May jobs #'s are in +280k, 2.3% increase in hrly wage uemp 5.5

[fskimospy]

Dullard said people's pensions depend on interest rates, they do. Not only do the value of the pensions depend on them, but SO DO THE PAYMENTS. Are you such a retard as to think that a defined benefit plan cannot be influenced by interest rates?

In some plans the payments may depend on returns or inflation, but for lots of them they do not. Sure the pension plan could go under, but again, not what we are talking about.

Seems like you might want to stop, take a breath, and try to figure out what's being talked about before going on another shrieking rant.

By the way, it's also funny that of all the things in this thread you tried to scream about you chose pensions, and not the guy saying raising interest rates causes increased inflation. Are you still mad about the other thread or something?

 

[LegendKiller]

They come from whoever issued the fixed income instrument, which could be anyone, including the tooth fairy, and those payments are due regardless of federal interest rates. I guess the issuer could go under, but that's not what we are talking about.

Keep screaming though, haha. I have no idea why you decided to come into this thread and start shrieking about things that everyone agrees on.

You do realize that fixed income investments are *heavily* influenced by the Fed? What about zero coupon bonds? What about bond funds? What about when you want to buy or sell bonds?

But hey, the significant increase in bond yields in the last two days had nothing to do with the Fed.

 

[LegendKiller]

In some plans the payments may depend on returns or inflation, but for lots of them they do not. Sure the pension plan could go under, but again, not what we are talking about.

Seems like you might want to stop, take a breath, and try to figure out what's being talked about before going on another shrieking rant.

By the way, it's also funny that of all the things in this thread you tried to scream about you chose pensions, and not the guy saying raising interest rates causes increased inflation. Are you still mad about the other thread or something?

Guess you need to tell that to IL, or CT, or any number of under funded pensions. Why are they underfunded? A big portion is because their return projections depended on higher yielding fixed income investments.

Or what happens when it isn't a public pension and the pension company goes BK because of the too-optimistic return estimates resulted in underfunding? Well, the PBGC takes over and cuts benefits.

Rates matter massively to pension plans, there isn't a single investor on the planet who thinks otherwise.

 

[LegendKiller]

By the way, it's also funny that of all the things in this thread you tried to scream about you chose pensions, and not the guy saying raising interest rates causes increased inflation. Are you still mad about the other thread or something?

Raising rates doesn't cause inflation.

Why would I be mad about the other thread? I am winning. Rates are way up since that thread.

 

[fskimospy]

Raising rates doesn't cause inflation.

Why would I be mad about the other thread? I am winning. Rates are way up since that thread.

Huh? You should go read that thread again. What just happened is literally exactly what I predicted. As the economy improves inflation expectations will rise, and rates with them. QE wasn't the reason for low rates, low inflation and the liquidity trap were. Today is just more evidence of that.

Regardless, no need to rehash.

But yes, you might want to tell dullard that raising rates doesn't cause inflation. He seems very confused.

 

[fskimospy]

Guess you need to tell that to IL, or CT, or any number of under funded pensions. Why are they underfunded? A big portion is because their return projections depended on higher yielding fixed income investments.

Or what happens when it isn't a public pension and the pension company goes BK because of the too-optimistic return estimates resulted in underfunding? Well, the PBGC takes over and cuts benefits.

Rates matter massively to pension plans, there isn't a single investor on the planet who thinks otherwise.

This post is completely unrelated to the discussion, and is just restating things everyone agrees on. It doesn't even seem to be a response to the post you quoted.

 

[Mai72]

Yet, Obama's number are still in a free fall.

When people are still asked about the economy, many will say that it stinks. The economy might be improving, but the average person just doesn't see it.

 

[LegendKiller]

Huh? You should go read that thread again. What just happened is literally exactly what I predicted. As the economy improves inflation expectations will rise, and rates with them. QE wasn't the reason for low rates, low inflation and the liquidity trap were. Today is just more evidence of that.

Regardless, no need to rehash.

