And a chart this bad has to have all the trend followers max short as well?

No one in their right mind would go short into this!

(Apart from the MOF which has been buying $ around these levels…)

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17 Responses

  1. Hi Warren,
    I am having a little trouble reading between the lines (of sarcasm perhaps?) Could you please explain the yen outlook for us non financial types in plain English. Thanks.

  2. Mark,

    Warren is saying that the yen is very likely to depreciate (go down) against other currencies, especially the GBP, given the govt’s recent decision to spend outright for fiscal stimulus. This event is highlighted by the fact that for the first time in 11 years, this spending will not be matched by a commensurate bond issuance to “pay” for the spending.

  3. Warren,

    Sorry to be off topic but I’m not sure what the best way would be to send

    I’m wondering if you’ve seen this. It might be worth posting and using it to help the MMT case in the future considering how well respected Warren Buffett is. Here are a couple of quotes from about 9 minutes in.

    http://money.cnn.com/video/news/2010/10/05/n_buffett_MPW.fortune/

    “When people talk about the United States going bankrupt, it’s nonsense. As long as we issue debt in our own currency, the only thing we have to worry about is the printing presses breaking down.”

    “People should always distinguish between debt issued in your own currency and debt issued in someone else’s.”

      1. I had the same thoughts. He seems to think that the high deficit will lead to inflation rather than bankruptcy though, so at least he knows a lot more than the President.

        I have to admit I still don’t fully understand the MMT’s position regarding inflation. Is there a document in the mandatory reading section that explains it well?

        Thanks

      2. Essentially inflation occurs when the supply of money outstrips the supply of goods. Or to put it another way when new money is used for unproductive purposes.

        John Hussman has a good non-MMT article that touches on this:

        “Over the years, I’ve repeatedly emphasized that inflation is primarily a reflection of fiscal policy – specifically, growth in the outstanding quantity of government liabilities, regardless of their form, in order to finance unproductive spending. Look at the experience of the 1970’s (which followed large expansions in transfer payments), as well as every historical hyperinflation, and you’ll find massive increases in government spending that were made without regard to productivity (Germany’s hyperinflation, for instance, was provoked by continuous wage payments to striking workers). ” http://www.hussmanfunds.com/wmc/wmc101025.htm

      3. when spending outstrips supply, which is ‘demand pull’ and traditionally what’s been called inflation

        or when costs rise, as from an external oil monopolist, which is a very different matter, and historically the source of what’s been called ‘inflation’ in the US since WW11

      4. Most people know that the US government cannot go bankrupt including Kotlikoff. However, they remark pejoratively “They can print the money right”

      1. Cool

        So we’ll give you credit for educating Warren Buffet!!

        Thats quite a special place to hold 🙂

  4. Off topic again, but MMT discussion elsewhere.

    Politics, economics and Hotelling’s law.

    http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/10/miliband-hotelling-vs-overton.html

    “[This law] says that it is often rational for firms/political parties to make products very similar.

    […]

    “Because no mainstream party will espouse modern monetary theory, or some variant thereof, entirely reasonable economic positions are denied the respectability they deserve.”

    1. The idea will spread and people will come to know it. You’ll it’s taken root when talk of U.S. bankruptcy and deficts no longer attract votes. Politicians mostly parrot our own fears back to us. That lets you know where the control really is….

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