Inflation to solve all

[GRG55]

Re: Inflation to solve all

exactly how friggin predictable can these idiots be? isn't this what itulip's been saying for years... these morons will change 'orthodoxy' & inflate us out?

That was my reaction also. Then I went on to read this in the posted article at top of thread:

Given the Fed’s inability to cut rates further, Mankiw says the central bank should pledge to produce “significant” inflation. That would put the real, inflation-adjusted interest rate -- the cost of borrowing minus the rate of inflation -- deep into negative territory, even though the nominal rate would still be zero.
If Americans were convinced of the Fed’s commitment, they’d buy and borrow more now, he says.

Is there any American out there with at least one functioning brain cell that is still not convinced of the Fed's commitment to inflate (other than Mankiw)? Fergawdsake the bloody politicians and their hired hacks must think the entire population complete idiots...:p

[metalman]

Re: Inflation to solve all

Is there any American out there with at least one functioning brain cell that is still not convinced of the Fed's commitment to inflate (other than Mankiw)?

at least three... moe ackerman, curly shedlock & larry denninger the three deflationsitas...

[metalman]

Re: Inflation to solve all

There is a huge hedge fund inflow into gold lately. Lots of money going into gold from hedge funds.

you mean this?

Hedge Funds Making Big Bets on Gold
Joseph Checkler, DOW JONES NEWSWIRES, May 18, 2009
http://www.smartmoney.com/breaking-n...18-000493-1519

NEW YORK -(Dow Jones)- Hedge fund firms Paulson & Co. and Lone Pine Capital made big bets on gold during the first quarter, becoming the No. 1 and No. 2 shareholders, respectively, in the SPDR Gold Trust (GLD) exchange-traded fund, according to regulatory filings.

Paulson & Co. - run by John Paulson, who had already been beefing up his exposure to gold companies - bought 31.5 million shares of the ETF during the first quarter, according to its mandatory end-of-first-quarter holdings report with the Securities and Exchange Commission. That stake would be worth more than $2.8 billion if Paulson still holds all those shares at present.

Stephen Mandel's Lone Pine bought 26.5 million shares of the ETF, which would be worth $2.4 billion if it still holds those shares. Lone Pine didn't immediately return a message seeking comment.

Many hedge fund managers have been increasing their gold investments lately. More than 28% of the SPDR Gold Trust ETF's outstanding stock was owned by hedge funds as of the end of the first quarter, according to Factset Research Systems.

The increased bets on gold come as the price of the yellow metal have remained high, above $900 an ounce. Funds also see hard assets as insurance against further turmoil in the financial system, including a decline in the value of paper currency.

Most active investing in gold has been by Paulson.

In March, Paulson paid $1.3 billion to buy Anglo American PLC's (AAUK) remaining stake in South African miner AngloGold Ashanti Ltd. (AU). Paulson also recently introduced to investors a new share class pegged on the price of gold.


David Einhorn of Greenlight Capital, who had also been buying more gold-exposed stocks, added to his SPDR Gold Trust position during the first quarter as well.

Paulson, a merger arbitrager by trade, became the highest-paid hedge fund manager in 2007 when he bet against securities tied to subprime mortgages. His funds also produced double-digit gains in 2008, when the industry as a whole showed an average loss of 19%, according to Hedge Fund Research .

Mandel's Lone Pine, which according to Factset now has almost 20% of its equity portfolio in the ETF, stumbled last September along with other hedge funds. The firm, however, was not among the funds reported to have barred investors from withdrawing money from its funds.

[nero3]

Re: Inflation to solve all

incorrect. gold mining companies did well in 1930 on because the government fixed the gold price but not the price of any other metal.. the rest went down. gold miners did even better after fdr jacked the price up 70%. how'd you like to have been an insider on that deal?
rumor or fact? got evidence?

