Wednesday, March 28, 2012

This Is Not the 1970s

Money Supply

MZM: Money with zero maturity. It measures the supply of financial assets redeemable at par on demand.

Click to enlarge.

Click to enlarge.

As seen in the chart, investors/savers are still perfectly willing to sit in cash equivalents.

November 17, 2008
Short Treasuries? Never A Better Time - Rakesh Saxena

The reason for the aggressive recommendation, as distinct from an early call, is based on the belief (as alarming as it may sound at this juncture) that the yield curve has started to price in, expressly or implicitly, some element of US government risk. Professional arbitrage players have already started to redefine the risk-free rate concept, given that 5-year CDS spreads on securities issued by the US government have widened to 48-55 basis points since late last month. These spreads are only headed in one direction, i.e. the 60-80 bps range, as the socialization of banks, insurers and auto makers will lead to increasing uncertainty on the quality of America’s credit 3-5 years into the future.

Disclosure: Author owns positions in TBT, QID

It is 3-5 years into the future. Let's see how he's done.

TBT Adjusted Close (11/17/08): 60.09
TBT Adjusted Close (3/27/12): 20.05
Net Loss: 66.6%

Hey, it could always be worse.

QID Adjusted Close (11/17/08): 350.74
QID Adjusted Close (3/27/12): 29.71
Net Loss: 91.5%


Source Data:
MZM Money Stock


Troy said...

hey man he's still got a year+ to go and who knows what wicked this way comes from Tampa Bay this summer : )

Stagflationary Mark said...


Well, Peter Schiff did say there would be a market-crushing treasury collapse "around 2013". Perhaps he's still got some hope.

I have to love the "around" part. I guess it is tough to pinpoint it exactly when you are using a Mesoamerican Long Count calendar. ;)

mab said...

It's not the 1970s.

Just run an imaginary family budget comparison between 2007 and today. And this time try accounting for actual home ownership! Consider:

In 2007, a $250K home with a 30yr fixed mortgage at 6.5% would cost ~ $1,580/mo. Currently, based on national Case Shiller declines, that same house can be bought for ~ 65% of the 2007 price or $163K. Moreover, the same fixed 30 year mortgage interest rate is now only 4% resulting in a monthly cost of $776! The savings in short term ARM loans is even larger (~7% vs. ~2.8%)

The monthly savings are over 50% and, imo, far exceed the increase in cpi on a family budget since 2007.

Schiff and all the other hyper-inflationists are clueless. Bond vigilante idiots. Their understanding of the Fed and reserve bank credit is completely misguided. Imo, they're ignorance is the reason they're given so much media time despite their horrendous track records.

The eCONomic and financial dis-information is willful! It's policy!



Ron Paul is another ignoramous with a flawed understanding of the sytem.

Stagflationary Mark said...


Please don't hold back. Tell us what you really think, lol.

In all seriousness, I'm not done either. I'll be posting another aluminum chart soon. There will be all kinds of hyperinflation to be seen with in it. NOT!

Stagflationary Mark said...


One more thought. Property taxes are one of my biggest expenses for the year. This year (unlike all previous years), I'm seeing a massive 10% drop. Hyperinflation poned.

Jazzbumpa said...

Just a little update to mab's comment:

Ron Paul is bat-shit crazy.


Stagflationary Mark said...


I notice that you didn't say he was the bat-@#$% craziest though. Perhaps that's because I have some libertarian in me.

I'm [santorum] trying [santorum] to [santorum] figure [santorum] out [santorum] who [santorum] I [santorum] would [santorum] pick, but for the life of me I'm drawing a blank, lol.

mab said...

Property taxes are one of my biggest expenses for the year. This year (unlike all previous years), I'm seeing a massive 10% drop.

I hear you. I peruse numerous property markets around the country on Zillow. Have a look at Florida, the declines in real estate taxes are huge!

People are spending an extra $1.00/week on eggs and saving $60/week on real estate taxes. Behold the hyper-inflation!

Poneage!.....? We need an entirely new vocabulary to describe the corruption, deceit, mis-direction and ignorance.

People now learn to be taught, they're not taught how to learn!

Stagflationary Mark said...


People are spending an extra $1.00/week on eggs and saving $60/week on real estate taxes. Behold the hyper-inflation!

When gasoline prices first rose I half-joked to my girlfriend that it was saving her money. She was being much more efficient at planning her trips.

The cost of the gasoline is only part of the expense. Cut back on driving and more expenses vanish.

100k miles @ 25mpg x $4 gasoline = $16k

What's a $16k car worth after 100k miles once maintenance and repairs are subtracted? Not much!

It is probably good that most people don't factor in math. Our entire economy would collapse.

There's no way I would ever drive even 3 miles (one way) to pick up a single carton of eggs. At 50 cents per mile, that's $3 in transportation costs alone (round trip). No thanks! I can think of better uses for that money.

And don't even get me started stopping by a Starbucks to buy a drink while picking up a single carton of eggs.

That would be like my worst grocery shopping nightmare as it would bring the cost per egg up to nearly a dollar, lol.