An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Very similar to what Matt and Mike does has been doing it since the 1970's
Bio:
Syntex (who developed the birth control pill) was the first stock I bought (in 67). Bought my first options (IBM calls) in Dec 1974. Was a commodity broker from 79 to 82. Have never had a losing trade in Treasury-bond futures since 1979.
Nominal gNp hit 19.2% in the 1st qtr 1981, the FFR to 22%, & AAA Corporates to 15.49%. My prediction for the peak in AAA corporate yields for 1981 was 15.48% (& that bonds would bottom in Oct). Predicted the month stocks bottomed in 82 & in 84. Predicted the 87 crash. Predicted the top in the Y2K bubble. Predicted that the top in stocks would be July 2007. Predicted the severe contraction in the 4th qtr of 2008 in January of that year. Identified the bottom in stocks as March 2009. The markets confused me only once - when the FED executed QE2 (but I nailed the bottom in the CPI in Jan 2011 i.e., 7 months before it bottomed out).
It is axiomatic. You don't target N-gDp. You target R-gDp. And total spending, AD, does not equal N-gDp as the Keynesian economist claim.
If the Fed’s technical staff can't target R-gDp, how can they target N-gDp? And why would the Fed target N-gDp - when it could target R-gDp?
So the “nominal-anchor” prevents bond prices from rising - because “inflation is overshooting”, and interest rates from falling, slowing any recovery or slowing real output? No, that perpetuates income inequality. Stagflationist thinking is as ephemeral as their RX.
The fact is that these McCarthyite armchair economists are “Know-Nothings”. The stagflationists don’t know money from mud pie. Rates-of-change in monetary flows, volume X’s velocity (for the same time intervals or distributed lags), equal RoC’s in P*T (where N-gDp is a subset of “aggregate nominal spending”).
The distributed lag effect of money flows have been mathematical constants for greater than 100 years.
Thus we know several things, that money is robust, that the RoC in R-gDp = exactly 10 months, trough to peak. And we know whether money is robust because we know when inflation accelerates relative to inflation, whose distributed lag is exactly 24 months, trough to peak.
Since the distributed lag effects of monetary flows are mathematical constants (which no economist understands or even knows about), you know in advance, what th trade-off between R-gDp and inflation, or the monetary fulcrum, will be. So we know when interest rates will respond to the monetary fulcrum, based on fixed money lags, and the "arrow of time".
So to target N-gDp is stupid. It maximizes inflation and minimizes real-output. IF you can target R-gDp, why try targeting N-gDp? R-gDp accelerates before inflation. And we know when the teeter-totter tips.
That’s why you target R-gDp as a policy standard, and obviously, not the other way around. The debit and deposit turnover time series is documentary proof.
There are number of things he highlights in the complete history of central banking and commercial banking.
That causes the things to happen the way they do.
However' (I think he had something to as analyst when it happened)
He says when the G.6 debut and debt turnover release was abandoned for spurious reasons in 1996. The FED and Treasury could no longer track the flows.
This led to M1 M2 etc being useless. Why Greenspan abandoned them
I think why he has such a fantastic prediction rate is he continues to use the equations that was in the G.6 debut and debt turnover release and rates of change in other things.
I've checked his predictions on here from 2015 and sometimes he gets it right down to the correct month.
No one can predict 4 years out. But the strength of r2 to rate of change in MVt relative to n-gDp surpasses anything anyone has ever been able to come up with.
I haven’t looked at his site yet but after reading what you have posted my only comment is this; as I understand it, R-gDp is a derived measurement. It is N-gDp minus inflation. N-gDp is the only thing we can control, it is the absolute level of expenditures. Only once an inflation rate has been calculated/measured can we go back and determine R-gDp.
That is one of the problems I have always had with the real vs nominal discussions. Nominal is the only thing we know or can control. If I give you 1000 dollars a month, after a certain number of months you could argue I’m not giving you the same amount of buying power any more due to inflation so I’m really only giving you 950 relative to our initial 1000/mo arrangement. Measuring relative buying power is not cut and dried. A lot gets left out in official calculations. The basket of goods has been adjusted over time.
The central banks and Treasury can no longer track the flows since the G.6 debit and debt turnover release was abandoned for spurious reasons in 1996.
He knows exactly how to do it. Then predict what is going to happen. Is it the system fairy Mike says doesn't exist ?
This guy takes it to another level with the flows. I don't even know if he is still alive.
He says
Do not be bamboozled. Contrary to what the Austrian economists claim, Henry Hazlitt in his 1968: “The Velocity of Circulation”, and Ludwig von Mises in "Human Action", and Murray Rothbard, an American heterodox economist of the Austrian School, who wrote in Man Economy and State:
“But it is absurd to dignify any quantity with a place in an equation unless it can be defined independently of the other terms in the equation.”
These economists were debating Vi (which, for example, excludes intermediate goods), not Vt (or all physical transactions in American Yale Professor Irving Fisher’s truistic modeling). The transactions velocity, Vt, is an “independent” exogenous force acting on prices. And there is never any mention of money velocity in the FOMC deliberations.
The point is, obviously, because of the off-bank balance sheet risk transfer, no money stock figure acting alone, or even commercial bank credit, is adequate as a solitary “guide post” for monetary policy. That is why economists, e.g., William Barnett of Divisia Monetary Aggregates Index, brings the liquidity ex-post test of an asset to his modeling. That is why Shadow Stats reconstructs and reports M3.
Remember that MMT follows the standard equation of exchange: MV = PY
The difference is that we don't consider velocity to be constant, and we know that the stock of money available doesn't equal the amount of money in flow at any point in time. (Back to the key MMT finding:
"It's the savings, stupid "
He says because banks now save at the CB - interest on reserves and in Time deposits it changed everything when trying to figure out the flows that really matter to be able to control the flows and make predictions.
In monetarist terms not all the M they like to tot up ends up being multiplied by V. There's an amount of M that is multiplied by zero. It is static. That is our "net savings".
he is complaining about the same thing ("This destroys money velocity, simply because all bank-held savings are un-used and un-spent") but could be measured by the old the G.6 debit and debt turnover release.
He agreed with MMT and it is connected with the formula (S-I ) -> (G-T),
That's the way I see it anyways but I am no expert. Once you dive into his blog and seeking alpha posts and the other link I have posted.
“If the principles here advocated are correct, the purchasing power of money — or its reciprocal, the level of prices — depends exclusively on five definite factors:
(1)the volume of money in circulation; (2) its velocity of circulation; (3) the volume of bank deposits subject to check; (4) its velocity; and (5) the volume of trade.
“Each of these five magnitudes is extremely definite, and their relation to the purchasing power of money is definitely expressed by an “equation of exchange.”
“In my opinion, the branch of economics which treats of these five regulators of purchasing power ought to be recognized and ultimately will be recognized as an EXACT SCIENCE, capable of precise formulation, demonstration, and statistical verification.”
Taking Irving Fisher’s *KATALLACTIC* approach (the science of exchanges), viz., as George Garvy spells out in his: “DEPOSIT VELOCITY AND ITS SIGNIFICANCE” published in Nov. 1959 (as: “Digitized for FRASER”):
George Garvy: “Ideally, only balances subject to check or, even better, balances shown on checkbook stubs of depositors should be used to compute velocity rates.”
This is analogous to Dr. Richard G. Anderson’s, Ph.D. Economics, Massachusetts Institute of Technology (the world’s leading guru on bank reserves) explanative: “legal reserves are driven by payments”, payments being “total checkable deposits”.
Documentary proof of this demarcation is given within the G.6 release, Debit and Demand Deposit Turnover, discontinued in Sept. 1996 (discontinued for spurious reasons: “The usefulness of the FR 2573 data in understanding the behavior of the monetary aggregates has diminished in recent years as the distinction between transaction accounts and savings accounts has become increasingly blurred. Further, the emphasis on monetary aggregates as policy targets has decreased.”). Ed Fry was its manager. William G. Bretz (of Juncture Recognition), told Fry he had an error in his statistics. That’s the value of a “knowledge worker”, and not an “arm chair” economist.
Since these structural changes have now reached “maturity” the rate of increase of Vt has tapered off, and there may be other factors associated with a declining economy that could result in an absolute decrease in Vt.
The recent warped distribution of securities tendered on the front end of the yield curve, and term structure flattening, is chiefly influenced by Vt; Vt is chiefly influenced by the impoundment of monetary savings; Vt is influenced by katallactics.
This begs a syllogistic inquiry. If the growth of the M2 money stock is not due to DFI credit expansion, or not due to an expansion of currency held by the nonbank public, but merely reflects the shifting of the deposit accounts into those categories included in non-M1 components, as a larger proportion of a larger volume of money becomes interest bearing (Keynes’ liquidity preferences #3, the orthodox interpretation of the “demand for money”), then unexpectedly, money velocity demonstrably slows.
This stock vs. flow, backwardation (inverted prices) vs. contango (rising prices) clears up QE’s contrary forces: first rising rates, then falling rates; and FOMC schizophrenia: Do I stop - because inflation is increasing? Or do I go - because R-gDp is falling?
The impact of any shift in the DFI’s liabilities was altered in 1981, from an accelerated turnover of deposits, bank debits or demand drafts to those accounts (money actually exchanging counterparties), in both (1) total checkable deposit classifications in M1, and in (2) savings-investment type accounts in non-M1, during the historical pattern and subsequently forgotten “monetization of time deposits“ (the relaxation of structural gate-keeping restrictions - legal and administrative), in the 1960-1981 period.
