TaoOfSatoshi
Well-known member
Originally posted on BCT, haven't seen it here and I quite enjoyed it. Bring on the new Dash economy!
All Financial Hell Is About To Break Loose
- Thread starter TaoOfSatoshi
- Start date
*Sigh* I'm frustrated with these pseudo economists and their techno babble. This segment is just a firehose of information and statistics, I only made to about 5 minutes in, due too sheer frustration. Here are main my points of contention.
Using the inflation rate in high end goods as an indicator of economic health is dubitable, especially since higher inflation is expected in this area due to the fact that recent years have disproportionately favored those already well off. Eg The increases in the American stock market means average guys $10k is now worth $20k but the rich guys $1m is now $2m so luxury goods will obviously be increasing in price faster.
Using Demographics as a predicting variable is flawed since the assumptions about spending habits(This is a whole area of economics) are constantly changing and are one only one part of a very vast fiddly puzzle. Eg People live longer now so they need to save more for retirement than before and the timing of their spending should be strongly affected by interest rates(which strangely it is not).
Endless QE - Creating money out of thin air does sound scary and according to classical theories is really bad. However the caveat to this is that the way they have done is it is not to flood the money into the actual USA economy, but to banks balance sheets. Bypassing the issue of is 'giving banks cheap money' good or bad, what this results is an negligible inflation rate. This because when you boil it down, inflation is really only the aggregated expectation of price changes and since the general population aren't affected this tidal wave money their inflation expectations stay constant ergo steady inflation. What they are actually doing is exporting this inflation away from America to other countries. How? Because all these cashed up banks with incredibly low interest rates want higher returns and are throwing money at overseas investments 'crowding out' local investment, fueling investment bubbles and wrecking havoc with exchange rates.
The Bubble? - No idea what is this is referring too.
China? The problems with the housing market is a minor one really because Chinese consumers do not yet make up a large proportion of international demand so when the crash does happen it is not globally relevant and secondly even considering the possible huge size of the crash the Chinese have enough monetary reserves to buy their way out of trouble for decades. Secondly predicting when the crash will happen is very hard because Chinese have very few other avenues of investment and China's iron grip on the banking system there means they can manage this much better.
I find it really frustrating that these people take real credibility away from the field of economics. The worst part is that there are hundreds of theses guys, so statistically speaking there is always to be that one guy that got a prediction or two right and are now guru "experts".
Using the inflation rate in high end goods as an indicator of economic health is dubitable, especially since higher inflation is expected in this area due to the fact that recent years have disproportionately favored those already well off. Eg The increases in the American stock market means average guys $10k is now worth $20k but the rich guys $1m is now $2m so luxury goods will obviously be increasing in price faster.
Using Demographics as a predicting variable is flawed since the assumptions about spending habits(This is a whole area of economics) are constantly changing and are one only one part of a very vast fiddly puzzle. Eg People live longer now so they need to save more for retirement than before and the timing of their spending should be strongly affected by interest rates(which strangely it is not).
Endless QE - Creating money out of thin air does sound scary and according to classical theories is really bad. However the caveat to this is that the way they have done is it is not to flood the money into the actual USA economy, but to banks balance sheets. Bypassing the issue of is 'giving banks cheap money' good or bad, what this results is an negligible inflation rate. This because when you boil it down, inflation is really only the aggregated expectation of price changes and since the general population aren't affected this tidal wave money their inflation expectations stay constant ergo steady inflation. What they are actually doing is exporting this inflation away from America to other countries. How? Because all these cashed up banks with incredibly low interest rates want higher returns and are throwing money at overseas investments 'crowding out' local investment, fueling investment bubbles and wrecking havoc with exchange rates.
The Bubble? - No idea what is this is referring too.
China? The problems with the housing market is a minor one really because Chinese consumers do not yet make up a large proportion of international demand so when the crash does happen it is not globally relevant and secondly even considering the possible huge size of the crash the Chinese have enough monetary reserves to buy their way out of trouble for decades. Secondly predicting when the crash will happen is very hard because Chinese have very few other avenues of investment and China's iron grip on the banking system there means they can manage this much better.
I find it really frustrating that these people take real credibility away from the field of economics. The worst part is that there are hundreds of theses guys, so statistically speaking there is always to be that one guy that got a prediction or two right and are now guru "experts".
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TaoOfSatoshi
Well-known member
Sapereaude Yeah, I don't take it too seriously. I find it entertaining, though! Thanks for your reply.
Sub-Ether
Well-known member
You gotta be careful with people like Alex Jones, they like to pump out fear porn, he does have useful information but it has to be picked out of all the ranting and scare mongery. Same goes for Jim Rickards in a financial way, useful to listen to and has stuff to say but be aware they both can mislead you.
I don't think being careful covers it fully. These people are deliberately misrepresent themselves as experts, throwing around correlations as thought they were causation's, oversimplifying complex issues and present one sided arguments. This has a very caustic effect on economic discourse.
Hell they act as if their best buddies with Warren Buffet, sit on the board of the Fed and are Honorary Economics Professors at Harvard.
Hell they act as if their best buddies with Warren Buffet, sit on the board of the Fed and are Honorary Economics Professors at Harvard.