Saturday, January 17, 2015

I had an earful of the Tiffen Dilemma. Somehow during the Nixon reign, at a Bretton Woods congregation-somebody decided that whoever holds the world's reserve currency has to be in deficit to the world so that there was enough reserve currency available throughout the world. 

I'm just going to stop right there because I strongly believe that monetary policy is a fallacy of false outcomes and the Federal Reserve is not going to fix anything. They don't have the tools to.

I'm not a believer in monetary policy, but a fiscal and legislative one that will fix the U.S. economy. 

The country's economy was not only trashed by massive trade deficits with OPEC and China, but a severe investment deficit as well. 

The boomer voting and fiscal majority elected politicians made a huge epic mess out of this. 
There is literally no volume on the US stock exchanges.

The Asians LOVE to invest. It's part of that gambling gene. Asians love businesses. This is inevitable. Maurice Greenberg made bank for AIG when he sold insurance to the Chinese back in 1992 (I think TARP bailed out the wrong people for this reason, the others are useless). 

We needed to put Asia to good use before "overinvestments" over heat their economy again like it did in the late 90's.

So refereed by Malaysia and India, the Multilateral Investment Agreement between the US and China in 1995 was a complete disaster because the wannabe Nixon then POTUS Clinton didn't convince China to remove their barriers to the U.S. financial sector.

So the only Cash Flow to the US was from the U.S. Treasury funded by foreign governments - whom the Federal Reserve could not afford to print or buy treasuries without (France loaned Britain gold during their quantitative easing with the bank of England a few centuries ago).

Again, all this did with no cash flowing through the private sector was give the US politicians/government a monopoly of power over the private sector and U.S. citizens through this absolutist massive amount of leverage. 

The other massive disaster was replacing Glass Stegall with SOX. 

Back during the Reagan administration, the actor who majored in economics cut taxes to encourage the wealthy to bring their money back to the U.S., and they had nothing better to do than to invest it.  Reagan's economy produced 84% employment to population growth and Clintons had 79%.  Back in 1996, there were 675 IPOs.  IN 2012, I believe there were 19?  For companies that already exist. 

Being that Glass Stegall was still law, that money fueled business growth which resulted in the largest employment/population growth in the history of the world.

Now we have some assets collataeralizing loans.  SOME.  Not $4 quadrillions worth.

Petrodollars have provided liquidity to banks.   Because of things like SOX red tape to venture capital, IPOs, etc., the Frank Dodgy thingie,  and the excessive taxation on mid-sized companies, those bank loans were sold as mortgages. 

Houses are merely inanimate objects.  They don't create value.  People create value and in this country, it's through businesses.  And you need Research and Development fees assigned with your operating cash flow in order to get this accomplished.  And I believe that the techies voted for all of that red tape to protect themselves from competition.  Not from PR's, but their own personal character and outlooks on how to retain that market share. The trouble is their block is a negative externality to every other sector and the entire economy leaving many Americans out of work?   It was recklessly implemented.  And the connections to Venture and Private Equity in the San Francisco Yay Area of gold diggers is deeply bottlenecked. 

And in a more political economy- and on the thesis of "New Trade and Michael Porter" that a "limited government should support an emerging industry to help it gain that competitive advantage (ie. "strategic Trade Policy).... a little company in the global market is like sending a floating device to save the Titanic in our business climate. 

How do you qualify for a Dim Sum Bond in this rip tide?  They want a track record like anyone else before they trust you with investor money.  If the stock market isn't going to perform there, the bonds will and bonds are getting more expensive when they raise their interest rates. 

I know that the Boomers are threatened by younger generations and they like to patronize, condescend and put us down-they did so in the Main stream media with their thrive on negativity influence.  But come on.  This is ridiculous. 

No comments:

Post a Comment