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To: ahhaha who wrote (40859)	9/26/1999 4:48:00 PM
From: Bobby Yellin	Respond to of 116793

not in supermarkets here..rents are exorbitant and I assume merchants have to pass on the charges..also fuel bills are getting there once again it has to be a lot higher wages for inflation in my book- As Jim M. said..as wages increase everything else increases to make most people status quo.. As the market doesn't give the stellar returns, that should really slow down the economy..

To: ahhaha who wrote (40859)	9/26/1999 8:08:00 PM
From: Zardoz	Respond to of 116793

For the last two years something new has developed in the macroeconomics equation. The major economic nations must stimulate their economies with direct monetary action in order to prevent their currencies from falling. This is opposite to what has been held to be the way the machine works. In Japan the leaders are talking about increase in stimulus to get the yen down, but as usual, this is completely wrong. Such stimulus would drive the yen even higher. You can't have it both ways: either you believe in monetarism or you don't. There are no new macroeconomics equations. They are, have been for years, the same. In USA the FED has stimulated monetary policies to stymie the growth of the US currency. This has lead to both an asset growth, as well as asset inflation {the expectation of higher earnings}. BUT the nature of the monetary growth has mitigated the inflationary pressures. So inflation, the increase in the amount of fiduciary money issued, is benign when reported against GNP. Monetary excesses such as M2 & M3 offset what would've caused a rise in the US dollar. This can been seen in Japan of late, where sterilization of the GOJ actions by the BOJ has resulted in an appreciating currency. By not permitting the M2 growth to find it's way into the markets, the BOJ has thus caused the appreciation of the YEN. So they are in fact hurting themselves. But the BOJ is doing this to limitate the cash inflows and to prevent a hyperinflation routing in the future. The true value of the YEN is worth around 250/USD or more, but at that rate the economy would go from near zero growth to a high growth rate. So those funds looking forward are early investors. But as we know a jump to 250 yen/USD is a discontinuous function, and some happy median is in between. This unknown value is where the growth rates and inflation rates are somewhat equal. So if you get in early enough you may have 1-2 quarters of bad returns, but as growth picks up, and the Yen depreciates you will effectively have higher growth then inflation; at least that is the premise. Monetary policies always effect inflation. And in many cases actually can hide inflation. In Aug 98 the REAL inflation rate was somewhere approaching 6.25%. But the Consumer Price Index {which isn't an inflation record} was trending around 1%. If we believe that the 30yr bonds are related to inflation and real returns we can suggest: 30yr Yield := Real Return + Inflation Then for 98, the 30 yr were around 5%, and since historical real returns are around 4%, this would suggest inflation of 1%. But monetary policies are inflationary as well. It's nice to say that a 10.75% increase in M2 is equal to 10.75% inflation. But that isn't true. Since monetary policies need the growth factored out. And in Aug 98 growth was nearing 4.5% So if we assume the excess of M2 yield - GNP yield we get 10.75%-4.5% which is 6.25%. Now the GNP rate for 99 is around 5.2%, and the M2 yield is effectively moot. So we can expect a slightly higher inflation rate since M2 is negated, but with an exceptional growth. This should result in higher earnings. The above example of M2 and growth is the main reason why Gold has performed so bad since 1996. To assume that gold is the only store of value is to neglect the value of markets and money. In deed GOLD always does best in deflationary times, and NOT inflationary times {It seems non monetarist will always assume the opposite, and they are of course wrong}. As in Aug 98, it wasn't until the deflationary spiral of Asia hit the coast of USA that the dollar tanked, and interest rates dived. In fact you can see that the dollar dove well in advance of gold rising. And it wasn't until a focal point was achieved that gold rose. The fears of a world recession? But many counter and suggest that high interests rates cause gold to climb. This is the fallacy of their logic. When the Fed is ahead of the yield curve that it's deflationary, and thus is good for gold. But when the FED is behind the yield curve, as now, this is bad for gold. The FED has been behind the yield curve since Jan 95, and the effects of which can be seen. Yes Gold can rise while interest rates rise, but then it can also fall as interest rates rise. It's the state of deflationary or inflationary that are important. Up until last week the POG has been falling to new 20+ years lows. Nothing has changed. You have stated many times that inflation is high, and that this is good for gold. I say inflation has been high for a long time now. The FED laid off on M2 because the dollar stopped appreciating, NOT the dollar stopped appreciating because they laid off M2. This is/was the plan of the FED to occur before the Y2K. If in these gloomers aspect the year 2K has a negative reaction in the rest of the world, and a capital inflow occurs into USA, the FED wants to be ready to add monetary extremes to the economy to prevent a currency spike. Let's all admit: Asia and Europe may not be ready! Hutch PS: A short covering rally? Well, maybe for the Sept delivery only. Which I might adds expires Sept 28/99. So a TRUE rally need go past Sept 30. PPS: Yes the Dow can hit 20K... this is still a bull market. And is likely to remain one as long as a monetarist is in power at the FED. When to get out, when a monetarist is no longer in power.

To: ahhaha who wrote (40859)	9/26/1999 8:37:00 PM
From: long-gone	Read Replies (1) \| Respond to of 116793

<<Can't do it. I keep seeing the creep everywhere except supermarket food where the effect is seen in a decrease in product moving discounts. >> Please, go back to the supermarket again, and look, instead of what you always buy, look at those items people not from your region or ethnic background might buy and add a few produce items. The "normal" foodstuffs are well in line or as you have found, even falling in price, but some items are far higher. Tomatoes for one, 5 years ago, in a local supermarket I could buy tomatoes, in season for $.39-.59 now $.99-1.59 off season double that price range. Peaches this year were high as were plums, & chille peppers(a staple of our diet in the southwest) lower quality and double the ptice of last year. Pinto beans are up 15% over the price of only 5 years ago. Really go look, the increases are there, maybe just not in the items you are buying or the items you notice. Yes, that 15% increase in pinto beans can be offset by lower spud & (in some cases)rice prices, but sweet potatoes 20% higher in last 3 years. Or at least that is what we are seeing.