we've seen lots of posts about reduced liquidity and credit

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

You could always attempt to prove that it wasn't a causal factor... and there were points during Wiemar or Argentina when the dollar price of things rose significantly too... ;)

Ahhh ... grasshopper ... causality need not be disproved, but rather proved ...

... and perhaps you could venture a ... (gasp!) ... chart illustrating the association between a manifold increase in mark or peso liquidity and a falling dollar?

[bart]

Re: we've seen lots of posts about reduced liquidity and credit

Ahhh ... grasshopper ... causality need not be disproved, but rather proved ...

I give it a 7.8.
Cause is as cause does...

... and perhaps you could venture a ... (gasp!) ... chart illustrating the association between a manifold increase in mark or peso liquidity and a falling dollar?

Of course I could, but some exercises should be left to the student... ;-)

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

I give it a 7.8.
Cause is as cause does...

Or to paraphrase, guilty until proven innocent ... ?

Of course I could, but some exercises should be left to the student... ;-)

I agree. But I thought you deserved a break today ...

;)

[jk]

Re: we've seen lots of posts about reduced liquidity and credit

But was it a causal factor? Is all "liquidity" the same? If the Wiemar Republic or Argentina prints zillions of marks or pesos, does it cause the dollar price of things to rise?

i don't think there was a peso or mark carry trade back then. the yen carry trade is a big deal.

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

i don't think there was a peso or mark carry trade back then. the yen carry trade is a big deal.

Forget about loaded terms like "carry trade" that serve to do little but make something simple sound mysterious. Anybody that went short marks or pesos against another long position was doing basically the same thing as people who short yen against another asset. The bottom line is still the same. The primary effect is to drive down the yen. If, by weakening the yen, the sponsors of other currencies are emboldened to inflate faster, the inflation of those other currencies must still be laid squarely at the feet of those inflating those currencies.

Sounds to me like the whole blame-the-carry-trade fad couldn't be more convenient for inflationists around the world.

[jk]

Re: we've seen lots of posts about reduced liquidity and credit

Forget about loaded terms like "carry trade" that serve to do little but make something simple sound mysterious. Anybody that went short marks or pesos against another long position was doing basically the same thing as people who short yen against another asset. The bottom line is still the same. The primary effect is to drive down the yen. If, by weakening the yen, the sponsors of other currencies are emboldened to inflate faster, the inflation of those other currencies must still be laid squarely at the feet of those inflating those currencies.

Sounds to me like the whole blame-the-carry-trade fad couldn't be more convenient for inflationists around the world.

finster, i think you've strayed from the question at hand. no one is saying that the carry trade relieves domestic policy makers of responsibility for their own actions and their consequences. the question is how the actions of the boj may effect our markets.

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

finster, i think you've strayed from the question at hand. no one is saying that the carry trade relieves domestic policy makers of responsibility for their own actions and their consequences. the question is how the actions of the boj may effect our markets.

Sounds like don't have a fundamental disagreement here, JK. My main objective here was to try and counter the popular impression that our policy makers are not responsible.