked at random off the periodic tables you will own a few pounds of a metal with little to no industrial value. What will you fo if you go to buy a chicken with your silver dime and the farmer says no thank you, but Ill trade you for a pack of smokezs (which have been used in prison camps as currency since at least WW2 - go read King Rat)

Fri, 04/06/2012 - 23:25 | Link to Comment UP Forester
UP Forester's picture

You must have been a riot on the short bus, the one with the strawberry-flavored windows....

Sat, 04/07/2012 - 09:18 | Link to Comment Badabing
Badabing's picture

Tru dat Forester.

@roadkill

repost:

On this day in history thirty pieces of silver paid for a contract on an important political person.

The same thirty pieces of silver bought a large parcel of land in a world center city.

The pieces of silver probably used, where the shekel because it came from the temple.

http://www.antiques.com/classified/1094298/Antique-Year-One-Silver-Shekel---LC-138

This coins weight is around 22 grams. 22 x 30 = 660 divided by 32 = 20.625 oz or around $655 in today’s money. Does this sound like the correct price to you?         Cursed is the men that uses faulty weights and measures !

Happy Easter ZH 

Sat, 04/07/2012 - 11:06 | Link to Comment RoadKill
RoadKill's picture

You missed the point again. The silver content of the coins he was paid is IRRELEVANT. He was paid 200 days labor (according to the link’s math). Who cares if the coins were made of silver or supercalifragalisticexpialidousinium. What matters is the guy with the chickens was willing to accept them at a certain exchange rate. Today’s exchange rate is MUCH lower because most of the industrial uses for silver have been replaced by things like stainless steel (like the silverware mentioned in the link).

And regardless of the math - $650 or $18,000 – I’m guessing guys named Jesus get ratted out for less in East LA all the time.

Ohh and CRAMER likes PMs… So I win Fight Club AGAIN!

Sun, 04/08/2012 - 02:11 | Link to Comment Badabing
Badabing's picture

“The silver content of the coins he was paid is IRRELEVANT. He was paid 200 days labor (according to the link’s math).”

In south NY we have guys named Jesus also. They line up by the 7-11s and will work for $100 a day no questions asked. Thats $20,000 or alot of chickens.

The best part about Fight club is watching a guy like you punch himself in the face!

Zing Bitchez

Fri, 04/06/2012 - 23:49 | Link to Comment Straying from t...
Straying from the flock's picture

I do agree with you on the value of things like cigs and alcohol during times of great strife.  Many things have value when the chips are down.  In your reply, I saw nothing that resembles a counter argument or alternative plan.  As for silver having no industrial value:  Seeing as you typed your comment on a keyboard which needed silver to function, you sir have shown how little information you have on the subject.  Please watch another video or two in the series.  To the point of me being delusional, only time will tell.  I for one would rather be a year early than a day too late.

Sat, 04/07/2012 - 00:55 | Link to Comment iDealMeat
iDealMeat's picture

deleted..  good luck all..

Sat, 04/07/2012 - 11:58 | Link to Comment SeattleBruce
SeattleBruce's picture

"If the fiat system falls apart and we decide to use anything other then those 2 metals picked at random off the periodic tables you will own a few pounds of a metal with little to no industrial value."

 

First of all, silver has industrial value.  Secondly, regarding silver and gold, you must be just conveniently leaving out their place in monetary history?!  Thirdly, what is your solution?  I'm not for a strict gold standard - I'm for non-debt based accountable money.

http://economicedge.blogspot.com/2009/12/freedoms-vision-outline.html

Sun, 04/08/2012 - 02:40 | Link to Comment Umh
Umh's picture

You can waddle around with your spending salt/iron/copper/cigarettes if you want to. I'll go with something lighter & smaller.

Fri, 04/06/2012 - 23:28 | Link to Comment Chief KnocAHoma
Chief KnocAHoma's picture

The real problem is here:

http://annoyanidiot.blogspot.com/

Sat, 04/07/2012 - 00:06 | Link to Comment LowProfile
LowProfile's picture

Wow.  If you think pro-Republicunt shit is gonna fly here, you have an education coming.

Fri, 04/06/2012 - 23:52 | Link to Comment Chief KnocAHoma
Chief KnocAHoma's picture

Time has come to end this one sided bullshit:

http://annoyanidiot.blogspot.com/

Sat, 04/07/2012 - 01:58 | Link to Comment SilverFish
SilverFish's picture

How about people like you stop being distracted by bullshit social/racial issues meant to distract from the economic problems caused by both parties.

 

Worrying about Obama's birthplace wont solve anything. As if he would be any less of a douche-bag if he just had a valid US birth certificate.

Sat, 04/07/2012 - 12:03 | Link to Comment SeattleBruce
SeattleBruce's picture

" Worrying about Obama's birthplace wont solve anything."

 

Practically speaking you are correct.  But from the standpoint of the lack of respect for law, what's the difference if we disregard Art. 2, Section 1 of the US Constitution, or Art. 1, Section 8 regarding the coining and control of money by Congress, or how about the disregard for criminal TBTF bankers? (compare even with the arrest during the S&L crisis.)

The lack of respect and application of existing law makes for a risk free playpen for the banksta/politico elites in which to enrich and engorge themselves on the rest of us.

Sat, 04/07/2012 - 07:56 | Link to Comment Urban Roman
Urban Roman's picture

Lymph node.

Fri, 04/06/2012 - 21:18 | Link to Comment ACP
ACP's picture

Hey send me some of that Bunga Bunga! It's only a matter of time before we gotta start taking shit seriously.

Fri, 04/06/2012 - 23:42 | Link to Comment Doña K
Doña K's picture

Sometime ago, I found a small wooden table for sale, very well made and in good condition. It needed some cleaning and refinishing and it was only $10 dollars. The low price was curious, but I bought it anyway.

This story below is a good example of what will happen to the economy when the central planners like Bennie and the inkjets run out of bullets. 

When I took the table home, I found out that it was kind of lower than other tables and the legs must have been different lengths as I could never get it to stand without tilting one direction or another. I realized that someone had attempted to make the legs equal and had failed. Considering the low price I decided to measure the legs as best as I could and cut the excess. I don't want to bore you with how many times and how many legs I shortened. The end result was that by the time I stabilzed the table the legs were so short that it did not qualify to be called a table as you could not even fit your legs under it while sitting on the floor. So even an atempt to sell it to a Japanese person was out of the question.

 

Sat, 04/07/2012 - 05:19 | Link to Comment Tom_333
Tom_333's picture

Shocking!...I say...Shocking.

Wait.... wasn´t there something about saving odd table legs during good times to facilitate largesse during downturn to stabilize that rickety ole thang ? Maybe there are some of them lying around.Have you checked?

 Prof Kruger, sorry Krugman. You still here dawg? Why don´t ya help us with this one as well. I am sure there must be some kinda retrospective -econometric - non-randomized - non controlled ...erh..data... of dubious quality from 70 yrs ago that will explain all this.Ya know - reading bones and feathers and allt that "science" that you guys do.

