Alan Greenspan: QE Failed

Discussion in 'Business & Economics' started by Michael, Oct 30, 2014.

  1. Michael 歌舞伎 Valued Senior Member

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    WSJ: Former Fed Chief Greenspan Worried About Future of Monetary Policy

    To summarize Alan 'Bubbles' Greenspan:
    1. QE failed to help the economy
    2. The unwind will be painful
    3. "Buy Gold"

    Translation, the richest most powerful Americans have used their Government and their Federal Reserve Central Bank to bail themselves out the tune of trillions and trillions and trillions of dollars of forced debt obligations. Now that that's over, time to tighten up the screws on the middle class and start seizing any and every form of money or asset they have....errr, I mean 'tax' (well, in the case of the IRS they just outright steal it - hell, who do they think they are? The Police?!?). This will be painful (for the middle class). And, if you have any money left, you may consider buying gold as it's the last thing left of value that the State can't steal from you - maybe.


    So, there you have it.
    Another classic case of Death by Central Planning.
     
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  3. joepistole Deacon Blues Valued Senior Member

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    Except that isn't what Greenspan said. Not unexpectedly, you are back to misleading and deception yet again.

    Not to mention the fact Greenspan was one of the worst Fed chairmen of the last century.
     
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  5. sculptor Valued Senior Member

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    Agree
     
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Quite possibly so. He did engineer the housing bubble collapse with too many mortgages to the unqualified, but I don't think Ben Bernanke is out of the running for that title. He has, with 4 trillion of newly created dollars during QEs, engineered a 129% increase in the S&P 500 in just the last 6 years - that may be a bigger bubble that can collapse - only time will tell.

    With 4 trillion added to the Feds balance sheet, and interest rates held at their lowest level ever, only equities were available for moderately low risk gains. I. e. Ben not only printed the money but drove all the newly printed fiat money into stocks with history's lowest interest rates on "safe" bonds.* Lets wait a few months, at least until 30 November 2014. (or years, if my expectation / prediction of seven years ago is badly wrong) before crowing Greenspan with that title - He may just be 2nd worst. I suspect he has learned some things about the consequences of artificially inflating asset prices that Ben may only secretely fear still.

    * Only the Fed, foreigners without attractive local stocks, and life insurance companies are and have been buying bonds. Fed owns more than half of many Treasury issues now and Life insurance companies don't care if the widow collecting on dead husband 100K face value policy can only pay her rent and food bills for a couple of months with 100K - they paid her what the contract required. What it will buy is her problem (and perhaps yours if all your assets are in dollars).
     
    Last edited by a moderator: Oct 30, 2014
  8. joepistole Deacon Blues Valued Senior Member

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    22,910
    Well Bernanke didn’t engineer the “housing bubble” through Fed policy. But he was important in influencing Clinton, along with several bankers to repeal Glass-Steagall and enact the Commodities Futures Modernization Act which became the foundation for the liquidity trap of 2007-2009.

    “Paul Krugman argued repeatedly in 2008–11 that much of the developed world, including the United States, Europe, and Japan, was in a liquidity trap.[3] He noted that tripling of the U.S. monetary base between 2008 and 2011 failed to produce any significant effect on U.S. domestic price indices or dollar-denominated commodity prices.[4][5]”
    http://en.wikipedia.org/wiki/Liquidity_trap

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    As has been explained to you numerous times, your assessment and prognostications are based on a profound misunderstanding of economic principals and facts on the ground. Your prediction of monetary Armageddon was for October 31, 2014 on the dime. Then you gave yourself some wiggle room, 30 days of wiggle room. It won’t make any difference. The dollar is strong. The dollar index is up 8% this year.
     
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Now, yes, but any time China thinks it is in its long term interest, dollar is trash compared to the "petroyuan" with gold backed bonds preferentially held by central banks and the IMF as they pay higher interest than US can afford and are "good as gold." Recently a London bank issued for first time bonds with face value in yuan - it was Over subscribed by nearly a factor of two. I think China was "testing the market." China has much to gain if it can pay for imports with printed paper (petroyuan) as US did for last 40+ years instead of items and services with real value.

