Donald Trump

[Wolf DeVoon]

5 hours ago, Michael Stuart Kelly said:

Wolf,

That's a hell of a great way to describe fractional reserve banking and the attitude of the bankers at the same time.

Michaellyst

Well, it's standard terminology in banking, nothing to do with attitudes. Perhaps the greatest of all bank philosophers was Walter Bagehot, a shrewd analyst in the days when the Bank of England was a private bank and "lender of last resort" because it was the strongest bank in England. It was a difficult thing for private bank directors to grasp, that they should impair their best capital reserves (gold) by making interbank loans to country and commercial banks when customers faced dwindling sales and commercial credit slumped (the miller no longer trusted a baker to pay invoices, etc). Bagehot helped persuade the Bank of England to lend freely during a panic, to tide everyone over until the economy picked up again. Otherwise smaller banks and factors who discounted commercial paper would fail in a cascade of unmet payments due, bankrupting otherwise solvent financial firms. All of this predates Keynes.

The point I'm making is that it's difficult to make profits as a bank by making loans, even in good times when households and firms are prosperous, making profits and building assets by labor or trade. Most modern banks make fees and commissions by underwriting or taking an investment position involving mergers and commercial REITs. It's not for lack of compassion or decency that banks decline to lend freely, but rather that fewer bank customers became able to make timely loan payments when sales and employment contract.

None of this pertains to home mortgage origination after legislative mandate of Federal agencies to discount (purchase) and securitize home loans ("agency paper"). Much private-sector money creation now consists of credit card balances, home equity loans, leasing, and OEM new car finance. Sad thing about Fannie Mae and Freddie Mac is epistemological confusion, often said to be backed by the full faith and credit of the U.S. Government -- not true, not by any stretch of constitutional language. Agency paper is backed by the Treasury, a claim on future Federal taxation, true, but the Constitution's "full faith and credit" clause pertains to all of the 50 state governments recognizing bills of exchange, contracts, marriages, divorces, parenthood and custody in another state. In other words, Georgia has to recognize a marriage in Wisconsin and a legal decision in Hawaii, unless it becomes a Federal question and then all bets are off.

[jts]

1 hour ago, BaalChatzaf said:

This bank draft money, in a sense, is future money.  If invested and producing more goods and services,  the future money is redeemed  since it can actually buy stuff it helped to create. No modern commercial  or industrial society can grow without "future money"  or credit.  There isn't enough precious metal to back the amount of money required to keep the industrial societies humming and growing. Gold and Silver worked during the late 18 th century and 19 th century because more gold and silver were being dug up.   When the gold stock and silver stock either ceased to grow or were put to more direct use,  metal backed money could no long sustain growth. 

We need credit but it has to be managed prudently.  Not like the  junk credit that lead to the Great Meltdown of 2007

You are assuming the purchasing power of gold is constant. It is not. Gold is subject to supply and demand like everything else. If the amount of wealth (goods and services) goes up and the amount of gold remains unchanged then the purchasing power per unit of gold increases.

 

[Michael Stuart Kelly]

I just saw an interview between Paul Ryan and Sean Hannity.

Sean raised the trillion dollar infrastructure plans and asked where the money is going to come from.

Ryan said public-private partnerships. In other words, some of it will come from the government and some from private companies, all done on a case-by-case project basis.

Everybody has been so acclimated to government corruption, they automatically think infrastructure cost means boondoggle and pork and some even think Trump doesn't know his ass from a hole in the ground about government finance.

Well how does public-private partnerships sound? They work. 

Since Ryan kept talking about "leveraged" private money, I presume he is talking about a lot of the funds overseas that might get tax concessions if they are repatriated and invested in infrastructure.

To make this idea more concrete, in a hypothetical as I see it, Factory X needs a better bridge on a public road to get more product rolling. The traffic bottlenecks are killing delivery and there are no other routes. Under the old boondoggle way, the factory owner would have to invest heavily in bribes and covering those bribes up (i.e., lobbying) in order to get funding for the bridge overhaul added as a pork rider on some congressional bill or other.

