As I told Peoplenomics readers yesterday, I finally gave up on my long-term short position and called it a loss yesterday and took both cents and invested on the long side of things. Even though the market is likely to be down at the open, there’s a “paper case” for a massive rally onto new highs between now and the elections since it’s become pretty obvious to me that there’s not a winning republicorp in the field presently. Barring a miracle, the return of Obama II is scheduled and the money crowd is lined up.
But some of my recent comments about money have brought some good questions from readers – like this one:
“Call me provincial George: But could you explain how printing money translates into a higher market rise???”
Good question. This is best explained using the “Thirsty Reader” story.
Pretend, just for a moment that you have just wandered out of the Sahara desert and into an oasis where George has managed to secure water rights. You are dying of thirst and if you don’t pay me enough, you’re not going to get water…and you’ll die.
George, playing the role of the globalistas, isn’t particularly happy to see you die, but takes great comfort knowing that where there’s one customer, there will be others and since fresh water is going up in price, sacrificing a few customers will be more than made up for by higher prices later on. So I’m in no hurry to sell you water, unless I can get all your money.
Well, turns out, that you half-crawl and stumble toward my air conditioned oasis water access point (the small lake is surrounded by concertina wire) and there’s a turnstile-type arrangement making it obvious that you have to pay in order to get to the water. Did I mention the rather nasty (and smelly) guards with big mean dogs on short leash who are circling?
Reaching into your pocket, you haul out a single sweat-soaked dollar bill and offer it to me at the window.
“Is that all you have?”
“Yes…”
“Well, go ahead then, we happen to be having an all-you-can-drink Thursday.”
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What this illustrates is that if we know the amount of “liquid money” available, it sets a limit on the upper price of water of $1 even though you would gladly pay more if you had it.
Now, let’s rerun the example: Once again, you stumble out of the desert but this time instead of a single dollar, you happen to have five $100-bills in your pocket. Knowing that there’s an example being rerun, I’ve turned down my a/c a bit in my ticket booth and I’ve been berating the guards making them even meaner and crankier looking.
“How much money you got on you this time?”
“Five hundred dollars – surely that’s enough?”
“Well, if you promise to come back next times you’re stupid enough to wander into an UrbanSurvival economics example, go on in…this happens to be “Drink All You Can Thursday” and the price is $500-bucks.”
You see what happened, right? The price of drinking your fill out at the oasis was $1 – when that was all the available water money. And with no other conditions than changing the amount of available paper money, the price zoomed up to $500 for the same deal.
This isn’t a perfect example. If it was, I would now be holding $501 dollars, which I’m not. But, it’s very much how the stock market works.
The more “liquid money” there is chasing after “drink money [for brokers]” the higher the paper price of stocks.
Has the underlying utility value of the water changed? Nope. But the price has gone skyward simply because there is more liquid money available.
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But where’s the money?
The headline this morning is one tipper: “EU nears one-year boost in Rescue Fund to $1.3 Trillion.” Oh, sure, that’s just to stave off disaster in the EU (which might paper things over for another year or three, we’ll just keep munching popcorn on that one) but you may rest assured that when $1.3 trillion gets created there will be some “leaking” into the stock market which should push things on to new highs.
And that’s the dandy game of paper money in a nutshell: By creating more paper, things will go up in price. Not value…just price. And that allows a knowledgeable player to make some really simple decisions:
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If the real estate prices don’t break down further (not expected by me until at least after the elections (such as those are) then housing will level off and maybe even rise. More liquid money. Remember, even with equal money, very low rates result in more money to sellers, so it’s kinda like liquid money, capiche?
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Same thing on “hard assets” like silver and gold. Do I think the top is in? Nope, I’m holding on to both coins with all my might. I think higher prices for metals are just ahead.
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Nationally, the price of gasoline is up to $4.19 average for premium. Is oil up a corresponding amount. Any difference? Economic recovery…the amount of liquid money for gas is slightly higher.
So there you have it in a example form: How having money money printed drives up prices. It’s not pretty, and it doesn’t do much but transfer wealth (specifically control of utility values) to unscrupulous guys who hang out at the various oasis around the world. But for now, it’s a fun game for them.
