Nassim Taleb on Charlie Rose: "Massive Deflation Nightmare, Roubini Too Bullish"

Quote from Pekelo:

So HOW do we know when deflation switches to inflation?
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Hey there Pekelo,

Hope you left "hard 10 " alone for awhile.

Basically, the simple answer is when money supply exceeds productivity...then you have money chasing goods, therefore prices go up. Hope I haven't simplified it too much :D

I don't think we need to be concerned with the inflation aspect for quite awhile...say, at least 12 to 18 months.
 
Quote from Now is Now:

I don't think we need to be concerned with the inflation aspect for quite awhile...say, at least 12 to 18 months.
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Watch the baltic freight. When that starts spiking, time to start worrying a bit more.

$147 crude -> $40 is six months... Hmmm.... It is just as probable in six months we will be above $100 and once again worried about inflation.
 
Quote from zdreg:

2% money supply growth is not a fed mandate.. The central bank in the US has a duel mandate to maintain employment with
price stability.
when the two conflict and the politicians howl the mandate of price stability flies out the window. central banks who get involved with employment always end up with severe inflation in sharp downturns.. the 2 goals are incompatible.
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Not officially a mandate, but undoubtedly engrained in the policymakers' decisionmaking mentality.

By Mr. Bernanke himself.

http://books.google.com/books?id=Mr...a=X&oi=book_result&resnum=6&ct=result#PPP1,M1


http://www.bos.frb.org/economic/wp/wp2005/wp0513.pdf
Inflation targeting is very real.



The US Federal Reserve's policy setting committee, the FOMC (Federal Open Market Committee) and its members, regularly publicly state a desired target range for inflation (usually around 1.5-2%), but do not have an explicit inflation target. This is under debate within the Fed, since inflation targeting is usually very successful in other countries because of its transparency and predictability to the markets.

http://en.wikipedia.org/wiki/Inflation_targeting
 
Quote from JamesVU2000:

Why does everyone one assume that Bernanke has any idea what he is doing?
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Well relative to some guy on an internet message board that can barely put together a coherent sentence in English, he absolutely has an idea of what he is doing.
 
Yea, under Bernanke and Greenspan the global banking system has collapsed and now Im going to supposed to make a blind bet that they can can put this back together?
 
Quote from scriabinop23:

Well relative to some guy on an internet message board that can barely put together a coherent sentence in English, he absolutely has an idea of what he is doing.
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I think it's pretty clear that Bernanke is no idiot. I also think it's pretty clear he has no idea what he's doing - that is, he has no idea what the effects of what he's doing will be.

This is no surprise and it is due to the fact that he is trying to centrally plan millions of individual decisions by millions of very different individuals. No central planner - not even a very smart central planner like Paulson or Bernanke - can know enough to make the right decision for everyone. No matter how brilliant you are, you can't know the unknowable. Also, they are subject to political pressure. Was keeping the interest rate so low for so long a good idea after 9/11? Is an incentive to default on your payment and not find another job to get your payments reduced a good idea now? Is pouring money down a Detroit toilet a great idea? Yet, smart people do all those things.
 
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