The warp in N-gDp (stretch and squeeze) is predominately being driven by changes in Vt. Japan is a textbook case. Changes in Vt are largely determined by an increasing percentage of monetary savings being impounded and ensconced within the confines of its payment’s system. This is the direct cause of secular strangulation, chronically deficient aggregate monetary purchasing power, AD. Low interest rates are a reflection of this stagnation, generating an excess of savings over investment outlets.
Like I observed:
The interest-bearing character of the DFI’s deposits which results in any sudden larger proportion of commercial bank deposits in the interest-bearing category destroys money velocity.
National Rate on Non-Jumbo Deposits (less than $100,000): 12 Month CD
2018-11-05 0.49
2018-11-12 0.49
2018-11-19 0.56 [spike]
2018-11-26 0.57
This is also an excellent device for the banking system to reduce its aggregate profits.
It is hard for the average person to believe that banks do not loan out savings or existing deposits – demand or time. But the DFIs always create money by making loans to, or buying securities from, the non-bank public.
This results in a double-bind for the Fed. If it pursues a rather restrictive monetary policy, e.g., QT, interest rates tend to rise.
This places a damper on the creation of new money but, paradoxically drives existing money (savings) out of circulation into frozen deposits (un-used and un-spent). In a twinkling, the economy begins to suffer.
% Deposits vs. large CDs on "Assets and Liabilities of Commercial Banks in the United States - H.8"
Jul ,,,,, 12227 ,,,,, 1638.6 ,,,,, 7.46
Aug ,,,,, 12236 ,,,,, 1629.4 ,,,,, 7.51
Sep ,,,,, 12268 ,,,,, 1662.4 ,,,,, 7.38
Oct ,,,,, 12318 ,,,,, 1685.8 ,,,,, 7.31 (twinkling)
Nov ,,,,, 12313 ,,,,, 1680.1 ,,,,, 7.33
Dec ,,,,, 12425 ,,,,, 1698.6 ,,,,, 7.31
Jan ,,,,, 12465 ,,,,, 1732.9 ,,,,, 7.19
Feb ,,,,, 12494 ,,,,, 1744.6 ,,,,, 7.16
Convergence of spot to futures (rise in bonds, fall in stocks) is underway.
#1 Alfred Marshall: “Money, Credit, and Commerce” (London: MacMillan, 1923)
#2 The “Go-for-Broke Banker” Ron Chernow’s review of: Phillip L. Zweig’s “Wriston” (Crown, 952 pages)
#3 John Maynard Keynes: "The General Theory of Employment, Interest and Money", pg. 81 (New York: Harcourt, Brace and Co.)
#4 “Should Commercial banks accept savings deposits?” Conference on Savings and Residential Financing 1961 Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43.
See: John Tatom: "Was the 1982 velocity decline unusual?"
See: Stephan M. Goldfield, Princeton University “The Case of the Missing Money”
See: Philip George: “The velocity of money is a function of interest rates”
If consumption is approximately 70% of US GDP, then inputs to the consumer are critical to the stability and growth of the economy." But those who advocate N-gDp LPT would have it otherwise. How do you think we got this slowdown? It was the stagflationists fault, the perverse monetary policy mix:
bit.ly/2JYJxZ7
You increase money velocity by driving the commercial banks out of the savings business, whereby you get a non-inflationary matching of savings with investment. This makes both the non-banks and the commercial banks more profitable (as size isn't synonymous with profitability when a bank pays interest for something that they already own). Any increase in commercial bank held savings, monetary savings, destroys money velocity.
Money velocity has decelerated since 1981, because the DIDMCA of March 31st 1980 laid the legal basis for turning 38,000 non-banks, the CUs, MSBs, and Savings and Loan Associations, into 38,000 commercial banks.
Money velocity decelerated again when Bankrupt-u-Bernnanke remunerated interbank demand deposits.
Money velocity has been augmented by dis-savings, since mid-2016. That is, non-M1 components decelerated relative to transaction deposit classifications. The deceleration in non-M1 components, or dis-saving, is a Hyman Minsky “displacement”. An event that raises optimism (increases money velocity), one which artificially stimulates the economy, a grand illusion (disguising the fact that an increasing number of folks are struggling to make ends meet).
Percentage of time/savings deposits to transaction type deposits: 1939 ,,,,, 0.42 1949 ,,,,, 0.43 1959 ,,,,, 1.30 1969 ,,,,, 2.31 1979 ,,,,, 3.83 1989 ,,,,, 3.84 1999 ,,,,, 5.21 2009 ,,,,, 8.92 2018 ,,,,, 4.87 (declining mid-2016 with the increase in Vt)
Price = Cost + Profit? No, that’s “money illusion” (a confusion of nominal values vs. real values).
Mass production requires concomitant mass consumption. Only in the frictionless world created by the mathematical model builders are the asked prices in equilibrium with consumer spendable income. In the real world, there is always a purchasing power deficiency gap of varying proportions.
It is axiomatic, given monopolistic price practices, unless money expands at least at the rate prices are being pushed up, output cannot be sold and hence the work force will be cut back. As Danielle DiMartino Booth points out, the probability is that it’s more likely to metastasize into a credit problem, as businesses are unable to pass along unaffordable costs.
And it is also axiomatic: inflation is the most destructive force that capitalism encounters, persistently eroding the purchasing power of the dollar. What a dollar bill could buy in 1913, today costs $25.76. As Dr. Franz Pick of “PICK’S World Currency Report” famously quipped: “the dollar will be wiped out”, and; “Treasury bonds are certificates of guaranteed confiscation”, and; “the destiny of a currency determines the destiny of a nation", etc.
As Dr. Richard G. Anderson (Ph.D. Economics, MIT), Emeritus, FRB-STL (world’s leading guru on bank reserves), stated: Sent: Thu 11/16/06 9:55 AM:
"Today, with bank reserves largely driven by bank payments (debits), your views on bank debits and legal reserves sound right!"
RoC's in RRs underweight money velocity. Note that MZM income velocity has risen since the 2nd qtr. of 2017 (MZM tracks bank debits the closest). So M has a little more "punch".
Nonetheless we know the precise Minskey Moment of the GFC:
POSTED: Dec 13 2007 06:55 PM | The Commerce Department said retail sales in Oct 2007 increased by 1.2% over Oct 2006, & up a huge 6.3% from Nov 2006. 10/1/2007,,,,,,,-0.47,... -0.22 * temporary bottom 11/1/2007,,,,,,, 0.14,,,,,,, -0.18 12/1/2007,,,,,,, 0.44,,,,,,,-0.23 01/1/2008,,,,,,, 0.59,,,,,,, 0.06 02/1/2008,,,,,,, 0.45,,,,,,, 0.10 03/1/2008,,,,,,, 0.06,,,,,,, 0.04 04/1/2008,,,,,,, 0.04,,,,,,, 0.02 05/1/2008,,,,,,, 0.09,,,,,,, 0.04 06/1/2008,,,,,,, 0.20,,,,,,, 0.05 07/1/2008,,,,,,, 0.32,,,,,,, 0.10 08/1/2008,,,,,,, 0.15,,,,,,, 0.05 09/1/2008,,,,,,, 0.00,,,,,,, 0.13 10/1/2008,,,,,,, -0.20,,,,,,, 0.10 * possible recession 11/1/2008,,,,,,, -0.10,,,,,,, 0.00 * possible recession 12/1/2008,,,,,,, 0.10,,,,,,, -0.06 * possible recession Trajectory as predicted.
Why did Bankrupt-u-Bernanke misjudge the economy? It is because Bankrupt-u-Bernanke thinks that money is neutral, and not robust. Bernanke in his book “The Courage to Act”: “Monetary policy is a blunt tool” and “Unfortunately, beyond a quarter or two, the course of the economy is extremely hard to forecast".
The illuminating revelation is that: rates-of-change in monetary flows, volume X’s velocity, equal, for the same interval, RoC’s in P*T (where R-gDp and inflation are subsets). So we know the actual “Minskey Moment” where money ceases to be robust, and metastases into stagflation.
So N-gDp LPT is STUPID. It minimizes (caps) real-output, and maximizes inflation.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 1.9 percent --------------
Since August 2015, the rate-of-change, roc, in money flows (proxy for R-gDp) has fallen 139 percent. Since August 2015 the roc in money flows (proxy for inflation has fallen 35 percent).
Y-o-Y money flows have fallen (i.e., contrary to all pundits, the Fed's already following a contractionary money policy):
According to roc's in M*Vt, long-term money flows are signaling, at least, a short term bottom in oil prices. And stock averages should have hit a bottom concurrent with short-term money flows
The ratio of TD/DD in 1939 = 0.45 The ratio of TD/DD in 2016 = 6.67
The drive by the commercial bankers to expand their savings accounts has a totally irrational motivation, since it has meant, from a SYSTEM's standpoint, competing for the opportunity to pay higher and higher interest rates on deposits that already exist in the commercial banking SYSTEM.
As long as savings are held in the CBs in whatever form, these deposits are not financing investment, or indeed anything; their transactions velocity is zero. If on the other hand these deposits are transferred through the NBs they are invested or otherwise "put to work". Such use of deposits does not change the volume of deposits in the CBS, merely their ownership.
This is the cause of our economic malaise.