In the "leveraged" private money model, some money from the government will go to that bridge, but the factory will pay for the rest, bringing its funds for this from overseas to boot at lower tax, and maybe even oversee the construction. That will end up being a hell of a lot cheaper in the end for everyone. Especially the company that can deliver more product after the bridge overhaul is finished and make a lot more money.

Oh... and there's this. The bridge overhaul will be done right because the factory will not want its product and trucks falling into the damn river.  Nor will it want to overhaul the bridge again in a couple of years. The local community will benefit with a great bridge almost as an afterthought.

Here's the relevant part of the interview. 

Ryan seems pleased as punch with Trump and it does not look like ass-kissing.

Michael

[Michael Stuart Kelly]

Life just got a little easier than it was for incoming President-elect Trump (from Breitbart):

Louisiana Sends Republican John Kennedy to U.S. Senate in Runoff Election

Some are calling this the Trump effect.

Michael

[Backlighting]

51 minutes ago, Michael Stuart Kelly said:

I just saw an interview between Paul Ryan and Sean Hannity.

Sean raised the trillion dollar infrastructure plans and asked where the money is going to come from.

Ryan said public-private partnerships. In other words, some of it will come from the government and some from private companies, all done on a case-by-case project basis.

Everybody has been so acclimated to government corruption, they automatically think infrastructure cost means boondoggle and pork and some even think Trump doesn't know his ass from a hole in the ground about government finance.

Well how does public-private partnerships sound? They work. 

Since Ryan kept talking about "leveraged" private money, I presume he is talking about a lot of the funds overseas that might get tax concessions if they are repatriated and invested in infrastructure.

To make this idea more concrete, in a hypothetical as I see it, Factory X needs a better bridge on a public road to get more product rolling. The traffic bottlenecks are killing delivery and there are no other routes. Under the old boondoggle way, the factory owner would have to invest heavily in bribes and covering those bribes up (i.e., lobbying) in order to get funding for the bridge overhaul added as a pork rider on some congressional bill or other.

In the "leveraged" private money model, some money from the government will go to that bridge, but the factory will pay for the rest, bringing its funds for this from overseas to boot at lower tax, and maybe even oversee the construction. That will end up being a hell of a lot cheaper in the end for everyone. Especially the company that can deliver more product after the bridge overhaul is finished and make a lot more money.

Oh... and there's this. The bridge overhaul will be done right because the factory will not want its product and trucks falling into the damn river.  Nor will it want to overhaul the bridge again in a couple of years. The local community will benefit with a great bridge almost as an afterthought.

Here's the relevant part of the interview. 

Ryan seems pleased as punch with Trump and it does not look like ass-kissing.

Michael

Ryan seemed sincere and straight up with Hannity, whose questions covered a myriad of issues. Looks like the Republic may be saved.  --J

[moralist]

Just a little sidebar factiod...

Clinton got 3,100,000 MORE votes than Trump in California. So all of Clinton's popular vote lead was in just one state.

Thank God for the Electoral college!

 

Greg 

[BaalChatzaf]

15 hours ago, jts said:

You are assuming the purchasing power of gold is constant. It is not. Gold is subject to supply and demand like everything else. If the amount of wealth (goods and services) goes up and the amount of gold remains unchanged then the purchasing power per unit of gold increases.

 

This approach would lead to collapse of prices.  There is nothing wrong with gradual and manageable decrease in the price of goods and services sold,  but this would  give a free gift to those who hoard their metal  and bury it in their back yard.  In exchange for hoarding,  a vast increase in purchasing power would be granted.  Money has to move to be worth anything.  This approach would reward  not investing one's precious gold and silver.  Read  the  Parable of Talents  in the gospels.   This parable actually teaches something wise and useful. 

Properly managed "future money"  can sustain productivity and even increase it through investment. 

[Peter]

Ba’al wrote: Money has to move to be worth anything . . . . Properly managed "future money" can sustain productivity and even increase it through investment. end quote

What if your ancestor named Ba’al buried a 2000 pound golden ox in 25 BC? What would it have purchased then compared to what it would purchase now? I have a hunch its purchasing power has not increased over the millennia. Over time, few things increase in value if we don’t count art and antiquities.

