Being permanently bearish on equities definitely pays.
Just ask ZeroHedge. Unfortunately, for wool-dyed pessimists and the other overly-skeptical black sheep of the thundering herd, it pays apocalyptic newsletter writers’ paychecks, and ZeroHedge/Tyler Durden’s Manhattan bar tabs rather than those who permanently position against market priapism. And it’s worse than zero-sum because those who are optimistically-challenged often pay for the bad advice – whether directly in subscriptions, inflated margins on retail bullion products, or indirectly via page-views and click-throughs AND then they get hosed by the market.
The first step to improving behaviour toxic to one’s own self interest is admit one has a problem. As an aid to help those who have difficulty in distinguishing “a bearish trade” from “the lead boots of anger and pessimism”, I’ve devised a little something I call the ZeroHedge Test to determine more precisely whether readers objective realities are sufficiently paranoid, pessimistic, anti-social and rantingly angry to warrant more serious help.
Instructions: Circle the letter that best describes the accompanying image:
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a. a glass of water b. glass of water, half-empty c. glass of water, half-full d. glass of errrr ummm , Grey Goose vodka? (NB: ed. choice) e. The US Government must have stolen half of a glass of water.
a. First black elected (and first to be re-elected) President of the USA b. Barack Hussein Obama c. A Former Senator from Illinois d. tall guy who used to like to sneak a cigarette now & then e. Jezebel, dark Sith Lord Vader Emperor & Chief of the Plunge Protection Team. Odious non-American african muslim responsible for taking away our world-beating healthcare, encouraging the immigrants and foreigners who took our our jobs, and formulating a secret plan to put two-dads in every home.
a. Something that still buys a 12oz can of Coca-Cola b. A greenback, worth a dollar, which, on average, an American is paid each 4 minutes of work c. A US Federal Reserve Banknote almost universally accepted in exchange for goods and services the world over d. A cocaine hoovering apparatus c.1978 e. Worthless fiat toiletpaper, so useless that bric-a-brac, watches, baseball cards or bitcoin should be more preferred than this P.o.S. that forms part of the elders of Zion grand plan to steal your labour savings before eating your babies.
a. six would-be wedding bands b. 1oz novelty of pure gold smelted by JM c. Au = element #79 on Periodic Table d. Reward for a 9.59 sec 100m e. The solution to all our financial problems…changer of men from liberal faggot zionist atheist swine into god-fearing hardworking people of fortitude and rectitude…curer of cancer, balancer of budgets….purifier of all our precious bodily fluids and divinely-given laws….come, my preciousssss…
a. ummm Europe? b. Site of the war which was believed to be the war to end all wars (excepting the worse one that immediately followed) c. Continent with mix of culture, cuisine, history, engineering, and civilized living standards d. A place for Brits to go on holiday e. Socialist commie cesspit of looney bureaucrats, unworkable financial alliances, gulag-healthcare systems, leading the world in obstinate unions, lazy workers, regulatory morass and geographical epi-center of the soon-to-be-arriving disintegration of civilized life on earth.
a. a bull market b. an uptrend c. a squiggly line d. reflection of long-term (nominal) growth e. an accident waiting to happen caused by insane, stupid, or insanely stupid people, or conspirators doing insane and stupid things that will end very very badly with the dystopian destruction of the civilized economy as we know it and reversion to an economic life of warlords and barter using nuggets of gold and silver as portrayed in that film with Kevin Costner, “The Postman”….
a. beginning of a 5-year bull market b. beginning of an uptrend c. a squiggly-line d. technical reversal of severely oversold position e. an obvious orchestrated short-squeeze caused by the elders of zion and their 0.1% lackeys controlling the Soros-Rubin-Banker-Fed-Axis pulling the levers at the Fed Plunge Protection Team for the sake of enriching their cabal whilst duping and hiding the truth of how the rich steal money from hardworking ordinary Americans.
a. a pooled investment in Gold b. a low-cost alternative to buying, holding, storing & insuring physical commodities c. an easy liquid way to bet on the price of gold d. useful asset allocation tool for diversification e. a conspiracy to defraud honest hard-working speculative investors who’ve put their hard-earned savings into physical bullion held at secure vaults outside the USA, who have been cheated by the depressing influence these instrument have on the physical gold price by diluting the buying power which would otherwise raise the price of Gold benefitting all the other paranoid gold-bugs and survivalists who’ve already bought physical bullion in the form of coins at significant premiums or for delivery in a secure vault outside the USA.
a provider of goods for the shelves of Walmart b. ambitious nation that has (for the moment) successfully lifted hundreds of milllions of her citizens out of poverty c. future demographic bomb resulting from 1-child policy d. one of the oldest civilizations who made fine silks when most Europeans were donning animal skins e. yellow peril mercantilist currency manipulator who took our jobs (please watch -C.) who are taking the places of children of hard-working americans at our top universities and the trading rooms on Wall Street, and who are taking over ownership of our country.
