Where are the damned handcuffs?
Legere and I got into it last night on Twatter over this article, along with some of his people. It was an amusing exchange, and I'll go through some of the salient points in this article.
T-Mobile is today issuing a warning to customers: stop taking unlimited data to ridiculous extremes. In a post on T-Mobile's blog, CEO John Legere has publicly called out "a fraction of a percent" of users who've been sucking down hundreds or even thousands of gigabytes of data each month.
But these customers aren't using all of that data on their smartphones alone; instead, T-Mobile claims they've come up with ways to conceal mobile tethering and hotspot usage. Tethering allows customers to get other devices (PCs, tablets, etc.) online using their smartphone data plan.
With its $80 unlimited data plan, T-Mobile already offers a generous 7GB limit for tethering purposes. Once customers exceed that, their hotspot speeds are slowed down considerably. But there are many apps — particularly on Android — that promise to hide tethering activity from wireless carriers, making it hard to distinguish what data is actually being used for.
By going this route, T-Mobile's hungriest data users can blow past the 7GB ceiling and keep tethering at full speed. Legere claims some people are doing exactly that, and he's not happy about it. In the most extreme cases, these customers are eating up as much as 2TB (yes, terabytes) per month, so they're using T-Mobile's network for way more than checking Facebook or streaming Spotify. "If their activities are left unchecked their actions could eventually have a negative effect on the experience of honest T-Mobile customers," he said. "Not on my watch."
So let's put some numbers on this issue.
A "SD" video stream (e.g. Netflix) requires about 2Gb/hour to sustain. It does not matter the final display device; phone, tablet, laptop or TV.
What this means is that the so-called unlimited data is really not, and T-Mobile knows it. But here's the rub, when you get down to it -- if you want to watch Netflix you can plug an HDMI cable into most modern phones and then run the Netflix app on the phone, displaying the video on your nice big TV!
How does that differ from tethering to your laptop -- or TV running a Netflix app?
It doesn't; the amount of data consumed will be exactly the same between these two paths, which means that T-Mobile's "differentiation" is a flat-out load of crap.
At the end of the day the issue once again becomes selling what you cannot deliver. I recently left T-Mobile after having been their customer all the way back to the Voicestream wireless days (a hell of a lot longer than Legere has been involved with T-Mobile) because although I had a 5Gb data bucket before throttling they refused, on my grandfathered plan, to allow me to consume any of that 5Gb through a tethered connection unless I was willing to cheat -- or pay them more money.
I had put up with the generally-crappier network that T-Mobile has (as compared against either Verizon or AT&T) for close to a decade due to the cheaper price. But their "customer disservice" people's idea of "solving" this disparity was for me either to pay $15/month permanently (for something I might use once in a while) or to move to the "current" rate plan -- which incidentally was 55% more expensive than what I was currently on.
You got that right -- they thought I should eat a 55% price increase to simply have what I had, but with the one restriction that I needed roughly once a month removed. They could have dropped the restriction with a few keystrokes, and I asked repeatedly for them to do so on several occasions spanning months -- but they refused.
My answer to the demand that I instead pay 55% more for the same bucket but with the restriction removed was "**** that." I'll get to what I did about those clowns and their incessant attempt to milk my wallet in a bit, because it's partly (but only partly) tangential to the fundamental issue.
I believe what Legere is upset about is, at its root, that he got caught advertising what he can't deliver. This is a common problem that I have plenty of experience with going back to the 1990s when I ran my Internet company. Then the common theme was to sell unlimited Internet service for a fixed price, in this case roughly $20/month.
MCSNet never did offer that service at that price, for the simple reason that it was not possible to actually deliver what was in that bold advertised text to any real percentage of the overall customer base and remain in business. In other words we would have to play games, wordsmith and stick some fine print in there (which I considered dishonest at best) to be able to proclaim such in an advertisement.
The gating factor was (at the time) inbound lines and slots on the modem line cards which had to be paid for in the former case and amortized in the latter. You could not possibly have a 1:1 relationship between those lines and customers yet sell that service for $20/month as those fixed costs exceeded the $20 in revenue you'd receive!
