Inflation-Consider yourselves warned

[Trajan]

did someone say we are in QE to keep inflation from starting its arc?

 

[Trajan]

QE has not done its intended job, it may have very early on - to an extent- but the rationale for continuing it has been flawed thru practice.

They are parking the money not lending it and I will say thats not entirely the banks fault, biz's are jittery even at 3-4%.

 

[JimmieD]

Where is the money coming from that the Fed uses?

There has to be a bank deposit to balance the purchase.

(hmmm where are the GDs)

When the Fed conducts QE it purchases an asset from a primary dealer bank using bank reserves. The exchange creates both an asset (the security) and liability (bank reserves) for the Fed. All it does to the bank's balance sheet is switch one asset (the security) for another (bank reserves).

The Fed isn't creating money as most people think of it (it's not creating cash). The Fed is creating bank reserves.

 

[percysunshine]

Where is the money coming from that the Fed uses?

There has to be a bank deposit to balance the purchase.

(hmmm where are the GDs)

When the Fed conducts QE it purchases an asset from a primary dealer bank using bank reserves. The exchange creates both an asset (the security) and liability (bank reserves) for the Fed. All it does to the bank's balance sheet is switch one asset (the security) for another (bank reserves).

The Fed isn't creating money as most people think of it (it's not creating cash). The Fed is creating bank reserves.

Don't those have to be balanced with GDs?

 

[eagle1462010]

 

[eagle1462010]

4 Trillion in QE's for what.......................................

.25% GDP growth............................

Wow, about 40 Billion in growth for paper swapping the hell out of our currency.............

In the G8 And G20 Conferences China and Japan are accusing the Federal Reserve of Starting a Currency War. Purposely devaluating our dollar............

Japan has been in the currency trap for decades, and now holds a debt of 200 % of their GDP.......

Europe is still in the chits as well........................

Our velocity of money has been falling since 2000...................

As our debt goes through the roof, but inflation is low according to the gov't......................

Yet everyone who goes to the store knows that everything costs more.....................

It's all BS. And the corrective action of our so called leaders is BS.

 

[Trajan]

Where is the money coming from that the Fed uses?

There has to be a bank deposit to balance the purchase.

(hmmm where are the GDs)

When the Fed conducts QE it purchases an asset from a primary dealer bank using bank reserves. The exchange creates both an asset (the security) and liability (bank reserves) for the Fed. All it does to the bank's balance sheet is switch one asset (the security) for another (bank reserves).

The Fed isn't creating money as most people think of it (it's not creating cash). The Fed is creating bank reserves.

thats a good explanation I think, but it may require further clarification; if you read that literally it may be seen as saying that until such time a bank makes use of or has to put up the reserve for/as collateral or realize it in some way, the Fed side has not 'created' any thing ..... risk, obligations that count against the fisc in anyway etc. .

 

[expat_panama]

There is no inflation. There may be in the future, but there isn't now.

But the Fed definitely has a problem with deflation

 

[percysunshine]

Second warning shot across the bow:

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Billionaires Dumping Stocks, Economist Knows Why

 

[Toro]

Second warning shot across the bow:

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Billionaires Dumping Stocks, Economist Knows Why

Stocks are up 30% and stocks are getting expensive. It's no surprise he's selling. I'm selling.

 

[percysunshine]

Second warning shot across the bow:

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Billionaires Dumping Stocks, Economist Knows Why

Stocks are up 30% and stocks are getting expensive. It's no surprise he's selling. I'm selling.

The question is; 'Who is buying?'

I hope it is not my 401k fund administrator.

 

[Toddsterpatriot]

Second warning shot across the bow:

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Billionaires Dumping Stocks, Economist Knows Why

Stocks are up 30% and stocks are getting expensive. It's no surprise he's selling. I'm selling.

The question is; 'Who is buying?'

I hope it is not my 401k fund administrator.

Who is buying? Probably the people who are tired of losing money in gold.

 

[percysunshine]

Stocks are up 30% and stocks are getting expensive. It's no surprise he's selling. I'm selling.

The question is; 'Who is buying?'

I hope it is not my 401k fund administrator.

Who is buying? Probably the people who are tired of losing money in gold.

Or land.

So this is totally anecdotal. I visited the in-laws over Christmas in middle America farm country. Talk in the local coffee shops was about the ridiculous price that their farm land would rent, or sell, for. They were all 75ish life time farmers who got their leg up when farm prices crashed in the 80s. The coffee shop consensus was that farm acreage was in a land bubble.

