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

To: GST who wrote (53864)	2/15/2006 12:10:45 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Don't be a big dummy Mike -- prices DO rise for reasons other than money supply. Perhaps you are familiar with the following expression -- supply and demand. Of course they do. That is why attempting to target prices is a fool's game. It can't be done. Thanks for admitting it. Mish

To: GST who wrote (53864)	2/15/2006 12:18:55 AM
From: Claude Cormier	Read Replies (1) \| Respond to of 110194

- prices DO rise for reasons other than money supply. Of course. But if there is no increase in the money supply, the general level of prices will not increase overtime as whatever increase takes place somewhere, will simply be eventually compensate by a decrease in prices elsewhere. This is call the balancing act. If people spend more on gas or mortgages, they will spend less on fishing trips and mercedes if their paycheck has remained stable in the period. As well, if one defines price inflation as a general increase in the level of prices, an increase in the money supply does not necessarily and immediately imply price inflation as other factors can allow a balancing act. However, an increase in the money supply is certainly the best definition of what is inflation, because it is the only thing that can cause permanent prices inflation. Even if production of good and services increase at the same rate as the money supply therefore compensating for the additional purchasing power, over time, some goods and services are somehow destroyed or depleted while the money is still there. You then get price inflation somewhere. In short GST, I think that everything (all ...flations) have to do with the rate of growth in the money supply in the first place, be it positive or negative. The money supply come first and its movement will always cause some kind of ..flations. RIght or wrong, this is how I see it.

To: GST who wrote (53864)	2/15/2006 3:17:19 AM
From: pogohere	Read Replies (1) \| Respond to of 110194

INflation is not a change in money supply -- money supply is simply one of many, many factors that influence long term price changes. That's why I find using only price as the indicator of inflation is useless as an analytic tool. I'll always want to know why the price is what it is so I can come to some conclusion about where it's going. Money supply is considered to be important for rather obvious reasons. So are many other factors. If you have a way or model to parse price in a way that explains its movement(s), I'd really appreciate it if you'd share that. You have made observations about a number of concerns, China, for example, that validate my research and readings and for that I thank you. But so far the observations haven't added up to a model/method/approach that could be applied in general. It seems to me that tracking price as the sole determinant of inflation amounts to elevating a data point/set to the status of a full blown understanding of the phenomenon being examined. I haven't found this approach to inflation useful, even as I find some of the observations valid. Mish has from time to time addressed a number of the factors that influence price and uses a model that he asserts works to explain what's going on and what will happen. Maybe it does, or will, and maybe it won't. Maybe he's right, maybe not. He thought housing would have collapsed by now with short rates at 4.5%. Timing is a bitch. It's increasingly clear that housing probably peaked in the 4th quarter of '05. But it certainly hasn't collapsed. Still, he works with data and draws conclusions based on an understanding that emphasizes one factor more than others. That's not primate behavior.

To: GST who wrote (53864)	2/15/2006 5:46:43 AM
From: Mike Johnston	Read Replies (1) \| Respond to of 110194

You are confused. I bet you watch CNBC too much and read too many personal finance magazines. With stable money supply, prices not only do not rise, they actually go down, due to increases in productivity being passed along to the consumer. This discussion is not about supply shocks or demand spikes. If the price of tomatoes goes up, because of weather related destruction of crops, that is not inflation. And return back to the lower price after supply returns to normal is not deflation. Rising prices of eggs due to temporary spike in demand related to the Atkins craze is not inflation either. However, if an average home in a neighborhood is worth $200K, only an excess in money supply and excess credit can allow and compel someone to bid $250K for it few months later. That is inflation since barring a sudden population influx or increase in building costs (again, inflation due to credit and money supply excesses) there is no reason for price of a house to ever go up. That is why after bursting of the Nasdaq bubble in 2000, home prices instead of declining 30% , went up 300%. This would not be possible without huge credit excesses and balooning money supply.

To: GST who wrote (53864)	2/15/2006 4:13:21 PM
From: shades	Respond to of 110194

supply of money, the demand for money, the supply of goods and the demand for goods to know anything about the direction of prices I know a lot of geeks who spend all thier helicopter money on hookers - they talk of prices going from 100 to 500 to 2000 per hour in just a few years - this INFLATION of price has not been tracked in any official CPI I know of - can you point me to any? Some may not take this number seriously - but to a great many IBM employees - this is a serious issue and hurting them badly in thier sex lives - and if they are not happy in thier sex lives - the internet, data centers, comm centers etc etc that make your WEB work may not function as efficiently with stressed geeks. One manager at IBM says he hates the japanese - I said why - he said for about the past decade they have been going over to vegas and really causes the prices of a good hooker to sky rocket - he used to get a good hooker for about 700, now that same quality after all those asian businessmen is about 2000K per hour. He has started flying to the phillipines because Vegas is too crazy now - but he says it is starting to inflate their now too. My uncle got so fed up with ever increasing inflation on the price of his sexual company - he went and joined the mormon chuch - HAHA what a dumb sucker - after a few years they took one of his wives - the one he liked best and gave her to some elder - HAHA - he quit them after that.