Where Is Gold Going In This Market

[crs]

 

i agree. but if Switzerland is far away from your country of residence you have not only have a problem to access your gold but also to move it where you need it.

I use Goldmoney. Check out their services if you're not already familiar.

[Naam]

 

i agree. but if Switzerland is far away from your country of residence you have not only have a problem to access your gold but also to move it where you need it.

I use Goldmoney. Check out their services if you're not already familiar.

you use "Goldmoney" to move the physical gold you own from one country to another???

[flying]

Gold + 1.6% today already & moves through resistance at $1150/oz USD

Moving up with the dollar today

Silver also looking strong today

[Naam]

Gold + 1.6% today already & moves through resistance at $1150/oz USD Moving up with the dollar today Silver also looking strong today

that's something i have never understood and will never understand. how can investors believe in technicals if they are convinced that the fundamentals of an asset are paramount positive over and above all other assets (except precious metals).

there's another thing which not only makes me chuckle but puts a dirty grin on my face when sworn goldbugs (i am not referring to you Flying!) measure the present value of their gold using [YUCK²!] something they describe with a four-letter word, namely "fiat"

[sokal]

Gold + 1.6% today already & moves through resistance at $1150/oz USD

Moving up with the dollar today

Silver also looking strong today

The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty

I also find it suspicious that the TSX Venture was up +11 while the TSX was down -45. The TSX Venture has the most gold junior companies listed in the world.

Although the Aussy ASX 200 is currently down -22, who knows what to make of it.......

Edited April 8, 2010 by sokal

[edgarfriendly]

dunno about all the waffle, gold here went up 200 baht this mornin.

17550 per half oz.

that equals 35100 THB per OZ (96.5)

OR 1084 USD where did u get 1150? (maybe 99.99)

or 710 GBP

Thats the PRICE, u tell me the 'spot price'

ef

Edited April 8, 2010 by edgarfriendly

[flying]

Gold + 1.6% today already & moves through resistance at $1150/oz USD Moving up with the dollar today Silver also looking strong today

that's something i have never understood and will never understand. how can investors believe in technicals if they are convinced that the fundamentals of an asset are paramount positive over and above all other assets (except precious metals).

there's another thing which not only makes me chuckle but puts a dirty grin on my face when sworn goldbugs (i am not referring to you Flying!) measure the present value of their gold using [YUCK²!] something they describe with a four-letter word, namely "fiat"

:D You know what is funny is I feel the exact same way.

I only mention these things for conversational interest.

I know many say gold is gone up today because the dollar is down. So I notice days like today at times...

I also hear the levels of resistance & support from the chartist & cycles types.

But as I have said many times those are not the reasons I bought & have no intention of selling anytime soon. Well maybe of the Dow & Gold reached a 1:1 parity

Edited April 8, 2010 by flying

[simcity]

But as I have said many times those are not the reasons I bought & have no intention of selling anytime soon. Well maybe of the Dow & Gold reached a 1:1 parity

Death is hereditary, if you do not spend it, they will !

Edited April 8, 2010 by simcity

[flying]

But as I have said many times those are not the reasons I bought & have no intention of selling anytime soon. Well maybe of the Dow & Gold reached a 1:1 parity

Death is hereditary, if you do not spend it, they will !

Well yes but I only said "anytime soon" I have a target in mind

[simcity]

But as I have said many times those are not the reasons I bought & have no intention of selling anytime soon. Well maybe of the Dow & Gold reached a 1:1 parity

Death is hereditary, if you do not spend it, they will !

Well yes but I only said "anytime soon" I have a target in mind

Is that going to be when the Gold & Dow reached parity ?

[manarak]

measure gold price in fiat... we are forced to do so.

but don't focus on the gold price so much.

I invested two years ago in gold mines denominated in CAD and AUD (home currency is EURO). It was 50% of my portfolio then, and it grew to 90% today.

I let the profits run.

I already wrote about why I believe in CAD and AUD, but now I will explain why gold mines.

Gold has a production cost which varies depending on how difficult the metal is to extract.