Yet people did advertise exactly that, and thus there was always an "asterisk" and fine print -- "if you abuse it we'll toss you", basically. In short the entire premise of said "sale" was that you wouldn't actually consume what you believed you were buying, if you were at all naive, and if you tried to use what you thought you purchased you'd suffer in some fashion -- perhaps getting incessant busy signals, being restricted or even thrown out the door.
We did it differently because I refused to advertise what I could not actually deliver nor would I resort to "fine print." We instead included 200 hours/month of use in our $20/month account, and billed you a buck an hour if you went over. We also, as a defensive measure for you to prevent you from being billed for an idle circuit you were not using due to some problem with your computer (or you simply being inattentive) stuck a 20 minute timeout on the line. No packets move in 20 minutes and we'd drop the call to free up the port and circuit (and stop counting the time against you.) Yes, we had a fairly long user agreement but every word of it was in 10 point type and the really important parts were in bold so nobody could reasonably claim they didn't see it.
Now here was the reality of what our limits meant: They permitted roughly 6-1/2 hours a day of online time every single day. Could you really use more than that while actually using the net in the first-person? Not realistically, no. You had to eat, crap, shower, sleep, etc. The odds of you going over unless you were doing something outrageous like nailing up a circuit on purpose were effectively zero.
We did offer "personal dedicated" service. It was considerably more expensive but it explicitly permitted you to nail up a circuit if you wished on a 24x7 basis. If that's what you wanted to do then we would sell you that truly unlimited service with no asterisks but we also priced it where we didn't go broke if you actually used what you bought!
When it comes to so-called "unlimited" data in the cellular space, in short, it's the old "sell it but we can't actually deliver it" problem -- exactly as it did in the dial-up Internet days. The difference is that in the wireless business spectrum is a limited resource and it costs a lot of money to both acquire it and then provision service on it. While that cost has come down it hasn't come down nearly as fast or as far as it has in the wired Internet space.
Again we go back to the fact that an hour of SD streaming video is about 2Gb of data, which means that if the limit is 7Gb tethered you can watch exactly one standard-length, roughly 2 hour movie per month because the second one puts you over your cap and you get throttled part-way through it -- and it's even worse if you have a "retina" display and thus select "HD" instead of "SD"!
This, of course, is not how it's sold -- it's sold as "all you can eat" but there is no functional difference between eating it on a phone and eating it on a laptop, desktop or TV with a streaming video app, especially as resolutions rise on mobile screens and those screens get bigger -- or if you plug an HDMI cable into the phone.
T-Mobile is trying to get too cute by half, which is what usually happens when you have marketing -- or loudmouth CEOs -- run around selling something that the technical guys cannot deliver at the price charged without your company going bankrupt or everyone's service going to hell.
Let's look back just a bit here to see how this developed. A couple of years ago I was driving through a major US city with my Z-10 and the "LTE" indicator came on. That was a first for me and I was probably one of the whole 10 or so customers with an LTE-enabled phone in that area at the time, so I decided I'd run a speed test and was rewarded with a 40Mbps data rate. "Wow; that's better than most home broadband" was my first reaction.
That's what T-Mobile wanted -- and still wants -- you to think.
But since I am a former ISP operator, and didn't fail four-function math in middle school within a few seconds the sobering reality of arithmetic set in as I stared at the little screen mounted on my car's A/C vent.
40Mbps is a data transfer rate of 300 Megabytes per minute, approximately. At that transfer rate you'd exhaust a 5Gb monthly quota and get throttled in..... 16.67 minutes, or approximately 0.04% of a month!
So exactly how useful is such a data rate to you on a mobile device? Not very, unless your requirement is to transfer a big file once or twice a month very quickly, but otherwise not use the capability available to you at all. That's a use case that basically nobody has, particularly if you're limited to doing it to and from the phone.
What exists, effectively, is a nice bragging banner for a firm's advertising but given the little asterisk on the end of the user agreement the customer can't actually use it. In other words its only value is the braggadocio and worse, it entices the customer to attempt something that will find them throttled to dial-up speeds for the rest of the month within literal minutes!
Customers don't see it this way: The American population is innumerate by and large, and T-Mobile helps this along on purpose by not including the math in their ads. Why would they, considering that if they did include the math then they'd have to admit that their 40Mbps data rate would hit the cap in under 20 minutes for a 5Gb bucket -- and in 23 minutes for the current 7Gb tethering limit, at which point there would be no more nice fast data until next month 29 days and counting away.
