Tuesday, December 30, 2014

A better measure of the natural logarithm

Start with sets and define the cartesion   product of multiple sets making another set. This is basic set theory. Then define the decomposition of sets into a unique set of prime sets, show the prime sets are ordered, then all sets are uniquely ordered. And the ordering can be found from the sequence of prime sets that make up any set. We include cartision division, the removal from some cartesian product all elements having members from the divisor.

Having done that, then define the following:

The thing to the left maps any set x to its unique position onto a ruler.  As the number of prime sets grows the thing on the left retains it mapping properties, and the ruler is notched with markers that are logarithm spaced. Logarithm is defined to mean the spacing between notches that keeps the laws of sets valid.

Then you have it.  From there, let the primes go to infinity and you have calculus.  Find the inverse mapping (the exponential) and you have the standard number line.  Thus, everything is ultimately combinatorics, and the rules of combinatorics remain valid as the number of combinations go to infinity.

From there we use the science of yardsticks.  The notch length and the space between notches are both defined, the notch length has to be ordered opposite the spacing..  Exchanging the notch with the spacing gives us a dual yardstick defining one as the dividing line between them.  The dual yardstick has the same ordering, but in the opposite direction.

The basic idea is to simply a lot of proofs using the minimum redundancy. For example, what is the least number of operations required to find the position of a particular set on the ruler?  Use its prime decomposition. Then as you let the primes go to infinity a lot of prime theory is maintained.

All the transcendentals are simply the definition of a set formula as the number of primes gets larger. Irrationals are defined as the value of some integer fraction as the number of primes gets larger.

So I am using this approach since my head is getting worn out when I have to constantly ask, how does nature know the value of some transcendental,

Monday, December 29, 2014

The logarithm as a measure of precision

 This is the standard property of the logarithm. But this property relies on uniform convergence of the integrals as dx or dt go to zero.  The integrand, 1/x, is really the precision, the spacing of the number line relative to the size of the number x. If the number line retains accuracy as x gets larger then the number line must increase in precision, or decrease spacing.  in the limit, as dx goes to zero, the precision of the number line must go to perfect accuracy, spacing between numbers goes to zero.  The accuracy of the number line increases, monotonically as x gets larger. At infinity, there is a one to one mapping between x and the number line, so precision must add.  The log just gives you the precision of the number line at x. The proof above is just a tautology since the integrals will not converge uniformly unless the number line obeys logarithmic precision.

The grammar involving exponents is simply a standard to map precision to size.

The more general definition of the logarithm is:
This computes the rate of change in the size of f relative to f.

Sunday, December 28, 2014

The science of yard sticks

The game in yard sticks is to get the density of notches to match the derivative of the density of notches, and then the utilization of integers is optimal.  I can do this with hyperbolics. The chart is from my spreadsheet.

The X axis is N, the integer assigned to the angle. The Y axis is:
-cosh(angle)/137 * log(cosh(angle)/137); which is the -iLog(i), and i, the probability of any given angle is the cosh divided by the total number of sums in my Lebesque summation.  The angles are multiples of ln(Phi) and the 137 being the inverse of the Fine Structure.  As you can see, each angle, so constructed, contributes almost the same entropy as any other, the -iLog(i) all within a few points of each other, until the angle 12 is reached.  That angle corresponds to the dimensionality of a sphere I presume.  Now I am not restriced to the fine structure, I am restricted to making sure the delta angle and the maximum number of sums match; meraning I have to pick of sinh(max angle), that matches the delta angle.  The hyperbolic diffecential handles the rest:

 I can add motion to this formula by introducing the proper polynomial.  However, I await the experts in the field since I am still the amateur. But, I am pretty sure the equation above really is the standard equation for measure theory, adjustable by adding a polynomial.  It works because Tanh is cosh'/cosh, and integral of tanh is the log(cosh). That condition is what makes the differential equation above work.

Has Jeb Bush crashed the economy yet?

Washington (CNN) -- Jeb Bush is the clear Republican presidential frontrunner, surging to the front of the potential GOP pack following his announcement that he's "actively exploring" a bid, a new CNN/ORC poll found.
He takes nearly one-quarter — 23% — of Republicans surveyed in the new nationwide poll, putting him 10 points ahead of his closest competitor, New Jersey Gov. Chris Christie, who tallied 13%.
Physician Ben Carson comes in third, with 7% support, and Sen. Rand Paul and former Arkansas Gov. Mike Huckabee are both tied for fourth with 6%.
That marks a drop in support for all but Christie and Bush from the last CNN/ORC survey of the field, conducted in November. That poll showed Bush in the lead, but only taking 14% of the vote, while Carson came in second with 11% and Christie tied Rep. Paul Ryan for fourth with 9% support.
Bush's 10-point lead is a milestone for the potential GOP field — it marks the first time any prospective candidate has reached a lead beyond a poll's margin of error in the past two years.
The economy has learned the Bush motion. As soon as a Bush gets near the WHite House, layoffs start, debt rises, spending goes wild and the economy crashes.  So, rather then wait for the election, I am sure the economy will crash in anticipation of yet another deficit spending, economy crashing Bus family member. 

Saturday, December 27, 2014

Some mathematical physics (and updates)

I re-enter the zone of minimal redundancy, integrating a function such that precision is maintained and operations are minimized.

Consider f'/f, the rate of change relative to the size. Below I change that to Tanh, but for now I handwave.  I wish to do an integrate of f with the least number of operations, but I am limited to a fixed number of bits, the number of bits is my dimensionality. My function,f is broken into discrete chunks, and the total chunks is some finite number T.  So the portion with a large f will add to my integral in the weight f/T. But, if I am hyperbolic, f'/f approaches 1.0, it adds more information.  When f'/f is low, it adds less information.  These results are because I am using hyperbolics, I force the function to be modelled as a series of cosh(x), for some set of x, angles which will be spaced. So cosh(x) is the share of the integral allocated for some x, and -log(cosh(x)) are the number of bits allocated.  Hence I want cosh(x)*ln(cosh(x)), the entropy, to be almost equal for each sum in my integral.  Partial sums that do not add much information will have more bits, but will be included less often. Hence, for some total precision, the total integral will be encoded to have the smallest number of operations, its encoding graph will be minimal. So a Lebesque integral is about minimizing the number of operations. The encoding process determines the sets the error function and the quantization sizes. In other words, this is not encoding to a given error function, creating both the error function and quant size to match a particular total precision.

Let me attempt a handwave (with errors)  using hyperbolics:

Consider tanh(n*a), a discrete set of values for angles a times the integer set nTanh is cosh'/cosh or the rate of change of some measure divided by  Cosh. So we have a ntural process and we model it as a discrete set of cosh function.

Ln(cosh(n*a)'/cosh(n*s) is the integral of n*a * tanh(n*a).

