anyone else read ej's twits?

[GRG55]

Re: anyone else read ej's twits?

Labour may become so cheap that domestic servants and butlers will make a comeback. Along with chauffeurs and messenger boys. Saudi is like this already.

Most of the Arab side of the Persian Gulf is the same. This is because this region is a huge importer of cheap, almost slave, labour from labour exporting countries such as India, Sri Lanka, the Philippines, Thailand, with China in the early stages of joining that list (the main impediment to the Chinese is that English is the working language in the Arab Gulf countries, so migrants from Commonwealth or former USA protectorates have an advantage).

Saudi has huge unemployment, particularly young males, which is always an invitation for social unrest. The "Saudization" that followed Gulf War 1 (when professional expats bailed out to safety and nearly collapsed the Saudi economy) was supposed to address this, but it is difficult for countries like Saudi, Kuwait, the UAE and Qatar to unwind the incredible welfare entitlement programs they have erected over nearly 50 years to buy peace. The locals won't do the construction, retail service and domestic help jobs that the imported labour fills, and there is no where near enough skilled and experienced nationals to fill all the professional positions in the energy, construction and banking sectors that dominate these economies.

I suspect we'll see something similar in the USA. Lots of low paid, unskilled jobs that go unfilled while an army of long term unemployed lack the education, experience and work habits to secure one of the growing number of skilled jobs in the economy. Unless the USA is willing to import a lot of labour from SE Asia (or Mexico?), I doubt that "domestic servants and butlers will make a comeback" in a big way.

[shiny!]

Re: anyone else read ej's twits?

I will have to re-read this book as it has been several decades ago since I last read it. Hess is good.

My thoughts exactly.

[Shakespear]

Re: anyone else read ej's twits?

Hesse's "The Glass Bead Game" comes to mind.

I will have to re-read this book as it has been several decades ago since I last read it. Hess is good.

[llanlad2]

Re: anyone else read ej's twits?

Labour may become so cheap that domestic servants and butlers will make a comeback. Along with chauffeurs and messenger boys. Saudi is like this already.

“There will never be a mass market for motor cars – about 1,000 in Europe – because that is the limit on the number of chauffeurs available!”
Spokesman for Daimler Benz


“The Americans have need of the telephone, but we do not. We have plenty of messenger boys.”
Sir William Preece, Chief Engineer, British Post Office, 1876

. . .

John Joseph Mathews in his books on the Osage has maintained that the surplus energy in any society tends to flow into what he described as practically useless yet prestigious and extremely ornate embellishments, I forget his exact phrasing. For the neolithic Osage this was their complex rituals. Hesse's "The Glass Bead Game" comes to mind.

[cobben]

Re: anyone else read ej's twits?

where are the new jobs going to be? service jobs

. . .

John Joseph Mathews in his books on the Osage has maintained that the surplus energy in any society tends to flow into what he described as practically useless yet prestigious and extremely ornate embellishments, I forget his exact phrasing. For the neolithic Osage this was their complex rituals. Hesse's "The Glass Bead Game" comes to mind.

[jk]

Re: anyone else read ej's twits?

this is an interesting thread to catch up on [after several days without electricity]. overall, i much enjoyed the discussion, save the long detour into the labor theory of value versus other theories. re the longer-term evolution of the economy, and the rising cost of energy in suppressing economic activity, i think we need to keep in mind that we are in the midst of another industrial revolution. when agriculture was mechanized in the late 19th century, agricultural employment plummeted while the value of production continued to increase. we are now seeing the same in manufactured good, where:

The atrophying of the country’s ability to “make real things” has been much lamented, but the truth is that U.S. manufacturing has never been stronger. While there are no universally accepted numbers, the United Nations Statistics Division calculates that the dollar value of goods made in America is at an all-time high of $1.9 trillion, just about even with China. The catch is that the number of American workers needed to create all thatvalue has dropped steadily. In the mid-1940s, more than half of the New Jersey work force was in factories; today around 7 percent do. There are the same number of manufacturing jobs nationwide as there were in 1941, when the country was just more than one-third its current population.

http://www.nytimes.com/2012/11/04/ma...pagewanted=all

where are the new jobs going to be? service jobs which can't be done more cheaply remotely over the internet. some of those jobs are high-paying, but most are not. overall, global wages are rising, but mostly in china.

