Looks like the Fed was right in focusing in Core CPI afterall

[rothschild]

Quote from Cutten:

Was it a mistake though? Prices in commodities are not speculations on far future value in the same way that as stocks are. Commodity prices are set by immediate supply & demand needs mostly, albeit speculation can swing things up and down for a while. Industry needed oil in late 2007 and H2 2008, and was prepared to pay $100-147 a barrel for it. And don't forget that part of the reason prices are lower now is because they went so high. The cause of low prices is prior high prices, and vice versa.

Also, part of the reason the market was wrong was because of the distorting effect on credit of a Fed easing cycle. The Fed cutting made rates go lower than normal, encouraging more lending. Their reaction to a weakening financial system ironically exaggerated investment in the one remaining healthy part of the economy, causing excessive prices, and now a subsequent bigger than necessary bust the other direction.

This is part of the argument against central banks - they cause overinvestment. Each time they respond to one sector getting into trouble, they cause overinvestment and speculative excess in other sectors, thus setting up the next bust. An infinite bubble-blowing machine.

Short term solutions for a much too complex world for individuals.

Though, their roles is giving a human face to all that is happening.

People can find some informations through their body expressions of the information they are giving to the media.

No central banks would mean de-personalization of the process, risking to make people more cynical than they are right now, even if it looks like pure propaganda and marketing strategies.

Catch-22..the least-evil.

 

[Daal]

Quote from Cutten:


Also, if the Fed can't affect the economy, or go counter-cyclical, then what are they for? Their whole reason for existing is based on the premise that i) they can affect the economy, and ii) they can do so counter-cyclically. If those premises are both false, as you seem to imply - whether it is for economic reasons, or political reasons - then what is the purpose of having a central bank?

I believe it can affect the economy just not to the extend the marc fabers of the world think. He thinks the fed fueled a world wide bubble in everything and yet when greenspan tried to push the 10y up he failed miserably

sure 1% helped but most countries in the world achieved single digits inflation rates from 2000 to 2006 which was historic. they already lied about inflation before so this was a real thing
long-term rates went down making real estate affordable everywhere

Regarding having a central bank, I dont know if most countries need one, probably not. However maybe there is a case for having one when you have a garbage financial system in a large country like the US given that the system will need a rescue every once and while and its politically impossible to clean the system

 

[Daal]

The reason I defend the fed is simply because we should only care about being right, no matter how painful it is to have to our change views. if it turns out that nanci pelosi creates an economic plan that would work, then thats reality I'm not going to fight it
at the end of the day you need to be right, only your PL should speak

The inflationist conpiracy theorists bought into gold at $1000 thinking the fed was 'printing money' and had their head handed to them.
some austrians take their worshipping of mises too far and that blinds them. buffett have charity and helping the poor as his hobby and tries to impose that into everybody else at gunpoint through the government but uses rationalizations to justify it.
Those are the kind of biases that can always cost you money or left you with no understanding of whats going on

 

[wutangfinancial]

In any case, this nonsense about hyperinflation is total garbage.

Were about to hit a god damn liquidity trap and these nutters are worried about inflation.

All the liquidity injected into banks is being used to shore up their balance sheets, none of it's being lent. When the money multiplier functions again, there's plenty of room to raise rates.

 

[piezoe]

Quote from Daal:

the rogers agriculture ETF is down almost 50%

Since i usually don't eat grain purchased by the freight car load from ADM, only bread, i made the common error of thinking food prices had actually gone up when a paid 2 bucks for a loaf of bread that cost $1.20 last year. Silly me. Perhaps in time the drop in agricultural prices will actually be reflected in food eaten by Homo sapiens, but i doubt it, because Mr. Bernanke can always buy Treasuries to deal nicely with that problem.

 

[clacy]

Quote from piezoe:

Since i usually don't eat grain purchased by the freight car load from ADM, only bread, i made the common error of thinking food prices had actually gone up when a paid 2 bucks for a loaf of bread that cost $1.20 last year. Silly me. Perhaps in time the drop in agricultural prices will actually be reflected in food eaten by Homo sapiens, but i doubt it, because Mr. Bernanke can always buy Treasuries to deal nicely with that problem.

Don't worry, lower prices are headed your way.........

http://www.google.com/hostednews/ap/article/ALeqM5hgJF9nSoEJfKwmRnquO9ulJuMyvgD94H16JO1

 

[piezoe]

Quote from wutangfinancial:

In any case, this nonsense about hyperinflation is total garbage.

Were about to hit a god damn liquidity trap and these nutters are worried about inflation.

All the liquidity injected into banks is being used to shore up their balance sheets, none of it's being lent. When the money multiplier functions again, there's plenty of room to raise rates.

You're not one of those who thinks we are actually going to see significant deflation in the overall economy 3 or 4 years hence are you? If you are, then please be my guest and hoard as much cash as you can. Personally, I like to do what the big boys do, like the US Government, and hoard debt! I figure since they are in control, or supposed to be anyway, They'll do what's best for them and just screw you guys hoarding cash and ammo. Hyperinflation (whatever that is?) here we come.

 

[rothschild]

1st, The FAO made a report last week claiming food prices would go up again next summer to a great extent. they expect lower growth to provoke farmers to cut planting.

2nd, hyperinflation would have a duration of 1 month. Do you expect all the people talking in blogs, discussion room and facebook groups to leave it that way for more than one long 30 days?

I would not like to be the cause of that hyper-inflation, people would likely revenge after 2 weeks of sustained hyperinflation. I mean cruelty and killings.