So, if a mine has extraction cost of 500 and the gold price is at 600, the mine makes a profit of 100.

If the price of gold jumps to 700, this is only an increase of 17%, but the profit of the mine doubles! So will the share price!

Who cares about fiat or not fiat - the value of my shares tripled! Not to mention CAD and AUD gained about 25% against EURO in that time.

And I always keep the real estate market under surveillance on the other side... I can now buy three times more real estate :-)

Edited April 8, 2010 by manarak

[Gambles]

that's something i have never understood and will never understand. how can investors believe in technicals if they are convinced that the fundamentals of an asset are paramount positive over and above all other assets

Just posted something similar on the stock thread

TA has its place but charts should be confirmations of technicals and maybe clues to timing but if 90%+ of short term return comes from asset allocation then fundamentals should by 9X more important than technicals...

there's another thing which not only makes me chuckle but puts a dirty grin on my face when sworn goldbugs (i am not referring to you Flying!) measure the present value of their gold using [YUCK²!] something they describe with a four-letter word, namely "fiat"

[PCA]

that's something i have never understood and will never understand. how can investors believe in technicals if they are convinced that the fundamentals of an asset are paramount positive over and above all other assets

Just posted something similar on the stock thread

TA has its place but charts should be confirmations of technicals and maybe clues to timing but if 90%+ of short term return comes from asset allocation then fundamentals should by 9X more important than technicals...

there's another thing which not only makes me chuckle but puts a dirty grin on my face when sworn goldbugs (i am not referring to you Flying!) measure the present value of their gold using [YUCK²!] something they describe with a four-letter word, namely "fiat"

true for institutionals and commercials but very wrong for the small guys like you and me.

Correction after second read since you talk about short term returns which are not targeted from instis the whole statement is wrong.

Edited April 9, 2010 by PCA

[Gambles]

that's something i have never understood and will never understand. how can investors believe in technicals if they are convinced that the fundamentals of an asset are paramount positive over and above all other assets

Just posted something similar on the stock thread

TA has its place but charts should be confirmations of technicals and maybe clues to timing but if 90%+ of short term return comes from asset allocation then fundamentals should by 9X more important than technicals...

there's another thing which not only makes me chuckle but puts a dirty grin on my face when sworn goldbugs (i am not referring to you Flying!) measure the present value of their gold using [YUCK²!] something they describe with a four-letter word, namely "fiat"

true for institutionals and commercials but very wrong for the small guys like you and me.

Correction after second read since you talk about short term returns which are not targeted from instis the whole statement is wrong.

Well PCA, I have to view from an institutional perspective but moreover in terms of all portfolio allocation you have to measure alpha in defined periods otherwise it becomes meaningless - have you read Brinson, Hood & Beebower - I think that I still have a copy somewhere; it's out of date now but it's the foundation to everything that follows on. This is a fascinating topic - PM me if you'd like pointing in the right direction. There's a whole raft of work on this and it's inevitably pretty technical but I'm sure that you'll enjoy it!

[Naam]

Well PCA, I have to view from an institutional perspective but moreover in terms of all portfolio allocation you have to measure alpha in defined periods otherwise it becomes meaningless - have you read Brinson, Hood & Beebower - I think that I still have a copy somewhere; it's out of date now but it's the foundation to everything that follows on. This is a fascinating topic - PM me if you'd like pointing in the right direction. There's a whole raft of work on this and it's inevitably pretty technical but I'm sure that you'll enjoy it!

[sokal]

Does anyone understand the latest post by FOFOA. I know some people here read it. Its complicated.....

BTW Naam, hating blogs is like hating sentences or books. I wonder if anyone out arbitrarily hates "books"

Edited April 13, 2010 by sokal

[Naam]

Does anyone understand the latest post by FOFOA. I know some people here read it. Its complicated.....

BTW Naam, hating blogs is like hating sentences or books. I wonder if anyone out arbitrarily hates "books"

who hates blogs?

[JRinger]

Does anyone understand the latest post by FOFOA. I know some people here read it. Its complicated.....

