I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
Wednesday, November 3, 2010
Our Fed's Intended Economy (Musical Tribute)
That's just their intended economy of course. Here's an alternate song just in case they blow it.
The law of unintended consequences is an adage or idiomatic warning that an intervention in a complex system always creates unanticipated and often undesirable outcomes.
The Fed's simple solution might not fix complex problems.
A perverse effect contrary to what was originally intended (when an intended solution makes a problem worse), such as when a policy has a perverse incentive that causes actions opposite to what was intended.
If QE fixes housing busts, then why has Japan been stuck in a rut for 20+ years?
The entire banking edifice has become an insult to personal liberty. Our eCONomy is founded on fraud and run for the benefit of thieves.
Wall Street used lies and propaganda to dupe people into taking on impoverishing debt loads - outright criminal activity on an enormous scale. People never wanted debt, they wanted wealth.
Our money supply is polluted with trillions in fraudulent loans. Bernanke is trying to dilute the toxic money in the system and bury the fraud by spurring new borrowing. It's not working.
And here's the sad thing - artificially high asset prices ARE the problem. That's an intended CONsequence, a travesty.
It wasn't fairly priced houses and stocks that bankrupted households and put pension funds underwater! It was artificially inflated asset prices.
Imo, it's unlikely QE will increase household demand much. With that in mind, QE is welfare for banks and corporate insiders that will get to cash out their piece of the fraud at sky high prices. Again, this will come at a cost to Main Street in the future.
Here I lie We can't lose more mortgaged parts of towns Held in line In a world of fears while homes are down Sellin' hope You just need some more "cheap" loans I really am just selling you Selling you Lending you lending you
Travesty When the income's gone and you can't go on It's travesty When the assets die and you don't know why It's time for bears...
"Our deep experience administering fixed income and bank debt products combined with our investment in first-rate technology and talent has produced a unique and compelling suite of Fund Services that adds tremendous value to our customers."
Perhaps Wells Fargo has developed an innovative financial technology that can create positive real yields out of today's -0.65% 5-Year TIPS? But NO... YOU HAD TO HANG UP. Now we'll NEVER know if they hired Harry Potter! Shame on you!! ;)
Sorry about that, but it won't matter anyway according to Denninger and Glen Beck.
Bernanke has just DESTROYED! OUR ECONOMY. The END GAME is here. MARGINS WILL BE COMPRESSED and RATES WILL RISE so that nobody will be able to pay their debts!
Wow thats a long link. Anyway, I think Galbraith's idea has some some merit.
I just don't see anyway we will ever have enough jobs. Mish & Denninger are way off base with their capital formation memes. The idea isn't to manufacture more and more stuff for lower and lower pay. We've already got more crap than we need. Free time is a sign of wealth too.
Yeah, I think one of the reasons job creation is so difficult right now is that we've at least temporarily run out of ideas.
At least some talk of our crumbling infrastructure. Okay, maybe we create a few jobs there. But how many? I know I could drive from Seattle to Florida on our highway system. I doubt very much the potholes would slow me down.
Free time is a sign of wealth too.
You are preaching to the choir on that one. I spent VERY little money last year on myself or material possessions. Free time is far more "precious" to me than any "precious" bling-bling.
I haven't read the article but I think I can guess the gist based on your comment.
Among my reasons for absolute disgust is that one of the options we had available to us was a massive releasing of entrepreneurial spirit/class with real health care reform.
How many thousands of people keep jobs they hate because they need the health care? If the govt would have properly severed health care from employment I think a bunch of people would have taken them up on the option to do something for themselves. There is no telling what kind of small business growth and innovation would have been released.
But no, people choosing to de-leverage would be bad for GDP. We need to keep the wage slaves shackled to their jobs and we need to protect the over-leveraged banks at any cost.
How many thousands of people keep jobs they hate because they need the health care? If the govt would have properly severed health care from employment I think a bunch of people would have taken them up on the option to do something for themselves. There is no telling what kind of small business growth and innovation would have been released.
As much as we'd all love the commodity inflation of the 1970s to continue and combine with the rising unemployment of that era...
ReplyDeleteUnintended consequences
The law of unintended consequences is an adage or idiomatic warning that an intervention in a complex system always creates unanticipated and often undesirable outcomes.
The Fed's simple solution might not fix complex problems.
A perverse effect contrary to what was originally intended (when an intended solution makes a problem worse), such as when a policy has a perverse incentive that causes actions opposite to what was intended.
If QE fixes housing busts, then why has Japan been stuck in a rut for 20+ years?
Stag,
ReplyDeleteThe entire banking edifice has become an insult to personal liberty. Our eCONomy is founded on fraud and run for the benefit of thieves.