Economic prognostications within 1 year are actually infallible (unbeknownst to Bankrupt U Bernanke and the 300 Ph.Ds. on the Fed's research staff - including gDpNOW Atlanta Fed).
bit.ly/1KXzawv
Monetary policy objectives should be formulated in terms of desired rates-of-change, roc's, in monetary flows, M*Vt (our means-of-payment money times its transactions rate-of-turnover), relative to roc's in R-gDp.
Roc's in N-gDp (though "raw materials, intermediate goods and labor costs, which comprise the bulk of business spending are not treated in N-gDp"), can serve as a proxy figure for roc's in all transactions, P*T, in Professor Irving Fisher's truistic "equation of exchange".
Roc's in R-gDp have to be used, of course, as a policy standard. This is inviolate and sacrosanct. It has been true for over 100 years. I’m not teaching economics, I’m teaching human nature (where naysayers are always considered omniscient).
So we can surmise that after May (after stocks fall - if they are not decoupled from growth), the economy picks up slightly (but continues at subpar economic growth rates). Oil and other commodities should be headed for a fall - until July.
My equation is the Gospel. It is worth trillions of economic dollars. It should be classified as "top secret" by the CIA (it is an economic weapon). My equation proves that since the Great Depression all boom/busts were entirely the Fed's fault (including the GR).
Oil bottomed in Jan as predicted in Sept 2015. There were double peaks in 2016 as predicted (an asset price forecast which pundits say can't be done). Yellen shouldn't raise rates as N-gDp is now decelerating.
In 2017 there will be subpar R-gDp growth and accelerating inflation (decreasing real rates of interest which will burst the bond bubble).
Daily Treasury Yield Curve Rates:
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
used FRED's figures because the BOG's data has not been updated yet (somebody at the BOG's site has become lazy). RRs behave differently than bank debits (as the big seasonal drop this year demonstrates). RRs are a surrogate for money flows. When there is a decline in RRs, immediately followed by a rebound, it looks like the data should just be smoothed.
There's been increased volatility in the #s, e.g., Treasury's General Fund Account, and this has affected accuracy in my time series. I’ve extrapolated the data to try and establish “levels”, and I might be too generous (conservative):
“Oil is definitely a short at some point in late January. It will bottom at some point in March”. Jan 5, 2017. 05:52 PMLink
————– These aren’t well researched estimations. They just track money flows. But Houston, we have a problem – money velocity. MZM velocity fell for 2 qtrs. after the 12/17/15 rate hike. And we’ve now had 2 back-to-back rate hikes on 12/15/16 & 3/15/17.
FRB-ATL’s GDPNow model’s iterative downward revisions are no happenstance. Under the remuneration of IBDDs, a hike in the inter-bank remuneration rate (outside money), either induces non-bank dis-intermediation, or impedes the S=I brokering channel (increases leakages from the main, circular, income stream).
I.e., the payment of interest on IBDDs, destroys savings velocity by driving existing money (voluntary savings) out of circulation into the stagnant, commercial bank impounded and ensconced, savings deposits (where savings velocity is a subset of both money & credit velocity).
And it was non-inflationary savings velocity (all non-bank activity clears thru the payment’s system), that spawned the U.S. “Golden Era” in economics. Economic policy is perverse, one where the majority of policies are regressive (backsliding models leading to “arrested development”).
A hike in the remuneration rate swallows up successive prints in R-gDp. It decreases the demand for durable consumer goods, and then in the longer-term->business’s demand for new capital goods (a reflection of also, Alfred Marshall’s “cash-balances equation”, where “K” becomes the reciprocal of “V, and Larry Summers’: an excess of savings over investment outlets).
Oil and inflation will be lower in 2018. But I have to question as to whether bonds will follow suit (as there is now a snowballing demand side factor in the supply of and demand for loan-funds (gov’t deficit financing). But after this correction, stocks to the moon - TINA
S&Ps went down in 2018 because they were increasing the risk free rate which caused the losses on available for sale securities to reach 60b and banks had to mark down the price of their risk assets by 10x that.... 600b...
Once they stopped raising the rate in Jan 2019 (Trump freaked out on them) and reversed the rate policy asset prices stabilized and started to increase again..,
We got a good rally in risk asset prices 2019 ..as the 60b of former losses on available for sale securities became 60 of GAINS on available for sale securities... 120b positive swing... 10x favorable to banks ... 1.2 T of increased risk asset price authority...
Indexes went up until they started adding Reserves again in September and those non risk asserts started to displace the value of risk assets on bank balance sheets...
Look at situation today ...they put IOR risk free rate to all time low 0.1% and suspended inclusion of non risk assets in regulatory leverage ratio and then nasdaq goes to all time high Other indexes largely recovered while economy shutdown and earnings in the shitter due to COVID...
Less earnings is worth MORE if policy Risk free rate is lowered to zero lower bound.,,
Here
https://en.wikipedia.org/wiki/Net_present_value
If Risk free rate is zero the denominator goes to 1
You have to look at the policy rate and leverage regulatory policy...
Buffett: “ if govt said rate was going to be 0% for 50 years the Dow would immediately go to 100,000...”
Present value of 50 years of Dow earnings at 0% is equal to sum of 50 years of earnings...
This is what they train people to do in the discipline of Corporate Finance via Science methodology... this is how the people doing this stuff are trained to conduct themselves...
It is inaccurate, for the Federal Reserve’s cataloguer of economic statistics, to exclude the Treasury’s General Fund Account from the assets included in M1 (with the exception of WWII).
Once again, data dependency depends upon accurate definitions. Accurate prognostications are contingent upon "conforming statistics" (and a little grunt work). There is a lot of room for improvement in the government’s statistics. Data dependency requires, as William Barnett of “Divisia Monetary Aggregates”, an Oswald Distinguished Professor of Macroeconomics at KU (an actual former NASA “rocket scientist”), advocated, that the Fed should establish a “Bureau of Financial Statistics”.
No one has established any unique price effect of federal outlays, as compared to state and local government outlays, or expenditures by the private sector. Of course, the shifting of funds to, and out of, one of the 12 District Reserve banks has, depending upon the distribution of IBDDs, at its upper limit, a dollar for dollar impact on complicit reserves, but that is another problem that can be, and is dealt with, via the FRB–NY’s “open market operations”.
An injection of IBDDs, a member banks’ clearing balances, introduces market liquidity. Draining IBDDs, as in quantitative tightening, QT, withdrawals market liquidity. This is observable in both asset prices and bid/asked spreads for these assets.
What’s entirely overlooked in performing the seasonal outlook’s tests, is the fallacious use of measuring seasonality by one of the Gregorian calendar’s 12 whole months, as opposed to delimiting one of the 52 weeks during the yearly cycle.
These are the c. seasonal inflection points (they may vary a little from year to year):
#1) 3rd week in Jan.
#2) mid Mar.
#3) May 5,
#4) mid Jun.
#5) July 21,
#6) 2-3 week in Oct.
These are all driven by the Fed's "trading desk". And any week coincides with “bank squaring day”, bank’s adherence to reserve maintenance obligations.
These are all driven by the Fed's "trading desk". And any week coincides with “bank squaring day”, bank’s adherence to reserve maintenance obligations.
As I previously explained: the upcoming weekly NSA category: “Total Checkable Deposits (WTCDNS)” on the FRB-STL’s “FRED” database, will determine the 5th seasonal inflection point.
The 2 #’s are respectively:
5/28/18 $2,2037
6/4/2018 $2,1601
While it may appear from these figures, that money flows RoC has fallen, one cannot ignore the prospect that velocity is more than offsetting, as the cash-drain factor is bullish.
The "Δ" in large CDs on BOG's: "Assets and Liabilities of Commercial Banks in the United States" - H.8 release points towards higher money velocity (esp. prevalent this time of the year):
Remember that in 1978 all economist's forecasts for inflation were drastically wrong. To put that into perspective (Business Week): there were 27 price forecasts by individuals & 9 by econometric models for the year 1978. The lowest (Gary Schilling, White Weld), the highest, (Freund, NY, Stock Exch) & (Sprinkel, Harris Trust & Sav.).
The range CPI, 4.9 - 6.5 percent. For the Econometric models, low (Wharton, U. of Penn) 5.7%; high, 6.6% U. of Ga.).
For 1978 inflation based upon the CPI figure was 9.018%.
Roc's in M*Vt projected 9.0%
The importance of Vt in formulating - or appraising monetary policy, derives from the obvious fact that it is not the volume of money which determines prices & inflation rates, but rather the volume of monetary flows, M*Vt, relative to the volume of goods & services offered in exchange. And the importance of Vt is demonstrated by the historical fact that it has fluctuated 2.5 times as widely as the primary money stock over a corresponding 50 year period.
Inflation analysis cannot be limited to the volume of wages and salaries spent. To do so is to overlook the principal "engine" of inflation - which is of course, the volume of credit (new money), created by the Reserve & the commercial banks, plus the expenditure rate (velocity) of these funds. Also, e.g., overlooked is the effect of the expenditure of the savings of the non-bank public on prices (dis-savings). M*Vt's outcome encompasses the total effect of all these monetary flows."
Prior to Sept. 1996, the BOG reported the numeric values for the variables indispensable for solving Fisher's truistic concept money velocity on its G.6 release: "Debit and Demand Deposit Turnover" (back then, it was the BOG's longest running statistical time series).
The significance of bank debits in the G.6's prologue was described as: "Changes in business activity are closely linked with changes in the volume of money payments made by check, of which bank debits provide the best available single indicator."