How many people would think their so-called "unlimited" plan (with tethering and the asterisk of a 7Gb cap on it) would be "so enticing" if they realized that after 23 minutes of using it at its full capacity they'd be throttled to 128kbps or less and their streaming video would stop working altogether? Worse, even if they didn't use it to full capacity but simply watched a couple of movies they'd be lucky to get through two of them -- and would not get through a third.
Good question. T-Mobile is of course under no obligation to explain middle-school arithmetic to adults but that doesn't change the expectation that those adults have predicated on what they think they're buying. Worse, as it sits T-Mobile is under an obligation (at least in theory, although I'm sure there are more asterisk clauses!) to deliver that unlimited data provided you don't tether.
But what happened is that people bought the advertised service and then of course they expected to use it, including with tethering. Some didn't get their expectations met because the company quietly chuckled at the public's (that's you, by the way) innumeracy and greed -- while covering their own ass with omission, fine print and asterisks.
Yes, the details were there, but so was that word Unlimited.....
What came next? Some customers with a bit of technical savvy attempted to actually get what they thought they ought to get and Legere got all*****ed off. This was compounded by June Networks' PDANet app (among others) available for Android devices that doesn't require root access (at least for Bluetooth connections in virtually all cases and on some devices for both WiFi and USB tethers as well.)
There are other ways T-Mobile can probably determine that you might be using one of those apps, by the way. I won't go into them because if they haven't figured it out I don't want to give them any (free) ideas, but attempting to discern so via those methods is fraught with risk (for them) because proving what's behind an encrypted (e.g. HTTPS or VPN'd) connection is difficult and suspicion is not enough.
But this belies one of T-Mobile's problems with this plan in that on the advertised unlimited plan "for smartphone data only" it appears, if I'm reading their TOS correctly, that you would be entirely within their Terms of Service to run the Netflix app on your phone while plugging a HDMI cable into your bigscreen TV in the living room, watching it all night long every night. You can find such a cable for five bucks right here.
Should any material percentage of people do that I expect that T-Mobile can and will almost-certainly try to get clever to stop it, and the arms race will thus continue onward. I suspect one of the next moves Legere would make will be to try to pressure Google to remove (or restrict from T-Mobile customers) offerings such as June's PDANet on the Play Store, pressure Netflix to change their app to detect an inserted HDMI cable and if one is found refuse to run, and/or simply start "quietly" considering those who actually use unlimited data to be "disruptive" customers.
Why not instead set the throttle cap at a reasonable place for what the company intended and sell it that way instead? It seems we already know where that line is too -- roughly 7Gb, more or less. That's easy: The word "Unlimited" sounds so good from a marketing perspective, even if it can't be delivered on a consistent basis to any material percentage of the customer base, especially when that delivery involves high-bandwidth, low-latency services such as video streaming.
That's the macro-level view as I see it.
Now back to my particular situation.
T-Mobile thought I'd be willing to pay ~30% more for a 40% smaller data bucket with tethering (3gb .vs. 5) or 55% more to retain my 5Gb bucket while moving to one of their "current" plans. My top-level answer to such a view was quite simply "You're insane; 55% more money for what amounts to nothing?!"
Let's face it when it comes to T-Mobile: Their network simply doesn't have the coverage of Verizon or AT&T -- the comparison is not even close. They like to claim "roaming is included" but that's disingenuous at best; yes, you can roam, but if you think you're going to get good or even reasonable data performance while doing so you're on crack. And by the way, while I happen to have a VoLTE-enabled device and thus it can roam on Verizon there is no agreement to do so anywhere I've seen thus far and as a result if you're in a Verizon-only signal area all you get is "Emergency Calls only."
As just one (particularly glaring) example of T-Mobile's signal vacuum the entire State of Michigan north of roughly Saginaw has zero T-Mobile native service. That's well more than half the landmass, when one considers the Upper Peninsula as well as the top half of the lower. There used to be a little regional carrier called Centennial Wireless in the area that had a roaming agreement with T-Mobile and provided rational data and working voice. Unfortunately a number of years ago (in 2008 if I remember correctly) AT&T bought them and roaming service there immediately went in the toilet.