But yes, you might want to tell dullard that.

QE was a huge reason for the reduction in rates. There was a piece just put out by Goldman explaining how the mortgage market is going to get hit by an increase in rates as the economy improves AND the Fed stops purchasing RMBS from amortization proceeds.

The silly thing is that you think QE was a point-in-time issue that was in a vacuum. As I said before, you use the exclusion of rates increases as testament for QE not decreasing rates. That is an asinine viewpoint. Every money manager on the planet disagrees with you.

But please, link to a single one saying QE has had nothing to do with keeping rates artificially low.

But lets go back to your statement.

The good news is that time will tell. I bet that bond rates for the U.S. will increase modestly, but will remain historically low until inflation expectations increase. This is because QE is not the primary reason for the low bond rates. That's the nature of a liquidity trap, which most of the world has been in pretty obviously for a long time now.

Rates haven't increased modestly, inflation expectations haven't increased. In fact, everything still shows moderate to low inflation, despite a pickup in wages.

 

[LegendKiller]

This post is completely unrelated to the discussion, and is just restating things everyone agrees on. It doesn't even seem to be a response to the post you quoted.

It has everything to do with the discussion, you just don't want to discuss it. Pensions and fixed income holders are massively effected by artificially low interest rates caused by Fed funds rates *AND* QE. Only a moron would disagree with that.

 

[fskimospy]

QE was a huge reason for the reduction in rates. There was a piece just put out by Goldman explaining how the mortgage market is going to get hit by an increase in rates as the economy improves AND the Fed stops purchasing RMBS from amortization proceeds.

The silly thing is that you think QE was a point-in-time issue that was in a vacuum. As I said before, you use the exclusion of rates increases as testament for QE not decreasing rates. That is an asinine viewpoint. Every money manager on the planet disagrees with you.

Nope, never said that. I said it wasn't the primary cause for low rates, and it wasn't, and every economist who hasn't ended up looking like an idiot over the last 6 years agrees with me.

But please, link to a single one saying QE has had nothing to do with keeping rates artificially low.

As previously discussed, "artificially low" is a nonsensical statement. The rate is effectively set by the fed to be whatever they want.

But lets go back to your statement.

Rates haven't increased modestly, inflation expectations haven't increased. In fact, everything still shows moderate to low inflation, despite a pickup in wages.

Rates are still historically low, and core CPI has shown some of its largest increases in years over the last few months. So again, right in line with my prediction. Did you miss the latest BLS data?

 

[fskimospy]

It has everything to do with the discussion, you just don't want to discuss it. Pensions and fixed income holders are massively effected by artificially low interest rates caused by Fed funds rates *AND* QE. Only a moron would disagree with that.

This was already covered in previous posts. You appear to be trying to find someone to argue with about how pension funds are affected by interest rates despite that having nothing to do with what's being discussed. You can keep arguing with yourself or some position you imagine me to have, but what's the point?

I suggest you go back and read the thread and then realize you're only arguing with yourself.

 

[LegendKiller]

Nope, never said that. I said it wasn't the primary cause for low rates, and it wasn't, and every economist who hasn't ended up looking like an idiot over the last 6 years agrees with me.

No, every economist who hasn't guessed the worldwide economic "solution" of currency devaluation and interest rate suppression from successive CB's have been wrong.

As previously discussed, "artificially low" is a nonsensical statement. The rate is effectively set by the fed to be whatever they want.

So please, explain the reduction in high yield rates *AFTER* the Fed had already lowered rates. Please explain the reduction in risk spreads which are at historical lows. Artificially low is not a nonsensical statement, as it is used by every money manager on the planet. Again, show one who hasn't used it.

The *RISK* rate is not set by the Fed, the risk free rate is. The risk rate is set by the number of assets in the market and the supply of liquidity in the market. Liquidity has been increased dramatically because there are not enough risk assets out there to soak it up, thus rates are low. This was the express purpose of QE. It is why risk spreads in every asset class is low. It is why "HIGH YIELD" is no longer high yielding.

