All you need do is look at how much the dollar has dropped against foreign currencies to realize that your 3% raise or bump in your stock fund is not making up the difference, you're still losing money. You can arrange a pile of turds in many different ways, but in the end essentially you still have a pile of turds.
Why is it people define inflation/deflation with prices rising/lowering.
Price increases are not the cause of inflation but usually the result!!!!
Inflation is defined as the increase in the money supply. Prices and CPI can be manipulated. You can even have falling prices or wages in an inflationary time.
Bottom line is if the Fed is printing gobs and gobs of money 24/7, regardless if gas does go down in one month or the price of your computer goes down at Future shop, you better believe that in the long run you are in for a time of massive INFLATION!
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
The Fed does not even report how many US dollars are being printed anymore, the World Bank has no idea, this concept of printing off paper money without any reporting has slammed countries in the past... hard!
House prices are down becuase... foreclosures are up
Just keep printing money, based on nothing (forget the ole 'Gold Standard'), and just keep granting interest only loans and sub prime mortgages, and just keep outsourcing all our jobs to Communist China… yup, the economy is looking GREAT!
I respect this websites coin experts as they are experts. The ridiculous assumptions of some of the so-called Gold and economic experts is a huge joke. I'm glad people come here for coin advice and not investment advice!! And you can take that to the bank!!
ditto roadrunner - feel that gold bullion and common date gold have always been a good investments and I've been adding to my position for several years - I'm a serious goldbug and will continue to hold long positions in gold and gold stocks - with the financial fiasco occuring in today's market - you name it - mortgage mess, dollar decline, inflation etc, I hate to say that the US economy is in for tough times - the FED is trying to hold up a sinking ship of paper money with their cut in interest rates - ones that are holding tangible assets will win in the end.
currently putting together a EF/AU/BU 18th & 19th Century Type Set; and CC Morgan Set
just completed 3d tour to Iraq and retired after 28+ years in the US Army
-- << Lower interest rate translates to low inflation. Low inflation doesn't bode well for precious metal, does it? >> -- -- Actually, you got that wrong. Rate cuts = sacrificing the dollar = highly inflationary. That's why you see gold up and the dollar down today.
Lower rates are inflationary. Imported goods (including oil) will cost more. Lower rates also stimulate the economy which increases demand for everything.
I find that everything I buy is going up in price so it sure feels like inflation is way more than %2. Often the news folks talk about core inflation which strips out energy and food prices. However I believe energy and food prices are not just whipping around I believe they are in a secular climb.
Once you realize that the only way out of our entitlement mess is to experience real inflation of 6-8% while reporting it as 2-3%, it allllll makes sense!
<< <i>Once you realize that the only way out of our entitlement mess is to experience real inflation of 6-8% while reporting it as 2-3%, it allllll makes sense! >>
Once you realize that this kind of socialism is immoral and doesn't work then it will all make sense!
The title of this thread says that gold is flying. I did not see gold soar today at all. The price rose less than the stock indices.
The problem with gold bugs is that they develop an "attitude" based upon a fixed conviction that dollars are worthless paper and that investments in other than precious metals are not to be trusted. As a result they ride the metal to the top, buying more and more as new highs are achieved, and then they ride the metal right back down again without ever taking a profit.
<< <i>The title of this thread says that gold is flying. I did not see gold soar today at all. The price rose less than the stock indices.
The problem with gold bugs is that they develop an "attitude" based upon a fixed conviction that dollars are worthless paper and that investments in other than precious metals are not to be trusted. As a result they ride the metal to the top, buying more and more as new highs are achieved, and then they ride the metal right back down again without ever taking a profit.
Gold rose 1.51% and Lehman Brothers Holdings Inc. rose 10.01%, and the S & P 500 rose 2.92% to 1,519.78, 52wk Range for the S & P : 1,310.94 - 1,555.90 .
Lot of short covering both in the metals and stocks today I think, things might settle down on both later in the week.
Coin Collector, Chicken Owner, Licensed Tax Preparer & Insurance Broker/Agent. San Diego, CA
Amazing, I expected a quarter point but never a half. I'm in agreement with you guys who said they are not reporting the true numbers, the housing mess is way worse than they are letting on, not to mention all the free money the home equity loans during the past few years enabled the economy to look great and supplied a ready source of "income" to spend for the poor schmucks who took out all those loans on overvalued property.
This is exactly the cut I expected. Also think it is going to backfire just like debt consolidation does at the individual level. The economic issues cannot be managed for long this way.
