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Thread: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

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    Default Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen





    ďESTRAGON: I can't go on like this.

    VLADIMIR: That's what you think.Ē

    ― Samuel Beckett, Waiting for Godot




    Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation




    • Asset Price Inflation as a tool of monetary policy
    • Rate hikes to end soon
    • New large-scale asset purchases in the future
    • Crash and recession delayed



    Yes, it's getting to be that time in the cycle. After a long hiatus we are re-launching iTulip.com to track the final innings of the current asset price bubbles, and the period after.



    iTulip was originally launched in November 1998 to track the tech stock bubble,identified that peak in April 2000 and forecast an 50% NASDAQ correction followed by recession. iTulip re-launched in March 2005 to track the housing mortgage bubble, identified a peak in December 2007, and forecast a 40% SP500 decline followed by a 2-year recession.



    This is the first iTulip update on the current state of the markets and economy since January 2014. This analysis identifies a number of reasons why the current expansion, already the longest in US history, may continue in a fashion for some time. This follows from the previous update January 2014 that forecast continued expansion at a time when crash forecasts from reputable sources were legion. Nearly four years later we have an even better handle on why this expansion and asset price inflation period has continued long past its sell-by date.



    Backdrop



    Recent market volatility has brought out the usual rash of warnings of an imminent crisis, playing on investor anxiety. Market crash forecasts have been a staple of the financial press since the 2008 crash. Following that traumatic time investor anxiety levels have reached a permanently high plateau and markets have been climbing a wall of worry every since.



    Another Market Crash in 2011?

    - Dan Dorfman, Huffington Post



    Wave Theory Predicts A Stock Market Crash In 2012

    - Gregor Hovat, Business Insider



    THE NEXT STOCK MARKET CRASH 2013: Why Many Pros Think It Has Already Begun

    - Sam Ro, Business Insider



    Has the Stock Market Crash of 2014 Begun?

    - Alex Dumortier, Motley Fool



    Stock Market Crash 2015: The Dow Has Already Plummeted 2200 Points From The Peak

    - Michael T. Snyder, Seeking Alpha



    Opinion: Stock-market crash of 2016: The countdown begins

    - Paul B. Farrell, Marketwatch



    80% Stock Market Crash To Strike in 2017, Economist Warns

    - Jeff L. Yastine, Banyan Hill



    A Stock Market Crash In 2018

    -Taki Tsaklanos, Investing Haven



    Worries about a crash and new crisis are understandable. A total of 113 months have passed since the last recession, nearly as long as the most extended period between recessions in US history when 120 months passed between the end of the 1991 recession and start of the 2001 recession. The perception that ďweíre overdueĒ is valid from an historical perspective.








    Long-term interest rates and recessions since 1860. Today the economy is experiencing the longest expansion in US history. Note that

    counter-cyclical policy has succeeded at reducing the frequently and length of recessions relative to the period preceding.




    Further fueling investor angst is the sense that price levels across many asset classes are growing to increasingly alarming and distorted proportions, including housing, ETFs, stocks, and bonds; debt taken on over the period is unsustainable and in some cases quite perverse, notably student debt.








    Underlying these asset price inflations is artificially low interest rates and excess liquidity created by large-scale asset purchases (LSAP) by the Fed intended to keep the U.S. economy from falling into a liquidity trap, a condition of an economy in a low interest rate environment that makes Fed rate policy ineffective to increase liquidity. US policy makers are determined to avoid a liquidity trap at all costs. The cost that was incurred to avoid a liquidity trap following the 2008 crisis are the side-effects of the elimination of a market rate of interest across the yield curve.



    Starting from the condition of credit, property, and equity markets inflated for a decade by an extended period of artificially low interest rates and Fed asset purchases, this analysis points to a near-term pause in rate hikes or a resurgence of Asset Price Inflation to the Asset Price Inflation growth rate established in 2015, or possibly both. In that case, the cheap credit fueled economic expansion that began in mid-2009 at the end of The Great Recession will continue, albeit at a slower rate. Going forward from this analysis, we will track our API Index and other indicators to confirm or modify the forecast.