This aforementioned data was untimely, and un-necessarily, non-conforming: "based upon statistical aggregates where data cannot be compiled accurately or in a manner which conforms to rigid theoretical concepts, in which the entire approach tends to be ex posit and static".
Despite its delimited character, it provided accurate economic projections.
The Fed calculated the G.6 figures by
Dividing the aggregate volume of debits of these banks against their demand deposit accounts.
Today the way the come to the inflation numbers after all the changes they've made be reducing. the amount of products in the basket is even worse.
Which means when you see the inflation number it will be at the lower end of the scale and in reality a lot higher.
Contrary to monetary theory, and Nobel Laureate Milton Friedman, the distributed lag effects for money flows, have been observable, mathematical constants, for the last 100 years.
M*Vt = P*T; where roc's in RRs = roc's in N-gDp; a proxy for all transactions in the "equation of exchange". I.e., N-gDp is determined by the volume of goods & services coming on the market relative to the actual, transactions, flow of money.
Roc's in R-gDp serves as a close proxy to roc's in total physical transactions T, that finance both goods and services.
Then roc's in P, represents the price level, or various roc's in a group of prices and indices.
The distributed lag effects for both bank debits and M*Vt are not "long and variable".
The roc in M*Vt (the proxy for real-output) = 10 month delta (courtesy of Montreal, Quebec, Bank Credit Analyst's, "debit/loan ratio".
The roc in M*Vt (the proxy for inflation) = 24 month delta (courtesy of "The Optimum Quantity of Money" - Dr. Milton Friedman.
Note1: their lengths are identical (as the weighted arithmetic average of reserve ratios and reservable liabilities remains constant).
Note2: the roc's were originally derived from the G.6 release. RRs are substituted for bank debits as the proxy for M*Vt, since the G.6's discontinuance.
Mike and Matt are correct with their analysis of the Leverage radio's and bank lending.
I have found that Robert P. Balan has the best grasp of this subject and has taken the analysis and results far beyond MMT. I suggest you read his stuff he's taken it to the next level.
I've made so much money I no longer post on seeking alpha.
36 comments:
This is for Matt Franko
Bacground: was reading an old post on Bills site - Lending is capital- not reserve-constrained
http://bilbo.economicoutlook.net/blog/?p=9075
A guy on there posted some comments he called himself flow 5
Tracked him down to his seeking alpha posts
https://seekingalpha.com/instablog/7143701-salmo-trutta/5308783-6-seasonal-inflection-points
Tracked him down to his blog
http://monetaryflows.blogspot.com
The Distributed Lag Effect: {M*Vt}
http://monetaryflows.blogspot.com/2018/05/the-distributed-lag-effect-mvt.html
Very similar to what Matt and Mike does has been doing it since the 1970's
Bio:
Syntex (who developed the birth control pill) was the first stock I bought (in 67). Bought my first options (IBM calls) in Dec 1974. Was a commodity broker from 79 to 82. Have never had a losing trade in Treasury-bond futures since 1979.
Nominal gNp hit 19.2% in the 1st qtr 1981, the FFR to 22%, & AAA Corporates to 15.49%. My prediction for the peak in AAA corporate yields for 1981 was 15.48% (& that bonds would bottom in Oct). Predicted the month stocks bottomed in 82 & in 84. Predicted the 87 crash. Predicted the top in the Y2K bubble. Predicted that the top in stocks would be July 2007. Predicted the severe contraction in the 4th qtr of 2008 in January of that year. Identified the bottom in stocks as March 2009. The markets confused me only once - when the FED executed QE2 (but I nailed the bottom in the CPI in Jan 2011 i.e., 7 months before it bottomed out).
http://monetaryflows.blogspot.com/2018/06/n-gdp-lpt-is-vladimir-lenins-answer-to_16.html
It is axiomatic. You don't target N-gDp. You target R-gDp. And total spending, AD, does not equal N-gDp as the Keynesian economist claim.
If the Fed’s technical staff can't target R-gDp, how can they target N-gDp? And why would the Fed target N-gDp - when it could target R-gDp?
So the “nominal-anchor” prevents bond prices from rising - because “inflation is overshooting”, and interest rates from falling, slowing any recovery or slowing real output? No, that perpetuates income inequality. Stagflationist thinking is as ephemeral as their RX.
The fact is that these McCarthyite armchair economists are “Know-Nothings”. The stagflationists don’t know money from mud pie. Rates-of-change in monetary flows, volume X’s velocity (for the same time intervals or distributed lags), equal RoC’s in P*T (where N-gDp is a subset of “aggregate nominal spending”).
The distributed lag effect of money flows have been mathematical constants for greater than 100 years.
Thus we know several things, that money is robust, that the RoC in R-gDp = exactly 10 months, trough to peak. And we know whether money is robust because we know when inflation accelerates relative to inflation, whose distributed lag is exactly 24 months, trough to peak.
Since the distributed lag effects of monetary flows are mathematical constants (which no economist understands or even knows about), you know in advance, what th trade-off between R-gDp and inflation, or the monetary fulcrum, will be. So we know when interest rates will respond to the monetary fulcrum, based on fixed money lags, and the "arrow of time".
So to target N-gDp is stupid. It maximizes inflation and minimizes real-output. IF you can target R-gDp, why try targeting N-gDp? R-gDp accelerates before inflation. And we know when the teeter-totter tips.
That’s why you target R-gDp as a policy standard, and obviously, not the other way around. The debit and deposit turnover time series is documentary proof.
There's loads of posts on his blog.
I only posted the ones that might peak your interest Matt.
Seasonal inflection points
The full history how central banking and commercial banking
Changed
The Distributed Lag Effect
Targeting N- GDP
To see if you and Mike can add anything to your bow.
There are number of things he highlights in the complete history of central banking and commercial banking.
That causes the things to happen the way they do.
However' (I think he had something to as analyst when it happened)
He says when the G.6 debut and debt turnover release was abandoned for spurious reasons in 1996. The FED and Treasury could no longer track the flows.
This led to M1 M2 etc being useless. Why Greenspan abandoned them
I think why he has such a fantastic prediction rate is he continues to use the equations that was in the G.6 debut and debt turnover release and rates of change in other things.
I've checked his predictions on here from 2015 and sometimes he gets it right down to the correct month.
https://ymam.proboards.com/thread/47265/more-natural-hamlet?page=1
No one can predict 4 years out. But the strength of r2 to rate of change in MVt relative to n-gDp surpasses anything anyone has ever been able to come up with.
https://seekingalpha.com/user/79825/comments
http://monetaryflows.blogspot.com/2018/07/its-funny-but-not-ha-ha.html
I've been reading his posts on his blog and seeking alpha and here
https://ymam.proboards.com/thread/47265/more-natural-hamlet
For 6 weeks now.
This guy has been doing what you and Mike have been doing since the 70's and has made an absolute fortune.
I'm hoping there are some golden nuggets in there that will help you and Mike see something you haven't seen before.
He loves that The debit and deposit turnover time series
Always says they lost control of the flows after they abandoned that.
I'm convinced he still used the equations that were in it.
He loves R-gDp
But if anyone can figure out what he dies.
It's you guys..
It's always about roc
Rate of change in the flows with this guy....
I haven’t looked at his site yet but after reading what you have posted my only comment is this; as I understand it, R-gDp is a derived measurement. It is N-gDp minus inflation. N-gDp is the only thing we can control, it is the absolute level of expenditures. Only once an inflation rate has been calculated/measured can we go back and determine R-gDp.
That is one of the problems I have always had with the real vs nominal discussions. Nominal is the only thing we know or can control. If I give you 1000 dollars a month, after a certain number of months you could argue I’m not giving you the same amount of buying power any more due to inflation so I’m really only giving you 950 relative to our initial 1000/mo arrangement. Measuring relative buying power is not cut and dried. A lot gets left out in official calculations. The basket of goods has been adjusted over time.
I’m sure Mike will have a better comment
There are some interesting things going on right now...
TGA is surging above 1.7t as Treasury rate of issuance has been high.... they have been issuing much more than redemptions...
Might be similar to WW2 period when they issued the large amount of war bonds to prevent inflation...
right now, with COVID shutdowns there are many businesses closed or operating at fractional capacity....
So MAYBE they are issuing bonds to create savings as if people spend right now they may be thinking it would create “inflation”
Once we open back up then they may run the TGA down to their 800b target by decreasing rate of issuance and this might create dis savings ...
Might be like post WW2 condition similar to 1946- 1950 period...
Would be interesting to see if consumer spending increases in response to treasury decreasing rate of issuance...
iow govt policy would then appear to be either creating savings or dis savings by adjustments to UST rate of net issuance...
Have to watch what Treasury does coming out of shutdowns...
Greg,
This guy has figured it out...
The central banks and Treasury can no longer track the flows since the G.6 debit and debt turnover release was abandoned for spurious reasons in 1996.
He knows exactly how to do it. Then predict what is going to happen. Is it the system fairy Mike says doesn't exist ?
This guy takes it to another level with the flows. I don't even know if he is still alive.
He says
Do not be bamboozled. Contrary to what the Austrian economists claim, Henry Hazlitt in his 1968: “The Velocity of Circulation”, and Ludwig von Mises in "Human Action", and Murray Rothbard, an American heterodox economist of the Austrian School, who wrote in Man Economy and State:
“But it is absurd to dignify any quantity with a place in an equation unless it can be defined independently of the other terms in the equation.”