So what you have now in that entire part of the state is crap. Yes, you can make and receive calls, and send and receive text messages. All in that regard, provided you consider "cell service" to be what you had in something like 2003, is well. But any attempt to use data is severely throttled; it may say 4G on the phone but you're lucky to see 120kbps and what's worse is that some ports and destinations are flat-out blocked, which means some apps (like my RSS reader) refuse to work at all because they try to verify a working internet connection first and run into the block.
In short the so-called "data roaming" there is of almost no value. Find a coffee shop with an open WiFi link if you want to do anything on the 'net.
This is not an exclusive example either. Allegedly there is roaming allowed in areas near Cherokee NC. Good luck trying to use it, for the same reason, or you might move a few blocks away, get the wrong tower, and suddenly it won't authenticate because T-Mobile "thinks" they have service there and thus there is no roaming agreement on that particular tower with AT&T. Then there are the large swaths of on-freeway space where T-Mobile still has either EDGE or (worse!) GPRS data only, which is of course ~120 or ~40kbps, respectively. The Market Ticker runs acceptably well on low-speed data -- but many other apps and sites on the Internet are glacially slow or won't work at all.
I have been willing to put up with this materially-inferior coverage for a literal decade but only in exchange for a materially-cheaper price. That's called Capitalism and customer choice, and it's a good thing.
But the refusal of T-Mobile to drop the tethering restriction on my grandfathered plan and effectively try to force me to pay either 30% more for less service, or 55% more for the same service, led me to do some shopping because suddenly I was being asked to pay far more for the same sub-standard network coverage -- and it was implied I "didn't understand" when I challenged them.
In any event everyone now has options in the form of MVNOs that take service in large chunks from the carriers and resell it. There are several, including the arguably most well-known, Straight Talk which is sold through WalMart. It's $45/month with no junk "cost recovery" fees (just sales and communications tax in your area) and they'll discount it further if you pay for three or six months at a time. The company recently made two salient changes to their program: They started issuing SIMs with LTE data connections enabled (formerly you were limited to HSPA+ on GSM networks) and upped the data bucket from 3 -> 5Gb before throttling. You choose the network when you activate -- Verizon, T-Mobile or AT&T; they include all three SIM card sets in the setup package, which is $60 and includes the SIMs and a month of service. The salient reason for their offering all three in one box is so you can use a locked phone or one that is CDMA (Verizon); for those with unlocked and wideband GSM RF (both T-Mobile US and AT&T radio bands in them) you get to choose between those two carrier networks based on the coverage and performance trade-off you find best for you.
There is often a claim that the MVNOs don't include roaming. That's not entirely true by the way and varies with different MVNOs; Straight Talk, for example, permits some roaming at no additional cost, specifically talk and text work fine if you're on the T-Mobile SIM and go into the aforementioned AT&T areas (but not data service.)
But more to the point of what value is roaming if I already have the better network coverage? I've yet to run into a place in my travels over the last several years where I have a T-Mobile signal showing but not an AT&T and Verizon signal. The situation has always been the converse; I either have no service at all (sometimes with Verizon being visible) or I can see AT&T and sometimes I can register and roam on it.
If you're already on the better network, in short, then that "roaming service" has no value at all. Further, none of the carriers (MVNO or not!) in my experience will permit you to roam on a discretionary basis (that is, if I see a T-Mobile EDGE signal but an AT&T LTE one, with the latter obviously of vastly better performance, I cannot manually select AT&T -- none of the carriers will let you register on the other network in that instance.)
Note that Straight Talk also prohibits tethering in their Terms of Service; I hope they'll change that and I've made the suggestion to them (and reiterate it here) since with a data bucket and then throttled data there is no rational reason for them to prohibit tethering; if you try to abuse said tethering you'll hit the cap in short order and get throttled.
But at present this is not permitted -- so be it.
My solution to the tethering problem, when I need tethering once in a while, is a prepaid Hotspot device the size of a pack of cigarettes that I can "turn on" in seconds by adding a prepaid card to it which I purchase and then stash until needed. The device cost me $50, once, and the card is $15 -- but it doesn't start to run on time until used. Since I rarely need this, but when I do I need it now, this works nicely and I have a $15 card in my wallet that I will "burn" if and when I need to. Since when I need that it must work I have it on the network with the widest and best coverage -- Verizon -- once again through an MVNO.