    Before diving into the analysis, a few definitions and a brief iTulip review for the benefit of new readers before picking up where we left off January 2014.



    Definitions:

    Asset Price Inflation used as a verb refers to the process of financial asset prices rising due to non-market pricing inputs.
    Asset Price Inflation used as a noun refers to the condition of asset prices inflated by non-market pricing inputs.

    Passive Asset Price Inflation is Asset Price Inflation that results as a side-effect of monetary polices like low interest rates intended to meet macro-economic objectives, specifically stimulating the economy out of recession. The tech stock and mortgage credit bubbles were passive asset price inflations.
    Active Asset Price Inflation is Asset Price Inflation that is produced intentionally by the Fed via Large-Scale Asset Purchases to meet financial market objectives. Large-scale asset purchases (LSAP) from 2013 - 2015 appears to be the first active Asset Price Inflation.




    iTulip Review



    Exactly two iTulip.com market peak, crash, and recession forecasts have been made since iTulip site launch in 1998, the first in April 2000 at the peak of the Tech Stocks Bubble and the second in December 2007 at the peak of the Mortgage Credit Bubble. The last update January 2014 noted a top a year into a two-year Asset Price Inflation over the course of that year.



    The first two asset bubble peaks in 2000 and 2007 were identified here as harbingers of a market crash followed by recession, the first in technology stocks and the second in credit markets generally, led by mortgage credit. The third peak identified in 2014, however, noted that Asset Price Inflation peak as a pause in a long-term Asset Price Inflation process, with reflation of asset prices propelling renewed market growth in 2015 and beyond.



    iTulip has successfully identified two Asset Price Inflation peaks with no false negatives since 1998 when the site was launched. The analysis is based on an understanding of the inherent contradiction of the objectives of the Fedís counter-cyclical macro-economic policy framework and the asset bubbles that result as a side-effect of policy: counter-cyclical economic stimulus at the beginning of an economic cycle after a recession reflates the macro-economy, while counter-cyclical inflation mitigation collapses the asset bubbles that formed in parallel with economic growth over the expansion period, which asset bubbles are an integral part of the expansion via positive wealth effects and excess liquidity. Counter-cyclical policy applied to manage wage price inflation at the end of a cycle
    in the absence of asset bubbles may produce a "soft landing" for the economy as intended, to allow the expansion to continue without exceeding inflation targets. However, in the presence of asset bubbles the result consistently in the past two cycles has been to collapse the asset bubbles that were present at the end of the cycle, precipitating a hard landing when asset bubbles collapsed in response to tightening measures. A new policy framework that combines late cycle counter-cyclical policy to manage wage price inflation and application of active Asset Price Inflation via large-scale asset purchases to prevent sudden asset price deflation may explain the duration of the current expansion and also presage a continuation of it.



    The Fed's Counter-Cyclical Policy Framework







    Referring to the Asset Price Inflation Peak major indicators chart above, to simplify the explanation of the method used to make the previous two crash and recession forecasts we focus on six of 23 used:



    1. CPI Ė Consumer price inflation measure used among others in policy decisions.

    2. Fed Funds Rate Ė Measure of effectiveness of Fed manipulation of interest rates.

    3. Oil price Ė Primary future inflation expectations input for both consumers and producers.

    4. 10-Year Treasury Rate Ė Global interest rate ďsea levelĒ that previously grounded global markets in economic reality.

    5. Civilian Unemployment Rate Ė One of many labor market measures used in policy decisions.

    6. Consumer Confidence Ė Lagging indicator of consumer confidence in the economy used in policy decisions.



    Since The Great Inflation of the 1970s, the Fed has sought to prevent a recurrence of a wage-price spiral. There are several ways to end a wage-price inflation spiral once established. The means that the Volker Fed chose was to lower the availability of credit to induce enough unemployment to both lower labor pricing power and demand across the economy, inducing producers to lower prices to meet lower demand and wage rates in response to weaker labor markets.



