Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-14-2016, 01:05 PM   #21
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
Yet another well written piece on outer bounds of negative rates:

http://mishtalk.com/2016/03/13/how-l...aghis-madness/


Sent from my iPad using Early Retirement Forum
__________________

__________________
LARS is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

What happens when you let academics influence the real world...
Old 03-14-2016, 01:35 PM   #22
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
What happens when you let academics influence the real world...

Quote:
Originally Posted by Al in Ohio View Post
I read the article. Why are you bashing academics? Didn't read one thing about policy being set by academics? That policy I'm sure was in fact instituted by those in the "real world". Just like "real world" bankers and brokers push lobbyists to change policy to favor them whether it's a bad policy that could bankrupt our entire nation. Academia has no power or play in monetary policy.


Sent from my iPad using Early Retirement Forum

The Federal Reserve is staffed by Ph.D.'s in Economics. Janet Yellen herself is an academic. Ben Bernanke was an Econ professor at Princeton before Greenspan brought him into the Fed.

Need more? An example. A recent study/paper by two staff economists at the St. Louis Fed addressed the fact that their inflation models predicted, based upon their inputs, that the price of oil would be negative a few years out (i.e. oil companies would pay you to use their oil). Instead of questioning their basic assumptions/model they launched into an esoteric discussion of why their model said what it said.


Sent from my iPad using Early Retirement Forum
__________________

__________________
LARS is offline   Reply With Quote
Old 03-14-2016, 01:40 PM   #23
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,067
Quote:
Originally Posted by LARS View Post
Glad to know that my successful decades on Wall Street as an Investment Banker with a bulge bracket firm left me totally clueless on the ways of Finance, Wall Street and the how the Federal Reserve work. So I will defer to you and no doubt your decades of relevant experience.

That by the way is how you politely call someone an idiot...

Sent from my iPad using Early Retirement Forum
I had to look up "bulge bracket firm". I thought it might refer to something else:

From Wikipedia:

"The bulge bracket comprises the world's largest and most profitable multi-national investment banks[1] whose investment banking clients are usually large corporations, institutions, and governments...

The name comes from the way investment banks are listed on the "tombstone", or public notification of a financial transaction or deal. The bank responsible for control of allocation of securities to investors, known as the bookrunning manager is listed above the others and on the cover of the prospectus. The font size of the name of this bank, or banks if there are co-bookrunning managers, is larger and it may "bulge" out."

note: last sentence highlighted by "Bulge Bracket" redduck
all other highlights were done by Wikipedia
__________________
Carpe cōleī
redduck is online now   Reply With Quote
What happens when you let academics influence the real world...
Old 03-14-2016, 01:42 PM   #24
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
What happens when you let academics influence the real world...

Quote:
Originally Posted by redduck View Post
I had to look up "bulge bracket firm". I thought it might refer to something else:

From Wikipedia:

"The bulge bracket comprises the world's largest and most profitable multi-national investment banks[1] whose investment banking clients are usually large corporations, institutions, and governments...

The name comes from the way investment banks are listed on the "tombstone", or public notification of a financial transaction or deal. The bank responsible for control of allocation of securities to investors, known as the bookrunning manager is listed above the others and on the cover of the prospectus. The font size of the name of this bank, or banks if there are co-bookrunning managers, is larger and it may "bulge" out."

note: last sentence highlighted by "Bulge Bracket" redduck
all other highlights were done by Wikipedia

I wish. I could've had an equally lucrative career in the movies, which would've been more fun... ;-)


Sent from my iPad using Early Retirement Forum
__________________
LARS is offline   Reply With Quote
Old 03-14-2016, 01:42 PM   #25
Full time employment: Posting here.
CaliforniaMan's Avatar
 
Join Date: Dec 2013
Location: San Diego
Posts: 847
Quote:
Originally Posted by LARS View Post
The Federal Reserve is staffed by Ph.D.'s in Economics. Janet Yellen herself is an academic. Ben Bernanke was an Econ professor at Princeton before Greenspan brought him into the Fed.

Need more? An example. A recent study/paper by two staff economists at the St. Louis Fed addressed the fact that their inflation models predicted, based upon their inputs, that the price of oil would be negative a few years out (i.e. oil companies would pay you to use their oil). Instead of questioning their basic assumptions/model they launched into an esoteric discussion of why their model said what it said.