BTW Naam, hating blogs is like hating sentences or books. I wonder if anyone out arbitrarily hates "books"

naam hates everything and rejects everything that isn't written by 'naam'.

[Naam]

[Gambles]

Does anyone understand the latest post by FOFOA. I know some people here read it. Its complicated.....

Just read it

you mean the piece by Aristotle?

not so much complicated as vague and woolly

It's 11 years old but hasn't gotten any better or worse in that time

I'll set myself up to be shot down here but did everyone see my piece a couple of months back in The Nation about fiat money creation -

In the aftermath of the credit crunch, asking the question “whose fault was it?” has been a very popular pastime, although mainly in The West, not Asia, which probably reflects;

1) The West’s greater need to attach blame crystallize that through litigation and wherever possible financial redress for all courses of events. Mind you it’s hard to imagine that anyone could ever enforce a judgement for the trillions of dollars of resulting loss and damages stemming from the Global Financial Crisis even if they can prove that any parties were criminally negligent although we’d hate to guess what a typically sharp New York attorney would claim in punitive damages.

2) The greater immediacy (AKA short-termism) that dominates western political and economic thought. In journeys around China travel writer Paul Theroux tried to initiate dialogue concerning Mao’s Cultural Revolution that began in the 1940s. The virtually unanimous response Chinese was that “it’s too soon to be able to tell.” Asian thinking often seems less inclined to jump to hasty conclusions concerning events whose consequences are still playing.

It is undoubtedly too soon to tell if anyone was to blame for the GFC but there is no shortage of opinions: Many blogs are full of heartfelt criticism of The Federal Reserve Bank for their role in this. In years to come it may be that this criticism turns out even more right than is now being imagined.

Liaquat Ahamed’s book “Lords of Finance” explains how the creation of the Fed, in the period between the banking crisis surrounding the collapse of The Knickerbocker Trust co. in 1907 and the signing into legislation of The Federal Reserve Act on December 23rd 1913, was lobbied so strongly and furtively by bankers themselves, primarily Henry Davison the de facto head at J.P Morgan. This branch of quasi-government was designed to serve the bankers, not the people. It was the bankers who had the most to gain from the creation of the Federal Reserve System and who stood to lose most if this didn’t happen!

The failure of Knickerbocker in 1907 was the Lehman Brothers of its day at – America’s biggest banking failure, the collapse of the 3rd biggest bank in New York at the time. Once the immediate crisis passed the biggest worry for the bankers was the threat to the fractional reserve banking system, whereby banks lend out many times the value of the cash that they take in on client deposits. The Knickerbocker collapse and the resultant damage to public faith in the banking system was an inevitable recurrence. Frank D Graham subsequently observed in 1936 –

“The attempt of the banks to realize the inconsistent aims of lending cash, or multiplied claims to cash, and still to represent that cash as available on demand is even more preposterous than … eating one’s cake and counting on it for future consumption… The alleged convertibility is a delusion dependent upon the right’s not being unduly exercised.”

Had governments shown the collective will to ‘outlaw’ or to more actively constrict fractional banking in 1907 or even if they had let the markets do that for them then there would have been a very painful period of adjustment, a severe depression and a raft of global bank failures. There would also arguably have been an end to the boom and bust excesses, an end to speculative asset bubbles and an end to excessive inflation. There would also have less reliance on the role of banks within the economy and consequently a reduction in rewards for both banks and bankers. Clearly, the cabal of bankers led by Davison would not have welcomed this. Although the final form of the Federal Reserve System that became law in 1913 didn’t give them all the powers that they sought, it did protect the 4-5 times bank leverage that was already embedded in the banking system at that time and within just over 3 years enabled this to swell to 10 times – spearheading a 6 fold increase in monetary potential. It is now clear that this expansion of the monetary base helped to fuel the ‘roaring twenties’ and also prevented the otherwise normal adjustments to the business cycle that would have otherwise occurred in the first half of the twenties’ or rather delayed them until the end of the decade and made their impact many times greater.

In other words the increased confidence that stemmed from the assumption that the US government implicitly guaranteed the new Federal Reserve System, thereby underwriting the entire banking system, was also a contributory factor to the booms and bubbles of the 1920s.

