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Jobs Report Plus June FOMC Meeting Prediction

ResponsiblyIrresponsible
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6/7/2015 1:48:45 PM
Posted: 1 year ago
Here's a great article from Tim Duy elucidating the employment report and a few other relevant indicators the Fed has hightlighted: http://economistsview.typepad.com...

And here's the employment report: http://www.bls.gov...

Brief Summary

-280k nonfarm payroll jobs in May
-32k additional jobs from upward revisions from March and April
-Wages rose 0.3 percent, and 2.3 percent year-on-year
-Labor force participation increased to 62.9 percent, and unemployment rate ticked up to 5.5 percent (must of which was due to the increase in participation)
-Due to the last point, 397,000 people reentered the labor force, so I think this explains why the unemployment rate ticked up

As a result, stocks and stock futures fell (good news for the economy right now tends to mean bad news for equities, as expectations of liftoff near), the 10-year inched up and the USD appreciated.

As for the June meeting, I think speculation will be speculation. I don't think the current stream of data, in spite of this great jobs report, and the risk calculus lends itself to a June liftoff. This is especially true with the slowdown in Q1, amounting to a contraction of 7 tenths of a percent in real terms.

My prediction is that, in June, the Fed will simply adjust his outlook for the economy, sounding a tad more pessimistic on the data and once more hammering home the "we're data dependent" message by holding off on lifting rates. Aside from that, I don't anticipate any changes to the guidance.

My prediction, hence, is that September is prime for a rate hike.
~ResponsiblyIrresponsible

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Blade-of-Truth
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6/8/2015 4:08:21 AM
Posted: 1 year ago
At 6/7/2015 1:48:45 PM, ResponsiblyIrresponsible wrote:
Here's a great article from Tim Duy elucidating the employment report and a few other relevant indicators the Fed has hightlighted: http://economistsview.typepad.com...

And here's the employment report: http://www.bls.gov...

Brief Summary

-280k nonfarm payroll jobs in May
-32k additional jobs from upward revisions from March and April
-Wages rose 0.3 percent, and 2.3 percent year-on-year
-Labor force participation increased to 62.9 percent, and unemployment rate ticked up to 5.5 percent (must of which was due to the increase in participation)
-Due to the last point, 397,000 people reentered the labor force, so I think this explains why the unemployment rate ticked up

As a result, stocks and stock futures fell (good news for the economy right now tends to mean bad news for equities, as expectations of liftoff near), the 10-year inched up and the USD appreciated.

As for the June meeting, I think speculation will be speculation. I don't think the current stream of data, in spite of this great jobs report, and the risk calculus lends itself to a June liftoff. This is especially true with the slowdown in Q1, amounting to a contraction of 7 tenths of a percent in real terms.

My prediction is that, in June, the Fed will simply adjust his outlook for the economy, sounding a tad more pessimistic on the data and once more hammering home the "we're data dependent" message by holding off on lifting rates. Aside from that, I don't anticipate any changes to the guidance.

My prediction, hence, is that September is prime for a rate hike.

This is some mind-blowing stuff here bro.

<3
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ResponsiblyIrresponsible
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6/8/2015 9:14:31 AM
Posted: 1 year ago
At 6/8/2015 4:08:21 AM, Blade-of-Truth wrote:
At 6/7/2015 1:48:45 PM, ResponsiblyIrresponsible wrote:
Here's a great article from Tim Duy elucidating the employment report and a few other relevant indicators the Fed has hightlighted: http://economistsview.typepad.com...

And here's the employment report: http://www.bls.gov...

Brief Summary

-280k nonfarm payroll jobs in May
-32k additional jobs from upward revisions from March and April
-Wages rose 0.3 percent, and 2.3 percent year-on-year
-Labor force participation increased to 62.9 percent, and unemployment rate ticked up to 5.5 percent (must of which was due to the increase in participation)
-Due to the last point, 397,000 people reentered the labor force, so I think this explains why the unemployment rate ticked up

As a result, stocks and stock futures fell (good news for the economy right now tends to mean bad news for equities, as expectations of liftoff near), the 10-year inched up and the USD appreciated.

As for the June meeting, I think speculation will be speculation. I don't think the current stream of data, in spite of this great jobs report, and the risk calculus lends itself to a June liftoff. This is especially true with the slowdown in Q1, amounting to a contraction of 7 tenths of a percent in real terms.

My prediction is that, in June, the Fed will simply adjust his outlook for the economy, sounding a tad more pessimistic on the data and once more hammering home the "we're data dependent" message by holding off on lifting rates. Aside from that, I don't anticipate any changes to the guidance.

My prediction, hence, is that September is prime for a rate hike.

This is some mind-blowing stuff here bro.

<3

Lol, really? I threw this together in a few minutes. I was actually worried I didn't go into enough depth.
~ResponsiblyIrresponsible

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slo1
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6/9/2015 8:42:56 AM
Posted: 1 year ago
At 6/7/2015 1:48:45 PM, ResponsiblyIrresponsible wrote:
Here's a great article from Tim Duy elucidating the employment report and a few other relevant indicators the Fed has hightlighted: http://economistsview.typepad.com...

And here's the employment report: http://www.bls.gov...

Brief Summary

-280k nonfarm payroll jobs in May
-32k additional jobs from upward revisions from March and April
-Wages rose 0.3 percent, and 2.3 percent year-on-year
-Labor force participation increased to 62.9 percent, and unemployment rate ticked up to 5.5 percent (must of which was due to the increase in participation)
-Due to the last point, 397,000 people reentered the labor force, so I think this explains why the unemployment rate ticked up

As a result, stocks and stock futures fell (good news for the economy right now tends to mean bad news for equities, as expectations of liftoff near), the 10-year inched up and the USD appreciated.

As for the June meeting, I think speculation will be speculation. I don't think the current stream of data, in spite of this great jobs report, and the risk calculus lends itself to a June liftoff. This is especially true with the slowdown in Q1, amounting to a contraction of 7 tenths of a percent in real terms.

My prediction is that, in June, the Fed will simply adjust his outlook for the economy, sounding a tad more pessimistic on the data and once more hammering home the "we're data dependent" message by holding off on lifting rates. Aside from that, I don't anticipate any changes to the guidance.

My prediction, hence, is that September is prime for a rate hike.

I would be more inclined to watch the consumer price index to make that prediction. We are in an time where energy costs are low, yet the core CPI is getting to the 2 % mark. If we are hitting at two and yet employment is still soft they may wait again.

Some curious things to ponder about the current state.
1. Is there a correlation between lower energy prices to consumer spending and inflation growth? If so, does that mean that less energy investment and energy job loss is less a drag than net benefit of cash in consumer's pockets.