    Counter-cyclical policy applied since the 1980s is intended to head off a wage-price inflation process and produce a soft landing for the economy at the end of an economic cycle. Operating within this policy framework, the Fed is especially sensitive to rising employment costs at the end of the cycle because, according to this formula, it is through wages that the transmission of price signals back into all-goods prices hap ends, and where a wage-price spiral needs to be cut short. However,
    Asset Price Inflation that creates asset bubbles, initially as an unintended consequence of stimulus applied to reflate the economy following recession, appeared immediately after the first implementation of counter-cyclical policy at the end of the Volker era and complicated execution on the anti-inflation prescription. As explained in The repetition compulsion of central bankers in 2010, each time a post-1980s styled tightening program was executed in the presence of an asset bubble that developed as a side effect of reflation policy it precipitated a market crash and recession. This cycle has repeated twice since iTulip was established in 1998 and is on the verge of being repeated again, albeit with a major modifier.



    Referring back to the Asset Price Inflation Peaks chart, today all the antecedents of the past two such events are present in extremis. But as in the case of my warning in 2014, there are two reasons to expect that this cycle will continue to be unlike the previous two: 1) today the Fed still lacks the tools to manage a major recession without resorting to cures that are worse than the disease and will seek to avoid a crash-induced recession until such time that the fall-out is manageable, and 2) I argue here that the Fed has the means to at least forestall an untimely crash, perhaps indefinitely, and has used it in the past, which explains the unusual durability of both the expansion and the length of financial market performance.



    To understand why this asset price inflation period is unlike the previous two covered by iTulip since 1998 we review major new developments in the policy framework.




    Weíre Not in Kansas Anymore



    [Fed Chairman] Greenspan assured the congressional Joint Economic Committee that even with the Fedís key economic policy lever, the federal funds rate, at a 41-year low of 1.25 percent, the central bank has other resources to influence interest rates to jump-start economic growth. He said that in addition to pushing the funds rate, the interest that banks charge each other on overnight loans, closer to zero, the Fed can simply begin buying longer-term Treasury securities to drive longer-term interest rates lower.


    óAssociated Press Newswires, May 21, 2003


    Philosophically the Fed decided years before the Great Recession that price fixing of long-term government bonds was justifiable as a means to an end, to prevent a debt deflation and the recurrence of a 1930s style deflationary depression.



    The result of the application of long-bond price fixing is a global economy cut loose from its moorings, operating for the first time in history without a market rate of interest that can be confirmed by market participants at any point in time. One cannot apply pre-2008 market forecasting methods in this new environment. Forecasts need to take into account the implications of fundamental changes both in the structure of financial markets that result from these changes, and more importantly in Fed policy imperatives that follow logically from them. These explain the longer than usual duration and of the current expansion and inform the expectation that the expansion may continue for some time as these methods continue to be applied. Note that we make no ideological or other judgements on these developments. We're in the "what's going to happen" not the "what should happen" business.



    My 2014 asset price re-inflation forecast was predicated on the notion that
    Asset Price Inflation is applied with other stimulus measures, such as fiscal stimulus, for the purpose of stimulating economic growth by inflating asset prices. From that notion it follows that active measures to prevent runaway asset price deflation Ė aka a market crashes Ė will be pursued via active Asset Price Inflation measures at times when a market crash is likely to cause a macro-economic crisis that cannot be effectively managed with policy tools available at the time under existing market and economic conditions.



    My argument in 2014 for a continuation of Asset Price Inflation versus a 2015 crash was that the Fed had been motivated to employ active Asset Price Inflation because the alternative was to subject the economy to a recession when effective reflation policy tools were unavailable. The two main tools are short-term interest rate cuts and fiscal stimulus.