Wall Street used lies and propaganda to dupe people into taking on impoverishing debt loads - outright criminal activity on an enormous scale. People never wanted debt, they wanted wealth.
Our money supply is polluted with trillions in fraudulent loans. Bernanke is trying to dilute the toxic money in the system and bury the fraud by spurring new borrowing. It's not working.
And here's the sad thing - artificially high asset prices ARE the problem. That's an intended CONsequence, a travesty.
It wasn't fairly priced houses and stocks that bankrupted households and put pension funds underwater! It was artificially inflated asset prices.
Imo, it's unlikely QE will increase household demand much. With that in mind, QE is welfare for banks and corporate insiders that will get to cash out their piece of the fraud at sky high prices. Again, this will come at a cost to Main Street in the future.
The majority are screwed.
mab,
ReplyDelete"That's an intended CONsequence, a travesty."
BB's Travesty! (Bee Gees Tragedy)
Here I lie
We can't lose more mortgaged parts of towns
Held in line
In a world of fears while homes are down
Sellin' hope
You just need some more "cheap" loans
I really am just selling you
Selling you
Lending you lending you
Travesty
When the income's gone and you can't go on
It's travesty
When the assets die and you don't know why
It's time for bears...
Stag,
ReplyDeleteAwesome tribute!
I just got a phone call from Wells Fargo. I hung up on them before they could tell me why they called.
It won't be me that gets credit (debt) flowing.
mab,
ReplyDeleteWells Fargo Launches Fund Services Product Line
"Our deep experience administering fixed income and bank debt products combined with our investment in first-rate technology and talent has produced a unique and compelling suite of Fund Services that adds tremendous value to our customers."
Perhaps Wells Fargo has developed an innovative financial technology that can create positive real yields out of today's -0.65% 5-Year TIPS? But NO... YOU HAD TO HANG UP. Now we'll NEVER know if they hired Harry Potter! Shame on you!! ;)
But NO... YOU HAD TO HANG UP.
ReplyDeleteStag,
Sorry about that, but it won't matter anyway according to Denninger and Glen Beck.
Bernanke has just DESTROYED! OUR ECONOMY. The END GAME is here. MARGINS WILL BE COMPRESSED and RATES WILL RISE so that nobody will be able to pay their debts!
We're Weimar NOT Japan.
http://finance.yahoo.com/tech-ticker/james-galbraith's-radical-plan-to-create-jobs-lower-the-retirement-age-535572.html;_ylt=ArNIdl9bSLHm6JfALIyoyBO7YWsA;_ylu=X3oDMTE2OGVkb2wyBHBvcwMxMgRzZWMDdG9wU3RvcmllcwRzbGsDamFtZXNnYWxicmFp?tickers=%5EDJI,%5EGSPC,SPY,DIA,TBT,MAN,TLT&sec=topStories&pos=9&asset=&ccode=
ReplyDeleteWow thats a long link. Anyway, I think Galbraith's idea has some some merit.
I just don't see anyway we will ever have enough jobs. Mish & Denninger are way off base with their capital formation memes. The idea isn't to manufacture more and more stuff for lower and lower pay. We've already got more crap than we need. Free time is a sign of wealth too.
mab,
ReplyDeleteYeah, I think one of the reasons job creation is so difficult right now is that we've at least temporarily run out of ideas.
At least some talk of our crumbling infrastructure. Okay, maybe we create a few jobs there. But how many? I know I could drive from Seattle to Florida on our highway system. I doubt very much the potholes would slow me down.
Free time is a sign of wealth too.
You are preaching to the choir on that one. I spent VERY little money last year on myself or material possessions. Free time is far more "precious" to me than any "precious" bling-bling.
RE: Galbraith
ReplyDeleteI haven't read the article but I think I can guess the gist based on your comment.
Among my reasons for absolute disgust is that one of the options we had available to us was a massive releasing of entrepreneurial spirit/class with real health care reform.
How many thousands of people keep jobs they hate because they need the health care? If the govt would have properly severed health care from employment I think a bunch of people would have taken them up on the option to do something for themselves. There is no telling what kind of small business growth and innovation would have been released.
But no, people choosing to de-leverage would be bad for GDP. We need to keep the wage slaves shackled to their jobs and we need to protect the over-leveraged banks at any cost.
Allan F,
ReplyDeleteThat's a interesting point about health care and entrepreneurism. That never occurred to me and for the life of me I don't know why.
AllanF (& mab),
ReplyDeleteHow many thousands of people keep jobs they hate because they need the health care? If the govt would have properly severed health care from employment I think a bunch of people would have taken them up on the option to do something for themselves. There is no telling what kind of small business growth and innovation would have been released.
It is indeed a very good point.