2. How long can this recovery cycle last? One may argue that since the boom has been slow and gradual it may last longer time period before any bubbles are created causing a bust to the business cycle?

3. Related to #2. many are calling for a correction because there has not been one for very long. If the rate of recovery increases, would it mean that people would be more likely to call for a correction. If that rate hike does indeed happen in Sept does it correspond with a 10% or more decline in stocks?
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6/9/2015 9:34:57 AM
Posted: 1 year ago
At 6/9/2015 8:42:56 AM, slo1 wrote:
I would be more inclined to watch the consumer price index to make that prediction. We are in an time where energy costs are low, yet the core CPI is getting to the 2 % mark. If we are hitting at two and yet employment is still soft they may wait again.

Why would you watch the CPI? It tends to, due to measurement problems, run about 30 basis points above the PCE index, which is the Fed's method.

Some curious things to ponder about the current state.
1. Is there a correlation between lower energy prices to consumer spending and inflation growth? If so, does that mean that less energy investment and energy job loss is less a drag than net benefit of cash in consumer's pockets.

I think this is a good question, and for a while the Fed seemed to think that over a period of time lower energy prices would boot AD, in which case the disinflationary effects were transitory, though that doesn't seem to be the case - case in point, the headlne PCE index was about 12 bps last month, and core is still around 1.3.

2. How long can this recovery cycle last? One may argue that since the boom has been slow and gradual it may last longer time period before any bubbles are created causing a bust to the business cycle?

I certainly think it can last much longer then the last, if only due to the regulatory tools implemented since the last crisis, including but not limited to the stress tests under Dodd-Frank. I have my complaints about that law, but the stress tests aren't among them.

3. Related to #2. many are calling for a correction because there has not been one for very long. If the rate of recovery increases, would it mean that people would be more likely to call for a correction. If that rate hike does indeed happen in Sept does it correspond with a 10% or more decline in stocks?

I don't think it does, and Ben Bernanke wrote about this recently. It's true that stock prices have been doing well, but give the extent to which they fell, the growth rate in prices is actually somewhat below trend. Stock prices will tend to fall a little after liftoff, but I don't see it being pronounced or permanent.
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ResponsiblyIrresponsible
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6/9/2015 3:35:18 PM
Posted: 1 year ago
Oops, I meant that the PCE is the Fed's preferred index. It's price-stability mandate is 2 percent headline PCE, year over year.
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6/17/2015 3:49:12 PM
Posted: 1 year ago
Need to bump this, because:

"To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate."

As expected, they wrote off much of the Q1 weakness as due to transitory factors, but the dot plot shifted back, projects for GDP and inflation fell a bit, unemployment is expected to be a tad higher, and September remains on the table for liftoff.

#vindicated
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6/17/2015 5:59:52 PM
Posted: 1 year ago
I was waiting for someone to call me out for gloating about a decision that was (a) entirely uncontroversial and (b) expected by literally everyone. When Jim Bullard, possibly the most anti-intellectual hawk of them all, says that markets are *right* to price in a later rate liftoff, you know for a fact that rates weren't going up in June.

On the bright side, though, retail sales data looks a heck of a lot better and consumer sentiment looks great. Wages are picking up a tad, though that could be the "new normal" in light of sh1tastic productivity gains (i.e., LRAS stuff). Investment still sucks, but the GDP estimates seem to be perking up, though they're below initial projections from the beginning of this year. In reality, that only means that "above trend" means "sort of on trend or slightly less above trend," depending of course on where the hell trend actually is.

Barring catastrophe, rate liftoff will take place in September. Mark my words.
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9/19/2015 2:05:54 AM
Posted: 1 year ago
At 6/17/2015 5:59:52 PM, ResponsiblyIrresponsible wrote:
I was waiting for someone to call me out for gloating about a decision that was (a) entirely uncontroversial and (b) expected by literally everyone. When Jim Bullard, possibly the most anti-intellectual hawk of them all, says that markets are *right* to price in a later rate liftoff, you know for a fact that rates weren't going up in June.

On the bright side, though, retail sales data looks a heck of a lot better and consumer sentiment looks great. Wages are picking up a tad, though that could be the "new normal" in light of sh1tastic productivity gains (i.e., LRAS stuff). Investment still sucks, but the GDP estimates seem to be perking up, though they're below initial projections from the beginning of this year. In reality, that only means that "above trend" means "sort of on trend or slightly less above trend," depending of course on where the hell trend actually is.

Barring catastrophe, rate liftoff will take place in September. Mark my words.

Was Chinese markets out preforming US markets, year to date, the catastrophe?
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9/19/2015 2:11:59 AM
Posted: 1 year ago
At 9/19/2015 2:05:54 AM, Chang29 wrote:
At 6/17/2015 5:59:52 PM, ResponsiblyIrresponsible wrote:
I was waiting for someone to call me out for gloating about a decision that was (a) entirely uncontroversial and (b) expected by literally everyone. When Jim Bullard, possibly the most anti-intellectual hawk of them all, says that markets are *right* to price in a later rate liftoff, you know for a fact that rates weren't going up in June.

On the bright side, though, retail sales data looks a heck of a lot better and consumer sentiment looks great. Wages are picking up a tad, though that could be the "new normal" in light of sh1tastic productivity gains (i.e., LRAS stuff). Investment still sucks, but the GDP estimates seem to be perking up, though they're below initial projections from the beginning of this year. In reality, that only means that "above trend" means "sort of on trend or slightly less above trend," depending of course on where the hell trend actually is.

Barring catastrophe, rate liftoff will take place in September. Mark my words.

Was Chinese markets out preforming US markets, year to date, the catastrophe?

Which catastrophe? August 24th?
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9/19/2015 6:17:45 AM
Posted: 1 year ago
At 9/19/2015 2:11:59 AM, ResponsiblyIrresponsible wrote:
At 9/19/2015 2:05:54 AM, Chang29 wrote:
At 6/17/2015 5:59:52 PM, ResponsiblyIrresponsible wrote:
I was waiting for someone to call me out for gloating about a decision that was (a) entirely uncontroversial and (b) expected by literally everyone. When Jim Bullard, possibly the most anti-intellectual hawk of them all, says that markets are *right* to price in a later rate liftoff, you know for a fact that rates weren't going up in June.

On the bright side, though, retail sales data looks a heck of a lot better and consumer sentiment looks great. Wages are picking up a tad, though that could be the "new normal" in light of sh1tastic productivity gains (i.e., LRAS stuff). Investment still sucks, but the GDP estimates seem to be perking up, though they're below initial projections from the beginning of this year. In reality, that only means that "above trend" means "sort of on trend or slightly less above trend," depending of course on where the hell trend actually is.