    1) Historically ultra-low short term rates, 0.07% at the time.








    2) High levels of Federal debt at 109% of GDP then as compared to 61% before the Great Recession.







    Taken together it was apparent then that the tools needed to effectively manage a major recession precipitated by a market crash were not available in 2014. Given that the Fed can and has intentionally inflated asset prices to meet both short-term and long-term policy objectives, I concluded that the Fed induced Asset Price Inflation in 2013-2015 to prevent a crash.







    Asset Price Inflation applied throughout 2014 carried markets upward until recently.



    History of Asset Price Inflation and Fed Policy



    Active Asset Price Inflation has evolved into a tool of economic policy since iTulip launched in 1998 but it did not start out that way.



    The first passive Asset Price Inflation episode occurred in the 1990s during the Greenspan Fed era, when the macro-economic benefits of Asset Price Inflation as a side effect of monetary policy were pronounced. Greenspan reveled in the popularity that the tech stock bubble produced for the booming economy and was genuinely surprised when the collapse of the tech stock bubble delivered a recession via negative wealth effects on his watch. A man of contradictions, in public when asked about the existence of a bubble, even as late as early 2000 before the crash, he asserted that no bubble existed. Yet the record of Fed meeting minutes released ten years later quote him as stating in 1994, ďWhen we moved on February 4th, I think our expectation was that we would prick the bubble in the equity markets."



    It is possible that privately he knew how effective passive Asset Price Inflation is as a tool of economic stimulus, delivering economic growth without fueling consumer price inflation, but neither he nor any Fed official has ever suggested in public that Asset Price Inflation is pursued actively as policy.



    I first noted passive Asset Price Inflation as a feature of economic policy 13 years ago in an article written for AlwaysOn Network in March 2005: The Bubble Cycle is Replacing the Business Cycle. Updated versions of that concept are available today at sites like TheBubbleBubble.com.



    I believe active Asset Price Inflation is an integral albeit unstated tool of policy. I posed the question to Yellen in a conversation I had with her in June 2012 at a Boston Economics Club meeting in a one-on-one conversation that followed her public speech and Q&A. That was a month after publication of Carlo Rosa's paper "How 'Unconventional' Are Large-Scale Asset Purchases?, The Impact of Monetary Policy on Asset Prices" (footnote, below). In Part II we review circumstantial evidence and review an API Index akin to the CPI developed to track the level of and changes in Asset Price Inflation.



    Four years have passed since the last iTulip update when I expected the Fed to continue to deploy LSAP to prevent a crash and extend the expansion in order to prevent the still fragile economy from experiencing a major market event. Today as financial markets and the economy are beginning to react visibly to counter-cyclical policy applied since 2016 in the presence of extreme asset valuations. The question arises: Is the economy in a better place to weather a crisis than it was in January 2014, the time of our last update?




    Can The US Afford a Recession Today?



    The assertion that interest rates are still too low to provide significant stimulus in a near term future recession is clear. A minimum of 5% in short-term interest rate reductions over two years or more was needed to stimulate the economy out of recession during the past two recessions, and the next recession is likely to be considerably more severe than the last one, given accumulated imbalances.







    Using the current 2.29% 6-month rate as a starting point, if stimulus from interest rate reductions during the 2001 recession was applied Nov. 2000 when the Fed began to cut interest rates to stimulate the economy out of the 2001 recession, by May 2001 interest rates are zero, one month into the recession. For the 2008 Ė 2009 recession, the run from 2.29% to zero is also about one month from recession onset, leaving the Fed out of rate cut ammo after nine months that in the event was needed for 50 months in total to help reflate the economy.



    Lacking short-term interest rates as a meaningful tool for economic stimulus if a recession occurs in the near term leaves fiscal stimulus as the primary tool available. However, both Greenspan and Yellen have recently issued public warnings about the Federal government balance sheet as it is. In Part II we review the implications of potentially growing Federal government debt significantly beyond the 109% of GDP level it is at today, up from 62% before the 2008 crisis. In short, if the Fed as I assert has the means to extend Asset Price Inflation the motivation to do so is there today. The alternative is an economic reflation challenge that policy makers are not in a position to meet at this time.




