Thursday, April 28, 2016

My solution to the slow economy

The solution to the slow economy is not found with the banks but is found with the non-banks.

There is a misunderstanding of how the banking system works by both economists within and outside the Federal Reserve Bank.  There is also a discriminatory bias within the Fed favoring commercial banks as the Fed is a creature of the commercial banking system.

It is a long standing myth that commercial banks are intermediaries.  That they match savers with borrowers.  That banks seek deposits in order to make loans.  In fact, banks do not and cannot lend out their deposits.  This is because when banks make loans they create the money with which to make the loans.

The banks want deposits to fund their other assets.  It is another misnomer that banks borrow short and lend long.  The borrowing short is to fund other than loan assets.  Banks carry an inventory of Treasury bonds, securitized products, credit default swaps, interest rate swaps, and stocks used for making markets for their customers. You may remember the mortgage backed securities that the banks were speculating with leading up to the financial crisis of 2008.  They were called toxic assets back then.  Deposits are the cheapest short term borrowing banks have.  Banks have been called hedge funds.

It is one big carry trade.  Banks want deposits to fund these assets with the cheapest money they can get their hands on and that is deposits.  Banks also borrow short as short term borrowing costs them less than they earn from the more illiquid assets they invest and speculate in. All this short term borrowing is called wholesale funding for the commercial banks.

The non-banks make loans but cannot create the money with which to make the loans.  They must have the money first.  The non-banks are the true intermediaries matching savers with borrowers.

Here is a non-inclusive list of non-banks.  Insurance companies, pension plans, brokerages, accounts receivable lenders, issuers of letters of credit, equipment leasing companies, money market funds, second mortgage companies, private equity funds, corporate issuers of commercial paper, investment banks, your local pawn shop and your online peer to peer lender.

The banks have eight trillion dollars in savings accounts.  This money does not support lending as stated.  It supports bank’s investment in Treasuries, market making, and speculation.  This money needs to be moved out of the banks and into the non-banks.

Doing this doesn’t reduce the amount of deposits at banks.  It does change the ownership of the deposits and shifts the deposits from time deposits to demand deposits, or, checking accounts if you prefer.  This is a good thing described later under “Note on velocity” below.

The banks must be forbidden from offering interest on deposits.  Income earned from loans to non-banks should become tax free.  Then Mr. & Mrs. Retiree can with draw their deposit from the bank and lend or invest it in a non-bank, say an insurance company. The insurance company then can make a construction loan (instead of the federal government paying for an infrastructure project using deficit spending).  Since the insurance company has to maintain its bank account with a commercial bank, the commercial bank’s deposits are not reduced.  The difference is that the deposit is owned by the insurance company and not Mr. & Mrs. Retiree.  And, the deposit will be in a checking account where you want it to be instead of tied up dead in a savings account doing nothing for the economy except where there is a benefit from bank speculation and holding of Treasuries.

You want lending?  Help the non-banks to do it.

Note on interest rates.  Low interest rates are a sin.  It kills the non-banks.  The NBs cannot offer a high enough interest rate to attract money in relation to the income they can earn from loans to the private economy.  Rates need to move up and with that the spread between interest cost and interest earned can widen.  Low interest rates reduce money velocity.

Note on velocity or the turnover of money if you prefer. Velocity of money has nothing to do with banks.  It is the realm of non-banks where velocity of money is relevant.  The non-banks turn over money.  The commercial banks create money.  Therefore, having checking account deposits grow at commercial banks at the expense of savings accounts at commercial banks will increase economic activity.

There is so much money in the system.  We don't need any more.  We need the money velocity, the turn over of money, to increase.

GDP first estimate of the first quarter 2016

From a year ago:

+2.0% Real GDP
+2.3% Real Final Sales of Domestic Product
+2.4% Real Final Sales to Domestic Purchasers

Not bad considering the slowing of the last three quarters.  But wait for the revisions.

Give us 20 minutes and then we can save you

Hey, what ever makes you feel good.

Wednesday, April 27, 2016

I don't know what the Fed said that was positive

But it was good enough to keep the S&P in the up trend.

Peak civilization definition

Societal suicide is the definition.

