Rethinking Motivation

Another brilliant TED talk and articulation of why the old paradigm and traditional models of work/achieve/reward simply do not play out as expected and will continue to not play out as expected in the years/decades to come. In short, providing human beings with Autonomy, Mastery and Purpose within what they do serves as a far more motivational and productive instrument than cold hard cash and/or fear of losing one’s job.

Intermediate Economics - The “Money Multiplier”

OK class, if you found the 1st Lesson informative and interesting here’s another (though a bit more complicated) discussion for you about why the creation of $7+ Trillion in debt is not a good thing for our Nation or the world at large.

First things first, you need to understand 2 fundamental concepts:

1. The Economic Theory that many/most of our financial systems and models are based on is/was largely derived from the assumption that people will act rationally and that specific industries work within economic vaccumes of sorts.

2. The “Money Multiplier” is a term that represents how a $1,000 deposit in a bank will allow the bank to lend $9,000 from the initial deposit over time and retain only $1,000 in hard cash as a “reserve”.

Alright, now that you have these concepts in mind, let’s jump into the meat of things… “The Roving Cavaliers of Credit” by Steve Keen

“Slow Money” at NextSpace on Jan 22nd

Author Woody Tasch will be at NextSpace on January 22 at 6:30 pm to discuss his book SLOW MONEY.  In these difficult economic times, I think Woody offers us a very Santa Cruz solution that will allow our community to leverage its ideals and strengths to create a sustainable economy.
……………….
Author and Investor’s Circle founder Woody Tasch will discuss his new book, Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered, at Nextspace (101 Cooper St) in Santa Cruz, CA on January 22nd at 6:30 pm. This event is free and co-sponsored by Nextspace, Pacific Mountain Advisors, and Bookshop Santa Cruz. Call 831-420-0710 or veronica@nextspace.us for more information.

Inquiries into the Nature of Slow Money presents the path for bringing money back down to earth—philosophically, strategically and pragmatically, and with an entrepreneurial spirit that is informed by the work of thousands of CEOs, investors, grant-makers, food producers and consumers who are seeding the restorative economy.  This mission emerges from Woody Tasch’s decades of work as a venture capitalist, foundation treasurer, and entrepreneur. His explorations shed new light on a truer, more beautiful, more prudent kind of fiduciary responsibility, a fiduciary responsibility that is not stuck in the industrial concepts of the nineteenth and twentieth centuries, but which reflects the new economic, social and environmental realities of the 21st century.

Woody Tasch is chairman of Investors’ Circle, a nonprofit network of investors that has facilitated the flow of $130 million to 200 sustainability-minded, early stage companies and venture funds. An experienced venture-capital investor and entrepreneur, he has served on numerous for-profit and non-profit boards, and was founding chairman of the Community Development Venture Capital Alliance, which supports venture investing in economically disadvantaged regions. He lives in northern New Mexico.

Debt Monetization = Inflation

OK class, here’s one of the most fundamental lessons in economics…

Monetization of market-less bankrupt debt with no guarantee of recovery in value is the ULTIMATE ACT OF INFLATION. For this case study we’ll speak directly to the US dollar.

Axiom: To monetize debt is to inflate currency

What Does Monetize Mean?
1. To convert into money.
2. To convert from securities into currency that can be used to purchase goods and services.

New York Fed Begins Purchases of Agency Mortgage Debt (Update1)
By Craig Torres

PS. The IMF and World Bank strictly prohibit their nation “clients” to monetize their debt… and yet this is EXACTLY what our Federal Reserve, Treasury and Congress are doing and have been doing for years to keep the perceived value of the dollar afloat.

PPS. Our founding fathers warned against this, and the creation of a privately held Federal Reserve, and the implementation of a 2 party political system…

Quotes from 2008

My dad’s a banker and sends me financial data, analysis and forecasts daily as he reads through mountains of this information and picks out the relevant/interesting stuff. Below is from an email he sent me today revealing just how ridiculous and off base some of the seemingly educated and informed talking heads are in the financial sector. Though this isn’t new news to most of us, it is entertaining. Enjoy.

…………

BusinessWeek published some good (I mean terrible) quotes from 2008. Here they are: (the comments are theirs, not mine).
1. “A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!” —Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
At the time of the prediction, the Dow Jones industrial average was at 12,300. By late Dece mber it was at 8,500.

2. AIG (AIG) “could have huge gains in the second quarter.” —Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008
AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.

3. “I think this is a case where Freddie Mac (FRE) and Fannie Mae (FNM) are fundamentally sound. They’re not in danger of going under…I think they are in good shape going forward.” —Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008
Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.

4. “The market is in the process of correcting itself.” —President George W. Bush, in a Mar. 14, 2008 speech
For the rest of the year, the market kept correcting…and correcting…and correcting.

5. “No! No! No! Bear Stearns is not in trouble.” —Jim Cramer, CNBC commentator, Mar. 11, 2008
Five days later, JPMorgan Chase (JPM) took over Bear Stearns with government help, nearly wiping out shareholders.

6. “Existing-Home Sales to Trend Up in 2008″ —Headline of a National Association of Realtors press release, Dec. 9, 2007
On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million—down 11% from a year earlier—in the worst housing slump since the Depression.

7. “I think you’ll see [oil prices at] $150 a barrel by the end of the year” —T. Boone Pickens, June 20, 2008
Oil was then around $135 a barrel. By late December it was below $40.

8. “I expect there will be some failures. … I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.” —Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008
In September, Washington Mutual became the largest financial institu tion in U.S. history to fail. Citigroup (C) needed an even bigger rescue in November.

9. “In today’s regulatory environment, it’s virtually impossible to violate rules.” —Bernard Madoff, money manager, Oct. 20, 2007
About a year later, Madoff—who once headed the Nasdaq Stock Market—told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.

10. A Bound Man: Why We Are Excited About Obama and Why He Can’t Win, the title of a book by conservative commentator Shelby Steele, published on Dec. 4, 2007.
Mr. Steele, meet President-elect Barack Obama.

With all the talking heads out there, it probably wouldn’t be hard to find some silly comments, but these aren’t talking heads. These are Ph.Ds (they’re supposed to know what they’re talking about), politicians (they have huge staffs that can do massive research for them), journalists (they’re supposed to be experts in their field) and T. Boone Pickens (who should know better).

These quotes are the #1 reason I’m a technical analyst who doesn’t pay attention to the fundamentals or the story. The best and the brightest are often wrong. A chart will tell me very quickly if I’m wrong, but the fundamentals or story will lag so small losses turn into big losses. It’s much more reliable to study the price action – because you’re trading the price action – and leave the other stuff alone.