Now consider a probabilistic integral in which the summation is composed of integrands summed such that the error introduced by each integral is approximately equal, bound by an error term.  This is an integral of a natural stationary process. so we apply the Shannon condition:

-Cosh(n*a) * ln(Cosh(a*s) which becomes -cosh(n*s) *n*a * int(tanh(n*a)).

But we are discrete and we hwant the integral into sums of:
Tanh(n*s) * a.  If the n and a are spaced properly, then the integral is accurate in the stationary sense.

From there I think we can get to the Schremm-Loewner condition.  Hence, I do believe that the hyperbolics are the key functions in measure theory. The N is the dimensionality of the system, and the a must match such that -cosh*log(cosh) are maximally equal for any given n.

So we model our natural function in the form P(n,a)*Tanh(n*a), P is a polynomial meeting the Schramm-Loewrner conditions and modelling the natural process.

Wednesday, December 24, 2014

Good grief Robert Waldman

He wants to see the total government expenditures including the states, and includes a real bonhead quote from Krugman:

This shows they haven’t been FREDing. The Keynesian story refers to government spending, not US Federal Government spending. A substantial fraction of Government consumption plus investment (G) is done by state and local governments. An economist may not ignore the “50 little Hoovers” (P Krugman 2009) just because political reporters focuse inside the beltway. -
Now the 50 states are not little Hoovers.  They are four huge states, five including Illinois; and the economy comes from some 20 different large municipalities, none of them correlated with the size of state economies.  Krugman's comment simply shows what an incompetent he is regarding data sets, but any way, lets go check total government spending.

These are changes in spending, and the Federal government (green) had the most volatile changes in spending over this series.  Total government is in blue and includes the states.  Right away we can tell that state spending goes down when Federal spending goes up.  But the data, using either total of federal shows that government spending accelerated from 2006 up to and including the crash, and that includes the stimulus and that is a huge negative multiplier.  Now I will go into state and local spending later. But I am doing other things at the moment.
Let's compare total state/local vs DC:
So  the accelerate spending from 2006 through 2010 was dominated by DC. State and local spending chugged right along its trend before and up through the crash. Then leveled off, as the DC, finally.

Would more spending in California have helped our unemployment problem?  Here is how we tax and spend out here:

And, I can post the unemployment data showing California is the worst managed state in the union, well possibly excepting New York.  The California pension plan was a disaster in waiting, a product of a corrupt legislature.  California taxes were tied to the stock market via the pension rules, about as stupid as any government can be. The recession started in California and we still have 7.3% unemployment, the worst in the nation and the pension plan has barely been fixed.  California, the largest economy in the nation not only has negative multipliers, but they habitually crash the economy as bad as DC politicians.

Finding Keynesians multipliers?

Krugman is a big fan of stimulus, so how about Krugman do a regression analysis in this series which contains DC spending as a percent of nominal GDP.  Notice that government spending continued to eat up a greater percentage of the economy from 2006 to 2010, all the way through the crash.  The voracious appetite for Republican and Democratic spending is clearly associated with the second worst crash in the last 100 years.

Kenyesians cannot find one bit of good news to tell us in this chart. The possible exception is the 2002 year in which war spending just started to ramp up. And second, how do the Keynesians hide the declining share of federal spending during the Clinton growth years?

Keynesians have absolutely no basis in fact, to support government spending, stimulus or otherwise. And Cristina Romer statistical fraud will not do. So the Keynesians associated with the Bill Clinton administration are forced to admit their own duplicity, and the Keynesians associated with the Obama administration got fired for good reason.  And they have no clear regression analysis they can do, they simply resort to fraud and hand waving.

Tuesday, December 23, 2014

Frances says: The sequestor is clearly visible on this graph

As claimed by Frances Coppola.
The usual Keynesian crowd is jumping on Cochrane for trashing the Keynesians promise. Here is the law:
The Budget Control Act of 2011 (Pub.L. 112–25, S. 365, 125 Stat. 240, enacted August 2, 2011) is a federal statute in the United States that was signed into law by President Barack Obama on August 2, 2011. The Act brought conclusion to the United States debt-ceiling crisis of 2011, which had threatened to lead the United States into sovereign default on or around August 3, 2011.

The sequester would have an effect on  the Q1, 2012 growth number in the blue line.  We can see that the growth rate of the US economy continued right along its 2.3% trajectory starting in late 2011. Shortly after the sequester took hold we have a period of accelerated growth.

The flat line between 2010 and 2011 was definitely a result of crowding out by the stimulus as that is when oil shortages re-appeared and Illinois went into a double dip on unemployment.   When the stimulus was halted and the sequester took hold we have had three years of steady 2.2% growth, and now we are seeing 3-4% growth over the last three quarters, possibly because the QE stopped, we shall see.

Then there is Krugman's constant claim that we must have inflation, yet we have higher growth and less inflation.  In fact, less inflation and higher growth have been the norm since 1988. At least Frances was willing to show a chart, Noah Smith does no such thing, and he has no response at all.

Why didn't we reduce the deficit faster and get more growth sooner?  Government is slow.  Obama and the sequester was about the best we could do.
Compare Larry Summers at Treasury and his ability to reduce the deficit and then Jack Lew. I say Obama and Jack did a much better, faster job.  These numbers are old, and the deficit is now about 2.8% of GDP (I think), that is faster than anything achieved by any president since 1985.. So we can see that when Larry Summer, Brad Delong and Bill Clinton got the deficit down, then growth began for them, and now growth is beginning for Jack and Obama. Good for them.

So, yes indeed, the Keynesians are fraudulent and statistically incompetent.  It is impossible to reverse flow the national account data, and in the last 35 years we have no evidence that excess deficit spending did much more than crash the economy. The only evidence I have seen to support the Keynesians claim was poor statistical analysis by Cristina Romer. Frances Coppala proves himself to be a willing liar.

David Beckworth and the permanency of monetary expansion

The Federal Reserve's Dirty Little Secret - David Beckworth
The Committee intends to reduce the Federal Reserve’s securities holdings in a gradual and predictable manner...The Committee intends that the Federal Reserve will, in the longer run, hold no more securities than necessary to implement monetary policy efficiently and effectively.

David Beckworth and other have the opinion that if the Fed held these securities over some long period, that convinces the bond market that we will have a permanent increase in the monetary base.

The permanency arises because these bonds come with an interest payment for which is rebated back to Congress. So that is a net interest stream that is not sent to the bond market, government grants the general taxpayer some relief,  from printed cash. They are bonds, after all, loans made by the central bank to Congress, which does indeed keep the net earnings from the fiat banker. Dave then shows us the plans the Fed has to sell these bonds, in the chart to the left.  That chart shows the Fed plan to sell off much of its holdings.

