Average SD family 2000 vs 2010

[CA renter]

[quote=Eugene][quote]You can’t just look at the narrow definition of CPI and say, “Look, no inflation!”

You have to look globally, and at EVERYTHING that money can buy at a given point in time. Today, your money can buy far, far less than it could two years ago, and that’s a fact. [/quote]

Did I say “no inflation”? I fully concur, some things got more expensive in two years. Stocks are up because they were undervalued in January 2009. Commodities are up because emerging economies are growing. Here’s industrial production in advanced & emerging economies:

[quote]I think it’s foolish for our CPI numbers to look at such a narrow “basket of goods” to determine whether or not there is inflation. As a matter of fact, if the CPI had taken asset prices into consideration as well, the inflation numbers during the bubble would have (hopefully) sounded the alarm much earlier than having to wait for the “financial crisis” to be officially noticed by the dolts who only look at CPI.[/quote]

There are many different reasons why you might want to measure the rate of inflation, and different reasons may require different definitions. People at the Fed who work on monetary policy use core CPI, which does not include food or asset prices, and there’s a good theoretical justification for that.[/quote]

But why do you think there has been so much investment in emerging markets and in global assets, commodities, etc.? Who do you think is behind all of that money? The financial institutions are behind a lot of that buying (hedging against inflation), and the FBs who would otherwise be homeless and starving on the streets have been able to spend like nothing ever happened because of all the stimulus and the “free rent” over the years. That “free rent” is one of the most successful forms of stimulus since the “financial crisis” began.

BTW, do you really think stocks were undervalued in 2009 based on fundamentals (especially forward-looking)? IMHO, they were going to levels where they belonged, but shot back up because of all the “stimulus” measures (interest rate suppression, bond/asset purchases, govt guarantees, etc.). Trillions of dollars worth of stimulus has hit the market since 2008. Do you think the price increases around the world happened **in spite** of all that stimulus? I believe the price increases are 90%+ due to all the money printing and guarantees by central banks and governments around the world; and that’s probably why we have different perspectives on the “inflation” issue.

[jstoesz]

[quote=Eugene][quote=jstoesz][quote=Eugene]
That newly created capital is not used to buy anything yet. It is not in the hands of people who do any real buying. It never leaves the vaults of financial institutions or at least it has not yet.[/quote]

Bold is mine.[/quote]

Do you expect that it will, any time soon? Do you see a mechanism for that?[/quote]

I can not read the future, but when banks do not have to mark to market, they can hold what ever reserves the wish…

[jstoesz]

[quote=Eugene][quote=jstoesz][quote=Eugene]
That newly created capital is not used to buy anything yet. It is not in the hands of people who do any real buying. It never leaves the vaults of financial institutions or at least it has not yet.[/quote]

Bold is mine.[/quote]

Do you expect that it will, any time soon? Do you see a mechanism for that?[/quote]

I can not read the future, but when banks do not have to mark to market, they can hold what ever reserves the wish…

[jstoesz]

[quote=Eugene][quote=jstoesz][quote=Eugene]
That newly created capital is not used to buy anything yet. It is not in the hands of people who do any real buying. It never leaves the vaults of financial institutions or at least it has not yet.[/quote]

Bold is mine.[/quote]

Do you expect that it will, any time soon? Do you see a mechanism for that?[/quote]

I can not read the future, but when banks do not have to mark to market, they can hold what ever reserves the wish…

[jstoesz]

[quote=Eugene][quote=jstoesz][quote=Eugene]
That newly created capital is not used to buy anything yet. It is not in the hands of people who do any real buying. It never leaves the vaults of financial institutions or at least it has not yet.[/quote]

Bold is mine.[/quote]

Do you expect that it will, any time soon? Do you see a mechanism for that?[/quote]

I can not read the future, but when banks do not have to mark to market, they can hold what ever reserves the wish…

[jstoesz]

[quote=Eugene][quote=jstoesz][quote=Eugene]
That newly created capital is not used to buy anything yet. It is not in the hands of people who do any real buying. It never leaves the vaults of financial institutions or at least it has not yet.[/quote]

Bold is mine.[/quote]

Do you expect that it will, any time soon? Do you see a mechanism for that?[/quote]

I can not read the future, but when banks do not have to mark to market, they can hold what ever reserves the wish…

[jpinpb]

CAR – thank you for factoring in the invisible stimulus of free rent for 2+ years. I think it would be error to not consider the impact of that upon our economy.

[jpinpb]

CAR – thank you for factoring in the invisible stimulus of free rent for 2+ years. I think it would be error to not consider the impact of that upon our economy.

[jpinpb]

CAR – thank you for factoring in the invisible stimulus of free rent for 2+ years. I think it would be error to not consider the impact of that upon our economy.