“Junk Food Diet” Feedback
Oh, boy, did I every step in it with the health foodies with my Junk Food Diet idea. Most were concerned that the means each had more than 50% of the daily adult recommended salt content…good point. But since the “bad guy” in salt is sodium and I take half a gram (or more) of magnesium and calcium, the BP hasn’t spiked, although it’s a good point.
One pointer to the RD (registered dieticians) who might work on such things is to look at spicing as an alternative to salt – Mrs. Dash comes to mind.
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Even my coleslaw came under fire, since I am using the K brand leader which is plenty sweet and sourish for my tastes:
“I involuntarily did the TV dinner diet… Finishing a new building at a somewhat remote site, didn’t pay to commute 160 miles round trip, no restaurant within easy reach and no kitchen or even running water. The “weight watchers” light meals ($1.50 at Wallyworld) 3 or even 4 times a day plus some coffee and instant oatmeal for breakfast (all I had was a refrigerator and an electric kettle) took off 10 pounds in a month.
About the slaw-
LOSE THE READY MADE DRESSING. Too oily and too sugary/probably has corn sweetner…
I grew cabbage here in MN last year. Incredibly durable in the fridge, still got 4 heads left at end of March!
1 head red Cabbage
1 head green/yellow cabbage
1 1/2 Cups shredded carrot
1/2 Cup fine chopped sweet onion
Dressing:
1 1/2 Cups low fat yoghurt
1/4 Cups mayonnaise
1 Cup skim milk with 2 Tablespoon lemon juice added- OR 1 Cup buttermilk
About 1/2 Cup apple cider vinegar
About 1/2 Cup lemon juice
Freshly fine ground black pepper to taste
Salt to taste (add 1/2 teaspoon to dressing and taste, add more to finished slaw only after it reposes for at least a couple of hours)
A heavy dash of balsamic vinegar goes well if it is to hand-
A fat pinch of sugar only
Mix the dressing ingredients and whisk or beat with fork. Taste. It should seem TOO TART at this stage
Chop the cabbage into 1/4′s, remove core and then slice thinly across the long axis- don’t use a food processor unless you can adjust it to produce quite a coarse chop, slaw should require chewing… Restaurant slaw with pieces the size of a rice grain is only for the toothless! Actually chewing on your slaw will make you feel fuller…
Add onions, carrots and dressing, mix well and adjust seasonings after about 2 hours repose. I like my slaw with a lemony and peppery edge, just a hint of sweetness. My homegrown yellow cabbages were so sweet I didn’t even need to add sugar to the slaw beyond the pinch in the dressing… The red cabbage needs just a bit. Some like straight yellow cabbage, to each their own!
Good luck with the diet!
As usual, we won’t drop any reader names, but my, oh my, this is an interesting website over here. I sometimes wonder if Homeland Security has a special office just to deal with television and movie productions.. ???
Reader’s Writes
Good thinking here…but….
“George,
I am completely surprised and amazed at your speculation about Mr. Obama. No president except FDR has been elected with the unemployment numbers he has; no president has tried to take us as far left of center (except FRD) and no president has won a presidency with his signature “accomplishment” (Obama Care) rejected by the Supremes as will Mr. Obama. And please remember that the Majority of the country wants Obama Care thrown out. Gas at the rates that it is and will most likely be at the time of the general election, and Mr. Obama wins? I don’t think so!
I read a report this morning that attorney Paul Clement told the court, just as Romney has told Republican primary voters, that states have the power to enact individual mandates whereas the federal government has no such authority.
“I do think the States could pass this mandate,” Clement said today in response to a question from Justice Sonia Sotomayor. “[T]he States can do it because they have a police power, and that is a fundamental difference between the States on the one hand and the limited, enumerated Federal Government on the other.”
Romney has argued throughout the presidential primary that Massachusetts has the ability, under the 10th Amendment, to enact an individual mandate for health insurance. (The Examiner Washington).
There is an axiom that if you say something enough and often you can make it a reality no matter the truth of what is being said. I know you to be a truthful person, so I am not inferring anything about honesty to you, but the mantra that Obama wins reelection from you is unsettling and disturbing. Let’s hope like you going long, which seems to be an oxymoron coming from you, is the same about your prediction of the upcoming presidential election; they both go the opposite way. I am going to Sell! Sell! Sell!”