Anyway - next great war will fix all. (I am just objectively looking at the Theory) Let's just go to war with North Korea and Iran since the Martians are not..hrmm..cooperating. Difficult idea in the first place...credible False Flag with the Martians is so hard to stage and to make somewhat minutely believable. Even in the U. S. of f-g A .

Sat, 04/07/2012 - 06:44 | Link to Comment spentCartridge
spentCartridge's picture

One of the more funny anecdotes I've read in a while.

 

Thank you.

Sat, 04/07/2012 - 09:36 | Link to Comment Gully Foyle
Gully Foyle's picture

Doña K

Just like a woman to blame the government for her poor woodworking skills.

Next time just call a man to fix your table.


Sat, 04/07/2012 - 10:11 | Link to Comment Doña K
Doña K's picture

I was 22 then. Now I am much older and make my own furniture from scratch. Last project was a platform bed dressed with fabric. I now know that when you cut 2x4's or a 4X8 plywood in to several pieces, you have to allow for the width of the cutting blade.

But....you missed the point. This story is not about me but about our illustrious leaders. 

Sat, 04/07/2012 - 10:40 | Link to Comment disabledvet
disabledvet's picture

awwwww.

Sat, 04/07/2012 - 12:25 | Link to Comment Gully Foyle
Gully Foyle's picture

Doña K

But you missed the point because I was just teasing.

Maybe dumb on my part, but if you had an issue with the width of the blade why not just shim the missing part of an inch? It would be hidden.

Sun, 04/08/2012 - 19:34 | Link to Comment Doña K
Doña K's picture

Based on past exhanges I knew, but I wanted to keep you on your toes.

BTW: A good way to keep men on their toes is to raise the utrinals. <jk>

Sat, 04/07/2012 - 10:50 | Link to Comment WmMcK
WmMcK's picture

Reminds me that:
The secret to painting is to not try and remove all the flaws but to make them all the same size.

Fri, 04/06/2012 - 19:54 | Link to Comment X.inf.capt
X.inf.capt's picture

unexpected

bitchez

Fri, 04/06/2012 - 19:56 | Link to Comment trulyslide
trulyslide's picture

To those cashing in their VIX lottery tickets next week, congratulations!

Fri, 04/06/2012 - 21:18 | Link to Comment gatorengineer
gatorengineer's picture

Absolutely DONT be surprised to see Monday be green with the spin that QE3 is right around the corner.......  Perhaps and its a small chance that some folks will realize that the QE's, Twists and LTRO's have only dug the whole exponentially deeper.  Watch the talking heads this sunday should be fun.....

Fri, 04/06/2012 - 23:45 | Link to Comment hyper-critical
hyper-critical's picture

Valid point - but I would be surprised this time. Nobody bought Zandy's bullshit this morning when he reacted to the number on television, and even some permabulls paused when they saw the enormous divergence between jobs and the unemployment rate. Stock futures plunged and closed on the lows, treasuries surged, and currencies were interesting.

We go into Sunday night and Monday ripe for a sell-off, as the pendulum can swing very quickly from greed to fear. The market has been in denial about the global industrial slowdown unfolding in front of their eyes, it's been migrating to this view toward the end of this week, and as to when the panic phase kicks in...I think it could be quicker than usual, given how stretched everything is, how poorly people are positioned, etc etc everything written about here the last six weeks.

Oh, and then there's EUR/CHF. If/when that cracks, which could be 6:01PM Sunday night, barriers are knocked out, and major banks are going to be forced to unload 10's-100's of billions notional of their delta-hedges. Flap flap flap you beautiful butterfly.

Sat, 04/07/2012 - 12:08 | Link to Comment SeattleBruce
SeattleBruce's picture

"Watch the talking heads this sunday should be fun....."

 

That right there sounds like a recipe for nausea!  :)

Fri, 04/06/2012 - 19:56 | Link to Comment bugs_
bugs_'s picture

a very heavy article for a friday afternoon - but great!

is government risk taking (solyndra, volt) cannibalizing some financial risk taking which cannibalized real economy risk taking?

Fri, 04/06/2012 - 20:52 | Link to Comment duo
duo's picture

yes, and should divorce lawyer fees be considered part of GDP?  Show me the wealth creation there.

Fri, 04/06/2012 - 21:18 | Link to Comment knukles
knukles's picture

Ah, the fallacy of the broken plates.

Sat, 04/07/2012 - 07:06 | Link to Comment spinone
spinone's picture

the more divorces, the more broken plates, the more headaches, the more advil sold!

Fri, 04/06/2012 - 22:11 | Link to Comment buckethead
buckethead's picture

Print more currency...(Adding value!) GDP to the moon! 

 

WINNING

Sat, 04/07/2012 - 00:01 | Link to Comment Mary Wilbur
Mary Wilbur's picture

Cannibalizing the taxpayers' money on green dreams.

Sat, 04/07/2012 - 08:06 | Link to Comment Urban Roman
Urban Roman's picture

... and really cannibalizing the taxpayers on BLACK dreams ...

(couple wars over in awul land, tar pipelines, etc)

Fri, 04/06/2012 - 20:16 | Link to Comment ebworthen
ebworthen's picture

I can only tell you that the bullshit of the past five years has made me lose faith that any of my contributions in terms of labor, voting, tax-paying, and bill-paying have been worth the effort.

NO TRUST, NO FAITH, NO ALLEGIANCE to the U.S.S.A. any more.

Put that in your pipe and smoke it Koolaid drinking fools.

Fri, 04/06/2012 - 21:26 | Link to Comment dolph9
dolph9's picture

Welcome to the wolf pack.  How does it feel not to be a sheep anymore?

Fri, 04/06/2012 - 22:02 | Link to Comment derek_vineyard
derek_vineyard's picture

Isn't it more cozy being a sheep?

Sat, 04/07/2012 - 00:08 | Link to Comment LowProfile
LowProfile's picture

I wouldn't know, and never will.

Sat, 04/07/2012 - 02:10 | Link to Comment SilverFish
SilverFish's picture

Sure.....

 

                    Till you get thrown to the wolves.

Sat, 04/07/2012 - 08:09 | Link to Comment Urban Roman
Urban Roman's picture

Are you sure this fake wolf-suit fits properly?

Fri, 04/06/2012 - 22:05 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Sadly, the vast majority of the public is still caught in Red Team vs. Blue Team.  Even if things go completely to hell, I think eighty percent of society will still cling to the idea that their team will fix it if they just vote hard enough for the next guy TPTB put up for office.  Orwell was right.  Put a propaganda screen in everyone's face 24/7 and you can get away with almost anything.  He had the details wrong, but man did he nail the basic concept.

Sat, 04/07/2012 - 00:10 | Link to Comment LowProfile
LowProfile's picture

This is why I'm glad Ron Paul WON'T get the nomination, even though he's clearly the best candidate, to win, and to start to fix things.  Because if he did, he would get the blame.

Only when the country lies in ruins will the collective pull it's head out of it's ass and start to look for real solutions.

Sat, 04/07/2012 - 02:42 | Link to Comment zhandax
zhandax's picture

You have more optimism about the collective than I do.

