|
PureBytes Links
Trading Reference Links
|
----- Original Message -----
From: "Timothy Morge" <tmorge@xxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
> Ira:
>
Big snip
> Those of you that think we have been benefiting
> from low grain prices might want to look at a basket of goods that is
produced
> from a bushel of corn, for example. While raw prices declined the past two
> years, the finished products sky rocketed.
Tim, I'm not sure what you're talking about here. As far as I know, the
largest by-product of corn is corn syrup, and the #1 use of corn syrup is in
sweetened beverages (soda). There's been only deflationary price wars in
soda where I live. Probably why KO is plummeting...
Big snip
> Last bit: Most people in this country don't think about or understand
asset
> driven inflation. But there has been a huge amount of wealth created in
this
> country by the stock market surge for the past umpteen years. That wealth
is
> simple creation of monetary assets. And what will it translate to?
Inflation.
Why? Inflation is too many dollars chasing too few goods. If companies can
continue to expand output at a rate to meet expanding demand, there will be
no inflation. Look around the world Tim and you'll see that there is still
a frighteningly large amount of excess capacity for just about everything.
Japan is still in the dumps because they are still sitting on hoards of
factories that are running at a fraction of their full potential. Why? Not
enough demand (yet).
Bruce
----- Original Message -----
From: "Timothy Morge" <tmorge@xxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Cc: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, March 08, 2000 12:11 PM
Subject: [RT] Re: Alan Greenscam, Public ENEMY Number ONE
> Ira:
>
> Thanks. I thought only I was paying those high prices. I haven't been back
to
> brush up on economics since I finished at the University of Chicago in
1980. But
> everything I see these days looks like inflation...I sometimes wonder what
other
> people are looking at when they talk about how we are all basking in such
low
> prices. Only a few select raw material prices are low--although taking
grains as
> an example, even the prices for raw grains are turning around and heading
> higher. And in their case, the farmers had the 'benefit' of near record
low
> prices for their crops, while the prices for the finished goods made from
their
> crops escalated year after year. Those of you that think we have been
benefiting
> from low grain prices might want to look at a basket of goods that is
produced
> from a bushel of corn, for example. While raw prices declined the past two
> years, the finished products sky rocketed.
>
> Sure, you get more computer for your $3K, but the everyday needs are
costing
> more and more. I just shake my head every time someone here or in the
media
> quotes the PPI or CPI ex food end energy. Folks, personally, I need heat,
I need
> to eat, I need gas for my car and I pay a huge amount for my family's
health
> insurance.
>
> Last bit: Most people in this country don't think about or understand
asset
> driven inflation. But there has been a huge amount of wealth created in
this
> country by the stock market surge for the past umpteen years. That wealth
is
> simple creation of monetary assets. And what will it translate to?
Inflation.
> The fun is just beginning, folks.
>
> Best,
>
> Tim Morge
>
> Ira Tunik wrote:
>
> > Your right, there is no inflation. Gas at $2 isn't inflationary,
Medical
> > insurance up 18% isn't inflationary, housing costs up 16% to 40%
depending
> > upon where you live isn't inflationary, Dentist visit up 25% not
> > inflationary, restaurant prices up 15% to 25% depending on where you are
at,
> > (exclude McD and Wendy's for you gourmet eaters), when inflation hits
are we
> > going to be in big trouble. Ira
> >
> > Daniel Goncharoff wrote:
> >
> > > It is important to understand the problem faced by Greenspan.
> > >
> > > The market goes up in an 'irrationally exuberant' way. He says he will
> > > take away the punch bowl as soon as he sees signs of the party getting
> > > out of hand, ie, when he sees inflation rise.
> > >
> > > The economy keeps growing at a healthy pace. But inflation doesn't
rise.
> > > Instead, the increase in wealth from the stock market is reinvested,
not
> > > spent.
> > >
> > > This leaves Greenspan with a dilemma. Does he raise interest rates
> > > anyway, risking stifling the economy and creating a deflationary
> > > environment? Or does he wait for signs of the stock market bubble
> > > translating into artificially higher asset prices?
> > >
> > > Obviously, he has done the latter. But inflation is not there. The
> > > wealth effect is much smaller than economists would have expected.
> > >
> > > The FT recently had an article saying that spending patterns of
> > > individuals reflect a 75% expectation of a serious market downturn.
> > >
> > > Perhaps it would have been better to assume that raising interest
rates
> > > would not have an important economic impact. Perhaps not...
> > >
> > > Regards
> > > DanG
>
>
>
>
|