Previously the regular failure of banks acted as a pressure value. Now, hitherto unimaginable forces built up and in 1929 created the greatest economic explosion that the world had seen.

Ahamed’s book reminds us of Murray Rothbard’s seminal work “The Causes of The Great Depression” which detailed how creating The Federal Reserve System in 1913 was the biggest single contributor to the economic collapse at 1929 and the ensuing Great Depression.

Fast forward to 2008 and the same Fed that originally created the perfect conditions to incubate the leverage boom that preceded The Great Depression could be argued to have done it again, not that American banks were uniquely culpable (reportedly UBS was operating at 82 x leverage). By 2008, banks had become too big to fail and the system had built up even more powerful forces than in the 1920s. Undoubtedly it is too soon to tell but early indications suggest that the continued implementation by Alan Greenspan and Ben Bernanke, of expansive credit policies, comparable to those of the 1920s may have been directly responsible for the Global Financial Crisis that started in 2008.

96 years in existence and outright responsibility for the 2 biggest global economic crises in history - that’s quite some record!

[sokal]

Does anyone understand the latest post by FOFOA. I know some people here read it. Its complicated.....

Just read it

you mean the piece by Aristotle?

not so much complicated as vague and woolly

It's 11 years old but hasn't gotten any better or worse in that time

I'll set myself up to be shot down here but did everyone see my piece a couple of months back in The Nation about fiat money creation -

In the aftermath of the credit crunch, asking the question "whose fault was it?" has been a very popular pastime, although mainly in The West, not Asia, which probably reflects;

1) The West's greater need to attach blame crystallize that through litigation and wherever possible financial redress for all courses of events. Mind you it's hard to imagine that anyone could ever enforce a judgement for the trillions of dollars of resulting loss and damages stemming from the Global Financial Crisis even if they can prove that any parties were criminally negligent although we'd hate to guess what a typically sharp New York attorney would claim in punitive damages.

2) The greater immediacy (AKA short-termism) that dominates western political and economic thought. In journeys around China travel writer Paul Theroux tried to initiate dialogue concerning Mao's Cultural Revolution that began in the 1940s. The virtually unanimous response Chinese was that "it's too soon to be able to tell." Asian thinking often seems less inclined to jump to hasty conclusions concerning events whose consequences are still playing.

It is undoubtedly too soon to tell if anyone was to blame for the GFC but there is no shortage of opinions: Many blogs are full of heartfelt criticism of The Federal Reserve Bank for their role in this. In years to come it may be that this criticism turns out even more right than is now being imagined.

Liaquat Ahamed's book "Lords of Finance" explains how the creation of the Fed, in the period between the banking crisis surrounding the collapse of The Knickerbocker Trust co. in 1907 and the signing into legislation of The Federal Reserve Act on December 23rd 1913, was lobbied so strongly and furtively by bankers themselves, primarily Henry Davison the de facto head at J.P Morgan. This branch of quasi-government was designed to serve the bankers, not the people. It was the bankers who had the most to gain from the creation of the Federal Reserve System and who stood to lose most if this didn't happen!

The failure of Knickerbocker in 1907 was the Lehman Brothers of its day at – America's biggest banking failure, the collapse of the 3rd biggest bank in New York at the time. Once the immediate crisis passed the biggest worry for the bankers was the threat to the fractional reserve banking system, whereby banks lend out many times the value of the cash that they take in on client deposits. The Knickerbocker collapse and the resultant damage to public faith in the banking system was an inevitable recurrence. Frank D Graham subsequently observed in 1936 –

"The attempt of the banks to realize the inconsistent aims of lending cash, or multiplied claims to cash, and still to represent that cash as available on demand is even more preposterous than … eating one's cake and counting on it for future consumption… The alleged convertibility is a delusion dependent upon the right's not being unduly exercised."

