January solar cycle 24 numbers, a new high for one, continued slumps for others

eric1skeptic says:
February 7, 2014 at 3:23 am

Eric, that rise in the CPI (Consumer Price Index) chart you linked to was not psychological. It was real. It reflected the high cost of money and doing business when the interest rate on loans was so high. It pushed prices higher, which was one of my points earlier about inflation when it is on the cost side (energy, etc). Ordinary businessmen had to pay 20% rates–the cost of money–in the early 80s to borrow for regular business operations like financing raw materials and finishing operations of their manufacture.
It also started the outsourcing movement, incidentally. The consequences of Volker’s ignorance were real.
I’m glad this is the end of a thread and off the radar because if it was higher, I’d get screams and yells for what I am about to say, but the figures are there and there is an actual article (had to search for hours to prove it), and it is this: what really brought down inflation and improved the economy was not Volker but Reagan’s massive deficit spending. It fired the economy up, which was running ice cold in spite of an ‘apparent’ inflation (which should have indicated full employment and smokin’ aggregate demand, but didn’t) that was not real but manufactured. Reagan did it, or so he thought, to prevent the Democrats from introducing any more government social programs. He thought the deficit spending would bury the Democrats. Idiot savant.
In 1985, Stockman let the cat out of the bag; Tom Wicker reported it.

After the budget director’s resignation, Sen. Moynihan of New York said Stockman had told him that even in 1981 Reagan knew the tax cuts would mean loss of revenue, but that the president had accepted the resulting rise In the deficit in order to bring pressure on Congress to cut spending.
That sharply contradicts what Reagan then publicly argued that cutting taxes would expand the economic base and increase revenues. In his 1980 campaign, he even contended that the increase in revenues resulting from the tax cut would pay for the military buildup he also planned.
But Moynihan said Stockman had told him that in 1981, “the plan was to have a strategic deficit that would give you an argument for cutting back the programs that weren’t desired. It got out of hand. ‘
Stockman, a former student of Moynihan’s, has denied “any such conversation” but not the substance of the allegation. Moynihan said he had had dozens of private talks with the budget director; their “thrust,” the senator said, was that ” the principal purpose of the tax cuts was to provide a basis upon which to shrink Government.”
Sen. Ernest Hollings of South Carolina, the ranking Democrat on the Budget Committee, has made a similar charge. He told the Association for a Better New York in January 1984 that Reagan “intentionally created a deficit so large that we Democrats will never have enough money to build the sort of government programs we want.”

The interesting thing in that 1985 article I link to is Freidrich Hayek’s comment. He was 84 at the time. Perhaps he was unaware that the US was 100% monetarily sovereign as of 1971. Perhaps he had no clue was that portended. Because he made one of the singular most idiotic statements that reflect what many Americans still believe today about how our economy works.

“I really believe Reagan is fundamentally a decent and honest man. His politics? When the government of the United States borrows a large part of the savings of the world, a consequence is that capital must become scarce and expensive in the whole world. That’s a problem.”

The USA doesn’t borrow squat! We are the monopoly creators of the US dollar. No one on the planet can make them, or issue them, unless they are counterfeiting. We are 100% monetarily sovereign. Period. As I wrote above, after the US Treasury spends into the economy per congressional appropriations, it then issues treasury securities—bills, notes, and bonds, prints them up at the Bureau of Engraving and Printing, or did until April 1 of 2013 when they became electronic–then auctions them to Americans (Fed can’t buy them) and the world on the 15th of the month to rebalance the money supply, to rebalance the spending. It doesn’t have to issue treasury securities for any financial reasons; it does it to help the rich reduce their risk, or people/companies/foreign govts and banks, with more that 250Gs in their savings accounts. 11-12% of US money are physical cash/dollar bills and coins. The rest of US ‘money’ are treasury securities (‘net financial assets’). Separately, the difference annually between the amount congress spends and the amount received in taxes is the deficit, but that deficit amount does not take into consideration US Treasury operations just described! It’s a phony index by which to judge things other than to indicate when spending needs to be higher because unemployment is high (because people can’t pay the tax).
That said, I agree with you that we have “we have a deflationary tendency like Japan in the 90′s. ” But it’s fiscal policy that’s going to change it: constitutionally Congress (fiscal) has to act, not the Fed (monetary). Congress has to lower taxes, get rid of FICA to help the middle class and poor, and increase deficit spending. Our deficit is far too small right now in this economy for the size of government we need, but that’s a story for another thread. Nice talking to you.

