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

To: FiveFour who wrote (53454)	2/10/2006 9:45:45 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

<<1) When the FED increases money supply for a prolonged duration do you expect prices of goods, services or assets to in general rise?>> There is no way to know if prices will increase or not because of the variables involved: - what is the rate of growth of money supply I said money supply was up, growth is irrelevant except that it controls the RATE of inflation (not whether or not it is occurring) - what is the rate of growth of gdp irrelevant - what is the rate of growth of taxes irrelevant - what is the rate of growth of trade deficit irrelevant - what is the rate of growth of inventories irrelevant - what is the rate of growth of savings irrelevant - what is the change in consumer sentiment irrelevant - etc, etc, etc. irrelevant Try putting that in a model, there is lots of grey area. Yes or No answer? You might as well flip a coin. You lose. When I said money supply I was referring to money supply and credit. If money supply and credit is expanding inflation is expanding. Period point blank. NOTHING else matters. Yes savings AFFECTS money supply and credit. Yes taxes AFFECT credit availability. Yes sentiment affects consumer borrowing (but that is reflected in credit !!!!) Inventories are a reflection of spending and sentiment. Yes , yes, yes thus you are blowing a bunch of irrelevant smoke. I POINT BLANK SAID MONEY SUPPLY (and I should have said Money supply/ credit) thus all the other horseshit you added was already accounted for in the question. In aggregate money supply/credit is either expanding, contracting, or staying flat. I could give a rat's ass what any individual component is doing if the aggregate is going up. Now answer the questions. They are simple enough. PS I am not sure GST makes a distinction between money and credit and that is who the questions were addressed to. Mish