Bubbles

can you estimate roughly how many times you've now posted this same information? 30? more?

LICC,
your obsession with steve is astounding. are you secretly envious of his status as renter in manhattan? or is it exposure to toxins?
it's OK..settle down....we understand that you differ with what you represent to be these 4 points made by steve..it's gonna be OK

I hadn't commented on at all on this thread and steve brought me up multiple times. I know it is tough on you when facts get in the way of your opinions.

how about the 47 other threads where you said the exact same thing? they don't count?

"malraux used to throw Kruggerands into his safety deposit box at the bank - and he wanted us all to believe that he had a real-estate empire."

Steve, do you think Malraux disappeared or still posts under a different alias?

one wonders. he didn't seem the type to go quietly out of sight. even more so than the spunkmeister.

I do miss spunky.

malraux - since he was exposed as a fraud (and lost his weasel bet) has run away with his tail between his legs, and now lives in rural Idaho in a shack next to an explosives depot.

LICC: "In steve's world of lunacy, income paid to you in 2011 gets reported on your 2010 income tax return, because it was "declared.""

IRS: "Dividends received in January. If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. You report the dividend in the year it was declared."

http://www.irs.gov/publications/p17/ch08.html#en_US_publink1000171629

What an arse.

Poor LICC: doesn't know the difference between a "derivative contract" and a "derivative instrument":

http://www.businessdictionary.com/definition/derivative-contract.html
http://www.riskglossary.com/link/derivative_instrument.htm

I know it's subtle, LICC, but if you put your mind to it you can get it to work for you.

"the strategies used in managing a portfolio of bonds are not different whatsoever from the technique used to trade a singe particular bond"

Read another way, "The whole (managing a portfolio of bonds) is not equal to the sum of the parts (the "technique used to trade a [single] particular bond").

What is that technique, pray tell, LICCdope?

"steve has been exposed as someone who does not have sufficient intelligent understanding about that of which he speaks. Fact."

Thanks for reinforcing this point with your above comment steve.

But, but, but, but, but ..... what about this bubble asset in my tooth? Are you saying it's so terrible that I should have it removed and replace it with something valuable? What should I use to fill this cavity instead?

LICCdope: In steve's world of lunacy, income paid to you in 2011 gets reported on your 2010 income tax return, because it was "declared."

IRS: "You report the dividend in the year it was declared."

LICCdope: "steve has been exposed as someone who does not have sufficient intelligent understanding about that of which he speaks. Fact."

Hmm....

Outfoxed and outargued again, LICC resorts to saying more dumb things.

Gold is in a bubble, LICCdope. As is Manhattan housing.

We aren't talking about dividend declarations. We never were talking about that. We were discussing bonuses. The payment of bonuses to you by your employer. You assert that bonuses paid to you in 2011 are reportable on your 2010 tax return. This assertion remains idiotic.

Thanks for continuing to make a fool of yourself.

Wrong again, LICCdope:

Section 409(a) of the IRS code defines when taxes are paid on bonuses, or other deferred income. Unless the plan specifically meets the requirements of Section 409(a), the bonuses are payable at the time they vest, not when they are actually paid:

http://www.lw.com/Resources.aspx?page=FirmPublicationDetail&office=22&publication=3746

You can read the details here:

http://www.409alaw.com/finalregulationsundersection409a/

Thanks for continuing to make a fool of yourself.

steve continues to reach for anything he can to obfuscate the fact that his assertion is moronic.

Thanks for meaningless links about bonuses around the world and on deferred compensation. Now to the issue at hand. A bank pays its employee as part of his or her compensation a bonus in 2011. We are not talking about deferred comp. We are talking about paying a bonus. The employee reports that income on his her 2011 tax return. To assert that it is reported on his or her 2010 return continues to be absolutely stupid.

steve, you should quit this argument now and stop making more of a fool of yourself.

Wrong again, LICCdope:

http://www.irs.gov/newsroom/article/0,,id=172883,00.html

The concept of "deferred income" is defined in the law. You aren't free to redefine it for the purposes of your dopey posts.

"you should quit this argument now and stop making more of a fool of yourself."

HAHAHAHA!

"its funny how gold brings out such emotions. why is that?"

UD,

There's a saying and it goes like this...

