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

Ricter · May 8, 2012

Quote from achilles28:

How is that accomplished, without destroying capital markets, liquidity, and price discovery? Sorta a difficult problem.

A new generation will emerge from their pupae, but one hopes they will be a bit more cautious than the last.

Max E. · May 8, 2012

This is the kind of goofballs we are up against on the left....They dont deal in reality.

Really? The fed has no impact on food or oil prices which are both denominated in U.S. dollars?

Quote from achilles28:

That's right. Bailouts and QE, intended to reinflate asset prices (real estate and equity), have zero affect on asset prices (energy and commodities). Brilliant. How does Krugman know which asset class is buoyed, and which isn't? Cheap money inflates stocks but not oil prices? Real estate but not the price of corn? Or wheat? Anyhow. These are the fucking idiots that run our economy.

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Brass · May 8, 2012

Quote from Max E. Pad:

This is the kind of goofballs we are up against on the left....They dont deal in reality.

Really? The fed has no impact on food or oil prices which are both denominated in U.S. dollars?

Against which currencies are you referencing the US dollar?

nutmeg · May 8, 2012

Quote from Max E. Pad:

Really? The fed has no impact on food or oil prices which are both denominated in U.S. dollars?

Question. Fed policy (lowering interest rates) really did not result in higher oil and food prices starting back in "03 and later.

Covertibility · May 8, 2012

Dollar index:
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From an old thread. So the big dollar drop from '00 to '05 didn't result in squat on the cotton, corn or coffee charts. Even if you use M2 instead of the dollar index, you won't get the results you're looking for.

But wait, from the Department of Facts and Reality, Huge corn deal, US frost send grain prices soaring. Shockingly, supply and demand for the actual goods and not Fed policy may have had some influence on prices.

Max E. · May 8, 2012

So if we were to move the interest rates to 10% tomorrow the price of oil would just stay the same right? All you need to do is look at the reaction of commodities to unexpected rate changes, on any given fed day, to know that you and krugman are full of shit.

Why dont you go start another "housing rolling along" thread, that was a brilliant call right before the worst housing collapse in history....

Quote from Covertibility:

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achilles28 · May 8, 2012

Quote from Brass:

Against which currencies are you referencing the US dollar?

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

Covertibility · May 8, 2012

Quote from Max E. Pad:

So if we were to move the interest rates to 10% tomorrow the price of oil would just stay the same right?

Why dont you go start another "housing rolling along" thread, that was a brilliant call right before the worst housing collapse in history....

You forgot the sell post right near the top. And the posts with the easy money trades that I recall doubled your money.

Why can't the republican mind process reality?

achilles28 · May 8, 2012

Quote from nutmeg:

Question. Fed policy (lowering interest rates) really did not result in higher oil and food prices starting back in "03 and later.

Cheap money forces speculative risk-taking in hard assets. Either real estate, stocks, bonds, commodities, or tulip bulbs. In 1999, cheap money found a home in tech stocks. In 2002, it was US real estate and MBS products. Towards mid '05 to current, it's commodities. Cheap money always finds a home since investors need yield and fixed income can't deliver (due to negative real rates) etc. The FED can't control which market that hot money funnels into (think first-mover benefits), but they do control whether or not asset bubbles are created, to begin with. Of course, they deny it though.

Covertibility · May 8, 2012

Quote from achilles28:

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

Here's a short read regarding gold: Unlocking the Money Matrix â The Summers Gold Price Suppression Scheme (PART 13/15)

"The next part is crucial to the plot. In 1988, a young economist out Harvard, Larry Summers wrote a verbose paper entitled 'Gibsonâs Paradox and the Gold Standard.' In the paper, Summers explains that when the real interest rate is positive, the gold price will not increase and even decrease as parties will prefer fiat currency that increases in purchasing power. However, when the real interest rate is negative, the price of gold will increase as parties will seek to preserve their purchasing power. Gold serves as âthe canary in the coal mineâ for all fiat currencies. When the price of gold rises, this is the prime signal that the currency is being debased."

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Fed operations and gold are linked but not other commodities.