    Details of that and other steps China has quite recently taken at the BRIC news and reports thread including this:
    More at: http://www.sciforums.com/threads/bric-news-comments.84022/page-39#post-3237310
    Post 762, on same page there shows photo of the 14Oct14 signing of a yuan-ruble swap line worth 150 billion yuan ($24.5 billion) deal and there are now more such deals (but most are smaller and a few more than twice a large*) between China and 25 other countries to avoid use of the dollar.

    * Indian and China have agreed to buy from each other 100 billion dollars worth of goods and services each year - not exactly a currency swap, but I think it is a "take or pay" deal.
     
    Last edited by a moderator: Oct 30, 2014
  10. joepistole Deacon Blues Valued Senior Member

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    Is this your source? http://online.wsj.com/articles/SB10001424052702304071004579406810684766716
    China is in no position to challenge the US or the US Dollar. Its economy is small compared to the US and its economy is an export economy. Without exports China doesn’t have much of an economy. For decades now China has manipulated its currency in order to keep its goods competitive - no new news there.
    In order to challenge the hegemony of the US Dollar, China will need a more stable and transparent government. And to date, the Chinese government has been very reluctant to make those changes. It will need to become a global power. China is not now nor is it likely to become a global power for decades to come. And finally it will need to diversify its economy, which gets us back to its problem with transparency and openness. China is a copycat nation. It is good a copying others. But it has yet to become an innovator and baring some major changes, is not likely to become an innovator for many decades. Free thinking and innovation is at odds with China’s government. China still throws dissenters in jail and harvests their organs. And all this assumes the US does nothing – a highly unlikely assumption.
    As has been explained to you many times before, Chinese economy is highly dependent on US trade. If it should do something radical and stupid like dumping US bonds, it would severely damage its own economy and have minimal impact on the US economy as the Fed would simply intervene.
    There are only two credible events which could justify your machinations for a collapse of the US Dollar. One, a global catastrophe, in which case it really wouldn’t matter, two, Republicans are successful in causing a US government debt default. That isn’t likely this year as Republicans would not do anything that stupid so close to an election, but next year with the elections behind them, it is a possibility. But you are not predicting those scenarios in your dollar collapse machinations.
    None of that is new, countries have been doing this kind of thing for decades and two, none of it is consequential. Twenty four billion dollars over three years is nothing even for Mother Russia.
     
  11. iceaura Valued Senior Member

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    30,994
    Now this guy is taking disgraced and corrupt government bureaucrats, formerly responsible for all that is evil in this world, as his economic authorities.
     
  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    No it is a Pay to view link but from tiny part I could read seems to just be re-stating more than year old news. I.e. buying yuan (sending dollars there mostly, which China does not want more of) was a "one way escalator" for years as China slowly revalued/ increased the value of the yuan - (before quite recently letting yuan decline - now fewer dollars require to buy one) it was a slow risk free profit machine. For a numerical illustration only: Investors bought 7 yaun with a dollar, waited a couple of years and then bought their dollar back for only 6 yuan, giving a sure profit of 1 yuan. China is now teaching the investors that the "escalator" can go down too.

    China does get a lot of dollars via the US's chronic trade deficit with China and fears, as I do, that their hoard of dollar assets will some day, in not distant future lose purchasing power. Has not happened much yet but on decade type time scales the value of the dollar has declined (Very much so wrt the yuan or as measured by how much in commodities it will buy, but recently in large part due to economic slow down in China the Chinese demand for most commodities has declined relative to the supply so commodity prices are down, making the value of the dollar measured that way increase.

    This of course lets China buy a somewhat lower volume of items it needs to import for much lower total cost - China may like that and have concluded that double digit growth is not sustainable - that growing only ~ 4 times faster than the US can is a more desirable rate. Also China wants to have more of its economy based on domestic consumption and a more valuable yuan facilities buying by the Chinese population.

