ot economics, bad...

[server]

https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

The Chinese and US issues are both driven by political stupidity and
corruption.

 

[Lasse Langwadt Christensen]

torsdag den 14. juli 2022 kl. 16.59.30 UTC+2 skrev jla...@highlandsniptechnology.com:

https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation.

if you have cash in the bank inflation makes that money shrink in value,
so increase the interest rates making that money increase in value ...

Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

or you got it backwards

 

[Phil Hobbs]

Lasse Langwadt Christensen wrote:

torsdag den 14. juli 2022 kl. 16.59.30 UTC+2 skrev jla...@highlandsniptechnology.com:
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation.

if you have cash in the bank inflation makes that money shrink in value,
so increase the interest rates making that money increase in value ...

Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

or you got it backwards

In normal times, when people actually own things, increasing real
interest rates makes it more attractive to save money, which defers
demand. It also reduces investment, because a new venture has to be
that much more lucrative to be worth doing.

In a world where everything is ridiculously leveraged after years and
years of near-zero real rates and an orgy of printing money that went
into asset price bubbles, raising rates is going to be inflationary
initially.

It\'s when real estate starts getting foreclosed on, people\'s cars get
repo\'ed, and margin calls get issued that we can get on with the very
painful and messy business of deleveraging all of that.

Of course, rate increases directly affect the sustainability of the
ridiculous levels of sovereign (and near-sovereign) debt.

Getting out of this one is not going to be painless.

Cheers

Phil Hobbs

 

[a a]

On Thursday, 14 July 2022 at 18:37:08 UTC+2, Phil Hobbs wrote:

Lasse Langwadt Christensen wrote:
torsdag den 14. juli 2022 kl. 16.59.30 UTC+2 skrev jla...@highlandsniptechnology.com:
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation.

if you have cash in the bank inflation makes that money shrink in value,
so increase the interest rates making that money increase in value ...

Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

or you got it backwards


In normal times, when people actually own things, increasing real
interest rates makes it more attractive to save money, which defers
demand. It also reduces investment, because a new venture has to be
that much more lucrative to be worth doing.

In a world where everything is ridiculously leveraged after years and
years of near-zero real rates and an orgy of printing money that went
into asset price bubbles, raising rates is going to be inflationary
initially.

It\'s when real estate starts getting foreclosed on, people\'s cars get
repo\'ed, and margin calls get issued that we can get on with the very
painful and messy business of deleveraging all of that.

Of course, rate increases directly affect the sustainability of the
ridiculous levels of sovereign (and near-sovereign) debt.

Getting out of this one is not going to be painless.

Cheers

Phil Hobbs

it\'s easy
china-urges-world-to-disregard-protesters-storming-banks-for-cash/

cash is what makes us happy

if interest rates are at Zero level, it\'s easy to get cash from a bank, since overheads are low.
So markets are flooded with cheap money (cash)
making us all happy.

This is an official version, theory,
but in practice
central bank emits unlimited flow of cash to perform some secrete business operations home and in abroad, to control the globe via oil, natural gas contracts, future options

So central bank should be described as cassino
which lets us win one day to make you looser on another day

If you sell $Bs in credits, as central bank does, at Zero level interest rates for 5-10 years to attract borrowers,
raising interest rates generates huge profit with any risk or extra effort

Keep in mind, money ( cash) is manufactured by central bank, exactly the same way, Elon manufactures Teslas

 

[John Larkin]

On Thu, 14 Jul 2022 12:36:56 -0400, Phil Hobbs
<pcdhSpamMeSenseless@electrooptical.net> wrote:

Lasse Langwadt Christensen wrote:
torsdag den 14. juli 2022 kl. 16.59.30 UTC+2 skrev jla...@highlandsniptechnology.com:
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation.

if you have cash in the bank inflation makes that money shrink in value,
so increase the interest rates making that money increase in value ...

Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

or you got it backwards



In normal times, when people actually own things, increasing real
interest rates makes it more attractive to save money, which defers
demand. It also reduces investment, because a new venture has to be
that much more lucrative to be worth doing.