And even that is an iffy proposition if certain artistically rendered images lose favor.  Recently the Accomack County Virginia “selected” school board had a complaint from one set of parents about “To Kill a Mockingbird,” which has the “n” word 40 times and “Huckleberry Finn” which has the “n” word 200 times. So they banned the books. Now the copies of those classics are sitting in a warehouse gathering dust and worth much less. There are calls for an “elected” school board.

Peter  

[merjet]

On 12/11/2016 at 0:28 AM, Michael Stuart Kelly said:

Sean raised the trillion dollar infrastructure plans and asked where the money is going to come from.

Ryan said public-private partnerships. In other words, some of it will come from the government and some from private companies, all done on a case-by-case project basis.

.....

Well how does public-private partnerships sound? They work. 

Since Ryan kept talking about "leveraged" private money, I presume he is talking about a lot of the funds overseas that might get tax concessions if they are repatriated and invested in infrastructure.

I don't. He wasn't clear, but I assumed he meant some private money from people who could clearly benefit enough from the improved infrastructure, akin to your stylized factory-bridge example. 

This link shows the companies with a lot of that money overseas that might be repatriated. It's pretty obvious that Apple, Google, Microsoft, Pfizer, Merck, and Abbott Labs aren't in the business of doing things like repair roads and bridges, or upgrade water/sewer systems. Allowing said companies to repatriate money and have it taxed at only, say, 10% would obviously add to federal government revenue, up to maybe $250 billion.

On 12/11/2016 at 0:28 AM, Michael Stuart Kelly said:

Oh... and there's this. The bridge overhaul will be done right because the factory will not want its product and trucks falling into the damn river.  Nor will it want to overhaul the bridge again in a couple of years. The local community will benefit with a great bridge almost as an afterthought.

Do you have any real evidence of such poorly built bridges in the United States? Bridges that do need repair were built many decades ago and were not expected to last forever.

"Part of the problem is maintaining aging bridges. Of the 250 most heavily traveled bridges that need repairs, 85% were built before 1970 with the creation of the interstate highway system.

The most heavily traveled bridges that need repairs include:
-- In California, several Interstate 405 bridges in Los Angeles.
-- In Pennsylvania, several Interstate 95 bridges in Philadelphia.
-- In Maryland, several Interstate 95 bridges.
-- In New York, the Brooklyn Bridge.
-- In Washington, D.C., Memorial Bridge." Link. 

What factory or other business do you believe has a specific enough financial interest to pay for part of the repairs for these bridges. Also, when the benefits of the repairs are very diffused, why not opt for free-riding? In these cases, it will likely be state or local governments, not private money. Ditto for highways.

During the Hannity interview with Ryan there was a reference to The Golden Triangle in Mississippi and Joe Max Higgins, who were the subject of a 60 Minutes episode.

To win the Yokohama tire plant Joe Max Higgins "installed water and sewer systems on the proposed site for the plant, and he secured $30 million from the state for a new access road so trucks could reach the factory" (link).

That is a real example, and it doesn't sound like public-private funding to me. 

"Yokohama agreed to build the $300 million plant in the Golden Triangle. Higgins secured about $100 million in incentives and an estimated $200 million in tax breaks from the state of Mississippi and the counties that make up the Golden Triangle." 

The incentives and tax breaks are worth as much as the cost of building the plant. Is that crony capitalism? The devil is in the details. The plant is expected to bring 2,000 jobs. Assume a generous $100,000 wages per job, one given in the 60 Minutes show. State income tax = $4,660 for single and $4,470 for married. I'll use the midpoint $4,565. 2,000 x $4,565 = $9.13 million. 200/9.13 = 21.9, the number of years to offset the $200 million in tax breaks. That doesn't include the $30 million for a road or $100 million in incentives. Hmm, that suggests crony capitalism to me.  

Of course, the people who get those jobs are going to be highly appreciative. But it doesn’t sound to me so great for the rest of the people of Mississippi.

Milton Friedman wisely observed that we spend our own money on ourselves very carefully. We spend other people’s money on ourselves less carefully. But the least carefully spent money is other people’s money on other people.

 

[Michael Stuart Kelly]

5 hours ago, merjet said:

Do you have any real evidence of such poorly built bridges in the United States?