How will the sale of government holdings reduce the money base? Any net profit is returned to Congress, and its rate subsidy is simply converted to a one time re-imbursement at market rates.  The money printed by the Fed to make the purchase is restored. Is the Fed likely to make a profit? Here is what happened when they were purchased:
The red line is the ten year interest rate, that is the typical rate that Congress pays for money. The blue line are the treasuries bought, it is rising when the fed is purchasing. We see that rates jump about a point when the Fed buys.  So the Fed has bought these bonds at a cheap price, and likely turns a profit when it sells, a profit taken from the bond market and remitted to Congress. It is not the Fed who is restoring the printed money, it is Treasury who sees the gains and wants its interest rate subsidy returned in a lump sum. 

The standard practice in Congress is to roll over debt, so all debt it converted into a permanent stream from the taxpayer to the bond market. The permanency of money must be tested against that background. The actions of the Fed and Treasury during the QE purchases, in a constrained market, likely caused a one point permanent increase in interest rates for all bonds not bought by the Fed during the QE expansion. So the net shift in money was less than meets the eye.  Even if the Fed keeps its bonds, then Congress continues paying higher than free market rates for its market purchases made during the period.  In other words, the Fed QE purchases were neutralized the day the Fed made the purchases. It never was permanent and always was neutral, the New York banks made sure of that from day one.

There really is no such thing as permanent money released by the Fed, but there are net gains and losses, and losses are free unencumbered money released to the market, gains are free unencumbered money take back by the Fed. Except gains are returned to Congress, thus making the flow asymmetrical.  That is the problem, the bond market knows the game is rigged, and they hedge the Fed operations from the start. To work properly, the fiat banker must always move toward the no arbitrage situation, the situation where there is no clear winner or loser.

Corruption in Mexico in the Presidents office

Evidently Raul Salinas, ex-president of Mexico was on the take, stealing millions and shipping the loot to his brother.  He was busted, convicted, then pardoned. Pablo Gomez has been following the case and wrote a book about corruption in Mexico.

Aristegui: "The Mexican government is corrupt ... corruption is the state itself," said Pablo Gómez, speaking of the recent exoneration of Raul Salinas Gortari.

In an interview with Carmen Aristegui (News MVS First Issue), Gomez said: "It is bad that a court has decided to annul the judgement (against Raul Salinas) because money  was stolen, using a secret account ... was in total, over the six years, from 12 billion pesos of current and back then were $ 854 million. "

Author of Secrets cost of the Chairman book in which denounces the dollar billionaires expenses hidden in  Carlos Salinas de Gortari  secret account, Pablo Gomez questioned the fate that befell the stolen money and said that "the only thing that was reached at know is that Salinas gave 224 million pesos, of those ... to his brother Raul. "

(Characterized as "uncomfortable brother" by the magazine Proceso, Raul Salinas traveled to Europe days after being exonerated)

"The secret account was not justified, no proof, so which violated the Constitution," Gomez said in speaking of the expenses of the Presidency of the Republic as a subject of illicit enrichment.

"It's a shocking thing, impunity and cynicism with which you have done these things ... In all states there is corruption, but not all states are corrupt. The Mexican government is corrupt, "he said.

"The structure added. ranging from lower officials, police, even the president of the Republic. Corruption is the state itself. "

The PRD politician also noted that since the presidency, "Carlos Salinas managed to organize most of his corruption".

The complete series, government spending and growth

Here it is.  Government spending as a share of nominal GDP (Blue) and real growth (red).  Clinton: Government spending down by 6%, growth up 2%, peaking at 4% in the late 90s.  Bush: Government spending trending up,  real growth trending down until we crash.  Post Bush: Government spending shooting straight up from the start of the crash until 2009, and growth down 3%.  2010, real growth back to Bush levels and government spending starts to decline.

Any regression on this series will show that government spending increases have been negative through the past two recession cycles and since 2009.  There is a possible one year of ambiguous data in 2002.  No Keynesian anywhere will ever publish this graph or perform some regression. We can expect Cristina Romer to cut and paste and confirm her priors, but there will be no honest analysis by any Keynesian, that is a well known fact.  Keynesians are almost always fraudulent unless their priors are confirmed.

Monday, December 22, 2014

Robert Waldmann says what?

Angry Bear: This is quite important because, when one considers state and local spending too, there has been constant anti-Keynesian austerity since ARRA stimulus spending peaked. Thus a stone Keynesian would predict consistently disappointing growth (at least until the past 2 quarters see the graph).

Robert considers 2.2% real growth dissapointing. 

Compared to this: Which is real growth since the last 20 years. But the growth we have now exactly equals the growth we had since 2005.   Yet government spending, which Robert likes, was growing much faster in 2005, and it has been flat since 2011, when the stimulus peaked.

So how Robert claims that government spending does not crowd out is beyond me, it is clear that we had the crash because of government crowding, and it is clear the stimulus was crowding, we went through all that.  We looked at oil prices before and after the crash and discovered that oil prices caused the crash and oil prices peaked once again with the stimulus spending and nearly sent the economy into a double dip.

The data is quite clear on this. You can see on the upper graph that growth tended back down to 2.5%, even lower right at the peak of the stimulus.

Robert has no evidence, he has some theory that crowding out does not happen during this period, lets look again shall we?
See, oil damn near went back up to its peak, right at the crash.  I added the Illinois unemployment rate, where we can all look at.  Why did that rate start back up right when oil was peaking?  The stimulus crowding out. Notice the Illinois unemployment rate then stabilized as the sequester took hold. And finally, after the oil glut, it rapidly reduced.

We have looked at government spending before and after the crash, the government was mis-allocating oil.

When did growth real start again? When the frackers got going and now we have an oil glut and growth is peaking.  Robert Waldman, we need some comparative graphs, we are all tired of the Keynesian recipe book. I have yet to see any definitive study that explains the Keynesian relation ship between oil consumption and government spending.  Why did oil prices peak just before the crash, then peak just as the stimulus had peaked, then why the rise in Illinois unemployment.

This was supposed to be a defense of Noah Smith, and a quick glance we see no supporting comparisons, no graphs, nothing.  Just a quote from the Keynesians bible, and that is all I have ever seen from the Keynesians.  The only exception has been Cristina's bogus statistics which was simply boneheaded errors.

John Cochrane is right, and none of the so called Keynesians signers of the pledge has produced on basic proof of any o their claims, they have all been quotes from the recipe book.

Why is physics quantized?

This equation is the general form of a Wiener process, in economics it is known as the no arbitrage condition. p(x,t) is a polynomial with integer, positive coefficients and gives us the range of combintations or arrangements that can be made at any given x. In physics it gives the Wave Solution in Schrodinger.

What it t?

Physicists call it time, but it really is a global variable representing steps along a yard stick.  The Polynomial in t tells us what notches are on the yard stick and their size.

Why are notches separated?

