Comments for Delusional Optimism

Comment on The reflection of the market’s shadow by Zlyn

Zlyn — Thu, 14 Mar 2013 05:53:35 +0000

I work in several inrtusdies, and talk to people about rents–industrial, retail, office. All soft and are going to stay soft for years. The recover in the office market just seems years and years off. House prices will be soft for years (generally). Wages are dead.Equipment gets cheaper every year.Utilities are flat.Food gets cheaper all the time.Health care and military hardware and services do get more expensive all the time–there is some inflation there.Bernanke could unload supertankers of money into this economy, and there would be little or no inflation.We are skittering along the edge of deflation, and I contend it is cheaper to start a business now than five years ago by almost all measures.Cheaper rent, and better tech means fewer employees. The secretary is history. Phones are cheap. Information is cheap (internet). The “problem” is that there is so much effing competition for everything that it is hard to make money!

Comment on Is the low rate environment sustainable in 2013? by Felix Dietrich

Felix Dietrich — Tue, 26 Feb 2013 23:08:39 +0000

Hi Alex!

Nice post. “All the cheap money has to go somewhere”. I have heard this at least since 2011 and I think it’s still relevant. But it’s kind of medium-term: “Which asset value will go up because financial demand is chasing it”.

However, to me the more interesting question is: Who is generating profits or who is adding economic value in the next years: banks, industrials, start-ups, governments, hedge funds? I really don’t know.

And with respect to currency wars: Last week there was an article in the Economist saying:

The BofE’s stance could be seen as part of a general commitment to easy policy by central banks. Sir Mervyn will soon be replaced by Mark Carney (or Chopper Carney, as he has already been dubbed, a tribute to “Helicopter Ben” Bernanke), the Fed has precommitted to low rates, the ECB will do “whatever it takes” and the Bank of Japan will soon choose a new (presumably pro-inflation) governor.

So: Each currency has its own problems and looks “weak”. But you can only devalue against somebody else. Everything is relative. And who will be the winner in this game? Again this is hard to tell, but my feeling is it will be the US dollar.

Mfg Rabo

Comment on Money is collateral by » Money Creation – Revisiting the LTRO Delusional Optimism

» Money Creation – Revisiting the LTRO Delusional Optimism — Mon, 14 Jan 2013 22:59:46 +0000

[...] my first post I re-told the story of a fictitious Irish village to show how money, as an abstract concept is hard [...]

Comment on The reflection of the market’s shadow by 10 MidWeek PM Reads | The Big Picture

10 MidWeek PM Reads | The Big Picture — Wed, 19 Dec 2012 21:30:03 +0000

[...] Apple’s iPhone 5 at big discount (Reuters) • The reflection of the market’s shadow (Delusional Optimism) • The Quest for Prosperity: An Economics Masterpiece You Should Be Reading Now (Bloomberg) • [...]

Comment on Money Multiplier Fallacy by » A case for a banking union Delusional Optimism

» A case for a banking union Delusional Optimism — Fri, 12 Oct 2012 20:22:43 +0000

[...] not be mitigated by government bond purchases. Using the schematic monetary system from a previous post I will add on a central bank system and assume that these banks are in different countries but [...]

Comment on Money Multiplier Fallacy by Alex

Alex — Sun, 07 Oct 2012 11:01:36 +0000

Thanks Steve.

Comment on Money Multiplier Fallacy by Steve

Steve — Fri, 05 Oct 2012 21:18:31 +0000

Great article – thank you for putting in the time and effort to diagram the process. It is scary how complex this system really is and most average adults don’t have any clue how it works or that they are trading their labor for 1′s and 0′s that the banks push around.

Comment on Money Multiplier Fallacy by » It doesn’t work like that… Delusional Optimism

» It doesn’t work like that… Delusional Optimism — Wed, 03 Oct 2012 20:25:00 +0000

[...] the previous post I have tried to explain that the amount of central bank money (reserves) available in the banking [...]

Comment on Money Multiplier Fallacy by FT Alphaville » Don’t call it money printing, rubiks cube edition

FT Alphaville » Don’t call it money printing, rubiks cube edition — Tue, 02 Oct 2012 16:02:13 +0000

[...] links: Money Multiplier Fallacy – Delusional Optimism A time of hoarding and inflation fears, 1930s edition – FT Alphaville The [...]

Comment on Money Multiplier Fallacy by Alex

Alex — Mon, 01 Oct 2012 08:46:01 +0000

Hi B, Thanks for your comment. You are correct. I have omitted the reserves in the final figure in contrast to the first one where Bank A held 10, but as ddx correctly stated the reserve requirements are not calculated on a daily basis but for a reserve maintenance period. On average the reserves for that period have to be sufficient but one can not infer a specific amount of reserves at any particular time within that period.