Sat, 04/07/2012 - 04:41 | Link to Comment StychoKiller
StychoKiller's picture

If that "real solution" doesn't involve accountability and individual responsibility, then it isn't REAL!  The Ignorati and the Parasites will demand another Gimme Free-sh!t System; Atlas just has to sit on his duff and outlast them -- death to the Grasshoppers!

Sat, 04/07/2012 - 08:33 | Link to Comment SheepDog-One
SheepDog-One's picture

Most of the collective will die when things get bad. Theyre lost and helpless if theres not a Burger King making their food.

Sat, 04/07/2012 - 07:55 | Link to Comment WTFx10
WTFx10's picture

Fuck-em, They have been feeding use lies all my 53 yrs and the only fuckers who have benefiited have been the liars. All the cocksuckers should be in jail ,we can make room by releasing all the pot smokers and other assorted DANGEROUS criminals (ANOTHER FUKIN LIE)

Fri, 04/06/2012 - 20:22 | Link to Comment UP Forester
UP Forester's picture

Unexpected.  Like Japan with a trade imbalance.  Like Australia with a trade imbalance.  The US still highly negative.

Who is left to export the world into growth?  China, who is slowly raising worker wages so they don't riot?  Germany, who is trying to strong-arm the rest of Europe in order to stay on top?  Russia, who is pissed off with the shenanigans in the ME, and controls the gas spigots to Europe?

I'm thinking that either the Fed, Treasury and the rest of the banking world has gone a bridge too far in trying to get the rest of the world to pay for the US profligacy, or this was all planned to get the next world conflagration started to clean up the financial mess with the blood of all 'Merikans that can see lightning and hear thunder.

This shit's gone on long enough, hope you stay out of the way and are stocked up on Jiffy-Pop....

Fri, 04/06/2012 - 23:50 | Link to Comment calltoaccount
calltoaccount's picture

"Who is left to export the world into growth?"

 

but growth is only to pay the interest.

Sat, 04/07/2012 - 01:27 | Link to Comment putaipan
putaipan's picture

long jiffy-pop and astroglide. check. thanks bitshhes. tonight's one of those nights when i couldn't get past the black velvet fog to grock the article. but the ranks have been most elucidating....thnx tylers for the knuckleheads. (i'll be back to give this post it's just rewards tom.)

Sat, 04/07/2012 - 10:41 | Link to Comment WmMcK
WmMcK's picture

Astroglide, is that better than (with) a Suzy Homemaker?

Fri, 04/06/2012 - 20:26 | Link to Comment stant
stant's picture

ocupy sesame street muppets.

Fri, 04/06/2012 - 20:32 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

You have oil, you have a century of growth.

You don't  have oil, you don't have any growth.  

It's not rocket science.

Fri, 04/06/2012 - 20:34 | Link to Comment ekm
ekm's picture

Whoever puts a whole story in two sentences is wise.

You are one.

Fri, 04/06/2012 - 20:35 | Link to Comment noob
noob's picture

Creedence Clearwater Revival: Bad Moon Rising

http://www.youtube.com/watch?v=5BmEGm-mraE

Fri, 04/06/2012 - 20:58 | Link to Comment Turin Turambar
Turin Turambar's picture

<cough><cough>

Austrian economics ftw

Fri, 04/06/2012 - 21:01 | Link to Comment non_anon
non_anon's picture

can't regrow what is already dead

Fri, 04/06/2012 - 22:43 | Link to Comment HD
HD's picture

Not sure about that. I saw Madonna at the Super Bowl Halftime show...

Fri, 04/06/2012 - 21:13 | Link to Comment Fred Hayek
Fred Hayek's picture

Interesting article. His point about modern economic theories ignoring the quality of economic activity in favor of a focus solely on the quantity of economic activity seems quite apt.

Fri, 04/06/2012 - 22:17 | Link to Comment rosiescenario
rosiescenario's picture

We do the same thing with th jobs number....we add 10 minimum wage jobs and lose 5 $100k ones, and things are just great....we added more jobs than we lost.

Sat, 04/07/2012 - 04:44 | Link to Comment StychoKiller
StychoKiller's picture

Lots of folks have supplied accurate diagnoses, what we need are effective prescriptions to cure the disease!

Sat, 04/07/2012 - 12:09 | Link to Comment Schmuck Raker
Schmuck Raker's picture
  1. Free Markets
  2. Personal Responsibility
  3. Time, lots of it.
Fri, 04/06/2012 - 21:24 | Link to Comment Atomizer
Atomizer's picture

MMT explained via Chart

 

You fucking muppets are going to experience social changes thru our Central Planning agenda. We expect our coercive acts of raising petrol cost will force you little motherfuckers to buy our channel stuffing automotive clown car inventory. Next year, we plan on raising the MPG regulations so we can keep you in indefinite debt and continue to fudge recovery success stories.  

 

/sarc

Fri, 04/06/2012 - 21:30 | Link to Comment knukles
knukles's picture

Gosh and be golly be.  Another fucking Goldilocks geewillikers, Charlie and the Chocolate factory type of excuse me but what the fuck it's not our money we're pillaging from but we'll get it right the next time.
Trust me, I'm an Investment Banker. 
From Goldman Sachs.
My seven year old unborn daughter in law's blind deaf and dumb ass ovarioan egg can figure out better shit to expell on a late Friday afternoon.

It is said that prayer makes things better...
Higher Power, please roast all of those fuckers in the showers of tinctured hell and Zyclon-B for the good of humanity.

It was also written that those who sorely affronted the throne in ancient Rome were finally disposed of as examples to calm the revolutionary fervor of the peasantry. 
They were cricifued along the Apian Way.
No wonder they've been getting NYC carry permits.

 

And why the fuck might anyone even merely warm and with a pulse excepting the KoolAide drinkers, have been expecting the nacent self generating finally its here economic recovery hiring and spending spree to have arrived.
Let me be the first to call HorseShit on anything new and different from the last several years.

Fri, 04/06/2012 - 21:44 | Link to Comment Atomizer
Atomizer's picture

Just send them in are direction..

History of Ohio electric chair

Fri, 04/06/2012 - 21:44 | Link to Comment Tuffmug
Tuffmug's picture

Qualitative vs. quantitative growth is the difference between formation of a functional organ  vs growth of a cancerous tumor. This article opened my eyes to the thought that the Moneterist and Keynesian "solutions" , by being quantitatively oriented and blind to the qualititative, are doomed to stimulate growth of a disfunctional economy riddled with cancerous tumors of misallocated human and financial capital. 

Fri, 04/06/2012 - 21:57 | Link to Comment Atomizer
Atomizer's picture

When you kill off organic growth, the parasites begin to eat one another because their hosts are becoming extinct.


Matrix is a system

Fri, 04/06/2012 - 22:17 | Link to Comment RiverRoad
RiverRoad's picture

The banksters' sophistry will come back to bite them in the butt one day.  Can't wait for that.....popcorn and all the fixin's.

Sat, 04/07/2012 - 12:23 | Link to Comment SeattleBruce
SeattleBruce's picture

Unfortunately, I'm afraid those will not be passive, popcorn popping type days...