Because the yardstick has to be kept updated, so a uncertainty constant is maintained between notches in which yard sticks can slightly shift their nothes as needed to maintain the boundary conditions.  This is the bandwidth needed to update the decoding table in a Shannon solution.  That buffer is the fine structure constant in the atom.

This happens because there are no fields in nature, everything is local.  And the locality constraint requires yardstick updates, and that means an uncertainty buffer, and that means we a separation between particles and waves.  All of this derives from the locality constraint, and the locality constraint requires conservation of the 'grid' and that implies Lucas numbers when we work the hyperbolic form. That is why the set of Lucas angles along Tanh gives Pi/2 and the fine strcuture.
An adiabatic process is one that occurs without transfer of heat or matter between a system and its surroundings. A key concept in thermodynamics, the adiabatic process provides a rigorous conceptual basis for the theory used to expound the first law of thermodynamics.
That adiabasis is in the fine structure constant.  It is all having the spectrum to about update the yardstick in measure theory.

Sunday, December 21, 2014

Spanish verbs strung together

Sería un placer de haber pensar de querer de comer.

Google translate accepts this as: 
It would be a pleasure to have to think about eating.

sin mucho que contar de querer  gustarse de comer
not much to tell about liking to eat

The translater is a graph matching tool, taking a graph of the phrse and colving that with a graph of the language, match branch by banch and stopping when a good score is acheived, ot the kanguage tree is exhausted. I doubt it takes more than four verbs in a row before the score is downgraded, which terminates a branch of the convolution.

He comenzado de correr de escuchar que ellos hablen

I started running to hear them speak

I am really just exploring the language tree in Google translate.

Saturday, December 20, 2014

Communists without beards

HAVANA — President Raúl Castro declared victory for the Cuban Revolution on Saturday in a wide-ranging speech, thanking President Obama for “a new chapter” while also reaffirming that restored relations with the United States did not mean the end of Communist rule in Cuba.
In a televised speech before Parliament and a group of favored guests — including Elián González, the center of a tug of war in 2000 between Cuban exiles and Havana, and the three men convicted of spying in the United States who were released as part of Wednesday’s historic agreement — Mr. Castro alternated between conciliatory and combative.
Republicans paved the way for clean shaven communists.

Friday, December 19, 2014

Savings and lending balances at the Fed

They are sort of in this chart.  Treasuries held and excess reserves.  They seem to be in balance.  Lets call the former lending  and the later saving.

Even the flows as represented by rates are close to balance, since the Fed turns over earning to Treasury. The banking law is screwed up, but the system is maintaining balance anyway.  Savers get screwed in the trade because the deposit rate is .25% and the inflation rate 1.5%. However, the one year treasury is now .25, that is the yearly rate paid by borrowers.  That is equilibrium. What happens when the Fed saving and lendign are in balance? We get very high growth and low inflation. For example:

This is the inflation rate and real growth.  Look at 1998, the inflation rate, blue line, was nearly 1%, and the growth rate, red line, was at 4%.  That is very good.

The inflation rate should continue to drop since the Federal reserve is now almost exactly in balance with both flows and balances equal. The equilibrium condition for inflation is zero because inflation is an expense, and extra cost. It represents mis-pricing. Hence, if the Fed is in balance, inflation is stabilized at zero.

Why am I so happy about the Federal reserve now?

One has to follow my learning process.  I started with the assumption that any third grader who knew about mud puddles understood fiat banking, it is always a corridor system.  We obviously had a corridor system because pricing was so accurate, it is within 1% when politicians do not screw up.  Then I discovered that the Keynesians never passed third grade and Congress frigged the fiat system by stealing all the incoming ink and paper.  That freaked me out since all of nature operates with equilibrium flows, its the law of conservation.  But I looked and discovered that the private banks were adjusting balances to keep the fiat accurate. For example, the private bond market raised rates during QE, the correct move. Also inflation was trending down to zero in the short, medium and long term; also a sign of equilibrium.  Hence my world went back to normal.

Economies use energy to move mass

Total transportation and oil prices.  Any relationship? You bet.

Any relationship between mass moved and economic growth? You bet.  But we notice a delayed reaction, about two quarters of reaction before high oil prices crash the transportation index.  Refineries are a quarter late and truckers will suffer for a quarter in order to complete their back log.

We now have solid growth, my expected Obamacare recession turned out to be a mere one quarter blip, I got that wrong.  So here we are, eight years late in resuming normal growth. Four years to shrink the war costs, three years waiting for the California Flounder, and one year delay caused by the stimulus. Two, make that two big fat G screw ups, a G in DC and a G in Sacramento.  We need to separate those two Gs, they feed on each other.

What can go wrong?  Likely the California Flounder will find some way to screw the economy.

California still the Boat Anchor of the US economy

But can it last?  With oil prices down, Texas might stumble a bit.  Texas which has survived everything the bozos in DC have thrown at it now faces its toughest test.

What money printing?

The Hayekians claim we have boat loads of excess money. lets list the 'new money'

QE purchases of 4 Trillion?

Those were purchases of bonds from the bond market and paid for with a neutral transfer from savers to taxpayers in the form of interest rate subsidies, an implicit tax on the bond market.  That tax causes the net size of the bond market to decrease and so is price neutral at equilibrium.

Government debt?

The total additional debt of 8T is divided into the 4T in bond purchases above, which is indirect taxation.  The rest new debt paid directly by the taxpayer of 4T.  That is paid for by the budget of which 12% is reserved for interest costs.
 Congress cannot let that number go much beyond 18% under the current regime, else government collapses.  Reagan was able to handle interest costs of near 25% of the budget for a short period, mainly because he was just starting to run up the debt.  Clinton was able to handle 20% of the budget devoted to interest costs but he was taxing more and running a surplus.  The limit is now around 18%, most likely, so Congress is bound to limit interest costs and eventually must run a surplus.  The room for runing Congress on the credit card is about gone, and interest payments, some 2.5% of the economy, cannot go much higher without a recession.

Real money printing?

What free and unencumbered cash has the Fed released? Not much, the interest on reserves and member bank dividends are about all, and they come to less than $120 billion since the crash. Yet the economy has grown by some $1.8 T since the crash, so the amount of free unencumbered money needed to support price neutral growth is short some 1 T, that is disinflation, soon to be deflation.

1.5% of GDP: The national cost of the Bush family

Frombailing out the brother in the S&L crisis, the 92 recession of elder Bush, and the 2008 recession of Bush the Little.  In total, that comes to well over half of the permanent 2.5% federal interest costs;   caused by the Bush family.

I did not include trading with the enemy of Bush the Great Grandad, or trading with Wahabi terrorists of Bush the elder. Why would we elect another Bush brother?

Even Romney with his plans for big government and biog deficits is bad enough, but another Bush brother? We would be fools.  Even the Yawk Town Dingbat is a better choice. That is slim pickings fo the electorate.