99.99% of everything said about gold is unsubstantiated rumor. all i care about was explained here 8 yrs ago, so long as it's still true.

that's my point. not every thing that goes up is a bubble. true bubbles, as ej explained 10 ways from sunday for 10 yrs, do not come back... nasdaq 5000, for example... housing for a generation. gold was not a bubble in 1980 and will never be per the itulip definition... it takes gov't to make a true bubble and gov't hates gold... taxes it as a collectible, etc.

google site:itulip.com gold

and read up on it all.

Then we disagree. I think Gold was a bubble that peaked in 1980, the same with silver, however the bubble in silver was much bigger. Where are gold now compared to 1980? so many years. No inflation since then you say? Gold not in a bubble in 1980? get real. The notion that gold cannot experience a bubble is ignorant. It was not the fixed gold price in my opinion that kept things up, with regards to gold miners, after 1929, instead if was the flight to safety. Silver shares performed just as well, and it had not been the case, had it strictly been because of the fixed gold price. Instead I think it was the safe haven perception, and the money-printing by the fed as stocks fell. I think history could repeat, however, something like the late seventies seems more likely to me.

[metalman]

Re: Inflation to solve all

Then we disagree. It was not the fixed gold price in my opinion that kept things up, with regards to gold miners, after 1929, instead if was the flight to safety.

whatever. i read the history and the history says if the gov't holds the price of gold to $22 while tin, nickel, lead, and all others fall 75% the only miners going up are the ones mining the stuff the gov't is buying. duh.

I think Gold was a bubble that peaked in 1980, the same with silver, however the bubble in silver was much bigger. Where are gold now compared to 1980? so many years. No inflation since then you say? Gold not in a bubble in 1980? get real. The notion that gold cannot experience a bubble is ignorant.

sigh. the hunt bros. ran the silver price up. the gov't shut them down.

you can call gold a bubble the way symbols called oil a bubble, but then you also have to call every severe pain you get in your head a 'headache'. on rare occasion a headache means a brain tumor and as such must be treated differently than a headache. maybe you don't care to know the difference but i'd rather know so i can act accordingly. a bubble is not simply a big rise in prices. you must fully understand the causes... to do that you have to know what you are looking at, and you don't.

Silver shares performed just as well, and it had not been the case, had it strictly been because of the fixed gold price. Instead I think it was the safe haven perception, and the money-printing by the fed as stocks fell.

where do you get this stuff? coins were still made of silver then. the gov't was inflating silver, too.

I think history could repeat, however, something like the late seventies seems more likely to me.

'something like the 1970s' is what itulip forecasts but without the usa as the winner in the end. that's why i bought gold in 2001. you? or are you just figuring this out now, eight years later?

[nero3]

Re: Inflation to solve all

http://bitcast-a.v1.iad1.bitgravity....o/llbigch1.jpg

I really insist that gold was a bubble in 1980. I don't think you can deny that. Just as much of a bubble in 1980, as the nasdaq was in 2000.

[Jay]

Re: Inflation to solve all

[quote=gorkypark;98581]

They understand inflation. They've fought it before and vanquished it. Deflation however is a whole 'nother animal that they feel powerless against.

An Ituliper said it best on another thread; to paraphrase "Deflation is kryptonite for the debt-as-money system". Whether they succeed at producing inflation in the face of contraction of the shadow banking system remains to be seen.

Their success is simply a choice to pull the lever on the machine that spits out greenbacks. They will suceed as the lever is found in DC, not on some other continent. Politicians like being elected, hence like to spend newly printed moolah to pay for promises to the electorate, previous ones and those to be made in the future. Also, the debts of the US are denominated in their own currency so printing doesn't indebt us to another nation but actually alleviates those prior debts. Inflation is a choice and the one Washington will make and is making.

[gorkypark]

Re: Inflation to solve all

[QUOTE=Jay;98945]

Their success is simply a choice to pull the lever on the machine that spits out greenbacks. They will suceed as the lever is found in DC, not on some other continent. Politicians like being elected, hence like to spend newly printed moolah to pay for promises to the electorate, previous ones and those to be made in the future. Also, the debts of the US are denominated in their own currency so printing doesn't indebt us to another nation but actually alleviates those prior debts. Inflation is a choice and the one Washington will make and is making.

agree with the basic premise, however the Fed control of levers is limited to bottom 2 levers of the liquidity pyramid...(see Tyler Durden's discussion on Zero Hedge...http://zerohedge.blogspot.com/2009_0....html)...would appreciate discussion of this aspect on Itulip...