Liberalism happens at peak civilization.

Trump’s foreign policy speech

Trump pointed out that the Democrat Party was the “war and aggression” party and deliberately destabilized the Middle East.

It is amazing the Republican Party won’t use this to their benefit against Hillary Clinton.

That is because the Republican Party wants to be known as the war and aggression party.

That CASA law is back

I cannot vote for neo progressives.  I am very close to not being able to vote Republican.

Republicans have given law to Obama where there was none giving Iran a nuclear bomb.  Now they are in the process of giving law to illegal kangaroo courts for the purpose of railroading boys out of college.  There is no basis in law for this so the Republican Party, including Kelly Ayotte and Marco Rubio, are trying to give law to this.

I cannot vote for neo progressives.  I am very close to not being able to vote Republican.

Brave New World was nothing on us

"Not only is it an incredible spectacle, highlighting the very moment that a new life begins, the size of the flash can be used to determine the quality of the fertilised egg."

Now we can caste people in varying degrees of low flash people to high flash people.

In case you want to refresh your memory:

Eliminating marriage licenses in Alabama


But the Deep State really isn’t affected.  They still will get to define what benefits you get using marriage as one of the criteria.

That problem is only solved by getting the state out of providing benefits.

What is the problem with the government providing benefits?  They borrow money to do it.  It is bad debt.  Eventually and always.

Really?  Well why not do as Europe does and actually tax people enough to provide the benefits without borrowing?

Who am I kidding?  Europe is in debt up to their eyeballs while taxing people to near death.

Some are saying the neoprogs finally are achieving what they wanted which is the destruction of marriage.

Computers in reporting at Bloomberg – We only know what they tell us

The point is that the computer in both types of computer reporting can only report on what is on the internet already.

There are two types of computer reporting:

“One irony of automation is that it is only as good as humans make it. That applies to both the main types of automated journalism. In the first, the computer will generate the story or headline by itself. But it needs humans to tell it what to look for, where to look for it and to guarantee its independence and transparency to our readers. In the second sort, the computer spots a trend, delivers a portion of a story to you and in essence asks the question: Do you want to add or subtract something to this and then publish it? And it will only count as Bloomberg journalism if you sign off on it.”

Note in neither case can the computer go out on its own two legs and check out the situation and ask people questions.  It cannot pick up the phone and call people.  This is because people won’t talk to the computer.  Can you imagine a newsworthy person getting a phone call from a reporter and the reporter saying, “I am putting my computer on to talk to you because it is so much smarter than me”.

In the case of the headline being produced by the computer but the reporter telling it what to look for and where to, it sounds like to me the editor, not the journalist, will put into the computer his desires and the computer will scour the internet to find already existing stories.

In the second case the computer software is looking for trends.  That is trends on the internet.  Only.  It is a virtual world we live in.  If the left gets its desire to centralize the inputs into the algorithm and independent reporting is diminished, we can have on big consensus society.  Reality isn't necessary for the majority of people.  Think on the fact that there is virtually no reporting on actual global warming.  It is what the models say that is reported.

We only know what they tell us.

Tuesday, April 26, 2016

New home sales slide again – not

All the economic pundits have been saying new home sales have slide again.  Here is the reason for it.  The seasonally adjusted chart.

I have no idea why the seasonal adjustment was what it was.  Here is the unadjusted actual monthly number.  It is still in an uptrend.  I would expect that it reaches a new high figure this summer like usual.  If not, then I would say home sales are suffering.

What do you want?  Home sales like 2005 leading up to the home price melt down?

Monday, April 25, 2016

Child Protective Services Nazis

Canadian mom investigated for letting kids play alone in backyard

“[The worker was] asking me about if we’ve ever dealt with CFS before, what my childhood was like, how I punish my children,” she said. “She had to look to see where my kid slept. She had to see if we had enough food in the house.”

Yes, they will create a file on you and use it against you.

Note that someone complained about unsupervised children in the back yard.  There are so many haters out there.

Saturday, April 23, 2016

Obama’s speech pattern

Obama’s speech pattern:

Simply (fill in the space), doesn’t make (fill in the space), any (fill in the space).

e.g. Simply putting people in jail doesn’t make our communities any safer.