In a world where everything is ridiculously leveraged after years and
years of near-zero real rates and an orgy of printing money that went
into asset price bubbles, raising rates is going to be inflationary
initially.

It\'s when real estate starts getting foreclosed on, people\'s cars get
repo\'ed, and margin calls get issued that we can get on with the very
painful and messy business of deleveraging all of that.

Of course, rate increases directly affect the sustainability of the
ridiculous levels of sovereign (and near-sovereign) debt.

Getting out of this one is not going to be painless.

Cheers

Phil Hobbs

We\'ll need a Giant Reset. That\'s going to hurt.

 

[Joe Gwinn]

On Thu, 14 Jul 2022 07:59:23 -0700, jlarkin@highlandsniptechnology.com
wrote:

,<https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

.<https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

Phil Hobbs explained the theory, but there is also a animal spirits
rationale - one must also break the cycle, which requires strong
enough policies to *cause* a recession. The recession is a necessary
feature, not just an annoying byproduct. So, no \"soft landing\".

In the 1980s, Ronald Reagan ended the inflation of the Carter years by
allowing Paul Volker to cause a well-timed recession. Which ended
after two years, and was over by the time Reagan ran for re-election,
on a rising economy.

The papers were saying 9.1% inflation in the US today. Carter peaked
at ~14%, and loans were 21%. This is when I disintermediated, moving
my savings (at 5.25%) out of a local bank into few-year US Treasury
Bills (which had just become available to non-millionaires, at more
like 15%, never to return.

The Chinese and US issues are both driven by political stupidity and
corruption.

Well, yes, but to somewhat differing degrees. The difference being
that in the US the population can dismiss a government rather easier
than in China, certainly with far less bloodshed.

Joe Gwinn

 

[bitrex]

On 7/14/2022 2:57 PM, John Larkin wrote:

On Thu, 14 Jul 2022 12:36:56 -0400, Phil Hobbs
pcdhSpamMeSenseless@electrooptical.net> wrote:

Lasse Langwadt Christensen wrote:
torsdag den 14. juli 2022 kl. 16.59.30 UTC+2 skrev jla...@highlandsniptechnology.com:
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation.

if you have cash in the bank inflation makes that money shrink in value,
so increase the interest rates making that money increase in value ...

Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

or you got it backwards



In normal times, when people actually own things, increasing real
interest rates makes it more attractive to save money, which defers
demand. It also reduces investment, because a new venture has to be
that much more lucrative to be worth doing.

In a world where everything is ridiculously leveraged after years and
years of near-zero real rates and an orgy of printing money that went
into asset price bubbles, raising rates is going to be inflationary
initially.

It\'s when real estate starts getting foreclosed on, people\'s cars get
repo\'ed, and margin calls get issued that we can get on with the very
painful and messy business of deleveraging all of that.

Of course, rate increases directly affect the sustainability of the
ridiculous levels of sovereign (and near-sovereign) debt.

Getting out of this one is not going to be painless.

Cheers

Phil Hobbs

We\'ll need a Giant Reset. That\'s going to hurt.

Gosh I hope someone manages to save all the landlords. Without their
valuable check-cashing skills I have no idea how we\'ll survive as a society.

 

[bitrex]

On 7/14/2022 10:59 AM, jlarkin@highlandsniptechnology.com wrote:

https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

The Chinese and US issues are both driven by political stupidity and
corruption.

Lamestream media:

<https://i.redd.it/9skgfml89hb91.jpg>

 

[John Larkin]

On Thu, 14 Jul 2022 18:38:47 -0400, bitrex <user@example.net> wrote:

On 7/14/2022 2:57 PM, John Larkin wrote:
On Thu, 14 Jul 2022 12:36:56 -0400, Phil Hobbs
pcdhSpamMeSenseless@electrooptical.net> wrote:

Lasse Langwadt Christensen wrote:
torsdag den 14. juli 2022 kl. 16.59.30 UTC+2 skrev jla...@highlandsniptechnology.com:
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation.

if you have cash in the bank inflation makes that money shrink in value,
so increase the interest rates making that money increase in value ...

Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

or you got it backwards



In normal times, when people actually own things, increasing real
interest rates makes it more attractive to save money, which defers
demand. It also reduces investment, because a new venture has to be
that much more lucrative to be worth doing.

In a world where everything is ridiculously leveraged after years and
years of near-zero real rates and an orgy of printing money that went
into asset price bubbles, raising rates is going to be inflationary
initially.

It\'s when real estate starts getting foreclosed on, people\'s cars get
repo\'ed, and margin calls get issued that we can get on with the very
painful and messy business of deleveraging all of that.

Of course, rate increases directly affect the sustainability of the
ridiculous levels of sovereign (and near-sovereign) debt.

Getting out of this one is not going to be painless.

Cheers

Phil Hobbs

We\'ll need a Giant Reset. That\'s going to hurt.


Gosh I hope someone manages to save all the landlords. Without their
valuable check-cashing skills I have no idea how we\'ll survive as a society.

We don\'t need landlords. People can live just fine in tents.

 

[Les Cargill]

jlarkin@highlandsniptechnology.com wrote:

https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

Related but not equivalent:

\"The act of raising interest rates is generally a signal of
disinflationary intent, but periods of rising interest rates are often
inflationary (i.e. the 1960s and 1970s). \"

https://www.themoneyillusion.com/nick-rowe-on-interest-rates-and-inflation/

The Chinese and US issues are both driven by political stupidity and
corruption.

Politics means a variation on bad spaghetti dinners for months on
end. Think about the sort that attracts. ( stolen from PJ
O\'Rourke )

The Chinese at least draw on engineers for their political class.

--
Les Cargill

 

[Les Cargill]

Phil Hobbs wrote:

Lasse Langwadt Christensen wrote:
torsdag den 14. juli 2022 kl. 16.59.30 UTC+2 skrev
jla...@highlandsniptechnology.com:
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/


https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html


I don\'t understand the concept that raising interest rates counters
inflation.

if you have cash in the bank inflation makes that money shrink in value,
so increase the interest rates making that money increase in value ...

Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

or you got it backwards



In normal times, when people actually own things, increasing real
interest rates makes it more attractive to save money, which defers
demand.  It also reduces investment, because a new venture has to be
that much more lucrative to be worth doing.

In a world where everything is ridiculously leveraged after years and
years of near-zero real rates and an orgy of printing money that went
into asset price bubbles, raising rates is going to be inflationary
initially.

It\'s when real estate starts getting foreclosed on, people\'s cars get
repo\'ed, and margin calls get issued that we can get on with the very
painful and messy business of deleveraging all of that.

Of course, rate increases directly affect the sustainability of the
ridiculous levels of sovereign (and near-sovereign) debt.

As it used to be said - \"where are the bond vigilantes\"? There should
be market based action if the debt is too much.

Global uncertainty makes the dollar and US bonds look better.

Getting out of this one is not going to be painless.

I actually think we\'re at the cusp of a small renaissance. The level of
unused human potential right now is staggering.

Cheers

Phil Hobbs

The other side is that low interest rates provide one method of keeping
zombie firms alive and zombie firms directly attenuate productive capacity.

Throw in the sheer volume of VC money not going to anything of very much
utility - in particular the iron triangle of phone \"tech\", engagement
and ads.

Even if you get firms rising, they want to be private equity now and
that\'s usually a recipe for bad governance. Not always.

But the frontier of new technology is very troubled right now for lots
of reasons. The so-called \"tech sector\" is mainly that way to mark time.

There\'s ML this and that but applications are weird at best. But
it beats learning to do real work I suppose.

--
Les Cargill

 

[rbowman]

On 07/15/2022 05:13 PM, Les Cargill wrote:

jlarkin@highlandsniptechnology.com wrote:



https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/


https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html


I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.


