Inflation versus deflation debate for Red Pill consumers

[GRG55]

Re: Inflation versus deflation debate for Red Pill consumers

Compliments to Charles Mackay for one of the most concise, far seeing and elegantly simple expositions on this website. There is a lot of condensed wisdom in this chart, and the fact it was acted on by him in completely unequivocal terms lends it yet more authority. The best of iTulip indeed.

I'll echo Lukester.

But what we REALLY want to know is what chart correlation is Charles looking at right now that he hasn't told us about yet...

[Guest]

Re: Inflation versus deflation debate for Red Pill consumers

GRG55 -

I don't know, Charles Mackay's play was planned as a ten year bet? Maybe we are required to wait patiently for a summary and a 'next play' in 2011 or 2012?

If we ask him now, he just may tell us we are early ... If nothing else we'll learn the art of waiting along with him. :rolleyes:

[*T*]

Re: Inflation versus deflation debate for Red Pill consumers

Perhaps these gold/whatever ratio graphs should be done with a log y-axis.
Then it doesn't matter which way you express the ratio since
log(dow/gld) = -log(gold/dow)

Anyways, I did a similar plot for UK ave house prices (Halifax housing index)


I will be renting for the foreseeable.

[Charles Mackay]

Re: Inflation versus deflation debate for Red Pill consumers

Perhaps these gold/whatever ratio graphs should be done with a log y-axis.
Then it doesn't matter which way you express the ratio since
log(dow/gld) = -log(gold/dow)

Anyways, I did a similar plot for UK ave house prices (Halifax housing index)

I will be renting for the foreseeable.

T, did you notice the extreme low and extreme high is almost identical to the United States? 100 oz of gold in 1980 and 660 oz of gold in '04/ '05 ... isn't that uncanny when you are dealing with local real estate and a whole different currency?

I could post the log of my chart here but the only thing that would be different is the trend lines as far as T.A. goes.

Now, you have further to fall than we do because our top was in 2001 and you are still at 550 oz.

Thanks for posting that!

[*T*]

Re: Inflation versus deflation debate for Red Pill consumers

T, did you notice the extreme low and extreme high is almost identical to the United States? 100 oz of gold in 1980 and 660 oz of gold in '04/ '05 ... isn't that uncanny when you are dealing with local real estate and a whole different currency?
[...]
Thanks for posting that!

Yep, credit is global I suppose. Would be very curious to see the same for Spain, Germany and Japan. Slightly complicated by the Euro switcheroo I suppose.

Just glad someone other than myself is interested! :p

(PS - what are these 'Credits' for?)

edit: ave price in spain approx 247000 euros = 460 oz; unable to find data on germany, japan.

[Spartacus]

Re: Inflation versus deflation debate for Red Pill consumers

hehehhehheh ...

When a couple of beauty salons were reducing their prices it was deflation (this was from a Mish article a couple of years back)

Deflation, NO question, NO doubt.

Not a limited local phenomenon, not supply and demand, NO, NO, NO - the only possible explanation was deflation beginning.

But today, for the price of oil .... every explanation BUT inflation must be considered first.

(he may be right about the petrol price, I'm not arguing that point at the moment, just pointing out the selectivity)

Oil is set to hit $100 a barrel: Is This Deflation?

Here is an interesting reader question from last week:

Mish,
Oil is set to hit $100 a barrel.
Gold is set to hit $800 an ounce.
Other commodities are periodically breaking all time highs.
Is this deflation?

My Reply:

No, of course not.
Then again the price of oil has little or nothing to do with inflation, at least in any measurable sense.

The above sentence may seem shocking to many, but before we proceed we must agree on a definition of inflation. The definition of inflation that I am using is this: Inflation is an increase in money supply and credit.

For further discussion of that definition, please see Which Comes First: The Cart or the Horse? And with the horse in front of the cart where it belongs, let's look at oil prices.

Ten Possible Factors Behind Oil's Rise

[/QUOTE]

[metalman]

Re: Inflation versus deflation debate for Red Pill consumers

hehehhehheh ...

When a couple of beauty salons were reducing their prices it was deflation (this was from a Mish article a couple of years back)

Deflation, NO question, NO doubt.

Not a limited local phenomenon, not supply and demand, NO, NO, NO - the only possible explanation was deflation beginning.

But today, for the price of oil .... every explanation BUT inflation must be considered first.

