by Summary:
So much ignorance and stupidity. They WANT you to take their money. It's your duty. Either that or you are too lazy. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
So much ignorance and stupidity. They WANT you to take their money. It's your duty. Either that or you are too lazy. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Jodi Beggs writes Economists Do It With Models 1970-01-01 00:00:00
Mike Norman writes 24 per cent annual interest on time deposits: St Petersburg Travel Notes, installment three — Gilbert Doctorow
Lars Pålsson Syll writes Daniel Waldenströms rappakalja om ojämlikheten
Merijn T. Knibbe writes ´Fryslan boppe´. An in-depth inspirational analysis of work rewarded with the 2024 Riksbank prize in economic sciences.
| So much ignorance and stupidity. They WANT you to take their money. It's your duty. Either that or you are too lazy. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman |
I thought everyone equated inflation with a crash in the dollar. Who is saying the dollar would go up?
There's a difference between a car slowing down and a car crashing.
Have an awesome hike! Please put safety first regarding hydration, water reserves, and notifying people of you route in case of emergency. We don't want to hear about you on "Missing 411."
Best of luck — look forward to seeing the videos
Drink plenty of water old man. (Joking. I admire your phys fitness.)
Mike enjoy your hike and be careful
Stay safe, yet have a great time at the Canyon!
See you at the finishing line!!
Inflation is always, everywhere a lack of competition. Price rises create their own supply
We don't have this kind of money to invest and wait for 20 years at 8% of gain a year. We do want our stock to go up 20% a day to put food on the table. Otherwise it is all just a jerk off.
Hey Mikey, good luck with your field trip…looking forward to seeing the highlights of the field trip to the Grand Canyon…
I'm a strong believer in the value based investment approach.
Told you a week ago market would reverse 14 may hehe
Isn't money a tangible representation of value created? With unemployment up, isn't value production down? With more "tangible" money in the market than created value, doesn't that mean inflation?
Stay cautious! Lots of rattlers in the area. Have a great hike, Mike!
Good luck Mike!
Thanks for cute video, have fun out west!
Higher interest rates would mean people looking to buy a house would have higher monthly mortgage payments to make therefore it would reduce the price of the house they would be able to afford. Same with someone leasing a car. Higher rates might mean they would have to lease a cheaper car. Not sure I'm really believing that higher interest rates lead to inflation. I guess the rebuttal is that if people are earning more interest on a savings account they might spend more of the interest, because, God forbid, the Fed is actually letting them earn interest….lol….but if they're borrowing money it's just the opposite. Also whether or not higher interest rates raise the cost of producing a product depends on whether the company has more cash than debt or vice-versa. Higher interest rates are good for savers. Lower interest rates are good for borrowers.
My gods I hope Mike is ok
Totally agree with every word you mentioned regarding people wanting to "hit it big" in trading, with two or three trades (or one, LOL) like it's a lottery ticket. Once upon a time, I used to train traders (Got out of that, now work on the Pro side of the house, Family Office). But I'd tell them the same thing over and over and over again: They have WILDLY UNREALISITIC expectations. I urged them to go to (Back then it was Altegris) Coquest's Ranking Database, IASG, Barclay Hedge, any one of the NUMBER of databases that rank Pro Asset Managers, and looking at the VERY BEST performers. Dunn, Eckhardt, etc, who have been around forever, and are managing over a hundred million, to billions. Study their performance (Of course, this depends on the average volatility of returns someone is going for, and how they want to set what I refer to as the 'risk knob') … but the overall point was: WHY are they trying to beat the TOP OF THE WORLD managers, who have steller performance … some with Sharpe's at 2.0 over the course of a decade … RIGHT OUT OF THE GATE? Naturally, it's easier for smaller guys to do well, as they don't have scaleability problems we have when we start managing larger positions with larger AUM. But regardless, the point stands … people don't even know what good performance actually LOOKS like. If you asked them something as simple as their Max DD (Drawdown) in a periodicity, they'd look at you with a blank stare, and you have to explain to them what Drawdown even is. They just want to hit two or three BIG TRADES and act like a BSD, as if they know something. Any moron can have two or three big trades. That's nothing more than a lottery ticket. But to consistently pull money out of the markets? That's where it's at … and where the real fun begins …
Hope you do well on your hike. I've never done it, but have friends who have. It's a beast … an absolute beast according to them. I know one girl who had to be carried out of the Canyon. Wish you well on it.
So here's the story with Volcker, and why he was and IS such a boss. And why we need another, and we'll probably never see his like again. And the correct chronological order of what happened.
The problem they had in the 1970's, was not simply that they were at the end of a 40 year bull in Treasury Yields. That was part of it, and comes with it's own complications. It's that they were … as you mention … they were experiencing Inflationary concerns. As you correctly mention, that was because they were hitting supply chain problem, after supply chain problem, after Oil Embargo, on top of Market Confusion with getting off the Gold Standard (Nitwits who didn't understand Fiat well, including Policy makers (who am I kidding, it's been nearly 50 years, and they still dont understand) were causing disruptions).