RGB, the Fed can bring out strong opinions. I don’t think the Fed needs to be abolished but it does need another Volker or someone even better.
It is a really bad idea to prop up big banks by buying mortgages that they churn while pretending that this helps the economy. It is ludicrous that the average Joe American should have the “right” to pay 4% or so for a loan on an overpriced house, while drowning in credit card debt, with generally diminishing job prospects, with little in the way of retirement savings, with a country that has unfunded obligations in the 10x GDP range. Properly priced credit would be a 15% mortgage at this point. Then a bank holding that mortgage would offer 10% on long term CD’s.
The essence of what Volker did is allow credit to become properly priced. When I put my money into a savings account in those days I got 15% interest because my money was highly valued, and even a little overvalued. But that switched the bulk of investors from short term speculation in commodities and collectables into long term investments which increased the productive capacity of the economy.
The other bad idea by the Fed is to print up money and give it to politicians to spend. That seems to be ok with some people but it is incredibly short sighted. It doesn’t necessary cause price inflation since a lot of the money goes to political connected investors who reinvest it in some way and a little to other constituents who live more or less hand to mouth. But it is a drug that it hard to withdraw and can lead to Zimbabwe style inflation in the worst case.
Our economy doesn’t need more credit or large banks or refinanced homeowners. It simply needs lower corporate tax rates (not the highest in the world) and lower long term gains taxes with those terms extended to 5 or 10 years. It also needs far fewer regulations. Price controls on debit cards? Come on.

eric1skeptic says:
February 7, 2014 at 3:23 am
Nowadays thanks to Greenspan and Bernanke and their policy of propping up large banks using monetary inflation, precious metal speculation is back.

They’re actually mutually exclusive. Allowing banks to speculate in commodities is, in my view alone, another goddam criminal act of dicking with the resources of this country that are the wealth of the people. The stuff was here before we were born and it’s under our collective feet. We own it—just like we own the airwaves that get licensed to business altho’ the govt gets the money, not us—if the idea of a social contract of a government, of the people, by the people, blah-blah-blah is to be believed. Allowing the banks to drive up the prices of these national assets affects the cost of business, the manufacture of products, and ultimately aggregate demand. It should be business demand that decides these prices. This is financial—not industrial—capitalism at its worse. Where is Congress? Why aren’t they stopping this? Banks should be made to go back what they do best: making prosaic home and business loans. Nothing else. Banks are public-private entities—like the military, like the Post Office—regulated by federal government charter. What is Congress doing allowing them to run a casino that excludes but ultimately affects the American people?
This: “their policy of propping up large banks using monetary inflation.” You talking about QE?

