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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Little Joe who wrote (391664)	11/6/2010 3:34:28 PM
From: rich evans	Read Replies (1) \| Respond to of 794363

Reserves are cash on deposit at the FED , not bonds. Monetary base= reserves plus currency. Commodity prices are affected by value of the dollar IMO but much less then good old supply and demand. China has altered this demand side. But commodity price increases generally are not based on inflation but supply and demand and commodity prices reach a equilibrium after they rise to equalized supply and demand. Labor rates are the true inflation indicator and with this high unemployment etc., it is unlikely they will rise. So commodity prices will follow supply and demand and not inflation expectations IMO. It is apparent now that the banks are not lending and the M1,M2 numbers show modest inflation. Rich