<< <i>Once you realize that the only way out of our entitlement mess is to experience real inflation of 6-8% while reporting it as 2-3%, it allllll makes sense! >>
What he said.
Of course there will be some wilder swings in some markets than others. Just try to stay a step ahead.
The Fed still reports the money supply. You can indeed check it out Fed Money Supply (M1, M2, etc). It is just that most economists don't believe it is the major factor anymore so it doesn't get reported daily on CNBC.
I think I am in total agreement with TDN when he says:
<< Once you realize that the only way out of our entitlement mess is to experience real inflation of 6-8% while reporting it as 2-3%, it allllll makes sense! >>
The Fed does not even report how many US dollars are being printed anymore, the World Bank has no idea, this concept of printing off paper money without any reporting has slammed countries in the past... hard!
The FED still reports the actual money being printed (part of M1) as well as M2. But what they no longer "track" or publish is M3. M3 involves all sorts of "odd" things like repurchase agreements for example. A simple key stroke on a computer can send Billions of dollars worth of liquidity into the system. And if properly massaged, this will not show up as part of M1/M2. Frankly, the amount of money being printed (M1) has been declining for some time. Hence the FED can point to a declining M1 and M2 to show they "aren't" increasing the money supply. But what they don't say is that the invisible M3 portion is pushing total liquidity at 13-14% per year. The FED/Treasury are up to the arm pits in pumping liquidity into the system through Treasuries, repo's, and what have you.
Yes, stocks had a good one day jolt based on the Bernanke rate change. You can bet the Exchange Stabilization Fund was in there as well helping to bolster the indicies. Ironically, gold is often called a poor "long term" investment ("long" often defined as anything longer than a flash in the pan). Yet here we are praising one good "day" in the stock market - all based on an expected rate change no less. Gold has been pushing itself up from $660 for several weeks, not to mention the longer term over 6 years. This move has now been relegated to a one day comparision to the S&P or DOW on 9/18/07. Same old stuff, different day. The only way to make this day fully complete, would be a return of Dollardude.
The comparison to the stock indices was merited by the title to the thread. Startign the day both the gold market and the stock market had already anticipated at least a quarter point reduction by the Fed (and gold had already moved up quite a bit during past week), yet the stock indices rose by a greater percentage. Perhaps just the result of there being more investors who believe in stocks than in gold, rightly or wrongly. One difference between the two types of investors (and of course many people hold both stocks and gold) is that the stock investors expect a roller coaster ride along the way and adjust their portfolio composition as they go, where as the metal mavens are by definition more unidimensional.
The real story is much further down the road. Sooner or later (and probably later), silver will break out. One could cite historic silver/gold spot ratios but that isn't even important. What is important is that it is an indispensibly important material increasingly short supply. Remaining known natural reserves are more difficult to exploit than earlier ones, are less rich, and cost more in unit costs. That all coupled with seriously lax exchange delivery and margin requirements, put the metal in a precarious position. When it comes to roost, many will be caught with their pants down and no belts to get and keep them up.
Lets see how the next few days play out before we evaluate the 50 basis points decrease by the Fed.
I was flabbergasted that the Fed went back to the old 50 basis point change which was what they used to do years ago. Greenspan seem to have pefected the art of the 25 basis point change.
Keep in mind that in the short run the stock market likes inflation and rises along with the commodity prices. But the effect of inflation is corrosive and at some point the stock market will pay for it dearly.
The economy is too complex for anyone to really know what is around the corner. CDOs. MBS, commercial paper, ect. are definately wildcards in the mix. I doubt there will be any more runs on the bank. Countrywide had a run on their bank 4 weeks ago then BofA bailed them out with $2 Billion then last week Countrywide borrowed another $10 Billion. There is too much easy money for big troubled companies to grab. Just look at our airline, rail, and auto industries over the past several decades. 9 times out of 10 the government either bails them out or another company bails out the troubled ones. A falling dollar is good for parts of our economy. Remember the lower the dollar falls the more our goods and services appeal to foreigners. Exports & tourism will flourish. US based companies that have a large international busines will also do well. I think the dollar will eventually hit a point where it will stabilize. Sure it will be painful for us but very nice for foreigners. The half of point cut will not affect the falling housing prices. Things will continue to get worse for housing before it gets better. With the dollar so cheap compared to other currencies foreigners just may rescue our housing market. Inflation inflation inflation is coming. Get ready for $4+ gal gas within the next several months. If wages do not rise with the cost of living we will see a recession. The fed has bought us some time. Without the rate cut a recession was probable within 6 months. Now who knows what is going to happen next. Hopefully we never get another terrorist attack like 9-11 or Gold just might go to $2000 / oz. overight and a massive run on the banks will begin.