Fri, 04/06/2012 - 21:51 | Link to Comment TooBearish
TooBearish's picture

Thank you for the clarity unfortunately the commies in control have a different agenda

Fri, 04/06/2012 - 21:54 | Link to Comment devo
devo's picture

devolution, bitchez.

Fri, 04/06/2012 - 22:01 | Link to Comment RiverRoad
RiverRoad's picture

Re "Unexpected":

T. Rowe Price announced today that they're closing their High Yield Corporate Bond Fund to new investors as of April 30th.  And if you're already an investor, you may not be able to carry your shares on just any broker's books.  As far as I can recall, they have never issued a dictum like this before.  What black swan a-swimming this way comes?!

Fri, 04/06/2012 - 22:29 | Link to Comment Mtn_Wolf
Mtn_Wolf's picture

It's so simple to understand:

Brokers win commissions when they push their clients into buying their crappy stocks with their song and dance routine.

Once the market rises (as it has) to a peak, the Exec's (errr THIEVES) are on the sort side.

Once the buyers go into PANIC SELL MODE....The THIEVES are waiting for the market to bottom and the BROKERS still win their commissions.

The Game has been going on since they created this SCAM CLUB.....

What's better than a WIN WIN SENARIO....WOLVES EAT SHEEP!! ALWAYS!!!

 

Sat, 04/07/2012 - 12:27 | Link to Comment SeattleBruce
SeattleBruce's picture

So 'they' win on the way up, and the way down, and with HFT machines to boot.  Question is, how can we change this highway robberty ultimately?  Appropriate law and prison terms would help.

http://economicedge.blogspot.com/2009/12/freedoms-vision-outline.html

Fri, 04/06/2012 - 22:33 | Link to Comment TimmyM
TimmyM's picture

This warms the cockles of my Austrian heart.

Fri, 04/06/2012 - 22:35 | Link to Comment Bansters-in-my-...
Bansters-in-my- feces's picture

Hey...!

You guys don't have a life either...????

Have a good weekend.

Fri, 04/06/2012 - 22:39 | Link to Comment Jim in MN
Jim in MN's picture

Here, add this to the pile

 

 

April 6, 2012

 

Iran halts Greek oil sales, may cut Shell supply

 

By Benoit Faucon

LONDON -(MarketWatch)- Iran has stopped shipping oil to Greece and may halt supplies to Royal Dutch Shell PLC over unpaid bills, Iran media said Friday, as the impact of sanctions widens.

The news suggests a decline in Iranian oil exports last month may accelerate as banking sanctions add to an upcoming European ban on Tehran oil. That could lead to upward pressure on oil prices, which have recently surged to a four-year high.

The Mehr news agency said that, due to unpaid bills, Iran stopped deliveries to Greek refiners Hellenic Petroleum and Motor Oil. Greece has long been the European Union country relying the most on Iranian oil--sometimes for as much as a third of its supplies.

The Mehr agency said Tehran may also cut shipments to Anglo-Dutch giant Shell because it has not paid for consignments equivalent to 8 million barrels since the beginning of 2012.

It said Shell has already halved its Iran oil shipments to 100,000 barrels a day.

"If the situation continues, Iran could cut oil exports to Shell as it has to the Greek companies Hellenic Petroleum and Motor Oil after they failed to fulfill payment commitments," Mehr said.

Motor Oil didn't return a request for comment.

A spokesman for Hellenic Petroleum declined to directly comment on the Iranian report but said "we have always proved that we are in a position to supply our refineries."

An oil-industry source said Shell was already on the cusp of stopping Iran oil purchases.

Shell has given notice on its one remaining contract with Iran and has no plans for further purchases of crude oil or refined products from Iran before the oil embargo, the industry official said.

An EU oil ban on Iran--aimed at forcing the Islamic Republic to curb its nuclear program--is set to come fully into force on July 1.

But a raft of sanctions on Iranian banks and shipping companies is already jeopardizing oil deliveries as buyers are having difficulties making payments and finding tankers for the crude.

Last month, Iranian crude exports fell by 300,000 barrels a day to 1.9 million barrels a day, according to preliminary data from oil-shipping consultancy Petro-Logistics SA.

 

Sat, 04/07/2012 - 00:18 | Link to Comment LowProfile
LowProfile's picture

I'm sure China will happily supply as many FRNs as needed for that oil the Greeks were getting.

Sat, 04/07/2012 - 01:19 | Link to Comment Jim in MN
Jim in MN's picture

I'm more interested in how Greece gets fuel since the Russians and others aren't taking IOUs.

Sat, 04/07/2012 - 04:49 | Link to Comment StychoKiller
StychoKiller's picture

Go long Donkey/Goat carts...

Fri, 04/06/2012 - 22:45 | Link to Comment ekm
ekm's picture

I like Mr. Sneider

He is a conceptual thinker. I'm going to read this post 4-5 times. A loooooooot to learn.

Fri, 04/06/2012 - 22:50 | Link to Comment HD
HD's picture

Excellent post. Well worth the read.

Fri, 04/06/2012 - 23:29 | Link to Comment prains
prains's picture

+1 HD

Instead of starting productive small businesses that were sustainable, marginally a significant segment of the workforce shifted its productive attention toward speculative activities such as daytrading

not only day trading but all the multilevel marketing bullshit and on and on, people stopped wanting to work to produce something.

still don't know how real estate agents can make a living, what a bunch of forkwits.

Fri, 04/06/2012 - 23:56 | Link to Comment HD
HD's picture

Yup. Everyone wants to be rich while doing as little as possible. Building something real takes time, effort and dedication.

My father went out everyday for 40+ years to work 10 hour days in the sun, rain, snow and wind. He bought a little land and built his own house (except for the electrical). Saved for a rainy day.

A lot of the people I've worked with over the years would have considered my dad a chump for working so hard. I wonder how they will feel in a few years when the ponzi they believe in so deeply has completely collapsed and they will find themselves "chumps" working for a living.

 

Sat, 04/07/2012 - 08:41 | Link to Comment A82EBA
A82EBA's picture

built my own house too, including electrical, saved $200k, took 6 years, everything you need is at hardware store, tend to stay in good shape during that time too

Fri, 04/06/2012 - 23:23 | Link to Comment mess nonster
mess nonster's picture

"In reality, asset bubbles are far more like vortices than bubbles..."

Reminds me of Cat's Cradle, when the ice-nine has been released, and all the water on the planet  has been frozen- all that is left are the relentless tornadoes that roam the frozen surface of the planet, destroying everything that is not already frozen.

Ice-nine in this case- ZIRP and all other QE?

Sat, 04/07/2012 - 01:35 | Link to Comment putaipan
putaipan's picture

 

 

 

tiger gotta hunt,

bird gotta fly,

man gotta sit and ask-

why? why ? why?

Sat, 04/07/2012 - 10:31 | Link to Comment WmMcK
WmMcK's picture

Don't let it (ice-nine/asset bubble) touch your lips.

Fri, 04/06/2012 - 23:26 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Why do people such as this author go to such great lengths to explain all the little details and aspects of what's basically a looting spree?

Why don't they just call it what it is, Wall Street looting America, and be on their way.