(he may be right about the petrol price, I'm not arguing that point at the moment, just pointing out the selectivity)

[/quote]

the doubletalk is too much.

buddy sent me this today. no, it isn't me. honest! who's behind this? a fellow ituliper? i wanna contribute!
Mush's Global Economic Trend Nonsense


Thoughts on the global economy, housing, gold, silver, interest rates, oil, energy, China, rabbits, yen, buckets of water, wind, freezing cold beer, euros, wall fasteners, carrots, cat pee.






http://globaleconomicnonsense.blogspot.com/

[GRG55]

Re: Inflation versus deflation debate for Red Pill consumers

Here's an interesting inflation chart (well I thought it was interesting) originally created by Jim Stack with a link to Barry Ritholtz' blog where I found it. No core inflation, eh?

Link:
http://bigpicture.typepad.com/

[FRED]

Re: Inflation versus deflation debate for Red Pill consumers

Here's an interesting inflation chart (well I thought it was interesting) originally created by Jim Stack with a link to Barry Ritholtz' blog where I found it. No core inflation, eh?

Link:
http://bigpicture.typepad.com/

That is a GREAT chart. Thank you for that.

[GRG55]

Re: Inflation versus deflation debate for Red Pill consumers

...with each passing day there is less incentive for foreigners to buy/hold US$ financial instruments, and increasing incentive to exchange accumulating $'s for something more tangible. The actions of Arab GCC SWFs (three Canadian natural gas companies, the Dubai, Nasdaq & Qatar menage a trois over the OMX, a bid for UK's Sainsbury supermarkets, the thwarted Dubai Ports bid - just a few recent examples) are credible indications that you are absolutely correct in this regard.

If they are politically impeded from directly purchasing US assets, China and the Arabs have clearly signalled they will invest through intermediaries (Blackstone, Carlyle) or exchange $'s for another fiat currency and go hunting in the UK, Europe, Canada, Australia, wherever...

Here they come again. Can you imagine the uproar if they were trying to buy eight percent of Intel? Reports out of the UAE this morning that Dubai property developer Emaar is running the ruler over US homebuilders.

Abu Dhabi buys stake in chip maker AMD
As oil riches flow into Silicon Valley, questions are raised
The Associated Press
updated 6:41 p.m. ET Nov. 16, 2007

SAN FRANCISCO - With oil prices surging and U.S. stock prices slumping, chip maker Advanced Micro Devices Inc.'s sale of an 8.1 percent stake to the Abu Dhabi government's investment arm represents the latest plunge by a wealthy Middle Eastern nation into a troubled U.S. corporation.

It also raises fresh questions about the appropriateness of Middle Eastern firms owning large chunks of U.S. businesses that specialize in advanced technologies.

Sunnyvale-based AMD, the world's No. 2 microprocessor maker, needs the $622 million investment from the Mubadala Development Company to help lift the company out of a deep financial slump.
AMD has lost more than $1.6 billion so far this year, and has just $1.5 billion in cash on hand as it works to pay down $5.3 billion in debt. The financial woes have caused AMD's stock to fall more than 35 percent since the start of the year, a slide that has wiped out nearly $4 billion in shareholder wealth.

The infusion, announced Friday, is a necessary jolt for AMD is it hunts for money to fund its counteroffensive against Intel Corp., the world's largest chip maker, and amid a huge spike in investments in U.S. companies from Middle Eastern nations.

Middle Eastern investments in U.S. companies has increased more than fivefold in 2007, leaping from $4.5 billion on 32 deals last year to nearly $25 billion on 42 deals so far this year, according to data compiled by Thomson Financial.

The money invested in the past two years is more than the entire total invested from 1990 to 2005, according to the latest Thomson data. During that period, $24.8 billion in investments were made in 258 deals...

Link:
http://www.msnbc.msn.com/id/21840227/

[FRED]

Re: Inflation versus deflation debate for Red Pill consumers

Here they come again. Can you imagine the uproar if they were trying to buy eight percent of Intel? Reports out of the UAE this morning that Dubai property developer Emaar is running the ruler over US homebuilders.

Abu Dhabi buys stake in chip maker AMD
As oil riches flow into Silicon Valley, questions are raised
The Associated Press
updated 6:41 p.m. ET Nov. 16, 2007

SAN FRANCISCO - With oil prices surging and U.S. stock prices slumping, chip maker Advanced Micro Devices Inc.'s sale of an 8.1 percent stake to the Abu Dhabi government's investment arm represents the latest plunge by a wealthy Middle Eastern nation into a troubled U.S. corporation.

It also raises fresh questions about the appropriateness of Middle Eastern firms owning large chunks of U.S. businesses that specialize in advanced technologies.

