The Epic American Credit and Bond Bubble Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: GraceZ who wrote (56097)	3/17/2006 3:12:58 PM
From: mishedlo	Read Replies (1) of 110194

Because something is difficult and problematic to do does not mean it is not worth doing. No one and I mean no one would care about the expansion of the money supply if it didn't affect the value of their money as measured against what money will buy. Grace, it is not worth doing (for economic policy) because it tells you next to nothing. It ignores asset bubbles like stocks and houses unless you think you know how to incorporate a basket of stocks into your basket and account for quality improvements on products as well. I say it can not be done and there are too many political reasons why it wouldnt be done even IF it could! OK the CPI has some use (if it was honest and accurate) for SS payments but that is about it. As far as economic forecasting and policy it is indeed useless because as I have stated a dozen time, productivity improvements and equity bubbles can mask real inflation (expansion of money and credit). That is where the problem is and trying to measure the result (a Rise in CPI is just one possible result to expansion of money), instead of measuring the cause, is point blank stupid. If the FED wants 2% inflation, it should increase money supply by 2% and be done with it. Let prices go where they go. At least we would have an honest system if they did that. Unfortunately that does not work because of fractional lending which allows 10 times as much credit to expand. There are ways to measure credit and if the FED does not like credit expansion then it can raise rates. The correct solution however is to get rid of fractional lending and the FED both and it might take a financial collapse for that to happen. It is not out of the question years down the road. Mish

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next