"There's no fever like gold fever.".

It's true, gold isn't money but it's a store of wealth.

Take that 1 oz golden eagle to a gold shop, ebay, craigslist, etc. and i can GUARANTEE you will can exchange it for $1,400 USD.

I'm glad steve's insanity is on display here for all to see. Either he doesn't understand the difference between discretionary bonuses and deferred income (likely since his intellectual comprehension skills are low), or he is being disingenous to try to cover his idiotic mistake. Either way, the fool continues on . . .

> gold isn't money but it's a store of wealth.

it has the enviable property of Bernanke being unable to reproduce it over and over again to come to the rescue of underwater homeowers.

LICCdope - you're getting more desperate by the moment. Discretionary bonuses can, in fact, be deferred, which is why the law was enacted.

Thus, the rule is that discretionary bonuses declared one year but payable the next are taxable in the year of declaration, UNLESS the plan is structured to conform with Section 409(a) of the federal tax code.

Proved wrong once again, LICCdope goes off the deep end.....

In fact, LICCdope doesn't even comprehend that if you declare a bonus in December and pay it in April, it is DEFERRED.

Deferred means "delayed," LICC. Not immediate.

Get it?

HAHAHAHAHA!

steve keeps sinking and sinking.

The funny thing is he knows he is wrong and looks like an idiot, but he still writes ridiculous things to try to weasel his way out of it.

LICC - Wrong on Taxes, Wrong on Everything.

You pay taxes on a cash bonus for the year in which you receive it.

Mutual fund distributions are not employee bonuses.

Gold is not a tulip.

"You pay taxes on a cash bonus for the year in which you receive it."

If you have a 409(a) compliant plan and are paid by March 15 of the next year, that is true.

Not all plans are 409(a) compliant, not all payments are made by March 15, and not all bonuses are in cash.

Actually, tulips are really worth more than gold, because they're edible.

From the American Heritage Dictionary(and based on this Gold *IS* mone)

n. A medium that can be exchanged for goods and services and is used as a
measure of their values on the market, including among its forms a commodity
such as gold, an officially issued coin or note, or a deposit in a checking
account or other readily liquifiable account.

Read this and laughed...

http://www.ritholtz.com/blog/2010/11/quantitative-mining-debasing-gold/

Its obvious from the chart below that Gold has no intrinsic value. Forget QE, the Gold Miners are doing QM Quantitative Mining. These irresponsible Miners are “printing gold” by scraping it out of the ground as fast as they can. They are debasing it as a store of value, and are no better than central bankers with their fiat currencies and printing presses.

Silver, not Gold should be the reserve currency of the world!

i can sell my gold and buy much more food with it, and it will taste better than tulips. As long as the gold market is liquid. Cmon steve

"As long as the gold market is liquid."

Yup. As long as you're sending your jewelry for Glen Beck to melt down.

I'm still waiting for RS - or now UD - to tell me: how do you pay interest if the currency is gold, and the quantity of gold is fixed?

steve stop being stupid or playing stupid...

Under a gold standard, paper notes are convertible into pre-set, fixed quantities of gold.
The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. There are distinct kinds of gold standard. First, the gold specie standard is a system in which the monetary unit is associated with circulating gold coins, or with the unit of value defined in terms of one particular circulating gold coin in conjunction with subsidiary coinage made from a lesser valuable metal.
Similarly, the gold exchange standard typically involves the circulation of only coins made of silver or other metals, but where the authorities guarantee a fixed exchange rate with another country that is on the gold standard. This creates a de facto gold standard, in that the value of the silver coins has a fixed external value in terms of gold that is independent of the inherent silver value. Finally, the gold bullion standard is a system in which gold coins do not circulate, but in which the authorities have agreed to sell gold bullion on demand at a fixed price in exchange for the circulating currency.

