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

To: pogohere who wrote (82654)	6/13/2007 2:29:59 PM
From: GST	Respond to of 110194

Mish utterly perverts the meaning of those he quotes. Take Faber to start with: "inflation is a loss of purchasing power of your currency, dollar or Rupee. It can manifest itself by rise in consumer price but it can also manifest itself by a loss of purchasing power of money against real estate, or against stocks and real estate." Then take Stern: "inflation is first and foremost a monetary phenomenon. It results from a long-term pattern of money creation which is excessive relative to the economy's ability to produce real goods and services" Mish concludes (after several more vacuous 'famous person quotations'): "On the basis of the agreed upon definition from those listed above (that inflation is an expansion of money and credit)" What? This is bullroar. There was nothing in his quotations agreeing with Mish's definition of inflation. On the contrary, each of them referred to the importance of money supply as a driver of inflation. Mish does not say that money supply is a driver of inflation. If he did that he would need to indicate what inflation actually is -- and it is NOT money supply. Nobody Mish cites has agreed with him at all on the matter of what inflation "is". What Mish says inflation "is" is nothing short of stupidity. It is not stupid to say that the supply of money is a factor driving inflation. It is not stupid to say that it is the most important driving force -- although this is highly debatable. But to say that "inflation is an expansion of money supply" -- this takes you into the realm of the truly stupid -- and I did not see any stupid people quoted on Mish's blog. What we are talking about is cause and effect. The cause of persistent changes in price levels is of great concern. The cause of the loss of purchasing power of a currency is of great concern. A focus on money supply as a leading cause is spot on. But it is an entirely different matter to say that inflation "is" an expansion of money supply. If you take this position you then end up in the most stupid position of all making the following claim: 'inflation is an expansion of money supply caused by an expansion of money supply'. The problem with a Blog -- any Blog -- is that people can wrap themselves up in a vain effort to look like they know what they are talking about when in reality they are spouting grossly misleading and ignorant nonsense. I feel entirely comfortable pointing out how dumb Mish is when ever he goes on about how inflation is an expansion of money supply.