Rothbard on the Panic of 1819.

[momeNt]

Except for the whole issue that growing economic output denominated by a physical asset with a fixed supply is inherently deflationary, which in itself renders any institution that charges interest to lend said asset proxies useless.

Why deposit anything in a bank, when you get a real return by stuffing it into your mattress? Or the funner question, why buy anything now when you get buy it later less?

Personal question for ya - feel free to be honest. You have no formal background and/or education in economics and mostly found out about this stuff thru wikipedia and/or blogs and youtube right?

Answer to your question, I have a degree in finance and took all the economics electives I could because it interested me.

Feel free to be honest with me, you got a master's in economics and decided you couldn't be useful to any price discovery in the markets and used your bachelor's degree in computer science to rip people off through quantitative trading algos?

 

[halik]

Answer to your question, I have a degree in finance and took all the economics electives I could because it interested me.

Feel free to be honest with me, you got a master's in economics and decided you couldn't be useful to any price discovery in the markets and used your bachelor's degree in computer science to rip people off through quantitative trading algos?

Close on the education, but I'm actually a market maker, much like the vast majority of other prop shops - so quoting both bid and ask (providing liquidity) and hoping not to get run over. Price discovery is essentially all that I do...

But I digress - it is interesting to find someone with formal education that happily goes against the scientific method. You should be asking yourself why your hypothesis isn't working in Canada or Aussieland, rather than arguing the flying spaghetti monster angle.

 

[momeNt]

http://www.zerohedge.com/news/example-hft-liquidity-10-bid-ask-spread-14-stock

Thanks for making the market?

 

[momeNt]

Anyways, the simple point is that comparing two countries with different economies, won't allow you to arrive at an empirical fact. It's sad but true.

 

[halik]

http://www.zerohedge.com/news/example-hft-liquidity-10-bid-ask-spread-14-stock

Thanks for making the market?

So what do you think the market would be there without the algos posting 8.75x17.5, would it be wider or tighter? If no algos were making market there, would you get better execution at that very moment?

 

[halik]

Anyways, the simple point is that comparing two countries with different economies, won't allow you to arrive at an empirical fact. It's sad but true.

That is the flying spaghetti monster/ intelligent design infallible argument. Dogma -> conclusion, since it is too complicated to be able to explain.

Don't you find it peculiar that Mises folk can never fully qualify any predictions and the ones that do get burned (Peter Shiff etc)? I'm still waiting for hyperinflation caused by helicopter ben...

 

[momeNt]

So what do you think the market would be there without the algos posting 8.75x17.5, would it be wider or narrower?

Depends on if you want the opponent of HFT or the proponent of HFT. You know both answers and what I am.

I think that in 2 seconds humans couldn't have spread it to 10 and closed it back to <1. I think that two algos maybe had a fight and hopefully some dimwitted idiot on a shitty front-end didn't get his bid chased either down or up and lost.

 

[halik]

Depends on if you want the opponent of HFT or the proponent of HFT. You know both answers and what I am.

I think that in 2 seconds humans couldn't have spread it to 10 and closed it back to <1. I think that two algos maybe had a fight and hopefully some dimwitted idiot on a shitty front-end didn't get his bid chased either down or up and lost.

This was right at the open and if you look at the graph closely, no human market maker from NYSE was even within 20 dollar spread (presumably for a good reason). This isn't matter of opinion - you would be strictly worse off if the boxes weren't quoting that name.

By the same logic, you're strictly better off with algos making market, since you're guaranteed NBBO and if you're getting filled from a box, it obviously beat a specialist on the floor (otherwise you'd be getting filled from him/her)

 

[momeNt]

That is the flying spaghetti monster/ intelligent design copout argument. Dogma -> conclusion, since it is too complicated to be able to explain.

Don't you find it peculiar that Mises folk can never fully qualify any predictions and the ones that do get burned (Peter Shiff etc)? I'm still waiting for hyperinflation caused by helicopter ben...

It's peculiar. Mises spent a great deal of his time wondering even what an economy was and here's a little nugget about what he thought about the grand daddy of em all - GDP

The attempt to determine in money the wealth of a nation or the whole mankind are as childish as the mystic efforts to solve the riddles of the universe by worrying about the dimension of the pyramid of Cheops.

 

[halik]

It's peculiar. Mises spent a great deal of his time wondering even what an economy was and here's a little nugget about what he thought about the grand daddy of em all - GDP

Heh I find that in line with all other Mises stuff - simplistic and of no practical application

 

[Jhhnn]

No, banks need to compete over physical specie, it would eliminate credit expansion immediately if banks went to redeem another bank's deposits for the physical and there was not enough or any gold behind the note. It would be too risky to print more notes than deposits physically at the bank.

Investment does not need to be facilitated at all by bank credit creation, if investment came only from saving we would eliminate the problem of bank credit caused inflationary booms and the resultant credit crunches.

And if pigs had wings, they'd fly. What's really wrong with modern monetary systems is that we cling to outmoded notions held over from the gold standard.

What you describe is the horizontal creation of money in the banking system, which is entirely different from the vertical creation of money in a fiat money system. All the money currently in existence was spent into existence by govt. It can be no other way, because modern money is the creation of govt, not tied to any archaic metallic standard. The problem is that we still think govt has to "borrow" to create money, as was the case with the gold standard.

Wrap your head around this-

http://pragcap.com/resources/understanding-modern-monetary-system

 

[momeNt]

And if pigs had wings, they'd fly. What's really wrong with modern monetary systems is that we cling to outmoded notions held over from the gold standard.

What you describe is the horizontal creation of money in the banking system, which is entirely different from the vertical creation of money in a fiat money system. All the money currently in existence was spent into existence by govt. It can be no other way, because modern money is the creation of govt, not tied to any archaic metallic standard. The problem is that we still think govt has to "borrow" to create money, as was the case with the gold standard.

Wrap your head around this-

http://pragcap.com/resources/understanding-modern-monetary-system

I've read the article, have posted the article and discussed it previously on this forum. I agree that MMT is an accurate description about how modern money works.

I agree that many of the terms such as "sovereign debt" and "china funds our spending" are understood improperly because they are generally talked about under the context of redeemable currency.

You are also wrong on money currently in existence. There are different measures of money, M0 is what MMT explains, it does not explain the nature of bank created credit. So I'll need you to read a little more from pragcap and wrap your head around the rest of it.

Steve Keen on how banks are cavalier with credit - ties in nicely with Rothbard's analysis on bank credit that I posted a few posts ago.

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/