Merlin,

I was making up an example, I said I was making up an example, and you ask for real evidence?

Good Lord.

Let me get this right. Are you seriously implying that there are no shoddy infrastructure projects built by the US government? Or that government infrastructure projects don't get abandoned right after the initial stages because the money kinda evaporates?

If so, I might have a bridge to sell you.

Trump's infrastructure upgrade project is going to triumph--ahead of schedule, under budget and without adding to the debt, the economy is going to boom under his economic policies, and from the tenor and tone of your posts, I imagine none of this will please you.

Fortunately for the rest of us, and for you in fact, it will happen. 

 

Michael

[moralist]

Trump and Mexico...

 

 

[Michael Stuart Kelly]

1 hour ago, moralist said:

Trump and Mexico...

 

 

OMG!

LOLOL...

The pain, the pain...

Michael

[Michael Stuart Kelly]

Has anybody been reading the news lately?

It is a hoot watching the leftist-progressive-socialist machine try to turn its attack Trump media into a commie-hunting Senator Joseph McCarthy. Even Joy Behar wondered when Trump will put the hammer and sickle on the American flag (the one she doesn't mind being burned).

I knew I had not seen everything there is to see, but this was never on the horizon of possibility.

Dayaamm!

I am impressed by the way this leftist-progressive-socialist media machine works in lockstep on propaganda talking points. Call them goofy or evil or boneheaded or toadies, you can't call them unorganized. These guys get their orders and they comply as one body.

I still chuckle on how many of them "spontaneously" came up with that goofball phrase that Hillary Clinton was going to "power through" her pneumonia. (And that's just one case out of countless.) Whoever heard of "powering through" an illness? Dayaamm! Yet these knucklehead imagined they could all say something like that from one minute to the next and people would find it normal.  

Anywho, we've got a new red scare going. And it's the reddies who are spreading the fear. 

 

Michael

[BaalChatzaf]

6 minutes ago, Michael Stuart Kelly said:

Has anybody been reading the news lately?

It is a hoot watching the leftist-progressive-socialist machine try to turn its attack Trump media into a commie-hunting Senator Joseph McCarthy. Even Joy Behar wondered when Trump will put the hammer and sickle on the American flag (the one she doesn't mind being burned).

I knew I had not seen everything there is to see, but this was never on the horizon of possibility.

Dayaamm!

I am impressed by the way this leftist-progressive-socialist media machine works in lockstep on propaganda talking points. Call them goofy or evil or boneheaded or toadies, you can't call them unorganized. These guys get their orders and they comply as one body.

I still chuckle on how many of them "spontaneously" came up with that goofball phrase that Hillary Clinton was going to "power through" her pneumonia. (And that's just one case out of countless.) Whoever heard of "powering through" an illness? Dayaamm! Yet these knucklehead imagined they could all say something like that from one minute to the next and people would find it normal.  

Anywho, we've got a new red scare going. And it's the reddies who are spreading the fear. 

 

Michael

And these knuckle heads propose medical  care plans for the rest of us.  Be afraid.  Be very afraid....

[Jules Troy]

And the DJIA keeps climbing....poking up over 19800 into unprecedented territory,finishing the day at 19796... I'm thinking within 2-3 months it's going to break 21k.

[Brant Gaede]

2017 will be a somewhat poor year for stocks in spite of the Trump rally, which will reverse as the Federal government isn't putting enough money into the economy to sustain it. And the first year of a new presidency works against higher prices.

--Brant

[Brant Gaede]

3 hours ago, Michael Stuart Kelly said:

Has anybody been reading the news lately?

It is a hoot watching the leftist-progressive-socialist machine try to turn its attack Trump media into a commie-hunting Senator Joseph McCarthy. Even Joy Behar wondered when Trump will put the hammer and sickle on the American flag (the one she doesn't mind being burned).

I knew I had not seen everything there is to see, but this was never on the horizon of possibility.

Dayaamm!

I am impressed by the way this leftist-progressive-socialist media machine works in lockstep on propaganda talking points. Call them goofy or evil or boneheaded or toadies, you can't call them unorganized. These guys get their orders and they comply as one body.