    Conclusion



    If we accept the notion that the Fed has in active Asset Price Inflation the opportunity to avoid a macro-economic crisis precipitated by a market crash and deployed it previously, from 2013 to 2015, and can by application of active Asset Price Inflation continue the already lengthy expansion without interfering with counter-cyclical policy objectives, we are still left with the question: How long can this go on?



    Longer than you think.



    The duration of the current expansion can be explained by the integration of active Asset Price Inflation into the Fedís counter-cyclical policy framework to resolve the inherent conflict between the execution of counter-cyclical monetary policy and the fact of Asset Price Inflation as an inevitable result of post recession stimulus measures. Further, market crashes when these present major macro-economic risks can be avoided by application of Asset Price Inflation by intention. If this formulation is correct, we can expect the Fed to end rate hikes shortly or begin a new LSAP program, or possibly both, if ending rate hikes in and of itself is not sufficiently simulative to financial markets to prevent a crash that could lead to an new unmanageable economic crisis. We model this in a Best Case Scenario model discussed in Part II.



    Alternatively, if this formulation is incorrect and counter-cyclical Fed policy continues unabated, with additional rate hikes in December and beyond, and perhaps even if not, sans active Asset Price Inflation a Worst Case Scenario is possible.



    In Part II we examine Best Case and Worst Case scenarios. The coming weeks and months will be crucial. We will watch our API index and other indicators closely.

    __________________________________________________ _______________________







    Economic Crisis Avoidance Deus ex Machina - Part II: Inside the Machine




    • How Active Asset Price Inflation Works
    • Will the Fed Continue Counter-Cyclical Policy Until the Todayís Asset Bubbles Pop?
    • Best Case and Worst Case Scenarios
    • Tracking Asset Price Inflation and crash risk going forward





    Asset Price Inflation delivers economic stimulus without producing wage inflation or boosting the CPI. As a stimulus tool Asset Price Inflation is nirvana for central bankers, resulting extremes of wealth distribution aside. The duration of the current expansion can be explained by the integration of active Asset Price Inflation into the Fedís counter-cyclical policy framework to resolve the inherent conflict between the execution of counter-cyclical monetary policy at the end of of any economic cycle to prevent "overheating" and rising wage and all-goods inflation and the effect of the same policy on financial markets that were inflated by the previous round of post-recession stimulus measures over the duration of the expansion.



    What if Asset Price Inflation can be applied actively through large scale asset purchases (LDAP) to stimulate financial markets to prevent asset prices from sudden declines while at the same time interest rates are cut to affect wage rates and all-goods inflation to target levels? In theory an economy could be operated this way for quite a long time, with "good inflation" in assets maintained or rising and "bad inflation" in wages and CPI kept in check.



    Next we look for evidence of active Asset Price Inflation has been applied in the past and perhaps helps explain the durability of the current expansion and financial market performance. We model a Best Case scenario that has the Fed halting rate hikes at or near the current wage cost level and the includes application of active Asset Price Inflation in the near future to support financial markets or and a Worst Case scenario that models continued rate hikes and no active Asset Price Inflation.



    If you are already an iTulip Select subscriber, click here for Part II.




    To subscribe, please review the two options, below.



    __________________________________________________ __________________________________________________ _______________

    This article is the re-launch of iTulip to track developments leading up to the next major market event, as from November 1998 to April 2000 and again June 2006 to December 2007, depends on the response.



    Today I'm occupied with running a virtual reality technology company based on an idea that I have had since the early 1980s, to use VR to bring the outdoors indoors to give millions of consumers an exciting new way to get the cardio they need, and discussed here on the iTulip forums starting in December 2013. I was encouraged by iTulip members to launch a company to execute on this idea a year later.