You cannot explain those by the *RISK FREE RATE*. You can explain those, 100%, by the grab for yield. Everybody knows this, except for you.

Rates are still historically low, and core CPI has shown some of its largest increases in years over the last few months. So again, right in line with my prediction. Did you miss the latest BLS data?

http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CU_cpibrief

So core CPI has shown its largest increase in years, where is that pray tell.

 

[fskimospy]

No, every economist who hasn't guessed the worldwide economic "solution" of currency devaluation and interest rate suppression from successive CB's have been wrong.

So please, explain the reduction in high yield rates *AFTER* the Fed had already lowered rates. Please explain the reduction in risk spreads which are at historical lows. Artificially low is not a nonsensical statement, as it is used by every money manager on the planet. Again, show one who hasn't used it.

I've already explained why it's a nonsensical statement, as has the former fed chairman, by the way. Go read the previous thread of you want to remind yourself why it's nonsensical.

The *RISK* rate is not set by the Fed, the risk free rate is. The risk rate is set by the number of assets in the market and the supply of liquidity in the market. Liquidity has been increased dramatically because there are not enough risk assets out there to soak it up, thus rates are low. This was the express purpose of QE. It is why risk spreads in every asset class is low. It is why "HIGH YIELD" is no longer high yielding.

You cannot explain those by the *RISK FREE RATE*. You can explain those, 100%, by the grab for yield. Everybody knows this, except for you.

You appear to again be trying to argue that I think QE had NO effect on rates. This is, yet again, wrong. It is simply not the primary reason for low rates.

I don't really feel like rehashing this again.

http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CU_cpibrief

So core CPI has shown its largest increase in years, where is that pray tell.

http://www.bls.gov/news.release/pdf... the largest in years. What is the confusion?

 

[LegendKiller]

I've already explained why it's a nonsensical statement, as has the former fed chairman, by the way. Go read the previous thread of you want to remind yourself why it's nonsensical.

Yes, the entire financial world knows what The Bernank doesn't know. This is how stupid you are.

You appear to again be trying to argue that I think QE had NO effect on rates. This is, yet again, wrong. It is simply not the primary reason for low rates.

I don't really feel like rehashing this again.

It is *the* primary reason for low risk rates, everybody knows this, except you. The residual effects of QE will be felt for a while, but when the Fed stops purchasing RMBS altogether, it'll ease up, quickly.

http://www.bls.gov/news.release/pdf...ucking fail at every other piece of evidence.

 

[UberNeuman]

Yes, the entire financial world knows what The Bernank doesn't know. This is how stupid you are.

It is *the* primary reason for low risk rates, everybody knows this, except you. The residual effects of QE will be felt for a while, but when the Fed stops purchasing RMBS altogether, it'll ease up, quickly.

Most recent seasonally adjusted core CPI was a monthly increase of 0.3 percent, which is the largest in years. What is the confusion?

Well, shit, boys and girls, a single month increase in medical spending is hugely indicative of broad-based inflation.

http://www.mesirowfinancial.com/blog/economics/2015/05/22/dswonk/inflation-looks-hotter-than-it-is/

You're such a fucking moron. You cherry pick one piece of data, without looking under, as a prime example of your great theory, yet you fucking fail at every other piece of evidence.

You're also a poophead that smells like poop and looks like poop, you poophead eskimospy you poop poop poop...

\quite enjoying the mental breakdown of the master economist/psychologist...
\\I'd say get help, LK, but you won't....

 

[fskimospy]

Yes, the entire financial world knows what The Bernank doesn't know. This is how stupid you are.

If you go re-read what he wrote his argument is a pretty basic statement of logic. There's not really any getting around it.

It is *the* primary reason for low risk rates, everybody knows this, except you. The residual effects of QE will be felt for a while, but when the Fed stops purchasing RMBS altogether, it'll ease up, quickly.

I guess we will find out, won't we.

