Krugman: Gas and Food prices have Nothing to do with FED Policy

[Brass]

Quote from achilles28:

Gold, silver, oil, copper, aluminum, corn, wheat.

If you're going to respond to my post, then please be sure to let me know when you actually answer the question:

Quote from Brass:

Against which currencies are you referencing the US dollar?

 

[Covertibility]

<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=DCOILWTICO,FEDFUNDS&scale=Left,Right&range=Custom,Custom&cosd=1995-01-01,1995-07-01&coed=2012-05-01,2012-04-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Daily,Monthly&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_date=2012-05-08,2012-05-08&revision_date=2012-05-08,2012-05-08>

Where's the correlation?

 

[achilles28]

Quote from Covertibility:

<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=DCOILWTICO,FEDFUNDS&scale=Left,Right&range=Custom,Custom&cosd=1995-01-01,1995-07-01&coed=2012-05-01,2012-04-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Daily,Monthly&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_date=2012-05-08,2012-05-08&revision_date=2012-05-08,2012-05-08>

Where's the correlation?

Fed funds are high = low oil.

Fed funds are low = high oil.

Are you kidding me? It's right on the bloody chart.

What do you think inflated the Nazdaq? Or the housing market? Or the DJIA, in '07?

 

[Max E.]

You keep on avoiding the same question i have asked you over and over.

If the fed was to raise interest rates to 10% tomorrow would the price of oil remain the same?

Quote from Covertibility:

<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=DCOILWTICO,FEDFUNDS&scale=Left,Right&range=Custom,Custom&cosd=1995-01-01,1995-07-01&coed=2012-05-01,2012-04-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Daily,Monthly&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_date=2012-05-08,2012-05-08&revision_date=2012-05-08,2012-05-08>

Where's the correlation?

 

[Lucrum]

Quote from RCG Trader:

No alerts for targets and stops?

You should work on that, it will make your trading life much much easier.

Or he could just join the National Guard with you to help make ends meet.

 

[achilles28]

Quote from Brass:

If you're going to respond to my post, then please be sure to let me know when you actually answer the question:

The question is irrelevant. Currency value isn't relatively determined. Currency value is based on purchasing power, which is a relative distinction against consumer prices. In this global ZIRP environment, currencies are in a race to the bottom. So while the EUR/USD or usd/gbp doesn't change much, oil, gold, silver, copper, meat and softs expressed in every one of those currencies, changes for the worse. Global prices are going up.

 

[Ricter]

Quote from achilles28:

The question is irrelevant. Currency value isn't relatively determined. Currency value is based on purchasing power, which is a relative distinction against consumer prices.

Lol.

Anyway, if Krugman thinks FED policy has no, as in "zero", effect on gas and food prices, then of course he's wrong. But I'd wager a closer look at the video will reveal some nuance, some qualification, in his statement.

 

[Covertibility]

Quote from achilles28:

Fed funds are high = low oil.

Fed funds are low = high oil.

Are you kidding me? It's right on the bloody chart.

What do you think inflated the Nazdaq? Or the housing market? Or the DJIA, in '07?

So if one were to look from the years 2000 to 2003, the Fed Funds droped from 6% to 1%, why did oil trade roughly sideways?? When the price of oil started increasing in 2004, the US economy was improving. Throw in the emergence of the BRIC's and you will, eventually, realize that world growth was the predominant reason for the run in oil prices.

Why are you including housing and the Nasdaq when in the first post of this thread you make claims that Fed policy also influence the price of corn, wheat and oil when clearly it does not.

 

[Brass]

Quote from achilles28:

The question is irrelevant. Currency value isn't relatively determined. Currency value is based on purchasing power, which is a relative distinction against consumer prices. In this global ZIRP environment, currencies are in a race to the bottom. So while the EUR/USD or usd/gbp doesn't change much, oil, gold, silver, copper, meat and softs expressed in every one of those currencies, changes for the worse. Global prices are going up.

Really? Relative value isn't important? Currency value is determined in a vacuum and should always be going higher as a matter of course? You may wish to share your epiphany with a few exporters.

Again, just to satisfy my curiosity, against which currencies are you referencing the US dollar? Because in a global economy connected by trade, an assessment is by necessity relative.

 

[Covertibility]

<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=DCOILWTICO,FEDFUNDS&scale=Left,Right&range=Max,Custom&cosd=1986-01-02,1986-07-01&coed=2012-05-01,2012-04-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Daily,Monthly&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_date=2012-05-08,2012-05-08&revision_date=2012-05-08,2012-05-08>

Longer term chart.

1988 to 1993, Fed Funds drops 10 to 3, oil price does squat. That little blip in '90 was Iraq War.

The 2000 era stands out at the BRIC's were coming online.