    The timing was propitious both with respect to VR market development and my projection at the time for the economic expansion and asset price inflation to continue for some years by virtue of new tools of economic and market management that were put in place by policy makers after the 2008 crisis. The prospect of delivering monotonous and repetitive descriptions to readers here on the workings of this new system for years on end while the expansion went on and on was unappealing, while the prospect of building an exciting new technology company that can change the world was exciting. Since then my co-founder and I have built an amazing VR technology company VirZOOM that leads the VR Fitness space.



    A re-launch of iTulip to cover the period ahead is a major time commitment. As a practical matter we need to conclude a crowd funding campaign on WeFunder. To that end, we are offering iTulip Select subscriptions as a perk to VirZOOM WeFunder investors. Not only do you get an iTulip Select subscription, you'll own a security Note called a SAFE in VirZOOM, too.



    iTulip Select Perks Offering -

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    Click here ->
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    To subscribe directly click: iTulip Select: The Investment Thesis for the Next Cycleô

    _________________________________________________

    Footnotes:

    Using a Long-Term Interest Rate as the Monetary Policy Instrument

    FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES - December 2004



    Federal Reserve Bank of New York Staff Reports

    How ďUnconventionalĒ Are Large-Scale Asset Purchases?

    The Impact of Monetary Policy on Asset Prices

    Carlo Rosa, Staff Report No. 560 May 2012



    The Liquidity Trap: An Alternative Explanation for Today's Low Inflation

    Maria A. Arias , Yi Wen

    Federal Reserve Bank of St. Louis



    The Risk of Yield Curve Inversionóand How to Avoid It


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    Last edited by FRED; 02-22-19 at 06:16 PM.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    1.
    neither he nor any Fed official has ever suggested in public that Asset Price Inflation is pursued actively as policy.

    isn't this "the wealth effect" which has indeed been discussed as the mechanism by which qe stimulates the economy?

    2. as i said in the thread about the itulip reboot ej announced on twitter, LSAP is following in the footsteps of the boj. qe was one form of lsap. the boj started buying etf's to support the japanese stock market in oct 2010. we have been following roughly 10 years behind japan since the 2000 u.s. equity peak followed the 1990 peak of the japanese market. maybe we should start a pool on when the fed starts directly supporting the stock market. as i posted in that other thread, bernanke outlined how the fed could do so without technically violating the legal limits on its operations.

    otoh the fed may not need to support equities directly. the way the deficit is rising even during these so-called "boom" times means there will be plenty of treasury paper to buy to pump money into the system. modern monetary theory is enjoying newfound respectability.

    3. a big problem with asset price inflation is that virtually all the benefits go the holders of assets, a small minority of the population. this has led to the growing inequality in the u.s., with serious and still evolving political consequences.
    Last edited by jk; 11-28-18 at 11:24 PM.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Glad to see iTulip is back! Just invested $1000 in VirZOOM.

    How do I go about claiming iTulip Select Perks?

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by geodrome View Post
    Glad to see iTulip is back! Just invested $1000 in VirZOOM.

    How do I go about claiming iTulip Select Perks?
    Thanks for investing in VirZOOM.
    Please PM "FRED" with your full name that was signed up at Wefunder.com/ VirZOOM.
    We will grant you full access to "iTulip Select" and "VirZOOM" forums.
    Ed.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    It seems you've done away with the monthly subscription. I do hope you reconsider that decision for those who choose not to invest and like the flexibility the monthly subscription provided.

    Nevertheless, all the best to EJ and the new, new iTulip .

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by Woodsman View Post
    It seems you've done away with the monthly subscription. I do hope you reconsider that decision for those who choose not to invest and like the flexibility the monthly subscription provided.