Gold certificates were used as paper currency in the United States from 1882 to 1933. These certificates were freely convertible into gold coins.
Contents [hide]
1 The gold specie standard
2 The crisis of silver currency and bank notes (1750–1870)
3 The gold exchange standard
4 The gold bullion standard
5 Dates of adoption of a gold standard
6 Suspension of the gold standard
6.1 Gold standard from peak to crisis (1901–1932)
6.1.1 Suspending gold payments to fund the war
6.2 Depression and World War II
6.2.1 Prolongation of the Great Depression
6.2.2 British hesitate to return to gold standard
6.3 Post-war international gold-dollar standard (1946–1971)
7 Theory
7.1 Differing definitions
8 Advantages
9 Disadvantages
10 Advocates of a renewed gold standard
11 Gold as a reserve today
12 See also
13 References
14 Further reading
15 External links
[edit]The gold specie standard

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A gold specie standard existed in some of the great empires of earlier times. One example is the Byzantine Empire, which used a gold coin known as the Byzant. But with the ending of the Byzantine Empire, the European world tended to use the silver standard. An example is the silver pennies that became the staple coin of Britain around the time of King Offa in the year 796 AD. The Spanish discovery of the great silver deposits at Potosí and in Mexico in the 16th century led to an international silver standard in conjunction with the famous pieces of eight, important until the nineteenth century.
In modern times the British West Indies was one of the first regions to adopt a gold specie standard. Following Queen Anne's proclamation of 1704, the British West Indies gold standard, was a 'de facto' gold standard based on the Spanish gold doubloon coin. In the year 1717, master of the Royal Mint Sir Isaac Newton established a new mint ratio between silver and gold that had the effect of driving silver out of circulation and putting Britain on a gold standard. However, only in 1821, following the introduction of the gold sovereign coin by the new Royal Mint at Tower Hill in the year 1816, was the United Kingdom formally put on a gold specie standard.
The United Kingdom was the first of the great industrial powers to switch from the silver standard to a gold specie standard. Soon to follow was Canada in 1853, Newfoundland in 1865, and the USA and Germany 'de jure' in 1873. The USA used the Eagle as their unit, and Germany introduced the new gold mark, while Canada adopted a dual system based on both the American Gold Eagle and the British Gold Sovereign.
Australia and New Zealand adopted the British gold standard, as did the British West Indies, while Newfoundland was the only British Empire territory to introduce its own gold coin as a standard. Royal Mint branches were established in Sydney, New South Wales, Melbourne, Victoria, and Perth, Western Australia for the purposes of minting gold sovereigns from Australia's rich gold deposits.
[edit]The crisis of silver currency and bank notes (1750–1870)

To understand the adoption of the international gold standard in the late 19th century, it is important to follow the events of the late 18th century and early 19th. In the late 18th century, wars and trade with China, which sold to Europe, but had little use for European goods, drained silver from the economies of Western Europe and the United States. Coins were struck in smaller and smaller amounts, and there was a proliferation of bank and stock notes used as money.
In the 1790s England suffered a massive shortage of silver coinage, and ceased to mint larger silver coins, issued "token" silver coins and overstruck foreign coins. With the end of the Napoleonic Wars, England began a massive recoinage program, that created standard gold sovereigns and circulating crowns and half-crowns, and eventually copper farthings in 1821. The recoinage of silver in England after a long drought produced a burst of coins: England struck nearly 40 million shillings between 1816 and 1820, 17 million half crowns and 1.3 million silver crowns. The 1819 Act for the Resumption of Cash Payments set 1823 as the date for resumption of convertibility, reached instead by 1821. Throughout the 1820s small notes were issued by regional banks, which were finally restricted in 1826, while the Bank of England was allowed to set up regional branches. In 1833, however, the Bank of England notes were made legal tender, and redemption by other banks was discouraged. In 1844 the Bank Charter Act established that Bank of England Notes, fully backed by gold, were the legal standard. According to the strict interpretation of the gold standard, this 1844 act marks the establishment of a full gold standard for British money.
The US adopted a silver standard based on the "Spanish milled dollar" in 1785. This was codified in the 1792 Mint and Coinage Act, and by the Federal Government's use of the "Bank of the United States" to hold its reserves, as well as establishing a fixed ratio of gold to the US dollar. This was, in effect, a derivative silver standard, since the bank was not required to keep silver to back all of its currency. This began a long series of attempts for America to create a bimetallic standard for the US Dollar, which would continue until the 1920s. Gold and silver coins were legal tender, including the Spanish real, a silver coin struck in the Western Hemisphere. Because of the huge debt taken on by the US Federal Government to finance the Revolutionary War, silver coins struck by the government left circulation, and in 1806 President Jefferson suspended the minting of silver coins.
The US Treasury was put on a strict hard money standard, doing business only in gold or silver coin as part of the Independent Treasury Act of 1848, which legally separated the accounts of the Federal Government from the banking system. However the fixed rate of gold to silver overvalued silver in relation to the demand for gold to trade or borrow from England. The drain of gold in favor of silver led to the search for gold, including the "California Gold Rush" of 1849. Following Gresham's law, silver poured into the US, which traded with other silver nations, and gold moved out. In 1853 the US reduced the silver weight of coins, to keep them in circulation, and in 1857 removed legal tender status from foreign coinage.
In 1857 the final crisis of the free banking era of international finance began, as American banks suspended payment in silver, rippling through the very young international financial system of central banks. In the United States this collapse was a contributory factor in the American Civil War, and in 1861 the US government suspended payment in gold and silver, effectively ending the attempts to form a silver standard basis for the dollar. Through the 1860–1871 period various attempts to resurrect bi-metallic standards were made, including one based on the gold and silver franc, however, with the rapid influx of silver from new deposits, the expectation of scarcity of silver ended.
The interaction between central banking and currency basis formed the primary source of monetary instability during this period. The combination that produced economic stability was restriction of supply of new notes, a government monopoly on the issuance of notes directly and indirectly, a central bank and a single unit of value. Attempts to evade these conditions produced periodic monetary crisis — as notes devalued, or silver ceased to circulate as a store of value, or there was a depression as governments, demanding specie as payment, drained the circulating medium out of the economy. At the same time there was a dramatically expanded need for credit, and large banks were being chartered in various states, including, by 1872, Japan. The need for a solid basis in monetary affairs would produce a rapid acceptance of the gold standard in the period that followed.
[edit]The gold exchange standard