These economists were debating Vi (which, for example, excludes intermediate goods), not Vt (or all physical transactions in American Yale Professor Irving Fisher’s truistic modeling). The transactions velocity, Vt, is an “independent” exogenous force acting on prices. And there is never any mention of money velocity in the FOMC deliberations.
The point is, obviously, because of the off-bank balance sheet risk transfer, no money stock figure acting alone, or even commercial bank credit, is adequate as a solitary “guide post” for monetary policy. That is why economists, e.g., William Barnett of Divisia Monetary Aggregates Index, brings the liquidity ex-post test of an asset to his modeling. That is why Shadow Stats reconstructs and reports M3.
Remember that MMT follows the standard equation of exchange: MV = PY
The difference is that we don't consider velocity to be constant, and
we know that the stock of money available doesn't equal the amount of
money in flow at any point in time. (Back to the key MMT finding:
"It's the savings, stupid "
He says because banks now save at the CB - interest on reserves and in Time deposits it changed everything when trying to figure out the flows that really matter to be able to control the flows and make predictions.
In monetarist terms not all the M they like to tot up ends up being
multiplied by V. There's an amount of M that is multiplied by zero. It
is static. That is our "net savings".
he is complaining about the same thing ("This destroys money velocity,
simply because all bank-held savings are un-used and un-spent") but could be measured by the old the G.6 debit and debt turnover release.
He agreed with MMT and it is connected with the formula (S-I ) -> (G-T),
That's the way I see it anyways but I am no expert. Once you dive into his blog and seeking alpha posts and the other link I have posted.
You'll get a better idea yourselves.
“If the principles here advocated are correct, the purchasing power of money — or its reciprocal, the level of prices — depends exclusively on five definite factors:
(1)the volume of money in circulation;
(2) its velocity of circulation;
(3) the volume of bank deposits subject to check;
(4) its velocity; and
(5) the volume of trade.
“Each of these five magnitudes is extremely definite, and their relation to the purchasing power of money is definitely expressed by an “equation of exchange.”
“In my opinion, the branch of economics which treats of these five regulators of purchasing power ought to be recognized and ultimately will be recognized as an EXACT SCIENCE, capable of precise formulation, demonstration, and statistical verification.”
Taking Irving Fisher’s *KATALLACTIC* approach (the science of exchanges), viz., as George Garvy spells out in his: “DEPOSIT VELOCITY AND ITS SIGNIFICANCE” published in Nov. 1959 (as: “Digitized for FRASER”):
https://fraser.stlouisfed.org/files/docs/meltzer/gardep1959.pdf
George Garvy: “Ideally, only balances subject to check or, even better, balances shown on checkbook stubs of depositors should be used to compute velocity rates.”
This is analogous to Dr. Richard G. Anderson’s, Ph.D. Economics, Massachusetts Institute of Technology (the world’s leading guru on bank reserves) explanative: “legal reserves are driven by payments”, payments being “total checkable deposits”.
Documentary proof of this demarcation is given within the G.6 release, Debit and Demand Deposit Turnover, discontinued in Sept. 1996 (discontinued for spurious reasons: “The usefulness of the FR 2573 data in understanding the behavior of the monetary aggregates has diminished in recent years as the distinction between transaction accounts and savings accounts has become increasingly blurred. Further, the emphasis on monetary aggregates as policy targets has decreased.”). Ed Fry was its manager. William G. Bretz (of Juncture Recognition), told Fry he had an error in his statistics. That’s the value of a “knowledge worker”, and not an “arm chair” economist.
The 6 seasonal inflection points are important.
http://monetaryflows.blogspot.com/search?updated-max=2018-05-31T14:49:00-07:00&max-results=7&start=6&by-date=false
What's also interesting is he quoted Alan Longborn
We all know Alan. Alan is an Australian MMT'r
Alan also studies the flows ,
https://seekingalpha.com/author/alan-longbon#regular_articles
In the last year or so Alan has teamed up with Elliot wave founder Robert P Balan
https://seekingalpha.com/author/robert-p-balan#regular_articles
Guess what the foundation is for Robert P Balan analysis is ?
The 6 seasonal inflection points and flows and Elliot wave.
:)
Have they worked out what this guy was doing for years ?
That I don't know but I will have a chat with Alan to see what the chat is.
Matt,
Dive into this guy's work.
You and Mike will be able to pick it apart..
Plenty of theory on his articles to get your teeth into.
:)
Vt
*katallactics*.
Exogenous.
Deceleration.
Since these structural changes have now reached “maturity” the rate of increase of Vt has tapered off, and there may be other factors associated with a declining economy that could result in an absolute decrease in Vt.
The recent warped distribution of securities tendered on the front end of the yield curve, and term structure flattening, is chiefly influenced by Vt; Vt is chiefly influenced by the impoundment of monetary savings; Vt is influenced by katallactics.
This begs a syllogistic inquiry. If the growth of the M2 money stock is not due to DFI credit expansion, or not due to an expansion of currency held by the nonbank public, but merely reflects the shifting of the deposit accounts into those categories included in non-M1 components, as a larger proportion of a larger volume of money becomes interest bearing (Keynes’ liquidity preferences #3, the orthodox interpretation of the “demand for money”), then unexpectedly, money velocity demonstrably slows.
This stock vs. flow, backwardation (inverted prices) vs. contango (rising prices) clears up QE’s contrary forces: first rising rates, then falling rates; and FOMC schizophrenia: Do I stop - because inflation is increasing? Or do I go - because R-gDp is falling?
The impact of any shift in the DFI’s liabilities was altered in 1981, from an accelerated turnover of deposits, bank debits or demand drafts to those accounts (money actually exchanging counterparties), in both (1) total checkable deposit classifications in M1, and in (2) savings-investment type accounts in non-M1, during the historical pattern and subsequently forgotten “monetization of time deposits“ (the relaxation of structural gate-keeping restrictions - legal and administrative), in the 1960-1981 period.
The warp in N-gDp (stretch and squeeze) is predominately being driven by changes in Vt. Japan is a textbook case. Changes in Vt are largely determined by an increasing percentage of monetary savings being impounded and ensconced within the confines of its payment’s system. This is the direct cause of secular strangulation, chronically deficient aggregate monetary purchasing power, AD. Low interest rates are a reflection of this stagnation, generating an excess of savings over investment outlets.
Like I observed:
The interest-bearing character of the DFI’s deposits which results in any sudden larger proportion of commercial bank deposits in the interest-bearing category destroys money velocity.
National Rate on Non-Jumbo Deposits (less than $100,000): 12 Month CD
2018-11-05 0.49
2018-11-12 0.49
2018-11-19 0.56 [spike]
2018-11-26 0.57
This is also an excellent device for the banking system to reduce its aggregate profits.
It is hard for the average person to believe that banks do not loan out savings or existing deposits – demand or time. But the DFIs always create money by making loans to, or buying securities from, the non-bank public.
This results in a double-bind for the Fed. If it pursues a rather restrictive monetary policy, e.g., QT, interest rates tend to rise.
This places a damper on the creation of new money but, paradoxically drives existing money (savings) out of circulation into frozen deposits (un-used and un-spent). In a twinkling, the economy begins to suffer.
% Deposits vs. large CDs on "Assets and Liabilities of Commercial Banks in the United States - H.8"
Jul ,,,,, 12227 ,,,,, 1638.6 ,,,,, 7.46
Aug ,,,,, 12236 ,,,,, 1629.4 ,,,,, 7.51
Sep ,,,,, 12268 ,,,,, 1662.4 ,,,,, 7.38
Oct ,,,,, 12318 ,,,,, 1685.8 ,,,,, 7.31 (twinkling)
Nov ,,,,, 12313 ,,,,, 1680.1 ,,,,, 7.33
Dec ,,,,, 12425 ,,,,, 1698.6 ,,,,, 7.31
Jan ,,,,, 12465 ,,,,, 1732.9 ,,,,, 7.19
Feb ,,,,, 12494 ,,,,, 1744.6 ,,,,, 7.16
Convergence of spot to futures (rise in bonds, fall in stocks) is underway.
#1 Alfred Marshall: “Money, Credit, and Commerce” (London: MacMillan, 1923)
#2 The “Go-for-Broke Banker” Ron Chernow’s review of: Phillip L. Zweig’s “Wriston” (Crown, 952 pages)
#3 John Maynard Keynes: "The General Theory of Employment, Interest and Money", pg. 81 (New York: Harcourt, Brace and Co.)
#4 “Should Commercial banks accept savings deposits?” Conference on Savings and Residential Financing 1961 Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43.
See: John Tatom: "Was the 1982 velocity decline unusual?"
See: Stephan M. Goldfield, Princeton University “The Case of the Missing Money”
See: Philip George: “The velocity of money is a function of interest rates”
https://seekingalpha.com/instablog/7143701-salmo-trutta/5279991-vt
An easier way to do it is..
Is send him an email with MMT trader attached.
https://draft.blogger.com/profile/13910212017849902362
Ask him to read it and ask him what would you add
If he is still alive see what he says
:)
If consumption is approximately 70% of US GDP, then inputs to the consumer are critical to the stability and growth of the economy."
But those who advocate N-gDp LPT would have it otherwise. How do you think we got this slowdown? It was the stagflationists fault, the perverse monetary policy mix:
bit.ly/2JYJxZ7
You increase money velocity by driving the commercial banks out of the savings business, whereby you get a non-inflationary matching of savings with investment. This makes both the non-banks and the commercial banks more profitable (as size isn't synonymous with profitability when a bank pays interest for something that they already own). Any increase in commercial bank held savings, monetary savings, destroys money velocity.
