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

Let me make sure I understand this, almost every single commodity is breaking all time highs..................and this is the best explanation Krugman can come up with, and there are plethora of people on itulip here that believe, the printing of trillions of $$ and the continued monthly $100 billion plus POMO have nothing to do with this???

Are you people dumb?
Didn't Jim Rogers and others say - on video - for more than the past five plus years that the result of printing more dollars to chase fewer non-renewable and renewable natural resources is inflationary on its face?

And home values never go down.................................... sheeple

You should had seen what Jim Rogers said about Iceland when he made is trip around the world.

i'm not sure if I got this. But as I have mentioned before commodity prices for things as copper now are similar to levels seen before the asian crisis relative to the money supply. It's all money supply, and that the flow of money also went in a way that made demand go up to their potential relative to the money supply. I am under the opinion that it's likely that the tide of liquidity is likely to find some other host organism than commodities soon. Then the money supply will probably keep going up without commodity prices going up. Krugman deny the impact of money printing because of his left wing political agenda that makes him think we are running out of resources. Of course we are, but that's not it, it's the money printing. Krugman have a weakness there. Just as Peter Schiff have a weakness with gold, letting his political views totally getting in the way of seeing the metal as a bubble that will eventually implode.

[touchring]

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

You should had seen what Jim Rogers said about Iceland when he made is trip around the world.

i'm not sure if I got this. But as I have mentioned before commodity prices for things as copper now are similar to levels seen before the asian crisis relative to the money supply. It's all money supply, and that the flow of money also went in a way that made demand go up to their potential relative to the money supply. I am under the opinion that it's likely that the tide of liquidity is likely to find some other host organism than commodities soon. Then the money supply will probably keep going up without commodity prices going up. Krugman deny the impact of money printing because of his left wing political agenda that makes him think we are running out of resources. Of course we are, but that's not it, it's the money printing. Krugman have a weakness there. Just as Peter Schiff have a weakness with gold, letting his political views totally getting in the way of seeing the metal as a bubble that will eventually implode.

if it doesn't go into commodities where will it flow to?

[flintlock]

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

I don't get copper especially. I was shocked at wire prices last time I checked. Shocked. Get it?

But seriously, what the heck is going on?

[touchring]

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

I don't get copper especially. I was shocked at wire prices last time I checked. Shocked. Get it?

But seriously, what the heck is going on?

I believe this uses a massive amount of copper.

http://en.wikipedia.org/wiki/High-speed_rail_in_China

[nero3]

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

if it doesn't go into commodities where will it flow to?

Look at this guy: http://www.youtube.com/watch?v=J2_cVRRhsgM

124 people liked his video, nobody disliked it. Should that be a warning sign? He reminds me of someone I was just having a discussion with here. The same dogmatism.

I think the answer to your question is US equities. Developing countries are fighting inflation, China is overheating, Gold is in a bubble.

Update:

After seeing his video again I think it could go like this: There might be a bubble in expectations that gold will eventually turn into a 1980 like bubble (from the small bubble it's in now).

[touchring]

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

Look at this guy: http://www.youtube.com/watch?v=J2_cVRRhsgM

124 people liked his video, nobody disliked it. Should that be a warning sign? He reminds me of someone I was just having a discussion with here. The same dogmatism.

I think the answer to your question is US equities. Developing countries are fighting inflation, China is overheating, Gold is in a bubble.

Possible, if the dollar rises, money will flow into wallstreet.

There is now also a belief in China that real estate prices will never fall because the chinese are "too rich", got too much money, and the Americans are also printing too much money.

[nero3]

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

Possible, if the dollar rises, money will flow into wallstreet.

There is now also a belief in China that real estate prices will never fall because the chinese are "too rich", got too much money, and the Americans are also printing too much money.

The dollar will rise if money flows into the US stock market from the previous "hot money" destinations. I don't think the dollar will rise first to signal that money should go into the US. I think the dollar will rise as a result of money going into the US, but perhaps more of a Obama story, than safe haven demand as before.

Alternatively money could escape commodities, china and emerging market's and create a correction in US equities to, as before, where the dollar goes up and mostly everything else goes down, however I think that pattern is broken, and broke down from around October to November there have been a tendency where the US market and the dollar does well at the same time. I think that's suggesting an inflow of investments into the US.

[jk]

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

[didn't andy xie write a piece, discussed in another thread, about whether the u.s. or china would be the first to crash?]

if china crashes [a prediction of which i am still unconvinced] i would expect the prime beneficiary to be the u.s. dollar, and to a lesser extent tbonds. a chinese crash would imply a global recession, as china has been providing a big part of global growth. i don't see how an em crash would help u.s. equities.

[touchring]

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

[didn't andy xie write a piece, discussed in another thread, about whether the u.s. or china would be the first to crash?]

if china crashes [a prediction of which i am still unconvinced] i would expect the prime beneficiary to be the u.s. dollar, and to a lesser extent tbonds. a chinese crash would imply a global recession, as china has been providing a big part of global growth. i don't see how an em crash would help u.s. equities.

A chinese crash doesn't mean china will stop importing commodities or stop building factories. China is a communist country, banks can continue lending money even in a crash.

[jk]

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

A chinese crash doesn't mean china will stop importing commodities or stop building factories. China is a communist country, banks can continue lending money even in a crash.

if the chinese continue to build as much as ever, what does it mean to say they have "crashed"?