Barring catastrophe, rate liftoff will take place in September. Mark my words.

Was Chinese markets out preforming US markets, year to date, the catastrophe?

Which catastrophe? August 24th?

You stated here, back a few months ago, that rising rates were coming. My question is, what was the castatrophe that kept the Fed from raising rates?

I assumed you would blame it on Chinese markets, markets that are up from a year ago, versus US markets that are down from a year ago, or compare year to date Chinese are higher that US. Chinese markets were not the catastrophe that kept the Fed from raising rates.

August 24th was not very bad, predicted by many as a great short opportunity.
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9/19/2015 5:12:46 PM
Posted: 1 year ago
At 9/19/2015 6:17:45 AM, Chang29 wrote:
You stated here, back a few months ago, that rising rates were coming. My question is, what was the castatrophe that kept the Fed from raising rates?

Sure. I still think they're *coming* -- and if you watched Yellen's press conference, you would have seen her stunning deference to the Phillips curve and the inherently hawkish undertones (which was to be expected, to be honest) -- but the main thing she cited holding back the Committee from moving was global uncertainties: they didn't know the extent to which China/EME turmoil would bleed over to the U.S. outlook, so whilst it isn't currently impacting their overall assessment of the economy's trajectory, it added to forecast error.

She mentioned the recent tightening in financial conditions, as well, but I think that was less of a concern -- or at least she wanted to portray it as such, because she doesn't want the Fed to give off the appearance that it responds to financial volatility. Of course, there's a big difference between the current behavior of equities, risk spreads, etc. and the typical, markets-will-be-markets, ebbs and flows. Don't expect her to cede to that anytime soon, though.

Ironically, RGDP forecasts for this year went up, but down for the next two -- probably because of a lower estimate for potential. Inflation forecasts were revised downward even as employment was revised up. Doesn't sound like a Phillips curve to me.

I assumed you would blame it on Chinese markets, markets that are up from a year ago, versus US markets that are down from a year ago, or compare year to date Chinese are higher that US. Chinese markets were not the catastrophe that kept the Fed from raising rates.

I addressed this a long time ago. Year-over-year stock measures are a whole lot less important than *stability.* Chinese stock markets soared last year, cratered, soared again, and then cratered over the summer (losing $3 trillion in 3 months). The recent behavior of the Chinese stock market, irrespective of the extent to which it's disconnected from the real economy (which it is, because (a) only 5 percent of Chinese households own stocks, RGDP grew at about 9.2 percent in 2009 while stocks exhibited this same volatility, etc.), portends uncertainty amongst the investment community, and adds to forecast error.

The behavior of U.S. stocks is probably a sign of uncertainty over a rate hike. I mean, the U.S. is also not propping up its stocks as China is, who weakened margin requirements, funneled money through state enterprises to stock brokers to pump up equities, etc. The U.S. also doesn't have the same imbalances as China -- namely the glut of investment over consumption, or the overly-reliant export model.

But the point isn't solely Chinese stock markets, or even the volatility that's created in global markets. It's what that volatility might *represent.* The Chinese real economy is also doing really sh1tty right now, with growth forecasts being revised down to their lowest level in 20 years, production and factory data sucks, abundance of debt burdens, and a lack of faith in Chinese institutions to address their underlying problems. A lot of that is structural in nature -- declining labor force, transitioning to a service/consumption-based economy, decline in trend growth, etc. -- but we don't know to what extent that is the case, and thus it adds to *uncertainty.*

And, of course, there's the fact that inflation is unbelievably soft in the US, we don't know where the NAIRU or potential growth is, and tightening sends the wrong signal about how the Fed views the Phillips curve and its NAIRU, and that could feed over to changing market perceptions of its reaction functioned.

August 24th was not very bad, predicted by many as a great short opportunity.

But it was bad, not solely because of the downward move in equities, but because of what it represented: people are scared sh1tless about China, the rising dollar (which continues to hold down already anemic levels of inflation), and falling global commodity prices (which hold down inflation domestically, and screw with large oil exporters, like EME's, Canada, etc.).

Also, financial conditions -- a primary transmission of monetary policy -- tightened considerably: equities are still lower, dollar is still rising, risk spreads widened, inflation expectations fell, policy uncertainty is up, the VIX is up, etc. Goldman Sachs recently estimated that this tightening constituted the equivalent of a 75-basis-point tightening, which is far more than the Fed -- even the most hawkish of its members -- viewed as necessary. Markets tightened enough to basically overcompensate for what the Fed didn't do, and their actions were a de-facto liftoff and then some.

But, mainly, lifting in September even *before* the volatility was a horrible idea, and it's wrong to -- as I think you are -- treat it as the default. June was the default for a while, and so-called "transitory" factors (which now the Fed thinks are slightly less transitory) took that date off the table. The problem is, there's no good reason and certainly no urgency to get rates up. I think Kocherlakota got it right: not only hold off, but ease *even more.* The only potentially negative consequence is higher inflation, and even *that* sounds like a wonderful thing to actually be concerned about, considering the Fed currently projects it'll miss its inflation target for about a decade.
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Chang29
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9/20/2015 1:20:59 AM
Posted: 1 year ago
At 9/19/2015 5:12:46 PM, ResponsiblyIrresponsible wrote:
At 9/19/2015 6:17:45 AM, Chang29 wrote:
You stated here, back a few months ago, that rising rates were coming. My question is, what was the castatrophe that kept the Fed from raising rates?

Sure. I still think they're *coming* -- and if you watched Yellen's press conference, you would have seen her stunning deference to the Phillips curve and the inherently hawkish undertones (which was to be expected, to be honest) -- but the main thing she cited holding back the Committee from moving was global uncertainties: they didn't know the extent to which China/EME turmoil would bleed over to the U.S. outlook, so whilst it isn't currently impacting their overall assessment of the economy's trajectory, it added to forecast error.

She mentioned the recent tightening in financial conditions, as well, but I think that was less of a concern -- or at least she wanted to portray it as such, because she doesn't want the Fed to give off the appearance that it responds to financial volatility. Of course, there's a big difference between the current behavior of equities, risk spreads, etc. and the typical, markets-will-be-markets, ebbs and flows. Don't expect her to cede to that anytime soon, though.

Ironically, RGDP forecasts for this year went up, but down for the next two -- probably because of a lower estimate for potential. Inflation forecasts were revised downward even as employment was revised up. Doesn't sound like a Phillips curve to me.