Money velocity has decelerated since 1981, because the DIDMCA of March 31st 1980 laid the legal basis for turning 38,000 non-banks, the CUs, MSBs, and Savings and Loan Associations, into 38,000 commercial banks.
Money velocity decelerated again when Bankrupt-u-Bernnanke remunerated interbank demand deposits.
Money velocity has been augmented by dis-savings, since mid-2016. That is, non-M1 components decelerated relative to transaction deposit classifications. The deceleration in non-M1 components, or dis-saving, is a Hyman Minsky “displacement”. An event that raises optimism (increases money velocity), one which artificially stimulates the economy, a grand illusion (disguising the fact that an increasing number of folks are struggling to make ends meet).
Percentage of time/savings deposits to transaction type deposits:
1939 ,,,,, 0.42
1949 ,,,,, 0.43
1959 ,,,,, 1.30
1969 ,,,,, 2.31
1979 ,,,,, 3.83
1989 ,,,,, 3.84
1999 ,,,,, 5.21
2009 ,,,,, 8.92
2018 ,,,,, 4.87 (declining mid-2016 with the increase in Vt)
• Historical FDIC's insurance coverage deposit account limits:
• 1934 – $2,500
• 1935 – $5,000
• 1950 – $10,000
• 1966 – $15,000
• 1969 – $20,000
• 1974 – $40,000
• 1980 – $100,000
• 2008 - $250,000
• 2011 - unlimited
• 2013 – $250,000 (caused the taper tantrum)
Yes, we are living in the Twilight Zone
Price = Cost + Profit? No, that’s “money illusion” (a confusion of nominal values vs. real values).
Mass production requires concomitant mass consumption. Only in the frictionless world created by the mathematical model builders are the asked prices in equilibrium with consumer spendable income. In the real world, there is always a purchasing power deficiency gap of varying proportions.
It is axiomatic, given monopolistic price practices, unless money expands at least at the rate prices are being pushed up, output cannot be sold and hence the work force will be cut back. As Danielle DiMartino Booth points out, the probability is that it’s more likely to metastasize into a credit problem, as businesses are unable to pass along unaffordable costs.
And it is also axiomatic: inflation is the most destructive force that capitalism encounters, persistently eroding the purchasing power of the dollar. What a dollar bill could buy in 1913, today costs $25.76. As Dr. Franz Pick of “PICK’S World Currency Report” famously quipped: “the dollar will be wiped out”, and; “Treasury bonds are certificates of guaranteed confiscation”, and; “the destiny of a currency determines the destiny of a nation", etc.
As Dr. Richard G. Anderson (Ph.D. Economics, MIT), Emeritus, FRB-STL (world’s leading guru on bank reserves), stated: Sent: Thu 11/16/06 9:55 AM:
"Today, with bank reserves largely driven by bank payments (debits), your views on bank debits and legal reserves sound right!"
RoC's in RRs underweight money velocity. Note that MZM income velocity has risen since the 2nd qtr. of 2017 (MZM tracks bank debits the closest). So M has a little more "punch".
Q1 2018: 1.305
Q4 2017: 1.300
Q3 2017: 1.297
Q2 2017: 1.295
Q1 2017: 1.298
Nonetheless we know the precise Minskey Moment of the GFC:
POSTED: Dec 13 2007 06:55 PM |
The Commerce Department said retail sales in Oct 2007 increased by 1.2% over Oct 2006, & up a huge 6.3% from Nov 2006.
10/1/2007,,,,,,,-0.47,... -0.22 * temporary bottom
11/1/2007,,,,,,, 0.14,,,,,,, -0.18
12/1/2007,,,,,,, 0.44,,,,,,,-0.23
01/1/2008,,,,,,, 0.59,,,,,,, 0.06
02/1/2008,,,,,,, 0.45,,,,,,, 0.10
03/1/2008,,,,,,, 0.06,,,,,,, 0.04
04/1/2008,,,,,,, 0.04,,,,,,, 0.02
05/1/2008,,,,,,, 0.09,,,,,,, 0.04
06/1/2008,,,,,,, 0.20,,,,,,, 0.05
07/1/2008,,,,,,, 0.32,,,,,,, 0.10
08/1/2008,,,,,,, 0.15,,,,,,, 0.05
09/1/2008,,,,,,, 0.00,,,,,,, 0.13
10/1/2008,,,,,,, -0.20,,,,,,, 0.10 * possible recession
11/1/2008,,,,,,, -0.10,,,,,,, 0.00 * possible recession
12/1/2008,,,,,,, 0.10,,,,,,, -0.06 * possible recession
Trajectory as predicted.
Why did Bankrupt-u-Bernanke misjudge the economy? It is because Bankrupt-u-Bernanke thinks that money is neutral, and not robust.
Bernanke in his book “The Courage to Act”: “Monetary policy is a blunt tool” and “Unfortunately, beyond a quarter or two, the course of the economy is extremely hard to forecast".
The illuminating revelation is that: rates-of-change in monetary flows, volume X’s velocity, equal, for the same interval, RoC’s in P*T (where R-gDp and inflation are subsets). So we know the actual “Minskey Moment” where money ceases to be robust, and metastases into stagflation.
So N-gDp LPT is STUPID. It minimizes (caps) real-output, and maximizes inflation.
posted Oct 30, 2015 at 3:17pm
Lag recognition by investors will come late, aka, 1st qtr. 1981 N-gNp.
About as close as the #'s get to a recession level:
08/1/2015 ,,,,, 0.08 ,,,,, 0.28
09/1/2015 ,,,,, 0.05 ,,,,, 0.25
10/1/2015 ,,,,, -0.03 ,,,,, 0.19
11/1/2015 ,,,,, 0.00 ,,,,, 0.18
12/1/2015 ,,,,, -0.01 ,,,,, 0.10
01/1/2016 ,,,,, -0.02 ,,,,, 0.11
02/1/2016 ,,,,, -0.01 ,,,,, 0.12
03/1/2016 ,,,,, 0.01 ,,,,, 0.10
Roc in R-gDp drops by 11.
Roc in inflation drops by 18.
Can you say "revert-to-mean"?
Elliott Wave V ends Nov 27th.
Latest forecast — December 11, 2015
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 1.9 percent
--------------
Since August 2015, the rate-of-change, roc, in money flows (proxy for R-gDp) has fallen 139 percent. Since August 2015 the roc in money flows (proxy for inflation has fallen 35 percent).
Y-o-Y money flows have fallen (i.e., contrary to all pundits, the Fed's already following a contractionary money policy):
01/1/2015 ,,,,, -0.03 ,,,,, -0.04
02/1/2015 ,,,,, -0.04 ,,,,, -0.07
03/1/2015 ,,,,, -0.04 ,,,,, -0.03
04/1/2015 ,,,,, -0.08 ,,,,, -0.07
05/1/2015 ,,,,, -0.09 ,,,,, -0.10
06/1/2015 ,,,,, -0.06 ,,,,, -0.10
07/1/2015 ,,,,, -0.09 ,,,,, -0.07
08/1/2015 ,,,,, -0.06 ,,,,, -0.03
09/1/2015 ,,,,, -0.05 ,,,,, -0.03
10/1/2015 ,,,,, -0.07 ,,,,, -0.08
11/1/2015 ,,,,, -0.07 ,,,,, -0.09
12/1/2015 ,,,,, -0.05 ,,,,, -0.07
According to roc's in M*Vt, long-term money flows are signaling, at least, a short term bottom in oil prices. And stock averages should have hit a bottom concurrent with short-term money flows
Time deposits….demand deposits
1939........15.........................33
1954........47....................... 121
1964......126....................... 156
1974......421....................... 274
1979......676....................... 401
1986...1,215....................... 491
1996...1,271....................... 420
2006...3,696....................... 317
2016...8,222.................... 1,233
The ratio of TD/DD in 1939 = 0.45
The ratio of TD/DD in 2016 = 6.67
The drive by the commercial bankers to expand their savings accounts has a totally irrational motivation, since it has meant, from a SYSTEM's standpoint, competing for the opportunity to pay higher and higher interest rates on deposits that already exist in the commercial banking SYSTEM.
As long as savings are held in the CBs in whatever form, these deposits are not financing investment, or indeed anything; their transactions velocity is zero. If on the other hand these deposits are transferred through the NBs they are invested or otherwise "put to work". Such use of deposits does not change the volume of deposits in the CBS, merely their ownership.
This is the cause of our economic malaise.
Economic prognostications within 1 year are actually infallible (unbeknownst to Bankrupt U Bernanke and the 300 Ph.Ds. on the Fed's research staff - including gDpNOW Atlanta Fed).
bit.ly/1KXzawv
Monetary policy objectives should be formulated in terms of desired rates-of-change, roc's, in monetary flows, M*Vt (our means-of-payment money times its transactions rate-of-turnover), relative to roc's in R-gDp.
Roc's in N-gDp (though "raw materials, intermediate goods and labor costs, which comprise the bulk of business spending are not treated in N-gDp"), can serve as a proxy figure for roc's in all transactions, P*T, in Professor Irving Fisher's truistic "equation of exchange".
Roc's in R-gDp have to be used, of course, as a policy standard. This is inviolate and sacrosanct. It has been true for over 100 years.