Related but not equivalent:

\"The act of raising interest rates is generally a signal of
disinflationary intent, but periods of rising interest rates are often
inflationary (i.e. the 1960s and 1970s). \"

https://www.themoneyillusion.com/nick-rowe-on-interest-rates-and-inflation/

https://www.thebalance.com/who-is-paul-volcker-3306157

I doubt the current crew has balls the size of Volcker so they\'ll most
likely go for the Hayes yo-yo approach.

Disclaimer: my one course in economics used Samuelson so I know nothing
except some dimly remembered Keynesian mysticism.

 

[server]

On Fri, 15 Jul 2022 18:13:42 -0500, Les Cargill <lcargil99@gmail.com>
wrote:

jlarkin@highlandsniptechnology.com wrote:



https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.


Related but not equivalent:

\"The act of raising interest rates is generally a signal of
disinflationary intent, but periods of rising interest rates are often
inflationary (i.e. the 1960s and 1970s). \"

https://www.themoneyillusion.com/nick-rowe-on-interest-rates-and-inflation/

\"That’s also my ultimate thing. Keynesianism is another example of how
this can go badly wrong. Not ideal New Keynesianism, but actual, real
world Keynesianism.\"

Ah, humor.

The Chinese and US issues are both driven by political stupidity and
corruption.


Politics means a variation on bad spaghetti dinners for months on
end. Think about the sort that attracts. ( stolen from PJ
O\'Rourke )

I wasn\'t going to mention this, being off-topic, but you did open the
issue:

https://en.wikipedia.org/wiki/Cascatelli

https://www.dropbox.com/sh/wqsw4gb0714tugr/AADrQVtSGhejmKbmfiSWkeswa?dl=0

I boiled it for 18 minutes, near sea level. Try it.

The Chinese at least draw on engineers for their political class.

I know. That\'s embarassing. Muslim terrorist bombers are often
educated as engineers.

 

[Clifford Heath]

On 15/7/22 00:59, jlarkin@highlandsniptechnology.com wrote:

https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

The biggest chunk of domestic budgets is housing costs.

Raising interest rates increases mortgage outgoings (and more slowly,
rental prices) so reduces available discretionary spending. That reduces
demand for goods, which pushes prices down.

So goes the theory anyhow

 

[server]

On Sun, 17 Jul 2022 18:00:46 +1000, Clifford Heath
<no_spam@please.net> wrote:

On 15/7/22 00:59, jlarkin@highlandsniptechnology.com wrote:
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

The biggest chunk of domestic budgets is housing costs.

And a million or so immigrants per year need somewhere to sleep.

Raising interest rates increases mortgage outgoings (and more slowly,
rental prices) so reduces available discretionary spending. That reduces
demand for goods, which pushes prices down.

So goes the theory anyhow

I get it. Increasing the price of things reduces the price of things.
Economics!

 

[Clifford Heath]

On 17/7/22 23:52, jlarkin@highlandsniptechnology.com wrote:

On Sun, 17 Jul 2022 18:00:46 +1000, Clifford Heath
Raising interest rates increases mortgage outgoings (and more slowly,
rental prices) so reduces available discretionary spending. That reduces
demand for goods, which pushes prices down.

So goes the theory anyhow
I get it. Increasing the price of things reduces the price of things.

Increasing the price of borrowing reduces the price of goods.
Money is not a \"good\".

 

[Fred Bloggs]

On Thursday, July 14, 2022 at 10:59:30 AM UTC-4, jla...@highlandsniptechnology.com wrote:

https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

https://ca.finance.yahoo.com/news/bonds-slump-inflation-surge-fuels-130720879.html

I don\'t understand the concept that raising interest rates counters
inflation. Maybe that\'s an economics myth. Rising interest rates *are*
inflation.

The Chinese and US issues are both driven by political stupidity and
corruption.

\"In short, if making monetary policy is like driving a car, then the car is one that has an unreliable speedometer, a foggy windshield, and a tendency to respond unpredictably and with a delay to the accelerator or the brake,\" former Federal Reserve chair Ben Bernanke said in 2004 while still a Fed governor.