Let's keep looking, especially in Rand Paul's direction.

Obtendremos un presidente horrible DC, en cualquier caso. Secesión California es la mejor alternativa.

Thursday, December 18, 2014

Una vergüenza para toda América del Norte

MEXICO CITY — Scores of police officers – including the entire department of one town – have been detained in Mexican probes of killings and kidnappings.
Mayor Alfredo Osorio of the Gulf coast town Tierra Blanca said Monday that about 90 city policemen were being held for questioning about the kidnapping of undocumented Central American migrants.
The officers – the town's entire local force – were detained by state police and soldiers and taken to the capital of the Gulf coast state of Veracruz for questioning. No formal charges had been filed.
The police allegedly kidnapped the migrants to shake them down for money. Central Americans frequently are robbed or abused by police or by drug gangs as they cross Mexico to seek work in the United States.
In the central State of Mexico, prosecutors announced the arrest of two policemen and two former officers on charges they participated in 11 killings related to robberies.
The officers, ex-officers and a fifth man posing as a police office, had been assigned to two towns on the outskirts of Mexico City. They were detained over the weekend.
Mexico State Attorney General Alberto Baz Baz said the men allegedly preyed on businessmen and professionals, snatching them off the streets to steal debit cards and other possessions, and then often killing them. Another ex-officer is being sought in the case. Some of the crimes were allegedly committed while the officers were on duty.
The suspects face possible prison sentences of up to 70 years. They had no attorney of record.

 Having this corrupt criminal justice system anywhere in North America is cause for alarm and action by all governments. Not only the police, but the judges are incompetent and corrupt.  This situation is a leading cause of the immigration crisis.  California should take the lead, this should move up to the top of their priority, but California politicians are worthless in a crisis.

Los secuestros en México son un dolor

The first time, after the men with police badges had lashed Adriana Carrillo’s wrists and ankles with tape, and she had spent 37 hours in the back of a Nissan, her father tossed the $12,000 ransom in a black satchel over a graffiti-strewn brick wall and brought her nightmare to its conclusion. She took three days off and then went back to work.
“I don’t want to live as a victim,” she said.
Carrillo returned to the cash register of the family store, where she had worked since she was 8 with her parents and six sisters, amid the floor-to-ceiling jumble of marshmallows and mixed nuts and pinwheel pasta and Styrofoam cups. Their business — cash-based, working-class, on the outskirts of Mexico City — happened to put them squarely into the demographic most vulnerable to Mexico’s kidnapping epidemic. And on May 28, 2013, less than two years later, a white sedan pulled up alongside Carrillo’s car as she drove home late from the market. When she saw the guns, she covered her face with her hands.
“No, not again, no,” she remembered saying. “No. No. No. No.”
In Mexico, with its history of drug-war violence and corrupt police, kidnapping is an old story. In the past, the crime tended to target the rich. Now it has become more egalitarian. Victims these days are often shopkeepers, taxi drivers, service employees, parking attendants and taco vendors who often work in cash or in Mexico’s “informal” economy. Targets also tend to be young — students, with parents willing to pay ransoms, are commonly targeted.

This seems like a  problem for California, yet no help, no suggestions from Jerry Brown or the California legislature.  If Jerry wants to be the politician who unites Mexico and California then he might get off his butt and find some way to help out. That governor, fakes his way through the election, using Mexico to get votes, he then abandons the place.

El gobernador de California debería tener un fuerte interés en detener el terror de las bandas criminales en México. México es nuestro nuevo socio, que fue el tema de su elección, ahora no escuchamos la palabra de ayudar a México a resolver este problema. Jerry Brown, cobarde.

Cada vez más jóvenes se dedican al secuestro

México encabeza la lista de los países con mayores índices de secuestro registrados en 2013, incluso por encima de naciones como India y Nigeria, según un estudio publicado por el Observatorio Nacional Ciudadano (ONC).

“Tamaulipas, Morelos, Michoacán, Tabasco y Guerrero son los cinco estados más golpeados”

Criminal gangs in the heart of Mexico causing grief for our fellow citizens.  California stands by doing nothing. Shame on the California politicians.

Krugman still excited about the number zero

He thinks that he has discovered something about the number zero which he calls zero bound. The idea is that the short term rates have dropped to zero and that is significant. 
Significant of what exactly?

DC is debt bound as we see from this chart. The red line is DC debt as a percentage of the economy. the blue line is the ten year rate, the price DC pays for debt, while the green is inflation.  So what is happening? Government cannot spend because it has rollover disease, any more increase in the deficit and both the current deficit and past debts all raise the interest costs for the government.  Hence government has to be very careful about running larger deficits as that multiplies the interest costs.  If Krugman would read the latest research by Chris Sims, his colleague at Princeton, Krugman would realize the Congress would fail miserably it interest costs were raised up to 30% of the budget.  In fact, I think 15% of the budget is about all Congress can afford with its obligations. Hence, DC, which is the main cause of inflation, cannot afford any more spending without crashing the economy.

Let me name the problem Krugman has found.  The Reinhart-Rogoff disease, the Rollover disease, Bankrupt Congress, Hyper Republican Keyesianism,  or perhaps we should just name it the Krugman Boo Boo.

Ryan Avent wants inflation

The dark clouds around the silver lining

But the Fed also projects that inflation (both headline and core) will be at most 2% in 2016 and 2017. In 2015 inflation (both headline and core) will be below 2%, even if it runs at the high end of the Fed's central projected range. Not a single FOMC member projects that inflation, in either headline or core terms, will be any higher than 2.2% at any point between now and 2017. That, apparently, is what is considered running an economy hot these days. In 1986, when core inflation dropped from around 4% to just below 3%, the Fed responded with a quick series of rate cuts, totalling about 150 basis points. In 2015, by contrast, the median Fed member reckons the federal funds rate will rise by about 100 basis points, despite the fact that core inflation is anticipated to be at most 1.8%. Indeed, over the next three years the Fed intends to raise interest rates steadily in order to keep inflation from ever topping 2% for any meaningful amount of time.
 Let's look and see what inflation is doing.  It has gone down. Focus in on inflation since Q3 2011, the last part of the chart.  It has trended down, meanwhile growth has trended up. Q3 2011 is important because that was the period when the stimulus almost crashed the economy.  We figured out that Ryan's idea of crashing the economy is not good. 

Ryan has to explain why mis-pricing the cost of labor and goods makes any sense, as any normal person would think that accurate pricing represents a healthy economy.  In fact we see that inflation up is a strong indicator of growth going down.  Is this what they teach in Keynesian school? Deliberate mispricing is good?

