Author Topic: dollar milkshake theory  (Read 2858 times)

kenmoremmm

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matchewed

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Re: dollar milkshake theory
« Reply #1 on: May 06, 2020, 11:28:31 AM »
Don't got time to watch a video, what's the tl;dr/w?

kenmoremmm

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Re: dollar milkshake theory
« Reply #2 on: May 06, 2020, 11:36:20 AM »
-Although badly managed, expect the U.S. dollar will become stronger in the near term.

-Reasons that support a higher future gold price also support near-term dollar strength.

-Dollar-denominated gold price to go lower in the near term, but it will eventually rise in tandem with the dollar with safe-haven bid.

-Eventual worldwide collapse of monetary system


Wrenchturner

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Re: dollar milkshake theory
« Reply #3 on: May 06, 2020, 08:12:53 PM »
I've been interested in this perspective recently too.  Brent was wrong in the near term on gold, gold is pretty strong right now even in USD.  The milkshake theory was outlined approx. a year ago.  But I think his ideas are correct re: the relativism of currencies, CB printing and the fact that the USD is still the preferred haven against other currencies, and despite the fed's efforts to stave off a strong dollar.

I think the strength of his argument lies there, not necessarily in gold bullishness or monetary collapse--those things might occur and that perspective is not very unique, but at the moment the question seems to be about the near term future of USD demand in a global context.  The rest of the world keeps drinking the milkshake.

MustacheAndaHalf

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Re: dollar milkshake theory
« Reply #4 on: May 07, 2020, 04:04:17 AM »
This article is from back in 2018, and mentions the same "milkshake" theory of currencies:

"... the Federal Reserve is hiking rates, and reducing its balance sheet ..."
https://www.capitalandconflict.com/a-most-destructive-milkshake/

The problem being, the Fed isn't doing that now.  Back in March (2020), the Fed dropped it's funds rate to 0% and restarted quantitative easing.  I would say the Fed pushed the panic button, and markets got that message, too, as the next day the US market went limit down -7%.  So even if I don't question the milkshake theory, the timing seems off.  Or maybe the author is taking their pet theory, and just stamping it on every event that comes along - when the facts change, their theory doesn't.

waltworks

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Re: dollar milkshake theory
« Reply #5 on: May 07, 2020, 12:21:27 PM »
Looks like a website aimed at scaring grandpa, mostly. They have a good graphic designer, grandpa is probably ready to sign up/buy some gold.

-W

ChpBstrd

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Re: dollar milkshake theory
« Reply #6 on: May 12, 2020, 02:33:00 PM »
Why would a person interested in the economic future go to blogs and social media? Economics textbooks are literally thrown away when they are a few editions old, even though they have the same information as the new versions. Spend $5 on eBay and get real information.

Meanwhile, YouTube is full of crazy conspiracy theories, blogs are in a competition to be the most outlandish, and podcasts... Jesus Christ. The internet was made for making money while entertaining people (originally with porn, now with crackpot economic advice and fake news). Yet nobody gets it. Everybody believes everything they hear online. We're all misinforming ourselves because the actual analysis is too hard/boring. We're like children watching cartoons instead of doing our homework, except I don't hear children proclaiming how knowledgeable they are because they watched cartoons.

nereo

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Re: dollar milkshake theory
« Reply #7 on: May 12, 2020, 02:39:43 PM »
Fear gets clicks.

This about sums up what kind of blog you are reading:
Eventual worldwide collapse of monetary system


marty998

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Re: dollar milkshake theory
« Reply #8 on: May 12, 2020, 09:34:31 PM »
I always thought a milkshake referred to something else...

https://www.youtube.com/watch?v=6AwXKJoKJz4

I'll see myself out.

matchewed

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Re: dollar milkshake theory
« Reply #9 on: May 13, 2020, 09:53:26 AM »
I always thought a milkshake referred to something else...

https://www.youtube.com/watch?v=6AwXKJoKJz4

I'll see myself out.