I still chuckle on how many of them "spontaneously" came up with that goofball phrase that Hillary Clinton was going to "power through" her pneumonia. (And that's just one case out of countless.) Whoever heard of "powering through" an illness? Dayaamm! Yet these knucklehead imagined they could all say something like that from one minute to the next and people would find it normal.  

Anywho, we've got a new red scare going. And it's the reddies who are spreading the fear. 

 

Michael

I've powered through insanity.

--Brant

can'tja tell?

[Brant Gaede]

10 hours ago, Michael Stuart Kelly said:

Merlin,

I was making up an example, I said I was making up an example, and you ask for real evidence?

Good Lord.

Let me get this right. Are you seriously implying that there are no shoddy infrastructure projects built by the US government? Or that government infrastructure projects don't get abandoned right after the initial stages because the money kinda evaporates?

If so, I might have a bridge to sell you.

Trump's infrastructure upgrade project is going to triumph--ahead of schedule, under budget and without adding to the debt, the economy is going to boom under his economic policies, and from the tenor and tone of your posts, I imagine none of this will please you.

Fortunately for the rest of us, and for you in fact, it will happen. 

 

Michael

A lot of bridges, state and Interstate, need serious work.

What really is needed is hardening up electronics--world-wide too--to prevent the sun from wiping out the electrical grid in a repeat of what happened in the 1850s when only a few things were at risk.

--Brant

[Brant Gaede]

On 12/10/2016 at 4:54 PM, jts said:

You are assuming the purchasing power of gold is constant. It is not. Gold is subject to supply and demand like everything else. If the amount of wealth (goods and services) goes up and the amount of gold remains unchanged then the purchasing power per unit of gold increases.

 

Not only gold could be used. A pile of commodity assets could be too, such as copper. The Federal Gov't has vast assets that could be used to back up its money. For now, however, whatever the future of money, the present day central banking sovereign money inertia will seriously continue on to its inevitable blowup caused by way too much cheap debt.

--Brant

[Michael Stuart Kelly]

2 hours ago, Brant Gaede said:

A lot of bridges, state and Interstate, need serious work.

What really is needed is hardening up electronics--world-wide too--to prevent the sun from wiping out the electrical grid in a repeat of what happened in the 1850s when only a few things were at risk.

Brant,

Or an electromagnetic pulse bomb. I heard somewhere that the Congress just passed a bill to shore up the US power grid against such an attack and that Trump and his people are deeply interested in this, also. If it's Congress as usual, this bill is filled with pork. And if so, I'm not sure all that pork is going to get served under Trump, but I am sure Trump's people will get on the main project post-haste.

Imagine the US without the Internet and without electronic money, just for starters.

Michael

[Brant Gaede]

Imagine turning on the water faucet and no water.

Got a stream nearby?

--Brant

it'll solve the voting problem in California

[KorbenDallas]

5 minutes ago, Michael Stuart Kelly said:

Brant,

Or an electromagnetic pulse bomb. I heard somewhere that the Congress just passed a bill to shore up the US power grid against such an attack and that Trump and his people are deeply interested in this, also. If it's Congress as usual, this bill is filled with pork. And if so, I'm not sure all that pork is going to get served under Trump, but I am sure Trump's people will get on the main project post-haste.

Imagine the US without the Internet and without electronic money, just for starters.

Michael

EMPs only exist as prototypes, and are a long way from being a WMD.

[Jules Troy]

Well...nukes are a pretty darned good source of EMP...

[Michael Stuart Kelly]

6 minutes ago, KorbenDallas said:

EMPs only exist as prototypes, and are a long way from being a WMD.

Korben,

Let's back up to before Snowden.

I recall people back then saying this exact same thing about a surveillance state.

(I also recall accusations of tin foil hat--with great merriment. I don't hear those accusations or detect the merriment re the surveillance state anymore. What happened?  )

I think it's safer (for accuracy) to qualify your statement with "according to what is publicly known."

3 minutes ago, Jules Troy said:

Well...nukes are a pretty darned good source of EMP...

Then there's that.

 

Michael

[KorbenDallas]

7 minutes ago, Jules Troy said:

Well...nukes are a pretty darned good source of EMP...

Ha, yes they are