    The comparison of the size of US and Chinese economies by simple exchange rate conversion is essentially meaningless* as the exchange rate is very much controlled by China. Better and what is always used for honest conmparisons is PPP (Purchsing Power Parity). by that standard China's economy may have already passed that of the US last year. Also note that China's trade with SEATO and other groups of nations is growing much faster (double digits) than its trade with EU and US. This is, as I have pointed out several times mainly due to the CCP's policy of granting double digit annual REAL salary increases. I.e. Chinese labor is now too costly to make low tech items, like a small fan for a computer, so China imports most of the low value items it builds into the high value added items it exports, like iPads, cars, cameras, computers, pharmaceuticals, etc.

    All this surge of Chinese buying low value added items is pumping huge volumes of yuan into SEATO etc. so workers there now buy at least Chinese bikes, camera, computers, etc. at never before such high volume rates. Intentionally or not, China is making itself and its new trading partners into the "engine" that drives the global economy. For example, in 2013 Chinese bought 4 cars for every three than Americans did and lead the world in sales of many other items.

    Summary: China relative new policy of giving the Chinese worker fast increases in purchasing power both makes more rapid internal consumption possible AND double digit annual trade increases to other mainly Asian economies happen - why Export to US are a still important destination but shrinking as a fraction of total exports. Several years ago, Brazil's trade with China surpassed its trade with the US. China is clearly on the way up and US on the way down.

    To guess what will happen, you need to look at the current trends, not the past when China was a "copy cat" nation exploiting its cheap labor.

    * For example by exchange rate conversion a 1 Km taxi ride in Beijing is worth only ~10% of what a 1Km taxi ride in NYC is, but by PPP (or to the actual economy) they have the same value.
     
    Last edited by a moderator: Nov 1, 2014
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I might add that China is the world's largest producer of gold (at least 40% more than #2) and would's largest buyer also. I think why is that they want to be able to sink the US dollar at time of their choosing, with gold backed bonds for central banks to hold as reserves "good as gold" that pay higher interest rates than, heavily in debt already, US can afford. (China is world's largest creditor nation.)
    But this is the "big one" Discussion at the highest level on a Petroyuan:

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    Chinese Premier Li Keqiang, right, shakes hands with Saudi Crown Prince Salman Bin Abdulaziz at Ziguangge Pavilion in the Zhongnanhai leaders’ compound in Beijing on March14,2014
    Here is why they are talking:
    The petrodollar system is mainly why US had the "good life" for decades; but that can be replaced by petroyuan system. Exactly the conditions when Nixon & Kissenger got Saudi Arabia to set up and enforce the petrodollar system no longer exist between US and Saudi Arabia; But do exist between Saudi Arabia and China now. I.e. Now China is the main supplier of weapons to Saudi Arabia and main buyer of oil from Saudi Arabia. US buys less every year now with "fracking" and lower demand.
     
    Last edited by a moderator: Oct 31, 2014
  14. Michael 歌舞伎 Valued Senior Member

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    No, I've posted a classic example of Chattel Class mediocrity.

    Lets recall when the Chattel Class (many of whom are or where Economic "Professors" and financial "Professionals") sang praises to Alan 'Bubbles' Greenspan and for over a decade referred to Him reverently as 'The Maestro". They lauded Him as 'more powerful than the President of the USA' and watched as he sold snake oil Keynesian voodoo pretending to channel society's 'Animal Spirits' with such nonsensical gibberish and bullshit - it would even make a Sunday School Minister blush.

    In reality, all Bubbles, Helicopter Ben and The Garden Gnome have done is take on debt obligations. More debt obligations owed to a private banking cartel and an IRS that's going to make sure they get paid - even if it means out right stealing your money or 'taxing' it from you. Whatever. They're taking it if you got it. And if you think giving more fiat currency to Government "Officials" to squander and misdirect our limited resources on crony public works projects, never ending wars vis a vie Murder Inc and in building the Police State of the America is "good for Society' ..... then you're in luck, Welcome to Amooorikkka.

    The Central Bank works hand in glove with our narcissistic "Law Makers" to turn common everyday Americans into the same grotesque reflections of these sociopaths. And, it's worked.

