I have noticed that the last time I replied to @King Kreole , I dont know his position because he hopes all over the place like Trump
Recession of 2020? It’s actually a Great Depression
I have noticed that the last time I replied to @King Kreole , I dont know his position because he hopes all over the place like Trump
So? What does that have to do with the fact that cause was deregulation enacted by a Democratic president? Bush's sins are his own, there's no need to absolve Clinton of his.
Almost every respected economist acknowledges this is a quirk of history, not some meaningful insight.
Does the economy always do better under Democratic presidents?
Which of course makes sense because the economics practiced by Republicans pre-Reagan is very different from the economics practiced by Republicans post-Reagan. Same goes for Democrats. Also, there are a myriad of factors that play into economic performance, not just the President's party affiliation.
I'm arguing for decentralization of economic risk. I'm arguing for maybe learning a single lesson from the recession we just came out out.
The political environment isn't static. We just saw a Trump-influenced Republican platform advocate for a return of Glass-Steagall. The two biggest names on the Democratic side are both advocating for its return. There's momentum here. Wall Street doesn't have a strong base anymore.
Tax evaders being jailed is even less likely than them paying their taxes in the first place
Fair, but Bush is just as culpable.
Trumps entire campaign platform should be ignored, until we see seriousness there its all rhetoric
I have noticed that the last time I replied to @King Kreole , I dont know his position because he hopes all over the place like Trump
Damn I always try to live by this quote but at times I get caught up
Broke Wave
The GOAT
I almost got him to admit that he thinks Reaganomics was a good thing. Then he did some massive wall of text and Juelz.gif and I forgot about it. He knows that if nobody knows his actual beliefs, he can just be a contrarian and counter anything without having to defend anything.
I have noticed that the last time I replied to @King Kreole , I dont know his position because he hopes all over the place like Trump
Even in this discussion, he doesn't admit he believes in supplyside economics, so he doesn't have to defend it. He can simply bring up the flaws of Clinton etc and all sorts of irrelevant stuff.
King Kreole
natural blondie like goku
I've made my position known multiple times. I'm not an anarcho-capitalist or even a libertarian. Not only do I believe in responsible regulations, I think they're necessary to avoid letting the stallion of capitalism buck society off. Dodd-Frank did not go far enough in rectifying the mistakes that caused the recession of '08, namely because the fukking author is in bed with Wall Street
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My arguments re: Reaganomics have always been about its historical impact, not whether or not it should be applied again in 2016, which doesn't make sense to me because we're in a completely different context than we were in 1980. Taxation rates aren't in the 70s, so why would dramatically reducing them produce the same result? For that reason, I think the Bush Tax Cuts were a mistake. It's called the Laffer Curve for a reason. As I've said before, the fundamentals of Reaganomics are sound in that they did produce a massive economic boom, its failure is not distributing those gains to ensure equality of opportunity amongst the populace. I believe the election of a Democrat after 12 years of Republican rule represented an opportunity to rectify that failure, but instead we got the introduction of Clintonian Third-Way neoliberalism and the slashing of welfare and the social safety net. I'm not a liberal or a conservative. I'm more interested in history and ideology than the tribalism of modern politics. I think it causes people to look at the world through faulty, totalizing lenses.
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My arguments re: Reaganomics have always been about its historical impact, not whether or not it should be applied again in 2016, which doesn't make sense to me because we're in a completely different context than we were in 1980. Taxation rates aren't in the 70s, so why would dramatically reducing them produce the same result? For that reason, I think the Bush Tax Cuts were a mistake. It's called the Laffer Curve for a reason. As I've said before, the fundamentals of Reaganomics are sound in that they did produce a massive economic boom, its failure is not distributing those gains to ensure equality of opportunity amongst the populace. I believe the election of a Democrat after 12 years of Republican rule represented an opportunity to rectify that failure, but instead we got the introduction of Clintonian Third-Way neoliberalism and the slashing of welfare and the social safety net. I'm not a liberal or a conservative. I'm more interested in history and ideology than the tribalism of modern politics. I think it causes people to look at the world through faulty, totalizing lenses.