 

Fri, 04/06/2012 - 23:31 | Link to Comment prains
prains's picture

historical record

posterity

clarity

this is what to watch for

how it was done.......

Sat, 04/07/2012 - 01:01 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Historians have written volumes describing in detail the decline and fall of past empires, and it's the same stuff over and over again, oligharchs looting the people in all manner of crafty ways till there's nothing left to loot, or the people revolt, or the decaying empire is invaded and conquered.

No government regulator applies those historical accounts, those lessons from the past, to what's happening today.  

Roman emperors debased the coinage.  Today Bernanke debases the dollar, and not one government regulator says anything.  See, no lesson from the past applied to what's happening now. 

It's like there is no history to learn from.  How often have we heard top people say "Nobody could have seen this coming."

Nor will anything recorded today be considered in the future ...except successful looting techniques when some future ruler of some future empire decides to loot that empire.

Historical record?  Posterity?  How it was done?  What to look for?

For whom?  Future government regulators paid to rubber stamp what future looters are doing?

 

Sat, 04/07/2012 - 01:36 | Link to Comment i-dog
i-dog's picture

 

"Today Bernanke debases the dollar, and not one government regulator says anything"

Of course the "regulators" aren't saying anything ... because Bernanke is debasing on behalf of THE STATE ... and the regulators are regulating on behalf of THE STATE. Obama is issuing draconian Executive Orders on behalf of THE STATE. The two-faced political party is going along on behalf of THE STATE. They are all acting to preserve THE STATE and to merge it into a GLOBAL STATE.

Neither Bernanke nor the regulators nor the Congress nor the President have any interest in either private enterprise or capitalism. THE STATE is a socialist construct!

Sat, 04/07/2012 - 07:46 | Link to Comment WTFx10
WTFx10's picture

The Rothschild STATE of course.

Sat, 04/07/2012 - 03:52 | Link to Comment magpie
magpie's picture

Nope, sorry, it can't happen here.

Sat, 04/07/2012 - 12:39 | Link to Comment SeattleBruce
SeattleBruce's picture

"It's like there is no history to learn from."

 

Of course you make some good points here.  To some degree this is us NOT learning from history.  And it reminds me of the George Santyana quote, "Those who do not learn from history are doomed to repeat it."

That said, articles like this help us here to understand what's going on, and inasmuch as we may represent a circle of influence of 5 or 10 or more - we actually can have an impact as we instruct our circles.  Perhaps in this way there is some hope of learning from history, and minimizing the most extreme pain that appears to be coming our way fairly soon.

Sat, 04/07/2012 - 12:53 | Link to Comment prains
prains's picture

cranky

your debate is valid but is part of the spectrum of human folly, to NOT talk about it among the slaves is to NOT show we are watching, learning and paying attention to what is happening, to NOT show we are watching is to say to the Oligarchs your day is NOT coming. I for one will be there when that day arrives to say WE HAVE NOT FORGOTTEN ABOUT YOU. Mr. __________

Sat, 04/07/2012 - 00:09 | Link to Comment Mary Wilbur
Mary Wilbur's picture

Make you work too hard?

Sat, 04/07/2012 - 00:19 | Link to Comment LowProfile
LowProfile's picture

Nevermind him, he's old n' cranky.

Fri, 04/06/2012 - 23:58 | Link to Comment rsnoble
rsnoble's picture

There is no fucking recovery. I don't even need to read this article. Anyone that's done their homework over the past few years knows better. People have mouths and ears. People that know that have mouths talk to people with ears. EVERYONE FUCKING KNOWS THERE IS NO RECOVERY! Yet the elite press on with the gameplan like nothing is broken. And that's why everything is so fucked up right now. They're already planning on who's going to head the world gov't while the other billions of peoples are thinking about how to kill them. GAME OVER.

Sat, 04/07/2012 - 00:20 | Link to Comment HD
HD's picture

This article is one of the better ones mate. It's not about "recovery" as much as about how the current system incentivises economic activity (any activity) and discourages the investment and development in the real economy to actually support all that desired economic activity.

Basically, the system only cares how much gas is in the tank and never bothers to check if the engine has any oil.

Sat, 04/07/2012 - 01:31 | Link to Comment AssFire
AssFire's picture

Holy shit, I thought everything would be ok if $9/month worth of contrceptives could be recapitlized to pay off that 16 trillion. Now I guess our only hope is for Trayvon to get justice.

Jeezus... can people stick their heads any deeper in the sand??

Sat, 04/07/2012 - 05:34 | Link to Comment UP Forester
UP Forester's picture

Sure.  See that new Shahs of Sunset yet?

Sat, 04/07/2012 - 12:44 | Link to Comment SeattleBruce
SeattleBruce's picture

"Yet the elite press on with the gameplan like nothing is broken."

All very Orwellian.

Sat, 04/07/2012 - 00:11 | Link to Comment YesWeKahn
YesWeKahn's picture

if printing money can create wealth, nobody would need to work anymore in this world.

Sat, 04/07/2012 - 00:37 | Link to Comment CitizenPete
CitizenPete's picture

And now for something completely the same:  

Johns Hopkins University SAIS : The Financial crisis and Its Long Term Implications for the International Financial Industry

http://youtu.be/XnyKpzI2ewY

Sat, 04/07/2012 - 00:57 | Link to Comment jmc8888
jmc8888's picture

Good read. 

There is one part, the notion of monetarism, that I believe needs a bit of expansion.  The repeal (and earlier weakening of it) of Glass-Steagall allowed monetarism/financialisation into entirely new areas that once entered, wreak havoc.  They (it's repeals backers) knew this, because what they are doing in many cases is just what they did before Glass-Steagall was implemented in 1933.  That is how monetarism works.   The role of monetarism (the ideology) is always there pushing to be restarted.  Once those that suffered through WWII era were dead, dying, retired, etc....the guard was down and it was repealed.  As long as it is allowed to be alive and be considered legitimate somewhere, it's pushers and benefactors will try to use it to squeeze themselves into the action fraudulently, and pull the rug out from under everybody. 

Monetarism is seen from the oligarchy as a tool to insert a scheme of fraud to pilfer other's wealth.

Monetarism is seen from the masses as a legitimate economic system with some concrete rules based on...something real.

Monetarism has an ugly history here in America.  (let alone elsewhere...India...Africa...the Middle East including Iran...Asia...including China and the opium wars...etc)

The effects of a monetarist nation 3,000 miles away making decisions for the colonies (on behalf of the monetarists) was a major reason we had the split.  Because those that originally came here, did not just come for religious freedom, many came for economic freedom.  Because monetarism and it's follies were destructive then, people were smart enough to know it, and got the hell out of there.  It then reappeared here after the Massachusetts Bay Colony was forced back into the fold. 

We (the colonizers) had a Credit System, as opposed to Monetarist system.  This allowed us (early colonizers and later new Americans) to focus credit creation into the physical economy, manufactures, which is the bedrock of this nation economically. Who would of thought focusing on creating physical goods creates wealth?

But it was too good to last without the people having a steadfast commitment to conveying the knowledge of all that entails monetarism as inferior to the credit system.  A viewpoint that remains to this day.

