RE: [RT] m2 monet supply

["EAdamy" <eadamy@xxxxxxxxxxxx>]

My point is that M2 and M3 (about which there are more conspiracy theories than I can shake a stick at) are not reflecting what is going on in the real world of credit. It's like using the oil gauge to determine how fast you are going. Inflation is not, repeat not, being driven by money growth. Money and liquidity are contracting and that gauge says we should have deflation. Inflation is being driven by demand growth, and to a lesser degree by commodity speculation. Quite simply, there is more demand for corn, wheat, beans, copper, oil, gas, iron ore, and so forth than there is available supply.

 

Only 19% of China's GDP comes from exports ... the rest is internal consumption. That is huge. Similar story for India. These economies will slow down when the US/Europe slows but they are going to keep on growing due to internal growth and consumption. Food, energy, commodity inflation is not going away. Labor costs in China (and India) are rising and China is doing less to subsidize exports by removing tax breaks. We are at the end of the line in importing product deflation from China. We are competing with China, India and other emerging markets for virtually all commodities and that is not goig away.

 

Earl

---

From: realtraders@xxxxxxxxxxxxxxx [mailto:realtraders@xxxxxxxxxxxxxxx] On Behalf Of Charles Meyer
Sent: Saturday, March 01, 2008 4:52 PM
To: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] m2 monet supply

John Mauldin is claiming that a lot of commodity inflation
is due to
the production of ethenol, whereby corn is being
subsidized. I
wonder what M3 is estimated to be; maybe 11-12% growth?

chas
-----

On Sat, 1 Mar 2008 16:40:04 -0700
"EAdamy" <eadamy@xxxxxxxxxcom> wrote:
> I'm not expert on money supply but my understanding is
>that M2 is being
> driven by relentless flow of funds into money market. A
>strong argument can
> be made that we are undergoing the greatest credit and
>lending contraction
> since the great depression. Banks are in constant fear
>of violating reserve
> requirements as their assets become impaired so they
>minimize lending.
> Investment banks are in similar situation. Consumers are
>now reducing debt,
> not adding. Fed is pushing on a string lowering rates
>trying to get everyone
> to borrow again but it is not working because of asset
>quality issues. This
> is not going to change anytime soon.
>
> Inflation is being driven by food, energy, declining
>dollar, and inflation
> in China, not by expansion of the money supply.
>
> Earl
>
> -----Original Message-----
>From: realtraders@yahoogroups.com
>[mailto:realtraders@yahoogroups.com] On
> Behalf Of Ben
> Sent: Saturday, March 01, 2008 3:41 PM
> To: realtraders@yahoogroups.com
> Cc: TimeandCycles@yahoogroups.com; vincenn
> Subject: [RT] m2 monet supply
>
> I gues fed is REALLY afraid here
> look at last 8 weeks or m2
> Money Supply
>
> The chart below has bee provided by Gordon Harms.
>
> M2 has moved above its already elevated growth rate of
>the past year
>
> No virus found in this outgoing message
> Checked by PC Tools AntiVirus (4.0.0.25 - 10.063.001).
> http://www.pctools.com/free-antivirus/
>

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