Inflation

[Magox]

If a tree falls in a forest and no one is around to hear it, does it make a sound? If a trillion dollars is created but doesn't find it's way into circulation, does it cause inflation? if the fundamentals of my currency are ugly but not as ugly as all the other currencies, does it get devalued? IF the QE money is mostly sitting in the big financial institutions making them look more secure than they deserve to look with the rest stopping asset class investments from plummeting, is that a bad thing? personally I'd rather the money spent on infrastructure, job training and energy efficiency but Obama is a Wall street shill so this is what you get.

 

 

For the record, I'm adamantly opposed to QE. And To be fair, some of that money is being circulated into the economy. It does create lower interest rates, it allows people to refinance their homes at lower rates, which in turn saves them on their mortgages that allows them to have more disposable income of which some of that flows into the economy.

 

Secondly, there is a collateral impact on corporate bond issuance and rates. Corporate demand is higher because of lower rates, that allows companies to have more disposable cash for whatever purposes they need it for, which of course some of that flows back into the economy through more hiring and equipment.

 

Third, there is the consequence of altering consumer and investor behavior. If an investor knows that he isn't making jack **** putting money away in his savings account or whatever bonds he's investing in, some of that money will then flow into riskier assets such as stocks, which of course has a short-term impact of higher stock prices that creates higher consumer confidence to spend money into the economy.

 

Fourth, it does make our products more competitive, the lower the currency, the cheaper our goods are to foreign buyers with stronger currencies. So of course, this creates more demand for our products, which in turn leads to more profits and employment opportunities.

 

In regards to your currency devaluation question. it's sort of like what Bill Gross says, the U.S is the "cleanest dirty shirt". Since the U.S dollar is fundamentally stronger than the Euro, the Dollar doesn't get devalued relative to the Euro. And since just about every other developed nation is doing the same, taking on monetary policy that devalues their currency, the Dollar really isn't dropping. However, if you place those currencies relative to tangible assets such as commodities, then they are for the most part getting devalued.

Edited February 8, 2013 by Magox

[....lybob]

For the record, I'm adamantly opposed to QE. And To be fair, some of that money is being circulated into the economy. It does create lower interest rates, it allows people to refinance their homes at lower rates, which in turn saves them on their mortgages that allows them to have more disposable income of which some of that flows into the economy.

 

Secondly, there is a collateral impact on corporate bond issuance and rates. Corporate demand is higher because of lower rates, that allows companies to have more disposable cash for whatever purposes they need it for, which of course some of that flows back into the economy through more hiring and equipment.

 

Third, there is the consequence of altering consumer and investor behavior. If an investor knows that he isn't making jack **** putting money away in his savings account or whatever bonds he's investing in, some of that money will then flow into riskier assets such as stocks, which of course has a short-term impact of higher stock prices that creates higher consumer confidence to spend money into the economy.

 

Fourth, it does make our products more competitive, the lower the currency, the cheaper our goods are to foreign buyers with stronger currencies. So of course, this creates more demand for our products, which in turn leads to more profits and employment opportunities.

 

In regards to your currency devaluation question. it's sort of like what Bill Gross says, the U.S is the "cleanest dirty shirt". Since the U.S dollar is fundamentally stronger than the Euro, the Dollar doesn't get devalued relative to the Euro. And since just about every other developed nation is doing the same, taking on monetary policy that devalues their currency, the Dollar really isn't dropping. However, if you place those currencies relative to tangible assets such as commodities, then they are for the most part getting devalued.

I wish you'd explain that to my gold and silver assets because they been have bobbin around in a range for more than a year now. In fact I don't think many if any of the metals are at highs, housing? - food is up but the weather has been pretty ****ty the last couple years, Education and medical care are up but they've been going up 3-4xs the level of inflation since the 70s , which kinda leaves fuel which is open to all kinds of manipulation and premiums- speculators make up about 80% of the market now (would you support making players take physical delivery?) on the refinery side they have been following a policy of virtually zero spare capacity (If I was king I'd force them to have some robustness to the system but I guess efficiency and profits trump any kind of national concerns).

[Magox]

Well, since I was pretty much forced out of metals, I haven't been keeping up nearly as much as I use to. I will say this, just look at a gold chart, you'll see that it has had an uncanny habit of making new highs every two years, the off year it sort of just muddles along, or as what bullish traders would say, creating a base for it's next launching point.

[Magox]

I was just reading that the amount of money people are spending on gas – as a percentage of household income is at nearly 30-year highs.

[TakeYouToTasker]

[Magox]

I don't believe the debt has been the fundamental driver of gold over this past decade's bull run. It's more about currency devaluation than anything else.

[TakeYouToTasker]

I don't believe the debt has been the fundamental driver of gold over this past decade's bull run. It's more about currency devaluation than anything else.

The debt limit, federal spending, and the devaluation of the currency are inextricably linked.

[Magox]

"Increasing the debt limit means you print more dollars" is a false statement.

Edited February 12, 2013 by Magox

[TakeYouToTasker]

"Increasing the debt limit means you print more dollars" is a false statement.

It's certainly directly tied to it, however. You could argue that the budget process, and the creation of funding law means that you "print more dollars" over what you collect in revenues; but you can't argue that the actual need to pay those bills isn't linked to that "printing".

[B-Man]

I can't argue with Yoo......................

 

 

 

 

Thanks everyone, I'll be here all week.

 

 

.

[TPS]

I looked at data going back to the 1970s, and there isn't much of a relationship until after 2000. I wonder what happened that year...?