    Nevertheless, all the best to EJ and the new, new iTulip .
    Hello, Woodsman. We added back 3-month and 6-month subscriptions. Does that help?
    Ed.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by FRED View Post
    Hello, Woodsman. We added back 3-month and 6-month subscriptions. Does that help?
    Grateful for your quick response and I was referring to the 1 month subscriptions.

    FWIW, since my first encounter with "Columbia House Records" back in the day, I've been put off to the subscription model. I don't mind paying for the flexibility to roll on and off.


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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by Woodsman View Post
    FWIW, since my first encounter with "Columbia House Records" back in the day, I've been put off to the subscription model. I don't mind paying for the flexibility to roll on and off.
    I think much of the economy is ultimately headed in that direction.

    Google & Facebook ate the pie when it comes to ad-based businesses.

    And one-off sales of information products or services leaves one in a boom and bust model of always having to sell or repackage things with a new name once sales trickle off.

    As a person who once ran a membership site, the goal of running such a site (beyond writing to force oneself to better construct one's thoughts, improve one's mental models & get feedback that improves one's thinking while challenging any flaws in it) is hopefully to be priced to where churn is minimal & those who value it keep an active subscription. Back when I ran a membership site if a person regularly jumped in, asked a super detailed question, got multiple hours worth of responses & then asked for a partial refund for the rest of the month beyond that first day they would end up getting their refund, but they'd typically find it harder to subscribe in the future. Not saying you are doing that (I like the stuff you write here & find it interesting), but that stuff was brutal to be on the receiving end of.

    I think there was a big nuanced message EJ made when he did the start up in it being a statement he thought the economy had a long way to run before there being a recession. Perhaps he even stated so more explicitly, though the yearly crash headlines he mentioned above really do capture this:
    Recent market volatility has brought out the usual rash of warnings of an imminent crisis, playing on investor anxiety. Market crash forecasts have been a staple of the financial press since the 2008 crash. Following that traumatic time investor anxiety levels have reached a permanently high plateau and markets have been climbing a wall of worry every since.
    Glad to have EJ back at the helm analyzing the Rube Goldberg economy

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    i just got the joke in the "permanently high plateau." irving fisher famously said the stock market had attained "a permanently high plateau" just before it crashed in 1929.

    a permanently high plateau in anxiety seems both more a propos and more reliable a description of our world than such a plateau in stock prices.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    typo on "student loan" chart. last text bubble should be 2017.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    So a $1k investment in VirZOOM will translate to 5 year subscription? please clarify.

    Thanks

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by evangellydonut View Post
    So a $1k investment in VirZOOM will translate to 5 year subscription? please clarify.

    Thanks
    Yes, if you make a $1K investment in VirZOOM via WeFunder you receive a $1K SAFE Note and a 5-year iTulip subscription.
    Ed.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by FRED View Post
    Yes, if you make a $1K investment in VirZOOM via WeFunder you receive a $1K SAFE Note and a 5-year iTulip subscription.
    Invested. Looking forward to EJ's missives for another 5 years.
    "...the western financial system has already failed. The failure has just not yet been realized, while the system remains confident that it is still alive." Jesse

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Invested as well.

    Having started at the base level, I've tripled my investment commitment after further research and evaluation of the opportunity and it's potential.

    Very much looking forward to the interactions with EJ and a rejuvenated iTulip community!

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    the fed will print by buying treasuries to support expansive fiscal policy financed by huge and growing deficits. the federal gov't will spend the money into existence via social security checks, medicare and medicaid payments, defense contracts, interest payments on previously issued debt.

    see for reference the past 10 years at the boj. we are 10 years behind japan but very much on the same trajectory.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by jk View Post
    the fed will print by buying treasuries to support expansive fiscal policy financed by huge and growing deficits. the federal gov't will spend the money into existence via social security checks, medicare and medicaid payments, defense contracts, interest payments on previously issued debt.

    see for reference the past 10 years at the boj. we are 10 years behind japan but very much on the same trajectory.
    You don't seem to understand what the "national debt" is. This is a typical libertarian misunderstanding. You believe the United States - the most powerful nation in the history of mankind - needs to borrow money that only it has the exclusive right to create. You believe the United States operates like your household, and if expenses exceed your income, it's time to bring out the credit card.

