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I used to read Karl Denninger's blog a lot, but I haven't been focused too much on economics lately. However, I'd like to quickly address a number of topics bro

by muraiki 14y ago

I used to read Karl Denninger's blog a lot, but I haven't been focused too much on economics lately. However, I'd like to quickly address a number of topics brought up in the comments, as there seems to be a misunderstanding or lack of understanding as to who he is and why he has any sort of authority to speak on this topic. Karl is not a trained economist in the sense having gone to school for it, but he is a very intelligent investor who profited heavily during the 2008 recession. He does not keep his knowledge to himself; in fact, he was warning of the collapse of Fannie Mae and the problems with Freddie Mac more than six months prior to the events of 2008. He has consistently and accurately predicted the results of various failures of US and international monetary policy, which you can read and critique from his year end reviews. Karl is an old school hacker, having run an ISP and developed a variety of software. It was the sale of his ISP that allowed him to become a full time investor. Karl organized the first "tea party" style protest of Washington through the organization Fed Up USA. He views inflation via money printing as taxation and has been working for years to have those who illegally profited from fraud in relation to the 2008 recession prosecuted. His writing style can be a real pain to read, especially with his liberal use of html tags... but it's well worth it.

peejaybee 14y ago
Off topic here, but MCS was a hell of an ISP. I regretted when Karl sold it.
tptacek 14y ago
Can you point to some evidence of the accuracy of his predictions? It would be interesting to see if they're of the "stopped clock" kind, or of the "shotgun blast" sort, or if he really is canny about predicting monetary events. There is another side, as there always is with everyone, to this assessment of Karl Denninger. I ran (tech operations for) a popular ISP in Chicago too (mine was EnterAct), and my experience with Denninger --- which I feel was relatively extensive --- did not leave me looking to him for advice about world affairs. As I wrote elsewhere in the thread, the points in this blog post that seem valid are also well-worn --- the lack of direct anonymity in Bitcoin, the fact that Bitcoin is deflationary and lacks a central bank, the theoretical possibility of double-spending --- and are also overwrought, written in jargon that makes the points seem fresher than they are. The rest is a jumble of idiosyncratic first-principles stuff, like the "entropy" of Bitcoin relative to gold doubloons.
- muraiki 14y ago
  Well, I'd say that calling Fannie Mae and Freddie Mac -- along with a major recession to rival that of the Great Depression -- within a 6 month time window was a pretty good prediction. The other predictions that I can recall were related to that: the collapse of consumer credit availability, investment money being driven to treasurys despite the US predicament, problems with municipal bonds. He also warned about PIIGS pretty early, and that the measures that were being taken would only result in kicking the can while increasing the pain. But perhaps that's more of a stopped clock kind of prediction. As I said, I haven't followed him much lately, and he admits that he gets an F in terms of predictions for 2012: http://market-ticker.org/akcs-www?post=215356 http://market-ticker.org/akcs-www?post=215356 Regarding the freshness of his views: his post was written to his current audience (he runs a forum for investors). I don't think he had any idea this would end up on HN, if he even knows what HN is!
  - tptacek 14y ago
    When did he "call" Fannie Mae? Let's judge the prediction. When did he start warning about Italy, Spain, and Greece? What were his warnings? Wasn't the disparity between the economies of Greece and of Germany one of the original structural concerns about the Euro from the jump? Either way, let's see if he started warning about "PIIGS" before or after Michael Lewis wrote about Greece.
    - muraiki 14y ago
      I appreciate your desire to get an accurate analysis of his predictions; however, I'm recalling from memory the sequence of events that happened and I don't currently have the time to research all of these things for you. Perhaps I shouldn't have said anything in the first place if I can't take the time to piece together the sequence of events from all of the articles, emails, and forum discussions that I had during the three year time period that I followed his blog. I realize that the sequence of events is critical to my endorsement of Karl's ability; as such, I apologize if I unintentionally misled people to perceive him as an authority based off of a faulty recollection of events from my memory. Edit: I just realized that this post might sound very snarky, but I really don't mean it that way at all. I should have contributed something better in my initial post.

by muraiki 14y ago

peejaybee 14y ago

Off topic here, but MCS was a hell of an ISP. I regretted when Karl sold it.

tptacek 14y ago

Can you point to some evidence of the accuracy of his predictions? It would be interesting to see if they're of the "stopped clock" kind, or of the "shotgun blast" sort, or if he really is canny about predicting monetary events. There is another side, as there always is with everyone, to this assessment of Karl Denninger. I ran (tech operations for) a popular ISP in Chicago too (mine was EnterAct), and my experience with Denninger --- which I feel was relatively extensive --- did not leave me looking to him for advice about world affairs. As I wrote elsewhere in the thread, the points in this blog post that seem valid are also well-worn --- the lack of direct anonymity in Bitcoin, the fact that Bitcoin is deflationary and lacks a central bank, the theoretical possibility of double-spending --- and are also overwrought, written in jargon that makes the points seem fresher than they are. The rest is a jumble of idiosyncratic first-principles stuff, like the "entropy" of Bitcoin relative to gold doubloons.

muraiki 14y ago
Well, I'd say that calling Fannie Mae and Freddie Mac -- along with a major recession to rival that of the Great Depression -- within a 6 month time window was a pretty good prediction. The other predictions that I can recall were related to that: the collapse of consumer credit availability, investment money being driven to treasurys despite the US predicament, problems with municipal bonds. He also warned about PIIGS pretty early, and that the measures that were being taken would only result in kicking the can while increasing the pain. But perhaps that's more of a stopped clock kind of prediction. As I said, I haven't followed him much lately, and he admits that he gets an F in terms of predictions for 2012: http://market-ticker.org/akcs-www?post=215356 http://market-ticker.org/akcs-www?post=215356 Regarding the freshness of his views: his post was written to his current audience (he runs a forum for investors). I don't think he had any idea this would end up on HN, if he even knows what HN is!
- tptacek 14y ago
  When did he "call" Fannie Mae? Let's judge the prediction. When did he start warning about Italy, Spain, and Greece? What were his warnings? Wasn't the disparity between the economies of Greece and of Germany one of the original structural concerns about the Euro from the jump? Either way, let's see if he started warning about "PIIGS" before or after Michael Lewis wrote about Greece.
  - muraiki 14y ago
    I appreciate your desire to get an accurate analysis of his predictions; however, I'm recalling from memory the sequence of events that happened and I don't currently have the time to research all of these things for you. Perhaps I shouldn't have said anything in the first place if I can't take the time to piece together the sequence of events from all of the articles, emails, and forum discussions that I had during the three year time period that I followed his blog. I realize that the sequence of events is critical to my endorsement of Karl's ability; as such, I apologize if I unintentionally misled people to perceive him as an authority based off of a faulty recollection of events from my memory. Edit: I just realized that this post might sound very snarky, but I really don't mean it that way at all. I should have contributed something better in my initial post.