Remember Hillary’s speech pattern?

If only, if only we could just (fill in the space), then (fill in the space).

She used this a lot in the past.  If only we could pass such and such legislation, or do something or another, we could save the world or save something.

These homilies work because most people don’t stop and spend a moment to do critical thinking.   First of all, when a politician speaks, people should immediate go into the mode of asking what is this guy selling.

Another speech pattern I am hearing again now is – there are far too many (fill in the blank).  It is all too easy to (fill in the blank), or it is all too hard to (fill in the blank).

When I hear this pattern I immediately am against whatever they are selling.  Then I might ask myself if there is any reason I might be wrong.  But mostly I just reject it.

What term did communists use, and still use, for people like me.  The term is reactionary.

Liberals have even taken over  here is their definition for reactionary.

Cut off his junk

It is simple.  When a high school boy finishes his hormone treatments and has his junk surgically removed, he may use the same toilets, locker rooms, and showers as the girls.

Friday, April 22, 2016

Do you have faith in Yellen or don't you?

Gundlach on negative rates and Trump winning the White House

I went to this article to see exactly what Gundlach had to say about interest rates which is:

Why don’t negative interest rates work?Negative interest rates are designed to fight deflation. But they are the very definition of deflation: Your money is disappearing. As an investor, you are going to have less money in the future than you have today with negative interest rates. That’s deflation! So negative interest rates are deflationary and they are tremendously negative for monetary velocity. For instance, in Japan they’re issuing huge amounts of high denomination Yen notes. That’s because of negative interest rates people don’t want to put their money in the bank and they don’t want to invest in Yen denominated bonds. That’s why I think eventually you are going to get helicopter money.

This was instructive to me because I am trying to justify my gut feeling that negative rates are really really perverse.

He did talk about Trump:

So who do you think will win the race for the white house?Trump is going to win. I think Clinton and Sanders are both very poor candidates. I know the polls are signaling the opposite. But the polls said the opposite four years ago, too.
How would the financial markets react should Trump win?In the short term, Trump winning would be probably very positive for the economy. He says a lot of contradictory things and things that are not very specific. But he does say that he will build up the military and that he will build a wall at the border to Mexiko. If he wins he’s got at least to try those things. Also, he might initiate a big infrastructure program. What’s his campaign slogan? Make America great again. What that means is let’s go back to the past, let’s go back to the 1960s economy. So he might spend a lot of money on airports, roads and weapons. I think Trump would run up a huge deficit. Trump is very comfortable with debt. He’s a debt guy. His whole business has had a lot of debt over time and he has gone bankrupt with several enterprises. So I think you could have a debt-fuelled boom. But the overall debt level is already so high that you start to wonder what would happen after that.
How do you explain that a guy like Trump might actually win the election?His popularity is very similar to the popularity of unconstrained bond funds. About two or three years ago, unconstrained bond funds became the most popular thing in the United States retail market and in the institutional market probably, too. Because when investors analyzed all the bond segments they were familiar with, they didn’t like what they saw. They didn’t like treasuries, they were scared of the Fed, they didn’t like traditional strategies. So, if everything you think you know looks unattractive, you go for something that you have no idea about. And that’s an unconstrained bond fund. The thinking was: «Don’t even tell me what you are doing, I do not want to know. Because if I know, I won’t like it. » The same is true with respect to the elections: «Don’t give me a traditional candidate. Give me someone who I have no idea what he is going to do» – and that’s basically Donald Trump.
He also talked about debt levels and the attitude about debt among other things.  This is a really good interview and I recommend reading it.

Thursday, April 21, 2016

about that solution for transgender bathrooms

How many transgendered people are we talking about here?

The solution being offered is that mens bathrooms be converted to unisex adult and womens for children.

One.  Many men have really poor bathroom habits.  In the name of Buddha in heavan why would you do this to women?  It is bad enough for men.

Two.  It is a cave in.

Don't fucking cave in any more.

Transgender bathrooms have nothing to do with transgenderism

It is the Deep State grinding us down to accept that which is unreasonable.