I assumed you would blame it on Chinese markets, markets that are up from a year ago, versus US markets that are down from a year ago, or compare year to date Chinese are higher that US. Chinese markets were not the catastrophe that kept the Fed from raising rates.

I addressed this a long time ago. Year-over-year stock measures are a whole lot less important than *stability.* Chinese stock markets soared last year, cratered, soared again, and then cratered over the summer (losing $3 trillion in 3 months). The recent behavior of the Chinese stock market, irrespective of the extent to which it's disconnected from the real economy (which it is, because (a) only 5 percent of Chinese households own stocks, RGDP grew at about 9.2 percent in 2009 while stocks exhibited this same volatility, etc.), portends uncertainty amongst the investment community, and adds to forecast error.

The behavior of U.S. stocks is probably a sign of uncertainty over a rate hike. I mean, the U.S. is also not propping up its stocks as China is, who weakened margin requirements, funneled money through state enterprises to stock brokers to pump up equities, etc. The U.S. also doesn't have the same imbalances as China -- namely the glut of investment over consumption, or the overly-reliant export model.

But the point isn't solely Chinese stock markets, or even the volatility that's created in global markets. It's what that volatility might *represent.* The Chinese real economy is also doing really sh1tty right now, with growth forecasts being revised down to their lowest level in 20 years, production and factory data sucks, abundance of debt burdens, and a lack of faith in Chinese institutions to address their underlying problems. A lot of that is structural in nature -- declining labor force, transitioning to a service/consumption-based economy, decline in trend growth, etc. -- but we don't know to what extent that is the case, and thus it adds to *uncertainty.*

And, of course, there's the fact that inflation is unbelievably soft in the US, we don't know where the NAIRU or potential growth is, and tightening sends the wrong signal about how the Fed views the Phillips curve and its NAIRU, and that could feed over to changing market perceptions of its reaction functioned.

August 24th was not very bad, predicted by many as a great short opportunity.

But it was bad, not solely because of the downward move in equities, but because of what it represented: people are scared sh1tless about China, the rising dollar (which continues to hold down already anemic levels of inflation), and falling global commodity prices (which hold down inflation domestically, and screw with large oil exporters, like EME's, Canada, etc.).

Also, financial conditions -- a primary transmission of monetary policy -- tightened considerably: equities are still lower, dollar is still rising, risk spreads widened, inflation expectations fell, policy uncertainty is up, the VIX is up, etc. Goldman Sachs recently estimated that this tightening constituted the equivalent of a 75-basis-point tightening, which is far more than the Fed -- even the most hawkish of its members -- viewed as necessary. Markets tightened enough to basically overcompensate for what the Fed didn't do, and their actions were a de-facto liftoff and then some.

But, mainly, lifting in September even *before* the volatility was a horrible idea, and it's wrong to -- as I think you are -- treat it as the default. June was the default for a while, and so-called "transitory" factors (which now the Fed thinks are slightly less transitory) took that date off the table. The problem is, there's no good reason and certainly no urgency to get rates up. I think Kocherlakota got it right: not only hold off, but ease *even more.* The only potentially negative consequence is higher inflation, and even *that* sounds like a wonderful thing to actually be concerned about, considering the Fed currently projects it'll miss its inflation target for about a decade.

Then, your analysis from June about Sepemter was completely wrong.

With your current analysis, the central bank should be starting QE4, and not pretending that a rate hike is just down the road a piece.

Yellen is loosing credibility. At the press conference, she could not even rule out *zero* percent rates ***forever***. Her game of expectations management is nearing an end.

The two reasons the Phillips curve is not working correct. First, unemployment data is calculated by near fraudulent methods. The labor force size is plainly a *guess* (will stay in place, until bureaucrats view Washington power as a threat that requires embarrassment). Plus, inflation calculation is not any better. Both numbers have too many political impacts to be accurate. Second, even if the curve had good data, the curve itself is *mythical*. Finding A relationship between inflation and unemployment was a Keynesian political tool to give central bankers more power.

America's central bank will keep rates a zero. No rate change is just around a corner, over a ridge, or down the road. Yellen and her fellow central planners will find a small reason each meeting, why rates will stay at *zero*. These central planners know, but will not state, that ZIRP has created business and government plans that will be proven unsustainable at higher rates. Thus, America's economy is too weak to handle a 0.25% hike in rates.

Zero percent rates were supposed to have been a short term action by central planners to save America from a financial catastrophe caused by a handful of regulators failing to regulate, (they only needed a few more tools).
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9/20/2015 1:57:43 AM
Posted: 1 year ago
At 9/20/2015 1:20:59 AM, Chang29 wrote:
Then, your analysis from June about Sepemter was completely wrong.

Which analysis was that? That I foresaw a rate hike in September?

The problem is -- and what you don't understand (and, to be fair to you, market participants are the exact same way) -- monetary policy is conditioned by financial markets, and financial markets are extremely fickle. Before the volatility in August, the Fed was willing to look through China, move in September, and sit there for a year. Now, much like the Taper Tantrum of 2013, they want to hold off, make no mystery that only about one rate hike will likely be on the table (though several members still expect two), and simple adjust the initial moving, but not the trajectory.

You can't hold me to something I said months ago, as though the world is black and white and nothing at all changed. When the facts change, I -- and the Fed, and anyone who was watching this -- change my mind. This isn't different, especially for an institution that claims to be data dependent.

With your current analysis, the central bank should be starting QE4, and not pretending that a rate hike is just down the road a piece.

To be honest, they probably would be, lol... That is, if they bought my arguments and the arguments raised by Narayana Kocherlakota, who actually suggested a *negative* nominal interest rate.

The problem is, they don't accept my analysis. The arguments they're making for a rate hike are positively horrid -- Phillips curve, "the path is more important," "zero signals emergency," "bubbles," etc. -- but irrespective of whether *I* think it's a sh1tty idea (and I thought, even back in June, that it was a sh1tty idea) that doesn't change the fact that a rate hike is probably coming once financial markets settle down a bit.

Again, there's a huge difference -- and I hope you can appreciation the distinction -- between what I think the Fed *should* do and what it *will* do. My position isn't mainstream, but it happens to be right.

Yellen is loosing credibility. At the press conference, she could not even rule out *zero* percent rates ***forever***. Her game of expectations management is nearing an end.

I agree she's losing credibility, but not for the reason you cited.

