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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GST who wrote (53864)2/15/2006 3:17:19 AM
From: pogohere  Read Replies (1) of 110194
 
INflation is not a change in money supply -- money supply is simply one of many, many factors that influence long term price changes.

That's why I find using only price as the indicator of inflation is useless as an analytic tool. I'll always want to know why the price is what it is so I can come to some conclusion about where it's going. Money supply is considered to be important for rather obvious reasons. So are many other factors. If you have a way or model to parse price in a way that explains its movement(s), I'd really appreciate it if you'd share that.

You have made observations about a number of concerns, China, for example, that validate my research and readings and for that I thank you. But so far the observations haven't added up to a model/method/approach that could be applied in general.

It seems to me that tracking price as the sole determinant of inflation amounts to elevating a data point/set to the status of a full blown understanding of the phenomenon being examined. I haven't found this approach to inflation useful, even as I find some of the observations valid.

Mish has from time to time addressed a number of the factors that influence price and uses a model that he asserts works to explain what's going on and what will happen. Maybe it does, or will, and maybe it won't. Maybe he's right, maybe not. He thought housing would have collapsed by now with short rates at 4.5%. Timing is a bitch. It's increasingly clear that housing probably peaked in the 4th quarter of '05. But it certainly hasn't collapsed. Still, he works with data and draws conclusions based on an understanding that emphasizes one factor more than others. That's not primate behavior.
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