I haven't clicked but is it about bringing boys to the yard.

marty998

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Re: dollar milkshake theory
« Reply #10 on: May 13, 2020, 05:55:41 PM »
I always thought a milkshake referred to something else...

https://www.youtube.com/watch?v=6AwXKJoKJz4

I'll see myself out.

I haven't clicked but is it about bringing boys to the yard.

Mmmmhmm.... my then pre-school age cousins used to sing it all the time. I finally lost it when my mum started singing it and I had to tactfully explain what a "milkshake" was. I was a very mortified 17 year old....

She was straight on the phone to my aunt imploring her to never let the girls sing it ever again.

But little girls seem to need to sing something, so they developed a taste for the Black Eyed Peas and I started hearing about humps and "lovely lady lumps". That and telling me to shut up, just shut up shut up!

Innocence is a wonderful thing.

Wrenchturner

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Re: dollar milkshake theory
« Reply #11 on: May 13, 2020, 10:44:25 PM »
COVID rocking the Euro boat?
https://www.ft.com/content/f48e3a6b-6a95-4187-8a7d-0f8dad3fbecb


A judge in Germany’s highest court has warned that EU infringement proceedings against Berlin over the court’s contentious ruling on the European Central Bank would plunge Europe into crisis.

Peter M Huber, who drafted last week’s constitutional opinion, told the Frankfurter Allgemeine Zeitung that such a procedure “would trigger a significant escalation, potentially tipping Germany and other member states into a constitutional conflict that would be very difficult to resolve”.

matchewed

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Re: dollar milkshake theory
« Reply #12 on: May 14, 2020, 04:47:00 AM »
COVID rocking the Euro boat?
https://www.ft.com/content/f48e3a6b-6a95-4187-8a7d-0f8dad3fbecb


A judge in Germany’s highest court has warned that EU infringement proceedings against Berlin over the court’s contentious ruling on the European Central Bank would plunge Europe into crisis.

Peter M Huber, who drafted last week’s constitutional opinion, told the Frankfurter Allgemeine Zeitung that such a procedure “would trigger a significant escalation, potentially tipping Germany and other member states into a constitutional conflict that would be very difficult to resolve”.

So what you're saying is Merkel's milkshake is in fact better than yours, mine, or the rest of Europe.

...

I buy it.

waltworks

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Re: dollar milkshake theory
« Reply #13 on: May 14, 2020, 01:26:39 PM »
Ewww... Merkel, milkshake....

Thanks, now I won't sleep tonight.

-W

Wrenchturner

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Re: dollar milkshake theory
« Reply #14 on: May 14, 2020, 03:51:15 PM »
COVID rocking the Euro boat?
https://www.ft.com/content/f48e3a6b-6a95-4187-8a7d-0f8dad3fbecb


A judge in Germany’s highest court has warned that EU infringement proceedings against Berlin over the court’s contentious ruling on the European Central Bank would plunge Europe into crisis.

Peter M Huber, who drafted last week’s constitutional opinion, told the Frankfurter Allgemeine Zeitung that such a procedure “would trigger a significant escalation, potentially tipping Germany and other member states into a constitutional conflict that would be very difficult to resolve”.

So what you're saying is Merkel's milkshake is in fact better than yours, mine, or the rest of Europe.

...

I buy it.

Merkel doesn't have a milkshake.  The EU has a milkshake.  And that milkshake doesn't taste very good.

waltworks

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Re: dollar milkshake theory
« Reply #15 on: May 14, 2020, 06:15:05 PM »
OOh! A graph!

Seriously, if you really think everything is crashing forever, it's probably time to take those Euros stuffed in your mattress and buy ammo.

-W

Wrenchturner

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Re: dollar milkshake theory
« Reply #16 on: May 14, 2020, 07:25:02 PM »
OOh! A graph!

Seriously, if you really think everything is crashing forever, it's probably time to take those Euros stuffed in your mattress and buy ammo.

-W

Not sure why you insist on misrepresenting this theory.