King Kreole
natural blondie like goku
I don't think Trump's campaign platform should be ignored, just the opposite. I think it should be pressed. Like Bernie and Liz have said, he's made a lot of "progressive" promises, his feet should be held to the fire. He didn't campaign as a traditional right wing Republican, he's susceptible to pressure from the left.
Highlights from Rickards’ speech:
“Why don’t they [Federal Reserve officials and government economists] see the risks coming? Why are they constantly surprised? Why is it happening it again? How is this even possible? The answer to that is they have the wrong models. They have the wrong intellectual frame for understanding risk. They don’t understand the statistical properties of risk. If you’ve got the wrong model, you’re going to get the wrong result every time…
“We’re at the same place today in capital markets risk management [as astronomy was when Copernicus first proposed that the planets revolved around the sun]. The new models are there. The old models don’t work. But the people who embrace the old models are wedded to them; they’re married to them. They can’t change them up…
“Your savings and retirement are at risk, because you’re relying on a system that doesn’t know what it’s doing. It’s going to take a while to change…
“There is a move afoot to take the Chinese currency, the yuan, and include it in this basket [of currencies in the Special Drawing Rights (SDRs) of the IMF]… This would amount to an anointing. This would anoint the yuan as a big-time, global reserve currency. Along with dollar, sterling, euros, and yen. It makes China a very important part of the club…
“China recently created the Asia Infrastructure Investment Bank, the AIIB. They got most of the important countries to sign up, including a bunch of countries that the United States didn’t want to sign up… This bank is going to have $100 billion in capital, and it will be able to issue bonds. They haven’t said what currency they’re going to issue them in, but my estimate is that they’ll issue them in SDRs… They’re going to do big stuff. They’re going to build railroad, natural gas pipelines, oil pipelines, highways, airports. These are big, multi-billion dollar, multi-year infrastructure projects. Guess what? If you’re Germany, you want those contracts… Those contracts are going to go to German companies, British companies, French companies. They’re not going to go to American companies by and large, because we’re not in that club. That’s why everybody joined…
“China official says they have 1,054 tons of gold. The actual number is 3 or 4,000 – maybe more. Every time I’ve formed an estimate of Chinese gold, when I got better data I was always wrong on the low side. They always had more than I thought… They’re buying it in secret…
“Why don’t we have better information? Why doesn’t China just tell us how much gold they have? Well, if you were out to buy 2,000 tons would you want people to know what you’re doing? Of course not. That’d make the price go up…
“I have gold. I recommend gold to clients. 10%, by the way. Don’t let anyone tell you I said sell everything and buy gold. I never said that. 10% is a good allocation. There are plenty of other things to do with your portfolio… I like gold, because it is physical. You can’t hack it… People think they have money. No, what you have are digital statements. You have digital wealth. The statement you get from your stock broker, the price of a stock exchange, your bank account – everything you have except for land, gold, fine art, and a few other things is digital…
“Gold is going to go to $10,000 an ounce, but not for the reasons I’ve just described… China wants to be in the big club, but the US is holding a black ball: ‘Maybe we’ll let you into our club, maybe we won’t. What kind of behavior can we expect from you?’ So China is over here building their own club [with the AIIB]… China is doing both things at once…
“What is the United States saying is the price of letting China into the club? Putting China into the SDR and giving China more votes in the IMF – that’s what they want. That’s what is in play… The White House is deliberately slow-rolling this so they can get the concessions out of China… They want to peg the yuan to the dollar. They want China to stop fighting the currency wars. They want China to stop promoting their economy and growing their exports by cheapening their currency…
“The gold is plan B. Paper money is plan A. The United States is saying to China [that if] you want to be in the paper money club, that’s fine. Come on in. We’ll give your paper money the seal of approval by including it in the SDR. The fact that you have 7-8,000 tons of gold, that’s great. That’s your admission for getting into the club…
“[This year] Let’s look for China to publicly announce how much gold they have, which will be another lie. Because they have 3 accounts. They have the People’s Bank of China (PBOC), the State Administration of Foreign Exchange (SAFE), and China Investment Corporation. They have 3 buckets to put the gold in. They will move some gold from SAFE to PBOC. They’ll announce that. It will be a lot… But they might have 2-3,000 tons over in SAFE that they don’t disclose…
“All of this is moving toward the diminution, the elimination of the dollar as an important global reserve currency. But this is not something that happens overnight… It took 30 years for sterling to be diminished to a relatively important currency… We’re in the process of destroying the dollar, but it’s something that happens slowly.