Every system conceived of needs to be watched.  There is no final solution for this.  Building something and letting it rot, it rots.  Building something and maintaining it, lasts. 

You set up a credit system, then watch it like a hawk.  Any system, regardless of what it is, has a higher or lower level of functioning capacity based upon how screwed up those running it are.

Andrew Jackson rode in and changed us back to monetarists.  Yes, there were corrupt people running the bank.  But this can happen with anything.  Instead of just routing out the corrupt, the case was made to switch back to a monetarist system.  We did. We needlessly did.  The monetarists used the opportunity to pull us back into the fold.

It wasn't the system that was wrong, it was quite right.  It was the people that were running it that needed to be ousted.  If your basketball team sucks, you don't fold the team, you get rid of the players, managers, gm.  But by the 1820's It was easier then, because this was occurring when all those that had lived under British Monetarism and saw it's horrors were dead or dying.  People forgot.  Harder to convey this stuff generationally. 

Easier than cave man because they had paper, but much harder than it is today with video, audio, written, and virtual.  (which is why if we could just get over this hump...only when people are used to having direct sensory transferring as the norm...will the perception change enough to PERHAPS overcome this...oh that means jacking your brain into a computer and experiencing life through that lens. Even then I think the lessons we learned can be kept and transferred over, but that is the risk point...because we're not recording our experiences in that format now, thus that'll be the first time through that lens...though again it should be pretty obvious given all the other data points.)  Even that is just a guess of where tech may take us, not a certainty.  Just thinking ahead.

So moving on after Jackson....One could say that the monetarist setup was a major factor in the eventual launch of the Civil War.  Britain was happy to be a middle man for the flow of goods between North and South.  Great profit opportunity, and a waste.

Overall though, since the Union won, what the monetarists wanted, was lost.  But the pressure would never cease. 

Fast forward to 1913, and once again comes another monetarist conception, again sold to us falsely, again with ulterior motives for certain groups...hint the same group formerly linked to us whose monetarism is the bedrock of their entire existence since William of Orange.

Now since this time (1913) other than FDR and JFK, we've only been moving closer to a monetarist's wet dream, which was finally achieved in 1999 (or 2007-8 depending on how cynical you are).  In stages the American way was taken down, physical economy and replaced with the financial economy. We replaced our working model, with a flawed broken model...British Imperial Monetarism.

Obviously FDR had Glass-Steagall.  JFK would not have gotten us deep into Vietnam, as well as issuing non-federal reserve money.  Everyone else either were relatively neutral, to downright traitors in giving up America's competitive advantage inherent in our system of focusing on the real, physical economy in favor of the fraud that is monetarism  (and yes those that sponsor monetarism KNOW IT'S A FRAUD...they just created a web of legitimacy around it...prestigious awards and degrees so on and so forth....so that they can attract useful idiots to be believers [this model is used time and time again...you may recognize this in the Green Fascism debate as well...also British Monarchy created]).

Truman destroyed far too much of our industrial capacity, needlessly dropped the A bomb on a defeated and surrounded enemy (there was no need for a land invasion).  Johnson got us into Vietnam.  Then we had Nixon.  Who used the economic pressures of Vietnam (imperial and monetarism go hand in hand) to take us off the Gold/Silver standard.  They worked Nixon over by using the war they got us into to fund the removal of our gold...which then frightened Nixon into agreeing to the real goal....the end of the Gold/Silver standard.

From that point on the Rubicon had been crossed.  Monetarism had achieved the upper hand.   Even praising Volcker for raising interest rates only gives monetarism legitimacy it doesn't deserve to have.  Putting a fire out on a boat is worth congratulations.  But a better pat on the back would of been to not start the fire to begin with.  Because monetarism, created that fire.  Volcker merely used monetary policy and because it 'appeared' to work for so many (and at a time where the problems were fewer, the physical economy was stronger, and people had been on the merry go round fewer times), he is lauded incorrectly as a hero.   Even though the real economy took a massive nosedive. What he did, didn't solve anything, and set the stage for the Maestro the leeway and legitimacy for his ethereal magic.

Then the crash of 87 occurred and Alan Greenspan came up with a grand idea to solve that problem (or so the idiots thought).  He took a little used product, derivatives, and ushered it into the mainstream.  Derivatives were used to get us out of the 87 mess.

We also then had Clinton and the WTO, since financial economies don't need as much of a physical economy (the ideology says), we can lower our tariffs and sell off the old system by outsourcing it all and making a buck off it.  Don't want new tariffs on all those goods we outsourced coming back in.   Of course all this too was in stages, but after the WTO and all the financialization levers were in place, outsourcing and flat out shuttering of our physical economy shifted into a new gear.  I would call it high gear, because it was huge, but nowhere near its peak.

After Glass-Steagall repeal and the Bush bubbles/vertices were being inflated, all of the above just took off in high gear, until we blew the clutch with our current situation.

Now we have outright monetarism filling the gaps (attempting to is more accurate) created by monetary policy (not just recent but from each stage...so decades of misallocation), with more monetary policy, and of the most worthless kind.  Forget the fraud.  Forget the misallocation.  Forget how far we've gone from reality to fantasy land these last 40, 100, 180+ years.  They were all stages.  That finally led here.  Absolutely antithetical in our economy from our founding fathers.  Wholly monetarist.  Massively Imperial.  With a contracting physical economy since 1968.  YES 1968. 

So it's not just important to realize what monetarism does to us, but understand the events in America have been the culmination of this ideology reasserting itself over our affairs, and being PUSHED, from those who claim we have a 'special relationship' with.  Yeah, we get screwed, they laugh all the way to the insolvent bank.  That's special...for them. 

History doesn't just happen, it is created, through the desires of those in power over the dupes.  History doesn't repeat, but with monetarism being the scam the various oligarchs used for thousands of years, fucking people over and over and over, this is what causes many of the rhymes.

Monetarism must be routed, because monetary dogma will always be ineffective when compared against the realities of a physical economic based system, at everyone's peril. 

That is why we must impeach Obama, because all he has done is shift us into neutral and slam on the gas...burning the clutch, with impeachable acts a plenty.  He hears the engine roaring so he thinks we're accelerating, when really even a child can look around and notice we're slowing down and headed for a ditch.

The American Credit System, which like anything, must be tended to, is the correct (best conceived of) system to facilitate the physical economy.  But the problems with all the good setups of various things are the people involved.  A good business model can be ruined by corrupt CEO's just like a National Bank can be ruined by corrupt individuals...but that is as sure of a system as anyone is going to get.  So watch it, steward over it.

Glass-Steagall is the standard for what is in our system is judged upon and the clear lined boundaries that cannot be crossed.  We have worthless shit that in dozens of categories labeled as something that is supposed to be of value.  Glass-Steagall takes that crap and pulls all linkages with our physical economy away.  People with money can do what they want, but all of what matters in facilitating the economy is to be off limits to this kind of crap.  If people want derivatives with their own money, not linked to anything that touches the economy, fine.  If Southwest Airlines or Tyson foods want to hedge costs fine.  But they are taking physical delivery and is legitimate market action that has legitimate purposes to their business.  The other people cannot borrow to fund this crap, they can't co-mingle anything, and it's failures cannot be allowed to lower the supply of credit into the physical economy.  Hell there's perhaps more but that enough for now, and the spirit of the idea should be quite clear.

