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(former)FormerSanDiegan
ParticipantFirst shorting oil, now fighting the Fed. After that, what’s next ? Putting what’s left on the Padres to win the World Series ?
ParticipantJWM – Thanks, MIsh’s blog has a recent piece on this subject.
http://globaleconomicanalysis.blogspot.com/2008/04/unstoppable-credit-contraction.htmlMish makes the deflationary case. However, it is difficult for me to turn off the empirical evidence I see every day in my life when I buy milk, gas, and food as well as when I see broad measures of money supply numbers increase. BUt I do have an open mind, and I do see that the strictness of credit is clearly deflationary.
However, if the argument cannot be explained to an 8th grader I tend to discount it. For example, in 2004-2005 one could clearly see that home prices relative to incomes had expanded well beyond historic norms (see Rich’s primer). At that time, people tried to explain away this discrepancy with convoluted arguments.
Currently, we have inflationistas citing that broad measures of money supply are increasing and that the actions by the Fed are pushing down the value of the dollar (Thus requiring more dollars to buy goods and services).
The deflationistas are citing contraction in available credit (simple enough, I get that) coupled with esoteric arguments as to why basic measures of money supply (M2) are not reflecting the “real” effects.
I guess we will know how it turns out as things unfold over the next few years. We can argue all we want, but as Milton Friedman said, “The only relevant test of the validity of a hypothesis is comparison of prediction with experience.”
ParticipantJWM – Thanks, MIsh’s blog has a recent piece on this subject.
http://globaleconomicanalysis.blogspot.com/2008/04/unstoppable-credit-contraction.htmlMish makes the deflationary case. However, it is difficult for me to turn off the empirical evidence I see every day in my life when I buy milk, gas, and food as well as when I see broad measures of money supply numbers increase. BUt I do have an open mind, and I do see that the strictness of credit is clearly deflationary.
However, if the argument cannot be explained to an 8th grader I tend to discount it. For example, in 2004-2005 one could clearly see that home prices relative to incomes had expanded well beyond historic norms (see Rich’s primer). At that time, people tried to explain away this discrepancy with convoluted arguments.
Currently, we have inflationistas citing that broad measures of money supply are increasing and that the actions by the Fed are pushing down the value of the dollar (Thus requiring more dollars to buy goods and services).
The deflationistas are citing contraction in available credit (simple enough, I get that) coupled with esoteric arguments as to why basic measures of money supply (M2) are not reflecting the “real” effects.
I guess we will know how it turns out as things unfold over the next few years. We can argue all we want, but as Milton Friedman said, “The only relevant test of the validity of a hypothesis is comparison of prediction with experience.”
ParticipantJWM – Thanks, MIsh’s blog has a recent piece on this subject.
http://globaleconomicanalysis.blogspot.com/2008/04/unstoppable-credit-contraction.htmlMish makes the deflationary case. However, it is difficult for me to turn off the empirical evidence I see every day in my life when I buy milk, gas, and food as well as when I see broad measures of money supply numbers increase. BUt I do have an open mind, and I do see that the strictness of credit is clearly deflationary.
However, if the argument cannot be explained to an 8th grader I tend to discount it. For example, in 2004-2005 one could clearly see that home prices relative to incomes had expanded well beyond historic norms (see Rich’s primer). At that time, people tried to explain away this discrepancy with convoluted arguments.
Currently, we have inflationistas citing that broad measures of money supply are increasing and that the actions by the Fed are pushing down the value of the dollar (Thus requiring more dollars to buy goods and services).
The deflationistas are citing contraction in available credit (simple enough, I get that) coupled with esoteric arguments as to why basic measures of money supply (M2) are not reflecting the “real” effects.
I guess we will know how it turns out as things unfold over the next few years. We can argue all we want, but as Milton Friedman said, “The only relevant test of the validity of a hypothesis is comparison of prediction with experience.”
ParticipantJWM – Thanks, MIsh’s blog has a recent piece on this subject.
http://globaleconomicanalysis.blogspot.com/2008/04/unstoppable-credit-contraction.htmlMish makes the deflationary case. However, it is difficult for me to turn off the empirical evidence I see every day in my life when I buy milk, gas, and food as well as when I see broad measures of money supply numbers increase. BUt I do have an open mind, and I do see that the strictness of credit is clearly deflationary.
However, if the argument cannot be explained to an 8th grader I tend to discount it. For example, in 2004-2005 one could clearly see that home prices relative to incomes had expanded well beyond historic norms (see Rich’s primer). At that time, people tried to explain away this discrepancy with convoluted arguments.
