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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (67575)	11/29/2006 11:11:48 PM
From: mishedlo	Respond to of 306849

The second one leads to the first one as the new money flows into higher prices. Yes indeed but some put the cart before the horse. In fact almost everyone does. That suites the Fed quite well actually. The reason is that monetary stimulus does not always flow into higher prices. It can flow into higher stock prices instead. Those looking at price inflation as many here do, missed the massive inflation in dotcoms in the late 90;s. To them there was no inflation because oil and copper prices were falling. That is the fallacy of price monitoring. There was rampant inflation in the 90's but it was masked by falling commodity prices and productivity and falling computer prices etc etc. There are also reasons prices rise that have NOTHING to do with monetary stimulus. Crop disasters, corn blight, drought, peak oil. Using blunt instruments (interest rate policy) to attack peak oil is simply nuts but some here actually propose to do just that as if interest rates in the US can control demand for oil in India or China. What a joke. Mish