“another goddam criminal act of dicking with the resources of this country that are the wealth of the people. The”
If the banks are incentivized to do speculate in PM’s then that is what they will do. It doesn’t matter whether you think it is criminal or should be regulated or not, they will find a way to do it.
“Banks should be made to go back what they do best: making prosaic home and business loans.”
I agree with that completely. Credit should be priced properly so that money is valued properly. With a (for example) 5% rate for savers, they could loan money to small businesses at 10%, absorb risks and make adequate profit. That means money being saved is both investment and deferred consumption.
“It is how our monetary system works–it’s how the middle class was built in the 50s and 60s–and we’re not alone.”
Total rubbish. We didn’t build the middle class by printing money and having the politicians hand it out, but rather by productive capacity created by long term investment that came from a sound currency. The downhill slide of the middle class started in the 70’s when we debased the currency and has continued more or less since then.
“Look what happens when you don’t create and control your own currency: the Eurozone. Greece, Spain, Portugal, Italy, Iceland, Ireland, and 9 others all gave up their own currencies to adopt the experimental Euro controlled by unknown men with cruel tendencies no one votes for.”
Those countries were destroyed by socialism not by tight money. But we can certainly agree that adopting the euro was a huge mistake. Just like in Ukraine right now where there is a fake populist movement to join the EU. But we both know that only a few Ukrainians benefit in the long run by Ukraine joining the EU. It is primarily the elite in those countries like Greece that benefitted. And oh yes, the people got some great purchases for a while with an excessively strong currency. Look at all the nice made-in-China crap in Greek households that is now probably broken.
Once that party ended the 50% civilian labor participation rate caught up quickly: http://data.worldbank.org/indicator/SL.TLF.CACT.ZS
Very simply, if your country’s citizens are not working productive, private jobs, then you will need a weak currency to increase exports and that is when you are correct about that. A weak currency also depresses imports of crap from China which is generally healthy. But you cannot turn that into simply printing money and handing it out to people unless you want to create an inflationary spiral, black markets, etc.

[Think this will be my last on this topic. Too much weekend stuff.]

rgbatduke says:
February 7, 2014 at 12:16 pm
Or, maybe, possibly, the elimination of the Fed? […] But the stuff I’ve read about the evils of the Federal Reserve system is somewhat compelling.

The books that started it were those by Eustace Mullins, Thomas Scharf (Sharf?), and Gary Kah. All of them understood the monetary system as if we were still on the gold-standard, and all of them were subject to the arrogant opacity of the Federal Reserve, who refused for decades to reveal their operations. So these authors guessed. If you eliminate the Fed, you’re still going to want a central bank to be a lender of last resort and regulate the nation’s payment systems. Not to mention as a check-and-balance against corrupt politicians who might otherwise have access to the nation’s treasury through their congressional power to spend alone. Only Congress can tell the US Treasury what to spend, not the Fed or central bank. The Fed does not print up dollars to give to politicians to spend.
The Fed is nothing more than a fancy payday loan operation with big buildings and wood-paneled walls, the better to justify a couple of bottles of Opel for lunch on their expense accounts. It has two kinds of bank accounts: checking and savings, just like your bank. The Fed gives them fancy names to bamboozle the public and especially journalists who prefer exotic theories to operational reality: reserves (checking) and securities (savings) accounts. That’s it.
The Fed is the US Treasury’s banker. The US Treasury has a general account at the Fed. By law, from the days of the gold-standard—pre-1934—the US Treasury is not allowed to run a negative balance, although hat wouldn’t matter. When Congress appropriates a spending bill, it contains the authority for the US Treasury to spend that interest-free real money into the economy. The US Treasury then authorizes the Fed to mark up its general account by the amount of spending. They probably use Excel. So let’s say Congress appropriates $250 billion to fix all the roads in the national parks. The Fed would mark up the US Treasury’s general account by $250B with a keystroke, then pay the vendors by marking up with a keystroke their banks’ checking accounts at the Fed (for onward forwarding to the vendor), increasing the money supply by $250B, and at the same time subtract each payment to each vendor—marking down with a keystroke—from the US Treasury’s general account. The US Treasury issues treasury securities in the amount of $250 billion to restore this spending to balance. The US Treasury, of course, now owes interest on those treasury securities as they come due (3 months to 30 years), which they pay for by issuing more treasury securities once a year after they calculate the interest needed.
QE, when it involves treasury securities, is the Fed buying treasury securities on the open market. It is not allowed to buy them at auction. So if Duke University decided to cash in its 10-year $10 million treasury note before maturity, it would go to one of the 12-20 dealers authorized to sell them. Duke would have no idea that the Fed was buying. The Fed would purchase it and now the Fed would get the interest income that Duke would otherwise get on that 10-year note. Here’s the rub. It wasn’t Harvard buying the note. It wasn’t Nestle, the State of Georgia, or Bill Gates’ trust fund buying the note. It was the Fed. The Fed gets the interest income, which it sticks in its checking (reserves) account. Also, from the Fed’s POV, it was an asset swap from savings (securities) to checking (reserves), like you cashing in a CD. Because the Fed is getting the interest income, that money has now been removed from the economy. Why? Because the Fed is required by law since 1947 to return all net profits to the US Treasury every year. So Duke doesn’t have that interest income to pay for scholarships. Neither does Harvard. The State of Georgia doesn’t have that interest income to pay for roads. Bill Gates wouldn’t have that interest income to buy malaria medicine. The interest income, this real money, is removed from the economy because the Fed bought the treasury security. Last year the Fed returned nearly $100 billion to the US Treasury, destroying its existence in the process. It’s basically a tax on the economy. So why are they doing this? Because Bernanke thought the excess reserves in the banks’ checking accounts at the Fed would cause them to loan money to the real economy, and it was about the only thing he could dream up in light of the utter failure and abdication of responsibility of the US Congress to enact fiscal policy. The complete abject failure of Congress to do its job as the only legal entity that can authorize spending and jumpstart this economy because they are too busy occupying themselves with inconsequentials, and not fixing the mess they created over the last 15 years.