    As evidence I present the millions of children put into Day Supervision Centers so their mothers can get some 'me time' (middle class) or work three jobs to pay off Government debt obligations (the poor) to pay for bailing out the rich and the stock portfolios of the middle class. Even though most of the poor don't even own a god damn stock or share in anything. The millions more children put on anti-depressants, the millions starving or cutting themselves. The millions of functional illiterates who graduate from Government Schools each year. The millions living in Government rape-cages for smoking a weed.


    This IS the recovery, for the richest Americans.
    So, enjoy it, it isn't going anywhere - actually, it's going to get worse. But don't worry, you'll have decades to normalize to being a poor Peon living as Tax Chattel in a Police State.
     
    Last edited: Oct 31, 2014
  15. iceaura Valued Senior Member

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    You can't walk that back - you posted a quote from Greenspan because you agreed with it, you thought it was an example of informed regret.
    For which I am going to blame people like you - the entire crackpot "libertarian" enabling bandarlog chorus that set out to remove government curbs on capitalist corporate greed, succeeded, and are now whining about the incoming fascism they launched.
     
  16. joepistole Deacon Blues Valued Senior Member

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    A couple of things, one the Chinese economy is growing at a rate of 7% - 8%. The US economy is growing at a a 3% to 4% rate. That isn't the "~ 4 times faster than the US" as you stated. That is about twice as fast as the US economy. But China is having great difficulty maintaining that growth rate. In fact, China continues to stimulate its economy in order to keep economic growth about 7%. The US is not stimulating its economy...big difference. The Chinese government needs to maintain that high level of economic growth in order to maintain civil order and mask its internal problems and avert its looming real estate bubble. http://www.telegraph.co.uk/finance/...-in-China-raises-fears-of-broader-crisis.html
    An economic slow down in China could easily bring down the Chinese house of cards. China has had a few brushes with a liquidity crisis this year alone.

    In your second paragraph referencing fear of purchasing power loss, any holder of currency, regardless of the currency, is concerned about the potential loss of purchasing power. So that really isn't new, it isn't unique and it isn't relevant to this discussion. Further, China is a copycat nation. It has been a copycat nation and will likely remain a copycat nation for the foreseeable future. In order to be an innovator nation, China needs more transparency. It needs free thinkers. But in the China, free thinkers can be a threat to the state. Free thinkers don't always abide by the party line. It is a dilemma for the Chinese state.

    Below is a clip from a paper written by, Fan He, a Senior research fellow at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics and a visiting fellow at Australian National University.

    "To reform its financial sector, China must restrain excessive credit growth while dealing with the thorny problems of shadow banking and local debt. The global financial crisis led in China to an extremely expansionary monetary policy with almost no restrains from the regulators.

    "comparison of the size of US and Chinese economies by simple exchange rate conversion is essentially meaningless", except it is not. That is how it is done. Purchasing Power Parity is a hypothetical comparison base on fictitious hypothetical trades based on a set of hypothetical assumptions. Real GPD comparisons are based on real currency using real currency...not some fictitious hypothetical currency.

    On another note:

    Today is the date of your much vaunted US Dollar Armageddon prediction. No Armageddon and no Armageddon on the horizon.
     
  17. joepistole Deacon Blues Valued Senior Member

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    22,910
    Except, none of that is true - damn minor details again.
     
  18. joepistole Deacon Blues Valued Senior Member

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    Most of that post isn't relevant. And your dreams of a petroyuan (i.e. Petro Renminbi) are just that, dreams. China's Renminbi is not going to replace the dollar. The Chinese military isn't protecting Arab countries and their waterways. Nor are those Arab states likely to trust China to do so, even if China had that capability. For that reason alone, disregarding the substantial economic arguments, oil producing Arab states will not stop denominating oil contracts in dollars.
     
  19. Michael 歌舞伎 Valued Senior Member

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    Libertarian's do not support a Central Bank (see Ron Paul's book titled End the Fed). Alan Bubble's Greenspan was not a Libertarian. He was an avowed Statist (like yourself) and was more than happy to work for The Party in either it's Right or Left wing paying for the Warfare/Welfare State.

    I posted Bubble's commentary not as an appeal to authority, but as an example of how little these so-called "Economists" actually know and just how much flip-flopping they do.