I mean, hell, she laughed at that question, and at the question of negative nominal interest rates (which was stupid to laugh at, because it's a very real possibility and one I'd consider). The "zero rates forever" thing wasn't so much as a concern, but ruling that out would be just about as stupid as ruling out Jesus' second coming to descend upon the table upon liftoff, urging them to hold off. That's the degree of seriousness Yellen attached to that question. That's *hardly* the reason she's losing credibility. She's losing credibility because she has to represent the Committee consensus, and that consensus flies in the face of everything we know about her, which is why she wouldn't tell us where her *dot* was. She's a lot more dovish than the majority of the FOMC.

Also, the ZLB forever could be a very real concern if demographics push the Wicksellian equilibrium negative forever -- but I digress. Much like her, I wouldn't rule it out. Hell, Larry Summers thinks it's possible.

The two reasons the Phillips curve is not working correct. First, unemployment data is calculated by near fraudulent methods. The labor force size is plainly a *guess* (will stay in place, until bureaucrats view Washington power as a threat that requires embarrassment).

Lol.

The Phillips curve is probably off (read: flat) for several reasons (and, believe it or not, it may actually be temporary, and symptomatic of a larger employment gap, as some recent research suggests), but "fraudulent data" isn't one of them.

I was under the impression that you wanted to have a serious conversation, but when you actually suggest the BLS is fudging employment numbers--a feat so unbelievably hard that a suggestion of that sort borders between hilarity and inanity--I really lose my desire to converse with you.

Plus, inflation calculation is not any better. Both numbers have too many political impacts to be accurate.

This is ridiculous and circular, hinging on your lamentable cynicism of government. Again, this is not a serious position.

Second, even if the curve had good data, the curve itself is *mythical*. Finding A relationship between inflation and unemployment was a Keynesian political tool to give central bankers more power.

Lol, more unserious blabber.

In theory, the curve holds, and for good reasons. It's predicated on basic supply and demand. As unemployment goes down--i.e., as the "reserve army of the unemployed" disbands (because I know how much you love Karl Marx)--labor becomes scarcer. Once labor becomes scarcer, its price rises. As it price rises, costs for firms go up. Many of those costs are passed onto consumers through higher prices.

That relationship held during the 1960s, but has since broken down, and there are several reasons for that and a whole lot of research--including some really good work out of Jackson Hole--but insofar as you cling to conspiracy theories and remain utterly intellectually removed, you won't be able to appreciate the actual, serious arguments against what was been seen as conventional wisdom amongst serious people (and believe it or not, that's actually for very good reason).

America's central bank will keep rates a zero. No rate change is just around a corner, over a ridge, or down the road. Yellen and her fellow central planners will find a small reason each meeting, why rates will stay at *zero*. These central planners know, but will not state, that ZIRP has created business and government plans that will be proven unsustainable at higher rates. Thus, America's economy is too weak to handle a 0.25% hike in rates.

First, this just isn't true. In fact, your fellow goldbugs said the same damned thing about tapering QE3, and that happened.

Second, let's bet on it. I think they'll raise rates by December contingent on three factors:

(a) financial markets calm down
(b) inflation doesn't dip negative
(c) China/Greece/EME's doesn't implode.

*All* of these are not "excuses," but valid concerns which could conceivably spillover and impact the U.S. outlook. Assuming all three of these conditions are met, the Fed will raise rates by December.

How about it?

Zero percent rates were supposed to have been a short term action by central planners to save America from a financial catastrophe caused by a handful of regulators failing to regulate, (they only needed a few more tools).

No, it was never intended as "short term." In fact, this is just so demonstrably wrong and on par with Ax123man's assertion that Milton Friedman supported quantity theory. The two of you at this point are on the same wavelength of ignorance.

The *core* part of unconventional policy -- and that you didn't know this is the primary way I can discern that you regularly talk out of your ars -- was promising to keep the short end of the yield curve low for a long time. First they said it'd be low for "some time." Then they said "extended period." Then "until late 2013," and they shifted that twice more until mid 2015. Then a "considerable time" after they ended QE3, then they told us they'd be "patient," and now it's "some further improvement in the labor market and reasonable confidence inflation will reach 2 percent over the medium term."

The whole point of policy of late, in line with research by Krugman, Svensson, Woodford, and Eggertsson, is that once short rates hit zero, they can push down the long end of the curve by promising to keep short rates low for a while. This was NEVER a short-term solution. Suggesting as much just reveals your lamentable ignorance.
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9/20/2015 4:28:15 AM
Posted: 1 year ago
At 9/20/2015 1:57:43 AM, ResponsiblyIrresponsible wrote:
At 9/20/2015 1:20:59 AM, Chang29 wrote:
Then, your analysis from June about Sepemter was completely wrong.

Which analysis was that? That I foresaw a rate hike in September?

The problem is -- and what you don't understand (and, to be fair to you, market participants are the exact same way) -- monetary policy is conditioned by financial markets, and financial markets are extremely fickle. Before the volatility in August, the Fed was willing to look through China, move in September, and sit there for a year. Now, much like the Taper Tantrum of 2013, they want to hold off, make no mystery that only about one rate hike will likely be on the table (though several members still expect two), and simple adjust the initial moving, but not the trajectory.

You can't hold me to something I said months ago, as though the world is black and white and nothing at all changed. When the facts change, I -- and the Fed, and anyone who was watching this -- change my mind. This isn't different, especially for an institution that claims to be data dependent.

With your current analysis, the central bank should be starting QE4, and not pretending that a rate hike is just down the road a piece.

To be honest, they probably would be, lol... That is, if they bought my arguments and the arguments raised by Narayana Kocherlakota, who actually suggested a *negative* nominal interest rate.

The problem is, they don't accept my analysis. The arguments they're making for a rate hike are positively horrid -- Phillips curve, "the path is more important," "zero signals emergency," "bubbles," etc. -- but irrespective of whether *I* think it's a sh1tty idea (and I thought, even back in June, that it was a sh1tty idea) that doesn't change the fact that a rate hike is probably coming once financial markets settle down a bit.

America's central planners know that businesses and government can not withstand higher rates. That would clear out unstanable financial models, and end central bank caused bubbles.

If you were in control of the FOMC, what would interest rates be?

America's central bank will keep rates a zero. No rate change is just around a corner, over a ridge, or down the road. Yellen and her fellow central planners will find a small reason each meeting, why rates will stay at *zero*. These central planners know, but will not state, that ZIRP has created business and government plans that will be proven unsustainable at higher rates. Thus, America's economy is too weak to handle a 0.25% hike in rates.

First, this just isn't true. In fact, your fellow goldbugs said the same damned thing about tapering QE3, and that happened.

Second, let's bet on it. I think they'll raise rates by December contingent on three factors:

(a) financial markets calm down
(b) inflation doesn't dip negative
(c) China/Greece/EME's doesn't implode.

None of those matter, the only reason the central bank will raise rates is a currency crisis.


