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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (47144)12/13/2005 4:23:08 AM
From: mishedlo  Read Replies (4) of 110194
 
But Mish, Larry Kudlow, most fund managers paraded on CNBC and the fed have bought into it. I trust you and me before that cast of characters

Please do not misrepresent my position.
The FED should target money supply.
Period end of story.
The FED should not target, assets, oil, Ipods, houses or any damn thing else.

Peak oil is peak oil and it is blatantly stupid to target oil prices. I have said many times that the CPI is understated. But using a blunt instrument (interest rates) to target oil prices is nuts.

Productivity improvements masked the effects of inflation. Rampant increases in money fueled a stock market boom instead of going into prices. Falling oil prices in the late 1990's helped. It made it look like there was little inflation.

The above is why paying attention to prices is wrong.

The problem is not the CPI, the PPI, or any damn thing else. The problem is the FED let money supply get away from them.

Now if that is what Kudlow or the CNBC clowns is saying I will eat my fuckin hat.

The FED should target money supply and that would be that.
In fact the FED should be abolished and the market could set the freaking rates. But if you must have a FED it should not monetize govt spending.

I will say this, attempting to control the price of oil via interest rates is just plain fucking stupid and it should be obvious why. Greenspan thought there was no inflation when oil prices were falling. He was wrong. The solution is not to target prices but instead target money supply. If peak oil pushes up the price of oil so what? Rising or falling oil prices has nothing to do with inflation. Inflation is caused by printing and that money may go into stocks, houses, oil, or gold. Because of peak oil, oil prices might stay high if the fed jacked up rates 200 basis points tomorrow. If you are out of a commodity it is going to demand a high price regardless of what rates are up till the point you cause a depression.

Now if you disagree with what I just said. Fire away, but throwing me in with Kudlow is total bullshit.

Mish
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