a. a man with a beard b. Nobel-prive winning economist c. Princeton Prof & contentious NYT columnist d. Consistent proponent of the view that it is better to try to grow rather than austerity our way out of economic depression. e. A liberal faggot anti-christ he-Devil, devoted to Keynes and insulting to the spirit of the greatest economist of all time: Ludvig von Mises causing vilifiers to wonder why the USA Govt can increase its credit card bill, when if they do it (individually), they just get mean letters from Capital One or the card-services department at their bank; just wants to take the money of hardworking Americans and give it to entitlement-cheats who make babies to collect welfare and food stamps so they can buy drugs and Fritos (in that order).
a. impractical fashion trend b. An accessory when listening to late-night radio c. a joke from ser. 6, ep. 6 of Big Bang Theory d. art project c.1977 gone very wrong e. an important tool in preventing aliens and the American government from influencing your thoughts and controlling your brain which is one of the best kept secrets along with the PPT, George Soros’ role as the leader of the conspiracy by the Elders of Zion to take over the world financial system and rule the world and keep the hard-working man dumb and stupid and rig the system against hard-working Americans.
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How to Score:
a=1pt; b=1pt; c=1pt; d=1pt; e=5pts
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Interpreting the results:
11 – Surely a grad from an effeminate liberal east-coast university 12 – 22 – Got some financial redneck potential in you 23 – 33 – Wishing you had a Kazcynski-cabin of your own? 34 – 44 – Likely owner of guns, ammo, & survivalist subscriber 45 – 55 – Honorary Fight Club Member; NB: The NSA is watching you…
Warren Mosler and adherents of modern monetary theory, called deficit owls, are seen as a counterpoint to those who want to return to the gold standard. Richard Perry/The New York Times
Mr. Mosler, who lives in St. Croix, V.I., started his career at a small bank in Connecticut, became a Wall Street trader and in 2010 ran for Senate in Connecticut as an independent. Richard Perry/The New York Times
In the 1980s he designed a fuel-efficient [sic - sports] car, the Consulier. Richard Perry/The New York Times
By ANNIE LOWREY Published: July 4, 2013
CHRISTIANSTED, V.I. — Warren Mosler is a card-carrying member of the 1 percent. A deeply tanned, tennis-lean hedge fund executive, Mr. Mosler lives on this run-down but jewel-toned Caribbean island for tax reasons. Transitioning into an active retirement, he recently designed and had built an $850,000 catamaran called Knot My Problem. He whizzes around St. Croix in a white, low-slung sports car he created himself, too.
But his prescriptions for economic policy make him sound like a warrior for the 99 percent. When the recession hit, Mr. Mosler said, the government should have spent and spent until unemployment came down to a comfortable level. Forget saving the banks through the Troubled Asset Relief Program. Washington should have eliminated the payroll tax, given every state $500 per resident and offered a basic job to anyone who wanted one.
“There would have been no recession,” Mr. Mosler, 63, said over a salad at a hole-in-the-wall seaside cafe called Rum Runners.
Washington’s debts would have soared, of course. But Mr. Mosler sees no problem with that. A failed Senate candidate in Connecticut with unorthodox but attention-grabbing economic theories, he says he believes the United States should be running much bigger deficits and that the last thing the government needs to worry about is balancing its budget.
Mr. Mosler’s ideas, which go under the label of “modern monetary theory,” or M.M.T., are clearly on the fringe, drawing skeptical reactions even from many liberal Keynesian economists who agree with some of his arguments. But they have attracted a growing following, flourishing on the Internet and in a handful of academic outposts, as he and others who share his thinking have made the case that austerity budgeting in the United States and in Europe is doing irreparable harm.
Like many Keynesian economists, Mr. Mosler and other modern monetary theorists are particularly disturbed by the longstanding campaign articulated and financed by Peter G. Peterson, a former commerce secretary who co-founded the Blackstone Group private equity fund, to reduce the deficit or else.
“There’s a whole deficit lobby of Peterson-funded groups arguing we’re turning into Greece,” said James K. Galbraith, an economist at the University of Texas at Austin. “They’re blowing smoke and the M.M.T. group has patiently explained why.”
Still, even for those with some knowledge of economics, the tenets of the modern monetary theory can make your head spin. The government does not tax its citizens to pay for federal spending. It taxes them to ensure they use the dollar and to help to regulate demand. Since the government prints the dollar, it can never run out of money and it need never balance its budget, not even to prevent the crowding out of private investment when the economy is humming along.
What about inflation? “What about it?” Mr. Mosler replied. “How can the United States have $16 trillion in debt and still be on the verge of deflation, even when Chairman Bernanke’s using every alphabet-soup trick in his book?”
