Couldn't one make the argument that everything destroys value compares to a hypothetical superior alternative? It sounds silly, right, but I think it’s true.  Value that could have been but was not, is value that is lost.  That is where we get the notion of opportunity cost. Using force to divert c...

Here's a different perspective. Joe Weisenthal: Why The Claim That Government Can't Create Wealth Is Provably Wrong The Erie Canal is a good example — it made New York into a major financial capital and helped open the West for settlement. The father of the Erie Canal was Gov. DeWitt Clinton, and b...

Gov't employees don't build bridges or roads.  They award contracts to construction companies.  They're middle men with a forced monopoly. Your argument hinges on the necessity of middle men with a monopoly, to getting the value in the bridge.  Is there a reason that private companies would not cont...

I empathize, budd.  I don't think I will re-balance fully into LTTs and gold when the time comes.  I like the PP concept, but the tracking error against the SP has been eating at me for the last year. My plan is to re-balance only enough to get the allocation to one I deem reasonable, but slightly b...

A limited default might be a good thing for us.  Then equity tanks, and gold rises.  Balance out of gold, and buy undervalued equity. 

Maybe balance into Treasurys too, but maybe just do nothing with them.  They should bounce back once the missed payments are made.

I have been thinking about doing something like this, but I can't decide whether to use ETFs which I think might be a smart pick, either international or sector-specific... Or pick a high-risk/high-return fund, which is sounds like what you are doing.  If you don't mind me asking, are you using the...

Okay, thanks.  That sounds like a good guess, but I will hopefully ask about it on Roche's site as well. It seems like Flow B must have been occurring, even before IOR was paid.  But maybe it was not as important as Flow A, because scarcity of reserves truly was an important consideration, as you sa...

Yes, the first one was supposed to say "sells," not "buys," and the second was supposed to say "buys," not "sells."  Here it is corrected, also with Flow B in matching order. Flow A: Fed sells Treasurys / reduces liquidity (reserves)  -->  Reserves scarcer  --...

"Stay the course" doesn't sounds much like "stick your head in the sand" to me. The only possible head-sand-sticking I think is even remotely present here may be a slight lack of acknowledgement of the PP's anti-prosperity tilt that Budd mentioned. I've noticed this myself and e...

I read Roche's paper on MR, and I have a few questions for you guys. 1)   Do banks ever mix their outside money (Fed reserves) with their inside money (credit-created money, outside Fed)?  Or is the outside money only ever used in transactions with other banks with reserves, and with the Fed? 2)   T...

Gumby, I am not saying that increased cash reserves is what motivates the banks to lend more, under QE.  I understand they were never reserve-constrained to begin with. I am saying they lend more because they don't have the alternative of buying and holding Treasurys, nearly as available to them.  T...

Since interest rates are heavily influenced by the FED to say the least, I'm saying they are a major cause of the cycles if not the greatest cause. They are unquestionably wasteful. They drive people to borrow when absent manipulation they would prefer to save. They distort behavior. We know people...

He said it in other threads. He thinks that QE will result in the collapse of the dollar or hyperinflation if it is continued. I can't disagree that QE is unlikely, if not totally unable, to result in hyperinflation. QE in itself can't produce any inflation.  Only increased lending of the reserves ...

Ohhh boy, I've explained a dozen times in a half-dozen ways how QE expands the money supply. Sorry, but it's not a very convincing argument, KShartle. You are referring to the "Quantity Theory of Money". It's a theory that originated in the 16th century and was disproven in the 1930s and ...

@ Kshartle To use Dalio's video as an illustration, you're positing that either the short or long-term debt cycles are wasteful (i.e. result in misallocation of capital) and that they are exacerbated by the Fed influencing rates? If I am not mistaken, in the video Dalio remains agnostic as to whethe...

Those weekly amounts are minor in comparison to the 85B in monthly purchases and dont warrant a 3% decline. If anything, gold should habe risen now that tapering in October is less likely with the shutdown. Those purchases are an asset swap: cash reserves for Treasurys.  They aren't inflationary un...

The reason why I think wider understanding would reduce confidence is because it's been my experience that most people have a pretty good amount of faith in government competence, whether that's from positive personal experiences, patriotism, idealism, youthful naiveté, or something else. Learning ...

Isn't this a bit ridiculous, though?  Our government has a military that could destroy the world 5 times over. Would we ever give an entity that kind of power if we thought they'd try to use our fiat currency to acquire all our wealth from us? Nobody gave the USG a military.  They built it by issui...

It stands to reason that populations, who will not abide the practice of hitting, are raising their children to be more productive. That is an interesting theory, corporal punishment is extremely common in Singapore, administered by parents, schools, and the government itself as an official punishm...

  For the most part, we have an amazingly productive economy. While it is still good it is getting worse, and compared to other countries - much worse. http://i40.tinypic.com/262tabm.jpg Thank you for posting this graphic, Mdraf.  That countries like Sweden and Austria would be more productive than...

There will not always be thugs, thieves, and slave drivers.  Generations from now, human beings will look back on our times and wonder how we stayed sane in a nightmare of violence, propaganda, and dissociation.  Much the same way as we would look back on the Middle Ages. Another poster has written ...

If government is illegitimate than so is private property In any recognizable form, and then we're left basically with anarchy. This is a claim without an argument.  I'm not saying it isn't true.  It might be... but I don't see a reason to think so. Actually, I see a good reason that isn't true: go...

It's interesting that the 20th century wound up being the greatest period of prosperity overall in the history of the world, and it coincided with bankers and other financial interests basically getting their way with respect to control over the currency and expansion of credit. Not to imply that y...