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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: J-L-S who wrote (23794)	8/17/2006 8:59:55 AM
From: Kirk ©	Read Replies (2) \| Respond to of 42834

First, by plotting two variables (X and Y) on a graph, one could conclude that: A) X causes Y, or B) Y causes X. Are you making the claim that inflation happens BEFORE higher prices for oil? That is, CPI goes up then the oil gods say "Hey, we need to raise our prices too and take advantage!" There is obviously insufficient information to conclude one or the other, or that X and Y are related at all (there are lots of other things you could plot which would follow the same rough pattern, but for which it would be ridiculous to conclude a relationship). Show us one other item that has inflation (CPI and core CPI) tracking its ups and downs better than energy prices. Show us one other variable that went down in price then was followed by lower core and headline CPI numbers every time it went down. *It turns out that, for the worst kind of inflation, both A and B have to be true.* Yes, but the discussion was about Brinker saying higher prices doesn't cause inflation, which is wrong. Obviously, the economy is a closed loop system which means any small change causes other areas to compensate. I am not arguing that higher priced oil won't slow the economy similar to how raising taxes or interest rates slows the economy because it does. My "proof" was to show that Brinker's repeated statement that higher prices doesn't cause inflation is flat out wrong. Higher prices for anything reduces purchasing power which is the definition of inflation. Buying less jumk food at Walmart and taking the bus rather than driving is how some people react to loss of buying power, AKA inflation. Finally, Oil prices finished last month at $74.50, up $0.50 or up 0.7%

To: J-L-S who wrote (23794)	8/17/2006 12:21:00 PM
From: stockalot	Read Replies (2) \| Respond to of 42834

JLS sounds like he has swallowed Brinker's rather simplistic approach to the subject of inflation and energy prices hook line and sinker. He even has old Bob's hubris filled self importance down. "I don't consider you less intelligent. I only consider you less knowledgeable. If you feel condescended, it is because I consider myself more knowledgeable on the subject of inflation calculations; therefore, in my mind you are the student and I am the teacher"-J-L-S back in July. Bob Brinker has similarly hammered the Fed as Honey pointed out in her transcription. Going so far as to act as though a two bit radio show host was lecturing the fed chairman and "considering myself more knowledgeable on the subject of inflation calculations"--than Bernanke and the fed. Only a fool talks in absolute terms such as the quotes above when they are predicting the future of the economy. If anything we know that predictions are nearly as often right as wrong. To apply simplistic know-it-all, holier than thou, claims to such a complex business is laughable. Both Bob Brinker and JLS can yammer and pontificate and claim to be the teacher--with no real harm because no one pays any attention to either of them on the subject. Bernanke is quite different. His words and actions have consequences. He and the other fed governors put a lot more work and serious thought in it than a couple of "talking teachers" that think they know it all. He and the rest of the fed see inflation as a POTENTIAL problem. I think they are right to see inflation as a potential problem. Only a fool does not worry about inflation. And I would submit only a fool believes that high energy prices mitigates inflation as Brinker does. With high fuel costs employees are clamoring for more money, thus pressuring wages. The strong productivity boom based primarily on advances in computer technology has likely peaked. A business I am familiar with had a staff of 30 in the accounts recievable/payable department and now has probably 3 or 4. With low unemployment, likely a higher minimum wage which lifts many wages earned above the minimum, even more pressure is going to be exerted. A strong "anti-walmart" fever in much of the country will also increase prices along with wages. Indeed Walmart has been responsible for much of the lack of inflation in consumer goods. Though I am optimistic, (usually when you are worried to death about a problem (recall Greenspan worried about a surplus in a country with no debt 6 yrs ago??) something else is what you should be worried about), I can understand completely why those who are charged with balancing our economy do worry about inflation. I am also bright enough to understand that high energy prices are not likely to diminish inflation, but simply add more pain with inflation in a slowing economy. We saw stagflation, wasn't pretty. Bob Brinker is no more an expert on inflation than he was in predicting the QQQQ rally and kept predicting, and predicting and predicting...and then seems to hide that prediction.