Viva Mexico, Ee nuevo sur de California

La Marcha de Zacatecas - marcha nacional, canción patriótica, y el himno nacional no oficial de México. Compuesta en 1891 por Genaro Codina. Interpretada por la Navy Band Estados Unidos. Y también, tenemos Lupe Vélez
Es difícil determinar con exactitud quién fue el primero en componer la canción "La Llorona", ya que se deriva de los cien años de edad leyenda. Sin embargo, la canción fue hecha primero bien conocido por el público contemporáneo en 1993 por el cantante de origen costarricense Chavela Vargas. El nombre de la canción y la inspiración viene de la leyenda de La Llorona popular en Norteamérica y Sudamérica. La historia es de una mujer, dijo a rondar los valles de México, que llora a sus hijos a los que se ahogó en un ataque de locura.

Una Mas

Demasiado buena para dejarla pasar

Wednesday, December 17, 2014

The tradional US Federal reserve

Lets talk about the corridor fiat system.  First consider how the current system is supposed to work:

Assume the government does not take excess gains from the Fed and it used this system, the way it is supposed to
In the U.S., the Federal Reserve most commonly uses overnight repurchase agreements (repos) to temporarily create money, or reverse repos to temporarily destroy money, which offset temporary changes in the level of bank reserves.[4] The Federal Reserve also makes outright purchases and sales of securities through the System Open Market Account (SOMA) with its manager over the Trading Desk at the New York Reserve Bank. The trade of securities in the SOMA changes the balance of bank reserves, which also affects short-term interest rates. The SOMA manager is responsible for trades that result in a short-term interest rate near the target rate set by the Federal Open Market Committee (FOMC), or create money by the outright purchase of securities.
Now we think this might work, and it certainly works much better than having government hand in the excess inventory. The Fed should use its monopoly power to buy at high prices, and sell low; injecting money into the economy, or buy low and sell high extracting money. But it puts the primary dealers in an arbitrage battle with the Fed.

Instead lets make the Fed neutral, and let the borrowers and savers have an arbitrage battle between themselves.  Consider the corridor system as a queuing network. The Fed always wants the deposit balance and lending balance about equal.  It can always adjust both deposit and lending rates independently to make that happen.  But it also wants to make the transaction variance and mean equal for each of the two groups, moving both rates up or down in tandem to make that happen.  So it has two levers, the average rate and the differential rate.

Does this drive the system to zero mean inflation? I think so, even in the face of growth. When borrowers drive up the outstanding lending balances, the Fed raises deposit rates; and visa versa.  Savers will avoid inflation and borrowers will avoid deflation.

The backwards Fed system

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers declined 0.3 percent in November after being unchanged in October. The index for all items less food and energy increased 0.1 percent in November after rising 0.2 percent in October.
Raising the Fed deposit rates inject free unencumbered cash into the economy.  Lowering the fed lending rates extracts free unencumbered cash from the economy.  Letting Congress take all of the incoming flow just slams the Fed up against the boundary and it become useless.  We are confused because equilibrium times are thirty years.

The economy has reached its limit, some 2.5% of economic flows are dedicated to government interest payments. DC has to run a surplus and put some cash into savings so the Fed can raise deposit rates.

Good news

WASHINGTON (AP) — The United States and Cuba will start talks on normalizing full diplomatic relations, marking the most significant shift in U.S. policy toward the communist island in decades, American officials said Wednesday. The announcement comes amid a series of new confidence-building measures between the longtime foes, including the release of American Alan Gross and the freeing of three Cubans jailed in the U.S.
President Barack Obama was to announce the policy changes from the White House at noon Wednesday.
If DC can tolerate the California Legislature then it can tolerate Fidel and his beard.

Consumer inflation at 1%?

WSJ reports that Price Stats, an independent firm tracking consumer prices sees a 1% CPI. This chart from WSJ shows the official government number and price Stats over the recent past.

Tuesday, December 16, 2014

The man who intends to crash the economy

Here is is, the third in a line of Big Deficit Bush Republicans.  brother of the Bush who created the worst recession in post war times.  He intendes to do it again, father like son like brother.

The sad fact, the alternative is soms megalomaniac dingbat from Yawktown.

En serio, el gobierno de California es incompetente, pero estamos mejor dejar la unión de todos modos y hacer frente a la estupidez en Sacramento sin interferencia de DC.

Federal Reserve poetry analyzed.

Caroline Baum analyzes the Fed poetry. "considerable"? "patient", and  months and months of worthless poetry analysis. Finally she pinpoints the exact phrase, "The fed has no idea when it will raise rates"
Fed's Forward Guidance Amounts to a "Considerable (Waste of) Time"

To the list of reasons, I'd offer one more: Stanley Fischer. Fischer joined the Fed as vice chairman in May, and I've been waiting to see can sway his colleagues with his atypical —for a central banker, at least—views on forward guidance. At a September 2013 conference in Hong Kong, Fischer said the Fed can't spell out what it is going to do "because it doesn't know."

The Fed is not raising rates, the market raises them.  Even if the fed would rase rates, it would turn a profit and turn the profit over to the Treasury which then lowers rates by borrowing less!  Here is a clue to the dumbshits who try to decipher the nonsense.  Rates on the Treasury curve are denominated in Treasury notes for one simple reason, it is the Treasury who  is doing the borrowing! Anybody have a clue?

The Fed borrows from the member banks by paying rates on the excess reserves.  But not one economist, with the exception of John Cochrane and Tim Taylor has noticed that lending rates and deposit rates are opposite things!

Here is a clue to economists reading from the worn out recipe book.  Paying higher rates on deposits is a flow of new money from the printing press to the economy, that is inflationary.  Maybe not by much, it is only 10 billion a year, but it is not deflationary and some day economists will quit reading from the recipe book and actually think.

Lowering lending rates, if the Fed would ever lend money, mostly increases the gains by the Fed.  That is an increase in flow from the economy to the Fed, that is deflationary! Get a friggen clue, economists, try playing with a mud puddle with a flow in and a flow out, you might get the picture.

The economy looks fine to me

The Capital Spectator worries about this chart. Housing looks to be on track for the normal pre-bubble period.  Note the dip in 2010 was likely another result of the harmful stimulus.  Also note there was no over production all the way through the bubble years in 2006. The housing industry will well managed. The overall economy looks like it passed through its normal business cycle and our real down turn was a short Obamacare dip in the first quart of this year. 

How about the manufacturing PMI, a survey of manufacturing expansion or contraction?
I see a dip that is well within the range of any other dip we have had since the crash.  Note, we again see the stimulus take its toll in 2010.

I may be a contrary indicator, but right now it looks a lot like we are on our second business cycle since the almost recession of Q1 2014. If Obama can hold back the DC Boat Anchor he may well come out looking even better than Bill Clinton.

Mark Thoma still claims the stimulus wasn't big enough. But he has never put up one single piece of evidence.  Nor have any of the other stimulus activists for that mater, all the Keynesians does is quote unproven recipes. If you are from Illinois and want to see how the stimulus put your economy into a double dip, look at this unemployment chart.
There we have it, 2011, yet again, Illinois unemployment climbs again, right where the stimulus began driving up oil prices.  This now makes five years in which not one single shred of evidence has been produced showing any good result from the stimulus. Keynesians should be booted from our colleges for teaching fraud to young students.

