Tony Daltorio
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Latest Comments26 Comments
The American Crisis and the Case for an Inflationary Depression
On Dec 03 08:42 AM CLH wrote:
> You are delusionary. There is no possible way to make a deflation
> into inflation by magic. Print money? Not possible because no one
> will borrow it.
>
> This is a deflation (like Japan had) which is caused by the elimination
> of debt which causes the disappearance of money.
The Coming Dollar Deflation
The Downfall of Keynesian Economics and the U.S. (Part 3 of 3)
On Nov 21 08:58 AM BS Detector wrote:
> Once again, the author fails in his stated attempt to lay blame for
> our ills at the feet of John Maynard Keynes. The discussions here
> have very little to do with Keynesian theory at all.
>
> Now, specific problems:
>
> 1. If the banker is aware that there is only $300 in the monetary
> base, and he has it all, he won't be a banker. Why would he lend
> out money if there isn't any money to repay as interest?
>
> 2. "The answer is hyperinflation, and that is most likely the course
> that the Federal Reserve will take." Most likely based on what?
>
>
> 3. You show the scary monetary base chart, which takes off higher
> in the end. What you don't show is the actions of banks in the last
> year, while they have been deleveraging like mad to raise their capital
> levels. This IS a decrease in the overall money supply (which we
> used to measure - M3), and the fed's recent actions are meant to
> counteract this hugely deflationary action by the banking industry.
>
>
> 4. "Those signs come in the form of negative net sales of U.S. treasuries
> by foreigners..." Really? Why then is the dollar appreciating against
> all currencies except the Yen and why then are treasuries currently
> trading at historically low yields?
>
> 5. "...credit crunch making new loans more and more unavailable..."
> Which is because the banks have had to deleverage in response to
> much greater potential losses than previously expected.
>
> 6. "...and the deflation seen in financial markets." And commodity
> markets. And all other markets EXCEPT for US Treasury securities,
> which are seen by the market as SAFER THAN ANYTHING ELSE.
>
> 7. "The U.S. government and Federal Reserve will fight this with
> every tool they have, resulting in an end game of hyperinflation."
> Hogwash. The preferred share investments by the TARP aer structured
> such that as the banks regain their footing, take their losses, and
> start to function normally again, they will have a strong incentive
> to pay off the loans (reducing the monetary base) as they increase
> to normal levels their leverage (increasing the monetary base). The
> Fed and Treasury are well aware that in normal times their actions
> would be highly inflationary. These are not normal times.
>
> 8. More worthless, unsupported attacks on Keynesianism. And then:
> "We had a near implosion as a result of these theories in the early
> 1980’s." Without even a mention of the oil shocks of the early 1970s,
> which sent inflation rippling through the economy, or of the institution
> and repeal of wage and price controls, which, like a coiled spring,
> sent prices much higher. These had nothing to do with Keynes, and
> had much more impact on prices in the late 1970s than anything related
> to theory specific to Keynes'.
>
> 9. Let us not forget that Ronald Reagan's huge deficit spending (well,
> at least at first, during the recessions) fell nicely into line with
> Keynesian theory.
Great Expectations for Obama, But Not the Markets
On Nov 11 08:42 PM Georealist wrote:
> After reading JasonCs post I feel like I need a United Nations Translator...what
> can he possibly mean..if anything? The real price of something IS..what
> people pay for it in the market! Or is someone talking to him privately
> and only JasonC and a few select others know the REAL answer?
> As for the article..there will always be optimism about something..what's
> the point? The flight to treasuries is defensive and fear driven..hardly
> the stuff of great investing or bubbles.....
>
Great Expectations for Obama, But Not the Markets
On Nov 11 08:36 AM David Martin wrote:
> Spot on analysis.
> What is your take on the impact of the Chinese plans to spend another
> $300 billion a year themselves, leaving them with little budget surplus
> and presumably buying less US Treasury bonds?
> I(t soundds bad for US funding and the dollar.
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