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I believe I cut my own reply off...long afternoon. Let
me try again...
Our current Fed Chairman spent more than 3 years
behind the scenes advertising himself for the job, so
when Greenspan decided 'the getting was good', he was
in the right place at the right time. And his main
selling point? Not since Paul Volcker [he claimed over
and over nehind the scenes] would the Fed Chairman be
as fiscally responsible as he would be, because he was
a staunch monetarist--just what we would need to fix
the coming crisis.
Now, don't send me messages saying I said he was Paul
Volcker reincarnated. HE said it, although Paul wasn't
strictly speaking a monetarist [but he did apply
monetarist medicineto cure the ills of hyper
inflation].
What does this bode for all of us? If you can believe
when the curren chairman says, he may be doing window
dressing, which is what the recent actions are, but in
point of fact, he will be letting the money supply
contract. There is only one way to go from 17 percent
inflation to something reasonable [2-4-6 percent] and
that is to shrink the outstanding broad money supply
and change prices.
Is it gonna hurt? You betcha. Will we see 2 or 3 large
money center banks fail? Most likely. Jail time for
some of these moron lenders? I hope so.
By the way, someone [to remain nameless] sent me a
wonderful book about the Austrian School Economist
Mises. It was a great read and really helped pass the
2 1/2 weeks I was in the hospital in December. I
heartily recommend the book if you like Economics or
just are interested in one of the most influencial
thinkers in the financial world in the 1900's...
Just my 2 cents, adjusted for current inflation.
I wish you all good trading.
Tim Morge
www.marketgeometry.com
--- Ira <mr.ira@xxxxxxxxxxxxx> wrote:
> Look at it this way. The government buys back its
> paper to increase the money supply and sells its
> paper to reduce the money supply and finally it
> prints money when it needs it. There are certain
> facts about the markets. That there is no
> government action that can change the direction of
> market forces for more than a day or two. There is
> no government action that can change the direction
> of currency valuation for more than a day or two.
> The basic economic facts remain the same as they
> were a year ago, but not acknowledged. The
> government held that inflation last year was at 2+%
> and therefore at the end of the year all subsidy
> increases based upon inflation were held at that
> rate. Now they tell us that the actual rate was 6%
> by their measure. The cost of living actually rose
> by about 16+%.
>
> There is no amount of money that the government can
> pump into this economy that will solve its current
> problems. It will take time to cure. You are
> seeing the next step in the mortgage debacle and it
> won't be over for another year as far as I can see.
> Inflation will continue until the government decides
> to start raising interest rates. After a 100 years
> the cry from the pits "beans in the teens" has come
> to pass.
>
> There is a credit crunch as far as doing business is
> concerned and adding money supply wouldn't help that
> although it might help the stock markets short term.
> The banks and investment banks that were involved
> with the bad Russian loans, the bad South American
> loans and now the bad mortgage loans need capital to
> survive. They are getting that capital from the oil
> rich states of the middle east and the exporters of
> the far east. America is being sold at bargain
> basement prices and there is nothing that we can do
> about it right now. You lose your company billions
> and walk away with a billion dollar severance
> package. That seems to be the American way now.
> the bigger the screw-up the greater the payout.
>
> Sorry that I got carried away, so I had better stop
> here. Just one man's opinion. Ira.
> Ira
> www.delta100.com
> ----- Original Message -----
> From: Code 2
> To: realtraders@xxxxxxxxxxxxxxx
> Sent: Tuesday, January 15, 2008 8:36 AM
> Subject: Re[2]: [RT] Inflation
>
>
> 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@xxxxxxxxxxxxx>
> To: realtraders@xxxxxxxxxxxxxxx
> 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@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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