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
Let me say it again: Stop focusing on one measly variable - the price of gas. TODAY, food is priced the same as it was 5 years ago, HOUSING IS DOWN (this includes the cost to RENT, since so many can not SELL their homes for an exacerbated price listing from just a few years ago) , computers and other technologies, like TV's, DVD's, etc. are CHEAPER today than 5 years ago (for the same or better product), water costs the same, (unless you are one of those Californian's buying that "Bling" H2O for $50 a bottle).
I don't get it. WHERE IS THIS SO-CALLED INFLATION??????????
<< <i><<inflation, inflation, inflation is coming>>
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
Let me say it again: Stop focusing on one measly variable - the price of gas. TODAY, food is priced the same as it was 5 years ago, HOUSING IS DOWN (this includes the cost to RENT, since so many can not SELL their homes for an exacerbated price listing from just a few years ago) , computers and other technologies, like TV's, DVD's, etc. are CHEAPER today than 5 years ago (for the same or better product), water costs the same, (unless you are one of those Californian's buying that "Bling" H2O for $50 a bottle).
I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
Food pricing is the same as 5 years ago? I don't think so....you need to hit the super market more. Milk is well over $4 a gallon now which is much higher the last year alone.
<< <i>I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
I don't know where you're shopping that food prices are the same as five years ago.
Energy and health care, for starters, have inflated far more than the published rate of inflation.
Housing is down from 1-2 years ago in overheated markets, but not down from five years ago. And in some markets that never saw the bubble-pricing of real estate, housing is NOT down. Here in the Austin area, housing prices are as high as ever and still rising.
<< <i><<inflation, inflation, inflation is coming>>
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
Let me say it again: Stop focusing on one measly variable - the price of gas. TODAY, food is priced the same as it was 5 years ago, HOUSING IS DOWN (this includes the cost to RENT, since so many can not SELL their homes for an exacerbated price listing from just a few years ago) , computers and other technologies, like TV's, DVD's, etc. are CHEAPER today than 5 years ago (for the same or better product), water costs the same, (unless you are one of those Californian's buying that "Bling" H2O for $50 a bottle).
I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
Take a look at the CPI. 15% change in the last 5 years.
You go, lloyd. And if you mention the current inflation rate, this group will tell you that it is REALLY 10%. You can't win with the doom and gloomers. Tomorrow is going to be a disaster, no matter what. Everything is always bad, or will be soon.
Quis custodiet ipsos custodes?
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
Larry Kudlow's take on it...(link below)(CAUTION: optimistic content, may not be suitable for this forum)
"Bravo, Mr. Bernanke [Larry Kudlow]
Ben Bernanke’s shock-and-awe, frontloading action to slash the fed funds rate 50 basis points from 5.25 percent to 4.75 percent (which I predicted, see “Goldilocks 2.0”) is just what the doctor ordered.
This is Mr. Bernanke’s coming out party. It’s his Fed now. In one fell swoop, yesterday’s move wiped Alan Greenspan off the front pages (thankfully).
Tuesday’s Fed’s action ultimately boosts financial confidence and reduces the cost of money. This in turn will help stabilize, even boost asset values across-the-board. It moves us away from the punitive inverted yield curve. It’s pro-growth and it will increase the demand for money by reducing the interest cost of money.
Tight money had been strangling the low tax rate on capital and investment. So the Fed’s easing move will revive the investment incentive effects from the supply-side tax cuts. The idea here is that the Fed had been squelching them and now is liberating them. Now the reduced interest tax on money has become more compatible and congenial with the low tax rate cost on capital.
The inflation hawks out there will be disappointed because stronger investment and growth will absorb liquidity and reduce the inflation rate.
Across the pond, the European Central Bank and the Bank of England may follow Bernanke’s lead. They of course are suffering from the same problems we are.
I think this is ultimately bullish for stocks, bullish for the economy, bullish for the dollar, and bearish for gold. It will take some time for these things to work themselves out, but these are my expected outcomes.
Politically speaking, this sets up 2008 as a much better year for the GOP’s bid to capture the White House. While the economy is in low gear, and will remain so for at least another six months, a brighter economic picture is in the cards.
Goldilocks 2.0 is not as good as Goldilocks 4.0, but bravo for Bernanke. I give him three cheers and a big thumbs up."
<< <i>I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
I don't know where you're shopping that food prices are the same as five years ago.
Energy and health care, for starters, have inflated far more than the published rate of inflation.