Currently, we have inflationistas citing that broad measures of money supply are increasing and that the actions by the Fed are pushing down the value of the dollar (Thus requiring more dollars to buy goods and services).
The deflationistas are citing contraction in available credit (simple enough, I get that) coupled with esoteric arguments as to why basic measures of money supply (M2) are not reflecting the “real” effects.
I guess we will know how it turns out as things unfold over the next few years. We can argue all we want, but as Milton Friedman said, “The only relevant test of the validity of a hypothesis is comparison of prediction with experience.”
ParticipantJWM – Thanks, MIsh’s blog has a recent piece on this subject.
http://globaleconomicanalysis.blogspot.com/2008/04/unstoppable-credit-contraction.htmlMish makes the deflationary case. However, it is difficult for me to turn off the empirical evidence I see every day in my life when I buy milk, gas, and food as well as when I see broad measures of money supply numbers increase. BUt I do have an open mind, and I do see that the strictness of credit is clearly deflationary.
However, if the argument cannot be explained to an 8th grader I tend to discount it. For example, in 2004-2005 one could clearly see that home prices relative to incomes had expanded well beyond historic norms (see Rich’s primer). At that time, people tried to explain away this discrepancy with convoluted arguments.
Currently, we have inflationistas citing that broad measures of money supply are increasing and that the actions by the Fed are pushing down the value of the dollar (Thus requiring more dollars to buy goods and services).
The deflationistas are citing contraction in available credit (simple enough, I get that) coupled with esoteric arguments as to why basic measures of money supply (M2) are not reflecting the “real” effects.
I guess we will know how it turns out as things unfold over the next few years. We can argue all we want, but as Milton Friedman said, “The only relevant test of the validity of a hypothesis is comparison of prediction with experience.”
ParticipantHow does the contraction of $100 Billion via changes in SOMA compare to the $300 billion or so increase in M2 money supply we have experienced since October 2007 ?
Perhaps the tightening on one part of the system is intended to hedge what they are doing to influence the another part of the system via rates ?
ParticipantHow does the contraction of $100 Billion via changes in SOMA compare to the $300 billion or so increase in M2 money supply we have experienced since October 2007 ?
Perhaps the tightening on one part of the system is intended to hedge what they are doing to influence the another part of the system via rates ?
ParticipantHow does the contraction of $100 Billion via changes in SOMA compare to the $300 billion or so increase in M2 money supply we have experienced since October 2007 ?
Perhaps the tightening on one part of the system is intended to hedge what they are doing to influence the another part of the system via rates ?
ParticipantHow does the contraction of $100 Billion via changes in SOMA compare to the $300 billion or so increase in M2 money supply we have experienced since October 2007 ?
Perhaps the tightening on one part of the system is intended to hedge what they are doing to influence the another part of the system via rates ?
ParticipantHow does the contraction of $100 Billion via changes in SOMA compare to the $300 billion or so increase in M2 money supply we have experienced since October 2007 ?
Perhaps the tightening on one part of the system is intended to hedge what they are doing to influence the another part of the system via rates ?
April 30, 2008 at 10:37 AM in reply to: Inflation as a risk factor; it may be time to buy soon #196576Participantstockstradr, you’re going to have to get some evidence on the money printing theory before making an argument like this. There is no evidence of money printing and in fact the Fed is currently removing money from the system.
Actually, I’d like to see evidence to back up this statement.
Please explain how the Fed is removing money from the system, and by what amounts, because I see no evidence thereof.In fact the money supply, as measured by M-2 has increased about 7% in the past 12 months and has accelerated increasing by an annualized 12% in the last three months.
April 30, 2008 at 10:37 AM in reply to: Inflation as a risk factor; it may be time to buy soon #196609Participantstockstradr, you’re going to have to get some evidence on the money printing theory before making an argument like this. There is no evidence of money printing and in fact the Fed is currently removing money from the system.
Actually, I’d like to see evidence to back up this statement.
Please explain how the Fed is removing money from the system, and by what amounts, because I see no evidence thereof.In fact the money supply, as measured by M-2 has increased about 7% in the past 12 months and has accelerated increasing by an annualized 12% in the last three months.
April 30, 2008 at 10:37 AM in reply to: Inflation as a risk factor; it may be time to buy soon #196633Participantstockstradr, you’re going to have to get some evidence on the money printing theory before making an argument like this. There is no evidence of money printing and in fact the Fed is currently removing money from the system.
Actually, I’d like to see evidence to back up this statement.
Please explain how the Fed is removing money from the system, and by what amounts, because I see no evidence thereof.In fact the money supply, as measured by M-2 has increased about 7% in the past 12 months and has accelerated increasing by an annualized 12% in the last three months.
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