Austrian Economics Preferred

Cross ref

Like the author of this post, I tend to follow Austrian Economics; let’s see

18 Days Later…
By Vedran Vuk

Dear Reader,

In the Daily Dispatch, I often discuss what’s on Bernanke’s mind. However, to a large extent, I’m simplifying his real thoughts. With Keynesian economics, it’s always easier to discuss the philosophical aspects than the very specific underpinnings.

On the one hand, I want to share more knowledge on the subject, but on the other hand, no one wants to read a math journal. However, I did think of a way to bring the point across. Most of us have never peered inside an advanced economics textbook in our lives. And yet, these textbook pages are what Ben Bernanke is thinking about.

So, today, here’s a glance at just two pages of the most mainstream macroeconomics textbook out there, Advanced Macroeconomics by David Romer. (David Romer is the husband of the now famed economist Christina Romer. Those two must have some interesting arguments over breakfast.)

The hieroglyphics above represent a model quantifying the effect of the savings rate on long-term growth. And this is just chapter 1, page 23. The book continues for another 616 pages. And yes, I’ve read it cover to cover – twice. Not only do I know a lot about Austrian economics, but I’m fairly well trained in Keynesian economics too – or, as I like to call it, the dark arts.

Romer’s Advanced Macroeconomics is assigned to almost every first-year PhD economics students in the country. At MIT, it’s an undergraduate text. Now consider that Bernanke and other lovable characters such as Paul Krugman received their doctorate degrees from the very same math-intensive MIT program.

So, when Ben Bernanke thinks about interest rates, unemployment and GDP, he isn’t thinking about it like the regular guy on the street. He’s trying to solve some ridiculous equation. These two pages are a small sample of how his mind works. His policies may seem bizarre at times, and that’s due to the use of mathematics for his decision-making process. Most of us realize that printing piles of money isn’t a particularly wise idea. However, Bernanke’s equations tell him something different.

In my opinion, utilizing mathematics to centrally plan an economy isn’t a particularly intelligent idea. It only gives the illusion of understanding complexity. Unfortunately, the economics profession has long craved the respect of the sciences. Hence, economists futilely attempt to define social phenomena through mathematical approaches. Some of the cross-over is absolutely absurd. For example, many of the earlier economic growth models were based on ballistics theory. At the end of the day, economics just isn’t physics. And those who apply ballistics theories to growth rates more often than not blow up the world – economically speaking.

So, is there a use for this mathematical gibberish? Unfortunately, yes. As long as the MIT guys are at the helm, we’re in their world. With an understanding of their formulas, one can guess the equations on their minds and the importance of certain variables. Hence, one can get a better picture of the Fed’s actions in the short term.

In my own analysis, I follow Austrian economics for my long-term views on the economy. But for the short term, it’s actually more valuable to understand the ins and outs of Keynesian economics. That’s the only way to dig into Bernanke’s mind.

Even my prediction in yesterday’s Dispatch is influenced by this approach. Will Bernanke start discussing higher rates to boost the dollar? Believe it or not, there is an economic model quantifying whether a central banker should discuss higher rates. Now, I’m not going to base my prediction on a series of equations. But it’s very useful to understand the hobgoblins that may be jumping around Bernanke’s mind.

Well, I hope this gave you some insight into the central banking process and didn’t leave you even more confused.


Idkit aka Ana

Ag Moderator

Act of God and Cashflow

With the act of God in Japan, it is not easy to use Technical Analysis;  we’ll see what Ray has to say.

Charting Viewer Emails

Mon. Mar. 14 2011 | 11:50 AM[01:12]

Ray Barros, CEO of Ray Barros Trading Group, charts the S&P 500, JSX as well as gold.

Nuclear Concerns Weigh on Tokyo Stocks

Mon. Mar. 14 2011 | 11:00 AM[02:26]

Ray Barros, CEO of Ray Barros Trading Group shares his technical analysis of the Nikkei 225 and dollar-yen cross.