A few other notes about the stimulus, it drove inequality up.  The stimulus drove inflation above 2%, and inflation to high nearly always crashes the economy. We do not have a working fiat banker and inflation is almost everywhere simply a distortion in prices and not really the result of too much money.

And, by the way, a note on QE. Its purpose was most likely to halt the danger from the California pension system, and it also drove inequality higher. So poor people everywhere can blame the California legislature for their problems.  California is just too much of a flounder for the economy.

Here is a much better chart that explains what is going on.  Government spending flat, the blue line. And producer prices flat, the red line.  I would worry about the Republican tendency to sign onto more spending and we see the spike in spending in the recent quarter.  Note the same spike in federal spending in 2010 almost caused a double dip, and that was due to the stimulus. So it remains to be seen, clearly, but the Q1 dip was the end of the Obama recession cycle and we did in fact survive Obamacare.  And, Obama has one more delay available if Obamacare causes problems in 2015. But we may have defeated the Keynesians and saved the economy, just watch out for the Republican spending machine.

Monday, December 15, 2014

The stupidity of central banking

Reuters: Client notes from Goldman Sachs, Citi and Bank of America/Merrill Lynch this week deal with expectations for the removal of the wording, roughly agreeing that however close the call is, it is more likely than not that the phrase will go away.
“They are going to remove it; I don’t think (Fed Chair Janet Yellen) is going to keep it in there just because of what we are seeing with the energy sector,” said Sean McCarthy, regional chief investment officer for Wells Fargo Private Bank in Scottsdale, Arizona.
“All the other data has been strong, whether you are looking at construction, at the ISM numbers, and especially the jobs data that she cares about most.”
Dunno where everyone was last week, but Goldman Sachs and company just did their own central banking in Congress, getting the right of member banks to escape the thumb of the federal Reserve. 

So what forecast should we expect from Janet? What in the frig do we really expect her to say that makes sense in the face of the establishment of our new central banker, Goldman Sachs.  GS won the job fair and square, Janet should have started a policy of ignoring the Keynesians and she might have saved her job.

Europe continues to deflate

ECB May Have to Buy Sovereign Bonds
VIENNA–With its key interest rates as low as they can go, the European Central Bank may have to buy sovereign bonds if the inflation rate remains low and economic growth weak over the long term, a member of the governing council said Monday.
“Interest rate policy has reached a lower zero bound, for all practical purposes. I personally don’t see the possibilities for further interest-rate cuts,” said Ewald Nowotny, head of Austria’s central bank.
The European Central Bank, like government operated central banks, has no way to issue fresh cash, they are broken fiat bankers. Hence, in Europe, Japan and the USA we get more money tied up in the interest repayment cycle and no fresh cash to accommodate growth.   This problem is simply Keynesian stupidity, there is no other name for it.

Post election polling shows Chuck Schumer was right

Chuck Schumer was right

In fact, Obama was carefully instructed to follow the Clinton policy. He knew the best policy even in the primaries, it was obvious. The Democratic catastrophe was entirely the result of Pelosi, Cristina Romer, Krugman and fraud at the UC Berkeley economic department.

Lesson: California is a Boat Anchor. If UC Berkeley does not like that, then talk to the California legislature; DC cannot help, the problem is endogenous to California politics.

Sunday, December 14, 2014

The Federal Reserve becomes unemployed

WA Post: The acrimony that erupted Thursday between President Obama and members of his own party largely pivoted on a single item in a 1,600-page piece of legislation to keep the government funded: Should banks be allowed to make risky investments using taxpayer-backed money?
The very idea was abhorrent to many Democrats on Capitol Hill. And some were stunned that the White House would support the bill with that provision intact, given that it would erase a key provision of the 2010 Dodd-Frank financial reform legislation, one of Obama’s signature achievements.
But perhaps even more outrageous to Democrats was that the language in the bill appeared to come directly from the pens of lobbyists at the nation’s biggest banks, aides said. The provision was so important to the profits at those companies that J.P.Morgan's chief executive Jamie Dimon himself telephoned individual lawmakers to urge them to vote for it, according to a person familiar with the effort.

What is this all about? 

The member banks want freedom from Federal regulations, they are tired of  being limited to a miserable .25% YoY interest on reserves. So they organize their bretheren, the Wall Street investmen banks to get the Federal Reserve out of the loop and allow member banks to trade other market instruments rather than just loans and deposits.

The member banks are the separate half of the Wall Street investment banks, they keep separate books by law, but ultimately remain part of the same company.  The member banks have been on welfare since the crash, and now they are free again.

Is this a fair deal?
It is no more unfair then Ben stoking the stock market to save a moribund California pension system.  If the Keynesians can get Ben to fib about his intended purpose with QE, then anything is on the table. Wasn't it Ben himself using the pseudonym for emailing among the conspirators? One lie begets another, and I say go for it.

Besides, as near as I can tell, the Fed knows they are not independent, Congress, afterall, takes 100% of their gains. We know the fiat banker can never operate unless it controls both incoming and outgoing ink and paper, yet not one Keynesian pointed out this obvious error, in fact all economists, including Uncle Milt, missed this problem for 250 years. It was not until George Selgin that we learned what the problem with fiat banking really is.

What about a better currency alltogether?

Why not? A few lines of code, the smart credit card and we have it, a new money technology that avoids the government altogether and us free to issue out own currency if we want.

Milt Friedman said what?

 From Peter Ireland in talking about money supply growth.

Drawing on Milton Friedman’s dictum, and looking at current rates of money growth around six percent, FOMC members should have confidence that inflation will return to their two percent target even if real GDP continues to grow at four percent annually. 

Did Milt have cause and effect backwards, or was he simply implying an association?  As we can see, post crash, the blue line, the implicit price deflator, moves up above 2% while the M2 growth, red line, as barely gotten to 6%. Then with the M2 growth holding at 10%, the deflator begins dropping down to 1.6% while M2 growth is still above 6%! Then, further, M2 Growth stays above 6% while the deflator continues below 1.5%. Now we see M2 Growth dropping back below 6%, and we are supposed to expect the deflator to rise up to 2%?

By the way, check out 2006.  Here we have the price deflator at 3%, and the economy starts to crash while M2 Growth is at 5%.

No Peter, in case you have not heard, prices are dropping. The producer price index posted a negative change, and is now 1.4% YoY, and I doubt the consumer index will get near to 2% since it has been dropping anyway. In fact, Peter, the deflator has been dropping almost consistently since the stimulus almost crashed the economy in 2011. Further more, it seems clearly that Milt got cause and effect backwards, he was yet another economist with priors to confirm.