Had governments shown the collective will to 'outlaw' or to more actively constrict fractional banking in 1907 or even if they had let the markets do that for them then there would have been a very painful period of adjustment, a severe depression and a raft of global bank failures. There would also arguably have been an end to the boom and bust excesses, an end to speculative asset bubbles and an end to excessive inflation. There would also have less reliance on the role of banks within the economy and consequently a reduction in rewards for both banks and bankers. Clearly, the cabal of bankers led by Davison would not have welcomed this. Although the final form of the Federal Reserve System that became law in 1913 didn't give them all the powers that they sought, it did protect the 4-5 times bank leverage that was already embedded in the banking system at that time and within just over 3 years enabled this to swell to 10 times – spearheading a 6 fold increase in monetary potential. It is now clear that this expansion of the monetary base helped to fuel the 'roaring twenties' and also prevented the otherwise normal adjustments to the business cycle that would have otherwise occurred in the first half of the twenties' or rather delayed them until the end of the decade and made their impact many times greater.

In other words the increased confidence that stemmed from the assumption that the US government implicitly guaranteed the new Federal Reserve System, thereby underwriting the entire banking system, was also a contributory factor to the booms and bubbles of the 1920s.

Previously the regular failure of banks acted as a pressure value. Now, hitherto unimaginable forces built up and in 1929 created the greatest economic explosion that the world had seen.

Ahamed's book reminds us of Murray Rothbard's seminal work "The Causes of The Great Depression" which detailed how creating The Federal Reserve System in 1913 was the biggest single contributor to the economic collapse at 1929 and the ensuing Great Depression.

Fast forward to 2008 and the same Fed that originally created the perfect conditions to incubate the leverage boom that preceded The Great Depression could be argued to have done it again, not that American banks were uniquely culpable (reportedly UBS was operating at 82 x leverage). By 2008, banks had become too big to fail and the system had built up even more powerful forces than in the 1920s. Undoubtedly it is too soon to tell but early indications suggest that the continued implementation by Alan Greenspan and Ben Bernanke, of expansive credit policies, comparable to those of the 1920s may have been directly responsible for the Global Financial Crisis that started in 2008.

96 years in existence and outright responsibility for the 2 biggest global economic crises in history - that's quite some record!

Your putting the blame in the right place but while you where at it, you should have put some blame on Keynes.

about FOFOA, I am just not sure what his main point is. Is he just saying that underground oil has been collateralized to finance mines or some dam_n thing, i just dont get it, usually I get this stuff right away.

[Gambles]

Your putting the blame in the right place but while you where at it, you should have put some blame on Keynes.

about FOFOA, I am just not sure what his main point is. Is he just saying that underground oil has been collateralized to finance mines or some dam_n thing, i just dont get it, usually I get this stuff right away.

You're probably right about Keynes but you know Keynes really pushed understanding a long way forwards in his day. Yes, he also drew a lot of wrong conclusions that inspired a lot of bad decisions. While I'm no Keynesian a lot of the smart thinkers today have used Keynes as the building blocks of their understanding and then developed much more logical theories of their own (Minsky, Keen etc). Also while much of what Keynes said and wrote may have been wrong, it was plausible based on that little that we empirically knew at the time. So while I recognise the shortcomings, I've a great deal of respect for the role played by Keynes in pushing the debate forwards if not for the theories themselves which haven't generally stood the test of time particularly well.....on the other hand, don't even think of getting me started on Friedman and his monetarists who sadly now somehow dominate US/global positions of power. In the current crisis, Keynesianism is an anachronistic irrelevance whereas monetarism is the clear and present danger that we all face.......

I don't think that you're not getting it so much as the article isn't saying it

All businesses are NPV reflections of their future cash flows

This value is their collateral.

For commodity producers (like gold and oil) you can monetise future production now by borrowing against it.

You can then do 3 things:

monetise at today's prices if a supplier of capital will fix at today's prices (i.e. the lender takes all of the risk as buyer's risk)

monetise at future prices (the producer takes all the risk as seller's risk)

intermediate the risk (The House of Saud takes all the risk for raising capital against future Saudi oil supply)

In all 3 cases the risk taker is rewarded if prices go up and punished if they fall

In Saudi, the writer believes that the House took the risk by borrowing capital forwards against future oil supply at whatever the future price was - in other words Saudi debt would be inflated away by huge oil price rises or would be devastatingly increased in real terms by oil price deflation.