[rjwjr]

Re: Inflation to solve all

[quote=Jay;98945]

Their success is simply a choice to pull the lever on the machine that spits out greenbacks. They will suceed as the lever is found in DC, not on some other continent. Politicians like being elected, hence like to spend newly printed moolah to pay for promises to the electorate, previous ones and those to be made in the future. Also, the debts of the US are denominated in their own currency so printing doesn't indebt us to another nation but actually alleviates those prior debts. Inflation is a choice and the one Washington will make and is making.

FWIW, I'm in this camp also. Inflating our way out of this economic mess appears the most politically expedient solution, with politicians pushing-off the possible negative consequences (hyperinflation et al) to the future. It's the political way. Filter out all of the "noise", and you realize it's the exact path the Fed is already taking; surge in M3, monetization of debt, manipulation of interest rates. They will be successful, it's just a matter of when, but with all of their actions the POOM will be glorious indeed.

[Jay]

Re: Inflation to solve all

[quote=gorkypark;98965]

agree with the basic premise, however the Fed control of levers is limited to bottom 2 levers of the liquidity pyramid...(see Tyler Durden's discussion on Zero Hedge...http://zerohedge.blogspot.com/2009_0....html)...would appreciate discussion of this aspect on Itulip...

Google inflation and itulip and you will find many, many detailed and excellent threads discussing the issue. Start with any that EJ has written.

[ThePythonicCow]

Re: Inflation to solve all

Their success is simply a choice to pull the lever on the machine that spits out greenbacks. They will suceed as the lever is found in DC, not on some other continent.

But the oil America depends on comes mostly from other nations, including several in the Middle East.

If and when the Arabs find other security arrangements (Russia?) and other customers (China?), then they will be able to sell under contracts denominated in something other than dollars, and then the Americans will no longer control the price (in dollars) of their oil imports. America will likely still have oil from Canada, Mexico, Texas and Alaska, so it won't be running on fumes. But it will hurt.

Inflation, deflation and all other forms of price or currency instability always have this problem. Not everything moves in lock step. Perhaps the burden of non-inflation adjusted long term debt grows heavier or lighter. Perhaps purchases and debt in other currencies gain or suffer from forex rate risk.

Americans will have a lower standard of living over this next decade. The problems on Wall Street and in Washington, DC will be severe. Odds are someone will find (or concoct) an excuse to go to war, which is the usual way out for a nation caught in a web of critical unresolveable problems.

Some prices (as paid in dollars by Americans) will surely rise, some will likely fall. Wages, pensions and real estate will likely fall. Oil and Wal*Mart imports will likely rise. Some imports will simply become unavailable.

The words "inflation" and "deflation" are treacherous. There are various assets in various localities in various currencies in various time frames. Stuff keeps shifting around, not always in public view.

[charliebrown]

Re: Inflation to solve all

its not just oil. Just about everything we buy has some or all foreign components in it. Are there any domestic shoe manufactures anymore?
If we had to do it at home, how much would a pair of shoes cost?
Would the $25.00 pair of discount sneakers be $30.00 ..., $40.00?

Domestic cars contain many parts produced in Asia.

[ThePythonicCow]

Re: Inflation to solve all

its not just oil. Just about everything we buy has some or all foreign components in it.

Absolutely.

Many things are imported, not just oil. The single import that most affects our economy however is oil, not shoes or car parts.

Oil affects many prices besides gas, diesel, and heating oil. It's in plastics, fertilizer, drugs, etc. Most things are trucked to market.

Locally hired labor isn't directly imported. But even they need to eat and drive to work.

Americans, as did Brits before them, will learn to live on a lower standard of living.