Well, shit, boys and girls, a single month increase in medical spending is hugely indicative of broad-based inflation.

http://www.mesirowfinancial.com/blog/economics/2015/05/22/dswonk/inflation-looks-hotter-than-it-is/

You're such a fucking moron. You cherry pick one piece of data, without looking under, as a prime example of your great theory, yet you fucking fail at every other piece of evidence.

I didn't cherry pick anything, I simply stated that what is happening is perfectly in line with what I predicted, which it is. Sorry if that's news you didn't want to hear.

It's always amusing to watch you try and pull this raging Alpha shit. That might work on some people, but it doesn't work on me. You can shriek and carry on and yell about how stupid everyone is all you want but I don't find it intimidating, I find it funny.

 

[LegendKiller]

You're also a poophead that smells like poop and looks like poop, you poophead eskimospy you poop poop poop...

\quite enjoying the mental breakdown of the master economist/psychologist...
\\I'd say get help, LK, but you won't....

Hey, look, everybody, a clown has come to visit!

Care to actually add anything? Ohh, wait, poor clown can't, he can't add what he doesn't know...

 

[LegendKiller]

If you go re-read what he wrote his argument is a pretty basic statement of logic. There's not really any getting around it.



I guess we will find out, won't we.



I didn't cherry pick anything, I simply stated that what is happening is perfectly in line with what I predicted, which it is. Sorry if that's news you didn't want to hear.

It's always amusing to watch you try and pull this raging Alpha shit. That might work on some people, but it doesn't work on me. You can shriek and carry on and yell about how stupid everyone is all you want but I don't find it intimidating, I find it funny.

Yes, we all know you predicted no inflation anywhere else and large inflation in medical. I am going to laugh my ass off when that fails to materialize into any trend.

Don't really care what you think of it. I just like pointing out to everybody else what kind of moron you are. Can't believe you really thought that was for you...


Lol....silly boy...

 

[UberNeuman]

Hey, look, everybody, a clown has come to visit!

Care to actually add anything? Ohh, wait, poor clown can't, he can't add what he doesn't know...

You're so wrapped, so entwined in your psychosis that you can't see what a fool you've been in this thread... So far, you've been crude when not needed in an attempt to make your points...

\feeble attempts they've been...
\\can you address the matter without the autistic outbursts...

 

[fskimospy]

Yes, we all know you predicted no inflation anywhere else and large inflation in medical. I am going to laugh my ass off when that fails to materialize into any trend.

Don't really care what you think of it. I just like pointing out to everybody else what kind of moron you are. Can't believe you really thought that was for you...

Lol....silly boy...

I didn't predict any inflation or any lack of inflation. My prediction was based on the relationship between rates, inflation, and overall economic performance. Whether it becomes a trend or not doesn't mean anything in the scope of this discussion. It's only relevant in relation to the other figures.

So please, laugh all you want! You seem very angry these days so you could probably use a good laugh. It wouldn't be related to what we are talking about, but I wouldn't want to deprive you.

It's perfectly fine if your attempts to be all alpha aren't directed at me. I would prefer it, in fact! I was just letting you know that I find the whole act funny and if you were trying it for that reason you're wasting your time.

 

[dullard]

I'm sorry but you badly misunderstand the relationship between the federal funds rate and inflation.

Show me just ONE single month in the US history where low fed interest rates (say under 3%) led to high inflation in the next year. Or show me ONE single month in the US history where high fed interest rates (say over 6%, but choose your own numbers) led to low inflation in the next year.

I'm still waiting.

 

[MongGrel]

 

[fskimospy]

Show me just ONE single month in the US history where low fed interest rates (say under 3%) led to high inflation in the next year. Or show me ONE single month in the US history where high fed interest rates (say over 6%, but choose your own numbers) led to low inflation in the next year.

I'm still waiting.

I already provided you with data that shows a pretty clear inverse relationship between interest rates and inflation, so no, you aren't still waiting.