Housing is down from 1-2 years ago in overheated markets, but not down from five years ago. And in some markets that never saw the bubble-pricing of real estate, housing is NOT down. Here in the Austin area, housing prices are as high as ever and still rising. >>
Housing (real estate prices) is not included in the CPI, it was bumped 10 years ago, I think
<< <i>You go, lloyd. And if you mention the current inflation rate, this group will tell you that it is REALLY 10%. You can't win with the doom and gloomers. Tomorrow is going to be a disaster, no matter what. Everything is always bad, or will be soon. >>
I don't think it's 10% but it sure as hell ain't 2-3%. Not unless you live in a household which buys a disproportionate amount of high-tech equipment.
it's still gloom and doom on the horizon....after all the hype ....gold futures settle lower, oil futures up.
i still think it would be wise to put the DOW for below 12k, rather than get excited about what the mint is doing with the prices of unc AGE as a hedge.
Housing prices are not included in the CPI. They were removed in 1983 and replaced with "equivalent rents." That is, what you could rent your $350K home for out in the market place. This was pretty laughable over the past 5 years considering home prices were booming and rents were falling (everyone wanted a home). So with rents falling, "CPI housing" was falling. Considering equiv. rents make up 40% or more of CPI - that's a 40% FIXED rate over the previous 5 years (lol). Now that home prices are falling and rents are going up......I would laugh my a$$ off if the BLS went back to "home prices" in the CPI again! Considering the appliances, white goods, computers, clothing,and autos that comprise another 10-20% of the CPI......you have an index that has been for years, resistant to change. Many economists call it the Constant Price Index. Only a minority portion of it includes education, health care, energy/fuel, food, etc. (ie the things that have skyrocketed in price). Your milk is cheaper, but my cheese and bread are way up. Pizza prices are up almost 10% in the northeast over the past year. Fuel is almost 3X what is was a few years ago. Inflationary?
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
The definition of inflation is money supply increase. The USA has increased M3 1300% since 1982. That's truly inflationary. What do you think has pushed stocks up 15X from 1987? Asset inflation! The powers to be have been very good at keeping this away from CPI related consumer prices and other key hard assets for years. The substitution and quality effects on the CPI are also laughable (substitute dog food for steak and cost of living drops, buy a computer with 3X the memory and the quality factor drops the price by an effective 3X...because of improved quality). But the FED and Treasury started losing a grip on the hard asset control around 2001. Central Bank gold sales alone weren't cutting it.
A 1300% money supply increase and $500,000,000,000,000 in derivatives (those are trillions) is lurking out there. Believe me it's both very inflationary and depressionary. It's only a matter of which order they hit us. This is not one measly variable. It's 500 TRILLION of them.
I don't get it. WHERE IS THIS SO-CALLED INFLATION???????? It's scattered all around the world where are dollars and treasuries were planted. The final wave is when those trillions return to our shores looking for redemption. For now Walmart prices are steady, but other shopping venues aren't.
At some point inflation will become very apparent to Lloyd and others. Is gold (and many commodities) up 3X or more since 2001 on inflationary expectations/realities or recessionary expectations. I'll let you be the judge. I think we are currently in a huge stagflation warp. Part of the economy is experiencing lowering prices and other parts are still going up at 10-15% per year. We have both.
Contrary to what was mentioned here earlier this thread claims a 70% increase in Milk futures over the past 12 months on the CBOT. I guess that's not inflationary after all. One can always find at least one food product in a down cycle at any time...stock up then!
As Larry Kudlow says above, referring positively to the Fed rate cut, (and I belive him more than I believe some of you):
"The inflation hawks out there will be disappointed because stronger investment and growth will absorb liquidity and reduce the inflation rate."
I notice no one, not a single one of you, tried to refute his essay above.
And as to the inflation in food prices, do you support biofuel production as a means of lessening our dependence on foreign oil? Are you aware of what is used to make biofuels? Are you aware of what cows, which produce milk, eat? Do you have any examples of food item price increases that can not be correlated to the rise in grain prices due to the biofuel industry?
Maybe you do, I'm just wondering. And making a point, of course. I've always done the food shopping for our family, so I'm pretty aware of food pricing over the years.
Anyway, any takers at refuting Larry Kudlow's take? It is diametrically opposed to most of what has been complained about here re: the Fed rate cut.
That's all from here. Good night, and have a pleasant tomorrow. Arrgh. (sole forum reference to International Talk Like A Pirate Day, which is/was today)
Quis custodiet ipsos custodes?
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
Do you have any examples of food item price increases that can not be correlated to the rise in grain prices due to the biofuel industry?