[jpinpb]

CAR – thank you for factoring in the invisible stimulus of free rent for 2+ years. I think it would be error to not consider the impact of that upon our economy.

[jpinpb]

CAR – thank you for factoring in the invisible stimulus of free rent for 2+ years. I think it would be error to not consider the impact of that upon our economy.

[Eugene]

[quote]But why do you think there has been so much investment in emerging markets and in global assets, commodities, etc.? Who do you think is behind all of that money? The financial institutions are behind a lot of that buying (hedging against inflation)[/quote]

The red graph seems to be back on trend of pre-crisis growth. It’s just normal dynamics of emerging economies. China is growing like crazy, for example, even though it’s very hard to invest there for foreigners. You can’t even buy and sell RMB in the forex market, you need to go through one of the state-owned banks and you need a special dispensation from the communist government.

[quote]BTW, do you really think stocks were undervalued in 2009 based on fundamentals (especially forward-looking)?[/quote]

Absolutely. Companies like AA or CAT were trading at single digit P/E’s.

[quote] Do you think the price increases around the world happened **in spite** of all that stimulus?[/quote]

I think that price increases are part of the trend. All those various forms of stimulus helped shorten the crisis somewhat, but they have not been big enough to make any inappropriate influences on prices. Most of them weren’t even real (like the aforementioned tripling of the monetary base), they were just moving digits around with no impact on the physical world around us.

[Eugene]

[quote]But why do you think there has been so much investment in emerging markets and in global assets, commodities, etc.? Who do you think is behind all of that money? The financial institutions are behind a lot of that buying (hedging against inflation)[/quote]

The red graph seems to be back on trend of pre-crisis growth. It’s just normal dynamics of emerging economies. China is growing like crazy, for example, even though it’s very hard to invest there for foreigners. You can’t even buy and sell RMB in the forex market, you need to go through one of the state-owned banks and you need a special dispensation from the communist government.

[quote]BTW, do you really think stocks were undervalued in 2009 based on fundamentals (especially forward-looking)?[/quote]

Absolutely. Companies like AA or CAT were trading at single digit P/E’s.

[quote] Do you think the price increases around the world happened **in spite** of all that stimulus?[/quote]

I think that price increases are part of the trend. All those various forms of stimulus helped shorten the crisis somewhat, but they have not been big enough to make any inappropriate influences on prices. Most of them weren’t even real (like the aforementioned tripling of the monetary base), they were just moving digits around with no impact on the physical world around us.

[Eugene]

[quote]But why do you think there has been so much investment in emerging markets and in global assets, commodities, etc.? Who do you think is behind all of that money? The financial institutions are behind a lot of that buying (hedging against inflation)[/quote]

The red graph seems to be back on trend of pre-crisis growth. It’s just normal dynamics of emerging economies. China is growing like crazy, for example, even though it’s very hard to invest there for foreigners. You can’t even buy and sell RMB in the forex market, you need to go through one of the state-owned banks and you need a special dispensation from the communist government.

[quote]BTW, do you really think stocks were undervalued in 2009 based on fundamentals (especially forward-looking)?[/quote]

Absolutely. Companies like AA or CAT were trading at single digit P/E’s.

[quote] Do you think the price increases around the world happened **in spite** of all that stimulus?[/quote]

I think that price increases are part of the trend. All those various forms of stimulus helped shorten the crisis somewhat, but they have not been big enough to make any inappropriate influences on prices. Most of them weren’t even real (like the aforementioned tripling of the monetary base), they were just moving digits around with no impact on the physical world around us.

[Eugene]

[quote]But why do you think there has been so much investment in emerging markets and in global assets, commodities, etc.? Who do you think is behind all of that money? The financial institutions are behind a lot of that buying (hedging against inflation)[/quote]

The red graph seems to be back on trend of pre-crisis growth. It’s just normal dynamics of emerging economies. China is growing like crazy, for example, even though it’s very hard to invest there for foreigners. You can’t even buy and sell RMB in the forex market, you need to go through one of the state-owned banks and you need a special dispensation from the communist government.

[quote]BTW, do you really think stocks were undervalued in 2009 based on fundamentals (especially forward-looking)?[/quote]

Absolutely. Companies like AA or CAT were trading at single digit P/E’s.

[quote] Do you think the price increases around the world happened **in spite** of all that stimulus?[/quote]

I think that price increases are part of the trend. All those various forms of stimulus helped shorten the crisis somewhat, but they have not been big enough to make any inappropriate influences on prices. Most of them weren’t even real (like the aforementioned tripling of the monetary base), they were just moving digits around with no impact on the physical world around us.

[Author]

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