TPS Posted March 9, 2013 Share Posted March 9, 2013 (edited) Hyperinflation? Link? We get it, you are also a denier that the devaluation of currencies have contributed to higher prices. Any "economist" worth their salt would agree with that. You and professor dingbat on the other hand believe that currency devaluation hasn't had an appreciable affect on prices. You guys are wrong and its as simple as that. There is no middle ground with you ideologues, it's either all or nothing. Also, the spare capacity reference is to excess OIL spare capacity. But thanks for playin Spare or excess capacity, same concept for any discussion about prices. It's microeconomics 101.If you can't remember me posting that hyperinflation wouldn't happen in the US, then you better get tested for memory loss. I have not said there is no relation between prices and currency devaluation (if you mean exchange rate); I have a disagreement with your explanation of the process. I can point you to a thread from two years ago (or do your own damn search) where I stated the correlation between the $ and oil was -0.82 from 2004-2010, but before 2004 there is no consistent relationship between oil and the $--there are periods of positive correlation and negative. The most significant period begins when investors are allowed to dominate the commodity markets, and significant money inflows begin in 2003-4. Edited March 9, 2013 by TPS Link to comment Share on other sites More sharing options...
Magox Posted March 9, 2013 Author Share Posted March 9, 2013 (edited) Spare or excess capacity, same concept for any discussion about prices. It's microeconomics 101. If you can't remember me posting that hyperinflation wouldn't happen in the US, then you better get tested for memory loss. I have not said there is no relation between prices and currency devaluation (if you mean exchange rate); I have a disagreement with your explanation of the process. I can point you to a thread from two years ago (or do your own damn search) where I stated the correlation between the $ and oil was -0.82 from 2004-2010, but before 2004 there is no consistent relationship between oil and the $--there are periods of positive correlation and negative. The most significant period begins when investors are allowed to dominate the commodity markets, and significant money inflows begin in 2003-4. again, your reading comprehension skills fail you. Lybob made mention of a comment that I made and suggested that I claimed it would lead to hyperinflation and i responded. You and I years ago spoke about this, in which I said that it would lead to commodity inflation, but most likely not see prices go through the roof because there was a lot of slack in the economy, and that we wouldn't see heightened inflation until the global economy began to grow at a faster clip, at least avg global growth trend rate. I've spoken about this ad nauseam. It's not a singular issue, commodity prices are largely driven by growth, supply and monetary policy. If global monetary policy tightened, lets just say the unwinding of the bond purchases (QE) the effect would be twofold. One, there would be an immediate global repricing of virtually all commodities, currencies, bonds and equities, through the markets of course. Then there would be the tangible impact it would have on global growth, obviously world growth would slow, demand for just about everything would drop and that depressed demand would filter into the equity and commodity markets. Now of course this is under the assumption that monetary policy makers abruptly change course, in which of course they won't. Whenever they do unwind these positions I imagine they will do it in the most gradual way possible. But that isn't what this discussion is about, we are talking about the raw impact of monetary policy and commodities. Also your analysis on the relationship vs the dollar and oil is flawed. Your model is based on the traditional relationship it had, dynamics change professor, so when they change in order to keep up, analysis must change along with it. The correlation no longer exists in the way it use to because of a couple fundamental factors. One, just about the entire developed world is devaluing their currency, so the price of oil has risen more so over the past couple years in their currency because of their loose monetary polices, and two, even though we are still the top dog with reserve currency status, oil and other commodities are being purchased with other currencies. Currency swaps mainly between china and its trading partners have steadily been increasing over the past five years or so, lessening the reliance on the US dollar Edited March 9, 2013 by Magox Link to comment Share on other sites More sharing options...
....lybob Posted March 9, 2013 Share Posted March 9, 2013 (edited) Magox when you talk about inflation can you pullout the inflation cause by loose monetary policy from inflation caused by other factors? you know it's not that I disagree with you about loose monetary policy's ability to cause inflation, In fact about around 7 years ago I made a lot of investments that only really perform well in an high inflation environment because that's what I thought the fundamentals were predicting, but what reality has told me the last 4 or 5 years is that economic conditions can be manipulated or managed to a much greater degree and longer time period than I imagined - you seem shrill to me - It's like you're Paul Revere except instead of yelling "the British are coming" you're yelling " inflation is .6% higher than it should be given market conditions because of QE" I don't know who that's suppose to resonate with - on a different note I was listening Pete Schiff who always seems a little angry that dollar has yet to collapse leaving our country a smoking ruin - he almost laments that the rest of the world still buys our worthless debt and currency- you remind be a little of him Magox.. Edited March 9, 2013 by ....lybob Link to comment Share on other sites More sharing options...
