tag:blogger.com,1999:blog-8515247115132134144.post5042360888437412163..comments2024-02-17T12:34:01.400-08:00Comments on Illusion of Prosperity: 39.6 Million Missing JobsStagflationary Markhttp://www.blogger.com/profile/04568993350246477976noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-8515247115132134144.post-71623842185510183512012-05-04T22:13:17.423-07:002012-05-04T22:13:17.423-07:00Mr Slippery,
Deflation is fine with me. Inflation...Mr Slippery,<br /><br /><i>Deflation is fine with me. Inflation is fine, too, unless it is hyperinflation. I am generally betting on inflation, whether it spins out of control or not.</i><br /><br />As you know, that's pretty much my plan as well.<br /><br />If Bernanke can keep inflation to 2% or so (which seems possible to me), then paying off a 4.25% mortgage seems like a good plan. Based on today's real rates, you even have some wiggle room.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-88423002984450173122012-05-04T20:35:46.179-07:002012-05-04T20:35:46.179-07:00That's not consistent with an inflationary boo...<i>That's not consistent with an inflationary boom story</i>.<br /><br />Poor choice of phrases. I didn't mean a booming economy with high inflation. I meant an inflationary spike from a currency and bond crisis. An Argentina-style spike that lasts a couple of years and eats 40-50% of the dollar in those two years. That's what I am trying to hedge against.<br /><br />Gold is a hedge against all debt, e.g. Exter's pyramid. I occupy the three bottom tiers.<br /><br />Deflation is fine with me. Inflation is fine, too, unless it is hyperinflation. I am generally betting on inflation, whether it spins out of control or not.<br /><br />I wish I had the problem of having to consider EE bonds, but I have a big fat mortgage that I can earn 4.25% by paying down (or rather, not have to pay 4.25% interest in the future). We are already paying a hefty amount of extra principal each month now.<br /><br />With all the tax stuff expiring in 2013, it is going to be a very interesting year. Not that 2012 isn't turning out to be interesting.Mr Slipperynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-20708804718101496582012-05-04T20:14:19.175-07:002012-05-04T20:14:19.175-07:00Mr Slippery,
My real concern is an inflationary b...Mr Slippery,<br /><br /><i>My real concern is an inflationary boom and TIPS are acting like gold in that regard.</i><br /><br />And yet, here we are with a 30-year nominal treasury that yields just 3.07% today.<br /><br />That's not consistent with an inflationary boom story (nor is the average 2.5% annual CPI growth since 2000).<br /><br />It is consistent with a dying real yield story though.<br /><br />I'm not brave enough to bet on a 30-year treasury for 30 years that yields just 3.07%, but given the alternatives I am apparently brave enough to bet small amounts on 20 year EE Savings Bonds that will ultimately yield 3.53%.<br /><br />I guess what I'm trying to say is that our big problems require <a href="http://youtu.be/2Sz1TpU3OhI" rel="nofollow">lowered expectations</a>.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-55780096627450790292012-05-04T19:49:08.885-07:002012-05-04T19:49:08.885-07:00Troy,
Dunno why, but that graph I just made scare...Troy,<br /><br /><i>Dunno why, but that graph I just made scared me.</i><br /><br />FRED has 45,000 data series! Simply stop picking the scary ones!<br /><br />It's Friday. Live a little. Here let me show you. I'll pick one seemingly at random.<br /><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=6Zv" rel="nofollow">Mining Wages and Salaries in Utah</a><br /><br />Damn. It's gone parabolic (again). That trend probably won't end well.<br /><br />I'll try again.<br /><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=6Zx" rel="nofollow">Real Annual Growth in Dividends, Interest and Rent in Kentucky</a><br /><br />Damn. Lower highs and lower lows. That trend probably won't end well (again).<br /><br />I'm sure to find one uplifting chart at random if I try hard enough though! Right? ;)Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-21209292313711716282012-05-04T18:21:22.338-07:002012-05-04T18:21:22.338-07:00Mark,
I remember you saying that the Fed was arti...Mark,<br /><br />I remember you saying that the Fed was artificially increasing rates and I ended up agreeing with that train of thought. Funny to see Lacy Hunt come to the same conclusion.<br /><br />Makes me feel good about copying your trade on TIPS in my IRA. At least I can get a small real yield out to 2028. My real concern is an inflationary boom and TIPS are acting like gold in that regard. So, I have TIPS, gold, and cash weighted in that order. I'm done unless something major changes.Mr Slipperynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-31408239642484678512012-05-04T17:24:49.922-07:002012-05-04T17:24:49.922-07:00hmmm, actually, there's *4* clear inflection p...hmmm, actually, there's *4* clear inflection points.<br /><br />up in 1983 & 2003, and down in 1990 and 2009.<br /><br />hmmm. Next stop, the Moon!Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-47213018819995956302012-05-04T17:22:38.922-07:002012-05-04T17:22:38.922-07:00http://research.stlouisfed.org/fred2/graph/?g=6YT