I’m not teaching economics, I’m teaching human nature (where naysayers are always considered omniscient).
parse, dt., R-gDp, inflation, bond proxy
01/1/2016 ,,,,, 0.07 ,,,,, 0.20 ,,,,, 0.28
02/1/2016 ,,,,, 0.02 ,,,,, 0.16 ,,,,, 0.27
03/1/2016 ,,,,, 0.04 ,,,,, 0.13 ,,,,, 0.26
04/1/2016 ,,,,, 0.04 ,,,,, 0.15 ,,,,, 0.25
05/1/2016 ,,,,, 0.03 ,,,,, 0.17 ,,,,, 0.24
06/1/2015 ,,,,, 0.06 ,,,,, 0.13 ,,,,, 0.23
07/1/2016 ,,,,, 0.07 ,,,,, 0.11 ,,,,, 0.22
08/1/2016 ,,,,, 0.07 ,,,,, 0.15 ,,,,, 0.22
09/1/2016 ,,,,, 0.05 ,,,,, 0.13 ,,,,, 0.21
10/1/2016 ,,,,, -0.01,,,,, 0.11 ,,,,, 0.21
11/1/2016 ,,,,, 0.04 ,,,,, 0.11 ,,,,, 0.20
12/1/2016 ,,,,, 0.04 ,,,,, 0.04 ,,,,, 0.19
So we can surmise that after May (after stocks fall - if they are not decoupled from growth), the economy picks up slightly (but continues at subpar economic growth rates). Oil and other commodities should be headed for a fall - until July.
My equation is the Gospel. It is worth trillions of economic dollars. It should be classified as "top secret" by the CIA (it is an economic weapon).
My equation proves that since the Great Depression all boom/busts were entirely the Fed's fault (including the GR).
money flows]
parse: dt, R-gDp, price-level:
01/1/2016 ,,,,, 0.07 ,,,,, 0.20 Brent oil bottomed 1/20/16
02/1/2016 ,,,,, 0.02 ,,,,, 0.16 stocks bottomed 2/11/16
03/1/2016 ,,,,, 0.04 ,,,,, 0.13
04/1/2016 ,,,,, 0.04 ,,,,, 0.15
05/1/2016 ,,,,, 0.05 ,,,,, 0.19
06/1/2016 ,,,,, 0.07 ,,,,, 0.15 oil peaked 6/9/16
07/1/2016 ,,,,, 0.11 ,,,,, 0.15 oil bottomed 8/2/16
08/1/2016 ,,,,, 0.11 ,,,,, 0.20 oil top 8/29/16 stocks top 8/15
09/1/2016 ,,,,, 0.09 ,,,,, 0.18 sell stocks short
10/1/2016 ,,,,, 0.02 ,,,,, 0.16
11/1/2016 ,,,,, 0.08 ,,,,, 0.16 sell commodities / buy bonds
12/1/2016 ,,,,, 0.08 ,,,,, 0.08 buy commodities / sell bonds
01/1/2017 ,,,,, 0.05 ,,,,, 0.11
02/1/2017 ,,,,, 0.02 ,,,,, 0.10
03/1/2017 ,,,,, 0.03 ,,,,, 0.09
Oil bottomed in Jan as predicted in Sept 2015. There were double peaks in 2016 as predicted (an asset price forecast which pundits say can't be done). Yellen shouldn't raise rates as N-gDp is now decelerating.
In 2017 there will be subpar R-gDp growth and accelerating inflation (decreasing real rates of interest which will burst the bond bubble).
Daily Treasury Yield Curve Rates:
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
05/02/16 0.11 0.22 0.41 0.55 0.80 0.96 1.32 1.64 1.88 2.31 2.71
05/03/16 0.18 0.21 0.40 0.53 0.75 0.92 1.25 1.57 1.81 2.24 2.66
05/04/16 0.18 0.19 0.39 0.52 0.75 0.89 1.23 1.55 1.79 2.22 2.64
05/05/16 0.20 0.20 0.39 0.51 0.72 0.87 1.20 1.52 1.76 2.17 2.60
05/06/16 0.20 0.19 0.39 0.51 0.74 0.90 1.23 1.55 1.79 2.20 2.62
05/09/16 0.21 0.24 0.38 0.51 0.72 0.86 1.20 1.51 1.77 2.18 2.61
05/10/16 0.25 0.24 0.36 0.52 0.72 0.88 1.20 1.52 1.77 2.18 2.61
05/11/16 0.25 0.26 0.37 0.53 0.74 0.87 1.20 1.51 1.73 2.15 2.58
05/12/16 0.25 0.27 0.37 0.54 0.76 0.92 1.24 1.54 1.75 2.18 2.60
05/13/16 0.25 0.29 0.38 0.55 0.76 0.91 1.22 1.51 1.71 2.14 2.55
05/16/16 0.21 0.28 0.38 0.57 0.79 0.94 1.26 1.55 1.75 2.18 2.59
05/17/16 0.25 0.28 0.40 0.58 0.82 0.97 1.29 1.57 1.76 2.18 2.59
05/18/16 0.25 0.30 0.43 0.63 0.90 1.08 1.41 1.69 1.87 2.27 2.67
05/19/16 0.25 0.31 0.43 0.64 0.89 1.06 1.38 1.67 1.85 2.24 2.64
tinyurl.com/hh6...
"the fed follows the market"
bit.ly/N3MOau
used FRED's figures because the BOG's data has not been updated yet (somebody at the BOG's site has become lazy).
RRs behave differently than bank debits (as the big seasonal drop this year demonstrates). RRs are a surrogate for money flows. When there is a decline in RRs, immediately followed by a rebound, it looks like the data should just be smoothed.
There's been increased volatility in the #s, e.g., Treasury's General Fund Account, and this has affected accuracy in my time series. I’ve extrapolated the data to try and establish “levels”, and I might be too generous (conservative):
parse; dt; real-output; & inflation:
01/1/2016 ,,,,, 0.068 ,,,,, 0.201
02/1/2016 ,,,,, 0.020 ,,,,, 0.156
03/1/2016 ,,,,, 0.043 ,,,,, 0.129
04/1/2016 ,,,,, 0.041 ,,,,, 0.150
05/1/2016 ,,,,, 0.045 ,,,,, 0.188
06/1/2016 ,,,,, 0.073 ,,,,, 0.147
07/1/2016 ,,,,, 0.109 ,,,,, 0.151
08/1/2016 ,,,,, 0.111 ,,,,, 0.198
09/1/2016 ,,,,, 0.112 ,,,,, 0.200
10/1/2016 ,,,,, 0.039 ,,,,, 0.174
11/1/2016 ,,,,, 0.105 ,,,,, 0.188
12/1/2016 ,,,,, 0.132* ,,,,, 0.130
01/1/2017 ,,,,, 0.100 ,,,,, 0.161
02/1/2017 ,,,,, 0.071 ,,,,, 0.155
03/1/2017 ,,,,, 0.075 ,,,,, 0.146
04/1/2017 ,,,,, 0.053 ,,,,, 0.150
05/1/2017 ,,,,, 0.049 ,,,,, 0.180
*But the top in stocks during this December looks right.
As I said on 2/17/17: “stocks peak in March”
And as I also called:
“Oil is definitely a short at some point in late January. It will bottom at some point in March”.
Jan 5, 2017. 05:52 PMLink
————–
These aren’t well researched estimations. They just track money flows. But Houston, we have a problem – money velocity. MZM velocity fell for 2 qtrs. after the 12/17/15 rate hike. And we’ve now had 2 back-to-back rate hikes on 12/15/16 & 3/15/17.
FRB-ATL’s GDPNow model’s iterative downward revisions are no happenstance. Under the remuneration of IBDDs, a hike in the inter-bank remuneration rate (outside money), either induces non-bank dis-intermediation, or impedes the S=I brokering channel (increases leakages from the main, circular, income stream).
I.e., the payment of interest on IBDDs, destroys savings velocity by driving existing money (voluntary savings) out of circulation into the stagnant, commercial bank impounded and ensconced, savings deposits (where savings velocity is a subset of both money & credit velocity).
And it was non-inflationary savings velocity (all non-bank activity clears thru the payment’s system), that spawned the U.S. “Golden Era” in economics. Economic policy is perverse, one where the majority of policies are regressive (backsliding models leading to “arrested development”).
A hike in the remuneration rate swallows up successive prints in R-gDp. It decreases the demand for durable consumer goods, and then in the longer-term->business’s demand for new capital goods (a reflection of also, Alfred Marshall’s “cash-balances equation”, where “K” becomes the reciprocal of “V, and Larry Summers’: an excess of savings over investment outlets).
Oil and inflation will be lower in 2018. But I have to question as to whether bonds will follow suit (as there is now a snowballing demand side factor in the supply of and demand for loan-funds (gov’t deficit financing). But after this correction, stocks to the moon - TINA
Just as he predicted....
In 2018 SP500 went from 2926 - 2338
After the correction went to the moon 3400
Oil went from $ 75 - $ 40 a barrel
Inflation went from 3 - 1.5%
:)
S&Ps went down in 2018 because they were increasing the risk free rate which caused the losses on available for sale securities to reach 60b and banks had to mark down the price of their risk assets by 10x that.... 600b...
Once they stopped raising the rate in Jan 2019 (Trump freaked out on them) and reversed the rate policy asset prices stabilized and started to increase again..,
We got a good rally in risk asset prices 2019 ..as the 60b of former losses on available for sale securities became 60 of GAINS on available for sale securities... 120b positive swing... 10x favorable to banks ... 1.2 T of increased risk asset price authority...