“There’s no reason for you to sit around and wait for it to happen. There are things that you can do now…
“[What the power elites] want to happen is this orderly process that I just described. It would play out over years. It would go in stages. It would involve eventually substituting SDRs for dollars. The impact of that would be inflationary. The problem in the world today is there is just too much debt and not enough growth. There is no combination of growth on current conditions and taxes that will pay off the debt, or even make the debt sustainably… But if you can inflate the currency, then it is…
“You don’t have to have 20% inflation in one year. If you do 3% a year for 22 years, you cut the value of the dollar in half. You do it in another 22 years, you cut it in half again. So 44 years, which is the time from when your children are born to when they become adults, the value of the dollar has been reduced by 75%. That’s with 3% inflation. That’s the kind of inflation they think nobody notices…
“That’s what the elites think is going to happen. Here’s what is going to happen. I think we’re going to get a catastrophic financial panic sooner than later… Sometime in the next couple years… They happen every 5, 6, 7 years. It’s been 6 years since the last one. So how close can we be to the next one? The answer is probably pretty close. When that happens, it’s probably going to be a lot worse than 2008. The reason I say that is because the system is bigger…
“1998, Wall Street bails out the hedge funds. 2008, central banks bail out Wall Street. 2018, who’s going to bail out the central banks? There’s only one clean balance sheet left in the world and that’s the IMF. They’re going to come with these SDRs by the trillions… That’s going to be very inflationary.”
DonKnock
KPJ Gonna Save Us
Reagan increased taxes on the top 10% and increased the Social Security tax though
The modern conservative interpretation of Reagan to slash the hell out of everything is such a b*stardization of what Reagan actually did
DonKnock
KPJ Gonna Save Us
How did Obama slash welfare when he made taxes dedicated to SS jump with Obamacare and also proposed an additional increase for the SS tax that got shot down?
I guess medical care doesn't fall under welfare anymore?
King Kreole
natural blondie like goku
How did Obama slash welfare when he made taxes dedicated to SS jump with Obamacare and also proposed an additional increase for the SS tax that got shot down?
I guess medical care doesn't fall under welfare anymore?
I didn't say Obama slashed welfare, I said Clinton did.
DonKnock
KPJ Gonna Save Us
My mistake, carry on
Donald Trump’s Unhappy Fate is to Oversee a Financial Crisis Far Worse Than the Last
[Ed. Note: Jim Rickards latest New York Times best seller, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis (claim your free copy here) goes beyond the election and prepares you for the next crisis]
An earthquake doesn’t care if you’re progressive or populist. It destroys your house all the same. Likewise a financial crisis is indifferent to a politician’s policy mix.
Systemic crises proceed according to their own dynamic based on the array of agents in a system, and systemic scale.
The tempo of recent crises in 1994, 1998, and 2008 says a crisis is likely soon. A new global financial panic will be one legacy of the Trump administration. It won’t be Trump’s fault, merely his misfortune.
The equilibrium and value-at-risk models used by banks will not foresee the new panic. Those models are junk science relying as they do on notions of efficient markets, normally distributed risk, continuous liquidity, and a future that resembles the past. None of those hypotheses match reality.
Advances in behavioural psychology have demolished the idea of efficient markets. Data shows the degree distribution of risk is a power curve not a normal bell curve. Liquidity evaporates when most needed. Prices gap down; they do not move continuously.
Each of the 1994, 1998, and 2008 crises was worse than the one before, and required more drastic intervention. The future does not resemble the past; it keeps getting worse. The standard models are in ruins.
Recent model improvements that take into account so-called tail risk still fail to come to grips with systemic scale. The most catastrophic event possible in a complex system is an exponential function of scale. In plain language, if you double system size, you do not double risk; you increase it by a factor of five or more.
Since 2008, the largest banks in the world are larger in terms of gross assets, share of total deposits, and notional value of derivatives. Everything that was too-big-to-fail in 2008 is bigger and exponentially more dangerous today.
