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Stupid political crap your friends post on facebook. - Page 136

post #2026 of 5454
Quote:
Originally Posted by ChicagoRon View Post

In a perfect world, stocks appreciate rather than keeping pace with inflation - and they are a risky asset class for most investors (index funds are less risky, I know).
The only reason we have low inflation right now is that we are replacing money supply that was deflated out of the economy by loan write-offs. I'm not sure how much more of that we really need tho.

We're not yet close to replacing all the money we lost, let alone all the money we should have been accumulating in the interim recovery period necessary to keep pace with current account deficits and increases in productivity and population. We are still very, very far down in the hole. And that money is not being "created" by the Fed. QE is just a maturity transformation that exchanges one type of money (bonds) for another type of money (cash). It hasn't increased the velocity of money, which is at an all-time low.

fredgraph.png?&id=M2V,MZMV&scale=Left,Left&range=Max,Max&cosd=1959-01-01,1959-01-01&coed=2012-07-01,2012-07-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Quarterly,Quarterly&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_date=2012-11-16,2012-11-16&revision_date=2012-11-16,2012-11-16

Look at this shit? How can anyone possible be worrying about the inflation-effects of QE3 when we see how pathetically ineffective the program has been thus far? It's lunacy that flies in the face of the screaming empirical reality.

As it turns out, liquidity don't mean jack shit and all that matters is net assets in the private sector, which can only be created by the Treasury when it spends more than it taxes.
post #2027 of 5454
Seriously that chart of MZM velocity should fucking strike terror in the heart of everyone who looks at it. Especially when you consider that MZM (and even the now-discontinued M3) is way too fucking narrow to take into account all the varied-maturity instruments that constitute our practical and actual money supply, like bonds, and all the shadow-banking credit that isn't measured anywhere (and which totally evaporated in '08).

PEOPLE ARE NOT SPENDING THEIR MONEY. IT IS BECAUSE THERE IS NOT ENOUGH MONEY. WE NEED MORE MONEY.

Edit: Or to put it a little more calmly: The velocity of MZM and M2 is falling because people and businesses want to save. And the things they were using as savings, like real estate and shadow credit, are now worthless. So they need to save using other parts of the money supply--and that means liquid money.

And meanwhile the Fed looks at everything and pats themselves on the back because they're increasing the liquid money stock even as it is completely canceled out because people and banks are taking all the cash they're getting in exchange for their bonds and just stuffing it away in the same way that they had been stuffing away their bonds, which shows up as the huge falloff in velocity.

Why? Because of course people will take liquid money over bonds if they have the chance, but in reality both forms of money supply are satisfying a desire to save, and changing the liquidity of the savings does nothing to make those savings more effective at quenching the desire for savings.
Edited by NameBack - 11/16/12 at 1:15am
post #2028 of 5454
Quote:
Originally Posted by NameBack View Post

Look at this shit? How can anyone possible be worrying about the inflation-effects of QE3

From the Brooks Brothers sale thread, today:

I was waiting to stock up on the suede tassels from BB, last night checked them out on their website, put 5 pairs in my cart, I get up this morning to place an order and see a price increase. Price went up from $418 to $503, WTF?
post #2029 of 5454
You aren't going to change each others' minds...
post #2030 of 5454
Quote:
Originally Posted by musicmax View Post

From the Brooks Brothers sale thread, today:
I was waiting to stock up on the suede tassels from BB, last night checked them out on their website, put 5 pairs in my cart, I get up this morning to place an order and see a price increase. Price went up from $418 to $503, WTF?

oh, yeah, because THAT's inflationary.
post #2031 of 5454
Quote:
Originally Posted by Rambo View Post

oh, yeah, because THAT's inflationary.

That's a daily inflation rate of 20%.

Assuming this continues everyday, annual inflation is 7422%.
post #2032 of 5454
Can i ask a stupid question ?

I have read many articles about QE and it is difficult to determinate its efficiency at short/medium and long terms..

What are your opinions about it ?
post #2033 of 5454
Quote:
Originally Posted by brokencycle View Post

That's a daily inflation rate of 20%.
Assuming this continues everyday, annual inflation is 7422%.
meister and Lighthouse were right after all! Weimar Republic style hyperinflation!
post #2034 of 5454
Quote:
Originally Posted by brokencycle View Post

That's a daily inflation rate of 20%.
Assuming this continues everyday, annual inflation is 7422%.

20% a day is far, far higher than 7422%. It's actually 7,964,431,977,149,443,076,954,945,638,385.3%

That really is hyperinflation.
post #2035 of 5454
STFU !!!!!!!! JESUS H CHRIST
post #2036 of 5454
Quote:
Originally Posted by ChicagoRon View Post

In a perfect world, stocks appreciate rather than keeping pace with inflation - and they are a risky asset class for most investors (index funds are less risky, I know).
The only reason we have low inflation right now is that we are replacing money supply that was deflated out of the economy by loan write-offs. I'm not sure how much more of that we really need tho.

laugh.gif Come on that is ridiculous.
post #2037 of 5454
Quote:
Originally Posted by Ty_Webb View Post

20% a day is far, far higher than 7422%. It's actually 7,964,431,977,149,443,076,954,945,638,385.3%
That really is hyperinflation.

Yes, but I just did constant price increases not constant percentage increases.

($503-$418)/$418*365
post #2038 of 5454
Quote:
Originally Posted by cross22 View Post

laugh.gif Come on that is ridiculous.

Only reason may be an overstatement, but it's generally not that far off. Cheap money / creation of money by central banks would be much more inflationary if there was not a corresponding contraction in private banks.
post #2039 of 5454
Quote:
Originally Posted by Rambo View Post

oh, yeah, because THAT's inflationary.

OK then you tell me why the price went up 20%.

And then tell me how that 20% price increase accomplishes the Federal Reserve Act's mandate of "stable prices".

lurker[1].gif
post #2040 of 5454
Well that's certainly bringing this thread back to its "Stupid" roots, if not the "Facebook" aspect.
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