Sunnyvale-based AMD, the world's No. 2 microprocessor maker, needs the $622 million investment from the Mubadala Development Company to help lift the company out of a deep financial slump.
AMD has lost more than $1.6 billion so far this year, and has just $1.5 billion in cash on hand as it works to pay down $5.3 billion in debt. The financial woes have caused AMD's stock to fall more than 35 percent since the start of the year, a slide that has wiped out nearly $4 billion in shareholder wealth.

The infusion, announced Friday, is a necessary jolt for AMD is it hunts for money to fund its counteroffensive against Intel Corp., the world's largest chip maker, and amid a huge spike in investments in U.S. companies from Middle Eastern nations.

Middle Eastern investments in U.S. companies has increased more than fivefold in 2007, leaping from $4.5 billion on 32 deals last year to nearly $25 billion on 42 deals so far this year, according to data compiled by Thomson Financial.

The money invested in the past two years is more than the entire total invested from 1990 to 2005, according to the latest Thomson data. During that period, $24.8 billion in investments were made in 258 deals...

Link:
http://www.msnbc.msn.com/id/21840227/

Makes you wonder how the Chinese feel that oil producers get to spend their treasury bills more freely on real U.S. assets while Chinese purchases are more restricted.

[GRG55]

Re: Inflation versus deflation debate for Red Pill consumers

Makes you wonder how the Chinese feel that oil producers get to spend their treasury bills more freely on real U.S. assets while Chinese purchases are more restricted.

Well after the Dubai Ports fiasco and some of the reaction to this acquisition, I'm not sure the Chinese feel they are being treated that much differently from the Arabs.

On the other hand, perhaps the US Government places more importance on maintaining relationships with their key oil suppliers, compared to their supplier of lead painted toys? Just a thought...

[bill]

Re: Inflation versus deflation debate for Red Pill consumers

Makes you wonder how the Chinese feel that oil producers get to spend their treasury bills more freely on real U.S. assets while Chinese purchases are more restricted.

Makes the Chinese feel the hot potato dollar is getting less desirable to hold. SWF purchasing of “troubled

[flow5]

Re: Inflation versus deflation debate for Red Pill consumers

Statement Regarding System Open Market Account Activity

(1) December 3, 2007

On Thursday, December 6, 2007, the Federal Reserve’s System Open Market Account will redeem $5 billion of Treasury bill holdings. This action is designed to give the Federal Reserve Open Market Trading Desk (the “Desk”) greater flexibility in the day-to-day management of reserve levels. The Desk will continue to evaluate the need for the use of other tools to add flexibility to its open market operations. These may include further Treasury bill redemptions, reverse repurchase agreements and Treasury bill sales.

Statement Regarding System Open Market Account Activity (2) December 10, 2007 On Thursday, December 13, 2007, the Federal Reserve’s System Open Market Account will redeem $5 billion of Treasury bill holdings. This action is designed to give the Federal Reserve Open Market Trading Desk (the “Desk”) greater flexibility in the day-to-day management of reserve levels. The Desk will continue to evaluate the need for the use of other tools to add flexibility to its open market operations. These may include further Treasury bill redemptions, reverse repurchase agreements and Treasury bill sales. --------------------------------------------------------------------- I t said it would continue to evaluate possible further T-bill redemptions, reverse repurchase agreements and sales of Treasury bills. By not rolling over its T-bills when they mature, the Fed is actually draining money from the financial system. Yet it's doing so not only when strains persist in parts of the financial markets but at a time when it is normally doing just the opposite -- adding substantial amounts of money to the financial system. 'This is a time of year when demand for money grows substantially, both because consumers are engaged in their biggest spending spree of the year and because financial entities are engaged in activities to 'dress up' their balance sheets,' said Tony Crescenzi at Miller Tabak. Last year the Fed bought more than 9 bln usd of securities, putting that cash into the system. Nothing like that has happened this year, so Crescenzi thinks 'it seems likely that something much bigger is on the way. 'This could take the form of a 50 basis point cut in the funds rate and a 75 basis point cut in the discount rate, or a discount rate cut of 50 basis points, if the Fed decides on a 25 basis point cut in the funds rate.' ----------------------------------------------------------------------

This table summarizes recent Temporary Open Market Operations. All values in $billions.

The "Sloshing" columns show the total repos that have been accepted but have not yet matured as of the date shown.

This source of the data is the NY Fed web site. Each time this page is loaded, that site may be accessed and because of that delays are possible.

http://www.gmtfo.com/reporeader/OMOps.aspx

[flow5]

Re: Inflation versus deflation debate for Red Pill consumers

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