Comments for Alt-M Ideas for an Alternative Monetary Future Tue, 26 Jul 2016 03:55:00 +0000 hourly 1 Comment on Futures Unbound by gchakko Tue, 26 Jul 2016 03:55:00 +0000 Granted that bonds are an escape valve, esp. in times when
an economy goes unstable, and that is the case of the U.S. economy now, specifically indebted to China for over a trillion USD, why not go to the roots of the problem and nip it
at the bud. The Fed is the problem here. Can you not imagine a normal healthy national economy without bonds needing no collateral for clients? The U.S. is the only economy in the world that flashes its bonds. Boisterous Hedge Funds, Junks etc. How do you explain this ? Europeans are conservative, you are right. However they have a stable social market economy (Ludwig Erhard) which can’t be said of America, where multi-billionaires are on the rampage, neglecting the poor. Think over.

George (Chakko), Vienna, Austria
26/07/2016 05:53 hrs

Comment on Futures Unbound by Gary Anderson Mon, 25 Jul 2016 18:01:00 +0000 You are dreaming, George C. Look at the oversubscription at the bond auctions. Trust me, bonds are the new gold. The Eurozone faces a massive shortage of bonds as collateral because of austerity. That is why they may be turning to helicopter money.

Keep in mind, bonds are gold. Bonds are an asset in and of themselves and have been hoarded since the mid 1980's corresponding to Greenspan taking over at the Fed. QE or no QE, bond yields are relentlessly declining.

Comment on Futures Unbound by gchakko Mon, 25 Jul 2016 04:05:00 +0000 Sorry, bonds are the biggest U.S. humbug creation in world financial history. If anyone floats a bond, it is either a sign of his insecurity or a casino-roulade speculative. The US Treasury Bonds, supposedly the most secure on the basis of alleged economic military strength, is not credible anymore. Who wants to buy your overprinted dollar? China and Russia are trying to get rid of them. Only the U.S. Fed and its delusionary RR Banker entourage believes, it can bluff the world with its 8,100 tons of gold reserve with never an inventory check from outside for decades in order to keep printing worthless dollars to manipulate interest rate hikes. Sorry Sir, the dynamics of money has lost its credulance since 1971, as far as the U.S. dollar is concerned. Why? Other nations do not simply print like the U.S. beyond their minimum internal monetary needs. Junk the dollar will soon become the catchword for the "Gentile" majority.

George Chakko, Vienna, 25/07/2016 06:05 am

Comment on Why the Money Multiplier Remains so Low by Gary Anderson Mon, 25 Jul 2016 04:03:00 +0000 Las Vegas has turned from an ownership town to a town of renters, Benjamin. I think that is happening in many places. Housing is picking up according to Business Insider, so, maybe lending standards have secretly been lowered.

Comment on Why the Money Multiplier Remains so Low by Benjamin Cole Mon, 25 Jul 2016 00:36:00 +0000 I enjoyed this post.
Two thoughts:
Commercial and industrail lending has been rising at double-digit rates for several years.
Still, more than 80% of commercial bank lending is property lending in the US. To talk about banks is to talk about property markets.

Comment on The Very Model of a Modern Monetary Economist by M. Camp Sat, 23 Jul 2016 20:42:00 +0000 I was glad to read this. We all tend to personalize things that we oughtn't but rarely think to apologize, as you graciously have.

I have two other comments.

First, I don't think you really meant to refer to "throwing X under the bus". This metaphor refers to the act of cynically sacrificing an ally in order to protect oneself. I'm sure you would agree that the professor was simply giving his honest opinion, not acting in bad faith.

Second, Dr. Selgin happened to have a criticism to offer of what he views as the harmful behavior of 'large class of people'. I don't think anyone should be taken to task for a criticism, based on the size of the group being criticized. To object to a point on that basis is almost like defending status quo bias itself.

I also found your "sour grapes" accusation baffling. It is from one of Aesop's fables; it means hypocritically dismissing the value of something that one had sought, simply because one has failed to attain it.

You used it to complain about Dr. Selgin's critique, seemingly based merely on the fact that he happened to criticize the actions of the current establishment. I was glad that Dr. Selgin gave a polite but lethal rebuttal.