Are you invested in emerging markets or holding non-US currencies?  If not, why?

waltworks

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Re: dollar milkshake theory
« Reply #17 on: May 14, 2020, 07:39:31 PM »
OOh! A graph!

Seriously, if you really think everything is crashing forever, it's probably time to take those Euros stuffed in your mattress and buy ammo.

-W

Not sure why you insist on misrepresenting this theory.

Are you invested in emerging markets or holding non-US currencies?  If not, why?

I don't hold any more currency (of any kind) than I need to pay bills and for my EF. I invest a lot in emerging/non-US markets. But that has to do with my AA and IPS, not my (or anyone else's) useless crystal ball gazing predictions about geopolitics.

-W

nereo

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Re: dollar milkshake theory
« Reply #18 on: May 15, 2020, 05:49:03 AM »
Perhaps I missed it, by what are you implying about a declining Euro as measured against the USD?

During times of uncertainty investors flock to US Bonds, even when yields are stupidly low (like now). 

Wrenchturner

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Re: dollar milkshake theory
« Reply #19 on: May 15, 2020, 01:17:13 PM »
Perhaps I missed it, by what are you implying about a declining Euro as measured against the USD?

During times of uncertainty investors flock to US Bonds, even when yields are stupidly low (like now).

I'm implying the dollar milkshake theory may have credibility.  I get the impression that some posters are not doing their homework!

waltworks

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Re: dollar milkshake theory
« Reply #20 on: May 15, 2020, 01:39:20 PM »
After you've been through enough business cycles, you'll realize that grand theories, no matter how credible, have a poor track record. As do pundits, laymen, and everyone in between when it comes to macro scale economic predictions.

Is it credible? Sure! So are lots and lots of other theories about what will happen next. There's not much point in paying attention to them, though, because 90% of them will be proven wrong. Credible, but wrong. C'est la vie.

-W

Wrenchturner

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Re: dollar milkshake theory
« Reply #21 on: May 15, 2020, 01:51:12 PM »
After you've been through enough business cycles, you'll realize that grand theories, no matter how credible, have a poor track record. As do pundits, laymen, and everyone in between when it comes to macro scale economic predictions.

Is it credible? Sure! So are lots and lots of other theories about what will happen next. There's not much point in paying attention to them, though, because 90% of them will be proven wrong. Credible, but wrong. C'est la vie.

-W

Fair enough.

waltworks

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Re: dollar milkshake theory
« Reply #22 on: May 15, 2020, 02:03:53 PM »
I'll add a caveat: doomsday/everything is going to hell theories have a much *worse* track record. Probably 99% wrong. Or more.

When really bad things happen, they tend to be things nobody predicted.

Investing optimistically is usually your best move.

-W

nereo

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Re: dollar milkshake theory
« Reply #23 on: May 15, 2020, 02:15:55 PM »
After you've been through enough business cycles, you'll realize that grand theories, no matter how credible, have a poor track record. As do pundits, laymen, and everyone in between when it comes to macro scale economic predictions.

Is it credible? Sure! So are lots and lots of other theories about what will happen next. There's not much point in paying attention to them, though, because 90% of them will be proven wrong. Credible, but wrong. C'est la vie.

-W

I wish all financial prognosticators had their predictions tracked and displayed anytime they were asked for their financial opinon, much like we follow a baseball player’s ERA.  “Bob from MMM Capital is here to tell us why the hospitality industry has much further to fall but the tech industry is about to rebound.  In over 200 predictions over the last 10 years he’s trailing the SP500 by a mere 13%, which makes him one of the best prognosticators we have!”

ChpBstrd

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Re: dollar milkshake theory
« Reply #24 on: May 15, 2020, 02:58:26 PM »
I'll add a caveat: doomsday/everything is going to hell theories have a much *worse* track record. Probably 99% wrong. Or more.

When really bad things happen, they tend to be things nobody predicted.

Investing optimistically is usually your best move.

