mr. lonely
mrs. starr
mulholland drive
muscle worship
my chemical romance lyrics
myrtle beach golf packages
myspace inbox
nalgene bottles
narwhal
need for speed underground
need for speed underground 2
netscape mail
new dvd releases
nightmare
nonprofit organizations
northwest
norvasc
nurse name badge pins
nj.com
nj transit
oasis mp3
obituary searches
oil painting
oksana baiul
onegai teacher
one more time
online chess
online pdr
opie and anthony
palm software
pants down

It sounds like you are on a similar path to me in your interest in the nexus between economic theory and central banking operations. You might like Ulrich Bindseil’s book on Monetary Policy Implementation, published by Oxford University Press.

I can agree to disagree; I just wanted to make sure that my case - that the US is unusual in not maintaining reserves - is not misunderstood.

I agree totally about the UK, although I do not normally bring it up as the UK is a relatively minor player. So much of what applies to the US applies here. We are mad about houses - every newspaper has a property supplement, every night there is a property programme on TV. People are reluctant to save. We have received reserve inflows, have not increased our own reserves, and have a current account deficit. Interest rates err on the easy side. The measure of inflation is manipulated. Education for the majority is poor. I could go on. The one area where I think we do better is that the British are less protectionist.

Fortunately though, we have an atmospheric greenhouse with no glass, which we began to build but is now maintained for us by the US, so the weather here today is lovely!

I am curious as to why there is an embedded assumption that all hedge funds are myopic, coupon-clipping fools. While there are clearly a number of strategies (fixed income RV, CB arb, etc) that have coupon clipping and ‘normality’ embedded, good fund are buyers, rather than sellers, of risk premia. Not to dredge up old wounds via-a-vis the yen carry trade, but there was a blurb in the Nikkei today about how the stock of foreign currency assets of Japanese households rose by 20 trillion yen between September 2003 and December 2006. It’s still a pittance (2.5%) compared to financial assets, however…so is this a carry trade, or a responsible portfolio diversification?

RE, while I have enjoyed sparring with you (though I fear we may have to agree to disagree on the utility of a new US accrual of reserves), I must confess to some degree of concern over your welfare. The evenings in the UK are still quite chilly, so I can only hope that you glass house is well-insulated? While dissaving in the UK is admittedly not as bad as in the US, the accelerating trend of both the current account deficit and rising prsonal insolvencies does suggest a problem, while household leverage is strikingly similar to the US. Good thing we in the UK have Gordon Brown to look after our pensions!

Thanks - please bear in mind that you (and not only you) are educating me at least as much.

For someone with your background I think probably the best three Austrian books are Theory of Money and Credit (Mises’ original, 1912, revised in the ’20s); Money, Bank Credit, and Economic Cycles (de Soto, a very comprehensive history of fractional reserve from a modern Austrian perspective); and Man, Economy and State (for the classic taste of Rothbard, sort of the Laphroaig of Austrian economics). All three are free in PDF on line from the LvMI.

Government actions and market participant greed trump market efficieny during bubbles. The liquidity bubble is no different. As manias progress, profiting from these inefficiencies attracts many into the cowboy life. It is a very good life. Alas, the greenhorn pretentious types like to drink their own extrapolation flavored Kool-Aid and ride past the big neon sign reading, “Inflection Point Ahead!” Take heed, the coil is wound too tightly. The worthless subprime paper has given the world a glimpse into the absurdity. Contagion is a misnomer. Risk being mispriced is a misnomer. Simply stated, there is a lot of worthless paper floating around. This paper must and will go on its inevitable search for a bagholder. The mini correction of a few weeks was but a stirring.

I’ll revert to my previous ‘handle’ now. Thought I’d lie down and bleed for a while, under the cognomen of ‘guest’, given marginal evisceration arising from gross displays of ‘bookkeeping’ in central banking - ironically, an earlier response to RE. Better to be quiet for a while, and learn large from someone with an entirely different perspective.

I’ve downloaded ‘Crises and Cycles’. The excerpt you included was astonishing in its ‘history rhymes/repeats’ quality. I haven’t really explored the Mises site yet, but I also downloaded ‘Pure Theory of Capital’ by Hayek while I was at it. Hope to explore portions of these at least, in the near future.

RE, I found your reference to Alaska interesting. It reminded me of a Greenspan speech a few years ago, referring to the range of things that a central bank could ‘monetize’ if ‘necessary’ in a deflationary environment. And the initial conversation where Moldbug described an implicit / contingent option structure for the assets and liabilities of a central bank, given its power to monetize. Finally it reminded me of a paper I wrote long ago (not published, or up to any standard of publishing), exploring a corresponding conceptual range for the Bank of Canada, including Baffin Island. My conclusion then was that the economic textbooks had it totally wrong, and logically backward, in their description of ‘fractional reserve banking’. This was reinforced in my own mind later on, when the Bank of Canada eliminated reserve requirements (about a decade ago).

Because of my background, I’m fascinated by the intersection of economic theory with central banking operations (little classroom training in economic theory / meaningful encounters with commercial banking and central banking).

My mansion of ignorance includes Austrian economics. Encountering snippets over the years, I’m fascinated by what I understand to be its emphasis on time. Although having read virtually nothing, my instinct is that there may be a natural connection with option mathematics and risk theory. Given my lack of training, I find the topic of gold to be extraordinarily frustrating to understand at the money level, and ever more so, given its obvious importance.

Brad S. - an extraordinarily interesting Blog. Because of the 14-day trial, I paid close attention, and am pleased to continue basic access.

Pleasant evening to all.

What I am proposing is not intervention or manipulation per se, it is SAVING. I presume that you and Macro Man are American, so you may need to look the word up!

As you say, tariffs are a bad way of dealing with imbalances. Actually, given that the US is, at inter-government level at least, mainly complaining about China’s exchange rate policy implemented through dollar asset purchases, if America must introduce some restrictions on China, it might be most appropriate to restrict what it is allowed to purchase from the US, rather than what it sells. Perhaps the US could set some limit on China’s purchases of financial assets. Then China could choose itself whether to restrict its exports to the US, and which items specifically, or whether to find some particular goods and services in which to boost its purchases.

Anon - you wrote: “You hedgies should take all your carry trades, CMO tranches and Sharpe ratios and throw ‘em out the window. It has been easy money in the world of unlimited credit, but the risk spreads are about to widen. Subprime is the canary in a coal mine. Smart hedgies will be turning tail and getting on the other side of the trade. It will be very easy money when it all breaks loose. Or, keep all those highly leveraged trades and have ‘em blow out all your equity.”

HA! Agreed. I’m looking forward to the trading bloc of the finanacial industry being reduced by half. Interpolate all you want, but extrapolate at your own risk!!!