[gwynedd1]

Re: anyone else read ej's twits?

Like that for a loan to exist there must a borrower, and that when leverage becomes more expensive you would expect fewer of them. Fixed income investors will feel poor when interest rates rise and the bonds in their portfolio are worth diddly squat.

Right that's my point. Its netting out to nothing but only so long as interest rates keep dropping. Now they have little hope of any future gains which is the end game of low interest rate environments. In a glut what does more investment capital vs consumption mean? Now companies have money they still can't use even cheaper while the consumption buying power drops. When you have an oxygen starved fire piling on more wood cuts off more oxygen while there was already lots of wood.

As of now corporations are sitting on large cash hoards. How much will raising interest rate affect them offsetting the fixed income buying power?

Its also causing all the havoc in public pension funds.
http://www.american.com/archive/2012...-low-low-rates


It does not just pull the rope in one direction and in this environment its particularly feckless. And QE is particularly damaging in this regard because low short rates might imply long term inflation but QE pounds down that nail as well.

Fed influence is overrated.

[radon]

Re: anyone else read ej's twits?

When did reality matter so much? Rational expectations is a hoot.

Like that for a loan to exist there must a borrower, and that when leverage becomes more expensive you would expect fewer of them. Fixed income investors will feel poor when interest rates rise and the bonds in their portfolio are worth diddly squat.

[gwynedd1]

Re: anyone else read ej's twits?

I honestly can't follow your logic. Perhaps you should ask EJ to explain why the real cost of money affects all asset prices.

There is no such thing as a "can't lose" investment. And surely you don't believe that "all this QE" hasn't affected the price of bonds and equities, do you?

When did reality matter so much? Rational expectations is a hoot. What I am saying is people have operated on the assumption of can't lose investments. Real Estate is one of them. In the long wave it might actually be true. That is why real estate mortgages still have buyers. The other is sovereign debt. Does not mean they are can't lose. However the least likely to lose acts like a can't lose investment. Interest rates don't matter as much as preservation. It just seems pretty clear that interest rates , as I have said, are not unalloyed. Changing them makes some people feel rich while others feel poor. Fixed income investors now feel poor so how does that stimulus work? When savers are not getting returns they don't just turn into spenders. They try to save more. As institutions buy housing this will worsen since renters will not feel richer paying higher rents. Gold is a 0 yield money and its held. No one dumps it because it has no effective yield. What does swapping a 10 year note for cash when its 2% of a difference? All the Fed is doing is swapping same as cash. If this fails then all it will do is slow monetary growth since lower yields means lower deficits.

[radon]

Re: anyone else read ej's twits?

Have you ever watched The Money Masters? ;)

Enslaving one group of people in debt to make another group that intentionally committed trillions of Dollars of fraud whole is more aligned with fascism than capitalism, unless one doesn't distinguish between the 2.

This situation reminds me of The Confidence Man. It is in a way easier to cheat another con-artist. Nobody forced them to commit financial suicide by signing those loans, or to commit fraud by falsifying things like income on loan documents. We are quick to blame the bankers but forget that their supposed victims were once their accomplices.

[Raz]

Re: anyone else read ej's twits?

Starting to look more like a complex cause situation. Based upon what you are saying natural gas was not the only thing chasing higher oil prices. It was also oil itself. It still does not point to Fed policy.

Again so what about the high rates pulling in money from AAA rated bonds? If someone is raking in 20% on a 10 year he doesn't feel rich? Doesn't the seller get the cash? Where does the seller put the cash? People with treasuries can sell them to make large purchases as good as cash. Why does rising home prices make people feel rich but 20% return on another can't lose investment won't? Its Fed double speak and it why Fed policy is way overrated. So again I agree that it was oil prices and fiscal policy that ended inflation. I just fail to see large differences between interest bearing same as cash and non interest bearing same a cash. That is why all this QE isn't really changing the behavior of the security.

