re: ["Aw, c'mon, after all this build up, and it simply
comes down to money supply (whichever flavor of M you
pick, as long as it includes credit creation), that
many people have been posting here for years????? "]
You missed the point entirely.
This massive broad rally in commodities over the last couple
of weeks had nothing to do with MZM, M1, M2, or
reconstructed M3 charts.
And you are 100% right - those charts are old news...
and the market does not trade, let alone break out to new
all time highs - on old news.
Bernanke has actually slowed the pace of money supply growth.
Hence the current arguement about deflation vs. inflation.
My point on the M1, M2, M3 and MZM charts is that a massive
amount of money is still working it's way through the global
system.
Much of it was misallocated into paper instruments that have
blown up, and now it's being reallocated into hard assets
like commodites and gold.
The catalyst of this move was not about what the Fed has
done in the past - but rather about what the Fed is going
to do in the future.
Markets are always forward looking.
The catalyst for this move was the removal of a headline
agenda item at the February 8th & 9th G-7 meeting -
"Dollar Stabilization."
It signaled the Fed's future actions and the future
direction of the U.S. Dollar and Dollar policy.
Hedge funds poured massive amounts of new money, broadly
into commodities, not just gold - on that news.
Look at what happened in just the first two weeks, post
the G-7 meeting:
My other point, is that the real story on money supply is not
a US story, it's a global story.
18 of the 20 largest central banks are increasing money
supply at double digit rates.
The removal of "Dollar Stabilization" from the G-7 Agenda
was a major market "signal" on where the Fed is going. And
the market just voted for inflation - not deflation.
I hope that clears things up.
S.O.T.B. |