What might make someone think that Earth’s magnetic field would twist up. Which we now know isn’t the case on Earth at least but that’s not the point.
Earth’s magnetic equator. Earth’s magnetic dip equator is what made me think that there is a twisting up.
After learning that there were seen over 7000 electric double layers in a one minute interval inside Earth’s radiation belt, to me this was saying that this is a current sheet.
The dent at the magnetic dip equator, radiation belts containing current sheet like structure are in close proximity to Earth’s surface
and the warp produced (dip) made me think that the magnetic field was twisting up.
And in the case of Saturn’s current sheet and warp, changes in solar wind pressure affect the tilt angle.
Which makes me think that changes in the solar wind pressure affect the radiation belts and current sheet angle at Earth, which might alter the location of some primary vortex structures, which is implicated in the Saturn ref. abstract above.
For an example of large scale magnetic structure. The dent in the nose of Protostar0 another of the abstracts above, is a good example.

How is this relevant to the solar cycle..
lots of little bipolar regions on the solar disk with a “strangley tilt angle,” and spots not forming.

Coincidently .. was there a shift of tilt angle in the radiation belts.. at the same time as the strong perturbation in Earth’s polar motion Dec. 10 2013.. which coincidently correspondes with some strong polar air shifting,descending..
http://hpiers.obspm.fr/eop-pc/products/combined/realtime/realtimeplot.php?laps=60%20&eop=1&graphe=12&dimx=600&dimy=600&tver=0
that’s quite a jerk..

Just so happens ALL of us need to rethink our perception of the so called “ballerina skirt,” adaptation of the heliospheric current sheet..
And yes Dr. S., another abstract.. another stamp without and article in my stamp collection. And it’s a 2014 stamp woo woo woo…
EVIDENCE FOR TWO SEPARATE HELIOSPHERIC CURRENT SHEETS OF CYLINDRICAL SHAPE DURING MID-2012
Y.-M. Wang et al.
2014 ApJ 780 103 doi:10.1088/0004-637X/780/1/103
During the reversal of the Sun’s polar fields at sunspot maximum, outward extrapolations of magnetograph measurements often predict the presence of two or more current sheets extending into the interplanetary medium, instead of the single heliospheric current sheet (HCS) that forms the basis of the standard “ballerina skirt” picture. By comparing potential-field source-surface models of the coronal streamer belt with white-light coronagraph observations, we deduce that the HCS was split into two distinct structures with circular cross sections during mid-2012. These cylindrical current sheets were centered near the heliographic equator and separated in longitude by roughly 180°; a corresponding four-sector polarity pattern was observed at Earth. Each cylinder enclosed a negative-polarity coronal hole that was identifiable in extreme ultraviolet images and gave rise to a high-speed stream. The two current sheet systems are shown to be a result of the dominance of the Sun’s nonaxisymmetric quadrupole component, as the axial dipole field was undergoing its reversal during solar cycle 24.
And there is that “hourglass” structure again like we see in Protostar0..