The living wills and resolution authority of Dodd-Frank are entrances to gated communities. They seem imposing, but are a façade. They will do nothing to stop an angry mob. Increases in regulatory capital will not suffice. When a leveraged financial institution faces a liquidity panic, no amount of capital is enough. As boxing legend Mike Tyson mused, no plan survives the first punch in the face.
Banks should take a lesson from Mike Tyson.
If existing models don’t work, what does? A blend of complexity theory, Bayesian statistics, and behavioural psychology can produce models with robust predictive power. Such models are being developed in a few centers of excellence such as the Santa Fe Institute, the London School of Economics, and the Swiss Federal Institute of Technology in Zurich. Yet, they are far from mainstream thinking and will not be adopted in time to mitigate the next crisis.
Financial panics are dynamically and mathematically identical to a variety of natural phenomena such as earthquakes and avalanches. As snow accumulates on a mountainside, seasoned observers can spot avalanche danger. Soon one snowflake alights in such a way as to perturb others that begin to slide, form a chute, create momentum, and rip loose the entire snowpack. Timing is uncertain, yet the avalanche is inevitable.
What snowflake could precipitate the next financial panic? Deutsche Bank is an obvious candidate. Less obvious is a failure to deliver physical gold by a London bullion bank. That would expose the hyper-leveraged “paper gold” market for what it is. A natural disaster on the scale of Fukushima would do as well.
Looming over these catalysts is a global dollar shortage, which has been described by economists Claudio Borio and Hyun Song Shin at the Bank for International Settlements. The strong dollar could precipitate a wave of defaults on $9 trillion of dollar-denominated emerging markets corporate debt. Those defaults would make the 1994 Tequila Crisis look tame.
The 2008 crisis was truncated with tens of trillions of dollars of currency swaps, money printing, and rate cuts coordinated by central banks around the world. The next crisis will be beyond the scope of central banks to contain because they have failed to normalise either interest rates or their balance sheets since 2008. Central banks will be unable to pull another rabbit out of the hat; they are out of rabbits.
There are no rabbits left.
In the next crisis, liquidity will come from the IMF, which has the only clean balance sheet remaining. The IMF will print the equivalent of $10 trillion in world money called special drawing rights. China and Russia will acquiesce in this liquidity injection provided it hastens the demise of the dollar as the benchmark global reserve currency.
Can Trump avoid this fate? Possibly. Ski patrols reduce avalanche danger by using dynamite to descale the snowpack. Likewise the financial system can only be made safer by reducing its scale. Large vessels use watertight holds to achieve the same margin of safety. A hole in the hull floods one hold, but does not sink the ship.
Descaling finance means reinstating the Glass-Steagall and pre-Big Bang separation of deposit taking and securities underwriting. It means breaking up the big banks. JP Morgan, Chase Manhattan, and Chemical Bank should reemerge from the embrace of Jamie Dimon. Derivatives should be banned except for exchange-traded futures tied to specific assets used for commercial hedging. It’s time to close the casino.
Will Trump pursue these policies? It’s unlikely. Such proposals will be lost in a sea of competing priorities. Bank lobbyists rule Washington from the commanding heights; draining the swamp won’t change that.
Sooner than later a new treasury secretary and Fed chair will retrace the 2008 footsteps of Hank Paulson and Ben Bernanke to tell President Trump the system is having a heart attack. They will have no remedy except to suggest a call to Madame Lagarde.
[Ed. Note: Jim Rickards latest New York Times best seller, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis (claim your free copy here) goes beyond the election and prepares you for the next crisis]
An earthquake doesn’t care if you’re progressive or populist. It destroys your house all the same. Likewise a financial crisis is indifferent to a politician’s policy mix.
Systemic crises proceed according to their own dynamic based on the array of agents in a system, and systemic scale.
The tempo of recent crises in 1994, 1998, and 2008 says a crisis is likely soon. A new global financial panic will be one legacy of the Trump administration. It won’t be Trump’s fault, merely his misfortune.
The equilibrium and value-at-risk models used by banks will not foresee the new panic. Those models are junk science relying as they do on notions of efficient markets, normally distributed risk, continuous liquidity, and a future that resembles the past. None of those hypotheses match reality.
Advances in behavioural psychology have demolished the idea of efficient markets. Data shows the degree distribution of risk is a power curve not a normal bell curve. Liquidity evaporates when most needed. Prices gap down; they do not move continuously.