Comment on Dodd-Frank, Lending, and Slow Growth by gchakko Sat, 23 Jul 2016 20:21:00 +0000 While this is a purely American market specific banking debate related to the 2007/2008 crisis, let me point to the live nature of this problem elsewhere in the world in the banking sector and corroborate some of author’s apt objective

The author has hit the nail on its head. The Bankers’ main business is lending, because their root income is based on that ever since this business flourished under Jewish bankers since 500 years, simply because they were not allowed easy ride in other professions. Today the banker prejudice is for bonds of all kinds including the “Junk”, where manipulations are easy and have free-go and hence the potential huge to spin money artificially and lazily, especially when networked through banking conglomerates spread out worldwide. Today it has branched further into investment banking, M&A sectors, real-estate etc. Innovative technologies (in my jargon technovations) or their assessment is not their main priority interest or strength.

As corroboration let me table following facts from my experience as VP and CEO of advanced microelectronics projects, who was forced to knock at the doors of Big Banks and Venture capitalists in Europe & the U.S. including few Japanese banks,seeking investment capital over 2-digit $ millions. This was 2 decades before the sub-prime crisis:

1) The VP of Citibank in Frankfurt told me, the official allotted venture capital (VC) in Germany was DM 2 Billion then, the actual annual disbursement by banks but was DM 200 mill. only, due earth-bound conservatism of German investment mentality.

2) As a member of German Inventors Association branch in Düsseldorf, I noticed quite few inventors unable to maintain payment for their patents to be kept alive, the bankers tried to throttle them to sell them to the banks at tuppence value.

3) One VP of a reputed VC firm in San Francisco insisted the start-up to qualify for VC should not be more than 2 hours from so that the company come under strict observations and financial control of the VC firm. In other words it was “vulture” capitalism with banker dictates.

4) The Vice-Director of UBS in Zürich when asked to get the technology assessment of our project by technical professors, which is what the Purdue University did for the Indiana State Commerce Dept. on our project, he cynically reacted “No, we don’t trust professors. We make our own internal assessment”, again banker dictates story.

The real issue here is how to put an end to this kind of interference in innovations’ breeding that is the real backbone of any good national economy. This is where the Western world and Japan still has a big edge over fast growing Eastern economies of China and India. There are enough sound economists in this world who would categorically underscore the vital role of innovation for an economy to grow and flourish and why are bankers not promoting it? An economy to grow must be innovative, even if you cannot consume what you produce/overproduce.

George Chakko, former U.N. correspondent, now retiree in Vienna, Austria.
Vienna, 23/07/2016 22:21 hrs

Comment on Futures Unbound by Gary Anderson Sat, 23 Jul 2016 13:02:00 +0000 George Selgin is talking about derivatives clearinghouses. Yeah!!!! Unfortunately, nobody else who is an economist, is doing so. There is massive demand for bonds as collateral in the clearinghouses. This pushes yield down. Why do you think yields for bonds went down after QE ended even though pundit after pundit said that could not happen? The systemic risk in the system has been transferred from the banks to the clearinghouses. The only thing that could upset this cart is a shortage of bonds!! That would subject the clearinghouses to systemic risk.

Scott Sumner refuses to speak to the demand for bonds in both good and bad times, due to these clearing houses. It is like monetarists have a system that was formulated prior to the clearinghouses and bonds acting as the new gold for them. They cannot bring the new normal reality into that system. Now, I still hold out hope for helicopter money along the lines of Eric Lonergan's ideas, because you don't have to change interest rates in order for the people to hold the base money.

Comment on Dodd-Frank, Lending, and Slow Growth by Gary Anderson Fri, 22 Jul 2016 22:28:00 +0000 Ari, clearly central banks do not want big growth in the economy. I believe it is because of the massive demand for bonds as collateral in the clearing houses. This takes systemic risk out of the system, but unfortunately, a shortage of bonds could put the clearing houses in jeopardy. Scott Summer and most market monetarists won't give me the time of day about these bonds and this massive demand because it throws a wrench into their plans for NGDP targeting and the like. I think in a deflationary scenario, like in the Eurozone, some helicopter money to the real economy won't mess with bond interest rates that much if at all. But my question is do you get frustrated about this shortage of bonds reality or are you like the MMers and don't seem to even care that the demand for those bonds pushes yields down relentlessly?

Comment on Dodd-Frank, Lending, and Slow Growth by Gary Anderson Fri, 22 Jul 2016 22:18:00 +0000 I am convinced that procyclical central bankers always loosen when they should tighten and tighten when they should loosen. Please read this from Eric Lonergan: I am interested in what you think about the ECB's helicopter money to the real economy.