There was a lot of confusion. And yes, they kept raising the interest rate. But all they were doing, as was later explained to Volcker (I'll get to that) was matching in lock-step inflation with the Interest Rate, and weren't getting anywhere. Turkey, at the moment, is making the same mistake. Because they truly don't understand what Volcker did. They think: "Well, just raise the Target Rate, to battle inflation". Ehhhh, that's not the entirety of what Volcker did, and why he was such a boss.
Until later, I believe it was the Saint Louis Fed who came into ascendancy at the time (I think Kansas City back then was a BIG Fed Policy voice if you can believe it, but yeah, different times back then) … that the problem, was that yes, you should raise the Interest Rate to battle inflation … but it's not a matter of matching the inflation to the Interest Rate (The mistake Turkey is making at the moment). You're just matching it 0.9 to 1.0, and you're not going to get anywhere, and inflation won't calm down if that's all your doing, with that simplistic view. And that's what Volcker came to understand. The whole incident is referred to as that "Fateful Plane Flight".
One which flight, they explained to Volcker, it's more nuanced than that. They almost, without realizing it, made Volcker one of the first true MMT guys, and he was the ONLY one that had the guts to do, what needed to be done.
1) Aggregate Demand (Which is what MMT is all about) was absolutely out of whack. That had to be the primary driver. Because of the aforementioned reasons.
2) Without question, they were at the end of a 40 Year Bull Run in Yield.
3) A reset was needed, or Inflation would ramp up higher, to numbers even worse than they were then. 30% MONTH OVER MONTH would arrive, unless they squashed it.
4) The rate was high, but once they had those facts established, they convinced him that pretty much, the only thing that was going to work, is that the Fed had to cause a 'reset' that would simultaneously SQUASH inflation, and destroy ALL the weak Credit Markets … and the only want to do that, was to take the rate beyond high. They had to absolutely, raise it to a RIDICULOUS level. A Full 1000 Basis points! And if that didn't do the job? Then do it again. And at that point, you start a new bear market in price yield, which should fuel economic expansion for decades. Which it did.
Volcker was the only one with the guts, to do that. Within 15 minutes, his mind was made up. He was asked point blank: If you take this action, and you really do this to the credit markets, aren't you going to cause a Recession? A bad one?
His reply, was that yes, it would. He had the GUTS to say that, outloud, and to do it. But better a bad recession now, and a reset on those Credit Markets … than a runaway Inflation Depression.
And he was proven correct. Took a couple of time to get it right? But he did it. How many today, have that sort of iron fortitude.
And NO ONE … has the guts, to stop what Janet Yellens started. This idea of marrying concern over the 'stock market going up', to what the Fed is doing. They've tried Transparency, which is normally good? But it's politicized the Fed. And we're seeing the results of that. I'm on Druckenmillers side with this one. I disagree that the rate should be raised. (I don't go around calling other Pros stupid, if I disagree with them). And Big D DID point out, that their first move WAS CORRECT. But … his GREATER point, was they stayed too late. Usually, I agree with the Fed, and thought what they did throughout the Financial Crisis was GENIUS and proved all the haters to be know-nothings hacks (Big D was wrong on that one, and I disagreed with him then). Bernanke was not the best at Oration? But he was a BOSS in getting done, what needed to be done. But now? Now they've stayed too late. That's the greater point. The periodicity of the supply chain disruptions for the Pandemic? Their first move was ABSOLUTELY CORRECT. But they've stayed too long now. And the narrowing spread of Expections to CPI, to that PPI number? Is too tight. With the Second Stimulus? With being as dovish as they are at the moment? They are literally causing the heat up. Retail Sales were where they were Pre-Pandemic, after the first stimulus. Now, they've doubled. Because they've stayed too long. They are literally causing a heat-up. And I agree … the lack of understanding by people, is UNREAL. I think raising the rate would BE A MISTAKE at this point. A bad mistake, and where I respectfully disagree with Big D. What they have to do, priority one at the moment? Is just changing their guidance language and their tone. As Bernanke demonstrated? The power that can be done with that is unreal. And though Powell does some things right? I think his weakest point, is his use of Guidance Language.
Thankfully, Producers with PPI are eating it all up in the spread between CPI and PPI, so consumers aren't seeing it too bad at the moment. But I fear, they have stayed too late. The fires out, but they have a hard time adjusting to that, because they're being too cautious, and not quick enough.
Myself? I'm out of my STIRs arb's at the moment, and Flat Cash in front of Fed Minutes, because the above is what the Pro's (trust me) on the short-term Interest Rate side of the house are concerned about. Yeah, this is sort of my universe … as Short-Term Interest Rate Markets are my bread and butter …. the stuff I do, most people and DEFINITELY retail traders don't even know exist as markets.