Sent from my iPad using Early Retirement Forum
Isn't that the same thing?
__________________
Merrily, merrily, merrily, merrily,
Life is but a dream.
CaliforniaMan is offline   Reply With Quote
Old 03-14-2016, 02:37 PM   #26
Full time employment: Posting here.
 
Join Date: Apr 2014
Location: Houston
Posts: 639
Quote:
Originally Posted by CaliforniaMan View Post
Isn't that the same thing?
Maybe just a difference of how we use words, but I wouldn't think that is the same thing. At least it didn't mean the same thing to me in my job and the models I made. When I made models that didn't seem to result in reasonable results as I understood the "real world", my first step was to start over and challenge the whole basis of my model. Only if I couldn't find anything wrong there would I spend the time to explore all the ins and outs of why the model got various results. Maybe something different to the folks that predicted negative oil prices....don't know.
__________________
Whisper66 is offline   Reply With Quote
Old 03-14-2016, 05:10 PM   #27
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
For those with too much time on their hands, apparently like me, here is a link to the paper I referenced.

https://www.stlouisfed.org/on-the-ec..._campaign=2542


Sent from my iPad using Early Retirement Forum
__________________
LARS is offline   Reply With Quote
Old 03-14-2016, 05:48 PM   #28
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,067
Quote:
Originally Posted by LARS View Post
I wish. I could've had an equally lucrative career in the movies, which would've been more fun... ;-)


Sent from my iPad using Early Retirement Forum
Not your fault. This often happens when one doesn't receive proper occupational guidance. Who knows, you still might be happily working if you had chosen a career in the movies.

And, there's no chance that you would be reading this now (see directly below).

Quote:
Originally Posted by LARS View Post
For those with too much time on their hands, apparently like me, here is a link to the paper I referenced.

https://www.stlouisfed.org/on-the-ec..._campaign=2542
Lars, Lars, Lars, ah, what might have been...
__________________
Carpe cōleī
redduck is online now   Reply With Quote
Old 03-14-2016, 06:28 PM   #29
Recycles dryer sheets
 
Join Date: Aug 2015
Posts: 340
Current monetary policies were clearly described by Jim Rickards in his best selling book "Currency Wars" in 2012.
http://www.amazon.com/Currency-Wars-...=currency+wars
It is hard not to notice that all major economies Central Banks are involved in it (ECB, Japan, China and US at least till last December). Unfortunately above mentioned Central Banks do not have any other solution but "Easing". Where in the End you think it is going to lead to?
__________________
VFK57 is offline   Reply With Quote
Old 03-14-2016, 06:41 PM   #30
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
Quote:
Originally Posted by redduck View Post
Not your fault. This often happens when one doesn't receive proper occupational guidance. Who knows, you still might be happily working if you had chosen a career in the movies.

And, there's no chance that you would be reading this now (see directly below).



Lars, Lars, Lars, ah, what might have been...
Clearly all traces back to a misspent youth studying...
__________________
LARS is offline   Reply With Quote
Old 03-14-2016, 06:45 PM   #31
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
[QUOTE=VFK57;1708436]Current monetary policies were clearly described by Jim Rickards in his best selling book "Currency Wars" in 2012.
Currency Wars: The Making of the Next Global Crisis: James Rickards: 9781591845560: Amazon.com: Books
It is hard not to notice that all major economies Central Banks are involved in it (ECB, Japan, China and US at least till last December). Unfortunately above mentioned Central Banks do not have any other solution but "Easing". Where in the End you think it is going to lead to?



Central Banks, at least those pursuing NIRP for the moment, seem hell bent to ride this policy train to its conclusion. And as always as you barrel down a dark tunnel you have to ask yourself is that faint light you see coming at you daylight or another train heading your way?

I fervently hope the US Central Bank is smart enough to continue to take the spur it has started to follow (lifting rates) and avoids the temptation to veer back onto the main track of NIRP. IMHO nothing good will come of it.

As recent commentary is emerging, the good news is that the insanity of NIRP indeed may have real world practicable boundaries that will keep it in check. One can only hope so
__________________
LARS is offline   Reply With Quote
Old 03-14-2016, 06:50 PM   #32
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,708
Quote:
Originally Posted by redduck View Post
Who knows, you still might be happily working if you had chosen a career in the movies.

