A gift. Thank me after you get rich.

Discussion in 'Economics' started by BrandNewTrader, Jul 30, 2006.

  1. what are you talking about my friend? it's like you had your arguments ready before you even read my post, and didn't bother to think them through. It's very disturbing that you, a well-educated person, would knowingly use nonsensical and misdirected statements as plausible arguments.

    I understand M3, derivatives, and the history and nature of fiat currency. That doesn't mean our current system is fool-proof. In fact, it's quite the opposite. Things will stay rosy forever??? I don't understand your arguments. Your (egotistical?) sense of "knowing" how the system works seems to have over-ridden your common sense; the system isn't perfect, we have the data to tell us that. The system can't go on like this indefinitely, we have common sense to tell us that.

    What do you mean there is additional lending capacity for the housing market? Are you crazy? So we can take a bubble, and to prevent it from bursting continue to inflate the very same bubble? So the same bubble inflates forever? At what point does it deflate? At what point does it reach critical mass and implode upon itself? They can simultaneously deflate one bubble and inflate another, but this means there are market dislocations that wipe out wealth for many participants. Ususally participants who don't know anything about the markets. Do you understand bubbles? I think you do. So why are you saying this?

    I've read some of your other posts and you seem to be someone who knows alot about the financial system and you've also shown a uniquely (for this place) common sense approach to many issues. But this seems to be a situation in which your "belief" that others are naive/ignorant of true market realities and only you and few others understand the market better than the rest of us has gotten you too fat in the head.

    Your arguments all add up to the conclusion that there is nothing wrong with the imbalances in the current system. But that's the exact opposite of reality! You're not thinking rationally. For example, one of your claims is that there is alot of liquidity on the sideline and the equity market is a drop in the bucket. Ok. So? As if the equity market is like the only gas tank and we have unlimited gas. Fine, but there are other gas tanks, like the mbs, cds, fx, debt, and other derivative/money markets. And all of these markets are inter-linked, so filling up and draining these gas tanks isn't exactly a no brainer. in fact, it's pretty tricky and it can be very dangerous when they get too full or too empty.

    Wait, I think I understand. You think that because there is manipulation at the highest levels and the data is all massaged and is somewhat of an illusion that - the risk is an illusion or "false-flag" as well?? Just because there are illusions in gov econ data, earnings data, and general market data - it doesn't mean that the risk surrounding the interaction of these securities is also an illusion. The risk is real. Markets go up, and they also come down - very basic.

    And if you flood the system with too much liquidity you WILL create inflation, no matter what kinds of counter-inflationary tactics you use simply because over time the amount of currency in circulation will continue to grow at a higher rate than the value of the REAL GOODS AND SERVICES EXCHANGING HANDS. The only way to counter this is to create NEW ASSETS OUT OF NOTHING. This is currently being done in the financial system. But you cannot create assets out of nothing indefinitely! At some point, the rate at which you print money will outpace the rate at which you create new assets of out nothing. Why? Because the more money/debt you create, the more you need to print to pay the interest! Hydro, you know all this, yet you wrote that post.

    You post basically says to me that:
    1) economic fundamentals mean little. Because there is manipulation in the markets, the markets will remain disconnected from true fundamentals indefinitely. Reality is obsolete, what matters is what the markets.
    My response? This is nonsense. The tail can wag the dog temporarily, but the dog always ends up wagging the tail in the end.

    2)The housing market isn't really broke because the big boys run the mortgage markets and can fix it.
    My response? This is also nonsense. And your claim that the bubble can "start back again" is only feasible after it has bottomed and prices come down SIGNIFICANTLY. What are they going to do? Just put the entire population on double and triple mortgages? Haha! That's smart, AND sustainable!

    3)"Equities won't crash because there will be total chaos if they do."
    Huh? So because no one wants chaos, equities won't crash??? How do you know who wants what??? You also said if the dollar crashes buy large caps - i'm guessing for the nominal inflation effect? Well, doesn't that affect all dollar denominated assets? Like oil? Like gold? Isn't a dollar crash bad for dollar-reserves around the world? A dollar crash would mean there is no longer sufficient support for or confidence in the dollar to prop it up. A dollar crash would be very very bad, but somehow, you come to the conclusion that one should buy large-caps, as if the dollar and large-caps exist in a vacuum!