Obama, the mother fucking piece of shit

President Barack Obama says that it’s still important for the United States to stay involved in Iraq, as the nation struggles to fight radical Islamic terrorism.

“That’s a reason for us not to withdraw, but rather to get more involved in helping to stabilize areas like Anbar, where we’ve not cleared out ISIL but the towns that they were governing have been left devastated,” Obama said. The president made his remarks at the end of the GCC Summit.

Anbar was cleared of al Queada. At great cost in lives and treasure.  Then Obama left Iraq so he could say as a political point in his 2012 re-election bid he ended the war that war monger George W. Bush started.  Then he let in ISIS.


San Francisco, in fact, Silicon Valley, has become an offshore Chinese city.

I don't know who said that.

But this from the Canadian Financial Post:

The Canadian government doesn't not acknowledge this to be the case saying they don't have enough information and they don't want to make policy that might disrupt the economy.

Me: meaning they don't want to disrupt the real estate special interests

Non-banks - list


Insurance companies
Pension plans
Hedge funds
Equipment leasing companies
Mutual Funds
Money Market funds
Mortgage companies
Savings and loans
Credit Unions
Second mortgage lenders
Private Equity funds
Corporate commercial paper
Issuers of letters of credit
Investment banks
Accounts Receivable lenders
Pawn shops

Peer to peer lenders

Wednesday, April 20, 2016


I wish I could tell you who said this but I lost the link.

I understand the problems of legalism and censoriousness, the dangers that accompany a spirit of condemnation and lack of empathy, the temptation to mock those who struggle with problems we never even imagined. And I appreciate as an American the value of a live and let live attitude. But I know this, too: If a civilization cannot draw lines or boundaries – if it believes there are no objective truths, no givens to the human condition, no realities that transcend our own subjective interpretations – it will lead to chaos and eventually to great human suffering.

The death of the west at college

France is doomed

So is the U.S.

Death of the West as we sit by and watch.

Well, this is the reason for Trump.

By the way, I predicted that it will be females that will lead the way because they will respond to the dominate maleness of Islam.

What a split Supreme Court means

Four to four decisions may neutralize the Supreme Court but it means the president can do whatever he wants.

Congress could not fund what an autocratic president wanted to do but I haven't seen any of that.  Nor do I expect to see any of it.  Remember, the Republican party is all about keeping the status quo so they can fund raise on their efforts to keep liberals from being extreme.

There really is no justification for the Republican Party.  They don't want to be leaders.

A bubble doesn’t have to pop

The person blowing up the balloon can run out of air.

Transgender idolatry and the Deep State

Creep, I am so sorry you are so unhappy with the cards that nature dealt you.

In the Virginia case, a three-judge panel of the 4th U.S. Circuit Court of Appeals — which also covers North Carolina — ruled 2-1 to overturn the Gloucester County School Board's policy, saying it violated Title IX, the federal law that prohibits discrimination in schools. A federal judge had previously rejected Grimm's sex discrimination claim, but the court said that judge ignored a U.S. Department of Education regulation that transgender students in public schools must be allowed to use the restroom that corresponds with their gender identity.
Deep State

Tuesday, April 19, 2016

There is a lot of people that love these two

Well, she is less revolting than al Sadr.

I am so tired of this

The medical industry government supported cartel is allowed to charge you anything they want without telling you in advance what you will be charged.

This is one schmuck country.

The List

Liberalism brought us:

Identity politics
skyrocketing healthcare costs
skyrocketing education costs
Kangaroo courts in college to railroad boys
The Deep State
Youth as indentured servants
The Federal government as loan shark
Men using women's restrooms

Moral relativism  (thank you Pope for the idea)
Invasion of M&Ms - Mexicans and Muslims
A federal agency called The Protection Bureau (be very afraid)
White Guilt
White Privilege
Whites as the only racist people

Phony feminism.  Actually female superiority
The Syrian world war

Negative rates in Europe and in the U.S.

Europe is using negative rates applied to excess reserves to lower interest rates.  In the U.S. positive rates are applied to excess reserves to increase interest rates.

Monday, April 18, 2016

The Fed is your friend

Don’t fight your friend

ADS staying below zero

This bad news is good news, right?