*All* of these are not "excuses," but valid concerns which could conceivably spillover and impact the U.S. outlook. Assuming all three of these conditions are met, the Fed will raise rates by December.

How about it?

Let's bet real money, not inflationary currency say, 1/2 Troy oz. gold bullion. On what the rate will be on 1 January 2016, no conditions!


No, it was never intended as "short term." In fact, this is just so demonstrably wrong
The *core* part of unconventional policy -- and that you didn't know this is the primary way I can discern that you regularly talk out of your ars -- was promising to keep the short end of the yield curve low for a long time. First they said it'd be low for "some time." Then they said "extended period." Then "until late 2013," and they shifted that twice more until mid 2015. Then a "considerable time" after they ended QE3, then they told us they'd be "patient," and now it's "some further improvement in the labor market and reasonable confidence inflation will reach 2 percent over the medium term."

The whole point of policy of late, in line with research by Krugman, Svensson, Woodford, and Eggertsson, is that once short rates hit zero, they can push down the long end of the curve by promising to keep short rates low for a while. This was NEVER a short-term solution

Siting proven jack-leg economists that are partisan political hacks does not change the fact that zero percent rates were sold as just a short term policy to recover America's economy from the mistakes of a few asleep regulators.
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9/20/2015 11:31:32 AM
Posted: 1 year ago
At 9/20/2015 4:28:15 AM, Chang29 wrote:
Let's bet real money, not inflationary currency say, 1/2 Troy oz. gold bullion. On what the rate will be on 1 January 2016, no conditions!

Lol.

Siting proven jack-leg economists that are partisan political hacks does not change the fact that zero percent rates were sold as just a short term policy to recover America's economy from the mistakes of a few asleep regulators.

No, they literally were *not* sold as a short-term solution, and if you believe that you're just objectively wrong and don't know anything about the past six and a half years of monetary policy.

The whole point of forward guidance was to promise that short-term rates would be low for a very long time -- in textbooks, that's called "management of expectations." The logic is that long-term rates are largely determined by expectations of future short-term rates, so by promising to keep short rates low for a long time, they were pushing down current long rates.

Now, you could say they were sold as a *shorter* term solution -- not the use of the comparative adjective. It's very true the Fed overestimated growth and inflation (but underestimated employment) over the past few years, and at one point anticipated that it would've gotten off zero faster than it did. But in no way was this a *short* term solution. Hell, policy takes about two years to actually kick in; that itself isn't short term. If you want short term, look at Japan in the early 2000s.
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9/20/2015 12:16:50 PM
Posted: 1 year ago
At 9/20/2015 4:28:15 AM, Chang29 wrote:
America's central planners know that businesses and government can not withstand higher rates. That would clear out unstanable financial models, and end central bank caused bubbles.

So wrong for so many reasons....

(1) "Cannot withstand" higher rates is absurd, and is reasoning from a price change. Rates are low right now not because of the Fed (i.e., every time you use the term "central planner," you're demonstrably wrong) but because the economy is so weak, and thus the equilibrium real interest rate is low -- and much of that is structural in nature. For instance, demographics might have pushed that rate permanently negative, in which case the ZLB is permanent absent fiscal expansion or something (again, Larry Summer's argument).

The point isn't solely whether we could *handle* a 25-basis-point increase in the target range. Surely we could, but we'd have to sit there for a very, very long time because we would've in three unique ways narrowed the spread between the real FFR and the Wicksellian equilibrium -- reduced inflation expectations, higher real FFR, and lower equilibrium -- all of which constitute a considerably tighter policy, which isn't exactly a great thing with inflation *already* receding. The signaling channel also wouldn't bode particularly well (i.e., the "we'll move sooner, but gradually" narrative is bullsh1t), nor would its long-run credibility.

Finally, you're flat wrong on "bubbles," and a lot of research actually confirms that unexpected tightening (a) does nothing to slow bubble growth (in fact, you'd need a crystal ball to detect bubbles, *and* it may actually increase shadow-banking assets) and (b) leads to lower rates into the future. Twelve central banks for instance -- Bank of Israel, ECB, Japan, the Swedish Riksbank, etc. -- have already tightened, and then ended up back at zero. If low rates supposedly cause bubbles, then higher rates today are conducive to future bubbles.

If you were in control of the FOMC, what would interest rates be?

I wouldn't target interest rates, lol. But if I could become dictator tomorrow, here's what I would do:

(1) Drop the target range to -1/4 to 0 percent (drop IOR to 0).
(2) Raise the inflation target to 3 percent -- and commit to it.
(3) Commit to keeping the target range at *at most* -1/4 to 0 percent until inflation hits 3 percent.

So, let's see.... the nominal funds rate would be something between -1/4 to 0 percent (probably closer to the negative end due to depository rules and capital requirements and such). The real funds rate would be that less 3 percent, assuming the commitment were perfectly credible.

So let's just do a rough calculations. Let's assume I hit the midpoint of my target, so -1/8 percent, or -.125 percent.

Then we can subtract 3 percent from that.

Result: -3.125% short-term real interest rate.

Long rates would probably fall as well, but this is the only one I can actually quantify for you at the moment.

None of those matter, the only reason the central bank will raise rates is a currency crisis.

There is no currency crisis -- the dollar is on the rise. Yellen cited that as a headwind. All of these are the genuine concerns the Fed is looking at.

Geez... do you even bother to read *anything* before spewing hot air on this?
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9/20/2015 11:15:14 PM
Posted: 1 year ago
At 9/20/2015 12:16:50 PM, ResponsiblyIrresponsible wrote:
At 9/20/2015 4:28:15 AM, Chang29 wrote:
America's central planners know that businesses and government can not withstand higher rates. That would clear out unstanable financial models, and end central bank caused bubbles.

So wrong for so many reasons....

(1) "Cannot withstand" higher rates is absurd, and is reasoning from a price change. Rates are low right now not because of the Fed (i.e., every time you use the term "central planner," you're demonstrably wrong) but because the economy is so weak, and thus the equilibrium real interest rate is low -- and much of that is structural in nature. For instance, demographics might have pushed that rate permanently negative, in which case the ZLB is permanent absent fiscal expansion or something (again, Larry Summer's argument).

Central banks are for leading and correcting, not to reflect markets. If the FOMC has been talking about raising rates for some time now, but some small factor always prevents it, gives the appearance of a very weak economy.

Zero is just another point on a number line, there is no lower bound.


