I would appreciate if Tim, Ira, Jim and the others here could shed
some
light on the Fed's liquidity auctions -- most recently $30
billion in funds
at below-market interest rates.
It sounds like the Fed's traditional
open market operations are not
working like they used to to add liquidity.
The latest chart of M3
I've seen seems to show the year-over-year
percentage change in money
supply peaked in late 2007 and turning down
slightly.
The more the people in power tell us that the credit markets
are fine
and the crisis is abating, the more concerned I get.
From:
Timothy Morge <timothymorge@sbcglobal.net>
To:
realtraders@yahoogroups.com
Date:
Thursday, January 3, 2008, 2:01:11 PM
Subject: [RT] Inflation
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@xxxxxxxxxnet>
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