Fine, then. We each have our opinions, but I got BIG MONEY on my side. So yes, while the S&P might decline to as low as the 1,300 range, I am not at all worried since rallies going into US presidential elections are not terribly uncommon.
If you do want to short-term sell, sell, sell, have at it, but if a snap reversal comes tomorrow and we march smartly up to new highs going into May/June, just don’t whine, whine, whine.
With a slow improvement in unemployment, and plenty of people on various entitlement programs, and big corporate money behind ‘em, the Obama administration will be back. The republicorps are offering an elite, a nut, a sleaze, and an old man (I’m still voting for Paul as a write-in). Political reality is what it is and the republicorps had eight years of Bush II and managed to blow the Housing Bubble up on the way out and got sucked in to the Niger Uranium scandal. Voters aren’t completely stupid.
OK, maybe mostly….but there is only one party in America: The Corporate Party and all the individual contributions in the world don’t mean jacksh** compared to be Big Money that runs America.
OpenSecrets shows Obama has raised $160-million so far. The best the republicorps can do is less than half that (Romney) and with the Newtster spending money defeating Romney, he’s in reality being a spoiler who is just making it that much easier for Obama. If the republicorps had any sense at all, they would have given up their non-negotiable, never give an inch thinking and then the might close ranks and play a team game.
No. Instead they are pissing away good money buying things to throw at one another – like advertising or social media. The democorps buy presidential election voters…the GOP is on the defensive side in this one. Like it or don’t.
Money talks, voters walk. I don’t like it, but going off rabid right wing delusional crazy citing polls by right-of-center cluster sites, doesn’t change the balance sheet. A loss on the budget vote Wednesday just tosses the hot potato back to Congress which in an election year isn’t going to rock the boat any more than they have to.
Write when you break even: george@ure.net
Of Interest to Readers:
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Civilian Conservation Corps 2.0
Due to pressures of work (yada, yada) I don’t think I spend enough time pointing out the ever-growing body of evidence that the USA is in (and has been sin 2000) in a Second Depression which by many measures is worse than the first. It’s not apparent oftentimes because events which accompany economic collapse and unwinding have been spread out over time, so much. But sometimes I notice things which are almost totally “in your face” facts of a Great Depression return – like the current period’s rerun of the Civilian Conservation Corps. But, before we roll back the curtain on this one, a tromp through some of the Friday headlines and a look ahead into what seems to be shaping up in our charts as a big downer. [May load slowly due to lots of graphics this week.
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Safer Computing: Swearing Off Cookies
It has been a while since I roared the praises of the Maxa Cookie Manager which you can download and install for a free test drive by clicking here.
To upgrade from the demo to full working is still less than $30 (During their Spring Sale) and one heck of a bargain at that, if I do say so.
I am a high-reliability computing kind of guy – and near as I have it figured, the road to a hassle-free computing experience is (like flying an airplane) a matter of going through a proper checklist before popping onto the web:
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You need an active cookie manager – because sites you visit can put small bits of code on your computer and some of these are designed for Flash, have no expiration, and can really bugger-up the computing experience. This part gets handled by Maxa Labs’ product which on my system says 184,380 cookies have been removed, 73,881 “web bugs” which can track movement from site to site and such, and I have only 10-active cookies.
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Second thing you need is a good antivirus program – and I happen to really like Avira’s Antivir pro.
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Then you need to deal with Malware so for this Malware bytes is updated and run daily.
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And last, though certainly not least is the firewall and the one in Win 7 works fine.
Like anything in computers, updates are critical so before work every morning, the computer does its update ritual – Check of Maxa (5.3.02 is current) Avira, and Malware bytes.
Toss in a good bit of common sense (example: Don’t open email purporting to be from UPS, IRS, the US Post Office, or anything else that even has a hint of fishy odor to it) and first thing you know, the internet’s actually a useful tool.
“Live on $10,000″ A Year
Having a hard time making ends meet? (Like who isn’t, right?) A good starting point to better match up income with outgo is our $10 e-book “How to Live on $10,000 a Year…or less!”
It’s an automatic download. It’s written in an information dense style: The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the cheap, but also how to migrate up the economic foodchain if you have a little hustle left. A bonus section called “How to Build Anything” should instill confidence if you’ve never taken on a home improvement/home creation project before, too….. Click here for the index and details.
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