Krugman: Rising commodity prices have nothing to do with Fed money printing

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I read the krugman article again. In an earlier article from before Lehman he was comparing the recession to the 1990 recession, a far worse version of it. Later of course, he have went on to go all in on the 1930-s. I think krugman's original view could be the correct one. That's it infact like an extreme version of the early 1990's. I think the yield curve spread have only been like this in around 1992, 2003 and now. Given the big cash holdings in US firms it could be that we will see a full new upgrade cycle in the computer relates areas. I think the right action now would be if the FED raised interest rates to get long term interest rates down, then I'm sure the economy would go forward, while the stock market would benefit from a strong dollar and relative cheapness compared to long term interest rates. However it's possible that China will do the job for the US by taking down inflation and long term interest rates.

http://www.spiegel.de/international/...537078,00.html

[cjppjc]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I was under the impression a great deal of the $140 oil price was speculation. Wasn't this posted here.

http://www.cbsnews.com/stories/2009/...n4707770.shtml


"Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions," Gilligan explained.

[aaron]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

99% of the gold market is paper (fake) gold. I cannot help but think if this "supply" of gold were not available, gold would be much higher in price.

If people could not buy paper oil and needed to buy real oil, would it not be more expensive?

It is almost as if the entire futures market exists to keep commodity prices down (and the dollar up?).

[Slimprofits]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

Again, everything Krugman says has to be viewed as political propaganda.

Here is Rob Murphy on the Mises blog shredding to pieces several of Krugman's recent blog posts. The man is a powerful and dangerous liar.

http://mises.org/daily/4946

[jtabeb]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

That is exactly what Greenspan said.

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

99% of the gold market is paper (fake) gold. I cannot help but think if this "supply" of gold were not available, gold would be much higher in price.

If people could not buy paper oil and needed to buy real oil, would it not be more expensive?

It is almost as if the entire futures market exists to keep commodity prices down (and the dollar up?).

I think its working in a different manner, and oposite from your last sentence. The real influence of the futures market is rather found in the relative difference between the commodities that are available to speculators, and those thats not noted. Those noted are much higher. I think it shows that there is a bubble that started in 2004 and thats back in full force. As soros was saying. Its a speculative bubble imposed on a fundamental trend. Its like if the speculators in the paper market, giving the huge net long positions in the contracts push the price so high as the real market can support, eventually it will peak out. I also think speculation in the paper market can create hoarding in the real market that way speculation in sugar futures can eventually bring real hoarding and a huge price spike.

[aaron]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I thought there was some huge "short position" in silver and gold by the big banking cartel . Those shorts, if "naked" and always settled in cash, seem equivalent to extra "supply" in that magical supply and demand price curve.

I bet a lot of "smart" people made a lot of money in "gold". You will doubtless hear stories of their great successes over the next several months. Imagine if these people actually had to buy real gold or silver bullion to have profited. Would their be enough metal to meet the demand? In other words, if every single profitable trade in gold last year had to actually be carried out in bullion, I think its real value would be a lot higher.

Imagine a world in which to speculate in gold and silver, you actually had to buy bullion and hold onto it.

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I thought there was some huge "short position" in silver and gold by the big banking cartel . Those shorts, if "naked" and always settled in cash, seem equivalent to extra "supply" in that magical supply and demand price curve.

I bet a lot of "smart" people made a lot of money in "gold". You will doubtless hear stories of their great successes over the next several months. Imagine if these people actually had to buy real gold or silver bullion to have profited. Would their be enough metal to meet the demand? In other words, if every single profitable trade in gold last year had to actually be carried out in bullion, I think its real value would be a lot higher.

Imagine a world in which to speculate in gold and silver, you actually had to buy bullion and hold onto it.

In my opinion gold is not manipulated. It's a huge bubble in money printing and negative real interest rates and gold is tracking that trend. It's many stocks that generally track gold, even they have nothing to with precious metals. It's all about the negative real interest rates and perception of inflation. Had gold been manipulated it would stay at very low levels relative to the things moving on this trend. Many think you have to buy gold to get golds performance. It's not the case.

[c1ue]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I thought there was some huge "short position" in silver and gold by the big banking cartel . Those shorts, if "naked" and always settled in cash, seem equivalent to extra "supply" in that magical supply and demand price curve.

It isn't that I doubt there is some grain of truth in these types of statements. It is that the people screaming about this are the ones trying to sell you gold/silver.

As for supply/demand curve - that is a fallacy which continues to exist despite abundant evidence to the contrary.

Many think you have to buy gold to get golds performance. It's not the case.

So which stocks have tracked gold's performance since 2001?

And more importantly, what were all the stocks you owned in 2001 which did (or did not)?

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

It isn't that I doubt there is some grain of truth in these types of statements. It is that the people screaming about this are the ones trying to sell you gold/silver.

As for supply/demand curve - that is a fallacy which continues to exist despite abundant evidence to the contrary.



So which stocks have tracked gold's performance since 2001?

And more importantly, what were all the stocks you owned in 2001 which did (or did not)?