Helicopter money defined

It is called Money Financed Fiscal Expansion.  Better to say money financed deficit spending.

There are two forms of it.  The Fed could create money and the money could be sent to households.  That is not being considered because of the fear that people will save the money or pay down their debt.

What is being endorsed is the Fed creating money and giving it to the Treasury.  The federal government will spend the money into the economy.  Since the velocity of money is 1.5 times it is felt that this will kick start the economy even though it is believed that the government will spend the money inefficiently.

The worry is expectations.  If the program is thought to be too little or too much it will fail.

Too little and we get lower yields and a lower stock market and no improvement in the economy.

Too much and we get inflation expectations above the Fed target rate. Bond yields would spike upwards.

Getting it right on the other hand and we will see economic growth, moderately higher interest rates, and a higher stock market.

Good luck with micro managing every aspect of the financial economy.

Sunday, April 17, 2016

Liberals have no shame

Just listen to Obama spouting all that free enterprise stuff.  It is an election year and he is out conning the schmucks again.  He was raised as a Marxist and all of a sudden we are supposed to believe he is a capitalist.

Same with his religion.  He was raised a Muslim and all of a sudden we are supposed to believe he is a Christian.

But why should Liberals have any shame?  What they do works in a nation of schmucks.  Nobody ever said there was any morality in Liberalism.  They are not like the good, decent, honest people in America.  They do not possess morals.  If you don’t possess morals you don’t possess shame.

I keep getting amazed at Liberal mass hysteria / moral outrage

Environmental hysteria was big.  Still is.  I wondered what they could come up with to compete with that.

Bathroom laws allowing men, I mean people, with penises to use women’s rooms.  And locker rooms.  And showers.

The liberal moral outrage against North Carolina over passing a law requiring men, I mean people, with penises to use men's toilet rooms as been equally amazing.

Liberals have a save the world mentality.  Save it against the evil people who are not Liberal.

The magical decades of expanding credit are over

The mystical age of lower and lower interest rates is over.

The only thing we can do now is lower the cost of living and increase worker productivity.

Which presidential candidate is most likely to effect policies to lower the cost of living and increase worker productivity.

Hillary Clinton and Bernie Sanders will increase the cost of living by generating more government subsidies which act to support prices.

Keep in mind that almost the sole purpose of congress is to keep the cost of living high for the benefit of its donors.

Trump probably could go over the heads of congress directly to the people better than Cruz.  But Trump hasn't shown the slightest understanding that big government is counter productive.

Cruz completely gets it.  But as president could he go over the heads of congress?  I think he could to a degree but nothing like Trump could if only Trump had a clue.  Cruz certainly knows the insider game of politics and probably could effectively use that to move forward beneficial legislation.

Anyone up for the flat tax?
Anyone up for forbidding public unions?
Anyone up for eliminating the monopolistic protections of the medical industry?
Anyone up for repealing Obamacare?
Anyone up for cutting back on environmental Stalinism?

Friday, April 15, 2016

Germany has a law against insulting a head of state

Germany must die.

Corporation stock buy backs is like the Fed QE

Corporate buybacks sure have put a lot of “liquidity” in the hands of former stockholders.  This is like the Fed buying bonds and putting “liquidity” in the hands of former bond holders.

This is QE.  However, I don’t think former stockholders, all full of glee that they now have money in their checking accounts, are actually spending their new money.  I think they are putting it into savings accounts.  For the most part.

The sin of low interest rates

I don't know this for sure but I think Milton Friedman said that rates and velocity were correlated and if he did say it, this has been know for a long time.

Raise rates without reducing the money supply and we will get serious inflation.  The question is how much inflation does the Fed want.  Oh.  The Fed has lost complete control over the money supply due to the large amount of reserves.

This is a good example of deep state tactics

Thursday, April 14, 2016

So the Fed admits to paying musical chairs

Core Sticky Prices CPI

Cleveland Fed:

We have reached the Fed's goal of 2% inflation.  How come we aren't all happy about it.  Why isn't the financial media rejoicing about it?  Why isn't the Fed talking about it any longer and is talking about data points instead?