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Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (July 2010)
Towards the end of the 19th century some of the remaining silver standard countries began to peg their silver coin units to the gold standards of the United Kingdom or the USA. In 1898, British India pegged the silver rupee to the pound sterling at a fixed rate of 1s 4d, while in 1906, the Straits Settlements adopted a gold exchange standard against the pound sterling with the silver Straits dollar being fixed at 2s 4d.
Meanwhile at the turn of the century, the Philippines pegged the silver Peso/dollar to the US dollar at 50 cents. A similar pegging at 50 cents occurred at around the same time with the silver Peso of Mexico and the silver Yen of Japan. When Siam adopted a gold exchange standard in 1908, this left only China and Hong Kong on the silver standard.
[edit]The gold bullion standard

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Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (July 2010)
The gold specie standard ended in the United Kingdom and the rest of the British Empire at the outbreak of World War I. Treasury notes replaced the circulation of the gold sovereigns and gold half sovereigns. However, legally the gold specie standard was not repealed. The end of the gold standard was successfully effected by appeals to patriotism when somebody would request the Bank of England to redeem their paper money for gold specie. It was only in the year 1925 when Britain returned to the gold standard in conjunction with Australia and South Africa, that the gold specie standard was officially ended.
The British act of parliament that introduced the gold bullion standard in 1925 simultaneously repealed the gold specie standard. The new gold bullion standard did not envisage any return to the circulation of gold specie coins. Instead, the law compelled the authorities to sell gold bullion on demand at a fixed price. This gold bullion standard lasted until 1931. In 1931, the United Kingdom was forced to suspend the gold bullion standard due to large outflows of gold across the Atlantic Ocean. Australia and New Zealand had already been forced off the gold standard by the same pressures connected with the Great Depression, and Canada quickly followed suit with the United Kingdom.

steve is trying to misdirect the argument to deferred comp plans when we clearly are talking about discretionary cash bonus.

Sorry steve, you look like a fool, again.

The madness of steve continues . . .

How about Gold Forward and lease rates?

What does that have to do with anything, juliag, except to prove what I said: "the United Kingdom was forced to suspend the gold bullion standard due to large outflows of gold across the Atlantic Ocean. Australia and New Zealand had already been forced off the gold standard by the same pressures connected with the Great Depression, and Canada quickly followed suit with the United Kingdom."

It doesn't work, because as soon as people try to redeem the "promise" of gold - which is held in reserve, only as a percentage of the actual amount of money in circulation - it has to be abandoned. In other words, just like there are runs on banks, there can be runs on gold. That's why it didn't work the way it was implemented.

