Tuesday, April 2, 2013

ZIRP-A-Dee-Doo-Dah (Musical Tribute)

The following chart shows the average daily movement in the federal funds rate over the previous decade.

Click to enlarge.

It's not a bug, it's a feature.

This is when the programmers central bankers declare that they officially hate their end users savers and plan to never fix the problems in their code monetary system. Instead, users savers are forced to adapt to working around these "features."

Source Data:
St. Louis Fed: Effective Federal Funds Rate


Stagflationary Mark said...

My next post will be updated weight loss charts, but this chart was more interesting to me (and probably everyone else too ;)).

Troy said...

yeah, I was getting into this topic at DeLong's this week.

Money flow is such a fascinating topic.

When money hits the working class's grubby hands, watch out -- inflation and 20%+ Fed rates.

But when money collects at the top . . . it drives rates to zero.

I'm following Japan with bated breath, LOL.

Had a crazy business idea again. Food prices are pretty bad there, and selection is tough for the average American.

They've got Costcos now, but they're all located far from people and their prices aren't that great compared to "Personal import", buying stuff in the US and importing it directly.

There's one service that does this via sea shipping, they've been doing it since the 1980s and are the pros, but their service is slow and their ordering process is not as slick as it could be.

Anyhoo to cut to the chase a 40' shipping container can hold around 700 20" x 18" x 16" boxes and costs ~$2000 to ship from a warehouse in LA to the port of Tokyo. That's $3 per box, plus another $10 for shipping insurance. Delivery in Japan via domestic shipping company runs another $20, so with a $50-100 gross margin per box I'd see $30-50 in operating profit while the end user would be getting their stuff cheaper than in Japan.

The math worked better when the yen was 80, but it's still good at 100.

700 x $40 is $28,000. I could see this working on a weekly schedule, the business model scales well.

Problem is I need a million in startup capital, LOL, and advice from people who know logistics and Japan customs clearing.

I expect a total minefield in these areas.

But what a business! It's the best kind, something the owner needs himself desperately.

Troy said...

Holy crap, the BOJ has just wheeled out the Big Gun, 1% of GDP in long-term government debt purchases.

Per month.

I see the dollar going to ¥150 maybe.

If this doesn't add a zero to Japanese prices, nothing will.


I can haz inflation???

I remember that peak from 1975 -- that's when a single scoop of B&R went from 25c to 28c.

What was 25c in 1973 is now $1.25 in 2012, sigh.

4% pa inflation does that

Stagflationary Mark said...


I can haz inflation???


Stagflationary Mark said...


When I was hoarding bath towels at my local Costco a few years back (worked out well in hindsight by the way), there were several guys also buying large quantities (and had quite a list of other things).

Out of curiosity, I asked why. One said they were down from Alaska. I believe it was not their first trip and it was with the intent to resell. I didn't feel the need to quiz them further though.

You would seemingly be looking to repeat here business model on a much grander scale.

Many years ago my mom worked at a bank. Some "genius" in management thought it would be easier/better to take Canadian coins at par. That immediately opened up new short-term career opportunities in the Drive to Canada to Purchase Canadian Coins profession, lol.

It was Spokane, WA. It just wasn't that far from the border! ;)

Stagflationary Mark said...

"repeat their business model"


Troy said...

yeah, the key of this business is being able to stuff boxes to meet demand.

700 boxes can't be 700 trips to Trader Joe's, I'd have to work at the wholesale level, at least with TJ.

My main goal is to have access to TJ's products where-ever I go in this world.

Just one $200 box of stuff a month.

But even loading up the container with 700 boxes would take 2 hours at 10 seconds per!

Probably best to pallet them up, plastic wrap the boxes, and forklift them in.

This Japan easing news has really thrown me for a loop. Doubling the money base in two years!

I have no idea what's going to happen but if the BOJ can get the yen in the 120-150 range I suspect good things will happen for them.