TRUTH about Commodity Rally

[achilles28]

Quote from orange_trad:

Yeah, I agree. My point above, albeit vague, was that it is BIG institutional speculators that are to blame for the asset bubble and not retail specs. (And even if one's account is called 'institutional' he's still retail for these purposes. Big institution is Goldman.) That's what's shown in the divergence between M2 and M3.

Now that I think about it, since the Fed accepts papers that are saved from the shredder as collateral, these papers count as M0 (cash deposited in a CB), right? Since these came out of M3 and right into M0, the (real) divergence is even more severe than on that graph. I have to revise my earlier views: Ben is not stupid. Or the people who order him are not stupid. OK, I knew this before. Correction: Still, Ben is simple as a brick.

In theory, it checks out. But who knows if the FEDS accounting is legit.

FED has basically issued no-recourse loans on junk paper valued at AAA.

Which, yes, expands M3 by that amount.

Which is why all the inflation hawks like me keep on about inflation.

They're not taking any money out of the system. Socialized losses.

 

[achilles28]

Quote from orange_trad:

Ben is not stupid. Or the people who order him are not stupid. OK, I knew this before. Correction: Still, Ben is simple as a brick.

By the way, you might want to research who actually owns the Federal Reserve System to begin with.

Those are the chaps who are really pulling the levers.

Ben is a figure-head of power. Just a functionary.

 

[orange_trad]

Quote from achilles28:

By the way, you might want to research who actually owns the Federal Reserve System to begin with.

Those are the chaps who are really pulling the levers.

Ben is a figure-head of power. Just a functionary.

I know it's a private company. So it gives an excuse to be this dense?

 

[achilles28]

Bernackes not dense. He's an employee. He knows it. So do his employers.

Its a charade for the public to make it seem Bernackes got control.