I've asked you before, and I'll ask again: where did you get the idea that raising interest rates leads to inflation? Not only does it seem pretty obviously wrong from the data, but I've literally never even heard of an economic school of thought that thinks that's the case. In fact, every school I am aware of from the most liberal to the most conservative all think the opposite. As I noted before, the people actually in charge of the fed funds rate also think the opposite.

I'm very curious how you came to this conclusion, all that considered, because I've never heard someone try to argue that before.

 

[dullard]

I already provided you with data that shows a pretty clear inverse relationship between interest rates and inflation, so no, you aren't still waiting.

I gave you a task that was achievable (just you'll be looking for the very few needles in the haystack). There are a very few data point outliers that you could find.

You instead gave me a graph that when the interest rates were high, CPI was high. When interest rates were low, CPI was low. That is exactly what I've claimed.

You claimed "Higher interest rates make inflation LOWER, not higher." That is the exact opposite of the graph that you posted.

Try this for some deep thought:
http://pics.bbzzdd.com/users/dullard/FedFundsRateVsCPI.JPG
That plots the chosen fed funds rate vs. what happened to inflation in the year AFTER that rate was chosen. It isn't a perfect correlation since many other factors play a role. But it is the exact opposite of what you have been claiming.

How to interpret the graph in this post:
* Jan 1960: The fed funds rate was 3.99%. CPI for Jan 1960 was 29.3, CPI for Jan 1961 was 29.8. Thus, inflation for the year AFTER the fed funds rate was chosen was 29.8/29.3 - 1 = 1.71%. The chosen federal funds rate was low, and the following inflation in the NEXT year was low.

* Jan 1980: The fed funds rate was 13.82%. CPI for Jan 1980 was 77.8, CPI for Jan 1981 was 87. Thus, inflation for the year AFTER the fed funds rate was chosen was 87/77.8 - 1 = 11.83%. The chosen federal funds rate was high, and the inflation for the NEXT year was high.

* Jan 2000: The fed funds rate was 5.45%. CPI for Jan 2000 was 168.8, CPI for Jan 2001 was 175.1. Thus, inflation for the year AFTER the fed funds rate was chosen was 175.1/168.8 - 1 = 3.73%. The chosen federal funds rate was moderate, and the inflation for the NEXT year was moderate.

 

[fskimospy]

I gave you a task that was achievable (just you'll be looking for the very few needles in the haystack). There are a very few data point outliers that you could find.

You instead gave me a graph that when the interest rates were high, CPI was high. When interest rates were low, CPI was low. That is exactly what I've claimed.

You claimed "Higher interest rates make inflation LOWER, not higher." That is the exact opposite of the graph that you posted.

It most certainly is not.

Try this for some deep thought:
http://pics.bbzzdd.com/users/dullard/FedFundsRateVsCPI.JPG
That plots the chosen fed funds rate vs. what happened to inflation in the year AFTER that rate was chosen. It isn't a perfect correlation since many other factors play a role. But it is the exact opposite of what you have been claiming.

This is a basic analytic error. Higher inflation and higher interest rates are very closely related because higher interest rates are enacted specifically in response to higher inflation. That they are related is not only unsurprising, it is the whole point.

What you are doing here is akin to showing how ice cream sales rise as the temperature rises and then concluding that ice cream sales cause the weather to get hotter. Basic reverse causation error.

If you really want to look at the relationship between interest rates and inflation you need to look at the effect of a CHANGE in interest rates on CHANGE in inflation. (You should also control for other factors that influence inflation) If you go back and look at my chart you will see this relationship holds up quite well. As interest rates go up, inflation starts to go down shortly thereafter.

It seems that you've come to this conclusion through independent research. Is that right? If so, how do you square the fact that your conclusions are exactly the opposite of every economist and economic institution on the planet? Do you really think that by running such a basic analysis you've disproved the basis for all modern monetary policy? Does that seem likely to you? Isn't it quite a bit more likely that you don't understand what you're talking about?