Lars, Lars, Lars, ah, what might have been...
Or a highly satisfying career as a Hollywood parking valet.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 03-14-2016, 07:16 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by marko View Post
Or a highly satisfying career as a Hollywood parking valet.
Even so he'd get to park the occasional Ferrari. Everything is more grand in LA!

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 03-14-2016, 07:26 PM   #34
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,067
Quote:
Originally Posted by haha View Post
Even so he'd get to park the occasional Ferrari. Everything is more grand in LA!

Ha
Those Ferrari guys, they don't tip as well as you might think.
__________________
Carpe cōleī
redduck is online now   Reply With Quote
Old 03-14-2016, 07:48 PM   #35
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,067
Quote:
Originally Posted by marko View Post
Or a highly satisfying career as a Hollywood parking valet.
Uh, a little too close to home . You try parking cars when you're 70. Those private parties are killers--running up and down the street retrieving cars for people.
p.s. turns out that Lars is a pretty good tipper
__________________
Carpe cōleī
redduck is online now   Reply With Quote
Old 03-14-2016, 07:59 PM   #36
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
Quote:
Originally Posted by redduck View Post
Those Ferrari guys, they don't tip as well as you might think.
One of the side perks of my misspent youth on Wall Street is I owned my first Ferrari when I was 29.

And if we plunge down the rabbit hole of negative interest rates I may be buying more in my old age. Not such a bad side affect of NIRP now that I think about it...
__________________
LARS is offline   Reply With Quote
Old 03-15-2016, 02:46 PM   #37
Recycles dryer sheets
 
Join Date: Aug 2015
Posts: 340
Yet another warning from a prominent man in Finances
Mohamed El-Erian: We've reached the end of the road - Business Insider
__________________
VFK57 is offline   Reply With Quote
Old 03-15-2016, 04:08 PM   #38
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Welcome to a biased chaotic system.

You're traveling through another dimension -- a dimension not only of money and monetary flow but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's a signpost up ahead: your next stop: the Bifurcation Point!
__________________
M Paquette is offline   Reply With Quote
Old 03-15-2016, 04:16 PM   #39
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
Quote:
Originally Posted by M Paquette View Post
Welcome to a biased chaotic system.

You're traveling through another dimension -- a dimension not only of money and monetary flow but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's a signpost up ahead: your next stop: the Bifurcation Point!

I am sorry, but are you talking about monetary policy or the presidential election? (Mods feel free to interpret this as veering off into Porkyland and shut the thread down...)


Sent from my iPad using Early Retirement Forum
__________________
LARS is offline   Reply With Quote
What happens when you let academics influence the real world...
Old 03-18-2016, 12:20 PM   #40
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
What happens when you let academics influence the real world...

Quote:
Originally Posted by LARS View Post
I am sorry, but are you talking about monetary policy or the presidential election? (Mods feel free to interpret this as veering off into Porkyland and shut the thread down...)


Sent from my iPad using Early Retirement Forum

Eh? Nothing to do with elections in an individual country.

Economic systems tend to be mathematically chaotic systems. We can apply pressure on a system to try and steer it a bit, but often the chaotic 'noise' overwhelms the steering pressure that poking a single variable (e.g. Overnight interest rate) can have. A sudden loss of confidence in a market (Tulip Mania crash) or a misstep in fiscal policy (e.g. "Austerity economics" in Europe recently) can have a much larger effect than tinkering with a handful of variables available to a central bank.

Monetary policy is just one tool, and not a particularly powerful one. It is often compared to "pushing on a string" in terms of effectiveness.

You can google "chaotic systems" and "bifurcation point" for more information on those terms.

Sent from my iPad using Early Retirement Forum
__________________

__________________
M Paquette is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Poll:What influence has E-R.org had on your ability to retire early? Lisa99 Life after FIRE 71 03-30-2013 08:39 AM
Factors that influence your annuity rate of return? skyvue FIRE and Money 3 02-03-2010 03:52 PM
What happens if the unthinkable happens? newporttony FIRE and Money 79 03-09-2009 09:31 AM
How does demand for derivatives influence the physical commodity price? soupcxan FIRE and Money 19 07-04-2008 07:44 PM
longevity: influence the outcome perinova Health and Early Retirement 3 12-06-2006 10:13 PM

 

 
All times are GMT -6. The time now is 12:31 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.