I honestly can't follow your logic. Perhaps you should ask EJ to explain why the real cost of money affects all asset prices.

There is no such thing as a "can't lose" investment. And surely you don't believe that "all this QE" hasn't affected the price of bonds and equities, do you?

[gwynedd1]

Re: anyone else read ej's twits?

I now remember reading this years ago. I rejected it then and I reject it now.

In 1985 I was sitting in front of a Bunker Ramo quote machine with two clients who were short crude oil when it collapsed. It had little to do with NatGas abundance and everything to do with the Saudis who were fed-up with quota cheating by other OPECkers. At the same time the "invisible hand" of Adam Smith had been working since 1975 to effect conservation and we were fortunate to see new oil supplies brought online, particularly the North Slope and the North Sea. Cantarell's production was also rising, but the key to the lock then was Saudi Arabia.

If higher REAL rates pull money into GNMAs and other long-dated paper the funds have to come from somewhere. At a high enough real rate of interest on a AAA Rated 10-year note it makes little sense to keep ones capital in equities, and much less in gold.

Mr. Mosler is a smart man. I just don't happen to agree with his theories.

Starting to look more like a complex cause situation. Based upon what you are saying natural gas was not the only thing chasing higher oil prices. It was also oil itself. It still does not point to Fed policy.

Again so what about the high rates pulling in money from AAA rated bonds? If someone is raking in 20% on a 10 year he doesn't feel rich? Doesn't the seller get the cash? Where does the seller put the cash? People with treasuries can sell them to make large purchases as good as cash. Why does rising home prices make people feel rich but 20% return on another can't lose investment won't? Its Fed double speak and it why Fed policy is way overrated. So again I agree that it was oil prices and fiscal policy that ended inflation. I just fail to see large differences between interest bearing same as cash and non interest bearing same a cash. That is why all this QE isn't really changing the behavior of the security.

[Raz]

Re: anyone else read ej's twits?

I did and rejected it.

You can read his opinion here.

http://moslereconomics.com/2012/07/0...ost-article-2/

To me lowering interest rates introduce so many contravening forces that the real effect is rather murky.

Real oil prices dropped like a rock. How can that not receive the bulk of the credit?


http://www.inflationdata.com/inflati...ices_Table.asp


Instead we have the cult of Volcker.

I think fiscal policy is far more influential. Lets not forget the Bush deficits during the housing bubble. Either way people will be happy to buy up GNMA at 9%. Lots of money will be available.

I now remember reading this years ago. I rejected it then and I reject it now.

In 1985 I was sitting in front of a Bunker Ramo quote machine with two clients who were short crude oil when it collapsed. It had little to do with NatGas abundance and everything to do with the Saudis who were fed-up with quota cheating by other OPECkers. At the same time the "invisible hand" of Adam Smith had been working since 1975 to effect conservation and we were fortunate to see new oil supplies brought online, particularly the North Slope and the North Sea. Cantarell's production was also rising, but the key to the lock then was Saudi Arabia.

If higher REAL rates pull money into GNMAs and other long-dated paper the funds have to come from somewhere. At a high enough real rate of interest on a AAA Rated 10-year note it makes little sense to keep ones capital in equities, and much less in gold.

Mr. Mosler is a smart man. I just don't happen to agree with his theories.

[gwynedd1]

Re: anyone else read ej's twits?

This has nothing to do with my statement. Consider the difference between "nominal" and "real".

I did and rejected it.

You can read his opinion here.

http://moslereconomics.com/2012/07/0...ost-article-2/

To me lowering interest rates introduce so many contravening forces that the real effect is rather murky.

Real oil prices dropped like a rock. How can that not receive the bulk of the credit?


http://www.inflationdata.com/inflati...ices_Table.asp


Instead we have the cult of Volcker.

I think fiscal policy is far more influential. Lets not forget the Bush deficits during the housing bubble. Either way people will be happy to buy up GNMA at 9%. Lots of money will be available.

[Raz]

Re: anyone else read ej's twits?

This has nothing to do with my statement. Consider the difference between "nominal" and "real".