Magox Posted March 9, 2013 Author Share Posted March 9, 2013 (edited) Magox when you talk about inflation can you pullout the inflation cause by loose monetary policy from inflation caused by other factors? you know it's not that I disagree with you about loose monetary policy's ability to cause inflation, In fact about around 7 years ago I made a lot of investments that only really perform well in an high inflation environment because that's what I thought the fundamentals were predicting, but what reality has told me the last 4 or 5 years is that economic conditions can be manipulated or managed to a much greater degree and longer time period than I imagined - you seem shrill - It's like you're Paul Revere except instead of yelling "the British are coming" your yelling " inflation is .6% higher than it should be given market conditions because of QE" I don't know who that's suppose to resonate with - on a different note I was listening Pete Schiff who always seems a little angry that dollar has yet to collapse leaving our country a smoking ruin - he almost laments that the rest of the world still buys our worthless debt and currency- you remind be a little of him Magox.. Tell me where I have predicted the demise of the US dollar to occur in the near to mid-term. Or show me where I said we will be seeing hyper inflation any time soon . The problem is that you see things through a certain lens, you see me make my argument and somehow you believe I'm sounding the alarms to hyper inflation, where in fact what I'm saying is that loose monetary policy has had an appreciable effect on prices. Without QE we'd see a much lower price for oil and for that matter equities as well. The impact is felt on two fronts, as I alluded to earlier, one is the immediate re pricing in the markets, adjusting to the currency, and two is the peripheral tangible effects of the increased demand of the monetary policy. Also another point I'd like to make is that I find it ironic that you keep referencing CPI or at least making indirect references to it as a true gauge of inflation. Reason being is that CPI is a tool that is perpetuated by Wall Street to justify their investing habits. You of all people I would think wouldn't reference this metric to gauge real inflation felt on Main Street. You ask the average middle to lower income class person what their main economic concerns and fears are and they will overwhelmingly say job security and rising gas/food prices. So I just find it odd that you continue to bring this up. If you would just take the time to see the words for what they are and not view it through your preconceived lenses, I think you'd see that what I'm saying makes a lot of sense. Edited March 9, 2013 by Magox Link to comment Share on other sites More sharing options...
TPS Posted March 9, 2013 Share Posted March 9, 2013 again, your reading comprehension skills fail you. Lybob made mention of a comment that I made and suggested that I claimed it would lead to hyperinflation and i responded. You and I years ago spoke about this, in which I said that it would lead to commodity inflation, but most likely not see prices go through the roof because there was a lot of slack in the economy, and that we wouldn't see heightened inflation until the global economy began to grow at a faster clip, at least avg global growth trend rate. I've spoken about this ad nauseam. It's not a singular issue, commodity prices are largely driven by growth, supply and monetary policy. If global monetary policy tightened, lets just say the unwinding of the bond purchases (QE) the effect would be twofold. One, there would be an immediate global repricing of virtually all commodities, currencies, bonds and equities, through the markets of course. Then there would be the tangible impact it would have on global growth, obviously world growth would slow, demand for just about everything would drop and that depressed demand would filter into the equity and commodity markets. Now of course this is under the assumption that monetary policy makers abruptly change course, in which of course they won't. Whenever they do unwind these positions I imagine they will do it in the most gradual way possible. But that isn't what this discussion is about, we are talking about the raw impact of monetary policy and commodities. Also your analysis on the relationship vs the dollar and oil is flawed. Your model is based on the traditional relationship it had, dynamics change professor, so when they change in order to keep up, analysis must change along with it. The correlation no longer exists in the way it use to because of a couple fundamental factors. One, just about the entire developed world is devaluing their currency, so the price of oil has risen more so over the past couple years in their currency because of their loose monetary polices, and two, even though we are still the top dog with reserve currency status, oil and other commodities are being purchased with other currencies. Currency swaps mainly between china and its trading partners have steadily been increasing over the past five years or so, lessening the reliance on the US dollar Talk about reading comprehension. Did my post say you claimed hyperinflation was coming? Did I say the negative oil-dollar link was permanent? Sheesh! Link to comment Share on other sites More sharing options...
Magox Posted March 9, 2013 Author Share Posted March 9, 2013 Talk about reading comprehension. Did my post say you claimed hyperinflation was coming? Did I say the negative oil-dollar link was permanent? Sheesh! No, but lybob did, and did I say that you claimed that I did? Ok now this is getting silly. Link to comment Share on other sites More sharing options...
....lybob Posted March 10, 2013 Share Posted March 10, 2013 Tell me where I have predicted the demise of the US dollar to occur in the near to mid-term. Or show me where I said we will be seeing hyper inflation any time soon . The problem is that you see things through a certain lens, you see me make my argument and somehow you believe I'm sounding the alarms to hyper inflation, where in fact what I'm saying is that loose monetary policy has had an appreciable effect on prices. Without QE we'd see a much lower price for oil and for that matter equities as well. The impact is felt on two fronts, as I alluded to earlier, one is the immediate re pricing in the markets, adjusting to the currency, and two is the peripheral tangible effects of the increased demand of the monetary policy. Also another point I'd like to make is that I find it ironic that you keep referencing CPI or at least making indirect references to it as a true gauge of inflation. Reason being is that CPI is a tool that is perpetuated by Wall Street to justify their investing habits. You of all people I would think wouldn't reference this metric to gauge real inflation felt on Main Street. You ask the average middle to lower income class person what their main economic concerns and fears are and they will overwhelmingly say job security and rising gas/food prices. So I just find it odd that you continue to bring this up. If you would just take the time to see the words for what they are and not view it through your preconceived lenses, I think you'd see that what I'm saying makes a lot of sense. Quantify much lower- if oil is $110 a barrel, what part of that is production costs, what part is supply and demand, what part is normal speculative froth, what part is Israeli Iran hostility premium, what part is is due to the normal volatility surrounding most oil producers, what part is from sundry things I'm forgetting right now and finally what part is from QE- ballpark figure. Link to comment Share on other sites More sharing options...
Magox Posted March 10, 2013 Author Share Posted March 10, 2013 (edited) Virtually impossible to quantify, if i had to give my best rough guesstimate, I'd say through the combination of the lowering of US interest rate cycle beginning shortly after 9/11 and QE, at a very minimum 35% of the price is attributed to loose monetary policy. Edited March 10, 2013 by Magox Link to comment Share on other sites More sharing options...
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