The point isn't solely whether we could *handle* a 25-basis-point increase in the target range. Surely we could, but we'd have to sit there for a very, very long time because we would've in three unique ways narrowed the spread between the real FFR and the Wicksellian equilibrium -- reduced inflation expectations, higher real FFR, and lower equilibrium -- all of which constitute a considerably tighter policy, which isn't exactly a great thing with inflation *already* receding. The signaling channel also wouldn't bode particularly well (i.e., the "we'll move sooner, but gradually" narrative is bullsh1t), nor would its long-run credibility.

Lower price inflation is never bad for consumers, only feared by central bankers. Economies, by nature, create lower prices. Inflation is a creation of central banking and fiat currencies.

By the ideas that drive monetary policy, if lower rates are good for an economy, then higher rates are not.


Finally, you're flat wrong on "bubbles," and a lot of research actually confirms that unexpected tightening (a) does nothing to slow bubble growth (in fact, you'd need a crystal ball to detect bubbles, *and* it may actually increase shadow-banking assets) and (b) leads to lower rates into the future. Twelve central banks for instance -- Bank of Israel, ECB, Japan, the Swedish Riksbank, etc. -- have already tightened, and then ended up back at zero. If low rates supposedly cause bubbles, then higher rates today are conducive to future bubbles.

New easy currency bits up prices, thus bubble form, exactly what happened this year in China. New money was allowed into Chinese markets from new investors. These new investors got soaked. Once easy money policies are ended in America, bubbles and poor financing models will be exposed, just as in 2008.

US markets have stalled for a reason, investors realize that prices are too high, buying at the top of a bubble does not lead to long term success.


If you were in control of the FOMC, what would interest rates be?

I wouldn't target interest rates, lol. But if I could become dictator tomorrow, here's what I would do:

(1) Drop the target range to -1/4 to 0 percent (drop IOR to 0).
(2) Raise the inflation target to 3 percent -- and commit to it.
(3) Commit to keeping the target range at *at most* -1/4 to 0 percent until inflation hits 3 percent.

Wow, a real hatred against savers and the non-investor.

You know what I'd do, lock the doors, and let money be just another commodity.


So, let's see.... the nominal funds rate would be something between -1/4 to 0 percent (probably closer to the negative end due to depository rules and capital requirements and such). The real funds rate would be that less 3 percent, assuming the commitment were perfectly credible.

So let's just do a rough calculations. Let's assume I hit the midpoint of my target, so -1/8 percent, or -.125 percent.

Then we can subtract 3 percent from that.

Result: -3.125% short-term real interest rate.

Long rates would probably fall as well, but this is the only one I can actually quantify for you at the moment.

None of those matter, the only reason the central bank will raise rates is a currency crisis.

There is no currency crisis -- the dollar is on the rise. Yellen cited that as a headwind. All of these are the genuine concerns the Fed is looking at.

When more countries, un-peg from the US dollar and begin selling treasuries and hard currency, thus reducing overseas demand, the dollar will slide. Without the ability to export currency inflation, America will get all the harmful affects for the first three rounds of QE, along with the coming QE4.


Geez... do you even bother to read *anything* before spewing hot air on this?

As you said, you can not be held to prior statements, things change.

There is nothing else that needs to be said here. You are afraid to put real wealth behind your statements, just another political hack jack-leg academic economist.
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9/20/2015 11:36:35 PM
Posted: 1 year ago
At 9/20/2015 11:15:14 PM, Chang29 wrote:
Central banks are for leading and correcting, not to reflect markets. If the FOMC has been talking about raising rates for some time now, but some small factor always prevents it, gives the appearance of a very weak economy.

I don't know what the hell this means, or what relevance this is supposed to have. Central banks *do* adjust policy in accordance with macroeconomic and financial conditions.

Ah, the good ol' confidence fairy.

It's honestly a canard to say that the Fed has been telegraphing, committing to or promising a rate hike. This is another example of you opining on something you don't understand.

To the contrary, the Fed has cautioned that it is *data dependent,* and "anticipating" a rate hike is necessary forecast-dependent: in other words, they're not projecting that they *will raise the funds rate by 2015*, but rather conditions will *warrant raising the funds rate by 2015.* If conditions don't meet the forecast, either to the upside or downside, they'll adjust policy accordingly. It's always been like that, and it always will be like that. The "confidence fairy" argument you just made is utterly ridiculous, because (a) markets have access to the same information as the Fed and (b) Yellen was very clear that the Committee's outlook *has not changed,* but that global factors and associated volatility add to forecast uncertainty -- i.e., uncertainty surrounded that outlook. The base case hasn't changed, but they're unsure on whether it will change.

Finally, we're not talking about a "small factor." Slowing growth in China, EME, and the Eurozone, along with the global spillovers *and* the ramifications of raising rates--i.e., the fact that liftoff might intensify slowing global growth--as well as uncertainty over the labor-market outlook, risk aversion amongst investors (a lot of which the Fed is causing, admittedly, though it's largely a byproduct of the Great Recession, as well), and bitterly low inflation *do not* in any way constitute "small factors."

These are very real concerns, and there's a lot of things that you don't know or understand. I know that you don't know or understand them because I don't fully know or understand them, and I know for a fact that there isn't something that you know that I don't.

Zero is just another point on a number line, there is no lower bound.

This is demonstrably wrong. The arguments for a lower bound in nominal terms at zero is likewise wrong, but there *is* a lower bound, and ironically it's determined by supply and demand.

If at some nominal interest, you're indifferent between holding cash and holding demand deposits, you're unwilling to accept a nominal interest rate *below* that point because you would merely hold your wealth in cash. This point is determined by the nominal interest rate (opportunity cost of holding money) and the costs of holding cash--storage, buying and protecting a vault, etc. It's negative, as it is in many European countries, but we don't know where it is.

Fun fact: the 1-month Treasury bill just dipped negative for the first time in June.

Lower price inflation is never bad for consumers, only feared by central bankers. Economies, by nature, create lower prices. Inflation is a creation of central banking and fiat currencies.

Lol.

Now you're reasoning from a price change.

You said economies by their nature control lower prices--and at some positive rate of productivity growth, this is true. But what's the cause of that?

I want you to imagine a Hickisan Keynesian cross (just humor me--it's the graph you learn in Econ 101, with AD, AS, and LRAS curves).

Now, tell me: how do you get lower inflation in this model? I can think of two ways:

(a) negative AD shock.
(b) positive AS shock.

If disinflation is a byproduct of (b), this is a *good thing.* That applies upward pressure on RGDP and downward pressure on inflation, and insofar as it's permanent, it pushes up potential output, meaning we can produce more without using up as much slack or without stoking inflationary pressures.

