Comments on: Waiting for the Death of the Chicago School, and the Keynesian School also, Redux http://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Mon, 13 Feb 2012 17:14:22 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Seanhttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-24151 Sean Fri, 08 Jan 2010 03:19:22 +0000 http://alephblog.com/?p=1993#comment-24151 The answer will wind up being a combination of the old robbing the young via tax hikes and the young robbing the old via high rates of inflation The answer will wind up being a combination of the old robbing the young via tax hikes and the young robbing the old via high rates of inflation

]]> By: fran cannetohttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23243 fran canneto Fri, 11 Sep 2009 01:08:27 +0000 http://alephblog.com/?p=1993#comment-23243 David, Your a genius, I do enjoy your posts. I think you hit it on the head with Greenspan always running out to save eveyone who doesn't need saving. I say bankrupcy is the only way to clear the system of bad debt of bad investments of bad businesses, it sucks but is the only way we have to keep capitalism alive. Now alot of people have said that, but politians never see it that way. One point, we may be at the last cycle but it hasn't finished itself yet. The crash is followed by lower interest rates then the market finds its next thing. We already see the stock market rising and pundits saying, its excess liquidity. So maybe we have one last huge asset boom. How can we not will the U.S. Fed basically spending trillions to get humpy dumpy back again. The comes the next crash. frank David,

Your a genius, I do enjoy your posts. I think you hit it on the head with Greenspan always running out to save eveyone who doesn’t need saving. I say bankrupcy is the only way to clear the system of bad debt of bad investments of bad businesses, it sucks but is the only way we have to keep capitalism alive.

Now alot of people have said that, but politians never see it that way.

One point, we may be at the last cycle but it hasn’t finished itself yet. The crash is followed by lower interest rates then the market finds its next thing.

We already see the stock market rising and pundits saying, its excess liquidity. So maybe we have one last huge asset boom. How can we not will the U.S. Fed basically spending trillions to get humpy dumpy back again. The comes the next crash.

frank

]]> By: MJhttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23213 MJ Wed, 09 Sep 2009 06:22:43 +0000 http://alephblog.com/?p=1993#comment-23213 Thanks for this post and blog. I really appreciate your thoughts on both investing and Fed and public policy. I find your call for a 3% fed funds rate NOW pretty gutsy, and refreshing. Since I have no debt and don't plan to take on any, it would be fine with me. I think. I'd love a post from you laying out your preferred Fed and fiscal policies for - say - the next 3 years, including how said policies would affect various stakeholders and markets. For example, if the Fed were to raise the Fed funds rate to 3% now, how would it affect the banks? The housing market? How much pain would there be, and for whom, and when would the real recovery begin? Now that we have apparently avoided implosion and meltdown of the entire financial system, I mean. Thanks for this post and blog. I really appreciate your thoughts on both investing and Fed and public policy.

I find your call for a 3% fed funds rate NOW pretty gutsy, and refreshing. Since I have no debt and don’t plan to take on any, it would be fine with me. I think.

I’d love a post from you laying out your preferred Fed and fiscal policies for – say – the next 3 years, including how said policies would affect various stakeholders and markets. For example, if the Fed were to raise the Fed funds rate to 3% now, how would it affect the banks? The housing market? How much pain would there be, and for whom, and when would the real recovery begin? Now that we have apparently avoided implosion and meltdown of the entire financial system, I mean.

]]> By: But What do I Know?http://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23198 But What do I Know? Tue, 08 Sep 2009 11:40:00 +0000 http://alephblog.com/?p=1993#comment-23198 **Fed funds rate should be in the 3% region** Amen, amen. Regarding the importance of debt in macroeconomic concerns, I assume have you seen the work of Steve Keen, takes a similar tack. What do you think of him? BTW, I'm glad to see more comments here--this is one of the most intelligent and sober blogs out there. I can only hope that Rolfe Winkler links to you more often. . . **Fed funds rate should be in the 3% region** Amen, amen.

Regarding the importance of debt in macroeconomic concerns, I assume have you seen the work of Steve Keen, takes a similar tack. What do you think of him?

BTW, I’m glad to see more comments here–this is one of the most intelligent and sober blogs out there. I can only hope that Rolfe Winkler links to you more often. . .

]]> By: RNhttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23196 RN Tue, 08 Sep 2009 01:02:26 +0000 http://alephblog.com/?p=1993#comment-23196 You are right that indebtedness and loose monetary policy were problems. But they pale in comparison to the effects of the "free markets solve all problems" delusion. And the lack of regulation is merely a result in deluded faith in such. You are right that indebtedness and loose monetary policy were problems. But they pale in comparison to the effects of the “free markets solve all problems” delusion. And the lack of regulation is merely a result in deluded faith in such.