Remember that this was late '90s, pre-Dubai world etc

The basic principle is that commodity producers can borrow huge amounts and pay back only a tiny % of the real cost of that if prices shoot up but be virtually bankrupted by debt if prices fall.

What would have been nice would have been some stats about borrowing versus collateral commodity prices - otherwise this is merely an interesting if slightly obvious observation/question. It would be quite interesting to model to see what level each of the indebted oil producers needs to achieve to see their debt become manageable and at what levels of price and production it becomes a problem.

The really interesting point is to try to model this from a commercial exploitation poit of view - if country X can't afford oil supply/price to fall below X million barrels a day at $Y per barrel, how does that fit in with global oil production - can other producers exploit this? Is the problem so big that all producers need to co-operate to squeeze the price up and the Dollar down? What does that do to the global economy? There's a really interesting article here to be written but sadly this is just the first draft of the concept and it looks like the research hasn't been added in despite 11 years elapsing....

[flying]

early indications suggest that the continued implementation by Alan Greenspan and Ben Bernanke, of expansive credit policies, comparable to those of the 1920s may have been directly responsible for the Global Financial Crisis that started in 2008.

96 years in existence and outright responsibility for the 2 biggest global economic crises in history - that’s quite some record!

[teletiger]

early indications suggest that the continued implementation by Alan Greenspan and Ben Bernanke, of expansive credit policies, comparable to those of the 1920s may have been directly responsible for the Global Financial Crisis that started in 2008.

96 years in existence and outright responsibility for the 2 biggest global economic crises in history - that’s quite some record!

Do they (perp) walk on strike 3?

Regards.

[Abrak]

You're probably right about Keynes but you know Keynes really pushed understanding a long way forwards in his day. Yes, he also drew a lot of wrong conclusions that inspired a lot of bad decisions. While I'm no Keynesian a lot of the smart thinkers today have used Keynes as the building blocks of their understanding and then developed much more logical theories of their own (Minsky, Keen etc). Also while much of what Keynes said and wrote may have been wrong, it was plausible based on that little that we empirically knew at the time. So while I recognise the shortcomings, I've a great deal of respect for the role played by Keynes in pushing the debate forwards if not for the theories themselves which haven't generally stood the test of time particularly well.....on the other hand, don't even think of getting me started on Friedman and his monetarists who sadly now somehow dominate US/global positions of power. In the current crisis, Keynesianism is an anachronistic irrelevance whereas monetarism is the clear and present danger that we all face.......

I agree with much of what you have to say but one should remember that (1) Keynes was working under the assumption of monetary inflexibility and (2) that future generations have effectively bastardized Keynes for their own political/economic agenda. I entirely agree about Friedman monetary economics which was not only based on incorrect and virtually falsified work but clearly never really took into account causality.

Unfortunately we dont have much else to go on with unless you are in the 'evolution creates the perfect being' world. I personally believe that a combination of Keynesian and monetarism (aka Bernanke) essentially avoided meltdown. One without the other would have not worked. Unfortunately we are well beyond the limits that either policy is likely to be effective going forward. Monetary policy has been rendered ineffective and Keynesian policy placed on a pedestal of inflation.

[Gambles]

early indications suggest that the continued implementation by Alan Greenspan and Ben Bernanke, of expansive credit policies, comparable to those of the 1920s may have been directly responsible for the Global Financial Crisis that started in 2008.

96 years in existence and outright responsibility for the 2 biggest global economic crises in history - that's quite some record!

Do they (perp) walk on strike 3?

Regards.

if only.......

[Gambles]

You're probably right about Keynes but you know Keynes really pushed understanding a long way forwards in his day. Yes, he also drew a lot of wrong conclusions that inspired a lot of bad decisions. While I'm no Keynesian a lot of the smart thinkers today have used Keynes as the building blocks of their understanding and then developed much more logical theories of their own (Minsky, Keen etc). Also while much of what Keynes said and wrote may have been wrong, it was plausible based on that little that we empirically knew at the time. So while I recognise the shortcomings, I've a great deal of respect for the role played by Keynes in pushing the debate forwards if not for the theories themselves which haven't generally stood the test of time particularly well.....on the other hand, don't even think of getting me started on Friedman and his monetarists who sadly now somehow dominate US/global positions of power. In the current crisis, Keynesianism is an anachronistic irrelevance whereas monetarism is the clear and present danger that we all face.......