Impeach Obama

Glass-Steagall

American Credit (Hamiltonian) System 

 

Sat, 04/07/2012 - 02:18 | Link to Comment RichardP
RichardP's picture

And then what happened ... ?

Sat, 04/07/2012 - 04:56 | Link to Comment Setarcos
Setarcos's picture

Good extension to a good article.  I wonder how many will understand?

Sat, 04/07/2012 - 08:48 | Link to Comment purplefrog
purplefrog's picture

Unfortunately, not me.  Where does one go the get the basics of this?  I thought AJ was a hero for closing the Bank of the United States.  Perhaps I don't understand what the "credit" means in this context.

Thanks in advance.

 

Sat, 04/07/2012 - 05:08 | Link to Comment StychoKiller
StychoKiller's picture

[quote] We (the colonizers) had a Credit System, as opposed to Monetarist system.  This allowed us (early colonizers and later new Americans) to focus credit creation into the physical economy, manufactures, which is the bedrock of this nation economically. Who would of thought focusing on creating physical goods creates wealth? [/quote]

There's a difference between making Money and making FRNs:

 

"To the glory of mankind, there was, for the first and only time in history, a country of money--and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement.  For the first time, man's mind and money were set free, and there were no fortunes-by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being--the self-made man--the American industrialist.

"If you ask me to name the proudest distinction of Americans, I would choose--because it contains all the others--the fact that they were the people who created the phrase 'to make money.'  No other language or nation had ever used these words before; men had always thought of wealth as a static quantity--to be seized, begged, inherited, shared, looted or obtained as a favor.  Americans were the first to understand that wealth has to be created.  The words 'to make money' hold the essence of human morality.

"Yet these were the words for which Americans were denounced by the rotted cultures of the looters' continents.  Now the looters' credo has brought you to regard your proudest achievements as a hallmark of shame, your prosperity as guilt, your greatest men, the industrialists, as blackguards, and your magnificent factories as the product and property of muscular labor, the labor of whip-driven slaves, like the pyramids of Egypt.  The rotter who simpers that he sees no difference between the power of the dollar and the power of the whip, ought to learn the difference on his own hide-- as, I think, he will.

"Until and unless you discover that money is the root of all good, you ask for your own destruction.  When money ceases to be the tool by which men deal with one another, then men become the tools of men.  Blood, whips and guns--or dollars.  Take your choice--there is no other--and your time is running out."

-- Francisco D'Anconia, "Atlas Shrugged"

Time for a strike, I would say... (Who is John Galt?)

Sat, 04/07/2012 - 09:32 | Link to Comment Bob
Bob's picture

Nice work, jmc888!

Thanks.

Sat, 04/07/2012 - 12:52 | Link to Comment SeattleBruce
SeattleBruce's picture

"But by the 1820's It was easier then, because this was occurring when all those that had lived under British Monetarism and saw it's horrors were dead or dying.  People forgot.  Harder to convey this stuff generationally."

This is a HUGE reason we're in the pit we're in as a nation, as a world.  We MUST educate everyone around us.  It may be too late.  Are we ready for the reset when the collapse happens?

Thanks for the history review JMC - excellent.

Sat, 04/07/2012 - 02:58 | Link to Comment jabu
jabu's picture

I am not a financial whiz.  I'm not even a financial whuz.  I am a housewife.  My husband makes custom cabinetry.  I see no financial upturn.  It's been a long, slow slide down, and the incline is getting steeper!  3 years ago, a big job was 40-60k (we are small and local).  Today a big job is between 10 & 15k, and they are rare, even with most shops out of business.  At the grocery store, I am not the only one experiencing sticker shock.  I talk to people.  Most are passing up the nicer cuts of meat and the store brands are going faster than the nationals.  People are planning their meals more carefully so they only make one trip a week to the market (saves gas).  Non-perishible bulk items are the first to go.  I made my first veggie burgers today.  Hamburger (without pink slime, was that a marketing ploy?) was $3.50/lb.  Lentils were $1.40/lb.  Lentils now cost what hamburger should.  Tasted great, just needs work on the texture.  Generally, people are much more tight fisted than they were 3 years ago.  The fist is getting tighter, not looser.  I don't understand all the media reports of a bright future.  Where are they reporting from?  Bizzaroland?

Sat, 04/07/2012 - 05:11 | Link to Comment StychoKiller
StychoKiller's picture

You CANNOT make someone (the MSM!) understand what they are paid NOT to understand!

Sat, 04/07/2012 - 05:35 | Link to Comment UP Forester
UP Forester's picture

Besides, that bright future?

It's just a flash, right before the shock wave.

Sat, 04/07/2012 - 07:23 | Link to Comment WTFx10
WTFx10's picture

+

Its alll good news because they think most americans read it but most americans are to lazy to read and the ones that do read the bullshit know its bullshit becasue they read. I spend my days teaching masters and bachelors of computer science, MBA's and other assorted intelligent people (cause they went to collage and paid for that paper that says they are edgumacated) on how to read what thier computer screen tells them when something goes wrong. There are no intelligent people who run this country just bullshitters and they will continue to bullshit so they don't end up like me.

Sat, 04/07/2012 - 10:22 | Link to Comment WmMcK
WmMcK's picture

Long collage and papier-mâché.
Short college and sheep skins.

Sat, 04/07/2012 - 12:49 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

You to?

Sat, 04/07/2012 - 07:28 | Link to Comment scragbaker a ca...
scragbaker a cape cod clamdigger's picture

Nice to hear some TRUTH from a 'real person out in the trenches'.  I was beginnig to entertain the thought that the economic recovery was happening for everyone but me.  But truth be told, everyone that I know is in the same boat - including myself.  I moved from Cape Cod Ma ( construction industry is in a depression ) to Pennsylvania for a job in the natural gas industry.  I now find myself working six 12 to 14 hour days ( this does not include my getting ready for work or my travel time to and from ) for less money than I made ten years ago.  It is very disheartening to work so many hours with not much of a chance of getting ahead.  We call it "floating the boat" - just barely !   I have a friend in Great Barrington MA that founded and runs a soup kitchen and three food pantries.  He has been doing this for more than nine years now.  He said that he has never seen so many people in need.  Good luck and know you are not alone - the much talked about end of recesion in 2009 NEVER HAPPENED !  That we are in an 'economic recovery' is bullshit-we are in the beginning phase of another Great Depression.     

Sat, 04/07/2012 - 12:59 | Link to Comment SeattleBruce
SeattleBruce's picture

Re-elect Obama!

Support Party apparatchi!

/sarc

Claiming that the 'recession' is over in 2009 was the Obammy equivalent of Bushies 'mission accomplished' fiasco.

Sat, 04/07/2012 - 08:39 | Link to Comment SheepDog-One
SheepDog-One's picture

Youre right, things arent getting better, the rate of things getting worse is getting steeper no matter what the propaganda media or the purple lipped Kenyan says to the contrary.