Each of the 1994, 1998, and 2008 crises was worse than the one before, and required more drastic intervention. The future does not resemble the past; it keeps getting worse. The standard models are in ruins.
Recent model improvements that take into account so-called tail risk still fail to come to grips with systemic scale. The most catastrophic event possible in a complex system is an exponential function of scale. In plain language, if you double system size, you do not double risk; you increase it by a factor of five or more.
Since 2008, the largest banks in the world are larger in terms of gross assets, share of total deposits, and notional value of derivatives. Everything that was too-big-to-fail in 2008 is bigger and exponentially more dangerous today.
The living wills and resolution authority of Dodd-Frank are entrances to gated communities. They seem imposing, but are a façade. They will do nothing to stop an angry mob. Increases in regulatory capital will not suffice. When a leveraged financial institution faces a liquidity panic, no amount of capital is enough. As boxing legend Mike Tyson mused, no plan survives the first punch in the face.
Banks should take a lesson from Mike Tyson.
If existing models don’t work, what does? A blend of complexity theory, Bayesian statistics, and behavioural psychology can produce models with robust predictive power. Such models are being developed in a few centers of excellence such as the Santa Fe Institute, the London School of Economics, and the Swiss Federal Institute of Technology in Zurich. Yet, they are far from mainstream thinking and will not be adopted in time to mitigate the next crisis.
Financial panics are dynamically and mathematically identical to a variety of natural phenomena such as earthquakes and avalanches. As snow accumulates on a mountainside, seasoned observers can spot avalanche danger. Soon one snowflake alights in such a way as to perturb others that begin to slide, form a chute, create momentum, and rip loose the entire snowpack. Timing is uncertain, yet the avalanche is inevitable.
What snowflake could precipitate the next financial panic? Deutsche Bank is an obvious candidate. Less obvious is a failure to deliver physical gold by a London bullion bank. That would expose the hyper-leveraged “paper gold” market for what it is. A natural disaster on the scale of Fukushima would do as well.
Looming over these catalysts is a global dollar shortage, which has been described by economists Claudio Borio and Hyun Song Shin at the Bank for International Settlements. The strong dollar could precipitate a wave of defaults on $9 trillion of dollar-denominated emerging markets corporate debt. Those defaults would make the 1994 Tequila Crisis look tame.
The 2008 crisis was truncated with tens of trillions of dollars of currency swaps, money printing, and rate cuts coordinated by central banks around the world. The next crisis will be beyond the scope of central banks to contain because they have failed to normalise either interest rates or their balance sheets since 2008. Central banks will be unable to pull another rabbit out of the hat; they are out of rabbits.
There are no rabbits left.
In the next crisis, liquidity will come from the IMF, which has the only clean balance sheet remaining. The IMF will print the equivalent of $10 trillion in world money called special drawing rights. China and Russia will acquiesce in this liquidity injection provided it hastens the demise of the dollar as the benchmark global reserve currency.
Can Trump avoid this fate? Possibly. Ski patrols reduce avalanche danger by using dynamite to descale the snowpack. Likewise the financial system can only be made safer by reducing its scale. Large vessels use watertight holds to achieve the same margin of safety. A hole in the hull floods one hold, but does not sink the ship.
Descaling finance means reinstating the Glass-Steagall and pre-Big Bang separation of deposit taking and securities underwriting. It means breaking up the big banks. JP Morgan, Chase Manhattan, and Chemical Bank should reemerge from the embrace of Jamie Dimon. Derivatives should be banned except for exchange-traded futures tied to specific assets used for commercial hedging. It’s time to close the casino.
Will Trump pursue these policies? It’s unlikely. Such proposals will be lost in a sea of competing priorities. Bank lobbyists rule Washington from the commanding heights; draining the swamp won’t change that.
Sooner than later a new treasury secretary and Fed chair will retrace the 2008 footsteps of Hank Paulson and Ben Bernanke to tell President Trump the system is having a heart attack. They will have no remedy except to suggest a call to Madame Lagarde.
JahFocus CS
Get It How You Get It
If I haven't hit at least milli by the start of the next recession/depression, I'm gonna skate up outta here to a country in Latin America or Africa experiencing positive economic growth.