So how's this grand experiment working? Fabulously. I have LTE data service and it just works. I have yet to run into a "GPRS" service area; it's all HSPA+ or LTE thus far. I have better coverage than T-Mobile, by far. To put not too fine a point on it I have put somewhere around 30,000 road miles on my car in the last year, and in the last couple of weeks since changing over my service levels have improved massively, data performance is better than it was before on balance and a number of dead spots I used to encounter on some of my routine longer trips now have solid HSPA+ or LTE service; I can and have maintained calls through areas where that used to be impossible.
Did I "lose" my 40Mbps data (since AT&Ts network isn't as fast)? Yeah, but there was never a reason I needed to be able to pull 40Mbps on a phone anyway and I'm interested in the real world, not someone's bragging rights. I have the same data bucket I had before, I still have unlimited talk and text and I also have a lower all-in bill since unlike T-Mobile there are no junk "cost recovery" fees added on to the price.
By the way, I want to make one final point for all the carriers out there: Technology is supposed to come down in price over time. Don't give me this crap about "but the buildout is expensive." The facts are that LTE is far more efficient in the use of spectrum than the previous HSPA+/HSPA technology, and thus your cost per user is going down, not up. Unfortunately what I see is that cell service is much like health care in this country in how it's being priced and as such it sure smells like an oligopoly, complete with plenty of evidence of lock-step moves in pricing and service, to me.
Why not simply stay with T-Mobile and do the Hotspot thing on the MVNO for the few times I needed it?
That's pretty simple -- I got tired of my intelligence being insulted by T-Mobile's loudmouthed CEO and customer disservice people; coupled with the nickle and dime games with "regulatory cost recovery fees" and the demonstrably and much poorer network coverage. That came into sharp focus on a recent couple-of-week trip into the woods with my girlfriend (who was on AT&Ts network and thus I had a nice comparison point); I decided that if I could beat T-Mobile's price and get better service through an MVNO I would do exactly that.
Since I have an unlocked wideband device -- a BlackBerry Passport, to be precise -- it was not hard to do.
If the so-called "majors" want my business in the future they need to beat the number and start acting like competitors -- for an individual, not some screwball 4-line family plan that is really all about trying to get people to give the carrier their margin on device sales through their so-called "Easy Pay" plans, and with no contractual commitment.
Oh, and it has to be data agnostic -- where I use my data bucket is my business and nobody else's. That means no interference with any lawful use, including tethering and VPNs. Cut the crap carriers; data is data and it's time for you to both start treating it that way.
It'll be nice if and when Verizon finally is able to kill their proprietary CDMA network and moves entirely to LTE. As things stand right now my Passport would work on LTE-enabled Verizon areas, but not at all anywhere else -- and there's still too much "anywhere else." Here's hoping that day comes soon; more competition and carrier-agnostic devices are very good things.
My high watermark is simple:
$45 for 5Gb with unlimited talk and text, no junk fees. That's the bar set years ago and it should in fact be lower today, not higher by 55%. Oh, and no junk fees either; putting your cost of doing business out as a line item on my receipt is insulting beyond words.
We should be seeing serious deflation in wireless service prices but if the best I can do for now is flat pricing against what I bought a few years back then so be it.
Let's face it folks -- at $80 or $100 a month for cell service we're talking about roughly $1,000 or more for a cellphone on a yearly basis and that's before you buy the device. That might have been justified in the 1980s when the technology was new but 30+ years later the cost should have plummeted like a stone and, if there was effective capitalist competition, it would have. In other developed nations you can typically buy "all-in" 10Gb data service with a bucket of voice hours with no timed expiration for $20 or so -- less than half of the best deal you'll find here in the US, and there are no locked-phone games there either. But here in the US we have an oligopoly in cell service and CEOs who strut around claiming to be an "uncarrier" while trying to get customers, such as myself, to pay 55% more for the same thing they bought a few years previous.
My response to their bluster was and is simple: NO.
The scream fest coming from the clowncar brigade known as "apps" is amusing here -- they see the future and it's bright -- like 5,000K bright.
Apple’s Safari desktop browser has supported ad-blocking software for years. But the company is preparing to allow similar functionality in the mobile version of Safari in iOS 9, the next version of its operating system, which is expected to be released next month. The “beta” version that some people are testing includes the ad-blocking capability.