Also, Peter, try telling us what exactly the Fed was supposed to do to get M2 growth back up? You seemed to neglect that important fact in your post.  QE? Take a look, M2 dropping while the Fed was doing the QE all the way through 2013.  Buy Treasuries? What will that do? They are already at .1% at the time. I don't see anything in this chart that agrees with Peter's post.

Peter Ireland needs to find better Milt quotes.

Illiinois pulls ahead of California

Most states outperform California, almost always these days. But Illinois, overcoming the twin shocks of the oil shortage and the stimulus catastrophe is now doing better than California.

California is officially once again the Boat Anchor of the US economy, the disaster waiting to happen.  In fact, even Mexico has been outperforming California in unemployment. Should this always be the case? hard to tell.  Some might blame the Beach Boys, some might blame our incompetent legislature.  Maybe its just the nice weather.  Jerry Brown is perfectly happy with 7.3%, he is the expert on getting people unemployed.

Who really saved California from the bankruptcy? QE, without QE the pension funds would have failed.  notice the debt cartel raised the ten year treasury rate whenever Ben did the QE? That was the fix, the quid pro quo. Goldman Sachs and company did not want to get dinged because ben was bailing out the California legislature for a bonehead pension system. So GS and friends raised rates while Ben boosted the pension funds.

As a side effect, naturally, we had a huge transfer of wealth from the poor to the wealthy. But I do not hear many of the Democratic left complaining about inequality these days, as long as the public sector pensions are safe. But then, many of the Democratic left got booted from office.

Keynesians simply lied about the issue, Paul Krugman claiming that the stock market boost did not effect inequality. Plain evidence showed him to be disingenuous, to say the least.  So, for much of the inequality, blamed on Obama, one can blame, instead, the California Legislature and the Keynesian mafia.

Saturday, December 13, 2014

Should we give Jimmy Carter credit for the 81 recession?

Am I being to hard on the great communist Ronald Reagan?  Although the 81 recession occurred only six months after he started.  But Jimmy had his recession in 1980, and it was a mild one.  However, it is hard to blame the 81 recession to Reagan, though he is a Big Spending, big government communist with the deficits don't matter philosophy. You can see the blue line going down once he hit office, that would be more spending, and more deficits.  In fact, Reagan is the one who started the deficit monster.  Actually Volker pulled the plug in 1980 when he raises the reserve requirements and thus raised rates.  Actually the only central in the last 40 years to actually raise rates. Tough call.

So why is inflation good?

The Keynesians keep telling me that inflation is a good thing. Now this chart has the implicit price deflator, which is all of inflation, producer and consumer and anything else that falls out of the national accounts after the data is settles. So look at the thing, when it reaches 2.5 we crash.  Each an every recession is preceded by the price deflator spending time above 2.5, that would be 1991, 2001, and 2009.  Further back we see it peaked just before the big 1981 recession.  Look at 2011, it went above 2.0, right at the stimulus, and nearly threw the economy into another recession.

So what is inflation good for? Why do the Keynesians want more of it?

Yet another Bush plans to run up the deficit and crash the economy

WASHINGTON — When former Gov. Jeb Bush of Florida quietly visited Senator John McCain in his Capitol Hill office this fall, discussion turned to a subject of increasing interest to Mr. Bush: how to run for president without pandering to the party’s conservative base.
“I just said to him, ‘I think if you look back, despite the far right’s complaints, it is the centrist that wins the nomination,’ ” Mr. McCain, an Arizona Republican, said he told Mr. Bush.
In the past few weeks, Mr. Bush has moved toward a run for the White House. His family’s resistance has receded. His advisers are seeking staff. And the former governor is even slimming down, shedding about 15 pounds thanks to frequent swimming and personal training sessions after a knee operation last year.
But before pursuing the presidency, Mr. Bush, 61, is grappling with the central question of whether he can prevail in a grueling primary battle without shifting his positions or altering his persona to satisfy his party’s hard-liners. In conversations with donors, friends and advisers, he is discussing whether he can navigate, and avoid being tripped up by, the conservative Republican base.

Friday, December 12, 2014

Keeping an eye on the Republican Communist party

CNSNews.com) - The federal debt has increased by $3.8 trillion in the 3.8 years that have passed since House Speaker John Boehner cut his first spending deal with Senate Democrats and President Obama.
That would be the Conservative News network.  This is the first time I ever heard that Conservatives worried about Big Government and Debt.  They even have a graph!
Well, this graph shows the DC Treasury Department is having a hard time getting the 17T in debt rolled over.  In fact, the entire deficit only covers interest on previous debt, most of it from the Republican Communist Party.

Thursday, December 11, 2014

Did our central bankers get a clue on the corridor system?

Bank Of America Says Fed Needs To Test Interest On Reserves Power
Bank of America /Merrill Lynch analysts are warning the one tool the Federal Reserve plans to rely on most when it begins raising short-term rates is the one thing that hasn’t really been put through its paces. Analysts at Bank of America are warning the Fed should test its interest on reserves power Bloomberg “We believe the Fed’s exit toolkit is not ready for primetime,” bank analysts wrote in research Wednesday. Importantly, the Fed has not truly explored the effects of adjusting the interest rate it pays banks for reserves parked on its books as it has tested other new tools designed to help it raise rates when the time comes, the firm said. The Fed gained the power to pay interest on reserves in 2008. Since then, the central bank has created trillions of dollars in new reserves through various programs aimed at stabilizing the financial system and spurring a stronger recovery. The Fed says the large amount of reserves in the system mean it will not be able to adjust its benchmark short-term rate, the federal funds rate, as it has in the past. Instead, it will use the rate paid for reserves its primary tool for lifting short-term rates from zero, likely sometime next year. The Fed currently pays deposit-taking banks 0.25% for the reserves. By raising that rate, it would induce those firms to keep their cash at the central bank and out of the broader economy. This rate then would serve as the reference point for all other borrowing costs in the U.S. Several top central bank officials expect to start raising rates around mid-2015. The Fed expects the fed funds rate, which is set by the market, to trade just under the rate on reserves. Officials expect another tool, the interest rate it pays on reverse repurchase agreements to set a floor underneath short-term rates. Collectively the three tools will set a band for short-term rates, and by changing the high and low end rates, the Fed will influence borrowing costs throughout the economy.

Sounds to me they have figured out the corridor system.  Sometime in the next few weeks they will figure out that a 100% federal tax incoming fiat  will screw the corridor system up.  Is there some way the central bank can broach the idea of limiting Congressionl theft to 15%, a more reasonable tax? Or could they just label a part of their incoming fiat as working capital and keep Congress from sealing it?

Anyway, the Keynesians are going to go hysterical, nothing can be as simple has having a lending and savings rate and adjust them independently. They will lose their power to teach upside downism to their students.