-W

IDK... There certainly are a large number of people warning about potential problems, a tiny fraction of which ever come to fruition, but there are also credible experts who warn about problems long before they actually occur. Examples:

1) Engineers had been warning about New Orleans’ vulnerability to hurricanes for decades before 2005.
2) Investment analysts had warned that the tech bubble of 1995-2000 was unsustainable and based on impossible growth assumptions.
3) Economists expressed concerns about house price appreciation and loan underwriting standards prior to 2007.
4) Epidemiologists warned us to invest in public health for decades as we dodged bullets with SARS, swine flu, bird flu, MERS, and Ebola.
5) Counter-terrorism officials considered the risks of an airline being flown into a skyscraper prior to 9/11.
6) Some of the earliest, most rudimentary climate change models were put together in the late 1970’s and yet were eerily accurate in predicting the next few decades of data.

IMO, there are similarities between these people who foresaw the future and differences with run-of-the-mill doomsday predictors:

1) Successful predictors tend to be well-established, mainstream, practicing professionals, often with advanced degrees, rather than people who produce media for a living such as bloggers or authors.
2) They tend to have just enough influence to draw a limited amount of media/political attention, but not enough to change minds in time. They compete for attention with politicians and professional entertainers, and they just aren’t entertaining or telegenic.
3) They spend more time working on problems in their field than communicating about them. Their warnings often appear in academic journals or internal memos rather than popular news sources.

So if you bring me a non-expert with a cultivated social media presence who spends much of his/her time trying to get views, I can predict their predictions won’t come true. Gold bugs and conspiracy theorists fall into this camp. Bring me a professor who is concerned about a link between Roundup and pancreatic cancer, or a vulnerability in the internet’s architecture that could result in a worldwide outage, or the risks of counterparties trading derivatives on securitized mortgages and I’ll listen.

waltworks

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Re: dollar milkshake theory
« Reply #25 on: May 15, 2020, 04:54:57 PM »
I was speaking specifically about financial/macroeconomic predictions, ChpBstrd. I agree that there are many areas of human endeavor where listening to experts is useful and necessary. Financial pundits and academic economists alike generally have a miserable track record of predicting anything, unfortunately. You might as well just ignore them.

I mean, if you listened to the "experts" and refused to invest in the mid/late 90s, you missed out on lots of gains. Sure, with perfect market timing you'd do even better - but if you'd been listening to the gloom and doom crowd, you probably just sat on the sidelines. Even dumping all your money in in spring of 1999 you'd be sitting on a 5.5% annual return as of today, which is not horrible at all.

-W

nereo

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Re: dollar milkshake theory
« Reply #26 on: May 15, 2020, 05:59:55 PM »
I was speaking specifically about financial/macroeconomic predictions, ChpBstrd. I agree that there are many areas of human endeavor where listening to experts is useful and necessary. Financial pundits and academic economists alike generally have a miserable track record of predicting anything, unfortunately. You might as well just ignore them.

I mean, if you listened to the "experts" and refused to invest in the mid/late 90s, you missed out on lots of gains. Sure, with perfect market timing you'd do even better - but if you'd been listening to the gloom and doom crowd, you probably just sat on the sidelines. Even dumping all your money in in spring of 1999 you'd be sitting on a 5.5% annual return as of today, which is not horrible at all.

-W

Perhaps the best example of how Unreliable financial predictions can be comes from an analysis of the 22 ‘Chief Market Strategiest” on Wall Street.  These are a collection of some of the (supposedly) best and brightest working for the biggest investment banks.  Each year they release their own prediction of what the stock market will do in the coming year, and use all sorts of data and theory to back their predictions.

Yet their collective track record is attractions.  On average they have faired worse than someone who just guessed the market would earn a 9% return (the long-term historical average).  Even more shocking, not once have a majority of these 22 prognosticators successfully predicted an upcoming recession, including this one.   

It’s not that these people are random quacks or unversed in economic principles.  It’s just that a global economy is so incredibly complex that factors which seem important at the time might have a minor impact, while other events (sometimes ‘black swans’) have a much bigger impact than anticipated.