    That is incorrect. National Debt is how we account for foreign exchange reserves. The United States of America has an enormous debt because for a generation, the vast majority of foreign exchanges have been settled in United States Dollars. National debt is primarily held by foreign central banks or international commercial banks that facilitate "globalism".

    There will indeed be monetary expansion, but you are incorrect about the spending. As I mentioned in another post, Eric Janszen is right. Infrastructure spending will be the preferred method, but national debt will in time be exchange with Bancors. The actual method will be no different than the formation of the Eurozone. The difference is currency unit itself.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by Lord_Keynes View Post
    You don't seem to understand what the "national debt" is. This is a typical libertarian misunderstanding. You believe the United States - the most powerful nation in the history of mankind - needs to borrow money that only it has the exclusive right to create. You believe the United States operates like your household, and if expenses exceed your income, it's time to bring out the credit card.
    ...
    My goodness, you sure do manage to strike a pretty arrogant and dismissive tone.
    I've been reading jk's comments for more than 10 years and find no serious holes in his basic understanding of economics or finance.
    It's unlikely you have any factual basis for knowing what he might "...believe..."

    You seem to have some interesting ideas, and seem enthusiastic about discussing them, but it's hard to get past your confrontational approach and focus on your topics.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by thriftyandboringinohio View Post
    My goodness, you sure do manage to strike a pretty arrogant and dismissive tone.
    I've been reading jk's comments for more than 10 years and find no serious holes in his basic understanding of economics or finance.
    It's unlikely you have any factual basis for knowing what he might "...believe..."

    You seem to have some interesting ideas, and seem enthusiastic about discussing them, but it's hard to get past your confrontational approach and focus on your topics.
    Point taken. My apologies.

    I did log in to post this:

    https://www.breitbart.com/politics/2...ateral-system/

    Breitbart is obviously trash, but even the Pope is advocating a multilateral exchange rate system, which is only clear when you realize the United Nations was created specifically to operate such a system. The signs are all around us, if you look closely enough.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    as eric janszen has said many times on this site: we're not in the what should happen business; we're in the what's likely to happen business.
    btw, why do so many countries persist in this madness:
    https://twitter.com/i/status/1082283237689434112

    and btw, invest 20-30 min in googling the information behind the questions i posed you, lk, about foreign cb's ceasing their net acquisition of u.s. treasury instruments roughly q4 2013, and the many cb's which started accumulating more gold over the last 5 years, also the emergence of the petroyuan, the chinese oil deals with russia and nigeria to purchase oil in yuan, and recent deal with the saudi's with payment terms undisclosed, the weaponization of the dollar via control of the swift settlement system and the various responses to that, the increasing number of bilateral trade deals in which countries agree to trade in each other's currencies instead of dollars, the volumes of physical gold moved in shangai vs on the comex.

    as the cb's ceased purchasing net treasury instruments private buyers had to be found or forced to do so- thus first regulations on money market funds forced treasury purchases, then regulations on banks forced treasury purchases. next step: perhaps pension plans will be required to have some percentage of their assets in treasuries, for their own good of course. eventually, the fed "buys" them, and hands the coupon payments back to the treasury. just like the boj.

    we have come to the reductio ad absurdum that triffin foresaw. the chinese and europeans see it too, and have no desire to have their currencies replace the dollar as THE global reserve asset. so there will be several assets, and possibly the sdr or a modified sdr [you can call it a "bancor" if that pleases you] or just gold at a floating rate used to settle international trade balances. but the u.n.?? come on! get serious. you're more grown up than that.

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    Default Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

    Quote Originally Posted by Lord_Keynes View Post

    Point taken. My apologies...
    No apology required. Good to have a new voice around here.

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