re:[" No details on the particulars of the Fed's
or the ECB's actions. No data. No discussion of the
impact of taking non-reserved SIVs back onto the balance
sheet, where they require reserves. No discussion of who
is now borrowing these sums you claim are available for
lending.No discussion of the default rates going forward
on credit cards and car loans. No discussion or analysis
of the insolvency issues."]
Pogo, this isn't directed at you personally, so please
don't take it that way. Because it isn't just you, it's
both armchair and professional market pundits alike.
Just read the newspapers, online forums and blogs...
You can't find two economists, or market analysts that
can agree on how to measure money supply, let alone
decipher the Fed and Global Central bankers actions
of late.
And guess what?
That's just the way Central Bankers want it.
Now stop and pause for a moment and let that sink in.
When I tell you that you will make more money (much more),
by asking the right questions, versus seeking the right
answers -- I'm being 110% serious.
And you're a great example here, because you're seeking
the right answers to all the wrong questions.
You're asking about the particulars of the Fed and the ECB's
actions and you want data that they refuse to give.
You want to discuss of the impact of taking non-reserved
SIVs back onto the balance sheets....to which the answer
is obvious.
You want to know who is borrowing these sums "I claim" are
available for lending....when the Fed has just added a cloak
of anonymity so they can inject liquidity into these troubled
banks - without you, or anyone else knowing.
You want to know default rates going forward on credit cards
and car loans...in a society with a negative savings rate,
with falling real wages, a collapsing purchasing power from
a falling dollar, with rising unemployment and a slowing
economy?
...you really don't know the answer to that?
First I have to ask you - have you not paid attention
to anything the Fed has done of late?
Remember - trade on what they do - not on what they say,
trade the walk -- not the talk.
You want clarity, numbers, and particulars that you can
depend on and trust from the Fed?
The same Fed that says inflation is at 2.3% and that
people putting money into savings accounts is the
reason for ramping money supply.
You want "numbers" from THAT Fed?
Ahem, I won't say what I want to say... or, go where
I want to go here... instead, let me go back to my
resolution to be "kinder and gentler in the New Year"
and share this instead...
Here are three transcripts from conversations between
then Fed Chairman Alan Greenspan and Ron Paul.
These transcripts will hopefully give you an epiphany
moment vis a vis... asking the right questions vs. seeking
the right answers from the Fed.
Here they are...
---------------------------------------------------------------------------------------------------
2/17/2000
Dr. PAUL. "My concern is what is going to happen when this bubble bursts? I think it will, unless you can reassure me. But the one specific question I have is will M3 shrink? Is that a goal of yours, to shrink M3, or is it only to withdraw some of that credit that you injected through the noncrisis of Y2K?"
Mr. GREENSPAN. "Our problem is, we used M1 at one point as the proxy for money, and it turned out to be very difficult as an indicator of any financial state. We then went to M2 and had a similar problem. … The difficulty is in defining what part of our liquidity structure is truly money. … Our measures of money have been inadequate and as a consequence of that we … have downgraded the use of the monetary aggregates for monetary policy purposes.”
Dr. PAUL. "It is hard to manage something you can’t define."
Mr. GREENSPAN. "It is not possible to manage something you cannot define."
---------------------------------------------------------------------------------------------
2/11/2004 —
Dr. PAUL. "Maybe there is too much power in the hands of those who control monetary policy, the power to create the financial bubbles, the power to maybe bring the bubble about, the power to change the value of the stock market within minutes? That to me is just an ominous power and challenges the whole concept of freedom and liberty sound money."
Dr. GREENSPAN. "Congressman, as I have said to you before,
the problem you are alluding to is the conversion of a commodity standard to fiat money. We have statutorily gone onto a fiat money standard, and as a consequence of that, it is inevitable that the authority which is the producer of the money supply, will have inordinate power."
-----------------------------------------------------------------------------------------------
7/21/2004 —
Dr. PAUL. "Yesterday's testimony was received in the press as you painting a pretty rosy picture of the economy. … So my question to you is, how unique do you think this period of time is that we live in and the job that you have? … Since there is no evidence that fiat money works in the long run, is there any possibility that you would entertain that, quote, we may have to address the subject of overall monetary policy not only domestically but internationally in order to restore real growth."
Mr. GREENSPAN. "Well, Congressman, you are raising the more fundamental question as to being on a commodity standard or another standard. And this issue has been debated, as you know as well as I, extensively for a significant period of time. Once you decide that a commodity standard such as the gold standard is, for whatever reasons, not acceptable in a society and you go to a fiat currency, then the question is automatically, unless you have Government endeavoring to determine the supply of the currency, it is very difficult to create what effectively the gold standard did. I think you will find, as I have indicated to you before, that most effective central banks in this fiat money period tend to be successful largely because we tend to replicate that which would probably have occurred under a commodity standard in general."
----------------------------------------------------------------------------------------------
The Fed can not (or, will not) define money as it relates
to it's liquidity structure, yet you (and others) seek the
answer to a question it can not (or, will not) answer?
How about asking the right questions?
Like why did the Fed remove M3 from public scrutiny?
Or, why have they added a cloak of anonymity so banks
can now come to the discount window without public recourse?
Or, why they have started using auctions to inject
term funds through a broader range of counter parties and
against a broader range of collateral than open market
operations?
Oops!
They already answered that one (vbg).
...so they could help promote the efficient dissemination
of liquidity when the markets are under stress.
So why do you suppose that they removed M3?
...because they are creating more, or less money?
...because they wanted you to have more, or less clarity?
Why do you suppose they are creating so much mis-
direction, and confusion with their repos... and now
integrating coordinated actions with at least 4 other
Central Banks?
...because they are creating more, or less liquidity?
And why are they not telling us exactly what
kind of assets they are taking in as collateral?
...because they are taking in better, or worse collateral?
...because they are trying to inject more, or less liquidity?
...because they want you to have more, or less clarity?
It truly mystifies me to read the comments from professionals
like John Hussman, and bloggers & posters that you cited who
seemingly want to chase their tails in circles trying to find
detailed minutia - for which plain and simple answers already
exist to more relevant questions?
Go read the comments from the blogs you cited. Everyone is
using different numbers to come up with answers to your
questions.... and those who have come up with numbers as
answers, have changed them, or flip-flopped on them...
and their numbers don't match anyone else's?
With the Fed's obfuscation - they can't even agree on what
numbers to use... let alone what the resulting numbers are?
You are all missing the forrest for the trees....because you
are seeking answers to the wrong questions.
If you truly are in doubt as to whether the Fed is ramping
money supply, engineering a global injection of liquidity,
and why?
Then -- good luck and God bless you,
because you're going to need both.
S.O.T.B.
PS: Did you ever wonder why the average Wall Street
economist with a Phd makes about 1/10th of what
the average street savy trader on the Chicago Merc
makes?
One gets lost in the minutia of irrelevant answers,
and the other finds clear, simple and obvious answers,
to releveant questions.
I hope that helps. |
