Let's play 18 questions.
These are very simple questions. All but a few of them are simple YES/No questions, depending of course on how silly your answers are. The more silly your answer, the more you better be prepared to defend it.
1) When the FED increases money supply for a prolonged duration do you expect prices of goods, services or assets to in general rise?
2) If there is a rampant increase in credit (say from GSEs) do you expect prices of goods, services or assets (most notably housing) to in general rise?
3) If oil runs out or there is a supply shock do you expect the price of oil to rise?
4) If an enormous new supply of oil was found would you expect the price of oil to drop?
5) Can good or bad weather influence the price of crops?
6) If there is a dramatic increase in productivity making widgits would you in general expect the price of widgets to drop?
7) Double pane argon gas filled windows did not exist 50 years ago. Nor did teflon or cable TV. Is it possible to ACCURATELY account for quality differences vs something that did not even exist long ago? If so how? Who gets to decide that subjectivity? With what accuracy?
8) Can one ACCURATELY compare a car made today vs the price of a car from 1930? If you say, yes, please explain subjective measurements of quality, and with what accuracy.
9) Can one ACCURATELY compare home prices today (construction, room sizes, insulation, AC, heating, roofing, windows etc) with houses built 30 years ago? If you say, yes, please explain subjective measurements of quality, and with what accuracy.
10) Can one ACCURATELY tell why oil prices are rising due to geopolitical concerns, peak oil, genuine demand, or rising money chasing goods? If you say, yes, please explain how and with what accuracy.
11) If money supply increases is is possible that money bids up the price of stocks instead of prices of goods?
12) Do equity prices matter in your view of inflation or do you ignore them?
13) Is it possible to ACCURATELY measure prices if equities are included in the basket?
14) Do you want equities in your basket? If so please describe how you go about it.
15) If you do not want equities in your basket are you suggesting we should ignore stock market bubbles as not being caused by inflation?
16) If the fed is ramping up money supply like mad but prices of goods (oil, copper, etc) are falling, is there no inflation in your book?
17) Is money supply meaningless as you said?
18) If money supply is meaningless do you watch it, if so why?
There you go
18 simple, easy yes/no questions for you.
Have at it.
Mish |