Indexes went up until they started adding Reserves again in September and those non risk asserts started to displace the value of risk assets on bank balance sheets...
Look at situation today ...they put IOR risk free rate to all time low 0.1% and suspended inclusion of non risk assets in regulatory leverage ratio and then nasdaq goes to all time high Other indexes largely recovered while economy shutdown and earnings in the shitter due to COVID...
Less earnings is worth MORE if policy Risk free rate is lowered to zero lower bound.,,
Here
https://en.wikipedia.org/wiki/Net_present_value
If Risk free rate is zero the denominator goes to 1
You have to look at the policy rate and leverage regulatory policy...
Buffett: “ if govt said rate was going to be 0% for 50 years the Dow would immediately go to 100,000...”
Present value of 50 years of Dow earnings at 0% is equal to sum of 50 years of earnings...
This is what they train people to do in the discipline of Corporate Finance via Science methodology... this is how the people doing this stuff are trained to conduct themselves...
The Dark Side Of The Moon: The Seasonal Clock
It is inaccurate, for the Federal Reserve’s cataloguer of economic statistics, to exclude the Treasury’s General Fund Account from the assets included in M1 (with the exception of WWII).
Once again, data dependency depends upon accurate definitions. Accurate prognostications are contingent upon "conforming statistics" (and a little grunt work). There is a lot of room for improvement in the government’s statistics. Data dependency requires, as William Barnett of “Divisia Monetary Aggregates”, an Oswald Distinguished Professor of Macroeconomics at KU (an actual former NASA “rocket scientist”), advocated, that the Fed should establish a “Bureau of Financial Statistics”.
No one has established any unique price effect of federal outlays, as compared to state and local government outlays, or expenditures by the private sector. Of course, the shifting of funds to, and out of, one of the 12 District Reserve banks has, depending upon the distribution of IBDDs, at its upper limit, a dollar for dollar impact on complicit reserves, but that is another problem that can be, and is dealt with, via the FRB–NY’s “open market operations”.
An injection of IBDDs, a member banks’ clearing balances, introduces market liquidity. Draining IBDDs, as in quantitative tightening, QT, withdrawals market liquidity. This is observable in both asset prices and bid/asked spreads for these assets.
What’s entirely overlooked in performing the seasonal outlook’s tests, is the fallacious use of measuring seasonality by one of the Gregorian calendar’s 12 whole months, as opposed to delimiting one of the 52 weeks during the yearly cycle.
These are the c. seasonal inflection points (they may vary a little from year to year):
#1) 3rd week in Jan.
#2) mid Mar.
#3) May 5,
#4) mid Jun.
#5) July 21,
#6) 2-3 week in Oct.
These are all driven by the Fed's "trading desk". And any week coincides with “bank squaring day”, bank’s adherence to reserve maintenance obligations.
Jul. 4, 2018 3:31 PM ET
These are all driven by the Fed's "trading desk". And any week coincides with “bank squaring day”, bank’s adherence to reserve maintenance obligations.
As I previously explained: the upcoming weekly NSA category: “Total Checkable Deposits (WTCDNS)” on the FRB-STL’s “FRED” database, will determine the 5th seasonal inflection point.
The 2 #’s are respectively:
5/28/18 $2,2037
6/4/2018 $2,1601
While it may appear from these figures, that money flows RoC has fallen, one cannot ignore the prospect that velocity is more than offsetting, as the cash-drain factor is bullish.
The "Δ" in large CDs on BOG's: "Assets and Liabilities of Commercial Banks in the United States" - H.8 release points towards higher money velocity (esp. prevalent this time of the year):
https://fred.stlouisfed.org/data/LTDACBW027NBOG.txt
The "Δ" in the ratio of “total checkable deposits”:
https://fred.stlouisfed.org/data/WTCDNS.txt
to “total savings deposits:
https://fred.stlouisfed.org/data/WSAVNS.txt
is largely unchanged.
The impact on the financial markets is effectuated by a larger “footprint” (which should suddenly disappear).
Disclosure: I am long oex options.
Obviousley This was 2018 above...
Since we have just passed mid June 2020 which is probably A bad year to compare things due to the virus.
Velocity/ transactions must have fell off a cliff...
Any large footprints suddenly vanish or appear Matt ?
Considering most footprints have been large due to the virus..
Remember that in 1978 all economist's forecasts for inflation were drastically wrong. To put that into perspective (Business Week): there were 27 price forecasts by individuals & 9 by econometric models for the year 1978. The lowest (Gary Schilling, White Weld), the highest, (Freund, NY, Stock Exch) & (Sprinkel, Harris Trust & Sav.).
The range CPI, 4.9 - 6.5 percent. For the Econometric models, low (Wharton, U. of Penn) 5.7%; high, 6.6% U. of Ga.).
For 1978 inflation based upon the CPI figure was 9.018%.
Roc's in M*Vt projected 9.0%
The importance of Vt in formulating - or appraising monetary policy, derives from the obvious fact that it is not the volume of money which determines prices & inflation rates, but rather the volume of monetary flows, M*Vt, relative to the volume of goods & services offered in exchange. And the importance of Vt is demonstrated by the historical fact that it has fluctuated 2.5 times as widely as the primary money stock over a corresponding 50 year period.
Inflation analysis cannot be limited to the volume of wages and salaries spent. To do so is to overlook the principal "engine" of inflation - which is of course, the volume of credit (new money), created by the Reserve & the commercial banks, plus the expenditure rate (velocity) of these funds. Also, e.g., overlooked is the effect of the expenditure of the savings of the non-bank public on prices (dis-savings). M*Vt's outcome encompasses the total effect of all these monetary flows."
Prior to Sept. 1996, the BOG reported the numeric values for the variables indispensable for solving Fisher's truistic concept money velocity on its G.6 release: "Debit and Demand Deposit Turnover" (back then, it was the BOG's longest running statistical time series).
The significance of bank debits in the G.6's prologue was described as: "Changes in business activity are closely linked with changes in the volume of money payments made by check, of which bank debits provide the best available single indicator."
This aforementioned data was untimely, and un-necessarily, non-conforming: "based upon statistical aggregates where data cannot be compiled accurately or in a manner which conforms to rigid theoretical concepts, in which the entire approach tends to be ex posit and static".
Despite its delimited character, it provided accurate economic projections.
The Fed calculated the G.6 figures by
Dividing the aggregate volume of debits of these banks against their demand deposit accounts.
http://monetaryflows.blogspot.com/2018/03/surrogates.html
Today the way the come to the inflation numbers after all the changes they've made be reducing. the amount of products in the basket is even worse.
Which means when you see the inflation number it will be at the lower end of the scale and in reality a lot higher.
Contrary to monetary theory, and Nobel Laureate Milton Friedman, the distributed lag effects for money flows, have been observable, mathematical constants, for the last 100 years.
M*Vt = P*T; where roc's in RRs = roc's in N-gDp; a proxy for all transactions in the "equation of exchange". I.e., N-gDp is determined by the volume of goods & services coming on the market relative to the actual, transactions, flow of money.
Roc's in R-gDp serves as a close proxy to roc's in total physical transactions T, that finance both goods and services.
Then roc's in P, represents the price level, or various roc's in a group of prices and indices.
The distributed lag effects for both bank debits and M*Vt are not "long and variable".
The roc in M*Vt (the proxy for real-output) = 10 month delta (courtesy of Montreal, Quebec, Bank Credit Analyst's, "debit/loan ratio".
The roc in M*Vt (the proxy for inflation) = 24 month delta (courtesy of "The Optimum Quantity of Money" - Dr. Milton Friedman.
Note1: their lengths are identical (as the weighted arithmetic average of reserve ratios and reservable liabilities remains constant).
Note2: the roc's were originally derived from the G.6 release. RRs are substituted for bank debits as the proxy for M*Vt, since the G.6's discontinuance.
Warren says he is using fixed FX analysis..
Yet, this guy agrees with MMT.
I can't see the fixed FX myself.
Alan Longborn the Australian MMT'r got back to me
this is what Alan says below.
I have indeed been using the 6 seasonal inflection points and they work and in reality there are 7.
This article sets them out even more clearly and with great graphics.
https://seekingalpha.com/article/4351356-burden-of-bullish-bearish-meme-unleash-total-power-of-compounding-and-large-numbers-laws
Mike and Matt are correct with their analysis of the Leverage radio's and bank lending.
I have found that Robert P. Balan has the best grasp of this subject and has taken the analysis and results far beyond MMT. I suggest you read his stuff he's taken it to the next level.
I've made so much money I no longer post on seeking alpha.
I now Work with ANG
https://seekingalpha.com/author/ang-traders#regular_articles
Salmo and Robert P Balan.
Inflation doesn’t exist. It’s a figure of speech. Ask Matt and he will tell you that.
I don't want to post anything else..
As it seems that these guys now offer a paying service like Mike.
My point was not about paying services but knowledge and adding more knowledge to insights. I'm not bothered about who thinks their service is best.
I was interested in what can everybody add to improve knowledge by sharing knowledge. From what everyone has learned over the years..
But that search has stopped as you how have to pay to get it....
All the best
Foot...
“ Inflation doesn’t exist. It’s a figure of speech.”
Yo oil was just NEGATIVE $35 per bland these morons are going all around saying “we have inflation!”...
“Inflation” is a figure of speech created by monetarists... it’s QTM exclusive...
Oil goes from $160 to -$35 and these morons are running all around saying “inflation!”
By the way Salmo is alive and well be posted today.
Must be nearly 80
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