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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (21233)	11/2/2004 4:43:57 PM
From: ild	Read Replies (2) \| Respond to of 110194

Date: Tue Nov 02 2004 16:36 trotsky (mugwump@Nolan) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved obviously, he hasn't thought this through. when money 'flees' from money market funds into high yield bonds and other longer term debt instruments, those still have to be BOUGHT from someone. that someone then gets the money - it doesn't just 'disappear' into the blue yonder. however, i agree with most of the rest of his analysis...don't want to create the impression i'm completely at odds with him. Date: Tue Nov 02 2004 16:24 trotsky (Big Bob) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i won't argue that the Fed ISN'T an engine of inflation - it clearly is, and we can see it in all long term price studies. our progress has happened in spite of this permanent drag. i'd even agree that in industrialized nations, prices for 'necessities' tend to be relatively high and most prone to price inflation, but the average inhabitant's budget can hardly be considered to be reserved exclusively for necessities ( contrary to developing nations where necesities are cheap, but also constitute the bulk of the average inhabitants expenses ) . therefore when contemplating AGGREGATE price inflation it won't do to dismiss stuff one doesn't buy 'every day'. most people e.g. go on a vacation once a year. so we can't just dismiss the fact that vacations have become much cheaper and a mass market phenomenon as irrelevant. the same goes for e.g. DVD players, which may only get bought once every two or three years - prices have fallen about 90% for this stuff in recent years. there's an abundance of similar examples. also, i'm sure we can agree on the point that money supply growth is the fount of inflation - regardless of WHERE the inflation manifests in the end. money supply growth is the CAUSE iow. of aggregate price inflation, and not high oil prices. Date: Tue Nov 02 2004 15:37 trotsky (Big Bob, 15:01) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved but there are millions of goods and services to choose from - you picked out a few that rose in price, but what about those that got cheaper? Yorkie alleges an aggregate price inflation will be caused by high oil prices - i still dispute that, even though oil is part of about 500,000 different products. current money supply growth rates do not support the idea....i.e. it won't be possible to successfully pass on rising energy input costs. but it stands to reason that producers ( aside from energy producers that is ) will suffer on account of lower sales.