You can't go all the way back to 2001, but generally railroad shares (the same in the seventies) in the US the larger ones like UNP, and different emerging market stocks, even complete markets like India, have tracked gold pretty good, had gold been manipulated, gold had been very low, relative stocks as UNP, and other inflation hedges as well. In 1980 emerging market inflows was at record levels, and it was a huge boom in emerging markets. I think it's because a weak dollar, boost their bonds market's and general lowers interest rates / increase credit growth. http://finance.yahoo.com/echarts?s=GLD+Interactive#chart5:symbol=gld;range= my;compare=unp+^bsesn;indicator=volume;charttype=l ine;crosshair=on;ohlcvalues=0;logscale=off;source= undefined

[flintlock]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

do you recall $140/bbl oil? how about riots around the world because of the high price of food?

We had a 20+ year economic boom. Was oil $140 bbl the whole time?

Great post on how we've never had true Keynesianism by the way.

[flintlock]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I feel like they took our tax (and future tax) money for a risky business idea that I didn't think would work. Then they gave some of the money to their friends and blew the rest at a strip club. And then along comes Krugman to lecture us on how the problem is that they didn't spend enough.

That's how I've always seen it too. They blew any chance at actually jump starting the economy with this stimulus on booze and hookers.

[flintlock]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

couldnt have said it better steve!

BUT...
they had a plan alright: BAIL OUT THEIR BUDDIES IN NYC, BAIL OUT/PAYBACK THEIR VOTER BASE IN THE .GOV & AUTO UNIONS, while they _rob_ the prudent to bailout the profligate/reckless, _rob_ the savers to bailout the spenders, _rob_ the private sector to enrich the welfare class and their enablers in the political class, _shaft_ the productive to allow the parasitic to multiply!

oh yeah, they do have a plan: enslave the rest of us to fatten the DC aristocracy!

why there's only ONE WAY FORWARD AND IT BEGINS WITH ***TERM LIMITS*** in congress

I agree. We have a professional political class that is too entrenched and worried about paying back their political debts rather than governing. And its at all levels. Locally where I live was a very hot economy for many years. Low taxes and we still ran huge budget surpluses. Only in the end the local idiots found a way to piss it all away on public recreation and other pet projects. So we have dog walking parks but had to lay off teachers, fire, and police. We have brand spanking new parks that have been taken over by druggies and other transient types because they can't afford to maintain them or patrol them. Yet they are still buying up local land from politically connected owners at 2x the going rate to provide for "green space". This in a still largely rural area. Local politicians make the FEDs look like saints.

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I agree. We have a professional political class that is too entrenched and worried about paying back their political debts rather than governing. And its at all levels. Locally where I live was a very hot economy for many years. Low taxes and we still ran huge budget surpluses. Only in the end the local idiots found a way to piss it all away on public recreation and other pet projects. So we have dog walking parks but had to lay off teachers, fire, and police. We have brand spanking new parks that have been taken over by druggies and other transient types because they can't afford to maintain them or patrol them. Yet they are still buying up local land from politically connected owners at 2x the going rate to provide for "green space". This in a still largely rural area. Local politicians make the FEDs look like saints.

The problem have been (please don't be insulted anyone) the baby boomers. For the US and generally the west to be up and coming it's needed that initiative comes from those who are from 20-40 years old as it is in the emerging economies. Through clinging to power, through avoiding a collapse as Japan did, money stays with the old, and power stay with the incompetent. That's the negative side effect of avoiding a greek style collapse through this socialism for the rich programs. There is some sectors where the young are doing well. That's the technology sector, but in my opinion it should had been like that in all areas of the economy. Eventully, the worst case, is that you get to where Japan is, that you have complete domination by men in their 60-70's. I suspect that's why companies such as Sony are having the problems it have. They need to leave it in the hands of those who are 30-40 years old, when it comes to running the company, then they would avoid the series of mistakes they have made through the years, like the extremely stupid memory format's, their resistance to new formats such as MP3 and divx , Sony was probably the last company to implement it. All these issues they would have avoided if they had the sort of young and dynamic leadership they should have had. Sony is doing quite well even they have made a lot of mistakes, however with the right leadership they could have done so much better. The baby boomers had the 1980's and I think it's time for them to let go and let the younger generation step up, unfortunately the policies prevent it from happening.

[WDCRob]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

We had a 20+ year economic boom. Was oil $140 bbl the whole time?

This is what I was getting at as well - but realized that I was in a hole and decided to stop digging.

If this is demand-driven (and not AT ALL related to the Fed - as PK asserts) why didn't we see today's prices when economic activity first hit 2010s level earlier in the 2000s? And if long-view producers (contracts) and investors (options) are seeing something different today than they saw previously at similar demand levels (in 2003? 2004?) what's driving that change in perceptions?

I started pulling together some data to try and put some specifics behind this, but don't much care for being on the other side of an argument with JK (why sit down at the best poker table in the room?), and at the end of the day I suppose I just find Finster's explanation - that what's changed is the ability of producers and investors ability to express their demand via additional dollars - to be more compelling.