The View From 1776

Inflation At The Gate, The Fed Talks About Deflation

While flooding the banking system with excessive amounts of fiat dollars, Fed Chairman Bernanke has talked endlessly about the need to avert deflation.  Unspoken was the real reason: promoting inflation - robbing retirees and working people who are saving to support their retirements - in order to fund mounting federal debt.

Posted by .(JavaScript must be enabled to view this email address) on 04/24 at 05:14 PM
  1. Gas price rise due to QE2? Hardly. Prices are not being moved by fundamentals. Supply is ample...What you have instead is a price being driven merely by the amount of money that flows into oil as an asset class, which in fact the oil market, or any commodity market, was never intended to be
    Posted by .(JavaScript must be enabled to view this email address)  on  04/24  at  07:43 PM
  2. Mr. Jay, please explain why oil is not an asset class and why it's only a bet or a wager.

    If oil supply is ample, as you assert. why then is the price in dollars rising so high? And why would users be willing to pay such prices in the face of an ample supply?

    As for "flood of money into a marketplace that was never designed to accept it," the international market for oil is one of the largest on earth.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/24  at  10:49 PM
  3. two comments on this one:
    1-First--alarmingly, is that I agree, I think, with Mr. Jay!! I believe he is suggesting that the open free market price for oil is of late inflated by the existence of financial speculators. I have read that trading in commodities is a useful way for producers to hedge their production but should not become the plaything of Wall Street speculators; and that their actions spike artificial increases that distort the market actions of supply and demand.
    2- Isn't the Fed's low interest and flodding the market with money mostly designed to allow the big banks to earn big profits and recoup the losses they suffered from their past indiscretions?
    Posted by bill greene  on  04/25  at  08:21 AM
  4. Bill's sentiments are in line with mine on his point #1.

    Oil is a commodity and as such is subject to the pressures of speculation. And Tom, the reason "users" are "willing" to pay such prices is that the market for oil is inelastic due to our oil addiction. Our entire economy is so tied to oil that we can not turn up our collective noses and say, "No thank you," when the price rises. We need our oil fix every morning, or else we go into withdrawal pangs immediately.

    2. The Fed's QE2 policy was supposed to increase liquidity and grease the wheels of commerce. Unfortunately, QE2 has been less than an overwhelming success and the economy continues its very shaky resurrection (to use a seasonal metaphor). Many of the banks have used the liquidity to earn some interest dollars for themselves, unfortunately.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/25  at  10:42 AM
  5. Read more: <a >locksmith</a>
    Posted by misstenr  on  04/27  at  10:32 AM
  6. Inflation has been with us during most of my 77 years but I learned as a child how to live happily with it. If you understand the magic of holding inflationary assets financed with fixed dollar debt instruments such as mortgages, inflation is a godsend.

    I made a practice of leveraging large chunks of real estate with mortgages. After the real estate appreciated in value in line with inflation, I sold some and paid off the old dollar acquisition debt with the inflated dollars from sales. It's like a money tree, growing dollars as fast as Jack's beanstalk.

    It's a shame schools don't teach useful real-world arithmetic by having students schedule out the impact over time of compound interest, inflation, leverage, return on investment calculations, and net worth statements. Without such knowledge America's youth are constantly swindled by the ruling elites on Wall Street and in the halls of government.
    Posted by bill greene  on  04/27  at  01:31 PM
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