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My point here would be that the self proclaimed
savior, Greenspan, realized some time ago that real
inflation was driven by the expansion of the broadest
measure of the money supply [m3] and so he
conveniently had the Fed officially stop publishing
the aggregate M3 numbers. Why? Because then when the
'massaged' inflation numbers [You would die laughing
if you saw exactly how the BLS and Treasury officials
actually 'seasonally adjust' these and all economic
numbers, by the way] come out, they would no longer
have to explain how M3 could be growing at 8 pct and
their 'officially massaged' CPI number showed 2 pct
inflation.
But never fear! By law, regional Federal Reserve Banks
MUST report transactions, money supply growth by all
measures and several other very useful statistics. So
if you actually take the time to visit ALL the
regional Federal Reserve Bank web sites one by one,
record the actual M3 numbers monthly and then do the
simple math, you too can have the real money supply
number and will have a very good feeling for what
domestic inflation really is and what is likely to be
6-18 months from now.
I do not buy the 'domestic inflation' has been lowered
because of globalization and productivity. I am a pure
monetarist and in my opinion, price is all that
matters. If M3 is growing at 17 pct, I don't care
about those explanations--they are fluff
mis-information excuses put out by the Fed and the
Treasury to help explain their massaged numbers.
But as I said in an earlier post, this MY opinion. NO
ONE should take anything I say as the 'truth.'
Instead, look at all of these statements made by
everyone, especially the government and then do your
own reading and research. Then make your own decision
about what makes sense and what seems like hooey.
I can tell you...I have a wife and a 7 year old and a
9 year old and our grocery bills have more than
doubled in 2 1/2 years where I live. And we do not
live an lavish lifestyle. And gas went from $1.25 to
$3.00 on a good. And My insurance costs have nearly
doubled over the past 3 years. To me, productivity and
globalization don't change the fact that these numbers
look like I am facing 20+ pct inflation on an annual
basis already. And just wait until our current Fed
Chairman starts raising rates...
Tim Morge
www.marketgeometry.com
--- Jim White <jwhite43@xxxxxxxxxxxx> wrote:
> Years ago, after the rapid rise in inflation and
> interest rates put my development company out of
> business, I developed an equation to forecast
> interest rates based on the rate of increase in
> money supply and the rate of increase in GNP.
> I will have to review the formula but I believe it
> was
> Inflation rate = Rate of money supply growth - (rate
> of GNP growth + 3%). The effects of surplus money
> supply are felt as price increases with a lag of
> about 6 months.
> Today's conditions are somewhat different due to the
> globalization of business and the rapid rise in
> productivity due to technology and have resulted in
> a slowing of domestic inflation. Never the less, I
> believe there will be a reckoning and a return to
> more sustainable conditions but this time it will be
> world wide.
> Jim White
> Pivot Research & Trading Co.
> PivotTrader.com
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