Man! The world started revolving around biofuel and nobody told me. That stinks!
From an inflation standpoint, however, I vividly recall a few years ago when the news announced that $3.00/gallon milk was coming. And of course it did. And so about 6 weeks ago the same news announced that $5.00/gallon milk was coming. How surprised I was, to go in the store and see $6.99/gallon milk.
<< <i>I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
Well... it's here in SW Florida. Milk has more than doubled in 3 years (over $6 a gallon - too bad the kids can't drink gasoline)... rent has been on a steady climb forever (even though the housing market dived).... mortgages are still heading up (if you can get one)... it costs more to buy orange juice right here where it's produced than if I went to a state with no orange trees... and it's still a "right to work" state that primarily pays minimum wage... but wait - we have sunshine... and heat... 11 months of the year, electric bill with A/C: $300-$400 a month (FPL banks the cash)... and to make matters worse - not a single old-timey B&M coin shop!!
While stockmarkets rallied and traders cheered, analysts like Marc Faber doubt it will work.
"I think it's suicidal to cut interest rates when the gold price is at $[US]715 or $[US]720, when food prices are going through the roof, when oil prices are at an all-time high," he said.
Dr Faber is a famous investment adviser and publisher of the Gloom, Doom and Boom Report in Hong Kong.
Even if you leave aside the inflation threat from soaring commodity prices, he thinks the Fed has got it wrong.
"I think, actually, what the Fed should do is increase interest rates, because if you analyse the cause of the problems we have today, they are due to artificially low interest rates, expansionary monetary policies and extremely rapid credit growth that was fuelled by a totally irresponsible Fed," he said.
"I don't think that it is the responsibility of a central bank to look after the economy. The responsibility of a central bank is to look after the integrity of money, the maintenance of the purchasing power of money."
I do metal roofing. In the past three years we have had 3%, 5%, 6%, 3%, 7% increases in our metal prices. I don't know what inflation is, but the consumers are paying more for my wares and...my property taxes went up over $1000 per year last year.
Despite inflation, the wages of sin remain the same, so let's not lie !
Comments
Price increases are not the cause of inflation but usually the result!!!!
Inflation is defined as the increase in the money supply. Prices and CPI can be manipulated. You can even have falling prices or wages in an inflationary time.
Bottom line is if the Fed is printing gobs and gobs of money 24/7, regardless if gas does go down in one month or the price of your computer goes down at Future shop, you better believe that in the long run you are in for a time of massive INFLATION!
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
That's not of course what the media is reporting
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
House prices are down becuase... foreclosures are up
ABC News: Home Foreclosures Up as Mortgage Rates Climb
Just keep printing money, based on nothing (forget the ole 'Gold Standard'), and just keep granting interest only loans and sub prime mortgages, and just keep outsourcing all our jobs to Communist China… yup, the economy is looking GREAT!
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
just completed 3d tour to Iraq and retired after 28+ years in the US Army
HE>I
Course, that's not as much fun as all this pontificating.
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
--
-- Actually, you got that wrong. Rate cuts = sacrificing the dollar = highly inflationary. That's why you see gold up and the dollar down today.
Lower rates are inflationary. Imported goods (including oil) will cost more. Lower rates also stimulate the economy which increases demand for everything.
I find that everything I buy is going up in price so it sure feels like inflation is way more than %2. Often the news folks talk about core inflation which strips out energy and food prices. However I believe energy and food prices are not just whipping around I believe they are in a secular climb.
Anyway I'm happy to own some generic gold coins.
<< <i>Once you realize that the only way out of our entitlement mess is to experience real inflation of 6-8% while reporting it as 2-3%, it allllll makes sense!
Once you realize that this kind of socialism is immoral and doesn't work then it will all make sense!
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
The problem with gold bugs is that they develop an "attitude" based upon a fixed conviction that dollars are worthless paper and that investments in other than precious metals are not to be trusted. As a result they ride the metal to the top, buying more and more as new highs are achieved, and then they ride the metal right back down again without ever taking a profit.
CG
<< <i>The title of this thread says that gold is flying. I did not see gold soar today at all. The price rose less than the stock indices.
The problem with gold bugs is that they develop an "attitude" based upon a fixed conviction that dollars are worthless paper and that investments in other than precious metals are not to be trusted. As a result they ride the metal to the top, buying more and more as new highs are achieved, and then they ride the metal right back down again without ever taking a profit.
CG >>
Didn't look very hard did you?