If, on the other hand, disinflation is a consequence of (a), we have a problem on our hands--it means there's unused, excess capacity in the economy, and insofar as wages don't adjust (i.e., insofar as the slope of the AS curve is fairly elastic), we get exceptionally high levels of involuntary unemployment, and that might bleed over to undermining the economy's long-run potential (shifting the LRAS to the left, as is the case now). If we push it back far enough, we get upward pressure on inflation because instead of closing an output gap, we created hysteresis. Jeffrey Lacker thinks we're there--I don't.

By the ideas that drive monetary policy, if lower rates are good for an economy, then higher rates are not.

I answered this earlier!

"Higher" rates are associated with a booming economy, actually, because a booming economy is a *cause* of higher interest rates. It even follows the most simple MP curve predicated on the Taylor Principle:

r = r-bar + lambda * pi

where:

r = real interest rate
r-bar = autonomous policy changes
lambda >0 = regression relating the extent to which real interest rates move *upward* in response to upward ticks in inflation.
pi = inflation rate.

To the contrary, if interest rates are low, it's a consequence of a weak economy, a weak equilibrium real interest rate, and low inflation. Milton Friedman, whom I take it you're a fan of, once said that low rates mean not that money *is* easy, but that it *was* tight. The opposite is true for higher rates: it means money *was* easy, not that it was tight. If this doesn't follow, then it must've meant we had super easy money during the deflationary Great Depression and super tight money during the stagflation 1970s--and that just isn't the case.

Also, you shouldn't reason for a "high" or "low" number. I don't know what even constitutes "high" or "low," and again you don't know something that I don't. What matters isn't the *level* of interest rates, but where they are on a sliding scale relative to the pro-cyclical *equilibrium rate.*

I'll respond to the rest of your post in a second. Excuse me if I take a bit of time--I'm doing lots of stuff at the moment.
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9/20/2015 11:52:16 PM
Posted: 1 year ago
At 9/20/2015 11:15:14 PM, Chang29 wrote:
New easy currency bits up prices, thus bubble form, exactly what happened this year in China.

Actually, no, bubbles are not associated with high price inflation--we didn't have price inflation from 2002-2007.

China did have an equity bubble, but that was a byproduct of (a) weak institutions, (b) regulatory authority, and (c) government policies actively (and effectively) bribing investors to bid up stock prices, and a fixed exchange rate doesn't really help them out.

What's important to note, though, was that bubbles *do not* result from "easy money." It just isn't possible--"easy money" means higher future interest rates, whereas *tighter money* means lower future interest rates. If low rates cause bubbles, then tighter money is a great way to get it.

New money was allowed into Chinese markets from new investors. These new investors got soaked. Once easy money policies are ended in America, bubbles and poor financing models will be exposed, just as in 2008.

Lol, let's bet on it.

I also think it's comical that you're comparing the U.S. to China. You're so hopelessly ignorant on these issues that it's astounding that you have the gall to opine. This is why economics must remain, now and forever more, replete of jargon.

US markets have stalled for a reason, investors realize that prices are too high, buying at the top of a bubble does not lead to long term success.

Lol, what the hell? Investors are pricing in three fcking rate hikes right now--and that's from Goldman Sachs. Equities are volatile as fck because of global growth concerns and uncertainty over U.S. monetary policy, but bond prices are rallying.

Also, if you draw a trend line on equities from 2007 onward, they're actually growing at an even *slower* trend. There's no "bubble" in equities. If there were a bubble in ANYTHING, we'd see it in the data--we don't. The only explanation for that is secular stagnation, and I doubt you agree with Larry Summers's that we can never, ever, ever normalize monetary policy, ever, and that we should engage in permanent fiscal expansion. If you'd like to agree with Larry, we can have a discussion.

People like you really get me agitated on this, because you just throw around terms like they're candy that you don't understand, and dumb people on CNBC take you seriously. A bubble is a situation in which asset prices deviate from fundamentals. You don't know what the "fundamental" value of a stock is, and nor do I (and must I say, once again, that you don't know something that I don't). If you think stocks, or homes, or whatever are overvalued relative to fundamentals, the onus probandi is on you to prove it.

If you want to pull out Bob Shiller's model and start calculating intrinsic values, feel free.

Wow, a real hatred against savers and the non-investor.

Lol, nope!

To the contrary, I go back to Friedman: easier money means higher future interest rates. To have savings, you need income--and tighter money today means lower rates in the future, so savers earn even less. They should be thanking me.

You know what I'd do, lock the doors, and let money be just another commodity.

Lol, oh, I'm sure.

And thank goodness that, irrespective of how deficient many in the economics profession currently are, almost no one would take you seriously.

When more countries, un-peg from the US dollar and begin selling treasuries and hard currency, thus reducing overseas demand, the dollar will slide. Without the ability to export currency inflation, America will get all the harmful affects for the first three rounds of QE, along with the coming QE4.

China just sold off $94 billion in foreign-currency reserves--a record amount--to pump up its yuan. The 10-year Treasury didn't move--it's stuck around 2.13 percent. How do you explain that?

If you say "easy money," then you concede that the Fed has control over domestic interest rates, making this concern utterly asinine.

Also, the dollar still moved upward--and has been moving upward.

In reality, that's a really, really, really bad thing, but I'm not going to sit here with someone who thinks there's a bubble in this, that and the other and a currency crisis and explain to you why the ability to devalue to boost exports is the difference between Greece and Poland, or between Argentina and the US during the Depression.

Geez... do you even bother to read *anything* before spewing hot air on this?

As you said, you can not be held to prior statements, things change.

How does this have anything to do with you being ignorant?

Also, of course I can be held to prior statements, insofar as I'm opining on something. That is, if I tell you that, all else equal, X, Y, and Z conditions would merit liftoff, and even after one of those is met I changed my mind, then you should rightfully call me out. But that isn't the case. I was opining on what the *Fed* would do, not on what I thought it should do. I don't run the Fed, unfortunately. It is true, obviously, that they're shaped by incoming data, and moving amid financial volatility is, if nothing else, a horrible PR move.

There is nothing else that needs to be said here. You are afraid to put real wealth behind your statements, just another political hack jack-leg academic economist.

LOL.

First, I'm not a political hack. I don't care about politics. I regularly sh1t on political types as ignorant, know-nothing hacks.

Second, I'm not going to make a bet on the internet with some stranger.

Third, I'm humble enough to admit that there are a lot of things that I don't know because, frankly, *no one* knows what will happen with China, or Greece, or financial markets. I at least am willing to admit that. But you're stuck in this bloated sense of entitlement and this self-aggrandizing, the-world-is-black-and-white mentality. That's a classic case of the Dunning-Krueger effect.
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