Just one data point there.

.

 

[Toro]

The question is; 'Who is buying?'

I hope it is not my 401k fund administrator.

Who is buying? Probably the people who are tired of losing money in gold.

Or land.

So this is totally anecdotal. I visited the in-laws over Christmas in middle America farm country. Talk in the local coffee shops was about the ridiculous price that their farm land would rent, or sell, for. They were all 75ish life time farmers who got their leg up when farm prices crashed in the 80s. The coffee shop consensus was that farm acreage was in a land bubble.

Just one data point there.

.

Farm land prices are idiotic.

Residential land prices in smaller cities are generally cheap.

 

[Toro]

Second warning shot across the bow:

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Billionaires Dumping Stocks, Economist Knows Why

Stocks are up 30% and stocks are getting expensive. It's no surprise he's selling. I'm selling.

The question is; 'Who is buying?'

I hope it is not my 401k fund administrator.

You'd be surprised.

There's a lot of so-called "smart" money buying, i.e. institutional guys, hedge funds, etc. A lot of hedge funds have done relatively poorly, so they're trying to catch up.

I can't believe what some of this so-called "smart" money is doing.

Dumb money is more like it.

 

[oldfart]

Second warning shot across the bow:

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Billionaires Dumping Stocks, Economist Knows Why

Stocks are up 30% and stocks are getting expensive. It's no surprise he's selling. I'm selling.

The question is; 'Who is buying?'

I hope it is not my 401k fund administrator.

"Dum-dum-dum-de-dum-dum-dum"

 

[Bombur]

We already have high inflation...but the government understates it by manipulating the market basket of goods so that they can keep interest rates and increases in SS low.

Exactly, all you have to do is go to the grocery store on a regular basis and know that the 2% number is a complete farce.

Food inflation is not a good indicator of inflation on the whole. Especially in the short term.

Fuel is a bad indicator too.

HTH

 

[Kimura]

When ever the inside the beltway crowd is going to change something, they first telegraph it. Sometimes it is just a trial balloon which can be dismissed if the reaction is too negative. Sometimes it is more than that. I am thinking this is more than that. Especially since they are using the 'paper of record';

"WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough."

http://www.nytimes.com/2013/10/27/b....html?partner=rss&emc=rss&pagewanted=all&_r=0

Would you consider deflation theft against debtors? Deflation can be considered a tax on people and firms in debt. They have to pay back said debts with $$$$ that has increased purchasing power. This sounds like tax on modern life to me.

A little inflation in a healthy economy is a good thing. It discourages hoarding and stimulates investment.

 

[percysunshine]

When ever the inside the beltway crowd is going to change something, they first telegraph it. Sometimes it is just a trial balloon which can be dismissed if the reaction is too negative. Sometimes it is more than that. I am thinking this is more than that. Especially since they are using the 'paper of record';

"WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough."

http://www.nytimes.com/2013/10/27/b....html?partner=rss&emc=rss&pagewanted=all&_r=0

Would you consider deflation theft against debtors? Deflation can be considered a tax on people and firms in debt. They have to pay back said debts with $$$$ that has increased purchasing power. This sounds like tax on modern life to me.

A little inflation in a healthy economy is a good thing. It discourages hoarding and stimulates investment.

The corollary of inflating out of debt would be deflating into it. The massive scale of US government debt makes either circumstance untenable.

Then again, sometimes shit happens.

 

[Kimura]

When ever the inside the beltway crowd is going to change something, they first telegraph it. Sometimes it is just a trial balloon which can be dismissed if the reaction is too negative. Sometimes it is more than that. I am thinking this is more than that. Especially since they are using the 'paper of record';

"WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough."

http://www.nytimes.com/2013/10/27/b....html?partner=rss&emc=rss&pagewanted=all&_r=0

Would you consider deflation theft against debtors? Deflation can be considered a tax on people and firms in debt. They have to pay back said debts with $$$$ that has increased purchasing power. This sounds like tax on modern life to me.

A little inflation in a healthy economy is a good thing. It discourages hoarding and stimulates investment.

The corollary of inflating out of debt would be deflating into it. The massive scale of US government debt makes either circumstance untenable.

Then again, sometimes shit happens.

Why are US debt levels untenable? Take a look at Japan, twice the debt-to-GDP ratio of the US and zero interest rates.

Currency issuing governments don't operate like households or firms, nor do they usually run down their national stock of debt. Why would they? US public debt should actually be renamed national savings or national equity. This would be a first step in alleviating some of the confusion.