GOLD 09/18/2007 18:30 725.80 726.60 +10.80
+1.51%
SILVER 09/18/2007 18:30 13.00 13.05 +0.23
+1.80%
PLATINUM
09/18/2007 14:00 1301.00 1308.00 +1.00
+0.08%
PALLADIUM 09/18/2007 16:00 330.00 334.00 +1.00
+0.30%
Lot of short covering both in the metals and stocks today I think, things might settle down on both later in the week.
San Diego, CA
for I believe ,that we are in for a very bumpy ride.
Camelot
John
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>Once you realize that the only way out of our entitlement mess is to experience real inflation of 6-8% while reporting it as 2-3%, it allllll makes sense!
What he said.
Of course there will be some wilder swings in some markets than others. Just try to stay a step ahead.
I think I am in total agreement with TDN when he says:
<< Once you realize that the only way out of our entitlement mess is to experience real inflation of 6-8% while reporting it as 2-3%, it allllll makes sense! >>
The FED still reports the actual money being printed (part of M1) as well as M2. But what they no longer "track" or publish is M3.
M3 involves all sorts of "odd" things like repurchase agreements for example. A simple key stroke on a computer can send Billions of dollars worth of liquidity into the system. And if properly massaged, this will not show up as part of M1/M2. Frankly, the amount of money being printed (M1) has been declining for some time. Hence the FED can point to a declining M1 and M2 to show they "aren't" increasing the money supply. But what they don't say is that the invisible M3 portion is pushing total liquidity at 13-14% per year. The FED/Treasury are up to the arm pits in pumping liquidity into the system through Treasuries, repo's, and what have you.
Yes, stocks had a good one day jolt based on the Bernanke rate change. You can bet the Exchange Stabilization Fund was in there as well helping to bolster the indicies. Ironically, gold is often called a poor "long term" investment ("long" often defined as anything longer than a flash in the pan). Yet here we are praising one good "day" in the stock market - all based on an expected rate change no less. Gold has been pushing itself up from $660 for several weeks, not to mention the longer term over 6 years. This move has now been relegated to a one day comparision to the S&P or DOW on 9/18/07. Same old stuff, different day. The only way to make this day fully complete, would be a return of Dollardude.
roadrunner
The comparison to the stock indices was merited by the title to the thread. Startign the day both the gold market and the stock market had already anticipated at least a quarter point reduction by the Fed (and gold had already moved up quite a bit during past week), yet the stock indices rose by a greater percentage. Perhaps just the result of there being more investors who believe in stocks than in gold, rightly or wrongly. One difference between the two types of investors (and of course many people hold both stocks and gold) is that the stock investors expect a roller coaster ride along the way and adjust their portfolio composition as they go, where as the metal mavens are by definition more unidimensional.
CG
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
I disagree. The salesmen teach people to Buy and Hold stocks. Period.
I was flabbergasted that the Fed went back to the old 50 basis point change which was what they used to do years ago.
Greenspan seem to have pefected the art of the 25 basis point change.
Keep in mind that in the short run the stock market likes inflation and rises along with the commodity prices. But the effect of inflation is corrosive and at some point the stock market will pay for it dearly.
Canadian Dollar +1.32% 09/19-01:10 1.0097 0.9904 730.38
<< <i>Lower interest rate translates to low inflation. Low inflation doesn't bode well for precious metal, does it? >>
Are you a victim of the happy talking heads on CNBC? Lower interest rates mean just the opposite in our current state of fiscal disarray.
Lower interest rates=more money creation=(by definition) more inflation.
Sheesh.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
Inflation inflation inflation is coming. Get ready for $4+ gal gas within the next several months. If wages do not rise with the cost of living we will see a recession. The fed has bought us some time. Without the rate cut a recession was probable within 6 months. Now who knows what is going to happen next. Hopefully we never get another terrorist attack like 9-11 or Gold just might go to $2000 / oz. overight and a massive run on the banks will begin.
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
Let me say it again: Stop focusing on one measly variable - the price of gas. TODAY, food is priced the same as it was 5 years ago, HOUSING IS DOWN (this includes the cost to RENT, since so many can not SELL their homes for an exacerbated price listing from just a few years ago) , computers and other technologies, like TV's, DVD's, etc. are CHEAPER today than 5 years ago (for the same or better product), water costs the same, (unless you are one of those Californian's buying that "Bling" H2O for $50 a bottle).
I don't get it. WHERE IS THIS SO-CALLED INFLATION??????????