...<a href="http://research.stlouisfed.org/fred2/graph/?g=6YT" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=6YT</a><br /><br />Dunno why, but that graph I just made scared me.<br /><br />Green line is total domestic debt less TBTF's debt, since I'm told the latter is just an accounting artifact.<br /><br />Two clear inflection points -- coming out of the 1983 recession and coming out of the dotcom recession.<br /><br />Seeing the training video reminded me of my work in Japan. In retrospect I think that was a pure stimulus job -- BOJ printed money, gave it to the MOF, which gave it to the National Police, which gave it to a traffic safety NGO ("Quango"), which gave it to a major aerospace manufacturer, which then funded a project to create traffic safety machines for driving schools, ending up paying me for a year or two of the work.Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-23832131475724173662012-05-04T17:21:36.299-07:002012-05-04T17:21:36.299-07:00http://research.stlouisfed.org/fred2/graph/?g=6YT
...<a href="http://research.stlouisfed.org/fred2/graph/?g=6YT" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=6YT</a><br /><br />Dunno why, but that graph I just made scared me.<br /><br />Green line is total domestic debt less TBTF's debt, since I'm told the latter is just an accounting artifact.<br /><br />Two clear inflection points -- coming out of the 1983 recession and coming out of the dotcom recession.<br /><br />Seeing the training video reminded me of my work in Japan. In retrospect I think that was a pure stimulus job -- BOJ printed money, gave it to the MOF, which gave it to the National Police, which gave it to a traffic safety NGO ("Quango"), which gave it to a major aerospace manufacturer, which then funded a project to create traffic safety machines for driving schools, ending up paying me for a year or two of the work.Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-46760850717276646342012-05-04T16:59:52.912-07:002012-05-04T16:59:52.912-07:00I added a video that seems to fit in nicely with t...I added a video that seems to fit in nicely with the charts, lol. Sigh.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-57158555943467591202012-05-04T16:45:43.795-07:002012-05-04T16:45:43.795-07:00As a side note, I was watching CNBC when the emplo...As a side note, I was watching CNBC when the employment numbers were released.<br /><br />You should have seen <a href="http://illusionofprosperity.blogspot.com/2011/01/wisdom-of-mark-zandi.html" rel="nofollow">Mark Zandi</a> and his <a href="http://en.wikipedia.org/wiki/Lipstick_on_a_pig" rel="nofollow">pig lipstick kit</a> in action. It was a sight to behold!Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-75398440173593654722012-05-04T16:40:28.160-07:002012-05-04T16:40:28.160-07:00Mr Slippery,
"The 30-year yield is not at th...Mr Slippery,<br /><br /><i>"The 30-year yield is not at these low levels DUE to the Federal Reserve; but in SPITE OF the Fed," Hunt said.</i><br /><br />As you may recall, that's pretty much what I've been saying. Go figure.<br /><br />1. Interest rates would be lower if the Fed had done nothing. We'd be in a Great Depression this very moment and would have interest rates priced for it.<br /><br />2. Each dollar the Fed spent buying treasuries convinced investors to buy MORE than one dollar of something riskier instead.<br /><br />Neither of those things tell me that the Fed has artificially suppressed interest rates, as so many investors and mainstream economists seem to assume.<br /><br />I'm sticking with my long-term "death of real yields" theory until I see evidence to the contrary. Today's job report definitely supported my theory.<br /><br />Just opinions of course.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-21766044636038166452012-05-04T16:06:11.910-07:002012-05-04T16:06:11.910-07:00Check this quote from Stagflationary Lacy: "T...Check this quote from Stagflationary Lacy: "The 30-year yield is not at these low levels DUE to the Federal Reserve; but in SPITE OF the Fed," Hunt said.<br /><br /><a href="http://www.zerohedge.com/news/guest-post-dr-lacy-hunt-debt-disequilibrium-deleveraging-and-depression" rel="nofollow">A truly growing economy leads to rises in prosperity. GDP does NOT measure prosperity — it measures spending</a>.<br /><br />Missing job FTW.Mr Slipperynoreply@blogger.com