[nero3]

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

China are certainly the marginal buyer. I suspect emerging economies depending on income from commodities, even Australia, Canada could have recessions. In the 1990's I think the US real estate market's in the larger cities peaked in 89, Vancouver peaked in 95 I think, and HK real estate in 96. Emerging market stocks between 93 and 97. Something similar could be happening now, that the cycle in australia, canada, hong kong, even China is in trend. I think it was that peak in "hot money" destination's in the 90's that was one of the reasons for the overheating of the US stock-market towards the end of the 1990's.

I know everyone want's to see a story like towards the end of the 1970's, maybe that's what will happen to, but I suspect what's happening is creating a potential for Obama to have a boom without very high inflation, given the possibility of all that hot money returning to the US.

here is a fund: the thai fund:
http://finance.yahoo.com/echarts?s=TTF+Interactive#chart2:symbol=ttf;range= my;compare=^dji;indicator=volume;charttype=line;cr osshair=cross;ohlcvalues=0;logscale=on;source=unde fined

Look at the relative out-performance of the dow lately. I saw in an article on India, that they were starting to see a net positive inflow, in Indian funds (from national savers), in December, it makes me suspect it's the hedge-funds, dumping it on the locals, who knows. Maybe India will be in a multi year bull-market going forward, but something does not feel right.

[touchring]

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

if the chinese continue to build as much as ever, what does it mean to say they have "crashed"?

What I'm talking about is a commercial and residential RE crash. An RE crash is very reasonable, what can you expect of apartments 30x to 80x annual income?

An average middle class apt in Shanghai or Beijing will cost $300k, an engineer earns like $600 to $800 a month, which is 30 to 40 years annual income. It doesn't take genius to know this is a bubble.

Nonetheless even in an RE crash scenario, Chinese municipal governments can still continue building high speed rail, subways, freeways and low cost housing. Crash or not, China is going to be a superpower in the next 15 years.

[Milton Kuo]

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

if the chinese continue to build as much as ever, what does it mean to say they have "crashed"?

If the Chinese banks' balance sheets get cratered by a real estate crash, I'm guessing China will have to divert the RMB currently being printed to maintain the RMB-USD peg into recapitalizing their banks and arresting a debt deflation. The alternative is to print even more RMB to maintain both the peg and fill up the holes in their banks, which could cause inflation to become high enough to risk social unrest.

The CCP probably won't risk social unrest so they'll take the first option, which throws the U.S. under the bus since China will significantly decrease their purchases of U.S. debt. Sudden stop for the U.S.?

The commodity-exporting nations should also get hammered as Chinese banks reduce lending in the wake of a Chinese real estate crash, which reduces Chinese imports of building materials such as iron and copper. Interestingly, if a China crash triggers other crashes in the world, there might be a chance where the U.S. somehow doesn't get rocked. Whereas China stops buying U.S. dollars, capital from other parts of the world may flow into the U.S. dollars seeking a safe haven. Depending on the timing and perhaps the actions of the Federal Reserve, the U.S. might not experience a sudden stop.

[jk]

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

If the Chinese banks' balance sheets get cratered by a real estate crash, I'm guessing China will have to divert the RMB currently being printed to maintain the RMB-USD peg into recapitalizing their banks and arresting a debt deflation. The alternative is to print even more RMB to maintain both the peg and fill up the holes in their banks, which could cause inflation to become high enough to risk social unrest.

The CCP probably won't risk social unrest so they'll take the first option, which throws the U.S. under the bus since China will significantly decrease their purchases of U.S. debt. Sudden stop for the U.S.?

The commodity-exporting nations should also get hammered as Chinese banks reduce lending in the wake of a Chinese real estate crash, which reduces Chinese imports of building materials such as iron and copper. Interestingly, if a China crash triggers other crashes in the world, there might be a chance where the U.S. somehow doesn't get rocked. Whereas China stops buying U.S. dollars, capital from other parts of the world may flow into the U.S. dollars seeking a safe haven. Depending on the timing and perhaps the actions of the Federal Reserve, the U.S. might not experience a sudden stop.

re your scenario
1. shutting down real estate construction would cause widespread unemployment. some other jobs program will/must be created to compensate.
2. if china is still exporting to the u.s., then dollars will be coming in. if the pbc no longer buys these dollars from chinese exporters, the rmb will rise and hurt exports, creating unemployment.

[touchring]

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

If the Chinese banks' balance sheets get cratered by a real estate crash, I'm guessing China will have to divert the RMB currently being printed to maintain the RMB-USD peg into recapitalizing their banks and arresting a debt deflation. The alternative is to print even more RMB to maintain both the peg and fill up the holes in their banks, which could cause inflation to become high enough to risk social unrest.

The CCP probably won't risk social unrest so they'll take the first option, which throws the U.S. under the bus since China will significantly decrease their purchases of U.S. debt. Sudden stop for the U.S.?

The commodity-exporting nations should also get hammered as Chinese banks reduce lending in the wake of a Chinese real estate crash, which reduces Chinese imports of building materials such as iron and copper. Interestingly, if a China crash triggers other crashes in the world, there might be a chance where the U.S. somehow doesn't get rocked. Whereas China stops buying U.S. dollars, capital from other parts of the world may flow into the U.S. dollars seeking a safe haven. Depending on the timing and perhaps the actions of the Federal Reserve, the U.S. might not experience a sudden stop.

interesting analysis, with a conclusion that the dollar will rise in the medium term in the event of a crash.