<< <i><<inflation, inflation, inflation is coming>>
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
Let me say it again: Stop focusing on one measly variable - the price of gas. TODAY, food is priced the same as it was 5 years ago, HOUSING IS DOWN (this includes the cost to RENT, since so many can not SELL their homes for an exacerbated price listing from just a few years ago) , computers and other technologies, like TV's, DVD's, etc. are CHEAPER today than 5 years ago (for the same or better product), water costs the same, (unless you are one of those Californian's buying that "Bling" H2O for $50 a bottle).
I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
Food pricing is the same as 5 years ago? I don't think so....you need to hit the super market more. Milk is well over $4 a gallon now which is much higher the last year alone.
<< <i>I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
I don't know where you're shopping that food prices are the same as five years ago.
Energy and health care, for starters, have inflated far more than the published rate of inflation.
Housing is down from 1-2 years ago in overheated markets, but not down from five years ago. And in some markets that never saw the bubble-pricing of real estate, housing is NOT down. Here in the Austin area, housing prices are as high as ever and still rising.
<< <i><<inflation, inflation, inflation is coming>>
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
Let me say it again: Stop focusing on one measly variable - the price of gas. TODAY, food is priced the same as it was 5 years ago, HOUSING IS DOWN (this includes the cost to RENT, since so many can not SELL their homes for an exacerbated price listing from just a few years ago) , computers and other technologies, like TV's, DVD's, etc. are CHEAPER today than 5 years ago (for the same or better product), water costs the same, (unless you are one of those Californian's buying that "Bling" H2O for $50 a bottle).
I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
Take a look at the CPI. 15% change in the last 5 years.
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
"Bravo, Mr. Bernanke [Larry Kudlow]
Ben Bernanke’s shock-and-awe, frontloading action to slash the fed funds rate 50 basis points from 5.25 percent to 4.75 percent (which I predicted, see “Goldilocks 2.0”) is just what the doctor ordered.
This is Mr. Bernanke’s coming out party. It’s his Fed now. In one fell swoop, yesterday’s move wiped Alan Greenspan off the front pages (thankfully).
Tuesday’s Fed’s action ultimately boosts financial confidence and reduces the cost of money. This in turn will help stabilize, even boost asset values across-the-board. It moves us away from the punitive inverted yield curve. It’s pro-growth and it will increase the demand for money by reducing the interest cost of money.
Tight money had been strangling the low tax rate on capital and investment. So the Fed’s easing move will revive the investment incentive effects from the supply-side tax cuts. The idea here is that the Fed had been squelching them and now is liberating them. Now the reduced interest tax on money has become more compatible and congenial with the low tax rate cost on capital.
The inflation hawks out there will be disappointed because stronger investment and growth will absorb liquidity and reduce the inflation rate.
Across the pond, the European Central Bank and the Bank of England may follow Bernanke’s lead. They of course are suffering from the same problems we are.
I think this is ultimately bullish for stocks, bullish for the economy, bullish for the dollar, and bearish for gold. It will take some time for these things to work themselves out, but these are my expected outcomes.
Politically speaking, this sets up 2008 as a much better year for the GOP’s bid to capture the White House. While the economy is in low gear, and will remain so for at least another six months, a brighter economic picture is in the cards.
Goldilocks 2.0 is not as good as Goldilocks 4.0, but bravo for Bernanke. I give him three cheers and a big thumbs up."
Link to this quote, scroll down)
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
<< <i>
<< <i>I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
I don't know where you're shopping that food prices are the same as five years ago.
Energy and health care, for starters, have inflated far more than the published rate of inflation.
Housing is down from 1-2 years ago in overheated markets, but not down from five years ago. And in some markets that never saw the bubble-pricing of real estate, housing is NOT down. Here in the Austin area, housing prices are as high as ever and still rising. >>
Housing (real estate prices) is not included in the CPI, it was bumped 10 years ago, I think
<< <i>You go, lloyd. And if you mention the current inflation rate, this group will tell you that it is REALLY 10%. You can't win with the doom and gloomers. Tomorrow is going to be a disaster, no matter what. Everything is always bad, or will be soon. >>
I don't think it's 10% but it sure as hell ain't 2-3%. Not unless you live in a household which buys a disproportionate amount of high-tech equipment.
AL
i still think it would be wise to put the DOW for below 12k, rather than get excited about what the mint is doing with the prices of unc AGE as a hedge.
Your milk is cheaper, but my cheese and bread are way up. Pizza prices are up almost 10% in the northeast over the past year. Fuel is almost 3X what is was a few years ago. Inflationary?
This statement has been blasted for years. Probably 15 years now, and still little if any inflation:
The definition of inflation is money supply increase. The USA has increased M3 1300% since 1982. That's truly inflationary. What do you think has pushed stocks up 15X from 1987? Asset inflation!