The reason why a 100% gold standard doesn't work - not as a reserve, but as the actual coin of the realm - is because the supply is so fixed that the economy can't grow: you CAN'T pay interest, or increase value, when something with a strictly fixed supply is used as the currency. Economic transactions necessarily become a zero-sum game.

Then there's LICCdope to deal with again: "steve is trying to misdirect the argument to deferred comp plans when we clearly are talking about discretionary cash bonus."

Not misdirecting anything, LICCdope: "discretionary cash bonuses" can be deferred, or paid immediately, just like dividends, just like stock bonuses. If you declare a bonus one year but pay it in another, you are "deferring" it because it's not being paid immediately, and if it is deferred, taxation of it is governed by IRS Rule 409(a). It doesn't matter if it's cash or stocks or warrants or gold bars.

Read IRS Rule 409(a) and come back to me with an analysis - not more Onanism from you, please: you're sullying the cracks in the sidewalk.

steve's mental confusion continues.

The whole subject started because on a another thread about tax rates possibly going up next year, steve made the stupid remark, in his obnoxious insulting way too, that if you are paid your bonus in 2011, you report it in 2010 and thus will be subject to 2010's rates instead of 2011. Everyone rightly pointed out how ridiculously stupid was steve's statement. steve now tries to change the discussion any way he can because he knows how moronic is his claim.

Now people are posting entire Wikipedia articles that begin with the following:

"This section does not cite any references or sources."

POMOs start in earnest tomorrow, anyone else giddy?

Not giddy - it's already priced in, today we got the first day of real volume in months.

You will note that in LICCdumb's bizarro world, "Everyone rightly pointed out" means LICCdumb pointed out, as he is "everyone" in his mind.

Tax code be damned, LICCdumb said it ain't true! LICCdumb also believes the income tax is unconstitutional, so take it from its source.

Thanks for another lie steve. You really have fallen to the gutter over the last year or so.

Show me one comment where I ever said the income tax is unconstitutional.

The insanity of steve continues . . .

Ron Paul thinks it's unconstitutional, and so does your alter-ego julialg.

So you think it's constitutional, do you?

http://econlog.econlib.org/archives/2012/09/bubbles_who_to.html

I believe in bubbles. They turn up in theory, in the lab, in history. We are a bubbly species, prone to waves of enthusiasm that crash upon the shore.

Our financial crisis is often told as a story of a housing bubble that crashed and created financial chaos, bad policy choices, a more polarized politics. But what kept the bubble growing for so long?

Vernon Smith, emeritus professor here at GMU, ran experiments that I think give us a good reason to blame the Fed and Fannie and Freddie for a fair amount of the financial crisis--but for some reason, I don't see other economists connecting the dots the way I have.

Back in the 80's, Smith and his coauthors ran the first bubble experiments: Students (and professional traders!) kept creating asset price bubbles in these experiments. Lab subjects routinely traded these assets at freely-negotiated prices that were far above their objective cash value. But he found that as subjects played the same game again and again, bubbles became less common--people learned the lesson of The Who: "Won't Get Fooled Again."

One lesson a person could draw at this point: Perhaps lab bubbles don't really tell us about real life. After all, real life lasts a long time, and people in real life hear stories about bubbles, so maybe normal people are already at the Won't Get Fooled stage.

But a funny thing happened: The bubble literature grew. A key finding:

When you add liquidity to the market--even with the same set of experienced players--you can reignite bubbles. Liquidity creates bubbles.

Did we see liquidity pushed into the housing market? Of course we did. Not just the Federal Reserve's low rates in the mid-2000s (lower than the Taylor Rule recommended); we also saw the massive entry by Fannie and Freddie into the fringes of subprime, the most dangerous portion of the market.

The private sector created the housing bubble in the same sense that college students created bubbles in Smith's experiments: They voluntarily made the trades but Fannie, Freddie, and the Fed created a liquid, bubble-prone environment.

Humans are a bubbly species: Good government policy should take that into account before creating an agency whose mission is "to provide liquidity...to the mortgage market."

P.S. To those who think Fannie and Freddie had little subprime involvement: The SEC begs to disagree. Great PDF image from the SEC here.