I agree with much of what you have to say but one should remember that (1) Keynes was working under the assumption of monetary inflexibility and (2) that future generations have effectively bastardized Keynes for their own political/economic agenda. I entirely agree about Friedman monetary economics which was not only based on incorrect and virtually falsified work but clearly never really took into account causality.

Unfortunately we dont have much else to go on with unless you are in the 'evolution creates the perfect being' world. I personally believe that a combination of Keynesian and monetarism (aka Bernanke) essentially avoided meltdown. One without the other would have not worked. Unfortunately we are well beyond the limits that either policy is likely to be effective going forward. Monetary policy has been rendered ineffective and Keynesian policy placed on a pedestal of inflation.

Agreed but the stakes are too high to have thrown this much at the problem and hope that the next answer suddenly appears - I would have written down the bad & doubtful debts and written off the bad & doubtful banks...

[fletchsmile]

You're probably right about Keynes but you know Keynes really pushed understanding a long way forwards in his day. Yes, he also drew a lot of wrong conclusions that inspired a lot of bad decisions. While I'm no Keynesian a lot of the smart thinkers today have used Keynes as the building blocks of their understanding and then developed much more logical theories of their own (Minsky, Keen etc). Also while much of what Keynes said and wrote may have been wrong, it was plausible based on that little that we empirically knew at the time. So while I recognise the shortcomings, I've a great deal of respect for the role played by Keynes in pushing the debate forwards if not for the theories themselves which haven't generally stood the test of time particularly well.....on the other hand, don't even think of getting me started on Friedman and his monetarists who sadly now somehow dominate US/global positions of power. In the current crisis, Keynesianism is an anachronistic irrelevance whereas monetarism is the clear and present danger that we all face.......

I agree with much of what you have to say but one should remember that (1) Keynes was working under the assumption of monetary inflexibility and (2) that future generations have effectively bastardized Keynes for their own political/economic agenda. I entirely agree about Friedman monetary economics which was not only based on incorrect and virtually falsified work but clearly never really took into account causality.

Unfortunately we dont have much else to go on with unless you are in the 'evolution creates the perfect being' world. I personally believe that a combination of Keynesian and monetarism (aka Bernanke) essentially avoided meltdown. One without the other would have not worked. Unfortunately we are well beyond the limits that either policy is likely to be effective going forward. Monetary policy has been rendered ineffective and Keynesian policy placed on a pedestal of inflation.

Life is dynamic, as is economics. That people might consider Keynesianism anachronistic today does not necessarily mean it was wrong at the time. Simply by observing, measuring and developing theories that change peoples behaviour, this can in the end be the downfall of those theories themselves, and result in a change in the ball game.

Myself I think there's an element of quantum mechanics, Copenhagen Interpretation, Observer Effect, Hawthorne effect, or similar to be thrown in to the mix.

Pretty much like chartists and technical analysis have become self-fulfilling to an extent, until enough people actually realise that, and the ball game changes again - as it will...

We're just scratching the surface...

[Gambles]

You're probably right about Keynes but you know Keynes really pushed understanding a long way forwards in his day. Yes, he also drew a lot of wrong conclusions that inspired a lot of bad decisions. While I'm no Keynesian a lot of the smart thinkers today have used Keynes as the building blocks of their understanding and then developed much more logical theories of their own (Minsky, Keen etc). Also while much of what Keynes said and wrote may have been wrong, it was plausible based on that little that we empirically knew at the time. So while I recognise the shortcomings, I've a great deal of respect for the role played by Keynes in pushing the debate forwards if not for the theories themselves which haven't generally stood the test of time particularly well.....on the other hand, don't even think of getting me started on Friedman and his monetarists who sadly now somehow dominate US/global positions of power. In the current crisis, Keynesianism is an anachronistic irrelevance whereas monetarism is the clear and present danger that we all face.......