The powers to be have been very good at keeping this away from CPI related consumer prices and other key hard assets for years.
The substitution and quality effects on the CPI are also laughable
(substitute dog food for steak and cost of living drops, buy a computer with 3X the memory and the quality factor drops the price by an effective 3X...because of improved quality). But the FED and Treasury started losing a grip on the hard asset control around 2001. Central Bank gold sales alone weren't cutting it.
A 1300% money supply increase and $500,000,000,000,000 in derivatives (those are trillions) is lurking out there. Believe me it's both very inflationary and depressionary. It's only a matter of which order they hit us. This is not one measly variable. It's 500 TRILLION of them.
I don't get it. WHERE IS THIS SO-CALLED INFLATION????????
It's scattered all around the world where are dollars and treasuries were planted. The final wave is when those trillions return to our shores looking for redemption. For now Walmart prices are steady, but other shopping venues aren't.
At some point inflation will become very apparent to Lloyd and others. Is gold (and many commodities) up 3X or more since 2001 on inflationary expectations/realities or recessionary expectations. I'll let you be the judge. I think we are currently in a huge stagflation warp. Part of the economy is experiencing lowering prices and other parts are still going up at 10-15% per year. We have both.
roadrunner
Contrary to what was mentioned here earlier this thread claims a 70% increase in Milk futures over the past 12 months on the CBOT. I guess that's not inflationary after all. One can always find at least one food product in a down cycle at any time...stock up then!
roadrunner
"The inflation hawks out there will be disappointed because stronger investment and growth will absorb liquidity and reduce the inflation rate."
I notice no one, not a single one of you, tried to refute his essay above.
And as to the inflation in food prices, do you support biofuel production as a means of lessening our dependence on foreign oil? Are you aware of what is used to make biofuels? Are you aware of what cows, which produce milk, eat? Do you have any examples of food item price increases that can not be correlated to the rise in grain prices due to the biofuel industry?
Maybe you do, I'm just wondering. And making a point, of course. I've always done the food shopping for our family, so I'm pretty aware of food pricing over the years.
Anyway, any takers at refuting Larry Kudlow's take? It is diametrically opposed to most of what has been complained about here re: the Fed rate cut.
That's all from here. Good night, and have a pleasant tomorrow. Arrgh. (sole forum reference to International Talk Like A Pirate Day, which is/was today)
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
It does not matter what the FED or anyone else does, because people react differently to the same events at different times.
San Diego, CA
Man! The world started revolving around biofuel and nobody told me. That stinks!
From an inflation standpoint, however, I vividly recall a few years ago when the news announced that $3.00/gallon milk was coming. And of course it did. And so about 6 weeks ago the same news announced that $5.00/gallon milk was coming. How surprised I was, to go in the store and see $6.99/gallon milk.
<< <i>I don't get it. WHERE IS THIS SO-CALLED INFLATION?????????? >>
Well... it's here in SW Florida.
Milk has more than doubled in 3 years (over $6 a gallon - too bad the kids can't drink gasoline)... rent has been on a steady climb forever (even though the housing market dived).... mortgages are still heading up (if you can get one)... it costs more to buy orange juice right here where it's produced than if I went to a state with no orange trees... and it's still a "right to work" state that primarily pays minimum wage... but wait - we have sunshine... and heat... 11 months of the year, electric bill with A/C: $300-$400 a month (FPL banks the cash)... and to make matters worse - not a single old-timey B&M coin shop!!
While stockmarkets rallied and traders cheered, analysts like Marc Faber doubt it will work.
"I think it's suicidal to cut interest rates when the gold price is at $[US]715 or $[US]720, when food prices are going through the roof, when oil prices are at an all-time high," he said.
Dr Faber is a famous investment adviser and publisher of the Gloom, Doom and Boom Report in Hong Kong.
Even if you leave aside the inflation threat from soaring commodity prices, he thinks the Fed has got it wrong.
"I think, actually, what the Fed should do is increase interest rates, because if you analyse the cause of the problems we have today, they are due to artificially low interest rates, expansionary monetary policies and extremely rapid credit growth that was fuelled by a totally irresponsible Fed," he said.
"I don't think that it is the responsibility of a central bank to look after the economy. The responsibility of a central bank is to look after the integrity of money, the maintenance of the purchasing power of money."
Link
and...my property taxes went up over $1000 per year last year.
Despite inflation, the wages of sin remain the same, so let's not lie !
HE>I
99
I missed your postings lloydmincy and am glad to see you around.
HE>I