To mainstream economists, Mr. Mosler and his adherents represent something of a counterpoint to the handful of academics on the right who believe the United States should return to the gold standard because the government is supposedly going bankrupt and the Federal Reserve under Ben S. Bernanke is debasing the currency.
“They deny the fact that the government use of real resources can drive the real interest rate up,” said Mark Thoma, an economics professor and widely followed blogger [ http://economistsview.typepad.com/ ] who teaches at the University of Oregon. After delving into the technical details of modern monetary theory for a few minutes, he paused, then added, “I think it’s just nuts.”
But just as a return to the gold standard has attracted a popular following — including many supporters of Ron Paul, the charismatic former Texas congressman — so has modern monetary theory, which has been spread on the great stage of the Web. A thriving academic blogosphere brings ideas up and knocks them down, and popular sites like Business Insider [ http://www.businessinsider.com/ ] and Naked Capitalism [ http://www.nakedcapitalism.com/ ] have given modern monetary theorists a platform to join in.
“These ideas definitely aren’t disseminated through published academic journals,” said Stephanie Kelton, an economist at University of Missouri-Kansas City, who coined the term “deficit owls” to distinguish modern monetary theorists from “deficit hawks.” “It’s all on the Internet.”
Mr. Mosler has played a pivotal role in promoting the theory, and unlike many economists he has the resources to do so. He runs a popular blog called the Center of the Universe [ http://moslereconomics.com/ ], a sly joke, perhaps, given that tiny, tropical St. Croix, which is about 1,200 miles from Miami, is the easternmost point in the United States. He eagerly appears on radio programs and on television. Recently, he went on a tour of Italy to promote his anti-austerity ideas.
He has also helped to build an infrastructure to mint new modern monetary theorists, helping to found the Center for Full Employment and Price Stability [ http://www.cfeps.org/ ] at the University of Missouri-Kansas City, and financing a small army of graduate students. “Someone once said that economics advances one funeral at a time,” Mr. Mosler said, chuckling. “The hope is that we have a generation of economists coming up who really understand how things work and can put those ideas to a public purpose.”
There were also a few self-financed political campaigns, including some fruitless races in the Virgin Islands. In his 2012 run, Mr. Mosler said he believed the voting was rigged. He made a vanity run for Senate in Connecticut in 2010 as an independent, making waves by offering to use $100 million of his own money to pay down the deficit if any member of Congress could prove that government spending was actually constrained by tax revenue. He came in third, with about 1 percent of the vote. “It was a mistake,” Mr. Mosler said of running in Connecticut. “It did get the ideas out there, though.”
Mr. Mosler started his career at a small bank in Connecticut, and eventually became a Wall Street trader. It was there, he said, that he developed an intuitive understanding of how the economy works — one very different from that of policy makers in Washington and the vast bulk of academics.
“All debt management is, is debiting and crediting different accounts,” Mr. Mosler said, recalling seeing numbers appear and disappear from his computer at Bankers Trust in New York in the 1970s. “Can the federal government run out of dollars? No, because the Fed could pipe in a bigger number. That number doesn’t come from anywhere. It’s like when a player scores a field goal at a stadium. Three points just appear. The government is just the scorekeeper for the dollar.”
In the early 1980s, he left Wall Street and along with a partner, Clifford Viner, who is now the owner of the Florida Panthers hockey team, founded a hedge fund in Boca Raton, Fla. The fund made relatively few, relatively complicated financial bets, said Michael Reger, a partner of Mr. Mosler’s for the last 20 years. “He’s an urban myth,” Mr. Reger said of the affable, talkative and bookish Mr. Mosler.
Mr. Mosler’s fund has made a number of bets informed by his theory. For instance, Mr. Reger said, when the Treasury was paying down the United States debt during the Clinton years, many bond traders thought that prices would spike because of increasing scarcity. But Mr. Mosler predicted that no such scarcity would ever materialize, and shorted the bonds.
That trade panned out, though others have not. The business lost hundreds of millions of dollars betting that Russia would not default on its debts. That country’s fixed exchange rate spurred it to go belly up, Mr. Mosler said.
On the side, he ran Mosler Automotive, which created several dozen low-slung, lightweight, superfast sports cars over its nearly 30 years in business. That passion project never quite worked out, he said, and he is now in the process of selling it off. “The Consulier got named one of the 50 worst cars ever made by Time magazine,” he said with a laugh. “Look it up [ http://www.time.com/time/specials/2007/article/0,28804,1658545_1658533_1658528,00.html ]!”
But entering retirement, Mr. Mosler has more than enough work to do promoting his monetary theories, he said.
“Economics is about the allocation of scarce resources,” Mr. Mosler said. “If there’s a food shortage, you have a real problem in divvying up the food. Right now, we have a dollar shortage because of mistaken notions about how the monetary system works. How does that make any sense?”
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