[Magox]

It's certainly directly tied to it, however. You could argue that the budget process, and the creation of funding law means that you "print more dollars" over what you collect in revenues; but you can't argue that the actual need to pay those bills isn't linked to that "printing".

 

I could agree that it could be linked to one another, and that I believe that is precisely what will happen. However, budget deficits are tied to lending through U.S bonds, not the printing of money. I can also fairly certainly say that what is driving gold prices higher isn't so much because of our ballooning deficits, even though it certainly plays a role, but much more so the devaluation of currencies across the board. The way investors should view gold is an alternate currency, as monetary policy becomes loose, the price of gold goes higher, as it tightens, the appeal drops off.

Edited February 12, 2013 by Magox

[TPS]

I'm sure this is just a coincidence...

http://www.latimes.com/business/autos/la-fi-hy-betting-on-higher-gasoline-prices-20130211,0,6691385.story

And then there are the bets on oil...

http://www.reuters.com/article/2013/02/12/us-oil-speculators-gasoline-idUSBRE91B1L520130212

 

Edited February 13, 2013 by TPS

[Cinga]

I'm sure this is just a coincidence...

http://www.latimes.c...0,6691385.story

And then there are the bets on oil...

http://www.reuters.c...E91B1L520130212

 

no one is this ignorant are they??

[Magox]

Oh my god!! It's the SPECULATORS!!! Run for your lives! They mean you harm!

[TPS]

Oh my god!! It's the SPECULATORS!!! Run for your lives! They mean you harm!

Your article stated that gas prices are the highest they've ever been "for this time of year." The articles I posted stated that bets by investors are the highest ever for this time of year, do you think it's just a coincidence?

 

I guarantee you that HFs and other investors will bail from these bets very soon because the combination of higher prices and payroll tax is causing the economy to slow, so oil and gas inventories will rise, and this "mini bubble" will pop, all while the Fed continues to pump more liquidity into the system.

[3rdnlng]

I've been thinking this for some time now:

 

 

"Legendary international investor Jim Rogers says the stock market has been skyrocketing to new heights for one simple reason: the United States is printing large amounts of money — a practice that’s not sustainable.

 

“The market is near its all-time highs because the central bank is printing staggering amounts of money. This is very artificial,’’ Rogers told Steve Malzberg on Newsmax TV’s “The Steve Malzberg Show.’’

 

The United States is not the only culprit, according to Rogers, author of the new book, “Street Smarts: Adventures on the Road and in the Markets.’’

 

Editor’s note: To order ‘Street Smarts’ at great price — Click Here Now.

 

“We have the Japanese central bank printing money and the European, you got all of central banks printing money,’’ he said.

 

“It’s a vicious cycle and it is … This is all insanity. No sound person in his sound mind would say, this is the way to run things. Of course, it’s going to lead to more — we already have inflation. But the government says we don’t have inflation. If you shop, you know that there’s inflation.’’

Edited February 13, 2013 by 3rdnlng

[Magox]

Your article stated that gas prices are the highest they've ever been "for this time of year." The articles I posted stated that bets by investors are the highest ever for this time of year, do you think it's just a coincidence?

 

I guarantee you that HFs and other investors will bail from these bets very soon because the combination of higher prices and payroll tax is causing the economy to slow, so oil and gas inventories will rise, and this "mini bubble" will pop, all while the Fed continues to pump more liquidity into the system.

 

You truly don't understand what markets are. Until you do, you will always remain clueless on this topic.

[TPS]

I've been thinking this for some time now:

 

 

"Legendary international investor Jim Rogers says the stock market has been skyrocketing to new heights for one simple reason: the United States is printing large amounts of money — a practice that’s not sustainable.

 

“The market is near its all-time highs because the central bank is printing staggering amounts of money. This is very artificial,’’ Rogers told Steve Malzberg on Newsmax TV’s “The Steve Malzberg Show.’’

 

The United States is not the only culprit, according to Rogers, author of the new book, “Street Smarts: Adventures on the Road and in the Markets.’’

 

Editor’s note: To order ‘Street Smarts’ at great price — Click Here Now.

 

“We have the Japanese central bank printing money and the European, you got all of central banks printing money,’’ he said.

 

“It’s a vicious cycle and it is … This is all insanity. No sound person in his sound mind would say, this is the way to run things. Of course, it’s going to lead to more — we already have inflation. But the government says we don’t have inflation. If you shop, you know that there’s inflation.’’

 

 

 

Read Latest Breaking News from Newsmax.com http://www.moneynews...1#ixzz2KnsKlIRq

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This is the reason I predicted the markets (S&P) would rise 15% last year, there's no place to put all of the money INVESTORs have from the Fed buying bonds. The impact comes from what investors decide to do with the additional funds. Investors are desperate for yield, and they'll look anywhere and everywhere. Look at what's happened to junk yields.

 

Or was your real point that someone else says the government lies about inflation?

 

You truly don't understand what markets are. Until you do, you will always remain clueless on this topic.

It's a pretty simple test M, so we'll see how clueless i am. I made a prediction based on how i view the markets. It shouldn't take more than a month or two for this to happen, or not...

[Magox]

 

It's a pretty simple test M, so we'll see how clueless i am. I made a prediction based on how i view the markets. It shouldn't take more than a month or two for this to happen, or not...

 

What? So you have the market rising up in a direct line for almost one straight month, and predicting a pull back within a month or two is some sort of amazing prediction?