Just look at gas and food, and people arent making any more money! 

Sat, 04/07/2012 - 13:02 | Link to Comment The Alarmist
The Alarmist's picture

There's no recession in Big-Media Land ... Ever wonder why the "sure thing" Romney has had an uphill struggle against one after another also-ran? Maybe it has been the media glomming onto characters to keep the battle going so that the Mittster keeps on spending $50:$1 against them in media buys. Long elections serve only to keep media producers and outlets in the money.

Sure, they occasionally do a story or two about rising prices, but living in NYC and DC, they were paying those prices anyway (ever bought a pound of prosciutto at Grace's Marketplace or lox at Zabar's?), so $3+ for ground whatever still looks like a bargain to them.

Sat, 04/07/2012 - 03:28 | Link to Comment zonetraders
Sat, 04/07/2012 - 05:30 | Link to Comment mholzman
mholzman's picture

Excellent piece, Tyler. Very well written too.

Yes, why work hard on anything "real" when illusion is so much easier to start-up and quickly dismantle.

Before Y2K, I was making jokes about setting up a business called: Stocks-R-Us.COM.

Now I am working up a new idea: Solar Bank. Get the money from the Department of Energy, and the bail-out from the Fed.

 

 

Sat, 04/07/2012 - 05:45 | Link to Comment I am Jobe
I am Jobe's picture

Facebook crap will save the USSA. Believe in that crap and everything will be fine. Don;t fordet AAPL will enable users to be connected to friends which is of no value or use. Live in the Virtual world what a sick society defining themselves with things.

 

Sat, 04/07/2012 - 13:01 | Link to Comment SeattleBruce
SeattleBruce's picture

"enable users to be connected to friends which is of no value or use."

Mebbe AAPL's not of no value - but it's certainly not the kind of value this manipulated market is placing on it! (heading toward 1T market cap.)

Sat, 04/07/2012 - 07:57 | Link to Comment papaswamp
papaswamp's picture

The reason the NFP number was such as disaster is that fewer people are competing for jobs, yet this is the 'job growth' we get? The 16-19 yr old cohort group population is declining and the boomers are (supposedly) retiring, thus fewer people looking for jobs....this is the problem.

Sat, 04/07/2012 - 09:22 | Link to Comment I am Jobe
I am Jobe's picture

Sure, Americans just not qualified and not willing to work at the wages that are set and look beyond money. Welcome to a useless society

Sat, 04/07/2012 - 13:09 | Link to Comment SeattleBruce
SeattleBruce's picture

"thus fewer people looking for jobs"

 

That's the lie they tell us anyhow.  Re-elect Obama, bitchez!

Sat, 04/07/2012 - 08:27 | Link to Comment falak pema
falak pema's picture

OT : Here is a twist to the ongoing Multi billion dollar treasury notes scam that surfaced in Italy last year :

Millau. Une saisie à 12 milliards de dollars au péage | Les moutons enragés

 

More Mafia/ Dragon family type shenanigans this time in France! 

Sat, 04/07/2012 - 08:36 | Link to Comment SheepDog-One
SheepDog-One's picture

A bit wordy way of saying things are pretty much screwed, but they seem to want to hide that fact from the sheeple, for whatever reason. So thats 'the plan'...yea well Im not counting on it, Im counting on the lunatics and their false flags to go chaos route pretty soon.

Sat, 04/07/2012 - 09:09 | Link to Comment slowimplosion
slowimplosion's picture

This guy makes a lot of good points, but he misses the mark by a mile in some cases to try to fit everything into his viewpoint.

The rise of "non-productive risk activities" like day trading and real estate flipping had a lot less to do with Keynesism or montarism and a lot more to do with the SHIPPING OF PRODUCTIVE jobs overseas by the oligarch class.  In fact a lot of our woes are based squarely on having/choosing to complete with slave labor.

But hey, it's nice to be able to fit everything into one neat little hole, even if the hole is full of holes.

Sat, 04/07/2012 - 09:31 | Link to Comment dwdollar
dwdollar's picture

Who outsourced?

Large corporations and politicians.

 

Who funds large corporations and politicians?

Large Banks.

 

How do large banks exist?

By establishing a central bank and inflating a fiat currency indefinitely.

 

It all comes back to a sound currency. It is the key to solving so much misery.

Sat, 04/07/2012 - 09:43 | Link to Comment slowimplosion
slowimplosion's picture

Sound currency is a wonderful idea that no one would disagree with.

 

However, the same folks who drone on and on about "sound currency" would be the first to enable the financial industry to do whatever it wants in the name of "freedom".

Sat, 04/07/2012 - 10:11 | Link to Comment dwdollar
dwdollar's picture

The destructive power of the financial cartel would be greatly limited if it didn't have the capability to print (inflate).

A sound currency is one giant leap in the right direction. We can argue about the details after that's achieved.

Sat, 04/07/2012 - 10:10 | Link to Comment DOT
DOT's picture

Freedom to ship your job out.

http://news.yahoo.com/niall-ferguson-u-lost-competitive-edge-only-one-18...

Not that it's your job in fact.  Compete or just give up and die.

 

 

btw sorry for the link to NF, but the it is not he who speaks but what is said that must be judged.

Sat, 04/07/2012 - 11:11 | Link to Comment Clint Liquor
Clint Liquor's picture

However, the same folks who drone on and on about "sound currency" would be the first to enable the financial industry to do whatever it wants in the name of "freedom".

People who believe in sound money and freedom, also believe in prosecuting fraud. I know it will be difficult, but take a day or so and try to imagine how banks could 'do anything they want' in a sound money system without committing fraud.

Sat, 04/07/2012 - 21:16 | Link to Comment slowimplosion
slowimplosion's picture

Yes and they would define fraud narrowly as our current govt does because after all the rich would never do anything shady.  Just ask Alan Greenspan.

 

Most of what is wrong with our financial system is not fraud in any sense of the word, it is the freedom to rig the game.

Sat, 04/07/2012 - 09:32 | Link to Comment Widowmaker
Widowmaker's picture

The ignorance on ZH is amazing.

Finance is nothing more than institutionalized fraud from top to mother fucking centrally planned bottom.

All prices and levered-money itself is a joke on idiots. The fortunetelling of economics itself is proof.

Science is not blindly "anything wrapped in numbers" which the vast majority of fuckups refuse to see.

This is why markets need to crash and burn, to tear the misalocation of bullshit "knowledge" (and all the fabricated lies) to pieces.

Fuck the fed, both the racket and their congressional clusterfuck of fraud sciences and bullshit.

Sat, 04/07/2012 - 10:40 | Link to Comment Schmuck Raker
Schmuck Raker's picture

"The ignorance on ZH is amazing."

Are you referring to the article, or the comments?

Sat, 04/07/2012 - 09:26 | Link to Comment I am Jobe
I am Jobe's picture

Obama Admin. Plans $200M USD "Big Data" Spending Spree

http://www.dailytech.com/Obama+Admin+Plans+200M+USD+Big+Data+Spending+Sp...

More crap

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