I agree with much of what you have to say but one should remember that (1) Keynes was working under the assumption of monetary inflexibility and (2) that future generations have effectively bastardized Keynes for their own political/economic agenda. I entirely agree about Friedman monetary economics which was not only based on incorrect and virtually falsified work but clearly never really took into account causality.

Unfortunately we dont have much else to go on with unless you are in the 'evolution creates the perfect being' world. I personally believe that a combination of Keynesian and monetarism (aka Bernanke) essentially avoided meltdown. One without the other would have not worked. Unfortunately we are well beyond the limits that either policy is likely to be effective going forward. Monetary policy has been rendered ineffective and Keynesian policy placed on a pedestal of inflation.

Life is dynamic, as is economics. That people might consider Keynesianism anachronistic today does not necessarily mean it was wrong at the time. Simply by observing, measuring and developing theories that change peoples behaviour, this can in the end be the downfall of those theories themselves, and result in a change in the ball game.

Myself I think there's an element of quantum mechanics, Copenhagen Interpretation, Observer Effect, Hawthorne effect, or similar to be thrown in to the mix.

Pretty much like chartists and technical analysis have become self-fulfilling to an extent, until enough people actually realise that, and the ball game changes again - as it will...

We're just scratching the surface...

I wish I'd said that, Oscar, I wish I'd said it.....

[sokal]

You're probably right about Keynes but you know Keynes really pushed understanding a long way forwards in his day. Yes, he also drew a lot of wrong conclusions that inspired a lot of bad decisions. While I'm no Keynesian a lot of the smart thinkers today have used Keynes as the building blocks of their understanding and then developed much more logical theories of their own (Minsky, Keen etc). Also while much of what Keynes said and wrote may have been wrong, it was plausible based on that little that we empirically knew at the time. So while I recognise the shortcomings, I've a great deal of respect for the role played by Keynes in pushing the debate forwards if not for the theories themselves which haven't generally stood the test of time particularly well.....on the other hand, don't even think of getting me started on Friedman and his monetarists who sadly now somehow dominate US/global positions of power. In the current crisis, Keynesianism is an anachronistic irrelevance whereas monetarism is the clear and present danger that we all face.......

I agree with much of what you have to say but one should remember that (1) Keynes was working under the assumption of monetary inflexibility and (2) that future generations have effectively bastardized Keynes for their own political/economic agenda. I entirely agree about Friedman monetary economics which was not only based on incorrect and virtually falsified work but clearly never really took into account causality.

Unfortunately we dont have much else to go on with unless you are in the 'evolution creates the perfect being' world. I personally believe that a combination of Keynesian and monetarism (aka Bernanke) essentially avoided meltdown. One without the other would have not worked. Unfortunately we are well beyond the limits that either policy is likely to be effective going forward. Monetary policy has been rendered ineffective and Keynesian policy placed on a pedestal of inflation.

Life is dynamic, as is economics. That people might consider Keynesianism anachronistic today does not necessarily mean it was wrong at the time. Simply by observing, measuring and developing theories that change peoples behaviour, this can in the end be the downfall of those theories themselves, and result in a change in the ball game.

Myself I think there's an element of quantum mechanics, Copenhagen Interpretation, Observer Effect, Hawthorne effect, or similar to be thrown in to the mix.

Pretty much like chartists and technical analysis have become self-fulfilling to an extent, until enough people actually realise that, and the ball game changes again - as it will...

We're just scratching the surface...

I would argue that Austrian economics and a good understanding of this basic rule, is enough evidence to give Austrian economics the benefit of the doubt.

Under sound money, the supply of capital is finite the price of capital, the interest rate, must rise as the supply dwindles making it harder for businesses to borrow. This checks credit expansion at a level where the growth in the economy generates enough wealth to at least service said debt. We can then deduce that any further lending of capital beyond this point results in a loss as the growth rate will at some point become smaller than the interest rate.