Quote from Martinghoul:
1) Firstly, what data might that be? 'Cause I think you're mistaken in your simplistic interpretation of the relationship. For example, what are we to make of the particularly "predictive" 2008 period of high commodity prices? Secondly, TIPS have been arnd since 1997. How much more data do you need? Do you think data from the 1700s (to give an exaggerated example) would be relevant? As to QE (POMOs are QE; there are no other Fed bond-buying activities), you can look at the ultra long part of the curve, where the Fed doesn't go. TIPS breakevens out there are not pricing any crazy inflation either.
Quote from MKTrader:
1) 1970s data are certainly helpful when we're talking inflation and commodities. Data since 1997 may or may not even be statistically significant depending on how it's sliced and diced.
2) As for Fed activities, it can't be quantified precisely, but many think they're doing a lot more off the books than official QE/POMO $ numbers suggest.
1). Yeah, but if we take the 1970s data, I would suggest that your interpretation of it is excessively simplistic. Specifically, commodity price rises mattered in the 70s because they fed into wages. If there's no such passthrough inflation might not happen this time arnd. I am not suggesting inflation won't happen. I am just saying that, contrary to what the inflationistas would have you believe, (hyper)inflation is far from a foregone conclusion.Quote from MKTrader:
1) 1970s data are certainly helpful when we're talking inflation and commodities. Data since 1997 may or may not even be statistically significant depending on how it's sliced and diced.
2) As for Fed activities, it can't be quantified precisely, but many think they're doing a lot more off the books than official QE/POMO $ numbers suggest.
Quote from orange_trad:
"We're not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way."
He is right, technically. They are not printing the physical currency, ie not widening M0 (notes and coins in circulation and in bank vaults); so he is right, since most people associate 'printing money' with the physical production of notes and coins. But that's not what money printing refers to (it is the rapid expansion of the monetary base; the Fed is selling treasuries and (formerly) bought every crap on the street).
Most people - including journalists - don't understand what the fuck they are talking/asking about, and Ben is using that to his advantage. Anyone proficient to a minimal acceptable level in economics could have handed Bernanke his own ass on this remark as he was just weaseling his way out of the question using semantics. But don't expect that from journalists.
Quote from rsi80:
Could Bernanke go down in history as the most disingenuous Fed Chairman ever?
http://dailybail.com/home/bernanke-on-60-minutes-were-not-printing-money.html
"We're not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way."
Quote from trefoil:
No mention of the just passed unemployment benefit & income/estate/payroll tax deal?
That sucker will do far worse things than QE2. Everyone got every break they ever dreamed of, which means the deficit is going to absolutely skyrocket. The bond market cracked big time today.
QE2 is just a drop in the bucket compared to this nonsense. The Fed would need to announce QE3 to 10 just to begin to mop up the excess debt that's about to hit the market.
If there's inflation in the future, blame it on this deal. Ben is just a footnote on the balance sheet.
Quote from MKTrader:
And gold isn't going up...
And cotton and wheat prices aren't going up...
And CPI isn't a joke...
And Bernanke's apologists aren't complete idiots....
And there really weren't bubbles in tech or housing in recent years...
Denial is so much fun while it lasts.