The claim that this "can't work" in apps is false. This, incidentally, is one of the big reasons people "root" Android phones; by doing so you can modify the /etc/hosts file that is consulted as part of Internet name lookup, and by doing so you can point all "ad sources" of your choice at 127.0.0.1 which makes them "disappear".
Phone software manufacturers should and can easily expose such an interface to the user, which would make blocking all ads that come from a particular domain name trivial. I have urged BlackBerry to do so for quite some time.
Google and Apple, of course, would not like such a thing for obvious reasons -- they make money from app developers and advertising.
But the real question to ask is why you should be paying for cellular data that is used to do nothing more than serve advertising. Not only do you pay for such ads they severely impact performance as well, despite claims otherwise -- as anyone who has had and used an ad-blocked handset can attest.
My view is quite simple: It's my device, and I have the right to control what happens on it. Further, unless you're paying for my data transport then for you to serve ads at me unsolicited is theft of a resource I have purchased.
Trump, if you recall, said something that I agreed with fully recently in regards to the man who allegedly shot a TV news crew before killing himself: This isn't a gun problem, it's a mental problem.
AVONDALE - An Avondale mother told police that she drowned her two kids, and attempted to drown a third, because "nobody loved them and nobody loved her," according to court documents.
Mireya Lopez, 22, believed the 2-year-old boys were bullied and treated differently and did not want them to live a tough life, documents say, so she drowned both of them in a bath tub.
Lopez told police that she suffers from manic depression, psychosis, and schizophrenia and took prescribed medication.
That was rather-obviously not effective -- or perhaps the drugs potentiated the incident.
We'll probably never know for sure which. But the point remains -- there was no gun used here, nor one needed. The root of the problem in both cases appears to be severe mental illness that has not been met with institutionalization or sufficient monitoring to mitigate the risk of harm to others.
Remember that in our zeal to be "politically correct" we closed mental hospitals all across the country that formerly held people who were deemed to pose such a threat, and replaced them with..... effectively nothing.
I do not know the history that Ms. Lopez has, or whether she had been previously flagged as being potentially violent. But manic depression and psychosis together is a nasty combination well known to have the potential to produce extreme violent episodes, and when you add schizophrenia to the mix one has to ask exactly how well she was being monitored by mental health professionals or if any effective monitoring was being done at all.
In this case all she needed for a weapon was a bath tub.
Stop with the politically-correct crap folks; I'm getting tired of counting bodies and politicians blaming inanimate objects when it is they who shut down the inpatient mental facilities that formerly served individuals with these sorts of disorders and were quite effective in keeping them from harming others.
I read this twice before realizing the last name of the author perfectly fit the so-called "fix" for 2008 -- and the premise that "they could do that again."
By the end of the week, stocks, currencies and commodity prices weren't crashing any longer but financial markets were far from settled. Over the past 10 days, markets have plummeted, paused, recovered and fallen again. There's little sign the anxiety is lifting.
Until recently investors had been preoccupied with the weakness of the post-2008 recovery. Now some are asking whether 2008 might come round again. It's an especially disturbing possibility because, on the face of it, the policy options for responding to another slump are fewer than last time. Governments have run big budget deficits to support demand, so there's less so-called fiscal space for a new round of stimulus, or so the thinking goes. Interest rates are still at zero, and even the advocates of quantitative easing recognize that it ran into diminishing returns. What's left?
Clive goes on to raise the old flag once again; that the "effective remedies" could once again be trotted out.
There's a problem with this premise: They didn't work the last time.
My evidence? All of those measures are still in place!
If they were effective then they could have been withdrawn. They were not, any more than opiates are effective at resolving the source of pain. Oh sure, opiates mask pain (at the cost of making you stoned out of your mind!) but they don't fix whatever is causing the pain itself.
What's worse, of course is that in order to maintain their effectiveness you must continually increase the dose of these monetary instruments exactly as tolerance does the same thing with opiates. In the case of opiates you eventually reach a "coffin corner" as there is a depressant effect on the body that has a hard upper limit; when you reach it the user's respiration and heart stop, and that's the end of the show. As the effective dose ratchets upward you eventually reach the point where either the user accidentally takes too much and dies, or worse reaches the point that the effective and lethal doses cross and he dies that way.