Here’s Morgan Housel’s analysis five years ago... it’s continued since but I can’t find it right now”
https://www.fool.com/investing/general/2015/02/25/the-blind-forecaster.aspx

MustacheAndaHalf

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Re: dollar milkshake theory
« Reply #27 on: May 16, 2020, 01:21:21 AM »
If you believe the "milkshake theory", is the result that you buy gold?
I'd suggest stepping back, and looking at all theories for/against buying gold, instead of focusing on just one.  The action they recommend (buying gold) lines up with lots of theories, so you're really agreeing with all those theories when you buy gold.

Bond yields are quite low, making bonds look very similar to cash.  If you wanted to switch from bonds to gold, the loss in interest payments is fairly low.  I only owned gold as a mistake during March, when it turns out bonds/gold/U.S. stocks/international stocks all moved in sync.  The only safe asset was short-term treasury bonds.  So if you move out of short-term treasury bonds, you do take on more risk.  But you aren't giving up very much in bond yields, since they are near historic lows.


ChpBstrd

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Re: dollar milkshake theory
« Reply #28 on: May 16, 2020, 03:07:03 PM »
If we open our preferred financial news website and read that a “chief market strategist” has an opinion, that person is almost certainly tasked with advertising the services of their advisory firm or hedge fund by getting interviews in the financial media. They are among the type of “experts” whose main objective is getting views. 

The worse alternative is they are talking up or down an investment so they can take the opposite position they are advocating.

Academics and other more-likely-to-be-correct analysts tend to deal in theory and deviations from theoretical expectations, not short term forecasting.

MustacheAndaHalf

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Re: dollar milkshake theory
« Reply #29 on: May 19, 2020, 11:59:32 PM »
@ChpBstrd - That's a good point, anyone can have a theory.  I don't have a word to describe someone who advocates for one theory and provides arguments and back testing to support it.  Maybe "an author of multiple articles or books on a single theory"?  They can still be wrong, but they at least provide some underpinning for their reasons.  I don't expect that from market watchers who switch which stock they like each week.  But I don't have terms to separate them.

ChpBstrd

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Re: dollar milkshake theory
« Reply #30 on: May 20, 2020, 01:28:18 PM »
@ChpBstrd - That's a good point, anyone can have a theory.  I don't have a word to describe someone who advocates for one theory and provides arguments and back testing to support it.  Maybe "an author of multiple articles or books on a single theory"?  They can still be wrong, but they at least provide some underpinning for their reasons.  I don't expect that from market watchers who switch which stock they like each week.  But I don't have terms to separate them.

Nassim Taleb’s foxes and hedgehogs are related, but not an exact fit.

I’m thinking of two types of people, one whose profession is to create defensible, data-based descriptions of reality, and the other whose profession is promotion and marketing. Maybe simply “explainers” and “promoters”?

The point is, your average investor doesn’t know the difference.

waltworks

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Re: dollar milkshake theory
« Reply #31 on: May 20, 2020, 02:10:05 PM »
You don't need to know the difference, because the smartest, most honest, most honorable people out there *still* suck at predicting the future of the market and economy. Just like the hucksters.

I mean, economists outright suck at it. It's ok, it's a hard field to be in. And they're doing their best. But they just aren't good (yet).

If the market/economy *were* predictable that would open up an interesting can of worms (see: Asimov's Foundation novels) both practically and philosophically.

-W

MustacheAndaHalf

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Re: dollar milkshake theory
« Reply #32 on: May 20, 2020, 11:06:45 PM »
@ChpBstrdI don't have a word to describe someone who advocates for one theory and provides arguments and back testing to support it.
I’m thinking of two types of people, one whose profession is to create defensible, data-based descriptions of reality, and the other whose profession is promotion and marketing. Maybe simply “explainers” and “promoters”?
That's probably close enough to restate my point in clearer terms.

Those seeking to invest in gold shouldn't just read the "milkshake theory".  While avoiding promoters and salespeople, look at other articles and books for/against buying gold and the data they provide.