Greetings iBC’ers! I’m happy to be aboard, and my thanks to Vincenzo for putting my banner together so quickly and artistically. I chose the Andrew Jackson theme and quote because I think a healthy suspicion of our Central Bank and it’s various machinations is essential to any serious investor’s analysis of the markets– especially in these unprecedented days of fiscal and monetry expansion.
“Old Hickory” was probably the last of our President who really got the whole “banks are trouble” business in a serious enough way to rail against those moneyed interests that sought a Central Bank to “coordinate” national economic policy. Heck, his actions probably kept us out of a centrally administered Federal Reserve System for almost a century.
But the Federal Reserve’s founding in 1913 is almost a century away now too, and I’m afraid the Beast from Jekyll Island is with us until we figure out some radically different economic system. Frankly, I don’t see that coming any time soon. No, the pragmatic investor has to work with the field he’s given, and that’s one where a central authority politically vested with a “stabilization” charter is calling the shots on money supply and, tangentially, short term interest rates. Luckily, we’re aware that these systems are run by fallible humans who make mistakes, and who are likely susceptible to the same blinding pressures to which any publically accountable bodies are prone. Therein lies our “edge” — the predictability of the political animal — no matter the party reference.
Therefore, rather than treat the Fed like some sort of sinister Hand of the Illuminati out of a bad Tom Hanks picture, we should instead consider it a bumbling clown with sad faced white pancake, a violet polka dot tie and big red shoes. Rather than fear the Fed, we should instead bank coin off its often predictable policy mistakes. Truly, I don’t believe we have any choice but to do so, as the remaining option is to suffer the consequences of those mistakes like the well trained citizens of the Federal Reserve seal-pool within which we’ve all grown up.
There is a road to serfdom, like Friedrich Hayek said, and it’s paved — like the road to Hell — with our own good intentions and public policy mistakes. We need to navigate that road back towards independence — of thought and means — if we are to escape that destination. While we’re at it, let’s make sure we’re well capitalized for the trip, no?
I look forward to discussing this further with you as we explore these and other far less serious themes in the weeks and months ahead. I will leave off my first entry with one more quote from President Jackson, one that almost made my banner but for it’s length. I think it fits our theme, especially if you believe the Fed to be about as independent of our Federal government as your pancreas is from your liver. God bless, and thanks again for your support this week…
“There are no necessary evils in government. Its evils exist only in its abuses.” — Andrew Jackson 7th POTUS
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Welcome Jake.
Thanks, J!
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Bookmarked. Congrats.
Nicely done.
Welcome. Nice post.
Hell yeah. Congrats jake!
Copy of my PG-comment now that things are working here:
Good shit.
First read your title as ‘Enter the New Jakesonians’…the real title is not as cool, but the content is excellent.
Jackson, to me, has been a somewhat forgotten president…my education painted him as a butcher of Indians; turns out there was more to the man than just that!
Napoleon would have out quoted Jackson with ease.
about time you started working.
great post my friend. look foward going back and forth with you on this one.
Okay, thanks fellahs. First substantial post coming up… I think, like my gold posts from last week, it will be timely.
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Jake…looking forward to some really witty posts. Congrats!
Jed
PS…mrkcbill takes dance lessons from Ellen DeGeneres
JakeGint for President!
I knew my vote wasn’t mis-placed.
Great initial post.
Fly– Napolean was a psychotic dictator responsible for the ruin of France.
The pithy comments don’t really overcome all that.
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Chivas! Good to see you’re looking in! Are you back already?
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The tab of Neo ‘randy’ Ayn Randians!
That quote under your name Jake, is that like Samuel Clemens, “And don’t we have half the fools on our side, and isn’t that a big enough majority in any town?”
Congratulations on your tab. Though I don’t agree with many of your ideologies, and I think that your adherence to them insults your big brain, I also believe that ignorance, unlike stupidity, is curable.
Was this done on the Blackberry? (Just kidding)
Nice.
yes i am. what day is the derby next month? will probably be up there.
JakeGint 2012
Jed likes to do lunch at the BK for Burger Shots and a Diet Coke
Goin’ — you get me all wrong. I did the liberal thing, in fact, like you I was quite brain washed by it.