In the case of so-called "monetary stimulus" the facts are in at this point -- the 2008 nostrums did not work. Yes, the stock market went back up. But here's the rub -- they "worked" by increasing the debt in the system, and since GDP is computed in units of currency you must back out of the GDP equation the additional units that were added.
If you do this you'll find that from the time of the crisis to today GDP has in fact expanded by less than 1% a year. Since the population expands by about 1% a year in the United States (and has been for the last 50 years or so) this means that on a per-capita basis GDP has actually been negative the entire time.
Read that last paragraph however many times you need to until it sinks in: There has been no economic growth in real terms on a per-person basis since the economic crisis. Zip. Zero. Nada.
The so-called "prescriptions" or "remedies" did not work to restore economic expansion.
The idea goes back to Milton Friedman, if not before. The central bank can always -- repeat, always -- add to demand in the economy by directly creating purchasing power.
Nope. The central bank cannot create purchasing power. This is a lie and it is trivially proved.
Let us assume there is $1,000 in existence in the entire economy. Let us further assume that something horrifying happens to said economy and the central bank decides to double the amount of money by playing "helicopter."
Does this increase demand or increase purchasing power? No, it does not and cannot; since GDP is denominated in currency units all that has happened is that the same value is added to both sides of the equation; the net change is zero!
This is literally first-year algebra; start with the following:
GDP * $ = (C * $) + (G * $) + (I * $) + ((x - i) * $)
That's the equation for GDP. Note that every term is stated in terms of dollars (in the United States.)
So let's assume the central bank "prints money." The term "$" increases by some amount; on the left side that entire amount appears and on the right side the exact same amount appears. Plug whatever values you wish into the terms and the equality does not change with or without the so-called "money printing"; demand, as defined by GDP in invariant units, has not moved a millimeter.
The scam that is run by the money printers and the columnists like Crook (along with the government statistics offices) is that they never state GDP in an invariant unit. Instead they state it in units of currency, but first year algebra tells us what we have to do in order to solve the equation.
There's no question that helicopter money would stimulate demand.
The truth is that algebra -- basic algebra that cannot be denied -- says that helicopter money cannot stimulate demand. At best it can (and does) blow asset bubbles!
In other words while it doesn't change total demand in the economy (as evidenced by the fact that it didn't over the last eight years on a per-capita basis) what it can and often does do is distort the economy by enticing people to do uneconomic things. Specifically, it makes borrowing to goose stock prices (e.g. buy back stock and pay dividends) look attractive in comparison to borrowing only to build new facilities that produce more output than they cost in both principal and interest and thus that tends to happen. This in turn makes for companies with P/Es of 1,000 (Amazon) and others with both huge P/Es and monstrous off-balance sheet obligations (e.g. Netflix), all of which sell at astronomical valuations that have utterly no rational basis. In other words the stock market roars but it is doing so as a result of hydrogen-filled balloons, all of which require just one spark to go up in smoke.
This sort of crap ripples through everything that can be financed on credit -- college, cars, houses.... and stocks.
What did we really do in 2008 and 2009? We made fraud legal. Remember that? Oh, you don't? Well you should -- the market bottomed on the very day that intentionally lying about bank asset values was literally shoved down the financial standards board (FASB) by the US Congress. I reported on it at the time. I didn't believe anyone would be so stupid as to actually buy into that crap, but you and millions of others did.
So be it -- but no amount of arm-waving can change arithmetic, nor do lies change outcomes. They can delay, they can obfuscate, they can paper over for a while but dead fish continues to rot and eventually the maggots make their appearance.
Mr. Crook appears to believe that somehow these tools "remain available for use again", as if they were put away. The raw truth is that zero of these policy accommodations have been withdrawn in the ensuing seven years after 2008; they all remain firmly in place. Not one dollar has been taken off the Fed balance sheet nor have interest rates been raised on the short end. The market had a crapfest over the prospect of a mere quarter-point increase in the short-term rate while more than $4 trillion dollars, or roughly a quarter of all economic output in the US for a year, remains out there. Further, there are at least twelve and probably closer to sixteen quarter-point increases to come before rates "normalize" and that entire $4 trillion has to come off. If the prospect of just one quarter-point increase was good for a 10% sell-off would you mind explaining to me how much of the current DOW level will be left when it has all been reversed?
I'll see you at the figures on the top of The Market Ticker -- which are in fact optimistic if last week is any indication.
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