]]> By: Fed Logichttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23195 Fed Logic Mon, 07 Sep 2009 20:03:30 +0000 http://alephblog.com/?p=1993#comment-23195 In this post lies the great secret to American wealth. Just watch the Fed blow another bubble. With their flawed thinking and their flawed decision-making this is bound to happen quite often. Ride the Fed-induced bubble and leave at the first hint of trouble. Its okay to sell early. Enjoy your profits while you wait. When it all bursts, buy high quality assets for pennies on the dollar. Repeat. Historically a system like this has mostly benefited insiders and the crony capitalists but now with the internet and with it the difficulty of hoarding information, this very American road to prosperity is open to all. In this post lies the great secret to American wealth. Just watch the Fed blow another bubble. With their flawed thinking and their flawed decision-making this is bound to happen quite often. Ride the Fed-induced bubble and leave at the first hint of trouble. Its okay to sell early. Enjoy your profits while you wait. When it all bursts, buy high quality assets for pennies on the dollar. Repeat. Historically a system like this has mostly benefited insiders and the crony capitalists but now with the internet and with it the difficulty of hoarding information, this very American road to prosperity is open to all.

]]> By: Praxis22http://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23193 Praxis22 Mon, 07 Sep 2009 07:12:59 +0000 http://alephblog.com/?p=1993#comment-23193 Wouldn't argue with you, beyond the pragmatic Keynesian stimulus seen thus far, both Chicago/Monetarism & Keynes are dead. The interesting thing is going to be seeing what takes it's place. Wouldn’t argue with you, beyond the pragmatic Keynesian stimulus seen thus far, both Chicago/Monetarism & Keynes are dead. The interesting thing is going to be seeing what takes it’s place.

]]> By: pjhttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23191 pj Mon, 07 Sep 2009 05:25:48 +0000 http://alephblog.com/?p=1993#comment-23191 Great post indeed. There never was a free market in the first place. Crony capitalism indeed. Great post indeed. There never was a free market in the first place. Crony capitalism indeed.

]]> By: DaveinHackensackhttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23190 DaveinHackensack Mon, 07 Sep 2009 03:41:22 +0000 http://alephblog.com/?p=1993#comment-23190 A good post. I'd point out that, in addition to Hussman, you also had non-academics such as the self-made billionaire banker Andy Beal sounding the warning bells about the debt bubble. The country would be better off if the administration asked men such as Hussman and Beal to advise it on policy. They don't seem to be politically connected enough for that though. A good post. I’d point out that, in addition to Hussman, you also had non-academics such as the self-made billionaire banker Andy Beal sounding the warning bells about the debt bubble. The country would be better off if the administration asked men such as Hussman and Beal to advise it on policy. They don’t seem to be politically connected enough for that though.

]]> By: James Daileyhttp://alephblog.com/2009/09/05/waiting-for-the-death-of-the-chicago-school-and-the-keynesian-school-also-redux/comment-page-1/#comment-23189 James Dailey Mon, 07 Sep 2009 02:22:51 +0000 http://alephblog.com/?p=1993#comment-23189 Hello David, I think you touch upon a critical issue of credibility, which indirectly touches upon an even more critical issue, in my opinion. There were quite a few people who "saw this coming", however there were very few who had the courage to do something about it due to career risk and/or political pressures in their jobs. In addition, many more were in the "weak dollar" camp for this cyclical period and bought decoupling hook line and sinker. There were very few, such as Paulson, who not only saw this coming but also devised a way to benefit. Even someone like Grantham did something different with his personal money (I'm confident he made out very well) versus what GMO did for clients - we must all stay in business. Hussman, as brilliant as he is, hasn't made his shareholders money in 5 years when inflation is accounted for. As much respect as I have for you, I recall having a couple of exchanges about how durable you believed the peak profit margins could endure due to the global growth story, which turned out to be wrong. Roubini is on record stating that he didn't really change his personal portfolio in response to his macro forecast! So while there were actually a decent number of people who got the macro economic forecast reasonably correct, those who were able to translate that into investment performance were/are few and far between. Hello David,

I think you touch upon a critical issue of credibility, which indirectly touches upon an even more critical issue, in my opinion. There were quite a few people who “saw this coming”, however there were very few who had the courage to do something about it due to career risk and/or political pressures in their jobs. In addition, many more were in the “weak dollar” camp for this cyclical period and bought decoupling hook line and sinker.

There were very few, such as Paulson, who not only saw this coming but also devised a way to benefit. Even someone like Grantham did something different with his personal money (I’m confident he made out very well) versus what GMO did for clients – we must all stay in business. Hussman, as brilliant as he is, hasn’t made his shareholders money in 5 years when inflation is accounted for. As much respect as I have for you, I recall having a couple of exchanges about how durable you believed the peak profit margins could endure due to the global growth story, which turned out to be wrong. Roubini is on record stating that he didn’t really change his personal portfolio in response to his macro forecast!

So while there were actually a decent number of people who got the macro economic forecast reasonably correct, those who were able to translate that into investment performance were/are few and far between.

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