    Its becoming apparent to even the most daft: The Central Bankers Have No Clothes


    Anyway, you wanted a Progressive State - well, here it is. Bailing out the ruling elite who run it - just as always is the case. You taken all the power from the individual citizen and given in all to the worse, most dangerous group who work in the most inept dangerous institution in society: The State. All for a hand full of shinny beads and nice sounding promises.

    And you wonder why society is going down the shitter? The one group of people who's influence should be LIMITED (those that have the legal obligation to use force against innocent other groups) and you want to maximize and give them MORE power to rape the rest of society (see: ObamaCare). Why? Because wouldn't it be nice if everyone could magically have instant high quality 'free' healthcare, roads, schools, and every and any other bullshit promise a politician can make to you. Yes, wave the magic wand and turn the 20% functional illiterates into literary geniuses.


    We're getting more Regulations, more Regulators, less Civil Liberty, less opportunity and less privacy. And we'll all become much more poorer for it while the Oligarchy grows fat.

    So, as I said, enjoy the New Economy, it's going to be here for a long long time.
     
    Last edited: Nov 2, 2014
  20. Michael 歌舞伎 Valued Senior Member

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    The State just bailed out the richest most corrupt Americans in history of our country. People like Warren Buffet would be broke if it weren't for The State. You Progressives wanted a State with the power to steal - well you got one, oh, but it was you and your kids and your grandkids the State stole from. You only have yourself to blame. If there were no Central Bank, then the rich Oligarchs would be poor has-beens today.

    Blame yourselves.
     
  21. Michael 歌舞伎 Valued Senior Member

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    From WIKI (with modification):
    The same stench of bullshit 2000 years later. Only instead of Magi we have Central Bankers. Instead of Christianity we have Keynesian. High Priest Bubbles, full of the same bullshit today as his ancestors were then. Superstitious Peons of 200o years ago are the same superstitious Tax Chattel of modern day America. They still can't figure it out. Here's a clue: Your High Priests are full of bullshit, stop worshiping them. Stop listening to their propaganda. If you want something done right, you're going to have to do it yourselves. No magic Banker is going to come down from the heavens and tell you the future. What they will do is fleece if you let them. They'll tell you whatever bullshit they think you want to hear and fleece you, or have the State thugs fleece you. The irony is the 'markets' are moved by sermons given by the Banking Priest. Not fundamentals - just their bullshit is enough to stir the passions of the faithful. Hell, they're even funding modern day crusades in the middle east. Where Tax Chattel go to die for their Religion.
     
    Last edited: Nov 2, 2014
  22. joepistole Deacon Blues Valued Senior Member

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    Funny, it is those evil Keynesians who have the magic of science and centuries of historical data behind them. Keynesians don't need to lie. They don't need to make stuff up. They don't need to cherry pick And they don't need to deceive ppeople as you do and have done in order to rationalize your ideology. Ironically, it has been repeatedly pointed out to you through the years, your libertarian ideology suffers from the same critical flaws in reason and fact which have plagued communists over the years. It shouldn't be surprising, the folks who fund your ideology became wealthy servicing the oil fields of Joseph Stalin.

    The difference between your libertarian ideology and Keynesian economics is thus, libertarians believe people will magically stop behaving like people. It's the same flaw which has vexed communism. Keynesians believe people will continue to act like people. That is the difference between libertarians and Keynesians.
     
    Last edited: Nov 2, 2014
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    True Fed's QE has stopped, but money is still artificially being made available by near zero interest rates - There are several ways to stimulate - make money for new factories, or investments easily available. Now nether China nor the US is stimulating by "printing thin air money" the US however, is holding interest rates falsely low, to stimulate, and China is not.

    China's way to stimulate is increase the real value (purchasing power) of salaries by double digits annually. Why the Chinese are buying more of almost everything now than before (cars, cell phones, computers, airplane rides, pork, luxury hand bags - everything!) Why companies from all the world are mainly expanding their production facilities there, and not in the US were salaries of all but the top small percent are static or shrinking in purchasing power.
     
    Last edited by a moderator: Nov 2, 2014

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