    4) "It's not time yet." well, what do you mean it's not time yet? Not time for what? system armegeddon and meltdown? I never said that was going to happen soon. I'm talking about a recession that's on the horizon, and in fact we're already in it if you look at the gdp numbers, and adjust for (understated) inflation.

    So you're saying there's not going to be a recession in 2007? Or are you syaing that there will be a recession but we won't know because ALL of the capital markets will remain healthy throughout the recession. I'm pretty sure you're saying one of those two things. Is that what you're saying? Which one are you saying?

    What are you saying hydroblunt? I really don't get it, are you saying the current risks in the system are irrelevent?? Trivial??

    State your true position, mine is clear. If you don't have a position, then I submit you're just quarterbacking and shooting off at the mouth. Nothing logical or reasonable about your arguments.

    Or maybe I just didn't get it... =(
    #141     Nov 1, 2006
  2. laputa


    The US market is supposed to fall long time ago but somehow still manage to hang on - years after years after years...

    I guess there is a formula to stay afloat - print money (increase money supply at 18% a year), use the money to buy stock index futures (particularly dow), and sell short commodity futures (particularly gold)... until your put options expire (no offense)...

    And the party goes on for another year then another year... ha...
    #143     Nov 1, 2006
  3. yeah, for those who know how to parteyyyy!!!

    whaddya prefer pal, 20 years of depression and one big fat party at the end, or non-stop full-on parteyyyyy for 20 friggin' years and a big baoum at the end?

    sorry just talking shit but u started it bud...
    #144     Nov 1, 2006
  4. professors/academics/those with advanced degrees, ceteris paribus, tend to make terrible traders.

    a few reasons why

    1) academics and professors tend to be wed to theory. so much so, in fact, that cognitive dissonance kicks in when FACT/REALITY interferes with theory. they try to fit uncomfortable facts/data points, or ignore them altogether.

    2) they tend to think they are smarter than everyone else, and by extension - smarter than the market. when a good trader makes a trade that goes against him, he bails out. and moves on. a "smarter" person thinks the market MUST be wrong, after all - it disagrees with him, and will stubbornly dig himself a deeper hole.

    3) many of them have the 'god syndrome' seen in real life among academics (whose students and sycophants DARE not challenge the great and all-powerful Oz), Judges, etc.

    it's an occupational hazard

    4) if you ever need to proof positive that academics/economists know NOTHING about trading, just look at their pet theory- "efficient market theory". according to that theory that was GOSPEL for over a decade, and still is for many - there is no way to be a successful trader, without inside information. it's impossible. the market is efficient. all information ispriced in, the movements apart frm that are random noise.

    #145     Nov 2, 2006
  5. tinmanet


    I never heard that theory (GDP - inflation = real GDP) but somehow it makes sense. Any thots?
    #146     Nov 2, 2006
  6. laputa


    If you take a look at how the CPI is calculated, you may begin to think that the GDP minus actual inflation is actually negative... Take a look at this article from the SF Fed


    IMO the most interesting part lies under the title "Quality change and new goods"... basically it says the BLS makes a comparison of your computer today with computers 10 years ago and adjust the price downwards. Your computer is 100 times faster than 10 years ago, and in BLS's view the price has dropped 100 times...

    That's how they keep the inflation number low with huge money supply growth... amazingly wall street seems to take the CPI seriously, maybe it is the sentiment rather than fact that matters...
    #147     Nov 2, 2006
  7. #149     Nov 4, 2006
  8. i see shadowstuff's john williams has got a maths degree and he's done some contractor work for a stats dept... sounds like he's fully qualified... i mean thats reassuring to know that just about anybody can compute those stats after all innit?

    personally i've tried to compute CPI based on refrigerators' prices since it seems like as good a proxy as anything else but no success... dunno why :confused: :confused:

    any site that cld help?
    #150     Nov 4, 2006