It’s a lot harder to face the opprobrium of the elite academic types who espouse socialism when you travel in my circles.
Why, you might ask, might I make that turn into the wind?
As someone once said: “Facts are stubborn things.”
Good day to you, sir.
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yes i am. what day is the derby next month? will probably be up there.
First Saturday in May every year… you’d better haul arse if you want a hotel room.
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Good inaugural post as a “tabber”. Congrats.
I’m such a dork (and Jackson fan), that I saw that video on the History Channel.
I agree, if you take a diabolical view of the fed, then you start trading like a freedom fighter….it doesn’t work too well.
Jake…btw, do some reading (if you haven’t already) on…
the late Congressman from Texas … Wright Patman.
His battles against the Reserve Bankers and the Fed are legendary…and his Primer On Money (circa 1964) is must reading. imo
Again, GLTY !
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welcome aboard
I agree that treasuries are a great long-term short…but the issue is using Double-short ETFs to play it. Every “round trip” in this puppy costs you performance, especially since you’re using this as a long-term play.
Alf44 — thanks for the suggestion, I will definitely follow up… love the history.
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James — (this may be on the wrong board, but) TBT is not as volatile as most double ETF’s but your point is well taken… we discuss it some in the other post… using options, etc.
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Great post, but I am thinking it might be better to go long guns and farms. If the US implodes it might be difficult to collect on TBT
Congratulations, Jake!
The New Jacksonian Party – sign me up! I’ve been saying for years that we haven’t had a decent President since Jackson left office.
some comments for you, my friend. food for thought. would like your feedback.
1- dirty little secret, volker had the backing of all the powers to be when he took rates to 20%. his choice was not very much different from bernanke today. germany 1920’s vs USA 1930’s. both not acceptable.
2- a lot of people like to blame US monetary policy for part of the problem that we have today. imo, wrong. US monetary policy was handcuffed by 2 important events. 1) the sec decision to allow the increase in leverage for financial institutions from 12-1 to 40-1. this in turn caused the yen carry trade to intensify which in turn caused a premature flatting in the yield curve and a premature inversion of the curve. that was what caused greenspan’s famous cunundrum. this caused the artificial low 10 and 30yr yields relative to short rates at a time the fed was raising rates. they started raising in 2004. this condition applied to most of the world.
3- the 20 yr downturn in long term yields, imo, has been caused by the following,
collapse of the soviet union.
global growth story which added a ton of worldwide
production capacity.
explosion of worldwide productivity. brought about
in part by technology such as internet. that has kept
inflation in check. in fact turning the scales to more
deflation worries.
breaking down of trade barriers and increaded world
trade.
part of number 2 above.
4- our demographics are actually a help going foward. with
the fiscal challenges that we face, we need more savers than consumers.
5- the chinese are very happy campers. they have the best performing investment of the last 10 years, long term treasuries. also, it allows them to revalue their currency at their own pace, which is what they want. the added and most important benefit is of course exporting all their crap to us.
6-TBT although i agree in principle, the reality is that it may be a stagnant position for sometime for two reasons
1) the world is still in the process of deleveraging.
2) there is an artificial bid underneath, fed. and who knows who else.
7- whether you realise it or not, you seem to be making a case for monetary policy to be run by the white house. if so, i am in complete agreement. give the power back to the people. imagine the possibilities.
enough for now. congrats. enjoy this and learn from this new experience. if i know you at all, you have just added a ton of work for yourself.
Good luck, Jake.
-DT
Flux, thanks man — hope to see you around more often. Same goes for DT.
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Chivas — I agree with you on a lot of that, including taking the monetary reigns away from the Fed, although I’m not sure I’d put them with any political entity. Perhaps with an algorythm? Hmmmm…
And there will be a “bid” under TLT until there can be one no longer. I have a feeling we are reaching the end of the string here. I am not as sanguine about the growing problems of China (they will be hurt far worse than us, just as we were hurt as the account positive team during the Depression).
Agree that savings will bail us on this one (because we are account balance negative this time!), but it will be painful as consumption is cut back. Ultimately, it is a “reversion to the mean” that I think will be healthy.
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