\"Interest rates and inflation tend to move in the same direction but with lags, because policymakers require data to estimate future inflation trends, and the interest rates they set take time to fully affect the economy. Higher rates may be needed to bring rising inflation under control, while slowing economic growth often lowers the inflation rate and may prompt rate cuts.

The Fed targets a range of the federal funds rate, in part, by setting the rate it pays on banking reserve balances.\"

They\'ve been doing a pretty decent job at this for a few decades at least. The pandemic threw a wrench into the works so what we\'re seeing now is a lag response. Their financial models are lacking consideration of the human element apparently.

https://www.investopedia.com/ask/answers/12/inflation-interest-rate-relationship.asp

 

[server]

On Mon, 18 Jul 2022 09:38:40 +1000, Clifford Heath
<no_spam@please.net> wrote:

On 17/7/22 23:52, jlarkin@highlandsniptechnology.com wrote:
On Sun, 17 Jul 2022 18:00:46 +1000, Clifford Heath
Raising interest rates increases mortgage outgoings (and more slowly,
rental prices) so reduces available discretionary spending. That reduces
demand for goods, which pushes prices down.

So goes the theory anyhow
I get it. Increasing the price of things reduces the price of things.

Increasing the price of borrowing reduces the price of goods.

Sure. When businesses have to pay more interest, they cut their prices
to make up for that.

>Money is not a \"good\".

Not any more.

 

[whit3rd]

On Sunday, July 17, 2022 at 8:29:06 PM UTC-7, jla...@highlandsniptechnology.com wrote:

On Mon, 18 Jul 2022 09:38:40 +1000, Clifford Heath
no_...@please.net> wrote:

On 17/7/22 23:52, jla...@highlandsniptechnology.com wrote:
On Sun, 17 Jul 2022 18:00:46 +1000, Clifford Heath
Raising interest rates ...reduces
demand for goods, which pushes prices down.

So goes the theory anyhow

I get it. Increasing the price of things reduces the price of things.

Increasing the price of borrowing reduces the price of goods.

Sure. When businesses have to pay more interest, they cut their prices
to make up for that.
Money is not a \"good\".
Not any more.

Pricing is about supply and demand. What increased interest does, is make
the inventory (on which sunk costs are carried as a debt) expensive to keep on the shelf,
so the seller lowers prices to reduce that operating expense (or perhaps to put money
into other investments than inventory, which in increased-interest days, get a better return).

Supply AND demand; you can\'t just look at one half of the equation.

 

[Phil Hobbs]

whit3rd wrote:

On Sunday, July 17, 2022 at 8:29:06 PM UTC-7, jla...@highlandsniptechnology.com wrote:
On Mon, 18 Jul 2022 09:38:40 +1000, Clifford Heath
no_...@please.net> wrote:

On 17/7/22 23:52, jla...@highlandsniptechnology.com wrote:
On Sun, 17 Jul 2022 18:00:46 +1000, Clifford Heath
Raising interest rates ...reduces
demand for goods, which pushes prices down.

So goes the theory anyhow

I get it. Increasing the price of things reduces the price of things.

Increasing the price of borrowing reduces the price of goods.

Sure. When businesses have to pay more interest, they cut their prices
to make up for that.
Money is not a \"good\".
Not any more.

Pricing is about supply and demand. What increased interest does, is make
the inventory (on which sunk costs are carried as a debt) expensive to keep on the shelf,
so the seller lowers prices to reduce that operating expense (or perhaps to put money
into other investments than inventory, which in increased-interest days, get a better return).

Supply AND demand; you can\'t just look at one half of the equation.

You\'re leaving out our main problem, which is wholesale distortion of
markets by governments, both by money-printing and by intenitonally
destructive regulations.

You\'re also thinking down at DC, where there\'s an equilibrium that can
be tweaked slowly enough that things like inventory levels equilibrate
on their own.

The axe-swinging idiots that are running the show at the moment make
sure that\'s not the case.

Cheers

Phil Hobbs