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Taleb on QE2 and Risk
Old 11-12-2010, 12:18 PM   #1
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Taleb on QE2 and Risk

Nassim Taleb: The Fed Is Banging On A Ketchup Bottle And It Could All Explode

He says retirees are bearing risks of Q2, to make whole those who profited or gambled on gain.

Ha
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Old 11-12-2010, 12:54 PM   #2
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It is troubling.

But no worries.... they intend to fix the debt problem by reducing the COLA on SS.
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Old 11-12-2010, 01:23 PM   #3
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Wow. Taleb's long on analogies and slogans but very short on any real analysis. It's hard to evaluate a critique of monetary policy that begins and ends with a comparison to pouring ketchup from a bottle. Nowhere did he explain why it should work that way (what's keeping inflation low currently, what will change to make it accelerate, does he even know, does he even care?). The entire interview is like that.

He rides a couple of well worn hobbyhorses throughout, which I'm sure plays well with his targeted audience, regardless of whether they actually happen to be true or not. He talks repeatedly of the Fed printing money as an established fact, but here's a bunch of measures of money creation and inflation from Citigroup economists that beg to differ (look, in particular, at the area in white: M2, MZM, Bank Credit) . . .



And he talks repeatedly of "dollar debasement" as an objective fact, but here is the dollar index since the start of the Fed "money printing" campaign. I'm sure there is a reason we can't see the debasement that Taleb claims with absolute certainty. Maybe it is stuck in the ketchup bottle along with inflation.
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Old 11-12-2010, 04:15 PM   #4
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I agree with G4G. There was nothing substantive in the entire interview. I was particularly turned off by his insulting and dismissive attitude towards individuals that don't see the world the same way through his risk tinted glasses...

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Old 11-12-2010, 04:51 PM   #5
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In his book (Black Swan) he recommended a portfolio very high in treasuries (>80%) and the rest in areas with very high potential. Is he recommending something different or just being critical?
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Old 11-12-2010, 06:17 PM   #6
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In his book (Black Swan) he recommended a portfolio very high in treasuries (>80%) and the rest in areas with very high potential. Is he recommending something different or just being critical?
Even when asked what he would do it was just "get rid of the debt".

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Old 11-12-2010, 08:29 PM   #7
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[QUOTE=Gone4Good;999639]Wow. Taleb's long on analogies and slogans but very short on any real analysis. It's hard to evaluate a critique of monetary policy that begins and ends with a comparison to pouring ketchup from a bottle. Nowhere did he explain why it should work that way (what's keeping inflation low currently, what will change to make it accelerate, does he even know, does he even care?). The entire interview is like that.

QUOTE]

+1

As a side point, we already have inflation in many parts of the world. Australia is experiencing rising inflation (in spite of its strong AUD), China's most recent inflation number was 4.4%, Hong Kong's 3.7% etc. Globally, inflation is not "low". It's showing up noticably in our grocery bills (especially meat and fresh vegetables).
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Old 11-12-2010, 08:50 PM   #8
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Originally Posted by traineeinvestor View Post
As a side point, we already have inflation in many parts of the world. Australia is experiencing rising inflation (in spite of its strong AUD), China's most recent inflation number was 4.4%, Hong Kong's 3.7% etc. Globally, inflation is not "low". It's showing up noticably in our grocery bills (especially meat and fresh vegetables).
It turns out that food inflation isn't that high either. (And I'll let the central banks in China & Australia worry about their inflation problems).

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Old 11-12-2010, 09:05 PM   #9
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Originally Posted by traineeinvestor View Post
As a side point, we already have inflation in many parts of the world. Australia is experiencing rising inflation (in spite of its strong AUD), China's most recent inflation number was 4.4%, Hong Kong's 3.7% etc. Globally, inflation is not "low". It's showing up noticably in our grocery bills (especially meat and fresh vegetables).
Good info. Part of the grocery bill going up could be the cost of oil and because people are using corn and sugar to make fuel.

Also, there is that new term called 'leakage'. Some of the $ the money the US government has spent has found its way outside the USA. The stimulus bill was not allowed to limit spending to US firms.
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Old 11-12-2010, 10:49 PM   #10
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It turns out that food inflation isn't that high either. (And I'll let the central banks in China & Australia worry about their inflation problems).

Get ready though. With increases in many ingredient prices food manufacturers and restaurants are getting ready to pass those on to consumers. Food & wine | Expect higher food prices to take a bite out of your budget | Seattle Times Newspaper

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