Idkit aka Ana

Ag Moderator

Video by Jared Mast

For those who are not familiar with Ray’s track records, here is  a current interview with the Trading Elite.

Ray Barros – How to return 39% a year, for 30 years

I just got done talking to Ray Barros of While Ray may not be known as well in the west, his track record certainly speaks for itself.

Since he started trading more than thirty years ago, his track record reflects a whopping 39 percent per annum return on a compounded basis. This means a hypothetical investment of $1,000 returned over $230,000 in the 17-year period between 1990 and July 2007. He is also the author of ‘The Nature of Trends’ published by Wiley Press. Ray has been regularly featured in regional newspapers and publications like Sydney Morning Herald, Your Trading Edge Magazine, Business Times, and Smart Investor

A lawyer by profession and training, Ray gave up his lucrative law practice in the 1980s to focus on his first love – trading. His initial attempts at trading failed miserably and he suffered heavy losses. But, after making all the mistakes in a trader’s manual and then some, Ray finally hit on a trading approach that gives him the market edge.

This approach has proven effective in both trending and congested markets, allowing him to trade profitably and consistently. Thereafter, he was highly sought after by major banks to manage their funds. At the same time, he was also very much sought after as a trainer to train other institutional traders based on the strategies and techniques he developed.

Idkit aka Ana, Ag Moderator

Cashflow today with Ray

Airtime: Mon. Feb. 21 2011 | 11:20 AM ET

China has been slow to raise rates in the last few years due for fear of derailing the global economic recovery, Brian Jackson, Senior Emerging Markets Strategist at Royal Bank of Canada told CNBC’s Oriel Morrison. He shares his expectations for further tightening.

Ray Barros, CEO of Ray Barros Trading Group, believes the price of natural gas is heading downwards to $3.30 a gallon. He charts a variety of viewer emails, with CNBC’s Oriel Morrison.

Airtime: Mon. Feb. 21 2011 | 11:10 AM ET

Ray Barros, CEO of Ray Barros Trading Group, shares his technical analysis of the Shanghai Composite, with CNBC’s Oriel Morrison & Cheng Lei.

Airtime: Mon. Feb. 21 2011 | 11:00 AM ET

Ray Barros, CEO of Ray Barros Trading Group, says since January the S&P has been climbing higher on very light volume. He tells CNBC’s Oriel Morrison the index will touch 1,400 and thereafter begin trading sideways.

Airtime: Mon. Feb. 21 2011 | 11:40 AM ET

Campbell Dawson, portfolio manager at Elstree Investment Management, advises to sell on ANZ, Commonwealth, NAB & Westpac. The banks are overvalued, he explains to CNBC’s Oriel Morrison, and there is little growth in the Aussie market.

Idkit aka Ana

Ag Moderator

TRT Presentation by Ray on Mon Feb 28 @ 7pm

Cross ref

Traders Round Table Presentation by Ray : Mon Feb 28 @7 pm

Why You Must Learn to Trade Successfully Now

“It has never been more important than NOW to acquire the skills you need to succeed in investing and/or trading.”

– Ray Barros, Feb 2011

Dear Traders-Investors,

On Monday February 28 from 7:00 PM to 9:00 PM, Traders Round Table will be hosting a talk by Ray Barros.

Ray will be presenting a roadmap for Years 2015 to 2022. This information alone is worth the investment of your time.

He’ll tell you why it’s critical you acquire the necessary mindset, knowledge and skills of trading success, and what you need to do to acquire them.

The presentation will include ‘takeaways’ (i.e. tools you can immediately put to use) in the three areas of trading success. If you don’t know what these are, then you must come!

As an example of a takeaway: What is the FRED graph? Why is it important to your wealth? How do we use it?

In addition, Ray will illustrate his ideas by reviewing current market conditions and providing a one to three month roadmap for them.

Come hear from a 30-year, successful, professional trader!

Date: 28 Feb
Time: 7:00PM to 9:00PM
Price: $40

Reserve your seat now!

(Seats will be confirmed upon receipt of payment.)

Idkit aka Ana